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CANON ANNUAL REPORT 2009
Fiscal Year Ended December 31, 2009
canonAR_C1-C4_ipc_FSC_0325.indd 1-2 10.3.26 10:52:52 AM

Table of contents

  • Page 1
    CANON ANNUAL REPORT 2009 Fiscal Year Ended December 31, 2009

  • Page 2
    ... of U.S. dollars (except per share amounts) 2009 2008 Change (%) 2009 Net sales Operating profit Income before income taxes Net income attributable to Canon Inc. Net income attributable to Canon Inc. stockholders per share: -Basic -Diluted Total assets Canon Inc. stockholders' equity ¥3,209...

  • Page 3
    ... 6 8 STRATEGIES AND ACTIVITIES ...12 EXCELLENT GLOBAL CORPORATION PLAN IMPROVING THE QUALITY OF MANAGEMENT RESEARCH & DEVELOPMENT PRODUCTION SALES & MARKETING CORPORATE SOCIAL RESPONSIBILITY BUSINESS UNITS ...30 OFFICE BUSINESS UNIT CORPORATE PHILOSOPHY: Kyosei The corporate philosophy of Canon is...

  • Page 4
    2 CANON ANNUAL REPORT 2009 TO OUR STOCKHOLDERS Achieving a a New Era

  • Page 5
    ... various efforts, including reducing inventories. >> Canon, aiming to become one of the world's top 100 companies, views 2010 as the first year in a new era of growth. >> In 2010, we will further improve management quality by re-establishing a profit-earning structure through IT reforms and other...

  • Page 6
    ... currency exchange rates added to the severity of the business environment in 2009. Although the start of the year saw the yen-dollar rate in the low nineties, and for a time it seemed headed to top ¥100, it instead went in the other direction, appreciating an annual average of ¥10 in 2009. The...

  • Page 7
    ... our solutions and service offerings as well as the performance and product lineups of our office equipment. We will bolster the digital production system business by leveraging the capabilities of newly consolidated subsidiary Océ while reinforcing our direct-sales structure and human resources...

  • Page 8
    ... Managed Print Services (MPS). In addition, Canon will focus on emerging economies by introducing a large number of products designed exclusively for these markets while establishing and bolstering business bases in each target country. We are also working to expand our commercial printing business...

  • Page 9
    ... supply chain management (SCM) systems, that are based on daily sales and inventory information and have led to solid achievements in our digital camera business. Product quality control is another issue that Canon must decisively tackle company-wide. The occurrence of one serious quality problem...

  • Page 10
    ... related to important decisions and conducting strict audits of the Group's business and assets. Corporate auditors also work closely with accounting auditors and the Corporate Audit Center, which is in charge of monitoring the Company's compliance, risk management and internal control systems...

  • Page 11
    ... Group Executive, Device Technology Development Headquarters Hideki Ozawa President & CEO, Canon (China) Co., Ltd. Senior Managing Directors Katsuichi Shimizu Chief Executive, Inkjet Products Operations Masaya Maeda Chief Executive, Image Communication Products Operations Nobuyoshi Tanaka Group...

  • Page 12
    ... asset in the course of fulfilling its social responsibilities. With the aim of keeping its employees informed and aware, the Company conducts e-learning sessions as part of its personal information protection education programs every year. Significant Differences in Corporate Governance...

  • Page 13
    ...Law, the half or more of a company's corporate auditors must be "outside" corporate auditors. These are individuals who are prohibited to have ever been a director, executive officer, manager, or employee of the Company or its subsidiaries. The Company's current corporate auditor system meets these...

  • Page 14
    12 CANON ANNUAL REPORT 2009 STRATEGIES AND ACTIVITIES

  • Page 15
    13 EXCELLENT GLOBAL CORPORATION PLAN ...14 IMPROVING THE QUALITY OF MANAGEMENT ...16 RESEARCH & DEVELOPMENT ...20 PRODUCTION...22 SALES & MARKETING ...24 CORPORATE SOCIAL RESPONSIBILITY ...26 Photo: Canon introduced an extensive range of solutions based on the combination of various input and ...

  • Page 16
    ... each year. 5 Key Strategies 1. Achieving the overwhelming No.1 position worldwide in all current core businesses 2. Expanding business operations through diversification 3. Identifying new business domains and accumulating required technologies 4. Establishing new production systems to...

  • Page 17
    ... the entire printing industry. In addition, this FORTUNE Global 500 is a registered trademark of FORTUNE Magazine, a division of Time Inc. in the United States of America. move expands Canon's worldwide customer base by giving it access to the large number of outstanding global companies that are...

  • Page 18
    ... centralized technical information management throughout the design, procurement, prototyping and production processes, thereby shortening development times. Supply Chain With procurement and production operations sharing the purchase-order information managed by sales and marketing, Canon will be...

  • Page 19
    ... management of inventories, the Company has to develop a supply chain system that makes full use of information provided by sales companies and implement this system on a Group-wide scale. If these sales companies place purchase orders closely linked with real demand in the market and we manufacture...

  • Page 20
    ...factors as the environment, product quality, costs, logistics, consumer markets, human resources and parts procurement. One way the Inventories and Turnover Measured in Days (Billions of yen) Inventories 600 500 510.2 47 Turnover Measured (Days) in Days Increase in Property, Plant and Equipment...

  • Page 21
    ... SCM, realize IT reforms and build an optimal global production structure, the entire Canon Group has endeavored to improve its management quality. In 2009, Canon worked to optimize inventory management, the increase in property, plant and equipment and depreciation while reducing such costs...

  • Page 22
    .... * Source: U.S. Patent and Trademark Office. Calculated based upon publicly disclosed weekly totals. Enhancing Our R&D Structure Canon is working to bolster its R&D capabilities as part of efforts to improve its management quality. With an eye to achieving renewed, sound growth, the Company has...

  • Page 23
    ... liquid crystal displays (LCDs) to improve business profitability and product competitiveness. These technological stepping-stones are helping to give Canon added impetus toward establishing new business domains. The Company aims to develop its operations in these domains into next-generation core...

  • Page 24
    22 CANON ANNUAL REPORT 2009 >> PRODUCTION Canon is accelerating toward establishing completely lean SCM through the enhancement of production technologies, production structure and human resources. Canon has also expanded the scope of in-house production. Specifically, Canon further promoted the...

  • Page 25
    ..., Group-wide Canon's success in enhancing production technologies and developing an optimal global production structure hinges on one key factor: the capabilities of its workforce. As a company committed to manufacturing, we have long recognized the value of developing human resources, positioning...

  • Page 26
    ...aims to expand the contribution that solutions business sales make to total sales. Accordingly, we must set clear goals for product and business development in growth areas. In 2009, we launched Canon Managed Document Services (Canon MDS). Based on existing region- and market-specific Managed Print...

  • Page 27
    ...Group-a Belgian company boasting an extensive portfolio of scanning technologies. other areas in Asia. As a new initiative in China, Canon pioneered new sales channels, including Internet marketing and local distributors for certain products. We plan to expand our sales and servicing bases in China...

  • Page 28
    ... Use, Recycle-to achieve highly functional products with minimal environmental burden. Canon continues to expand these activities with its customers and business partners. Canon will contribute to a future that promotes both enrichment and the environment through technological innovation. Returnable...

  • Page 29
    ... designs, we have promoted closed-loop recycling, which facilitates the reuse of components and the recycling of plastic without compromising the quality of new cartridges made from used plastic. Today, Canon runs toner cartridge collection operations in 23 countries worldwide and to date has...

  • Page 30
    ... Tsuzuri Project Canon and the Kyoto Culture Association (NPO) jointly promote the Tsuzuri Project aimed at preserving important Japanese cultural properties. Using Canon's digital SLR cameras, large-format inkjet printers and color management technologies, skilled artisans produce 2009 Canon Green...

  • Page 31
    ... Diverse Human Resources Aiming to become a truly excellent global corporation, Canon effectively uses communication and education to motivate each employee to continue growing as an "excellent person." In 2009, Canon opened new skill training facilities in the city of Oita. Equipment includes...

  • Page 32
    30 CANON ANNUAL REPORT 2009 BUSINESS UNITS

  • Page 33
    ... MFDs • Office copying machines • Personal-use copying machines • Full-color copying machines • Laser printers • Large format inkjet printers 51.3% CONSUMER BUSINESS UNIT ...36 • Digital SLR cameras • Compact digital cameras • Interchangeable lenses • Digital video camcorders...

  • Page 34
    32 CANON ANNUAL REPORT 2009 BUSINESS UNITS OFFICE BUSINESS UNIT Photo: The imageRUNNER ADVANCE series (above: imageRUNNER ADVANCE C7065) incorporates the ideas from feedback accumulated by Canon's sales network through the provision of solution proposals. One imageRUNNER ADVANCE feature based on...

  • Page 35
    ... formerly had been concentrated among major printers, is being distributed throughout the industry. This shift will bring the expansion of the light/medium production market. Canon will target this promising market with competitive products and services. Digital production systems Laser printer

  • Page 36
    34 CANON ANNUAL REPORT 2009 Fiscal 2009 Review- OFFICE BUSINESS UNIT In 2009, net sales in the Office Business Unit totaled ¥1,645.1 billion, a decrease of 26.8% year on year. Global demand for office network MFDs-both color and monochrome products-decreased, even in Asia, where previously ...

  • Page 37
    ... machines and MFPs used by large corporations and SOHOs and in large-format printers aimed at businesses and design firms will help us build a strong complementary fit from a technology and product perspective. Through expanded business and technology portfolios, we will provide printing solutions...

  • Page 38
    36 CANON ANNUAL REPORT 2009 BUSINESS UNITS CONSUMER BUSINESS UNIT Photo: Thanks to Canon's built-in Dual DIGIC 4 image processors and 18.0-megapixel image sensor, the EOS 7D digital SLR camera boasts superior capabilities, including high-speed continuous shooting that comes close to that of pro-...

  • Page 39
    ...fic market conditions slowed only slightly. Nevertheless, Canon recorded sales growth in terms of volume in the Americas and Asia due to the high market evaluation of its products. In 2009, with advanced product technologies and excellent designs, Canon strove to expand sales channels, particularly...

  • Page 40
    ..., sales of digital SLR cameras remained healthy worldwide. On the other hand, the inkjet printer business faced weak market conditions. Against this backdrop, Canon strove to adjust its production and shipping operations in order to eliminate uneven inventories. In digital SLR cameras, sales of...

  • Page 41
    ... position worldwide in this product category. * Full-photolithography Inkjet Nozzle Engineering technology CanoScan LiDE 700F In Focus -Inkjet Printer Marketing Strategy in China To bolster sales and marketing activities and after-sales services related to its inkjet printers in China, Canon moved...

  • Page 42
    40 CANON ANNUAL REPORT 2009 BUSINESS UNITS INDUSTRY AND OTHERS BUSINESS UNIT Photo: Measuring 9.0 m in width, 11.6 m in depth and 5.8 m in height, and weighing approximately 100 tons, Canon's LCD lithography equipment can accommodate eighth-generation glass substrate sizes. Canon is currently ...

  • Page 43
    ... response, Canon launched drastic structural reforms to optimize the scale of businesses in the face of market contraction. In January 2010, Canon Marketing Japan's semiconductor lithography equipment business was transferred to Canon Inc. as the latter shifted to a style of business operation able...

  • Page 44
    ...Based OPTOPOL Technology S.A. The OPTOPOL Group develops, manufactures and markets such innovative ophthalmic diagnostic equipment as Optical Coherence Tomography (OCT) systems and operates throughout Europe, the United States and Japan. In line with the aging of the global population, the number of...

  • Page 45
    ...Accounting Policies Basis of Financial Statement Translation ...72 Investments Trade Receivables ...74 Inventories Property, Plant and Equipment Finance Receivables and Operating Leases ...75 Goodwill and Other Intangible Assets ...76 Short-Term Loans and Long-Term Debt ...77 Trade Payables Employee...

  • Page 46
    ... groups, taking into account recent market trends. Gross profit ratio (ratio of gross profit to net sales) is another KPI for Canon. Through its reforms in product development, Canon has been striving to shorten product development lead times in order to launch new, competitively priced products...

  • Page 47
    .... As Canon puts strong emphasis on its research and development activities, management believes that it is important to maintain a stable financial base and, accordingly, a high level of its stockholders' equity to total assets ratio. KEY PERFORMANCE INDICATORS 2009 2008 2007 2006 2005 Net sales...

  • Page 48
    46 CANON ANNUAL REPORT 2009 bundled with product maintenance contracts, revenue is first allocated considering the relative fair value of the lease and nonlease deliverables based upon the estimated relative fair values of each element. Lease deliverables generally include equipment, financing ...

  • Page 49
    ... expected long-term rate of return on plan assets of 3.7% for Japanese plans and 6.2% for foreign plans. In estimating the discount rate, Canon uses available information about rates of return on high-quality fixed-income governmental and corporate bonds currently available and expected to...

  • Page 50
    48 CANON ANNUAL REPORT 2009 Sales Canon's consolidated net sales in fiscal 2009 totaled ¥3,209,201 million (U.S.$34,883 million), representing a 21.6% decrease from the previous fiscal year. Although the markets for such consumer products as cameras and inkjet printers are clearly bottoming out...

  • Page 51
    ...-color copying machines, laser printers and large format inkjet printers. • The Consumer Business Unit mainly includes digital SLR cameras, compact digital cameras, interchangeable lenses, digital video camcorders, inkjet multifunction peripherals, single function inkjet printers, image scanners...

  • Page 52
    ... new products as the competitively priced EOS Rebel T1i (EOS 500D) and advanced-amateur model EOS 7D digital SLR cameras recorded solid growth. As for compact digital cameras, although stagnant market conditions led to a contraction in sales volume, the Company reinforced its product lineup through...

  • Page 53
    ... various regions in local currencies, while the cost of sales is generally in yen. Given Canon's current operating structure, appreciation of the yen has a negative impact on net sales and the gross profit ratio. To reduce the financial risks from changes in foreign exchange rates, Canon utilizes...

  • Page 54
    52 CANON ANNUAL REPORT 2009 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. ("Moody's") and Standard and Poor...

  • Page 55
    ...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 $ 106,098...

  • Page 56
    ... current core businesses; • Expand operations through diversification; • Identify new business domains and accumulate necessary technological capabilities; and • Establish new production system to sustain global competitiveness. Canon is striving to implement the three R&D related strategies...

  • Page 57
    ... LCD panels from Canon Marketing Japan Inc. ("Canon Marketing Japan") to the Company on January 1, 2010. This was in an effort to fortify the industry equipment business by establishing a completely integrated system from development to production, sales and servicing. Asia Pacific System Research...

  • Page 58
    ...number of major financial institutions. Millions of yen Canon's international operations expose Canon to the risk of changes in foreign currency exchange rates. Canon uses foreign exchange contracts to manage certain foreign currency exchange exposures principally from the exchange of U.S. dollars...

  • Page 59
    ... printers for commercial use and large-format printers for business use, into a consolidated subsidiary and by doing so, Canon will enhance its direct-sales and direct-service systems, mainly in Europe and the U.S., and apply its technologies and products to overwhelmingly achieve the No.1 position...

  • Page 60
    ... standardization of operational commands, market research companies are predicting that this segment will rebound once again in the future. In order to avoid missing this trend, Canon is working to expand sales with a lineup ranging from low-priced, mass market models to high value-added models. In...

  • Page 61
    ... in the third quarter, the market started to recover gradually and in the fourth quarter it returned to the levels of the previous year. To manage these trends, Canon has focused on selling mid-range to high-end models which enable large volume printing, including photo printers for professional and...

  • Page 62
    ... year Net income attributable to Canon Inc. 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 Canon Inc. stockholders' equity Total assets Per share...

  • Page 63
    ... taxes" and "net income" is now referred to as "net income attributable to Canon Inc." 2. U.S. dollar amounts are translated from yen at the rate of U.S.$1 = JPY92, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2009. 3. The Company made a three-for-two stock...

  • Page 64
    ... Investments (Note 3) Property, plant and equipment, net (Notes 6 and 7) Intangible assets, net (Note 8) Other assets (Notes 7,8,11 and 12) Total assets LIABILITIES AND EQUITY Current liabilities: Short-term loans and current portion of long-term debt (Note 9) Trade payables (Note 10) Accrued income...

  • Page 65
    ...dollars (Note 2) 2007 2009 Millions of yen 2009 2008 (As adjusted) (Note 1) Net sales Cost of sales (Notes 6, 8, 11 and 19) Gross profit Operating expenses (Notes 1, 6 ,8, 11, 16 and 19): Selling, general and administrative expenses Research and development expenses Operating profit Other income...

  • Page 66
    64 CANON ANNUAL REPORT 2009 CONSOLIDATED STATEMENTS OF EQUITY CANON INC. AND SUBSIDIARIES Millions of yen Additional paid-in capital Accumulated other comprehensive income (loss) Total Canon Inc. stockholders' equity Common stock Legal reserve Retained earnings Treasury stock Noncontrolling ...

  • Page 67
    65 Thousands of U.S. dollars (Note 2) Additional paid-in capital Accumulated other comprehensive income (loss) Total Canon Inc. stockholders' equity Common stock Legal reserve Retained earnings Treasury stock Noncontrolling interests Total equity $1,899,587 $4,389,022 Balance at December 31,...

  • Page 68
    66 CANON ANNUAL REPORT 2009 CONSOLIDATED STATEMENTS OF CASH FLOWS CANON INC. AND SUBSIDIARIES Years ended December 31, 2009, 2008 and 2007 Thousands of U.S. dollars (Note 2) 2007 2009 Millions of yen 2009 2008 (As adjusted) (Note 1) Cash ï¬,ows from operating activities: Consolidated net income ...

  • Page 69
    ... machines, laser printers and large format inkjet printers. Consumer products consist mainly of digital single-lens reï¬,ex ("SLR") cameras, compact digital cameras, interchangeable lenses, digital video camcorders, inkjet multifunction peripherals, single function inkjet printers, image scanners...

  • Page 70
    ... companies and nonmarketable equity securities. Canon reports investments with maturities of less than one year as short-term investments. Canon classifies investments in debt and marketable equity securities as available-for-sale or held-to-maturity securities. Canon does not hold any trading...

  • Page 71
    ... principally through the sale of office and consumer products, equipment, supplies, and related services under separate contractual arrangements. Canon recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss have been transferred to the...

  • Page 72
    ... 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 stated amount of the contract and recognized as services are provided. Canon also offers separately priced...

  • Page 73
    ...In June 2009, the Financial Accounting Standards Board ("FASB") issued the Accounting Standards Codification ("ASC"). The ASC has become the source of authoritative U.S. GAAP. Additionally, rules and interpretive releases of the U.S. Securities and Exchange Commission ("SEC") under authority of the...

  • Page 74
    72 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 2. Basis of Financial Statement Translation The consolidated financial statements presented herein are expressed in Japanese yen and, solely for the convenience of the reader, have been...

  • Page 75
    ...ficant for the year ended December 31, 2007. At December 31, 2009, substantially all of the available-forsale securities with unrealized losses had been in a continuous unrealized loss position for less than 12 months. Time deposits with original maturities of more than three months are ¥18,852...

  • Page 76
    74 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 4. Trade Receivables Trade receivables are summarized as follows: December 31 Millions of yen 2009 2008 Thousands of U.S. dollars 2009 Notes Accounts Less allowance for doubtful ...

  • Page 77
    ... included in selling, general and administrative expenses in the consolidated statement of income. 7. Finance Receivables and Operating Leases Finance receivables represent financing leases which consist of sales-type leases and direct-financing leases resulting from the marketing of Canon's and...

  • Page 78
    76 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 8. Goodwill and Other Intangible Assets Intangible assets developed or acquired during the year ended December 31, 2009 totaled ¥43,461 million ($472,402 thousand), which are subject to...

  • Page 79
    ... are made under general agreements which provide that security and guarantees for present and future indebtedness will be given upon request 10. Trade Payables Trade payables are summarized as follows: December 31 Millions of yen 2009 2008 Thousands of U.S. dollars 2009 Notes Accounts 7,608 331...

  • Page 80
    78 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 11. Employee Retirement and Severance Benefits The Company and certain of its subsidiaries have contributory and noncontributory defined benefit pension plans covering substantially ...

  • Page 81
    ... and 2008 before the effect of income taxes are as follows: December 31 Japanese plans Millions of yen 2009 2008 Thousands of U.S. dollars 2009 Foreign plans Millions of yen 2009 2008 Thousands of U.S. dollars 2009 Actuarial loss Prior service credit Net transition obligation ¥ 237,822 ¥ 251,731...

  • Page 82
    80 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) Net periodic benefit cost for Canon's employee retirement and severance defi...

  • Page 83
    ... diversified the investments. Pooled funds are selected using strategies consistent with the equity and debt securities described above. As for investments in life insurance company general accounts, the contracts with the insurance companies include a guaranteed interest rate and return of capital...

  • Page 84
    ...of Canon's pension plan assets at December 31, 2009, by asset category are as follows: Millions of yen Foreign plans Total Level 1 Level 2 Level 3 Total Equity securities: Japanese companies (a) Foreign companies Pooled funds (b) Debt securities: Government bonds (c) Municipal bonds Corporate bonds...

  • Page 85
    ...are valued using unadjusted quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 assets are comprised principally of pooled funds that invest in equity and debt securities, corporate bonds and investments in life insurance company Year ending December...

  • Page 86
    84 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES 12. Income Taxes Domestic and foreign components of income before income taxes and the current and deferred income tax expense (benefit) attributable to such income are summarized as ...

  • Page 87
    ... 31 Millions of yen 2009 2008 Thousands of U.S. dollars 2009 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...

  • Page 88
    86 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Millions of yen Thousands of U.S. dollars Within one year After one year through five years After five years through ten years Indefinite period Total Income taxes have not been ...

  • Page 89
    ... reï¬,ect current year-end dividends in the amount of Â¥67,896 million ($738,000 thousand) which were approved by the stockholders in March 2010. The amount available for dividends under the Corporation Law of Japan is based on the amount recorded in the Company's nonconsolidated books of account in...

  • Page 90
    ...CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments, Years...1,068 949 1,891 (632) 1,259 ¥ (2,100) ¥ 5,893 6,992 (3,101) 3,891 (9,...

  • Page 91
    ...-Based Compensation On May 1, 2009, based on the approval of the stockholders, the Company granted stock options to its directors, executive officers and certain employees to acquire 954,000 shares of common stock. These option awards vest after two years of continued service beginning on the grant...

  • Page 92
    ...by Canon taking into account their financial condition, and contracts are diversified across a number of major financial institutions. Foreign currency exchange rate risk management Canon's international operations expose Canon to the risk of changes in foreign currency exchange rates. Canon uses...

  • Page 93
    ... 31, 2009 Other current liabilities ¥ 644 $ 7,000 Millions of yen Balance sheet location Fair value Thousands of U.S. dollars Fair value Assets: Foreign exchange contracts Liabilities: Foreign exchange contracts Prepaid expenses and other current assets Other current liabilities ¥ 752...

  • Page 94
    ... in income on derivative Location Millions of yen Amount Thousands of U.S. dollars Foreign exchange contracts Other, net ¥(8,638) $(93,891) 19. Commitments and Contingent Liabilities Commitments At December 31, 2009, commitments outstanding for the purchase of property, plant and equipment...

  • Page 95
    ...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, 2009 and 2008 are summarized...

  • Page 96
    ... ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES appealed further against said decision of the court of appeals before the Federal Supreme Court. In December 2007, for a similar Hewlett-Packard GmbH case relating to single-function printers...

  • Page 97
    ... 31, 2009 and 2008. 2009: Assets: Cash and cash equivalents Available-for-sale securities (current): Government bonds Available-for-sale securities (noncurrent): Government bonds Corporate bonds Fund trusts Equity securities Derivatives Total assets Liabilities: Derivatives Total liabilities...

  • Page 98
    96 CANON ANNUAL REPORT 2009 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) CANON INC. AND SUBSIDIARIES Thousands of U.S. dollars Level 1 Level 2 Level 3 Total 2009: Assets: Cash and cash equivalents Available-for-sale securities (current): Government bonds Available-for-sale ...

  • Page 99
    ...Office copying machines, Personal-use copying machines, Fullcolor copying machines, Laser printers, and Large format inkjet printers Industry and Others Corporate and eliminations Consumer Business Unit: Digital SLR cameras, Compact digital cameras, Interchangeable lenses, Digital video camcorders...

  • Page 100
    ..., investments, deferred tax assets and corporate properties. Capital expenditures represent the additions to property, plant and equipment and intangible assets measured on an accrual basis. Geographic information Information by major geographic area as of and for the years ended December 31, 2009...

  • Page 101
    ...million for the years ended December 31, 2009, 2008 and 2007, respectively. Long-lived assets represent property, plant and equipment Millions of yen Japan Americas and intangible assets for each geographic area. The following information is based on the location of the Company and its subsidiaries...

  • Page 102
    ... of the total outstanding shares of Océ. Océ is engaged in research and development, manufacture and sale of document management systems, printing systems for professionals and high-speed, wide format digital printing systems. Canon and Océ have complementary technologies and products and would...

  • Page 103
    ...'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of Canon is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act...

  • Page 104
    ..., and the related consolidated statements of income, equity, and cash ï¬,ows for each of the three years in the period ended December 31, 2009, all expressed in Japanese yen. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion...

  • Page 105
    ... balance sheets of Canon Inc. and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income, equity, and cash ï¬,ows for each of the three years in the period ended December 31, 2009, all expressed in Japanese yen, and our report dated March 30, 2010...

  • Page 106
    ... American Depositary Receipts are traded on the New York Stock Exchange (CAJ). Ordinary General Meeting of Shareholders: March 30, 2010, in Tokyo Further Information: For publications or information, please contact the External Relations Headquarters, Canon Inc., Tokyo, or access Canon's Website...

  • Page 107
    ... 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 & Support Inc. Canon IT Solutions Inc. Canon Software Inc. e-system Corporation Asia Pacific System Research...

  • Page 108
    CANON INC. 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan PUB. BEP019 0410AB14.7 Printed in Japan