Canon 2007 Annual Report Download - page 58

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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following summarizes Canon’s contractual obligations at December 31, 2007.
Payments Due By Period
Millions of yen Total Less than 1 year 1–3 years 3–5 years More than 5 years
Contractual obligations:
Long-term debt:
Capital lease obligations ¥ 10,988 ¥ 4,651 ¥ 5,055 ¥ 1,268 ¥ 14
Other long-term debt 13,121 10,778 1,443 691 209
Operating lease obligations 57,401 16,365 20,019 9,736 11,281
Purchase commitments for:
Property, plant and equipment 117,119 117,119 — — —
Parts and raw materials 91,882 91,882 — — —
Total ¥290,511 ¥240,795 ¥26,517 ¥11,695 ¥11,504
Note: The table does not include provisions for uncertain tax positions and related accrued interest and penalties, as the specific timing of future payments related to
these obligations cannot be projected with reasonable certainty. See Note 14, Income Taxes in the Notes to Consolidated Financial Statements for further details.
Payments due by period
Thousands of U.S.dollars Total Less than 1 year 1–3 years 3–5 years More than 5 years
Contractual obligations:
Long-term debt:
Capital lease obligations $ 96,386 $ 40,798 $ 44,342 $ 11,123 $ 123
Other long-term debt 115,096 94,544 12,658 6,061 1,833
Operating lease obligations 503,518 143,553 175,605 85,403 98,957
Purchase commitments for:
Property, plant and equipment 1,027,360 1,027,360 — — —
Parts and raw materials 805,982 805,982 — — —
Total $2,548,342 $2,112,237 $232,605 $102,587 $100,913
Canon provides warranties of generally less than one year
against defects in materials and workmanship on most of its
consumer products. Estimated product warranty related costs
are established at the time revenue is recognized and is
included in selling, general and administrative expenses.
Estimates for accrued product warranty cost are primarily
based on historical experience, and are affected by ongoing
product failure rates, specific product class failures outside of
the baseline experience, material usage and service delivery
costs incurred in correcting a product failure. As of December
31, 2007, accrued product warranty costs amounted to
¥20,138 million (U.S.$177 million).
At December 31, 2007, commitments outstanding for
the purchase of property, plant and equipment were approxi-
mately ¥117,119 million (U.S.$1,027 million), and commit-
ments outstanding for the purchase of parts and raw materials
were approximately ¥91,882 million (U.S.$806 million), both
for use in the ordinary course of its business. Canon anticipates
that funds needed to fulfill these commitments will be gener-
ated internally through operations.
During fiscal 2008, Canon expects to contribute ¥13,699
million (U.S.$120 million) to its Japanese defined benefit pension
plans and ¥4,409 million (U.S.$39 million) to its foreign defined
benefit pension plans.
Canon’s management believes that current financial
resources, cash generated from operations and Canon’s poten-
tial capacity for additional debt and/or equity financing will be
sufficient to fund current and future capital requirements.
RESEARCH AND DEVELOPMENT, PATENTS
AND LICENSES
The fiscal year 2007 is the second year of Phase III (2006-2010)
of the Excellent Global Corporation Plan, which has an objective
to realize “Sound Growth” toward “Joining the World’s Top
100 Companies.”
Canon has established the following as key strategies:
• Realize an overwhelming No.1 position worldwide in all
current core businesses,
• Expand operations through diversification and
• Identify new business domains and accumulate necessary
technological capabilities.