Canon 2008 Annual Report Download

Download and view the complete annual report

Please find the complete 2008 Canon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

CANON ANNUAL REPORT 2008
Fiscal Year Ended December 31, 2008

Table of contents

  • Page 1
    CANON ANNUAL REPORT 2008 Fiscal Year Ended December 31, 2008

  • Page 2
    CORPORATE PROFILE Canon is engaged in the development, manufacture and sale of a growing lineup of copying machines, printers, cameras, optical and other products that meet a diverse range of customer needs. The Canon brand is well recognized and trusted throughout the world by the individuals, ...

  • Page 3
    ... approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2008, solely for the convenience of the reader. Net Sales (Millions of yen) Net Income (Millions of yen) Net Income per Share (Yen) Basic Diluted ROE / ROA (%) ROE ROA 20.0 5,000,000 500,000 488,3 48 332 32 400...

  • Page 4
    ... our cash-ï¬,ow management and supply chain management (SCM) as we raise product competitiveness and profitability. Canon is boldly pushing forward its Excellent Global Corporation Plan with the aim of entering the ranks of the global top 100 companies in terms of key performance indicators. 2

  • Page 5
    3

  • Page 6
    ... information on everything from development through sales, as well as through pull production, or the timely manufacture of products to meet the exact level of demand. Canon will promote a two-pronged production strategy of further developing cost-reducing technologies and building a globally...

  • Page 7
    ... the construction of a new plant in which we will build an integrated system that manufactures, sells, recovers and recycles toner cartridges. In order to launch businesses in a timely manner ahead of the market, it is essential that Canon possess the technological capacity to develop technologies...

  • Page 8
    ...the Company's shared digital platforms of color management, wireless and user interface technologies, cross-media imaging enables a high level of collaboration among input and output devices and increases product synergies and added value. Our second priority goal is to lower the cost to sales ratio...

  • Page 9
    ...brings new approaches to current technologies, and at the same time, greatly increases the possibility of uncovering a path leading to a paradigm shift in the industry. From this standpoint, Canon will continue working diligently to reduce environmental burdens with an eye to developing beneficial...

  • Page 10
    EXCELLENT GLOBAL CORPORATION PLAN-PHASE III Photo: The large-format imagePROGRAF inkjet printers have been adopted by the School of the Art Institute of Chicago, earning high praise for combining professional-level photographic image quality and outstanding print speed. 8

  • Page 11
    EXCELLENT GLOBAL CORPORATION PLAN-PHASE III 9

  • Page 12
    ...2012, our objective is to establish a business structure that is capable of achieving the level of sales and profits necessary to surpass our fiscal 2008 performance based on current foreign currency exchange rates and to attain our original goal of joining the global top 100 companies in terms of...

  • Page 13
    ...new business domains and accumulating required technologies 4. Establishing new production systems to sustain international competitiveness 5. Nurturing truly autonomous individuals and promoting effective corporate reforms • Financial Times Global 500 (March 31, 2008 issue) Market value ranking...

  • Page 14
    ... as the telephoto lenses of choice for sports media on site at international soccer matches and other sporting events around the world. Despite severe conditions in the global economy, in 2008 Canon held its No. 1 position for core products, including digital cameras, laser beam printers (LBPs...

  • Page 15
    ... the print-on-demand (POD) market, which it entered in 2007, Canon released several new products in the imagePRESS lineup in 2008. We will continue to enhance our POD lineups to consolidate our position in this market. Canon is also promoting the Group's expansion of independent businesses. In 2008...

  • Page 16
    ... applications, while continuing to carry out collaborative research. Industrial robotics is another nextgeneration business domain for Canon. The Company has already used robots to assemble toner and inkjet cartridges and is now working on developing intelligent robots that can carry out an even...

  • Page 17
    ... in global demand, Canon has begun a shift to localized production. In the United States, we are carrying out plans for large-scale expansion at Canon Virginia. The expansion will include a new toner cartridge manufacturing plant that will introduce high-speed automated production systems, while...

  • Page 18
    ... 31, 2008) Canon Inc. General Meeting of Stockholders Board of Directors Chairman & CEO President & COO Executive Vice President & CFO Board of Corporate Auditors Management Strategy Committee Executive Committee Corporate Audit Center Headquarters Administrative Divisions Product Group Operations...

  • Page 19
    ... management committees, listening to business reports from directors, carefully examining Compliance training via e-learning is conducted for employees at Canon U.S.A. documents related to important decisions and conducting strict audits of the Group's business and assets. Corporate auditors...

  • Page 20
    ... its social responsibilities. With the aim of keeping its employees informed and aware, the Company conducts elearning-based personal information protection education programs on an annual basis. Disclosure Canon makes every effort to disclose information on its management and business strategies as...

  • Page 21
    ... method, the amount of compensation for the directors and corporate auditors of the Company is determined by a resolution of the general meeting of shareholders. The allotment of compensation for each director from the total amount of compensation is determined by the Company's board of directors...

  • Page 22
    CORPORATE FUNCTIONS Photo: A Canon Hope elementary school, located in Xinglong, Hebei Province, northeast of Beijing, completed in November 2008. Canon supported the construction of schools including this school in China in 2008. 20

  • Page 23
    RESEARCH & DEVELOPMENT ...22 PRODUCTION ...24 SALES & MARKETING ...26 CORPORATE SOCIAL RESPONSIBILITY ...28 21

  • Page 24
    ... devices like cameras or camcorders and output devices like displays or printers. The achievement of such outstanding product collaboration is attributable to Canon's long experience in developing leading-edge digital platform technologies shared across the Company, such as the high-accuracy color...

  • Page 25
    of its development processes. In 2008, we continued to promote our integrated IT systems based on a unified 3D-CAD system that facilitates the sharing of design information and links design through production to strengthen concurrent processes. The Company also started new initiatives to reduce ...

  • Page 26
    ... management. Cell production of interchangeable lenses for SLR cameras at Oita Canon, Japan Improving the Production System Based on Supply Chain Management Canon has been working to improve its SCM through various reform activities to meet market demands, supply products to the market in a timely...

  • Page 27
    ...Center in Virginia. Canon collaborates with a local college to conduct technical training. Full Automation to Maintain International Competitiveness Canon pursues fully automated production as a means of boosting productivity. In 2008, new automation systems developed for toner cartridge production...

  • Page 28
    ... and promote face-to-face communication with customers in China. The Americas Canon U.S.A., Inc. is the Company's regional marketing headquarters in North, Central and South America. As a whole, sales in the Americas amounted to ¥1,154.6 billion in fiscal 2008, down 13.6% from the previous year...

  • Page 29
    ... printers, projectors and medical equipment. In China, we will focus on expanding business in second-tier cities and cultivating new customer segments. In Australia, Canon maintained strong market shares across all consumer product categories while strengthening its business solutions. Over 500...

  • Page 30
    ... E1 compact digital camera, compared with the earlier PowerShot A560 model, we reduced the volume of the packaging box by 48% and the number of pages in the manual by 57% by including an additional manual in electronic format. Canon promotes modal shifts to reduce CO2 emissions related to product...

  • Page 31
    ... Program In its commitment to developing the business leaders of tomorrow, Canon and Christopher Newport University located in Virginia, the United States, where Canon has a manufacturing company, created the Canon Leadership Scholars Program. Each year beginning in 2008, 25 students are awarded...

  • Page 32
    ... In Dalian, China, the Company began supporting "The Project Hope" in 1995, a program organized by the China Youth Development Foundation for supporting children who have difficulty attending school. Since then, Canon has funded the construction of schools and every year donates school supplies and...

  • Page 33
    ...the Group to raise the technical skills of employees and contribute to the expansion of employment opportunities in local communities. In 2008, Canon began construction of the Oita Manufacturing Training Center in Japan, to be equipped with such manufacturing equipment as grinding machines for lens...

  • Page 34
    ... GROUPS Photo: A camera shop in Prague, Czech Republic. Canon is a popular brand in Eastern Europe. Business Machines Business Machines OFFICE IMAGING PRODUCTS ...34 • Office network digital multifunction devices (MFDs) • Color network digital MFDs • Office copying machines • Personal...

  • Page 35
    Business Machines CAMERAS ...38 • Digital single lens reï¬,ex (SLR) cameras • Compact digital cameras • Interchangeable lenses • Digital video camcorders, etc. OPTICAL AND OTHER PRODUCTS ...40 • Semiconductor-production equipment • Mirror projection mask aligners for LCD panels • ...

  • Page 36
    ... sales in markets hit hard by the global economic crisis, we will bolster our sales structures in North America and Europe. Innovative Products and Technology-V-Toner Clear Canon has developed the new and unique V-Toner Clear system, which it introduced with the imagePRESS C1+ in 2008. The system...

  • Page 37
    ...involving the Company's MFDs and notify a service base as necessary. The convenience of this service resulted in a high rate of system installations. In commercial printers, Canon expanded its business in the POD market with the release of its new imagePRESS C6000 digital press, designed to meet the...

  • Page 38
    ... at its plant in Thailand. In 2009, we expect a severe global economic environment. To reduce the impact of declining printer prices and strengthen Canon's presence in the global market, we will further strengthen our sales structure. Moreover, we will further differentiate our products by enhancing...

  • Page 39
    ... single-function printer. For the SOHO market, in 2008 Canon released the PIXMA MX7600 all-in-one inkjet printer featuring the Company's original revolutionary new PgR technology. In addition, sales of consumables such as inkjet cartridges were strong. In scanners, although the market is shrinking...

  • Page 40
    ..., Image Communication Products Operations In 2008, the Company held its No. 1 position for both digital SLR cameras and compact digital cameras in the four markets of North America, Europe, Japan and China. Canon increased unit sales and expanded its market share for digital SLR cameras on the...

  • Page 41
    ... lenses also increased. In compact digital cameras, the market grew slightly in 2008 but demand plummeted toward the end of the year and prices continued to fall. Unit sales were up as the Company strengthened its product lineup with 16 new models led by the stylish PowerShot SD1100 IS DIGITAL ELPH...

  • Page 42
    ... severe economic conditions from the latter half of 2008. We responded by managing production capacity to meet demand and also made thorough efforts to reduce inventories while strengthening new product development to spur demand. In addition, Canon continued to advance its immersion technology for...

  • Page 43
    ... locations. The Company achieved strong sales growth especially in China for its CXDI series, particularly the 50G model. In broadcast and communications, Canon held on to its high market share as the shift to HDTV drove demand for upgraded equipment and did brisk business related to the holding...

  • Page 44
    .... Canon Engineering (Thailand) Ltd. Canon Vietnam Co., Ltd. Canon Electronic Business Machines (H.K.) Co., Ltd. Canon Imaging Systems Inc. MARKETING & OTHER Canon Marketing Japan Inc. Canon System and Support Inc. Canon IT Solutions Inc. Canon Software Inc. e-System Corporation Asia Pacific System...

  • Page 45
    ... Accounting Policies Basis of Financial Statement Translation ...72 Foreign Operations ...73 Investments Trade Receivables ...75 Inventories Property, Plant and Equipment Finance Receivables and Operating Leases ...76 Acquisitions Goodwill and Other Intangible Assets ...77 Short-Term Loans and Long...

  • Page 46
    ...one of the world's leading manufacturers of copying machines, laser beam printers, inkjet printers, cameras, steppers and aligners. Canon earns revenues primarily from the manufacture and sale of these products domestically and internationally. Canon's basic management policy is to contribute to the...

  • Page 47
    ... collect related product expenses by strengthening supply chain management. Canon's management seeks to meet its liquidity and capital requirements primarily with cash ï¬,ow from operations. Management also seeks debt-free operations. For a manufacturing company like Canon, it generally takes...

  • Page 48
    ... reductions to sales at the time of sale for sales incentive programs including product discounts, customer promotions and volume-based rebates. Estimated reductions in sales are based upon historical trends and other known factors at the time of sale. In addition, Canon provides price protection to...

  • Page 49
    ... information about rates of return on high-quality fixed-income governmental and corporate bonds currently available and expected to be available during the period to the maturity of the pension benefits. Canon establishes the expected long-term rate of return on plan assets based on management...

  • Page 50
    ...net sales in fiscal 2008 totaled Â¥4,094,161 million (U.S.$44,991 million). This represents an 8.6% decrease from the previous fiscal year, reï¬,ecting the effects of the significant appreciation of the yen coupled with declining prices of products such as digital cameras and inkjet printers, and...

  • Page 51
    ...and image scanners. Business information products mainly include computer information systems, document scanners and personal information products. • The cameras product group mainly includes digital SLR cameras, compact digital cameras, interchangeable lenses and digital video camcorders. • The...

  • Page 52
    ... by Canon's change in marketing strategy from selling single products to a solutions business involving combinations of various products. Sales of cameras declined by 9.6% in fiscal 2008, totaling ¥1,041,947 million (U.S.$11,450 million). The high-resolution, competitively priced EOS Digital Rebel...

  • Page 53
    ... INFORMATION BY PRODUCT Millions of yen Business Machines Cameras Optical and Other Products Corporate and Eliminations Consolidated 2008 Net sales: Unaffiliated customers Intersegment Total Operating cost and expenses Operating profit Assets Depreciation and amortization Increase in property...

  • Page 54
    SEGMENT INFORMATION BY GEOGRAPHIC AREA Millions of yen Japan Americas Europe Others Corporate and Eliminations Consolidated 2008 Net sales: Unaffiliated customers Intersegment Total Operating cost and expenses Operating p gp profit Assets 2007 Net sales: Unaffiliated customers Intersegment Total...

  • Page 55
    ... between foreign subsidiaries, by net sales of foreign subsidiaries. Marketing activities are generally less profitable than production activities, which are mainly conducted by the Company and its domestic subsidiaries. The returns on foreign operation sales in fiscal 2008, 2007 and 2006 were...

  • Page 56
    ... 31, 2008 compared to ¥8,680 million at December 31, 2007. Canon's long-term debt (excluding current portion) generally consists of lease obligations. In order to facilitate access to global capital markets, Canon obtains credit ratings from two rating agencies: Moody's Investors Services, Inc...

  • Page 57
    ...for the foreseeable future. Canon's capital requirements are primarily dependent on management's business plans regarding the levels and timing of purchases of fixed assets and investments. The working capital ratio (ratio of current assets to current liabilities) for fiscal 2008 was 2.19 compared...

  • Page 58
    ... 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 Other long-term debt Operating lease obligations Purchase commitments for: Property, plant and equipment Parts and raw materials Total $ 149,978...

  • Page 59
    ... Establish new production system to sustain global competitiveness. Canon is striving to implement the three R&D related strategies as follows: • Realize an overwhelming No.1 position worldwide in all current core businesses: Pursue development of new products which enable "cross-media imaging" by...

  • Page 60
    Equity price risk Canon holds marketable securities included in current assets, which consist generally of highly-liquid and low-risk instruments. Investments included in noncurrent assets are held as long-term investments. Canon does not hold marketable securities and Available-for-sale securities...

  • Page 61
    .... In 2008, Canon strengthened the product lineups of its color digital devices as well as its monochrome machines and maintained its market share by executing business strategies in line with current market trends. LOOKING FORWARD Regarding the global economy, given the combined effects of economic...

  • Page 62
    ... of parts to ensure stable procurement, is concurrently in progress. Business information products As for document scanners, the adoption of internal information management systems by corporations, and other factors are driving a worldwide movement to digitize documents and Canon expects the market...

  • Page 63
    ... to the current global economic downturn, in the medium term, Canon still expects that digitization will drive worldwide replacement demand. At the same time, there have been signs of expanded HDTV applications by the media, starting with relatively inexpensive HDTV production, as the TV lens market...

  • Page 64
    ... Percentage of previous year Net income Percentage of sales Advertising Research and development expenses Depreciation of property, plant and equipment Increase in property, plant and equipment Long-term debt, excluding current installments Stockholders' equity Total assets Per share data: Income...

  • Page 65
    ...544 177,922 155,682 200,386 ¥ 165,277 1,202...20.00 3,500 2,413 1,...rate of U.S.$1 = JPY91, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2008. 2. The Company made a three-for-two stock split on July 1, 2006. The average number of common shares and the per share...

  • Page 66
    ...) Investments (Note 4) Property, plant and equipment, net (Notes 7 and 8) Intangible assets (Notes 9 and 10) Other assets (Notes 8, 9, 10, 13 and 14) Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term loans and current portion of long-term debt (Note 11) Trade payables...

  • Page 67
    ... STATEMENTS OF INCOME CANON INC. AND SUBSIDIARIES Years ended December 31, 2008, 2007 and 2006 Thousands of U.S. dollars (Note 2) 2006 2008 Millions of yen 2008 2007 Net sales Cost of sales (Notes 7, 10, 13 and 21) Gross profit Operating expenses (Notes 1, 7, 10, 13, 18 and 21): Selling, general...

  • Page 68
    ...EQUITY CANON INC. AND SUBSIDIARIES Millions of yen Additional paid-in capital Accumulated other comprehensive income (loss) Total stockholders' equity Common stock Legal reserve Retained earnings Treasury stock Balance at December 31, 2005 Conversion of convertible debt and other Cash dividends...

  • Page 69
    CONSOLIDATED STATEMENTS OF CASH FLOWS CANON INC. AND SUBSIDIARIES Years ended December 31, 2008, 2007 and 2006 Thousands of U.S. dollars (Note 2) 2006 2008 Millions of yen 2008 2007 Cash ï¬,ows from operating activities: Net income Adjustments to reconcile net income to net cash provided by ...

  • Page 70
    ... printers. Business information products consist mainly of computer information systems, document scanners and calculators. Cameras consist mainly of digital single-lens reï¬,ex ("SLR") cameras, compact digital cameras, interchangeable lenses and digital video camcorders. Optical and other products...

  • Page 71
    ... the ability to exercise significant inï¬,uence, but does not hold a controlling financial interest, are accounted for by the equity method. Non-marketable equity securities in companies over which Canon does not have the ability to exercise significant inï¬,uence are stated at cost and reviewed...

  • Page 72
    ...the equipment is installed at the customer site and the specific criteria of the equipment functionality are successfully tested and demonstrated by Canon. Service revenue is derived primarily from separately priced product maintenance contracts on equipment sold to customers and is measured at the...

  • Page 73
    ... February 2008, the FASB issued Staff Position ("FSP") No. FAS 157-2, "Effective Date of FASB Statement No. 157," which delays the effective date of SFAS 157 for one year for certain nonfinancial assets and liabilities. Canon adopted SFAS 157 in the first quarter beginning January 1, 2008 for all...

  • Page 74
    ...fication Time deposits with original maturities of more than three months and marketable securities, which were previously disclosed separately in the consolidated balance sheets, have been reclassified to short-term investments to conform to the current year presentation. Intangible assets, which...

  • Page 75
    ... Cost and investments by major security type at December 31, 2008 and 2007 were as follows: Gross unrealized holding gains Gross unrealized holding losses Fair value 2008: Current: Available-for-sale: Government bonds Fund trusts Noncurrent: Available-for-sale: Government bonds Corporate debt...

  • Page 76
    ... FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Thousands of U.S. dollars Cost Gross unrealized holding gains Gross unrealized holding losses Fair value 2008: Current: Available-for-sale: Government bonds Fund trusts Noncurrent: Available-for-sale: Government bonds Corporate...

  • Page 77
    ... assets. Canon recognized impairment losses of ¥11,164 million ($122,681 thousand) related primarily to property, plant and equipment of its semiconductor production equipment business during the year ended December 31, 2008. As a result of declining demand in the semiconductor manufacturing...

  • Page 78
    ... and share exchange by the subsidiary of the Company, is engaged in providing architecture, management and maintenance services for information systems. In connection with those transactions, Canon recognized goodwill of ¥7,556 million, which is included in other assets, and intangible assets of...

  • Page 79
    ...and Other Intangible Assets Intangible assets developed or acquired during the year ended December 31, 2008 totaled ¥47,050 million ($517,033 thousand), which are subject to amortization and primarily consist of software of ¥38,986 million ($428,418 thousand), which is mainly for internal use, and...

  • Page 80
    ... yen convertible debentures, due 2008 Capital lease obligations Less current portion ¥ 95 - - 13,648 13,743 (5,320) ¥ 8,423 ¥ 2,993 10,000 128 10,988 24,109 (15,429) ¥ 8,680 $ 1,044 - - 149,978 151,022 (58,462) $ 92,560 The aggregate annual maturities of long-term debt outstanding at...

  • Page 81
    ... of the plan assets are as follows: Japanese plans Millions of yen 2007 2008 Thousands of U.S. dollars 2008 Foreign plans Millions of yen 2008 2007 Thousands of U.S. dollars 2008 Change in benefit obligations: Benefit obligations at beginning of year ¥ 493,478 ¥ 578,086 Service cost 20,786...

  • Page 82
    ... CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Amounts recognized in the consolidated balance sheets at December 31, 2008 and 2007 are as follows: December 31 Japanese plans Millions of yen 2008 2007 Thousands of U.S. dollars 2008 Foreign plans Millions of yen 2008 2007...

  • Page 83
    ...dollars 2008 Millions of yen 2007 Thousands of U.S. dollars 2008 2008 2006 2008 2006 Service cost Interest cost Expected return on plan assets...$ - (1,286) 12,330 Japanese plans 2008 2007 2008 Foreign plans 2007 Discount rate Assumed rate of increase in future compensation levels 2.4% 3.0% ...

  • Page 84
    ... the expected long-term rate of return based on the expected long-term return of the various asset categories in which it invests. Canon considers the current expectations for future returns and the actual historical returns of each plan asset category. December 31 2008 Plan assets The weighted...

  • Page 85
    ...124,011 (357,110) $ 1,766,901 The Company and its domestic subsidiaries are subject to a number of income taxes, which, in the aggregate, represent a statutory income tax rate of approximately 40% for the years ended December 31, 2008, 2007 and 2006. Years ended December 31 A reconciliation of the...

  • Page 86
    ... dollars 2008 Deferred tax assets: Inventories Accrued business tax Accrued pension and severance cost Research and development-costs capitalized for tax purposes Property, plant and equipment Accrued expenses Net operating losses carried forward Other Less valuation allowance Total deferred tax...

  • Page 87
    ... tax authorities are currently conducting income tax examinations of Canon's income tax returns for years after 2005 in Japan and for certain years after 2003 in major foreign tax jurisdictions. 15. Common Stock For the years ended December 31, 2008, 2007 and 2006, the Company issued 127,254 shares...

  • Page 88
    ... 31, 2008 do not reï¬,ect current year-end dividends in the amount of Â¥67,897 million ($746,121 thousand) which will be payable in March 2009 upon approval by the stockholders. The amount available for dividends under the Corporation Law of Japan is based on the amount recorded in the Company...

  • Page 89
    ...Years ended December 31 Before-tax amount Millions of yen Tax (expense) or benefit Net-of-tax amount 2008...change during the year Minimum pension liability adjustments Other...362 ¥ 308 3,037 2,715 5,752 (236) (312) (548) ¥ (62) (4,200) 2,422 (1,778) 354 460 814 62,768 (5,766) 57,002 ¥ 50,464 ...

  • Page 90
    ... option (in years) Expected volatility Dividend yield Risk-free interest rate 4.0 37.39% 2.10% 0.95% A summary of option activity under the stock option plan as of and for the year ended December 31, 2008 is presented below: Shares Weighted-average exercise price Yen U.S. dollars Weightedaverage...

  • Page 91
    ... share for the year ended December 31, 2008 excludes outstanding stock options because the effect would be anti-dilutive. 20. Derivatives and Hedging Activities Risk management policy Canon operates internationally, exposing it to the risk of changes in foreign currency exchange rates. Derivative...

  • Page 92
    ...) at year-end are expected to be recognized in earnings over the next 12 months. Canon excludes the time value component from the assessment of hedge effectiveness. Changes in the fair value of a foreign exchange contract for the period between the date that the forecasted intercompany sales occur...

  • Page 93
    ...were not significant. Canon also issues contractual product warranties under which it generally guarantees the performance of products delivered and services rendered for a certain period or term. Changes in accrued product warranty cost for the years ended December 31, 2008 and 2007 are summarized...

  • Page 94
    .... The summary also excludes investments which are disclosed in Note 4. Millions of yen 2007 Estimated fair value Carrying amount Thousand of U.S. dollars 2008 Estimated fair value Long-term debt, including current installments ¥ (13,743) ¥ (13,727) Foreign exchange contracts: Assets 10,516 10,516...

  • Page 95
    ... the quoted price in the most active market or the present value of future cash ï¬,ows associated with each instrument discounted using Canon's current borrowing rate for similar debt instruments of comparable maturity. Foreign exchange contracts The fair values of foreign exchange contracts, all of...

  • Page 96
    ... currency exchange rates and interest rates. The following table presents the changes in Level 3 assets measured on a recurring basis, consisting solely of corporate debt securities, for the year ended December 31, 2008. Millions of yen Thousands of U.S. dollars Balance at beginning of year Total...

  • Page 97
    ... company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies...

  • Page 98
    ...nancial statements, in 2007 the Company changed its method of accounting for depreciation. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Canon Inc.'s internal control over financial reporting as of December 31, 2008, based...

  • Page 99
    ... Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board...

  • Page 100
    ... Receipts are traded on the New York Stock Exchange (CAJ). Stockholders' Annual General Meeting: March 27, 2009, in Tokyo Further Information: For publications or information, please contact the External Relations Headquarters, Canon Inc., Tokyo, or access Canon's Website at www.canon.com 98

  • Page 101

  • Page 102
    This publication is printed on paper certified by the Forest Stewardship Council with ink that uses neither VOCs (Volatile Organic Compounds) nor mineral oil and realizes superior decomposability and deinkability. CANON INC. 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan PUB. BEP018 ...