Canon 2012 Annual Report Download - page 87

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 85
Guarantees
Canon provides guarantees for bank loans of its employ-
ees, affiliates and other companies. The guarantees for the
employees are principally made for their housing loans. The
guarantees of loans of its affiliates and other companies
are made to ensure that those companies operate with less
financial risk.
For each guarantee provided, Canon would have to per-
form under a guarantee if the borrower defaults on a payment
within the contract periods of 1 year to 30 years, in the case of
employees with housing loans, and of 1 year to 10 years, in the
case of affiliates and other companies. The maximum amount
of undiscounted payments Canon would have had to make in
the event of default is ¥13,333 million ($153,253 thousand)
at December 31, 2012. The carrying amounts of the liabilities
recognized for Canon’s obligations as a guarantor under those
guarantees at December 31, 2012 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.
Balance at beginning of year
Addition
Utilization
Other
Balance at end of year
2011
Millions of yen
Thousands of
U.S. dollars
20122012
¥ 11,691
13,553
(12,503)
(578)
¥ 12,163
¥ 13,343
14,296
(14,649)
(1,299)
¥ 11,691
$ 134,379
155,782
(143,713)
(6,643)
$ 139,805
Years ended December 31
Legal proceedings
Canon is involved in various claims and legal actions arising
in the ordinary course of business. Canon has recorded pro-
visions for liabilities when it is probable that liabilities have
been incurred and the amount of loss can be reasonably
estimated. Canon reviews these provisions at least quarterly
and adjusts these provisions to reflect the impact of the
negotiations, settlements, rulings, advice of legal counsel
and other information and events pertaining to a partic-
ular case. Based on its experience, although litigation is
inherently unpredictable, Canon believes that any damage
amounts claimed in outstanding matters are not a meaning-
ful indicator of Canon’s potential liability. In the opinion of
management, any reasonably possible range of losses from
outstanding matters would not have a material adverse
effect on Canon’s consolidated financial position, results of
operations, or cash flows.
Changes in accrued product warranty cost for the years ended December 31, 2012 and 2011 are summarized as follows: