Canon 2013 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 pay-
ment 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 ¥12,315 million
($117,286 thousand) at December 31, 2013. The carrying
amounts of the liabilities recognized for Canon’s obligations
as a guarantor under those guarantees at December 31, 2013
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.
Legal proceedings
Canon is involved in various claims and legal actions aris-
ing in the ordinary course of business. Canon has recorded
provisions for liabilities when it is probable that liabilities
have been incurred and the amount of loss can be reason-
ably estimated. Canon reviews these provisions at least quar-
terly and adjusts these provisions to reflect the impact of
the negotiations, settlements, rulings, advice of legal coun-
sel and other information and events pertaining to a
particular case. Based on its experience, although litigation
is inherently unpredictable, Canon believes that any damage
amounts claimed in outstanding matters are not a mean-
ingful indicator of Canon’s potential liability. In the opin-
ion 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.
Years ended December 31
Millions of yen
Thousands of
U.S. dollars
2013 2012 2013
Balance at beginning of year ¥ 12,163 ¥ 11,691 $ 115,838
Addition 13,467 13,553 128,257
Utilization (12,922) (12,503) (123,067)
Other (1,818) (578) (17,314)
Balance at end of year ¥ 10,890 ¥ 12,163 $ 103,714
Changes in accrued product warranty cost for the years ended December 31, 2013 and 2012 are summarized as follows: