Canon 2011 Annual Report Download - page 50

48 F I N A N C I A L S E C T I O N >F I N A N C I A L O V E R V I E W
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 costs 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, 2011, accrued product warranty costs amounted to
¥11,691 million (U.S.$150 million).
At December 31, 2011, commitments outstanding for the
purchase of property, plant and equipment were approxi-
mately ¥66,287 million (U.S.$850 million), and commitments
outstanding for the purchase of parts and raw materials were
approximately ¥75,823 million (U.S.$972 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 2012, Canon expects to contribute ¥21,946
million (U.S.$281 million) to its Japanese defined benefit pen-
sion plans and ¥8,931 million (U.S.$115 million) to its foreign
defined benefit pension plans.
Canon’s management believes that current financial
resources, cash generated from operations and Canon’s poten-
tial capacity for additional debt and/or equity financing will
be sufficient to fund current and future capital requirements.
RESEARCH AND DEVELOPMENT, PATENTS AND
LICENSES
Year 2011 marks the first year of the Excellent Global
Corporation Plan, its 5-year (2011-2015) management plan.
The slogan of the fourth phase (!Phase IV") is !Aiming for the
Summit$Speed & Sound Growth"and there are three core
strategies related to R&D:
%Achieve the overwhelming No.1 position in all core busi-
nesses and related and peripheral businesses;
%Develop new business through globalized diversification
and establish the Three Regional Headquarters manage-
ment system; and
%Build the foundations of an environmentally advanced
corporation
Canon has been striving to implement the three R&D
related strategies as follows:
%Achieve the overwhelming No.1 position in all core busi-
nesses and related and peripheral businesses: Continue to
introduce competitive products through innovation and
shift to a business that can gain profit through solutions
and services.
%Develop new business through globalized diversification
and establish the Three Regional Headquarters manage-
ment system: Reinforce capability to create innovative
products and systems of commercial printing sector,
medical imaging sector, industrial equipment sector and
security and safety sector. Expand our innovation center
by enhancing research and development operations in
Europe and the United States. Seek M&A opportunities to
accelerate this strategy.
%Build the foundations of an environmentally advanced
corporation; Focus our attention on energy- and resource-
conserving technologies to create products with the
highest environmental performance.
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 fundamental research and to
develop cutting-edge technologies.
Canon has fully introduced 3D-CAD systems across the
Canon group, boosting R&D efficiency to curtail product
development times and costs. Moreover, Canon enhanced
and evolved its simulation, measurement, and analysis tech-
nologies by establishing leading-edge facilities, including one
of Japan’s highest-performance cluster computers. As such,
Canon has succeeded in further reducing the need for proto-
types, dramatically lowering 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
cultivating closer ties in fields ranging from basic research to
product development.
Canon’s consolidated R&D expenses were ¥307,800 million
(U.S.$3,946 million) in fiscal 2011, ¥315,817 million in fiscal
2010 and ¥304,600 million in fiscal 2009. The ratios of R&D
expenses to the consolidated total net sales for fiscal 2011,
2010 and 2009 were 8.7%, 8.5% and 9.5%, respectively.
Canon believes that new products protected by patents
will not easily allow competitors to compete with them, and
will give them an advantage in establishing standards in the
market and industry. According to the United States patent
annual list, which IFI CLAIMS&Patent Services released,
Canon obtained the third greatest number of private sector
patents in 2011.
R&D EXPENSES
(Millions of yen)
400,000
300,000
200,000
100,000
0
20112010200920082007
368,261 374,025
307,800
315,817
304,600