Canon 2010 Annual Report Download - page 58
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Please find page 58 of the 2010 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.CANON ANNUAL REPORT 201056
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 are recognized and are
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, specifi c product class failures outside of
the baseline experience, material usage and service delivery
costs incurred in correcting a product failure. As of December
31, 2010, accrued product warranty costs amounted to ¥13,343
million (U.S.$165 million).
At December 31, 2010, commitments outstanding for the
purchase of property, plant and equipment were approximately
¥29,383 million (U.S.$363 million), and commitments outstand-
ing for the purchase of parts and raw materials were approxi-
mately ¥86,434 million (U.S.$1,067 million), both for use in the
ordinary course of its business. Canon anticipates that funds
needed to fulfi ll these commitments will be generated internally
through operations.
During fi scal 2011, Canon expects to contribute ¥22,055 mil-
lion (U.S.$272 million) to its Japanese defi ned benefi t pension
plans and ¥8,016 million (U.S.$99 million) to its foreign defi ned
benefi t pension plans.
Canon’s management believes that current fi nancial resourc-
es, cash generated from operations and Canon’s potential
capacity for additional debt and/or equity fi nancing will be suffi -
cient to fund current and future capital requirements.
RESEARCH AND DEVELOPMENT, PATENTS
AND LICENSES
Year 2010 marks the fi nal year of the Excellent Global
Corporation Plan, which started in 2006. The slogan of the third
phase (“Phase III”) is “Innovation & Sound Growth” and there
are four core strategies:
• Realize an overwhelming No.1 position worldwide in all
current core businesses;
• Expand operations through diversifi cation;
• Identify new business domains and accumulate neces-
sary technological capabilities; and
• Establish new production system to sustain global com-
petitiveness.
Canon has been 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 sophis-
ticated functional synergy among the variety of Canon’s
image handling products, benefi ting from the prolifera-
tion of broad band communication environment.
• Expand operations through diversifi cation: Focus on
developing various types of display, including Organic
Light-Emitting Diode displays (“OLED”).
• Identify new business domains and accumulate neces-
sary technological capabilities: Accumulate technological
capability to create innovative products and systems in
the focused three domains of the medical imaging sector,
intelligent robot industry and safety technology domain.
Canon has developed and strengthened relationships with
universities and other research institutes, such as Kyoto
University, Tokyo Institute of Technology, Stanford University,
The University of Arizona, the New Energy and Industrial
Technology Development Organization and the National Institute of
Advanced Industrial Science and Technology to assist with fun-
damental research and to develop cutting-edge technologies.
Canon has fully introduced 3D-CAD systems across the Canon
group, boosting R&D effi ciency to curtail product development
times and costs. Moreover, Canon enhanced and evolved its
simulation, measurement, and analysis technologies by estab-
lishing leading-edge facilities, including one of Japan’s highest-
performance cluster computers. As such, Canon has succeeded
in further reducing the need for prototypes, dramatically lower-
ing costs and shortening product development lead times.
Canon has R&D centers worldwide. Each R&D center is col-
laborating with other centers to achieve synergies, and is culti-
vating closer ties in fi elds ranging from basic research to
product development.
Canon’s consolidated R&D expenses were ¥315,817 million
(U.S.$3,899 million) in fi scal 2010, ¥304,600 million in fi scal 2009
and ¥374,025 million in fi scal 2008. The ratios of R&D expenses
to the consolidated total net sales for fi scal 2010, 2009 and
2008 were 8.5%, 9.5% and 9.1%, respectively.
400,000
300,000
200,000
100,000
0
06 07 08 09 10
R&D Expenses
(Millions of yen)
374,025
304,600 315,817
308,307
368,261