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90 CANON ANNUAL REPORT 2009
At December 31, 2009, all option awards were nonvested
but expected to be vested, and there was ¥558 million ($6,065
thousand) of total unrecognized compensation cost related to
these nonvested stock options. That cost is expected to be rec-
ognized over a weighted-average period of 0.96 year.
A reconciliation of the numerators and denominators of basic and diluted net income attributable to Canon Inc. stockholders per
share computations is as follows:
17. Net Income Attributable to Canon Inc. Stockholders per Share
Years ended December 31
Millions of yen
Thousands of
U.S. dollars
2009 2008 2007 2009
Net income attributable to Canon Inc. ¥ 131,647 ¥ 309,148 ¥ 488,332 $ 1,430,946
Effect of dilutive securities:
1.30% Japanese yen convertible debentures,
due 2008 — 2 4 —
Diluted net income attributable to Canon Inc. ¥ 131,647 ¥ 309,150 ¥ 488,336 $ 1,430,946
Number of shares
Average common shares outstanding 1,234,481,836 1,255,626,490 1,293,295,680
Effect of dilutive securities:
1.30% Japanese yen convertible debentures,
due 2008 — 79,929 221,751
Diluted common shares outstanding 1,234,481,836 1,255,706,419 1,293,517,431
Yen U.S. dollars
Net income attributable to Canon Inc.
stockholders per share:
Basic ¥106.64 ¥246.21 ¥377.59 $1.16
Diluted 106.64 246.20 377.53 1.16
The computation of diluted net income attributable to
Canon Inc. stockholders per share for the years ended December
31, 2009 and 2008 exclude outstanding stock options because
the effect would be anti-dilutive.
Risk management policy
Canon operates internationally, exposing it to the risk of chang-
es in foreign currency exchange rates. Derivative fi nancial instru-
ments are comprised principally of foreign exchange contracts
utilized by the Company and certain of its subsidiaries to reduce
the risk. Canon assesses foreign currency exchange rate risk by
continually monitoring changes in the exposures and by evaluat-
ing hedging opportunities. Canon does not hold or issue deriva-
tive fi nancial instruments for trading purposes. Canon is also
exposed to credit-related losses in the event of non-performance
by counterparties to derivative fi nancial instruments, but it is not
expected that any counterparties will fail to meet their obliga-
tions. Most of the counterparties are internationally recognized
fi nancial institutions and selected by Canon taking into account
their fi nancial condition, and contracts are diversifi ed across a
number of major fi nancial institutions.
18. Derivatives and Hedging Activities
Foreign currency exchange rate risk management
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 and euros
into Japanese yen. These contracts are primarily used to hedge
the foreign currency exposure of forecasted intercompany sales
and intercompany trade receivables that are denominated in for-
eign currencies. In accordance with Canon’s policy, a specifi c por-
tion of foreign currency exposure resulting from forecasted
intercompany sales are hedged using foreign exchange contracts
which principally mature within three months.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
CANON INC. AND SUBSIDIARIES
Canon AR09_FS_0325_ipc .indd 90 10.3.26 2:47:12 PM