o |
REGISTRATION STATEMENT PURSUANT TO | |||
SECTION 12(b) | ||||
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
OR | ||||
þ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) | |||
OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009 |
OR | ||||
o |
TRANSITION REPORT PURSUANT TO SECTION 13 | |||
OR 15(d) | ||||
OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from to | ||||
OR | ||||
o |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 | |||
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
Date of event requiring this shell company report |
Title of each class | Name of each exchange on which registered | |
(1) Common Stock (the shares)
|
New York Stock Exchange* | |
(2) American Depositary Shares
(ADSs), each of which
represents one share
|
New York Stock Exchange |
Page number | ||||
1 | ||||
62 | ||||
63 | ||||
65 | ||||
66 | ||||
67 | ||||
69 | ||||
70 | ||||
106 | ||||
107 | ||||
108 | ||||
109 |
i
1
Consolidated financial statements of Canon Inc. and Subsidiaries: |
Page number | |||
63 | ||||
65 | ||||
66 | ||||
67 | ||||
69 | ||||
70 | ||||
Schedule: |
||||
106 |
62
63
64
December 31 | ||||||||
2009 | 2008 | |||||||
(As adjusted) (Note 1) |
||||||||
(Millions of yen) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents (Note 1) |
¥ | 795,034 | ¥ | 679,196 | ||||
Short-term investments (Note 2) |
19,089 | 7,651 | ||||||
Trade receivables, net (Note 3) |
556,572 | 595,422 | ||||||
Inventories (Note 4) |
373,241 | 506,919 | ||||||
Prepaid expenses and other current assets (Notes 6 and 11) |
273,843 | 275,660 | ||||||
Total current assets |
2,017,779 | 2,064,848 | ||||||
Noncurrent receivables (Note 18) |
14,936 | 14,752 | ||||||
Investments (Note 2) |
114,066 | 88,825 | ||||||
Property, plant and equipment, net (Notes 5 and 6) |
1,269,785 | 1,357,186 | ||||||
Intangible assets, net (Note 7 ) |
117,396 | 119,140 | ||||||
Other assets (Notes 6, 7, 10 and 11) |
313,595 | 325,183 | ||||||
Total assets |
¥ | 3,847,557 | ¥ | 3,969,934 | ||||
Liabilities and equity |
||||||||
Current liabilities: |
||||||||
Short-term loans and current portion of long-term debt (Note 8) |
¥ | 4,869 | ¥ | 5,540 | ||||
Trade payables (Note 9) |
339,113 | 406,746 | ||||||
Accrued income taxes (Note 11) |
50,105 | 69,961 | ||||||
Accrued expenses (Notes 10 and 18) |
274,300 | 277,117 | ||||||
Other current liabilities (Notes 5 and 11) |
115,303 | 184,636 | ||||||
Total current liabilities |
783,690 | 944,000 | ||||||
Long-term debt, excluding current installments (Note 8) |
4,912 | 8,423 | ||||||
Accrued pension and severance cost (Note 10) |
115,904 | 110,784 | ||||||
Other noncurrent liabilities (Note 11) |
63,651 | 55,745 | ||||||
Total liabilities |
968,157 | 1,118,952 | ||||||
Commitments and contingent liabilities (Note 18) |
||||||||
Equity: |
||||||||
Canon Inc. stockholders equity: |
||||||||
Common stock |
||||||||
Authorized 3,000,000,000 shares;
issued 1,333,763,464 shares in 2009 and in 2008 (Note 12) |
174,762 | 174,762 | ||||||
Additional paid-in capital (Note 12) |
404,293 | 403,790 | ||||||
Legal reserve (Note 13) |
54,687 | 53,706 | ||||||
Retained earnings (Note 13) |
2,871,437 | 2,876,576 | ||||||
Accumulated other comprehensive income (loss) (Note 14) |
(260,818 | ) | (292,820 | ) | ||||
Treasury stock, at cost; 99,288,001 shares in 2009 and 99,275,245 shares in 2008 |
(556,252 | ) | (556,222 | ) | ||||
Total Canon Inc. stockholders equity |
2,688,109 | 2,659,792 | ||||||
Noncontrolling interests |
191,291 | 191,190 | ||||||
Total equity |
2,879,400 | 2,850,982 | ||||||
Total liabilities and equity |
¥ | 3,847,557 | ¥ | 3,969,934 | ||||
65
Years ended December 31 | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(As adjusted) (Note 1) | ||||||||||||
(Millions of yen) | ||||||||||||
Net sales |
¥ | 3,209,201 | ¥ | 4,094,161 | ¥ | 4,481,346 | ||||||
Cost of sales (Notes 5, 7, 10 and 18) |
1,781,808 | 2,156,153 | 2,234,365 | |||||||||
Gross profit |
1,427,393 | 1,938,008 | 2,246,981 | |||||||||
Operating expenses
(Notes 1, 5, 7, 10, 15 and 18): |
||||||||||||
Selling, general and administrative expenses |
905,738 | 1,067,909 | 1,122,047 | |||||||||
Research and development expenses |
304,600 | 374,025 | 368,261 | |||||||||
1,210,338 | 1,441,934 | 1,490,308 | ||||||||||
Operating profit |
217,055 | 496,074 | 756,673 | |||||||||
Other income (deductions): |
||||||||||||
Interest and dividend income |
5,202 | 19,442 | 32,819 | |||||||||
Interest expense |
(336 | ) | (837 | ) | (1,471 | ) | ||||||
Other, net (Notes 1, 2 and 17) |
(2,566 | ) | (33,532 | ) | (19,633 | ) | ||||||
2,300 | (14,927 | ) | 11,715 | |||||||||
Income before income taxes |
219,355 | 481,147 | 768,388 | |||||||||
Income taxes (Note 11) |
84,122 | 160,788 | 264,258 | |||||||||
Consolidated net income |
135,233 | 320,359 | 504,130 | |||||||||
Less: Net income attributable to noncontrolling interests |
3,586 | 11,211 | 15,798 | |||||||||
Net income attributable to Canon Inc. |
¥ | 131,647 | ¥ | 309,148 | ¥ | 488,332 | ||||||
(Yen) | ||||||||||||
Net income attributable to Canon Inc. stockholders per share (Note 16): |
||||||||||||
Basic |
¥ | 106.64 | ¥ | 246.21 | ¥ | 377.59 | ||||||
Diluted |
106.64 | 246.20 | 377.53 | |||||||||
Cash dividends per share |
110.00 | 110.00 | 110.00 |
66
Accumulated | Total | |||||||||||||||||||||||||||||||||||
Additional | other | Canon Inc. | Non- | |||||||||||||||||||||||||||||||||
Common | paid-in | Legal | Retained | comprehensive | Treasury | stockholders | controlling | Total | ||||||||||||||||||||||||||||
stock | capital | reserve | earnings | income (loss) | stock | equity | interests | equity | ||||||||||||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2006 |
¥ | 174,603 | ¥ | 403,510 | ¥ | 43,600 | ¥ | 2,368,047 | ¥ | 2,718 | ¥ | (5,872 | ) | ¥ | 2,986,606 | ¥ | 216,801 | ¥ | 3,203,407 | |||||||||||||||||
Cumulative effect of a change in
accounting principle adoption
of accounting guidance for
sabbatical leave and other
similar benefits, net of tax |
(2,204 | ) | (2,204 | ) | (2,204 | ) | ||||||||||||||||||||||||||||||
Conversion of convertible debt |
95 | 95 | 190 | 190 | ||||||||||||||||||||||||||||||||
Equity transactions with
noncontrolling interests and
other |
(617 | ) | (617 | ) | (12,185 | ) | (12,802 | ) | ||||||||||||||||||||||||||||
Dividends paid to Canon Inc.
stockholders |
(131,612 | ) | (131,612 | ) | (131,612 | ) | ||||||||||||||||||||||||||||||
Dividends paid to
noncontrolling interests |
(4,612 | ) | (4,612 | ) | ||||||||||||||||||||||||||||||||
Transfer to legal reserve |
2,417 | (2,417 | ) | | | |||||||||||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||||||
Net income |
488,332 | 488,332 | 15,798 | 504,130 | ||||||||||||||||||||||||||||||||
Other comprehensive income
(loss), net of tax (Note 14): |
||||||||||||||||||||||||||||||||||||
Foreign currency translation
adjustments |
(62 | ) | (62 | ) | (26 | ) | (88 | ) | ||||||||||||||||||||||||||||
Net unrealized gains and
losses on securities |
(1,778 | ) | (1,778 | ) | (577 | ) | (2,355 | ) | ||||||||||||||||||||||||||||
Net gains and losses on
derivative instruments |
814 | 814 | 7 | 821 | ||||||||||||||||||||||||||||||||
Pension liability adjustments |
32,978 | 32,978 | 7,664 | 40,642 | ||||||||||||||||||||||||||||||||
Total comprehensive income |
520,284 | 22,866 | 543,150 | |||||||||||||||||||||||||||||||||
Repurchase of treasury stock, net |
3 | (450,314 | ) | (450,311 | ) | (450,311 | ) | |||||||||||||||||||||||||||||
Balance at December 31, 2007 |
174,698 | 402,991 | 46,017 | 2,720,146 | 34,670 | (456,186 | ) | 2,922,336 | 222,870 | 3,145,206 | ||||||||||||||||||||||||||
Conversion of convertible debt |
64 | 63 | 127 | 127 | ||||||||||||||||||||||||||||||||
Equity transactions with
noncontrolling interests and
other |
761 | 761 | (26,218 | ) | (25,457 | ) | ||||||||||||||||||||||||||||||
Dividends paid to Canon Inc.
stockholders |
(145,024 | ) | (145,024 | ) | (145,024 | ) | ||||||||||||||||||||||||||||||
Dividends paid to noncontrolling
interests |
(5,123 | ) | (5,123 | ) | ||||||||||||||||||||||||||||||||
Transfer to legal reserve |
7,689 | (7,689 | ) | | | |||||||||||||||||||||||||||||||
Comprehensive income (loss): |
||||||||||||||||||||||||||||||||||||
Net income |
309,148 | 309,148 | 11,211 | 320,359 | ||||||||||||||||||||||||||||||||
Other comprehensive income
(loss), net of tax (Note 14): |
||||||||||||||||||||||||||||||||||||
Foreign currency translation
adjustments |
(258,764 | ) | (258,764 | ) | (1,911 | ) | (260,675 | ) | ||||||||||||||||||||||||||||
Net unrealized gains and
losses on securities |
(5,152 | ) | (5,152 | ) | (690 | ) | (5,842 | ) | ||||||||||||||||||||||||||||
Net gains and losses on
derivative instruments |
2,342 | 2,342 | | 2,342 | ||||||||||||||||||||||||||||||||
Pension liability adjustments |
(65,916 | ) | (65,916 | ) | (8,949 | ) | (74,865 | ) | ||||||||||||||||||||||||||||
Total comprehensive income (loss) |
(18,342 | ) | (339 | ) | (18,681 | ) | ||||||||||||||||||||||||||||||
Repurchase of treasury stock, net |
(25 | ) | (5 | ) | (100,036 | ) | (100,066 | ) | (100,066 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2008 |
¥ | 174,762 | ¥ | 403,790 | ¥ | 53,706 | ¥ | 2,876,576 | ¥ | (292,820 | ) | ¥ | (556,222 | ) | ¥ | 2,659,792 | ¥ | 191,190 | ¥ | 2,850,982 | ||||||||||||||||
67
Accumulated | Total | |||||||||||||||||||||||||||||||||||
Additional | other | Canon Inc. | Non- | |||||||||||||||||||||||||||||||||
Common | paid-in | Legal | Retained | comprehensive | Treasury | stockholders | controlling | Total | ||||||||||||||||||||||||||||
stock | capital | reserve | earnings | income (loss) | stock | equity | interests | equity | ||||||||||||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2008 |
¥ | 174,762 | ¥ | 403,790 | ¥ | 53,706 | ¥ | 2,876,576 | ¥ | (292,820 | ) | ¥ | (556,222 | ) | ¥ | 2,659,792 | ¥ | 191,190 | ¥ | 2,850,982 | ||||||||||||||||
Equity transactions with
noncontrolling interests and
other |
503 | 503 | (1,376 | ) | (873 | ) | ||||||||||||||||||||||||||||||
Dividends paid to Canon Inc.
stockholders |
(135,793 | ) | (135,793 | ) | (135,793 | ) | ||||||||||||||||||||||||||||||
Dividends paid to noncontrolling
interests |
(3,326 | ) | (3,326 | ) | ||||||||||||||||||||||||||||||||
Transfer to legal reserve |
981 | (981 | ) | | | |||||||||||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||||||
Net income |
131,647 | 131,647 | 3,586 | 135,233 | ||||||||||||||||||||||||||||||||
Other comprehensive income
(loss), net of tax (Note 14): |
||||||||||||||||||||||||||||||||||||
Foreign currency translation
adjustments |
33,340 | 33,340 | 30 | 33,370 | ||||||||||||||||||||||||||||||||
Net unrealized gains and
losses on securities |
2,150 | 2,150 | 67 | 2,217 | ||||||||||||||||||||||||||||||||
Net gains and losses on
derivative instruments |
(1,422 | ) | (1,422 | ) | (1 | ) | (1,423 | ) | ||||||||||||||||||||||||||||
Pension liability adjustments |
(2,066 | ) | (2,066 | ) | 1,121 | (945 | ) | |||||||||||||||||||||||||||||
Total comprehensive income |
163,649 | 4,803 | 168,452 | |||||||||||||||||||||||||||||||||
Repurchase of treasury stock, net |
(12 | ) | (30 | ) | (42 | ) | (42 | ) | ||||||||||||||||||||||||||||
Balance at December 31, 2009 |
¥ | 174,762 | ¥ | 404,293 | ¥ | 54,687 | ¥ | 2,871,437 | ¥ | (260,818 | ) | ¥ | (556,252 | ) | ¥ | 2,688,109 | ¥ | 191,291 | ¥ | 2,879,400 | ||||||||||||||||
68
Years ended December 31 | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(As adjusted) (Note 1) | ||||||||||||
(Millions of yen) | ||||||||||||
Cash flows from operating activities: |
||||||||||||
Consolidated net income |
¥ | 135,233 | ¥ | 320,359 | ¥ | 504,130 | ||||||
Adjustments to reconcile consolidated net income to net cash
provided by operating activities: |
||||||||||||
Depreciation and amortization |
315,393 | 341,337 | 341,694 | |||||||||
Loss on disposal of property, plant and equipment |
8,215 | 11,811 | 9,985 | |||||||||
Impairment
loss of fixed assets (Note 5) |
15,466 | 13,503 | 15,908 | |||||||||
Deferred income taxes |
20,712 | (32,497 | ) | (35,021 | ) | |||||||
Equity in (earnings) losses of affiliated companies |
12,649 | 20,047 | (5,634 | ) | ||||||||
(Increase) decrease in trade receivables |
48,244 | 83,521 | (10,722 | ) | ||||||||
(Increase) decrease in inventories |
143,580 | 49,547 | (26,643 | ) | ||||||||
Increase (decrease) in trade payables |
(76,843 | ) | (36,719 | ) | 21,136 | |||||||
Increase (decrease) in accrued income taxes |
(21,023 | ) | (77,340 | ) | 14,988 | |||||||
Increase (decrease) in accrued expenses |
(9,827 | ) | (30,694 | ) | 43,035 | |||||||
Increase (decrease) in accrued (prepaid) pension and severance cost |
4,765 | (12,128 | ) | (15,387 | ) | |||||||
Other, net |
14,671 | (34,063 | ) | (18,200 | ) | |||||||
Net cash provided by operating activities |
611,235 | 616,684 | 839,269 | |||||||||
Cash flows from investing activities: |
||||||||||||
Purchases of fixed assets (Note 5) |
(327,983 | ) | (428,168 | ) | (474,285 | ) | ||||||
Proceeds from sale of fixed assets (Note 5) |
8,893 | 7,453 | 9,635 | |||||||||
Purchases of available-for-sale securities |
(3,253 | ) | (7,307 | ) | (2,281 | ) | ||||||
Proceeds from sale and maturity of available-for-sale securities |
2,460 | 4,320 | 8,614 | |||||||||
Proceeds from maturity of held-to-maturity securities |
| 10,000 | 10,000 | |||||||||
(Increase) decrease in time deposits, net |
(11,345 | ) | 2,892 | 31,681 | ||||||||
Acquisitions of subsidiaries, net of cash acquired |
(2,979 | ) | (5,999 | ) | (15,675 | ) | ||||||
Purchases of other investments |
(37,981 | ) | (45,473 | ) | (2,432 | ) | ||||||
Other, net |
1,944 | (10,198 | ) | 2,258 | ||||||||
Net cash used in investing activities |
(370,244 | ) | (472,480 | ) | (432,485 | ) | ||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from issuance of long-term debt |
3,361 | 6,841 | 2,635 | |||||||||
Repayments of long-term debt |
(6,282 | ) | (15,397 | ) | (13,046 | ) | ||||||
Decrease in short-term loans, net |
(280 | ) | (2,643 | ) | (358 | ) | ||||||
Dividends paid |
(135,793 | ) | (145,024 | ) | (131,612 | ) | ||||||
Repurchases of treasury stock, net |
(42 | ) | (100,066 | ) | (450,311 | ) | ||||||
Other, net |
(3,343 | ) | (21,276 | ) | (11,691 | ) | ||||||
Net cash used in financing activities |
(142,379 | ) | (277,565 | ) | (604,383 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents |
17,226 | (131,906 | ) | (13,564 | ) | |||||||
Net change in cash and cash equivalents |
115,838 | (265,267 | ) | (211,163 | ) | |||||||
Cash and cash equivalents at beginning of year |
679,196 | 944,463 | 1,155,626 | |||||||||
Cash and cash equivalents at end of year |
¥ | 795,034 | ¥ | 679,196 | ¥ | 944,463 | ||||||
Supplemental disclosure for cash flow information : |
||||||||||||
Cash paid during the year for: |
||||||||||||
Interest |
¥ | 384 | ¥ | 901 | ¥ | 1,476 | ||||||
Income taxes |
82,906 | 263,392 | 273,888 |
69
1. | Basis of Presentation and Significant Accounting Policies |
(a) | Description of Business | |
Canon Inc. (the Company) and subsidiaries (collectively Canon) is one of the worlds leading manufacturers in such fields as office products, consumer products and industry and other products. Office products consist mainly of network multifunction devices (MFDs), copying machines, laser printers and large format inkjet printers. Consumer products consist mainly of digital single-lens reflex (SLR) cameras, compact digital cameras, interchangeable lenses, digital video camcorders, inkjet multifunction peripherals, single function inkjet printers, image scanners and broadcasting equipment. Industry and other products consist mainly of semiconductor production equipment, mirror projection mask aligners for liquid crystal display (LCD) panels, and medical equipment. Canons consolidated net sales for the years ended December 31, 2009, 2008 and 2007 were distributed as follows: the Office Business Unit 51%, 55% and 55%, the Consumer Business Unit 41%, 35% and 36%, the Industry and Others Business Unit 11%, 13% and 12%, and elimination between segments 3%, 3% and 3%, respectively. These percentages were computed by dividing segment net sales, including intersegment sales, by consolidated net sales, based on the segment operating results described in Note 21. | ||
Sales are made principally under the Canon brand name, almost entirely through sales subsidiaries. These subsidiaries are responsible for marketing and distribution, and primarily sell to retail dealers in their geographic area. Approximately 78%, 79% and 79% of consolidated net sales for the years ended December 31, 2009, 2008 and 2007 were generated outside Japan, with 28%, 28% and 30% in the Americas, 31%, 33% and 33% in Europe, and 19%, 18% and 16% in other areas, respectively. | ||
Canon sells laser printers on an OEM basis to Hewlett-Packard Company; such sales constituted approximately 20%, 23% and 22% of consolidated net sales for the years ended December 31, 2009, 2008 and 2007, respectively, and are included in the Office Business Unit. | ||
Canons manufacturing operations are conducted primarily at 25 plants in Japan and 16 overseas plants which are located in countries or regions such as the United States, Germany, France, Taiwan, China, Malaysia, Thailand and Vietnam. | ||
(b) | Basis of Presentation | |
The Company and its domestic subsidiaries maintain their books of account in conformity with financial accounting standards of Japan. Foreign subsidiaries maintain their books of account in conformity with financial accounting standards of the countries of their domicile. | ||
Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with U.S. generally accepted accounting principles (GAAP). These adjustments were not recorded in the statutory books of account. | ||
(c) | Principles of Consolidation | |
The consolidated financial statements include the accounts of the Company, its majority owned subsidiaries and those variable interest entities where the Company or its consolidated subsidiaries are the primary beneficiaries. All significant intercompany balances and transactions have been eliminated. | ||
(d) | Use of Estimates | |
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant estimates and assumptions are reflected in valuation and disclosure of revenue recognition, allowance for doubtful receivables, valuation of inventories, impairment of long-lived assets, environmental liabilities, valuation of deferred tax assets, uncertain tax positions and employee retirement and severance benefit plans. Actual results could differ materially from those estimates. | ||
(e) | Translation of Foreign Currencies | |
Assets and liabilities of the Companys subsidiaries located outside Japan with functional currencies other than Japanese yen are translated into Japanese yen at the rates of exchange in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the year. Gains and losses resulting from translation of financial statements are excluded from earnings and are reported in other comprehensive income (loss). | ||
Gains and losses resulting from foreign currency transactions, including foreign exchange contracts, and translation of assets and liabilities denominated in foreign currencies are included in other income (deductions) in the consolidated statements of income. Foreign currency exchange gains and losses was a net gain of ¥1,842 million for the year ended December 31, 2009, and were net losses of ¥11,212 million and ¥31,943 million for the years ended December 31, 2008 and 2007, respectively. | ||
(f) | Cash Equivalents | |
All highly liquid investments acquired with original maturities of three months or less are considered to be cash equivalents. Certain debt securities with original maturities of less than three months classified as available-for-sale securities of ¥184,856 million and ¥194,030 million at December 31, 2009 and 2008, respectively, are included in cash and cash equivalents in the consolidated balance sheets. Additionally, certain debt securities with original maturities of less than three months classified as held-to-maturity securities of ¥999 million and ¥997 million at December 31, 2009 and 2008, respectively, are also included in cash and cash equivalents. Fair value for these securities approximates their cost. |
70
1. | Basis of Presentation and Significant Accounting Policies (continued) | |
(g) | Investments | |
Investments consist primarily of time deposits with original maturities of more than three months, debt and marketable equity securities, investments in affiliated companies and non-marketable equity securities. Canon reports investments with maturities of less than one year as short-term investments. | ||
Canon classifies investments in debt and marketable equity securities as available-for-sale or held-to-maturity securities. Canon does not hold any trading securities, which are bought and held primarily for the purpose of sale in the near term. | ||
Available-for-sale securities are recorded at fair value. Fair value is determined based on quoted market prices, projected discounted cash flows or other valuation techniques as appropriate. Unrealized holding gains and losses, net of the related tax effect, are reported as a separate component of other comprehensive income (loss) until realized. Held-to-maturity securities are recorded at amortized cost, adjusted for amortization of premiums and accretion of discounts. | ||
Available-for-sale and held-to-maturity securities are regularly reviewed for other-than-temporary declines in the carrying amount based on criteria that include the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the issuer and Canons intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value. For debt securities for which the declines are deemed to be other-than-temporary and there is no intent to sell, impairments are separated into the amount related to credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in other comprehensive income (loss). For debt securities for which the declines are deemed to be other-than-temporary and there is an intent to sell, impairments in their entirety are recognized in earnings. For equity securities for which the declines are deemed to be other-than-temporary, impairments in their entirety are recognized in earnings. Canon recognizes an impairment loss to the extent by which the cost basis of the investment exceeds the fair value of the investment. | ||
Realized gains and losses are determined on the average cost method and reflected in earnings. | ||
Investments in affiliated companies over which Canon has the ability to exercise significant influence, but does not hold a controlling financial interest, are accounted for by the equity method. | ||
Non-marketable equity securities in companies over which Canon does not have the ability to exercise significant influence are stated at cost and reviewed periodically for impairment. | ||
(h) | Allowance for Doubtful Receivables | |
Allowance for doubtful trade and finance receivables is maintained for all customers based on a combination of factors, including aging analysis, macroeconomic conditions, significant one-time events, and historical experience. An additional reserve for individual accounts is recorded when Canon becomes aware of a customers inability to meet its financial obligations, such as in the case of bankruptcy filings. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. When all collection options are exhausted including legal recourse, the accounts or portions thereof are deemed to be uncollectable and charged against the allowance. | ||
(i) | Inventories | |
Inventories are stated at the lower of cost or market value. Cost is determined by the average method for domestic inventories and principally by the first-in, first-out method for overseas inventories. | ||
(j) | Impairment of Long-Lived Assets | |
Long-lived assets, such as property, plant and equipment, and acquired intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset and the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. | ||
(k) | Property, Plant and Equipment | |
Property, plant and equipment are stated at cost. Depreciation is calculated principally by the declining-balance method, except for certain assets which are depreciated by the straight-line method over the estimated useful lives of the assets. | ||
The depreciation period ranges from 3 years to 60 years for buildings and 1 year to 20 years for machinery and equipment. | ||
Assets leased to others under operating leases are stated at cost and depreciated to the estimated residual value of the assets by the straight-line method over the period ranging from 2 years to 5 years. |
71
1. | Basis of Presentation and Significant Accounting Policies (continued) | |
(l) | Goodwill and Other Intangible Assets | |
Goodwill and other intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment annually in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. Canon performs its impairment test of goodwill at the reporting unit level, which is one level below the operating segment level. All goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination. Intangible assets with finite useful lives, consisting primarily of software and license fees, are amortized using the straight-line method over the estimated useful lives, which range from 3 years to 5 years for software and 5 years to 10 years for license fees. Certain costs incurred in connection with developing or obtaining internal use software are capitalized. These costs consist primarily of payments made to third parties and the salaries of employees working on such software development. Costs incurred in connection with developing internal use software are capitalized at the application development stage. In addition, Canon develops or obtains certain software to be sold where related costs are capitalized after establishment of technological feasibility. | ||
(m) | Environmental Liabilities | |
Liabilities for environmental remediation and other environmental costs are accrued when environmental assessments or remedial efforts are probable and the costs can be reasonably estimated. Such liabilities are adjusted as further information develops or circumstances change. Costs of future obligations are not discounted to their present values. | ||
(n) | Income Taxes | |
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Canon records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not realizable. | ||
Canon recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Interest and penalties accrued related to unrecognized tax benefits are included in income taxes in the consolidated statements of income. | ||
(o) | Stock-Based Compensation | |
Canon measures stock-based compensation cost at the grant date, based on the fair value of the award, and recognizes the cost on a straight-line basis over the requisite service period, which is the vesting period. | ||
(p) | Net Income Attributable to Canon Inc. Stockholders per Share | |
Basic net income attributable to Canon Inc. stockholders per share is computed by dividing net income attributable to Canon Inc. by the weighted-average number of common shares outstanding during each year. Diluted net income attributable to Canon Inc. stockholders per share includes the effect from potential issuances of common stock based on the assumptions that all convertible debentures were converted into common stock and all stock options were exercised. | ||
(q) | Revenue Recognition | |
Canon generates revenue principally through the sale of office and consumer products, equipment, supplies, and related services under separate contractual arrangements. Canon recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss have been transferred to the customer or services have been rendered, the sales price is fixed or determinable, and collectibility is probable. | ||
Revenue from sales of office products, such as office network digital MFDs and laser printers, and consumer products, such as digital cameras and inkjet multifunction peripherals, is recognized upon shipment or delivery, depending upon when title and risk of loss transfer to the customer. | ||
Revenue from sales of optical equipment, such as steppers and aligners that are sold with customer acceptance provisions related to their functionality, is recognized when the equipment is installed at the customer site and the specific criteria of the equipment functionality are successfully tested and demonstrated by Canon. Service revenue is derived primarily from separately priced product maintenance contracts on equipment sold to customers and is measured at the stated amount of the contract and recognized as services are provided. | ||
Canon also offers separately priced product maintenance contracts for most office products, for which the customer typically pays a stated base service fee plus a variable amount based on usage. Revenue from these service maintenance contracts is measured at the stated amount of the contract and recognized as services are provided and variable amounts are earned. | ||
Revenue from the sale of equipment under sales-type leases is recognized at the inception of the lease. Income on sales-type leases and direct-financing leases is recognized over the life of each respective lease using the interest method. Leases not qualifying as sales-type leases or direct-financing leases are accounted for as operating leases and related revenue is recognized ratably over the lease term. When equipment leases are bundled with product maintenance contracts, revenue is first allocated considering the relative fair value of the lease and non-lease deliverables based upon the estimated relative fair values of each element. Lease deliverables generally include equipment, financing and executory costs, while non-lease deliverables generally consist of product maintenance contracts and supplies. |
72
1. | Basis of Presentation and Significant Accounting Policies (continued) | |
(q) | Revenue Recognition (continued) | |
For all other arrangements with multiple elements, Canon allocates revenue to each element based on its relative fair value if such element meets the criteria for treatment as a separate unit of accounting. Otherwise, revenue is deferred until the undelivered elements are fulfilled and accounted for as a single unit of accounting. | ||
Canon records estimated reductions to sales at the time of sale for sales incentive programs including product discounts, customer promotions and volume-based rebates. Estimated reductions in sales are based upon historical trends and other known factors at the time of sale. In addition, Canon provides price protection to certain resellers of its products, and records reductions to sales for the estimated impact of price protection obligations when announced. | ||
Estimated product warranty costs are recorded at the time revenue is recognized and are included in selling, general and administrative expenses in the consolidated statements of income. Estimates for accrued product warranty costs are 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. | ||
Taxes collected from customers and remitted to governmental authorities are excluded from revenues in the consolidated statements of income. | ||
(r) | Research and Development Costs | |
Research and development costs are expensed as incurred. | ||
(s) | Advertising Costs | |
Advertising costs are expensed as incurred. Advertising expenses were ¥78,009 million, ¥112,810 million and ¥132,429 million for the years ended December 31, 2009, 2008 and 2007, respectively. | ||
(t) | Shipping and Handling Costs | |
Shipping and handling costs totaled ¥45,966 million, ¥62,128 million and ¥63,708 million for the years ended December 31, 2009, 2008 and 2007, respectively, and are included in selling, general and administrative expenses in the consolidated statements of income. | ||
(u) | Derivative Financial Instruments | |
All derivatives are recognized at fair value and are included in prepaid expenses and other current assets, or other current liabilities in the consolidated balance sheets. | ||
Canon uses and designates certain derivatives as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). Canon formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. Canon also formally assesses, both at the hedges inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, Canon discontinues hedge accounting prospectively. Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income (loss), until earnings are affected by the variability in cash flows of the hedged item. Gains and losses from hedging ineffectiveness are included in other income (deductions). Gains and losses related to the components of hedging instruments excluded from the assessment of hedge effectiveness are included in other income (deductions). | ||
Canon also uses certain derivative financial instruments which are not designated as hedges. The changes in fair values of these derivative financial instruments are immediately recorded in earnings. | ||
Canon classifies cash flows from derivatives as cash flows from operating activities in the consolidated statements of cash flows. | ||
(v) | Guarantees | |
Canon recognizes, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in issuing guarantees. |
73
1. | Basis of Presentation and Significant Accounting Policies (continued) | |
(w) | Recently Issued Accounting Guidance | |
In June 2009, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Codification (ASC). The ASC has become the source of authoritative U.S.GAAP. Additionally, rules and interpretive releases of the U.S. Securities and Exchange Commission (SEC) under authority of the federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The ASC did not change current U.S GAAP, but was intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. This Codification is effective for fiscal years and interim periods ending after September 15, 2009 and was adopted by Canon beginning from the quarter ended September 30, 2009. This adoption did not have a material impact on Canons consolidated results of operations and financial condition. However, throughout the notes to the consolidated financial statements, references that were previously made to various former authoritative U.S. GAAP pronouncements have been removed. | ||
In December 2007, the FASB issued new accounting guidance for business combinations. This guidance establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired in a business combination. This guidance also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This guidance is effective for fiscal years beginning on or after December 15, 2008 and was adopted by Canon for any business combinations with an acquisition date on or after January 1, 2009. This adoption did not have a material impact on Canons consolidated results of operations and financial condition. | ||
In December 2007, the FASB issued new accounting guidance for noncontrolling interests in consolidated financial statements. This guidance establishes accounting and reporting guidance for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. This guidance also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This guidance is effective for fiscal years beginning on or after December 15, 2008 on a prospective basis, except for certain presentation and disclosure requirements, which must be applied retrospectively for all periods presented, and was adopted by Canon in the first quarter beginning January 1, 2009. Upon the adoption of this guidance, noncontrolling interests, which were previously referred to as minority interests and classified between total liabilities and stockholders equity on the consolidated balance sheets, are now included as a separate component of total equity. In addition, consolidated net income on the consolidated statements of income now includes the net income (loss) attributable to noncontrolling interests. These financial statement presentation requirements have been adopted retrospectively and prior year amounts in the consolidated financial statements have been reclassified or adjusted to conform to this guidance. This adoption did not have a material impact on Canons consolidated results of operations and financial condition. | ||
In October 2009, the FASB issued new accounting guidance for revenue recognition under multiple-deliverable arrangements. This guidance modifies the criteria for separating consideration under multiple-deliverable arrangements and requires allocation of the overall consideration to each deliverable using the estimated selling price in the absence of vendor-specific objective evidence or third-party evidence of selling price for deliverables. As a result, the residual method of allocating arrangement consideration will no longer be permitted. The guidance also requires additional disclosures about how a vendor allocates revenue in its arrangements and about the significant judgments made and their impact on revenue recognition. This guidance is effective for fiscal years beginning on or after June 15, 2010 and is required to be adopted by Canon no later than the first quarter beginning January 1, 2011 (with early adoption permitted). The provisions are effective prospectively for revenue arrangements entered into or materially modified after the effective date, or retrospectively for all prior periods. Canon is currently evaluating the effect that the adoption of this guidance will have on its consolidated results of operations and financial condition. | ||
In October 2009, the FASB issued new accounting guidance for software revenue recognition. This guidance modifies the scope of the software revenue recognition guidance to exclude from its requirements non-software components of tangible products and software components of tangible products that are sold, licensed, or leased with tangible products when the software components and non-software components of the tangible product function together to deliver the tangible products essential functionality. This guidance is effective for fiscal years beginning on or after June 15, 2010 and is required to be adopted by Canon no later than the first quarter beginning January 1, 2011 (with early adoption permitted) using the same effective date and the same transition method used to adopt the guidance for revenue recognition under multiple-deliverable arrangements. Canon is currently evaluating the effect that the adoption of this guidance will have on its consolidated results of operations and financial condition. | ||
(x) | Reclassifications | |
Certain reclassifications have been made to the prior years consolidated statements of cash flows to conform to the current year presentation. |
74
December 31, 2009 | ||||||||||||||||
Gross | Gross | |||||||||||||||
unrealized | unrealized | Fair | ||||||||||||||
Cost | holding gains | holding losses | value | |||||||||||||
(Millions of yen) | ||||||||||||||||
Current: |
||||||||||||||||
Government bonds |
¥ | 222 | ¥ | | ¥ | | ¥ | 222 | ||||||||
Noncurrent: |
||||||||||||||||
Government bonds |
¥ | 225 | ¥ | | ¥ | 21 | ¥ | 204 | ||||||||
Corporate bonds |
1,397 | 27 | 55 | 1,369 | ||||||||||||
Fund trusts |
2,275 | 300 | 7 | 2,568 | ||||||||||||
Equity securities |
11,932 | 7,295 | 1,501 | 17,726 | ||||||||||||
¥ | 15,829 | ¥ | 7,622 | ¥ | 1,584 | ¥ | 21,867 | |||||||||
December 31, 2008 | ||||||||||||||||
Gross unrealized |
Gross unrealized |
Fair | ||||||||||||||
Cost | holding gains | holding losses | value | |||||||||||||
(Millions of yen) | ||||||||||||||||
Current: |
||||||||||||||||
Government bonds |
¥ | 1 | ¥ | | ¥ | | ¥ | 1 | ||||||||
Fund trusts |
133 | 16 | | 149 | ||||||||||||
¥ | 134 | ¥ | 16 | ¥ | | ¥ | 150 | |||||||||
Noncurrent: |
||||||||||||||||
Government bonds |
¥ | 431 | ¥ | | ¥ | 18 | ¥ | 413 | ||||||||
Corporate bonds |
1,593 | 27 | 32 | 1,588 | ||||||||||||
Fund trusts |
2,366 | 40 | 170 | 2,236 | ||||||||||||
Equity securities |
10,522 | 2,532 | 836 | 12,218 | ||||||||||||
¥ | 14,912 | ¥ | 2,599 | ¥ | 1,056 | ¥ | 16,455 | |||||||||
75
Cost | Fair value | |||||||
(Millions of yen) | ||||||||
Due within one year |
¥ | 222 | ¥ | 222 | ||||
Due after one year through
five years |
3,274 | 3,568 | ||||||
Due after five years through ten years |
623 | 573 | ||||||
¥ | 4,119 | ¥ | 4,363 | |||||
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Notes |
¥ | 13,037 | ¥ | 20,303 | ||||
Accounts |
554,878 | 584,437 | ||||||
567,915 | 604,740 | |||||||
Less allowance for doubtful receivables |
(11,343 | ) | (9,318 | ) | ||||
¥ | 556,572 | ¥ | 595,422 | |||||
76
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Finished goods |
¥ | 228,161 | ¥ | 316,533 | ||||
Work in process |
129,824 | 171,511 | ||||||
Raw materials |
15,256 | 18,875 | ||||||
¥ | 373,241 | ¥ | 506,919 | |||||
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Land |
¥ | 258,824 | ¥ | 247,602 | ||||
Buildings |
1,299,154 | 1,268,388 | ||||||
Machinery and equipment |
1,422,076 | 1,395,451 | ||||||
Construction in progress |
105,713 | 81,346 | ||||||
3,085,767 | 2,992,787 | |||||||
Less accumulated depreciation |
(1,815,982 | ) | (1,635,601 | ) | ||||
¥ | 1,269,785 | ¥ | 1,357,186 | |||||
77
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Total minimum lease payments receivable |
¥ | 206,267 | ¥ | 198,611 | ||||
Unguaranteed residual values |
14,630 | 16,310 | ||||||
Executory costs |
(1,973 | ) | (1,729 | ) | ||||
Unearned income |
(26,994 | ) | (26,658 | ) | ||||
191,930 | 186,534 | |||||||
Less allowance for doubtful receivables |
(9,023 | ) | (8,268 | ) | ||||
182,907 | 178,266 | |||||||
Less current portion |
(65,146 | ) | (59,608 | ) | ||||
¥ | 117,761 | ¥ | 118,658 | |||||
Financing leases | Operating leases | |||||||
(Millions of yen) | ||||||||
Year ending December 31: |
||||||||
2010 |
¥ | 82,058 | ¥ | 4,685 | ||||
2011 |
59,342 | 2,304 | ||||||
2012 |
38,834 | 1,627 | ||||||
2013 |
18,580 | 814 | ||||||
2014 |
6,396 | 51 | ||||||
Thereafter |
1,057 | 10 | ||||||
¥ | 206,267 | ¥ | 9,491 | |||||
78
December 31, 2009 | December 31, 2008 | |||||||||||||||
Gross | Gross | |||||||||||||||
carrying | Accumulated | carrying | Accumulated | |||||||||||||
amount | amortization | amount | amortization | |||||||||||||
(Millions of yen) | ||||||||||||||||
Software |
¥ | 198,276 | ¥ | 114,410 | ¥ | 187,920 | ¥ | 103,535 | ||||||||
License fees |
23,889 | 13,546 | 21,537 | 11,104 | ||||||||||||
Other |
30,610 | 8,258 | 34,341 | 10,925 | ||||||||||||
¥ | 252,775 | ¥ | 136,214 | ¥ | 243,798 | ¥ | 125,564 | |||||||||
Years ended December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Balance at beginning of year |
¥ | 50,754 | ¥ | 56,783 | ||||
Goodwill acquired during the year |
4,805 | 4,975 | ||||||
Translation adjustments and other |
312 | (11,004 | ) | |||||
Balance at end of year |
¥ | 55,871 | ¥ | 50,754 | ||||
79
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Loans, principally from banks, maturing in
installments through 2017; bearing weighted average interest of 0.30% and 2.93% at December 31, 2009 and 2008, respectively |
¥ | 20 | ¥ | 95 | ||||
Capital lease obligations |
9,761 | 13,648 | ||||||
9,781 | 13,743 | |||||||
Less current portion |
(4,869 | ) | (5,320 | ) | ||||
¥ | 4,912 | ¥ | 8,423 | |||||
(Millions of yen) | ||||
Year ending December 31: |
||||
2010 |
¥ | 4,869 | ||
2011 |
3,357 | |||
2012 |
1,068 | |||
2013 |
352 | |||
2014 |
98 | |||
Thereafter |
37 | |||
¥ | 9,781 | |||
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Notes |
¥ | 7,608 | ¥ | 14,544 | ||||
Accounts |
331,505 | 392,202 | ||||||
¥ | 339,113 | ¥ | 406,746 | |||||
80
Japanese plans | Foreign plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Millions of yen) | ||||||||||||||||
Change in benefit obligations: |
||||||||||||||||
Benefit obligations at beginning of
year |
¥ | 521,985 | ¥ | 493,478 | ¥ | 78,468 | ¥ | 113,833 | ||||||||
Service cost |
21,759 | 20,786 | 2,426 | 3,141 | ||||||||||||
Interest cost |
12,535 | 12,253 | 4,251 | 4,991 | ||||||||||||
Plan participants contributions |
| | 1,177 | 1,460 | ||||||||||||
Amendments |
(674 | ) | (204 | ) | | (86 | ) | |||||||||
Actuarial (gain) loss |
10,822 | 10,160 | 3,533 | (4,521 | ) | |||||||||||
Benefits paid |
(15,107 | ) | (14,488 | ) | (1,784 | ) | (2,210 | ) | ||||||||
Foreign currency exchange rate
changes |
| | 6,099 | (38,140 | ) | |||||||||||
Benefit obligations at end of year |
551,320 | 521,985 | 94,170 | 78,468 | ||||||||||||
Change in plan assets: |
||||||||||||||||
Fair value of plan assets at
beginning of year |
429,870 | 511,450 | 62,996 | 92,908 | ||||||||||||
Actual return on plan assets |
26,616 | (81,981 | ) | 4,844 | (8,453 | ) | ||||||||||
Employer contributions |
15,173 | 14,716 | 3,059 | 8,317 | ||||||||||||
Plan participants contributions |
| | 1,177 | 1,460 | ||||||||||||
Benefits paid |
(14,451 | ) | (14,315 | ) | (1,784 | ) | (1,556 | ) | ||||||||
Foreign currency exchange rate
changes |
| | 4,766 | (29,680 | ) | |||||||||||
Fair value of plan assets at end
of year |
457,208 | 429,870 | 75,058 | 62,996 | ||||||||||||
Funded status at end of year |
¥ | (94,112 | ) | ¥ | (92,115 | ) | ¥ | (19,112 | ) | ¥ | (15,472 | ) | ||||
81
Japanese plans | Foreign plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Millions of yen) | ||||||||||||||||
Other assets |
¥ | 707 | ¥ | 806 | ¥ | 2,069 | ¥ | 2,461 | ||||||||
Accrued expenses |
| | (96 | ) | (70 | ) | ||||||||||
Accrued pension and
severance cost |
(94,819 | ) | (92,921 | ) | (21,085 | ) | (17,863 | ) | ||||||||
¥ | (94,112 | ) | ¥ | (92,115 | ) | ¥ | (19,112 | ) | ¥ | (15,472 | ) | |||||
Japanese plans | Foreign plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Millions of yen) | ||||||||||||||||
Actuarial loss |
¥ | 237,822 | ¥ | 251,731 | ¥ | 19,411 | ¥ | 15,650 | ||||||||
Prior service credit |
(155,928 | ) | (168,904 | ) | (670 | ) | (768 | ) | ||||||||
Net transition obligation |
1,444 | 2,166 | | | ||||||||||||
¥ | 83,338 | ¥ | 84,993 | ¥ | 18,741 | ¥ | 14,882 | |||||||||
Japanese plans | Foreign plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Millions of yen) | ||||||||||||||||
Accumulated benefit obligation |
¥ | 522,582 | ¥ | 493,559 | ¥ | 80,361 | ¥ | 71,627 |
82
Japanese plans | Foreign plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Millions of yen) | ||||||||||||||||
Plans with projected benefit obligations in excess of plan assets: |
||||||||||||||||
Projected benefit obligations |
¥ | 545,466 | ¥ | 516,646 | ¥ | 94,123 | ¥ | 77,083 | ||||||||
Fair value of plan assets |
450,647 | 423,725 | 72,942 | 59,150 | ||||||||||||
Plans with accumulated benefit obligations in excess of plan
assets: |
||||||||||||||||
Accumulated benefit obligations |
¥ | 509,638 | ¥ | 485,436 | ¥ | 80,314 | ¥ | 69,471 | ||||||||
Fair value of plan assets |
442,756 | 420,341 | 72,942 | 59,089 |
Japanese plans | Foreign plans | |||||||||||||||||||||||
Years ended December 31 | Years ended December 31 | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||
Service cost |
¥ | 21,759 | ¥ | 20,786 | ¥ | 20,161 | ¥ | 2,426 | ¥ | 3,141 | ¥ | 4,016 | ||||||||||||
Interest cost |
12,535 | 12,253 | 11,888 | 4,251 | 4,991 | 4,947 | ||||||||||||||||||
Expected return on plan assets |
(15,808 | ) | (19,721 | ) | (21,148 | ) | (4,211 | ) | (5,519 | ) | (5,427 | ) | ||||||||||||
Amortization of net transition obligation |
722 | 722 | 722 | | | | ||||||||||||||||||
Amortization of prior service credit |
(13,650 | ) | (13,373 | ) | (13,479 | ) | (98 | ) | (271 | ) | (86 | ) | ||||||||||||
Amortization of actuarial loss |
13,923 | 7,068 | 4,868 | 1,014 | 898 | 887 | ||||||||||||||||||
¥ | 19,481 | ¥ | 7,735 | ¥ | 3,012 | ¥ | 3,382 | ¥ | 3,240 | ¥ | 4,337 | |||||||||||||
83
Japanese plans | Foreign plans | |||||||||||||||
Years ended December 31 | Years ended December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Millions of yen) | ||||||||||||||||
Current year actuarial (gain) loss |
¥ | 14 | ¥ | 111,862 | ¥ | 2,900 | ¥ | 9,451 | ||||||||
Amortization of actuarial loss |
(13,923 | ) | (7,068 | ) | (1,014 | ) | (898 | ) | ||||||||
Prior service credit due to amendments |
(674 | ) | (204 | ) | | (86 | ) | |||||||||
Amortization of prior service credit |
13,650 | 13,373 | 98 | 271 | ||||||||||||
Amortization of net transition obligation |
(722 | ) | (722 | ) | | | ||||||||||
¥ | (1,655 | ) | ¥ | 117,241 | ¥ | 1,984 | ¥ | 8,738 | ||||||||
Japanese plans | Foreign plans | |||||||
(Millions of yen) | ||||||||
Net transition obligation |
¥ | 722 | ¥ | | ||||
Prior service credit |
(12,873 | ) | (117 | ) | ||||
Actuarial loss |
12,639 | 1,245 |
Japanese plans | Foreign plans | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Discount rate |
2.3 | % | 2.4 | % | 5.2 | % | 5.3 | % | ||||||||
Assumed rate of increase in future compensation levels |
3.0 | % | 3.0 | % | 3.5 | % | 3.1 | % |
Japanese plans | Foreign plans | |||||||||||||||||||||||
Years ended December 31 | Years ended December 31 | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
Discount rate |
2.4 | % | 2.5 | % | 2.5 | % | 5.3 | % | 5.1 | % | 4.5 | % | ||||||||||||
Assumed rate of increase in future compensation
levels |
3.0 | % | 2.9 | % | 2.9 | % | 3.1 | % | 3.1 | % | 2.9 | % | ||||||||||||
Expected long-term rate of return on plan assets |
3.7 | % | 3.7 | % | 3.9 | % | 6.2 | % | 6.5 | % | 6.0 | % |
84
Japanese plans | Foreign plans | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||||||||||
Equity securities: |
||||||||||||||||||||||||||||||||
Japanese companies (a) |
¥ | 48,844 | ¥ | | ¥ | | ¥ | 48,844 | ¥ | | ¥ | | ¥ | | ¥ | | ||||||||||||||||
Foreign companies |
5,444 | | | 5,444 | 3,898 | | | 3,898 | ||||||||||||||||||||||||
Pooled funds (b) |
| 85,353 | | 85,353 | | 47,290 | | 47,290 | ||||||||||||||||||||||||
Debt securities: |
||||||||||||||||||||||||||||||||
Government bonds (c) |
14,803 | | | 14,803 | 1,581 | | | 1,581 | ||||||||||||||||||||||||
Municipal bonds |
| 879 | | 879 | | | | | ||||||||||||||||||||||||
Corporate bonds |
| 7,665 | | 7,665 | | 6,673 | | 6,673 | ||||||||||||||||||||||||
Pooled funds (d) |
| 189,870 | | 189,870 | | 9,343 | | 9,343 | ||||||||||||||||||||||||
Mortgage backed securities
(and other asset backed securities) |
| 943 | | 943 | | 256 | | 256 | ||||||||||||||||||||||||
Life insurance company general
accounts |
| 94,269 | | 94,269 | | | | | ||||||||||||||||||||||||
Other assets |
| 8,367 | 771 | 9,138 | | 6,017 | | 6,017 | ||||||||||||||||||||||||
¥ | 69,091 | ¥ | 387,346 | ¥ | 771 | ¥ | 457,208 | ¥ | 5,479 | ¥ | 69,579 | ¥ | | ¥ | 75,058 | |||||||||||||||||
85
(a) | The plans equity securities include common stock of the Company and certain of its subsidiaries in the amounts of ¥950 million at December 31, 2009. | |
(b) | These funds invest in listed equity securities consisting of approximately 50% Japanese companies and 50% foreign companies for Japanese plans, and mainly foreign companies for foreign plans. | |
(c) | This class includes approximately 80% Japanese government bonds and 20% foreign government bonds. | |
(d) | These funds invest in approximately 55% Japanese government bonds, 25% foreign government bonds, 10% Japanese municipal bonds, and 10% corporate bonds. |
Japanese plans | Foreign plans | |||||||
(Millions of yen) | ||||||||
Year ending December 31: |
||||||||
2010 |
¥ | 13,029 | ¥ | 1,765 | ||||
2011 |
14,571 | 1,867 | ||||||
2012 |
15,643 | 1,972 | ||||||
2013 |
17,120 | 2,004 | ||||||
2014 |
17,961 | 2,074 | ||||||
2015 2019 |
114,536 | 12,939 |
86
Year ended December 31, 2009 | ||||||||||||
Japanese | Foreign | Total | ||||||||||
(Millions of yen) | ||||||||||||
Income before income taxes |
¥ | 130,857 | ¥ | 88,498 | ¥ | 219,355 | ||||||
Income taxes: |
||||||||||||
Current |
¥ | 45,079 | ¥ | 18,331 | ¥ | 63,410 | ||||||
Deferred |
15,415 | 5,297 | 20,712 | |||||||||
¥ | 60,494 | ¥ | 23,628 | ¥ | 84,122 | |||||||
Year ended December 31, 2008 | ||||||||||||
Japanese | Foreign | Total | ||||||||||
(Millions of yen) | ||||||||||||
Income before income taxes |
¥ | 382,299 | ¥ | 98,848 | ¥ | 481,147 | ||||||
Income taxes: |
||||||||||||
Current |
¥ | 168,428 | ¥ | 24,857 | ¥ | 193,285 | ||||||
Deferred |
(34,073 | ) | 1,576 | (32,497 | ) | |||||||
¥ | 134,355 | ¥ | 26,433 | ¥ | 160,788 | |||||||
Year ended December 31, 2007 | ||||||||||||
Japanese | Foreign | Total | ||||||||||
(Millions of yen) | ||||||||||||
Income before income taxes |
¥ | 575,017 | ¥ | 193,371 | ¥ | 768,388 | ||||||
Income taxes: |
||||||||||||
Current |
¥ | 238,921 | ¥ | 60,358 | ¥ | 299,279 | ||||||
Deferred |
(31,930 | ) | (3,091 | ) | (35,021 | ) | ||||||
¥ | 206,991 | ¥ | 57,267 | ¥ | 264,258 | |||||||
87
Years ended December 31 | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Japanese statutory income tax rate |
40.0 | % | 40.0 | % | 40.0 | % | ||||||
Increase (reduction) in income taxes resulting from: |
||||||||||||
Expenses not deductible for tax purposes |
0.9 | 0.5 | 0.3 | |||||||||
Income of foreign subsidiaries taxed at lower than Japanese statutory tax rate |
(5.4 | ) | (2.6 | ) | (2.8 | ) | ||||||
Tax credit for research and development expenses |
(2.8 | ) | (4.6 | ) | (4.5 | ) | ||||||
Change in valuation allowance |
5.4 | 0.1 | 0.1 | |||||||||
Other |
0.2 | 0.0 | 1.3 | |||||||||
Effective income tax rate |
38.3 | % | 33.4 | % | 34.4 | % | ||||||
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Prepaid expenses and other current assets
|
¥ | 94,798 | ¥ | 96,613 | ||||
Other assets
|
117,263 | 130,378 | ||||||
Other current liabilities
|
(2,018 | ) | (2,491 | ) | ||||
Other noncurrent liabilities
|
(36,278 | ) | (29,075 | ) | ||||
¥ | 173,765 | ¥ | 195,425 | |||||
88
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Deferred tax assets: |
||||||||
Inventories |
¥ | 24,121 | ¥ | 36,817 | ||||
Accrued business tax |
3,861 | 5,183 | ||||||
Accrued pension and severance cost |
52,639 | 51,713 | ||||||
Research and development costs capitalized for tax purposes |
45,718 | 41,661 | ||||||
Property, plant and equipment |
53,011 | 58,682 | ||||||
Accrued expenses |
29,409 | 27,748 | ||||||
Net operating losses carried forward |
12,305 | 6,745 | ||||||
Other |
44,709 | 44,894 | ||||||
265,773 | 273,443 | |||||||
Less valuation allowance |
(22,188 | ) | (10,817 | ) | ||||
Total deferred tax assets |
243,585 | 262,626 | ||||||
Deferred tax liabilities: |
||||||||
Undistributed earnings of foreign subsidiaries |
(8,023 | ) | (10,407 | ) | ||||
Net unrealized gains on securities |
(2,052 | ) | (607 | ) | ||||
Tax deductible reserve |
(7,797 | ) | (8,119 | ) | ||||
Financing lease revenue |
(35,505 | ) | (31,035 | ) | ||||
Prepaid pension and severance cost |
(314 | ) | (2,644 | ) | ||||
Other |
(16,129 | ) | (14,389 | ) | ||||
Total deferred tax liabilities |
(69,820 | ) | (67,201 | ) | ||||
Net deferred tax assets |
¥ | 173,765 | ¥ | 195,425 | ||||
89
(Millions of yen) | ||||
Within one year |
¥ | 1,534 | ||
After one year through five years |
7,209 | |||
After five years through ten years |
17,501 | |||
Indefinite period |
8,166 | |||
Total |
¥ | 34,410 | ||
Years ended December 31 | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(Millions of yen) | ||||||||||||
Balance at beginning of year |
¥ | 12,689 | ¥ | 15,791 | ¥ | 16,087 | ||||||
Additions for tax positions of the current year |
| 8,700 | 994 | |||||||||
Additions for tax positions of prior years |
1,442 | 1,354 | 1,902 | |||||||||
Reductions for tax positions of prior years |
(1,106 | ) | (8,512 | ) | (1,340 | ) | ||||||
Lapse of the applicable statute of limitations |
| | (1,311 | ) | ||||||||
Settlements with tax authorities |
| (1,208 | ) | (322 | ) | |||||||
Other |
210 | (3,436 | ) | (219 | ) | |||||||
Balance at end of year |
¥ | 13,235 | ¥ | 12,689 | ¥ | 15,791 | ||||||
90
Years ended December 31 | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(Millions of yen) | ||||||||||||
Foreign currency translation adjustments: |
||||||||||||
Balance at beginning of year |
¥ | (235,968 | ) | ¥ | 22,796 | ¥ | 22,858 | |||||
Adjustments for the year |
33,340 | (258,764 | ) | (62 | ) | |||||||
Balance at end of year |
(202,628 | ) | (235,968 | ) | 22,796 | |||||||
Net unrealized gains and losses on securities: |
||||||||||||
Balance at beginning of year |
1,135 | 6,287 | 8,065 | |||||||||
Adjustments for the year |
2,150 | (5,152 | ) | (1,778 | ) | |||||||
Balance at end of year |
3,285 | 1,135 | 6,287 | |||||||||
Net gains and losses on derivative instruments: |
||||||||||||
Balance at beginning of year |
1,493 | (849 | ) | (1,663 | ) | |||||||
Adjustments for the year |
(1,422 | ) | 2,342 | 814 | ||||||||
Balance at end of year |
71 | 1,493 | (849 | ) | ||||||||
Pension liability adjustments: |
||||||||||||
Balance at beginning of year |
(59,480 | ) | 6,436 | (26,542 | ) | |||||||
Adjustments for the year |
(2,066 | ) | (65,916 | ) | 32,978 | |||||||
Balance at end of year |
(61,546 | ) | (59,480 | ) | 6,436 | |||||||
Total accumulated other comprehensive income (loss): |
||||||||||||
Balance at beginning of year |
(292,820 | ) | 34,670 | 2,718 | ||||||||
Adjustments for the year |
32,002 | (327,490 | ) | 31,952 | ||||||||
Balance at end of year |
¥ | (260,818 | ) | ¥ | (292,820 | ) | ¥ | 34,670 | ||||
91
Years ended December 31 | ||||||||||||
Before-tax amount |
Tax (expense) or benefit |
Net-of-tax amount |
||||||||||
(Millions of yen) | ||||||||||||
2009: |
||||||||||||
Foreign currency translation adjustments |
¥ | 35,459 | ¥ | (2,089 | ) | ¥ | 33,370 | |||||
Net unrealized gains and losses on securities: |
||||||||||||
Amount arising during the year |
2,231 | (1,333 | ) | 898 | ||||||||
Reclassification adjustments for gains and losses realized in net income |
2,205 | (886 | ) | 1,319 | ||||||||
Net change during the year |
4,436 | (2,219 | ) | 2,217 | ||||||||
Net gains and losses on derivative instruments: |
||||||||||||
Amount arising during the year |
298 | (119 | ) | 179 | ||||||||
Reclassification adjustments for gains and losses realized in net income |
(2,670 | ) | 1,068 | (1,602 | ) | |||||||
Net change during the year |
(2,372 | ) | 949 | (1,423 | ) | |||||||
Pension liability adjustments: |
||||||||||||
Amount arising during the year |
(4,115 | ) | 1,891 | (2,224 | ) | |||||||
Reclassification adjustments for gains and losses realized in net income |
1,911 | (632 | ) | 1,279 | ||||||||
Net change during the year |
(2,204 | ) | 1,259 | (945 | ) | |||||||
Other comprehensive income (loss) |
¥ | 35,319 | ¥ | (2,100 | ) | ¥ | 33,219 | |||||
2008: |
||||||||||||
Foreign currency translation adjustments |
¥ | (266,568 | ) | ¥ | 5,893 | ¥ | (260,675 | ) | ||||
Net unrealized gains and losses on securities: |
||||||||||||
Amount arising during the year |
(17,485 | ) | 6,992 | (10,493 | ) | |||||||
Reclassification adjustments for gains and losses realized in net income |
7,752 | (3,101 | ) | 4,651 | ||||||||
Net change during the year |
(9,733 | ) | 3,891 | (5,842 | ) | |||||||
Net gains and losses on derivative instruments: |
||||||||||||
Amount arising during the year |
23,121 | (9,248 | ) | 13,873 | ||||||||
Reclassification adjustments for gains and losses realized in net income |
(19,219 | ) | 7,688 | (11,531 | ) | |||||||
Net change during the year |
3,902 | (1,560 | ) | 2,342 | ||||||||
Pension liability adjustments: |
||||||||||||
Amount arising during the year |
(111,215 | ) | 39,233 | (71,982 | ) | |||||||
Reclassification adjustments for gains and losses realized in net income |
(4,956 | ) | 2,073 | (2,883 | ) | |||||||
Net change during the year |
(116,171 | ) | 41,306 | (74,865 | ) | |||||||
Other comprehensive income (loss) |
¥ | (388,570 | ) | ¥ | 49,530 | ¥ | (339,040 | ) | ||||
92
Years ended December 31 | ||||||||||||
Before-tax amount |
Tax (expense) or benefit |
Net-of-tax amount |
||||||||||
(Millions of yen) | ||||||||||||
2007: |
||||||||||||
Foreign currency translation adjustments |
¥ | (396 | ) | ¥ | 308 | ¥ | (88 | ) | ||||
Net unrealized gains and losses on securities: |
||||||||||||
Amount arising during the year |
(7,721 | ) | 3,231 | (4,490 | ) | |||||||
Reclassification adjustments for gains and losses realized in net income |
(580 | ) | 2,715 | 2,135 | ||||||||
Net change during the year |
(8,301 | ) | 5,946 | (2,355 | ) | |||||||
Net gains and losses on derivative instruments: |
||||||||||||
Amount arising during the year |
589 | (236 | ) | 353 | ||||||||
Reclassification adjustments for gains and losses realized in net income |
780 | (312 | ) | 468 | ||||||||
Net change during the year |
1,369 | (548 | ) | 821 | ||||||||
Pension liability adjustments: |
||||||||||||
Amount arising during the year |
71,364 | (26,586 | ) | 44,778 | ||||||||
Reclassification adjustments for gains and losses realized in net income |
(7,088 | ) | 2,952 | (4,136 | ) | |||||||
Net change during the year |
64,276 | (23,634 | ) | 40,642 | ||||||||
Other comprehensive income (loss) |
¥ | 56,948 | ¥ | (17,928 | ) | ¥ | 39,020 | |||||
Years ended December 31 | ||||||||
2009 | 2008 | |||||||
Expected term of option (in years) |
4.0 | 4.0 | ||||||
Expected volatility |
40.08 | % | 37.39 | % | ||||
Dividend yield |
3.51 | % | 2.10 | % | ||||
Risk-free interest rate |
0.64 | % | 0.95 | % |
93
Weighted-average | ||||||||||||||||
Weighted-average | remaining | Aggregate | ||||||||||||||
Shares | exercise price | contractual term | intrinsic value | |||||||||||||
(Yen) | (Year) | (Millions of yen) | ||||||||||||||
Outstanding at January 1, 2008 |
| ¥ | | |||||||||||||
Granted |
592,000 | 5,502 | ||||||||||||||
Forfeited |
| | ||||||||||||||
Outstanding at December 31, 2008 |
592,000 | 5,502 | 3.3 | ¥ | | |||||||||||
Granted |
954,000 | 3,287 | ||||||||||||||
Forfeited |
(34,000 | ) | 4,851 | |||||||||||||
Outstanding at December 31, 2009 |
1,512,000 | ¥ | 4,119 | 3.0 | ¥ | 588 | ||||||||||
Years ended December 31 | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(Millions of yen) | ||||||||||||
Net income attributable to Canon Inc. |
¥ | 131,647 | ¥ | 309,148 | ¥ | 488,332 | ||||||
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 | ||||||
(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) | ||||||||||||
Net income attributable to Canon Inc. stockholders per share: |
||||||||||||
Basic
|
¥ | 106.64 | ¥ | 246.21 | ¥ | 377.59 | ||||||
Diluted
|
106.64 | 246.20 | 377.53 |
94
December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
To sell foreign currencies |
¥ | 494,314 | ¥ | 350,959 | ||||
To buy foreign currencies |
30,978 | 35,247 |
Derivatives designated as hedging instruments |
December 31, 2009 | ||||||||
Balance sheet location | Fair value | |||||||
(Millions of yen) | ||||||||
Liabilities: |
||||||||
Foreign exchange contracts |
Other current liabilities | ¥ | 644 |
95
Derivatives not designated as hedging instruments |
December 31, 2009 | ||||||||
Balance sheet location | Fair value | |||||||
(Millions of yen) | ||||||||
Assets: |
||||||||
Foreign exchange contracts |
Prepaid expenses and other current assets | ¥ | 752 | |||||
Liabilities: |
||||||||
Foreign exchange contracts |
Other current liabilities | 6,566 |
Gain (loss) recognized in | ||||||||||||||||||||
income (ineffective | ||||||||||||||||||||
Gain (loss) | Gain (loss) reclassified from | portion and amount | ||||||||||||||||||
recognized in OCI | accumulated OCI into income | excluded from | ||||||||||||||||||
(effective portion) | (effective portion) | effectiveness testing) | ||||||||||||||||||
Amount | Location | Amount | Location | Amount | ||||||||||||||||
(Millions of yen) | ||||||||||||||||||||
Foreign exchange contracts |
¥ | (2,372 | ) | Other, net | ¥ | 2,670 | Other, net | ¥ | (462 | ) |
Gain (loss) recognized in income on derivative | ||||||||
Location | Amount | |||||||
(Millions of yen) | ||||||||
Foreign exchange contracts |
Other, net | ¥ | (8,638 | ) |
96
(Millions of yen) | ||||
Year ending December 31: |
||||
2010 |
¥ | 16,259 | ||
2011 |
13,331 | |||
2012 |
9,641 | |||
2013 |
6,551 | |||
2014 |
5,002 | |||
Thereafter |
8,180 | |||
Total future minimum lease payments |
¥ | 58,964 | ||
Years ended December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Balance at beginning of year
|
¥ | 17,372 | ¥ | 20,138 | ||||
Addition
|
21,670 | 30,644 | ||||||
Utilization
|
(22,050 | ) | (26,846 | ) | ||||
Other
|
(3,048 | ) | (6,564 | ) | ||||
Balance at end of year
|
¥ | 13,944 | ¥ | 17,372 | ||||
97
December 31 | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
amount | fair value | amount | fair value | |||||||||||||
(Millions of yen) | ||||||||||||||||
Long-term debt, including current installments |
¥ | (9,781 | ) | ¥ | (9,777 | ) | ¥ | (13,743 | ) | ¥ | (13,727 | ) | ||||
Foreign exchange contracts: |
||||||||||||||||
Assets |
752 | 752 | 10,516 | 10,516 | ||||||||||||
Liabilities |
(7,210 | ) | (7,210 | ) | (678 | ) | (678 | ) |
98
Level 1 | | Inputs are quoted prices in active markets for identical assets or liabilities. |
Level 2 | | Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
Level 3 | | Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entitys own assumptions about the assumptions that market participants would use in establishing a price. |
December 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(Millions of yen) | ||||||||||||||||
Assets: |
||||||||||||||||
Cash and cash equivalents |
¥ | | ¥ | 184,856 | ¥ | | ¥ | 184,856 | ||||||||
Available-for-sale securities (current): |
||||||||||||||||
Government bonds |
222 | | | 222 | ||||||||||||
Available-for-sale securities (noncurrent): |
||||||||||||||||
Government bonds |
204 | | | 204 | ||||||||||||
Corporate bonds |
| 29 | 1,340 | 1,369 | ||||||||||||
Fund trusts |
1,589 | 979 | | 2,568 | ||||||||||||
Equity securities |
17,726 | | | 17,726 | ||||||||||||
Derivatives |
| 752 | | 752 | ||||||||||||
Total assets |
¥ | 19,741 | ¥ | 186,616 | ¥ | 1,340 | ¥ | 207,697 | ||||||||
Liabilities: |
||||||||||||||||
Derivatives |
¥ | | ¥ | 7,210 | ¥ | | ¥ | 7,210 | ||||||||
Total liabilities |
¥ | | ¥ | 7,210 | ¥ | | ¥ | 7,210 | ||||||||
99
December 31, 2008 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(Millions of yen) | ||||||||||||||||
Assets: |
||||||||||||||||
Cash and cash equivalents |
¥ | | ¥ | 194,030 | ¥ | | ¥ | 194,030 | ||||||||
Available-for-sale securities (current): |
||||||||||||||||
Government bonds |
1 | | | 1 | ||||||||||||
Fund trusts |
149 | | | 149 | ||||||||||||
Available-for-sale securities (noncurrent): |
||||||||||||||||
Government bonds |
413 | | | 413 | ||||||||||||
Corporate bonds |
43 | 29 | 1,516 | 1,588 | ||||||||||||
Fund trusts |
1,284 | 952 | | 2,236 | ||||||||||||
Equity securities |
12,218 | | | 12,218 | ||||||||||||
Derivatives |
| 10,516 | | 10,516 | ||||||||||||
Total assets |
¥ | 14,108 | ¥ | 205,527 | ¥ | 1,516 | ¥ | 221,151 | ||||||||
Liabilities: |
||||||||||||||||
Derivatives |
¥ | | ¥ | 678 | ¥ | | ¥ | 678 | ||||||||
Total liabilities |
¥ | | ¥ | 678 | ¥ | | ¥ | 678 | ||||||||
Years ended December 31 | ||||||||
2009 | 2008 | |||||||
(Millions of yen) | ||||||||
Balance at beginning of year
|
¥ | 1,516 | ¥ | 1,889 | ||||
Total gains or losses (realized or unrealized): |
||||||||
Included in earnings
|
(221 | ) | (559 | ) | ||||
Included in other comprehensive income (loss)
|
(1 | ) | (8 | ) | ||||
Purchases, issuances, and settlements
|
46 | 194 | ||||||
Balance at end of year
|
¥ | 1,340 | ¥ | 1,516 | ||||
100
101
Industry and | Corporate and | |||||||||||||||||||
Office | Consumer | Others | eliminations | Consolidated | ||||||||||||||||
(Millions of yen) | ||||||||||||||||||||
2009: |
||||||||||||||||||||
Net sales: |
||||||||||||||||||||
External customers |
¥ | 1,635,056 | ¥ | 1,299,194 | ¥ | 274,951 | ¥ | | ¥ | 3,209,201 | ||||||||||
Intersegment |
10,020 | 1,966 | 83,047 | (95,033 | ) | | ||||||||||||||
Total |
1,645,076 | 1,301,160 | 357,998 | (95,033 | ) | 3,209,201 | ||||||||||||||
Operating cost and expenses |
1,415,680 | 1,117,668 | 433,954 | 24,844 | 2,992,146 | |||||||||||||||
Operating
profit (loss) |
¥ | 229,396 | ¥ | 183,492 | ¥ | (75,956 | ) | ¥ | (119,877 | ) | ¥ | 217,055 | ||||||||
Total assets |
¥ | 745,646 | ¥ | 437,160 | ¥ | 359,635 | ¥ | 2,305,116 | ¥ | 3,847,557 | ||||||||||
Depreciation and amortization |
90,878 | 48,701 | 60,770 | 115,044 | 315,393 | |||||||||||||||
Capital expenditures |
96,718 | 27,503 | 25,644 | 108,387 | 258,252 | |||||||||||||||
2008: |
||||||||||||||||||||
Net sales: |
||||||||||||||||||||
External customers |
¥ | 2,223,253 | ¥ | 1,453,647 | ¥ | 417,261 | ¥ | | ¥ | 4,094,161 | ||||||||||
Intersegment |
23,356 | 2,428 | 105,144 | (130,928 | ) | | ||||||||||||||
Total |
2,246,609 | 1,456,075 | 522,405 | (130,928 | ) | 4,094,161 | ||||||||||||||
Operating cost and expenses |
1,789,263 | 1,232,951 | 570,281 | 5,592 | 3,598,087 | |||||||||||||||
Operating
profit (loss) |
¥ | 457,346 | ¥ | 223,124 | ¥ | (47,876 | ) | ¥ | (136,520 | ) | ¥ | 496,074 | ||||||||
Total assets |
¥ | 822,660 | ¥ | 502,927 | ¥ | 453,581 | ¥ | 2,190,766 | ¥ | 3,969,934 | ||||||||||
Depreciation and amortization |
99,962 | 58,082 | 71,557 | 111,736 | 341,337 | |||||||||||||||
Capital expenditures |
139,046 | 52,641 | 31,445 | 180,268 | 403,400 | |||||||||||||||
2007: |
||||||||||||||||||||
Net sales: |
||||||||||||||||||||
External customers |
¥ | 2,456,798 | ¥ | 1,585,307 | ¥ | 439,241 | ¥ | | ¥ | 4,481,346 | ||||||||||
Intersegment |
20,720 | 2,645 | 110,742 | (134,107 | ) | | ||||||||||||||
Total |
2,477,518 | 1,587,952 | 549,983 | (134,107 | ) | 4,481,346 | ||||||||||||||
Operating cost and expenses |
1,912,343 | 1,260,113 | 527,039 | 25,178 | 3,724,673 | |||||||||||||||
Operating profit |
¥ | 565,175 | ¥ | 327,839 | ¥ | 22,944 | ¥ | (159,285 | ) | ¥ | 756,673 | |||||||||
Total assets |
¥ | 981,627 | ¥ | 590,208 | ¥ | 535,825 | ¥ | 2,404,965 | ¥ | 4,512,625 | ||||||||||
Depreciation and amortization |
97,886 | 56,278 | 65,331 | 122,199 | 341,694 | |||||||||||||||
Capital expenditures |
126,857 | 35,548 | 113,178 | 194,081 | 469,664 |
102
2009 | 2008 | 2007 | ||||||||||
(Millions of yen) | ||||||||||||
Net sales: |
||||||||||||
Japan |
¥ | 702,344 | ¥ | 868,280 | ¥ | 947,587 | ||||||
Americas |
894,154 | 1,154,571 | 1,336,168 | |||||||||
Europe |
995,150 | 1,341,400 | 1,499,286 | |||||||||
Other areas |
617,553 | 729,910 | 698,305 | |||||||||
Total |
¥ | 3,209,201 | ¥ | 4,094,161 | ¥ | 4,481,346 | ||||||
Long-lived
assets: |
||||||||||||
Japan |
¥ | 1,205,887 | ¥ | 1,314,092 | ¥ | 1,284,283 | ||||||
Americas |
59,273 | 43,435 | 45,492 | |||||||||
Europe |
44,875 | 47,392 | 68,944 | |||||||||
Other areas |
77,146 | 71,407 | 78,499 | |||||||||
Total |
¥ | 1,387,181 | ¥ | 1,476,326 | ¥ | 1,477,218 | ||||||
103
Corporate and | ||||||||||||||||||||||||
Japan | Americas | Europe | Other areas | eliminations | Consolidated | |||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||
2009: |
||||||||||||||||||||||||
Net sales: |
||||||||||||||||||||||||
External customers |
¥ | 827,762 | ¥ | 871,633 | ¥ | 991,336 | ¥ | 518,470 | ¥ | | ¥ | 3,209,201 | ||||||||||||
Intersegment |
1,714,375 | 1,263 | 919 | 534,147 | (2,250,704 | ) | | |||||||||||||||||
Total |
2,542,137 | 872,896 | 992,255 | 1,052,617 | (2,250,704 | ) | 3,209,201 | |||||||||||||||||
Operating cost and expenses |
2,288,471 | 860,863 | 964,606 | 1,019,208 | (2,141,002 | ) | 2,992,146 | |||||||||||||||||
Operating profit |
¥ | 253,666 | ¥ | 12,033 | ¥ | 27,649 | ¥ | 33,409 | ¥ | (109,702 | ) | ¥ | 217,055 | |||||||||||
Total assets |
¥ | 1,386,511 | ¥ | 198,094 | ¥ | 378,477 | ¥ | 384,795 | ¥ | 1,499,680 | ¥ | 3,847,557 | ||||||||||||
2008: |
||||||||||||||||||||||||
Net sales: |
||||||||||||||||||||||||
External customers |
¥ | 998,676 | ¥ | 1,141,560 | ¥ | 1,337,147 | ¥ | 616,778 | ¥ | | ¥ | 4,094,161 | ||||||||||||
Intersegment |
2,318,521 | 3,758 | 4,329 | 670,678 | (2,997,286 | ) | | |||||||||||||||||
Total |
3,317,197 | 1,145,318 | 1,341,476 | 1,287,456 | (2,997,286 | ) | 4,094,161 | |||||||||||||||||
Operating cost and expenses |
2,812,645 | 1,136,288 | 1,314,942 | 1,247,156 | (2,912,944 | ) | 3,598,087 | |||||||||||||||||
Operating profit |
¥ | 504,552 | ¥ | 9,030 | ¥ | 26,534 | ¥ | 40,300 | ¥ | (84,342 | ) | ¥ | 496,074 | |||||||||||
Total assets |
¥ | 1,607,653 | ¥ | 203,255 | ¥ | 417,562 | ¥ | 344,638 | ¥ | 1,396,826 | ¥ | 3,969,934 | ||||||||||||
2007: |
||||||||||||||||||||||||
Net sales: |
||||||||||||||||||||||||
External customers |
¥ | 1,048,310 | ¥ | 1,329,479 | ¥ | 1,499,821 | ¥ | 603,736 | ¥ | | ¥ | 4,481,346 | ||||||||||||
Intersegment |
2,494,251 | 4,608 | 3,496 | 824,844 | (3,327,199 | ) | | |||||||||||||||||
Total |
3,542,561 | 1,334,087 | 1,503,317 | 1,428,580 | (3,327,199 | ) | 4,481,346 | |||||||||||||||||
Operating cost and expenses |
2,768,998 | 1,281,805 | 1,441,972 | 1,378,306 | (3,146,408 | ) | 3,724,673 | |||||||||||||||||
Operating profit |
¥ | 773,563 | ¥ | 52,282 | ¥ | 61,345 | ¥ | 50,274 | ¥ | (180,791 | ) | ¥ | 756,673 | |||||||||||
Total assets |
¥ | 1,899,452 | ¥ | 280,458 | ¥ | 591,104 | ¥ | 424,244 | ¥ | 1,317,367 | ¥ | 4,512,625 | ||||||||||||
104
105
Balance at | Addition- | Deduction- | Balance | |||||||||||||||||
beginning of | charged to | bad debts | Translation | at end of | ||||||||||||||||
period | income | written off | adjustments | period | ||||||||||||||||
(Millions of yen) | ||||||||||||||||||||
Year ended December 31, 2009: |
||||||||||||||||||||
Allowance for doubtful receivables |
¥ | 9,318 | ¥ | 3,054 | ¥ | 1,474 | ¥ | 445 | ¥ | 11,343 | ||||||||||
Year ended December 31, 2008: |
||||||||||||||||||||
Allowance for doubtful receivables |
¥ | 14,547 | ¥ | 1,304 | ¥ | 3,618 | ¥ | (2,915 | ) | ¥ | 9,318 | |||||||||
Year ended December 31, 2007: |
||||||||||||||||||||
Allowance for doubtful receivables |
¥ | 13,849 | ¥ | 3,527 | ¥ | 2,978 | ¥ | 149 | ¥ | 14,547 | ||||||||||
106
12
|
Certifications of Chairman and CEO and Executive Vice President and CFO pursuant to Section 302 of the Sarbanes-Oxley Act | |||
13
|
Certification of Chairman and CEO and Executive Vice President and CFO pursuant to Section 906 of the Sarbanes-Oxley Act | |||
107
CANON INC. (Registrant) |
|||||
By: | /s/ Toshizo Tanaka | ||||
Toshizo Tanaka | |||||
Executive Vice President and CFO | |||||
Canon Inc. 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan |
|||||
108
Exhibit number | Title | |
Exhibit 12
|
Certifications of Chairman and CEO and Executive Vice President and CFO pursuant to Section 302 of the Sarbanes-Oxley Act | |
Exhibit 13
|
Certification of Chairman and CEO and Executive Vice President and CFO pursuant to Section 906 of the Sarbanes-Oxley Act |
109