FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of ….		July		……………………………………………………  ,		2011		..

 

		CANON INC.
		(Translation of registrant’s name into English)
		30-2, Shimomaruko 3-Chome, Ohta-ku, Tokyo 146-8501, Japan
		(Address of principal executive offices)

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F		X		Form 40-F

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes				No		X

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-…………………

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Date….		July 25, 2011		….		By ……/s/…… Masashiro Kobayashi………
						(Signature)*

 

*Print the name and title of the signing officer under his signature.

The following materials are included.

1. CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND THE FIRST HALF ENDED JUNE 30, 2011

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CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND

THE FIRST HALF ENDED JUNE 30, 2011

July 25, 2011

CONSOLIDATED RESULTS FOR THE SECOND QUARTER

(Millions of yen, thousands of U.S. dollars, except per share amounts)

 

		Actual
		Three months ended June 30, 2011				Three months ended June 30,  2010				Change(%)				Three months ended June 30, 2011
Net sales		¥	836,574			¥	970,358			-	13.8			$	10,328,074
Operating profit			78,411				113,438			-	30.9				968,037
Income before income taxes			81,627				112,651			-	27.5				1,007,741
Net income attributable to Canon Inc.		¥	53,861			¥	67,638			-	20.4			$	664,951
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	43.99			¥	54.67			-	19.5			$	0.54
- Diluted			43.99				54.66			-	19.5				0.54

CONSOLIDATED RESULTS FOR THE FIRST HALF

(Millions of yen, thousands of U.S. dollars, except per share amounts)

 

		Actual																Projected
		Six months ended June 30, 2011				Six months ended June 30,  2010				Change(%)				Six months ended June 30, 2011				Year ending December 31, 2011				Change(%)
Net sales		¥	1,675,765			¥	1,725,884			-	2.9			$	20,688,457			¥	3,780,000			+	2.0
Operating profit			160,913				200,281			-	19.7				1,986,580				380,000			-	1.9
Income before income taxes			163,659				201,503			-	18.8				2,020,481				380,000			-	3.3
Net income attributable to Canon Inc.		¥	109,323			¥	124,449			-	12.2			$	1,349,667			¥	260,000			+	5.4
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	89.16			¥	100.68			-	11.4			$	1.10			¥	213.89			+	7.1
- Diluted			89.16				100.68			-	11.4				1.10				-				-
		Actual
		As of June 30, 2011				As of December 31, 2010				Change(%)				As of June 30, 2011
Total assets		¥	3,994,744			¥	3,983,820			+	0.3			$	49,317,827
Canon Inc. stockholders’ equity		¥	2,645,115			¥	2,645,782			-	0.0			$	32,655,741

 

Notes:		1.		Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.
		2.		U.S. dollar amounts are translated from yen at the rate of JPY81=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of June 30, 2011, solely for the convenience of the reader.

 

Canon Inc.		30-2, Shimomaruko 3-chome, Ohta-ku,
Headquarter office		Tokyo 146-8501, Japan
		Phone: +81-3-3758-2111

 

- 1 -

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I. Operating Results and Financial Conditions

2011 Second Quarter in Review

Looking back at the global economy in the second quarter of 2011, the United States saw a temporary slowdown due to supply chain disruptions triggered by the earthquake that struck northeastern Japan coupled with surges in fuel and food prices, while in Europe, trends continued to vary by country. In Japan, although the economy decelerated in the wake of the Great East Japan Earthquake mainly due to a drop in production activities, the economies of China and India continued to achieve solid growth fueled by stable domestic demand, leading to a continued moderate recovery of the global economy.

As for the markets in which Canon operates amid these conditions, within the office equipment market, while demand for network digital multifunction devices (MFDs) in the Japanese market declined due to the adverse effects of the earthquake, overseas markets continued to realize a moderate recovery. The laser printer market continued to display solid growth boosted by emerging economies. With regard to the consumer products market, demand for compact digital cameras grew steadily, mainly in emerging markets, while the market for digital single-lens reflex (SLR) cameras continued to realize robust growth in all regions with the exception of Japan. Overall demand for inkjet printers remained at around the same level as the previous year. In the industry and others sector, while active investment by chip manufacturers fueled growth in sales of semiconductor lithography equipment, demand for liquid crystal display (LCD) lithography equipment marked a significant decline largely due to decreases in investment following the large-scale outlays made in the previous year and a drop in LCD panel prices. Some of these markets incurred temporary product-supply shortages due to the impact of lower production in the aftermath of the Great East Japan Earthquake.

Despite the direct impact the earthquake had on Canon, including damage to buildings and production facilities, along with the significant effects of decreased production triggered by supply shortages of components, Canon swiftly launched recovery and restoration measures, realizing a recovery in parts procurement and rebuilding production systems ahead of initial forecasts, effectively minimizing the impact on Canon’s operating results and financial position.

The average values of the yen during the second quarter and first half of the year were ¥81.58 and ¥81.92 to the U.S. dollar, respectively, year-on-year appreciations of approximately ¥10 and ¥9, and ¥117.28 and ¥114.95 to the euro, respectively, a year-on-year depreciation of approximately ¥1 and appreciation of approximately ¥5.

Net sales for the second quarter totaled ¥836.6 billion (U.S.$10,328 million), a decrease of 13.8% from the year-ago period, largely due to such factors as the appreciation of the yen against the U.S. dollar and a shift in market demand toward more competitively priced products, along with reduction in sales resulting from the significant impact on production of compact digital cameras and digital network MFDs caused by supply shortages of components following the earthquake, and decreased sales of LCD lithography equipment as an outcome of the sluggish market. Net sales for the six months ended June 30, 2011 totaled ¥1,675.8 billion (U.S.$20,688 million), a year-on-year decrease of 2.9%, reflecting the effects of new consolidation arising from the acquisition of Océ N.V. in the previous year. Despite the appreciation of the yen against the U.S. dollar and decreased production turnover resulting from the earthquake, the gross profit ratio for the second quarter improved by 1.0 points overall from the year-ago period, reaching 50.0% thanks to ongoing cost-cutting efforts. The gross profit ratio for the first half of the year rose 0.3 points to 49.2%. Gross profit for the second quarter totaled ¥418.5 billion (U.S.$5,167 million), a year-on-year decrease of 12.0%, and totaled ¥824.7 billion (U.S.$10,182 million) for the first six months, a year-on-year decline of 2.3%. Operating expenses decreased by ¥21.8 billion (U.S.$269 million) for the quarter owing to Group-wide efforts to thoroughly reduce spending. For the six months ended June 30, 2011, however, the amount increased by ¥20.2 billion (U.S.$249 million), mainly stemming from the new consolidation. Consequently, second-quarter operating profit decreased by 30.9% to ¥78.4 billion (U.S.$968 million) while operating profit for the first half of the year decreased by 19.7% to ¥160.9 billion (U.S.$1,987 million). Other income (deductions) achieved a turnaround of ¥4.0 billion (U.S.$49 million), while income before income taxes for the second quarter totaled ¥81.6 billion (U.S.$1,008 million), a drop of 27.5% from the year-ago period, and ¥163.7 billion (U.S.$2,020 million) for the first half, a decline of 18.8% year on year. Net income attributable to Canon Inc. decreased by 20.4% to ¥53.9 billion (U.S.$665 million) for the quarter and declined 12.2% to ¥109.3 billion (U.S.$1,350 million) for the first six months of the year.

Basic net income attributable to Canon Inc. stockholders per share for the second quarter was ¥43.99 (U.S.$0.54), a decrease of ¥10.68 (U.S.$0.13) compared with the corresponding quarter of the previous year, and ¥89.16 (U.S.$1.10) for the first half of 2011, a year-on-year decrease of ¥11.52 (U.S.$0.14).

 

- 2 -

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Results by Segment

Looking at Canon’s quarterly performance by business unit, within the Office Business Unit, despite the admirable sales performance of imageRUNNER ADVANCE-series products, sales volume of digital network MFDs decreased from the year-ago period due to the impact on production arising from parts-supply shortages following the earthquake. As for laser printers, buoyed by hearty demand, sales volume remained in line with that from the corresponding period of the previous year thanks to efforts targeting an early recovery in production and expanded sales. Consequently, second-quarter sales for the segment totaled ¥465.8 billion (U.S.$5,751 million), a drop of 10.8% year on year, reflecting the appreciation of the yen against the U.S. dollar. Likewise, operating profit for the quarter decreased by 28.6% to ¥59.8 billion (U.S.$739 million) due to the decline in gross profit accompanying reduced sales. Sales for the combined first six months of the year totaled ¥946.7 billion (U.S.$11,687 million), growing 1.7% year on year owing to the impact of the new consolidation in the previous year, while operating profit decreased by 21.2% to ¥122.9 billion (U.S.$1,517 million).

Within the Consumer Business Unit, demand for digital SLR cameras continued to display solid growth. Amid the effects of parts-supply shortages, efforts to swiftly recover production levels and boost sales of such products as the competitively priced EOS Digital Rebel-series models and the advanced-amateur-model EOS 60D, resulted in sales volume comparable to that from the corresponding year-ago period. As for compact digital cameras, despite the launch of ten new ELPH (IXUS)-series and PowerShot-series models in the first quarter, unit sales decreased from the previous year, reflecting the significant impact of parts-supply shortages. With regard to inkjet printers, although sales in emerging markets displayed solid growth, unit sales overall recorded only a slight increase as a result of price competition among market players, mainly in Europe. Accordingly, second-quarter sales for the Consumer Business Unit declined by 17.0% year on year to ¥302.2 billion (U.S.$3,731 million), affected by the appreciation of the yen against the U.S. dollar along with the shift in demand toward lower priced products. Quarterly operating profit decreased by 32.3% to ¥45.3 billion (U.S.$559 million), reflecting the decrease in gross profit accompanying the reduction in sales. Sales for the first six months totaled ¥591.8 billion (U.S.$7,307 million), a decline of 9.5% year on year, while operating profit totaled ¥85.2 billion (U.S.$1,052 million), a decrease of 25.4% year on year.

In the Industry and Others Business Unit, while semiconductor lithography equipment recorded robust unit sales in response to the rapid restoration of production facilities amid growing demand, unit sales of LCD lithography equipment dropped substantially in the face of shrinking demand for equipment to produce large-size panels which Canon boasts strong performance. Consequently, second-quarter sales for the segment decreased by 16.2% to ¥91.3 billion (U.S.$1,127 million) while operating profit totaled ¥4.8 billion (U.S.$60 million), a turnaround of ¥10.3 billion (U.S.$127 million) through the improved gross profit ratio along with efforts to curb expenses. Sales for the first half of the year totaled ¥183.0 billion (U.S.$2,260 million), a drop of 4.3% year on year, while operating profit was ¥11.4 billion (U.S.$141 million), a turnaround of ¥19.8 billion (U.S.$245 million) from the year-ago period.

Cash Flow

During the first half of 2011, cash flow from operating activities totaled ¥190.8 billion (U.S.$2,356 million), a decrease of ¥157.8 billion (U.S.$1,948 million) compared with the year-ago period, as a result of decreased sales and profit triggered by the Great East Japan Earthquake. Due to ongoing capital investment focused on higher priority items and corporate acquisition activities from the year-ago period, cash flow from investing activities decreased ¥103.7 billion (U.S.$1,280 million) year on year, totaling ¥73.3 billion (U.S.$905 million). Accordingly, free cash flow totaled ¥117.5 billion (U.S.$1,451 million), a decrease of ¥54.1 billion (U.S.$668 million) from the previous year.

Cash flow from financing activities recorded an outlay of ¥126.4 billion (U.S.$1,561 million), mainly arising from the dividend payout and repurchases of treasury stock. Owing to these factors, as well as the positive impact from foreign currency translation adjustments, cash and cash equivalents increased by ¥8.0 billion (U.S.$99 million) year on year to ¥848.6 billion (U.S.$10,477 million).

 

- 3 -

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Outlook

As for the outlook in the third quarter onward, despite increasing downward risks, the trend of moderate recovery is expected to continue. Although concerns continue for the high unemployment in the United States and the debt crises in Europe are still yet to be resolved, these economies are expected to continue to gradually improve, while such emerging economies as China and India are expected to continue realizing healthy growth. In contrast, the Japanese economy is expected to take considerable time to recover from the effects of the earthquake.

In the businesses in which Canon is involved, within the office equipment market, demand for such products as network digital MFDs and laser printers is projected to grow steadily, particularly in emerging economies. As for the consumer products market, demand for digital SLR cameras is expected to achieve robust growth while demand for compact digital cameras and inkjet printers should grow steadily. In the industry and others market, while demand for semiconductor lithography equipment will likely increase steadily for the time being, demand for LCD lithography equipment is expected to decline compared with the year-ago period.

With regard to currency exchange rates for the third quarter onward, on which Canon’s performance outlook is based, despite the uncertain prospects of such factors as the sovereign debt crises in Europe and the future interest rate policies and economic forecasts of major countries, Canon anticipates exchange rates for the period of ¥80 to the U.S. dollar and ¥115 to the euro, representing an appreciation of approximately ¥7 against the U.S. dollar and the same approximate level against the euro compared with the annual average rates of the previous year.

Although uncertainty remains over such factors as electricity shortages, upon taking into consideration the abovementioned foreign exchange rate assumptions, current economic forecasts and an expected second-half boost in sales supported by the swift recovery of production, Canon projects full-year consolidated net sales of ¥3,780.0 billion (U.S.$46,667 million), a year-on-year increase of 2.0%; operating profit of ¥380.0 billion (U.S.$4,691 million), a year-on-year decrease of 1.9%; income before income taxes of ¥380.0 billion (U.S.$4,691 million), a year-on-year decrease of 3.3%; and net income attributable to Canon Inc. of ¥260.0 billion (U.S.$3,210 million), a year-on-year increase of 5.4%.

Consolidated Outlook

 

Fiscal year		Millions of yen
		Year ending December 31, 2011								Change				Year ended December 31, 2010				Change (%)
		Previous Outlook (A)				Revised Outlook (B)				(B - A)				Results (C)				(B - C) / C
Net sales		¥	3,730,000			¥	3,780,000			¥	50,000			¥	3,706,901				+2.0%
Operating profit			335,000				380,000				45,000				387,552				-1.9%
Income before income taxes			330,000				380,000				50,000				392,863				-3.3%
Net income attributable to Canon Inc.		¥	220,000			¥	260,000			¥	40,000			¥	246,603				+5.4%

 

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Basic Policy Regarding Profit Distribution

Canon is being more proactive in returning profits to shareholders, mainly in the form of a dividend, taking into consideration medium-term profit forecasts along with planned future investments, cash flow and other factors.

Canon Inc. plans to distribute an interim dividend of ¥60.00 (U.S.$0.74) per share for the first half of fiscal 2011, half the amount of the annual dividend paid out in fiscal 2010, to provide a stable return to shareholders. The year-end dividend, however, has yet to be decided.

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

II. Financial Statements

1.  CONSOLIDATED BALANCE SHEETS

 

		Millions of yen												Thousands of U.S. dollars
		As of June 30, 2011				As of December 31, 2010				Change				As of June 30, 2011
ASSETS
Current assets:
Cash and cash equivalents		¥	848,619			¥	840,579			¥	8,040			$	10,476,778
Short-term investments			78,248				96,815				(18,567	)			966,025
Trade receivables, net			492,157				557,504				(65,347	)			6,076,012
Inventories			478,719				384,777				93,942				5,910,111
Prepaid expenses and other current assets			257,671				250,754				6,917				3,181,123
Total current assets			2,155,414				2,130,429				24,985				26,610,049
Noncurrent receivables			16,531				16,771				(240	)			204,086
Investments			61,833				81,529				(19,696	)			763,370
Property, plant and equipment, net			1,204,153				1,201,968				2,185				14,866,086
Intangible assets, net			150,404				153,021				(2,617	)			1,856,840
Other assets			406,409				400,102				6,307				5,017,396
Total assets		¥	3,994,744			¥	3,983,820			¥	10,924			$	49,317,827
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt		¥	12,360			¥	7,200			¥	5,160			$	152,593
Trade payables			392,809				383,251				9,558				4,849,494
Accrued income taxes			58,391				72,482				(14,091	)			720,877
Accrued expenses			274,584				299,710				(25,126	)			3,389,926
Other current liabilities			161,993				134,298				27,695				1,999,912
Total current liabilities			900,137				896,941				3,196				11,112,802
Long-term debt, excluding current installments			5,572				4,131				1,441				68,790
Accrued pension and severance cost			200,468				197,609				2,859				2,474,914
Other noncurrent liabilities			77,837				75,502				2,335				960,951
Total liabilities			1,184,014				1,174,183				9,831				14,617,457
Equity:
Canon Inc. stockholders’ equity:
Common stock			174,762				174,762				-				2,157,556
Additional paid-in capital			401,234				400,425				809				4,953,506
Legal reserve			57,851				57,930				(79	)			714,210
Retained earnings			2,994,227				2,965,237				28,990				36,965,765
Accumulated other comprehensive income (loss)			(371,103	)			(390,459	)			19,356				(4,581,519	)
Treasury stock, at cost			(611,856	)			(562,113	)			(49,743	)			(7,553,777	)
Total Canon Inc. stockholders’ equity			2,645,115				2,645,782				(667	)			32,655,741
Noncontrolling interests			165,615				163,855				1,760				2,044,629
Total equity			2,810,730				2,809,637				1,093				34,700,370
Total liabilities and equity		¥	3,994,744			¥	3,983,820			¥	10,924			$	49,317,827
		Millions of yen												Thousands of U.S. dollars
		As of June 30, 2011				As of December 31, 2010								As of June 30, 2011
Notes:
1. Allowance for doubtful receivables		¥	14,452			¥	14,920							$	178,420
2. Accumulated depreciation			2,016,701				1,909,703								24,897,543
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments			(305,345	)			(325,612	)							(3,769,691	)
Net unrealized gains and losses on securities			1,773				3,020								21,889
Net gains and losses on derivative instruments			463				917								5,716
Pension liability adjustments			(67,994	)			(68,784	)							(839,433	)

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME

 

Results for the second quarter		Millions of yen																Thousands of U.S. dollars
		Three months ended June 30, 2011				Three months ended June  30, 2010				Change(%)								Three months ended June 30, 2011
Net sales		¥	836,574			¥	970,358				-				13.8			$	10,328,074
Cost of sales			418,075				494,995												5,161,420
Gross profit			418,499				475,363				-				12.0				5,166,654
Operating expenses:
Selling, general and administrative expenses			264,009				280,033												3,259,370
Research and development expenses			76,079				81,892												939,247
			340,088				361,925												4,198,617
Operating profit			78,411				113,438				-				30.9				968,037
Other income (deductions):
Interest and dividend income			2,124				1,722												26,222
Interest expense			(234	)			(867	)											(2,889	)
Other, net			1,326				(1,642	)											16,371
			3,216				(787	)											39,704
Income before income taxes			81,627				112,651				-				27.5				1,007,741
Income taxes			26,207				43,858												323,543
Consolidated net income			55,420				68,793												684,198
Less: Net income attributable to noncontrolling interests			1,559				1,155												19,247
Net income attributable to Canon Inc.		¥	53,861			¥	67,638				-				20.4			$	664,951

 

Note:		Consolidated comprehensive income(loss) for the three months ended June 30, 2011 and 2010 was JPY 37,266 million (U.S.$460,074 thousand) and JPY (5,095) million , respectively.

 

Results for the first half		Millions of yen																Thousands of U.S. dollars
		Six months ended June 30, 2011				Six months ended June 30, 2010				Change(%)								Six months ended June 30, 2011
Net sales		¥	1,675,765			¥	1,725,884				-				2.9			$	20,688,457
Cost of sales			851,029				881,953												10,506,531
Gross profit			824,736				843,931				-				2.3				10,181,926
Operating expenses:
Selling, general and administrative expenses			517,649				490,825												6,390,729
Research and development expenses			146,174				152,825												1,804,617
			663,823				643,650												8,195,346
Operating profit			160,913				200,281				-				19.7				1,986,580
Other income (deductions):
Interest and dividend income			3,760				2,743												46,420
Interest expense			(672	)			(953	)											(8,296	)
Other, net			(342	)			(568	)											(4,223	)
			2,746				1,222												33,901
Income before income taxes			163,659				201,503				-				18.8				2,020,481
Income taxes			52,259				73,975												645,172
Consolidated net income			111,400				127,528												1,375,309
Less: Net income attributable to noncontrolling interests			2,077				3,079												25,642
Net income attributable to Canon Inc.		¥	109,323			¥	124,449				-				12.2			$	1,349,667

 

		Note:		Consolidated comprehensive income for the six months ended June 30, 2011 and 2010 was JPY 131,884 million (U.S.$1,628,198 thousand) and JPY 52,747 million , respectively.

 

- 7 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES

 

Results for the second quarter		Millions of yen																Thousands of U.S. dollars
Sales by business unit		Three months ended June 30, 2011				Three months ended June 30, 2010				Change(%)								Three months ended June 30, 2011
Office		¥	465,799			¥	521,943				-				10.8			$	5,750,605
Consumer			302,216				364,027				-				17.0				3,731,062
Industry and Others			91,256				108,930				-				16.2				1,126,617
Eliminations			(22,697	)			(24,542	)			-				-				(280,210	)
Total		¥	836,574			¥	970,358				-				13.8			$	10,328,074
		Millions of yen																Thousands of U.S. dollars
Sales by region		Three months ended June 30, 2011				Three months ended June 30, 2010				Change(%)								Three months ended June 30, 2011
Japan		¥	165,556			¥	170,145				-				2.7			$	2,043,901
Overseas:
Americas			230,519				269,939				-				14.6				2,845,914
Europe			268,641				310,969				-				13.6				3,316,556
Asia and Oceania			171,858				219,305				-				21.6				2,121,703
			671,018				800,213				-				16.1				8,284,173
Total		¥	836,574			¥	970,358				-				13.8			$	10,328,074
Results for the first half		Millions of yen																Thousands of U.S. dollars
Sales by business unit		Six months ended June  30, 2011				Six months ended June 30,  2010				Change(%)								Six months ended June 30, 2011
Office		¥	946,661			¥	931,077				+				1.7			$	11,687,173
Consumer			591,837				654,314				-				9.5				7,306,630
Industry and Others			183,049				191,258				-				4.3				2,259,864
Eliminations			(45,782	)			(50,765	)			-				-				(565,210	)
Total		¥	1,675,765			¥	1,725,884				-				2.9			$	20,688,457
		Millions of yen																Thousands of U.S. dollars
Sales by region		Six months ended June  30, 2011				Six months ended June 30,  2010				Change(%)								Six months ended June 30, 2011
Japan		¥	323,604			¥	337,661				-				4.2			$	3,995,111
Overseas:
Americas			447,053				474,494				-				5.8				5,519,173
Europe			548,594				541,647				+				1.3				6,772,765
Asia and Oceania			356,514				372,082				-				4.2				4,401,408
			1,352,161				1,388,223				-				2.6				16,693,346
Total		¥	1,675,765			¥	1,725,884				-				2.9			$	20,688,457

Notes: 1. The primary products included in each of the segments are as follows:

Office:		Office network digital multifunction devices (MFDs) / Color network digital MFDs / Personal-use network digital MFDs / Office copying machines / Full-color copying machines / Personal-use copying machines / Laser printers / Large format inkjet printers / Digital production printers

Consumer:		Digital SLR cameras / Compact digital cameras / Interchangeable lenses / Digital video camcorders / Inkjet multifunction printers / Single function inkjet printers / Image scanners / Broadcast equipment / Calculators

Industry and Others :		Semiconductor lithography equipment / LCD lithography equipment / Medical image recording equipment /Ophthalmic products / Magnetic heads / Micromotors / Computers / Handy terminals / Document scanners

               2. The principal countries and regions included in each regional category are as follows:

Americas:		United States of America, Canada, Latin America / Europe: United Kingdom, Germany, France, Netherlands /Asia and Oceania: China, Asian countries, Australia

 

- 8 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4.  CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Millions of yen								Thousands of U.S. dollars
		Six months ended June 30, 2011				Six months ended June 30, 2010				Six months ended June 30, 2011
Cash flows from operating activities:
Consolidated net income		¥	111,400			¥	127,528			$	1,375,309
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			127,587				125,968				1,575,148
Loss on disposal of fixed assets			4,914				4,597				60,667
Deferred income taxes			(1,627	)			4,911				(20,086	)
Decrease in trade receivables			91,225				15,598				1,126,235
Increase in inventories			(83,978	)			(49,876	)			(1,036,765	)
Increase (decrease) in trade payables			(9,859	)			87,995				(121,716	)
Increase (decrease) in accrued income taxes			(14,803	)			19,734				(182,753	)
Decrease in accrued expenses			(32,986	)			(24,228	)			(407,235	)
Increase (decrease) in accrued (prepaid) pension and severance cost			(300	)			2,605				(3,704	)
Other, net			(748	)			33,743				(9,236	)
Net cash provided by operating activities			190,825				348,575				2,355,864
Cash flows from investing activities:
Purchases of fixed assets			(104,307	)			(96,783	)			(1,287,741	)
Proceeds from sale of fixed assets			616				1,306				7,605
Purchases of available-for-sale securities			(540	)			(9,028	)			(6,667	)
Proceeds from sale and maturity of available-for-sale securities			1,469				24				18,136
(Increase) decrease in time deposits, net			17,729				(16,840	)			218,877
Acquisitions of subsidiaries, net of cash acquired			17				(55,533	)			210
Purchases of other investments			(127	)			(505	)			(1,568	)
Other, net			11,835				377				146,111
Net cash used in investing activities			(73,308	)			(176,982	)			(905,037	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			593				3,107				7,321
Repayments of long-term debt			(2,345	)			(2,751	)			(28,951	)
Increase (decrease) in short-term loans, net			6,582				(76,661	)			81,259
Dividends paid			(79,850	)			(67,897	)			(985,802	)
Repurchases of treasury stock, net			(49,843	)			(5,022	)			(615,346	)
Other, net			(1,571	)			(1,381	)			(19,395	)
Net cash used in financing activities			(126,434	)			(150,605	)			(1,560,914	)
Effect of exchange rate changes on cash and cash equivalents			16,957				(44,325	)			209,346
Net change in cash and cash equivalents			8,040				(23,337	)			99,259
Cash and cash equivalents at beginning of period			840,579				795,034				10,377,519
Cash and cash equivalents at end of period		¥	848,619			¥	771,697			$	10,476,778

 

- 9 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. NOTE FOR GOING CONCERN ASSUMPTION

      Not applicable.

6. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY BUSINESS UNIT

 

Results for the second quarter				Millions of yen												Thousands of U.S. dollars
				Three months ended June 30, 2011				Three months ended June 30, 2010				Change(%)				Three months ended June 30, 2011
Office
Net sales:
		External customers		¥	464,301			¥	521,061			-	10.9			$	5,732,111
		Intersegment			1,498				882			+	69.8				18,494
		Total			465,799				521,943			-	10.8				5,750,605
Operating cost and expenses					405,957				438,159			-	7.3				5,011,815
Operating profit				¥	59,842			¥	83,784			-	28.6			$	738,790
Consumer
Net sales:
		External customers		¥	301,993			¥	363,562			-	16.9			$	3,728,309
		Intersegment			223				465			-	52.0				2,753
		Total			302,216				364,027			-	17.0				3,731,062
Operating cost and expenses					256,901				297,094			-	13.5				3,171,618
Operating profit				¥	45,315			¥	66,933			-	32.3			$	559,444
Industry and Others
Net sales:
		External customers		¥	70,280			¥	85,735			-	18.0			$	867,654
		Intersegment			20,976				23,195			-	9.6				258,963
		Total			91,256				108,930			-	16.2				1,126,617
Operating cost and expenses					86,422				114,354			-	24.4				1,066,938
Operating profit (loss)				¥	4,834			¥	(5,424	)			-			$	59,679
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(22,697	)			(24,542	)			-				(280,210	)
		Total			(22,697	)			(24,542	)			-				(280,210	)
Operating cost and expenses					8,883				7,313				-				109,666
Operating profit				¥	(31,580	)		¥	(31,855	)			-			$	(389,876	)
Consolidated
Net sales:
		External customers		¥	836,574			¥	970,358			-	13.8			$	10,328,074
		Intersegment			-				-				-				-
		Total			836,574				970,358			-	13.8				10,328,074
Operating cost and expenses					758,163				856,920			-	11.5				9,360,037
Operating profit				¥	78,411			¥	113,438			-	30.9			$	968,037

 

- 10 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the first half				Millions of yen												Thousands of U.S. dollars
				Six months ended June 30, 2011				Six months ended June 30, 2010				Change(%)				Six months ended June 30, 2011
Office
Net sales:
		External customers		¥	943,352			¥	926,577			+	1.8			$	11,646,321
		Intersegment			3,309				4,500			-	26.5				40,852
		Total			946,661				931,077			+	1.7				11,687,173
Operating cost and expenses					823,767				775,206			+	6.3				10,169,963
Operating profit				¥	122,894			¥	155,871			-	21.2			$	1,517,210
Consumer
Net sales:
		External customers		¥	591,361			¥	653,291			-	9.5			$	7,300,753
		Intersegment			476				1,023			-	53.5				5,877
		Total			591,837				654,314			-	9.5				7,306,630
Operating cost and expenses					506,613				540,048			-	6.2				6,254,482
Operating profit				¥	85,224			¥	114,266			-	25.4			$	1,052,148
Industry and Others
Net sales:
		External customers		¥	141,052			¥	146,016			-	3.4			$	1,741,383
		Intersegment			41,997				45,242			-	7.2				518,481
		Total			183,049				191,258			-	4.3				2,259,864
Operating cost and expenses					171,612				199,637			-	14.0				2,118,666
Operating profit (loss)				¥	11,437			¥	(8,379)				-			$	141,198
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(45,782)				(50,765)				-				(565,210)
		Total			(45,782)				(50,765)				-				(565,210)
Operating cost and expenses					12,860				10,712				-				158,766
Operating profit				¥	(58,642)			¥	(61,477)				-			$	(723,976)
Consolidated
Net sales:
		External customers		¥	1,675,765			¥	1,725,884			-	2.9			$	20,688,457
		Intersegment			-				-				-				-
		Total			1,675,765				1,725,884			-	2.9				20,688,457
Operating cost and expenses					1,514,852				1,525,603			-	0.7				18,701,877
Operating profit				¥	160,913			¥	200,281			-	19.7			$	1,986,580

 

- 11 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2)  SEGMENT INFORMATION BY GEOGRAPHIC AREA

 

Results for the second quarter				Millions of yen												Thousands of U.S. dollars
				Three months ended June 30, 2011				Three months ended June 30, 2010				Change(%)				Three months ended June 30, 2011
Japan
Net sales:
		External customers		¥	181,418			¥	215,079			-	15.7			$	2,239,728
		Intersegment			435,167				518,487			-	16.1				5,372,432
		Total			616,585				733,566			-	15.9				7,612,160
Operating cost and expenses					520,779				618,506			-	15.8				6,429,370
Operating profit				¥	95,806			¥	115,060			-	16.7			$	1,182,790
Americas
Net sales:
		External customers		¥	228,738			¥	265,607			-	13.9			$	2,823,926
		Intersegment			3,948				788			+	401.0				48,741
		Total			232,686				266,395			-	12.7				2,872,667
Operating cost and expenses					229,321				258,837			-	11.4				2,831,124
Operating profit				¥	3,365			¥	7,558			-	55.5			$	41,543
Europe
Net sales:
		External customers		¥	267,776			¥	309,486			-	13.5			$	3,305,877
		Intersegment			1,129				932			+	21.1				13,938
		Total			268,905				310,418			-	13.4				3,319,815
Operating cost and expenses					261,581				297,294			-	12.0				3,229,395
Operating profit				¥	7,324			¥	13,124			-	44.2			$	90,420
Asia and Oceania
Net sales:
		External customers		¥	158,642			¥	180,186			-	12.0			$	1,958,543
		Intersegment			149,572				184,022			-	18.7				1,846,568
		Total			308,214				364,208			-	15.4				3,805,111
Operating cost and expenses					298,305				350,070			-	14.8				3,682,778
Operating profit				¥	9,909			¥	14,138			-	29.9			$	122,333
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(589,816	)			(704,229	)			-				(7,281,679	)
		Total			(589,816	)			(704,229	)			-				(7,281,679	)
Operating cost and expenses					(551,823	)			(667,787	)			-				(6,812,630	)
Operating profit				¥	(37,993	)		¥	(36,442	)			-			$	(469,049	)
Consolidated
Net sales:
		External customers		¥	836,574			¥	970,358			-	13.8			$	10,328,074
		Intersegment			-				-				-				-
		Total			836,574				970,358			-	13.8				10,328,074
Operating cost and expenses					758,163				856,920			-	11.5				9,360,037
Operating profit				¥	78,411			¥	113,438			-	30.9			$	968,037

 

- 12 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the first half				Millions of yen												Thousands of U.S. dollars
				Six months ended June 30, 2011				Six months ended June 30, 2010				Change(%)				Six months ended June 30, 2011
Japan
Net sales:
		External customers		¥	358,894			¥	404,462			-	11.3			$	4,430,790
		Intersegment			878,099				952,682			-	7.8				10,840,729
		Total			1,236,993				1,357,144			-	8.9				15,271,519
Operating cost andexpenses					1,054,653				1,146,939			-	8.0				13,020,408
Operating profit				¥	182,340			¥	210,205			-	13.3			$	2,251,111
Americas
Net sales:
		External customers		¥	444,415			¥	466,654			-	4.8			$	5,486,605
		Intersegment			7,061				1,112			+	535.0				87,173
		Total			451,476				467,766			-	3.5				5,573,778
Operating cost andexpenses					447,066				456,262			-	2.0				5,519,334
Operating profit				¥	4,410			¥	11,504			-	61.7			$	54,444
Europe
Net sales:
		External customers		¥	545,489			¥	538,336			+	1.3			$	6,734,432
		Intersegment			2,011				2,188			-	8.1				24,827
		Total			547,500				540,524			+	1.3				6,759,259
Operating cost andexpenses					528,857				520,566			+	1.6				6,529,099
Operating profit				¥	18,643			¥	19,958			-	6.6			$	230,160
Asia and Oceania
Net sales:
		External customers		¥	326,967			¥	316,432			+	3.3			$	4,036,630
		Intersegment			335,430				335,783			-	0.1				4,141,111
		Total			662,397				652,215			+	1.6				8,177,741
Operating cost andexpenses					638,212				627,262			+	1.7				7,879,161
Operating profit				¥	24,185			¥	24,953			-	3.1			$	298,580
Corporate andEliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(1,222,601	)			(1,291,765	)			-				(15,093,840	)
		Total			(1,222,601	)			(1,291,765	)			-				(15,093,840	)
Operating cost andexpenses					(1,153,936	)			(1,225,426	)			-				(14,246,125	)
Operating profit				¥	(68,665	)		¥	(66,339	)			-			$	(847,715	)
Consolidated
Net sales:
		External customers		¥	1,675,765			¥	1,725,884			-	2.9			$	20,688,457
		Intersegment			-				-				-				-
		Total			1,675,765				1,725,884			-	2.9				20,688,457
Operating cost andexpenses					1,514,852				1,525,603			-	0.7				18,701,877
Operating profit				¥	160,913			¥	200,281			-	19.7			$	1,986,580

 

- 13 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

7. SIGNIFICANT CHANGES IN CANON INC. STOCKHOLDERS’ EQUITY

    Not applicable.

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

 

1.

Number of Group Companies

 

		June 30, 2011				December 31, 2010				Change
Subsidiaries			297				294				3
Affiliates			13				14				(1	)
Total			310				308				2

 

2.

Change in Group Entities

 

Subsidiaries
Addition:		6 companies
Removal:		3 companies
Affiliates(Carried at Equity Basis)
Removal:		1 company

 

3.

Subsidiaries Listed on Domestic Stock Exchange

 

Tokyo Stock Exchange (1st section): Canon Marketing Japan Inc., Canon Electronics Inc.
Osaka Stock Exchange (2nd section): ELK CORPORATION

(2) SIGNIFICANT ACCOUNTING POLICIES

Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.

 

- 14 -

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Canon Inc.

July 25, 2011

CONSOLIDATED FINANCIAL RESULTS FOR THE SECOND QUARTER

AND THE FIRST HALF ENDED JUNE 30, 2011

SUPPLEMENTARY REPORT

TABLE OF CONTENTS

 

				PAGE
1.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT		S    1
2.		SEGMENT INFORMATION BY BUSINESS UNIT		S    2
3.		OTHER INCOME / DEDUCTIONS		S    2
4.		BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT		S    3
5.		SALES GROWTH IN LOCAL CURRENCY (Year over year)		S    3
6.		PROFITABILITY		S    4
7.		IMPACT OF FOREIGN EXCHANGE RATES		S    4
8.		STATEMENTS OF CASH FLOWS		S    4
9.		R&D EXPENDITURE		S    5
10.		INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION		S    5
11.		INVENTORIES		S    5
12.		DEBT RATIO		S    5
13.		OVERSEAS PRODUCTION RATIO		S    5
14.		NUMBER OF EMPLOYEES		S    5

 

---

Canon Inc.

1. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT

(Millions of yen)

 

				2011												2010														Change year over year
				2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year						2nd quarter				1st half				Year
Japan
		Office			88,398				179,457				-				96,246				191,760				376,928						-8.2	%			-6.4	%			-
		Consumer			41,142				79,774				-				50,454				96,631				216,509						-18.5	%			-17.4	%			-
		Industry and Others			36,016				64,373				-				23,445				49,270				102,312						+53.6	%			+30.7	%			-
		Total			165,556				323,604				715,100				170,145				337,661				695,749						-2.7	%			-4.2	%			+2.8	%
Overseas
		Office			375,903				763,895				-				424,815				734,817				1,602,017						-11.5	%			+4.0	%			-
		Consumer			260,851				511,587				-				313,108				556,660				1,173,113						-16.7	%			-8.1	%			-
		Industry and Others			34,264				76,679				-				62,290				96,746				236,022						-45.0	%			-20.7	%			-
		Total			671,018				1,352,161				3,064,900				800,213				1,388,223				3,011,152						-16.1	%			-2.6	%			+1.8	%
		Americas
		Office			143,334				285,744				-				155,172				274,729				601,090						-7.6	%			+4.0	%			-
		Consumer			77,042				143,178				-				104,403				180,568				379,522						-26.2	%			-20.7	%			-
		Industry and Others			10,143				18,131				-				10,364				19,197				42,687						-2.1	%			-5.6	%			-
		Total			230,519				447,053				992,200				269,939				474,494				1,023,299						-14.6	%			-5.8	%			-3.0	%
		Europe
		Office			169,018				351,198				-				197,298				335,150				733,216						-14.3	%			+4.8	%			-
		Consumer			93,428				183,179				-				106,390				192,573				407,994						-12.2	%			-4.9	%			-
		Industry and Others			6,195				14,217				-				7,281				13,924				31,264						-14.9	%			+2.1	%			-
		Total			268,641				548,594				1,207,500				310,969				541,647				1,172,474						-13.6	%			+1.3	%			+3.0	%
		Asia and Oceania
		Office			63,551				126,953				-				72,345				124,938				267,711						-12.2	%			+1.6	%			-
		Consumer			90,381				185,230				-				102,315				183,519				385,597						-11.7	%			+0.9	%			-
		Industry and Others			17,926				44,331				-				44,645				63,625				162,071						-59.8	%			-30.3	%			-
		Total			171,858				356,514				865,200				219,305				372,082				815,379						-21.6	%			-4.2	%			+6.1	%
Intersegment
		Office			1,498				3,309				-				882				4,500				8,324						+69.8	%			-26.5	%			-
		Consumer			223				476				-				465				1,023				1,705						-52.0	%			-53.5	%			-
		Industry and Others			20,976				41,997				-				23,195				45,242				94,624						-9.6	%			-7.2	%			-
		Eliminations			(22,697	)			(45,782	)			-				(24,542	)			(50,765	)			(104,653	)					-				-				-
		Total			0				0				0				0				0				0						-				-				-
Total
		Office			465,799				946,661				2,029,000				521,943				931,077				1,987,269						-10.8	%			+1.7	%			+2.1	%
		Consumer			302,216				591,837				1,416,700				364,027				654,314				1,391,327						-17.0	%			-9.5	%			+1.8	%
		Industry and Others			91,256				183,049				403,600				108,930				191,258				432,958						-16.2	%			-4.3	%			-6.8	%
		Eliminations			(22,697	)			(45,782	)			(69,300	)			(24,542	)			(50,765	)			(104,653	)					-				-				-
		Total			836,574				1,675,765				3,780,000				970,358				1,725,884				3,706,901						-13.8	%			-2.9	%			+2.0	%

(P)=Projection

 

- S1 -

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Canon Inc.

2. SEGMENT INFORMATION BY BUSINESS UNIT

		(Millions of yen)
				2011												2010														Change year over year
				2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year						2nd quarter				1st half				Year
Office
		External customers			464,301				943,352				2,019,200				521,061				926,577				1,978,945						-10.9%				+1.8%				+2.0%
		Intersegment			1,498				3,309				9,800				882				4,500				8,324						+69.8%				-26.5%				+17.7%
		Total sales			465,799				946,661				2,029,000				521,943				931,077				1,987,269						-10.8%				+1.7%				+2.1%
		Operating profit			59,842				122,894				257,000				83,784				155,871				293,322						-28.6%				-21.2%				-12.4%
		% of sales			12.8%				13.0%				12.7%				16.1%				16.7%				14.8%						-				-				-
Consumer
		External customers			301,993				591,361				1,415,500				363,562				653,291				1,389,622						-16.9%				-9.5%				+1.9%
		Intersegment			223				476				1,200				465				1,023				1,705						-52.0%				-53.5%				-29.6%
		Total sales			302,216				591,837				1,416,700				364,027				654,314				1,391,327						-17.0%				-9.5%				+1.8%
		Operating profit			45,315				85,224				234,800				66,933				114,266				238,065						-32.3%				-25.4%				-1.4%
		% of sales			15.0%				14.4%				16.6%				18.4%				17.5%				17.1%						-				-				-
Industry and Others
		External customers			70,280				141,052				345,300				85,735				146,016				338,334						-18.0%				-3.4%				+2.1%
		Intersegment			20,976				41,997				58,300				23,195				45,242				94,624						-9.6%				-7.2%				-38.4%
		Total sales			91,256				183,049				403,600				108,930				191,258				432,958						-16.2%				-4.3%				-6.8%
		Operating profit			4,834				11,437				26,500				(5,424	)			(8,379	)			(9,831	)					-				-				-
		% of sales			5.3%				6.2%				6.6%				-5.0%				-4.4%				-2.3%						-				-				-
Corporate and Eliminations
		External customers			-				-				-				-				-				-						-				-				-
		Intersegment			(22,697	)			(45,782	)			(69,300	)			(24,542	)			(50,765	)			(104,653	)					-				-				-
		Total sales			(22,697	)			(45,782	)			(69,300	)			(24,542	)			(50,765	)			(104,653	)					-				-				-
		Operating profit			(31,580	)			(58,642	)			(138,300	)			(31,855	)			(61,477	)			(134,004	)					-				-				-
Consolidated
		External customers			836,574				1,675,765				3,780,000				970,358				1,725,884				3,706,901						-13.8%				-2.9%				+2.0%
		Intersegment			-				-				-				-				-				-						-				-				-
		Total sales			836,574				1,675,765				3,780,000				970,358				1,725,884				3,706,901						-13.8%				-2.9%				+2.0%
		Operating profit			78,411				160,913				380,000				113,438				200,281				387,552						-30.9%				-19.7%				-1.9%
		% of sales			9.4%				9.6%				10.1%				11.7%				11.6%				10.5%						-				-				-
		(P)=Projection
3. OTHER INCOME / DEDUCTIONS
		(Millions of yen)
				2011												2010														Change year over year
				2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year						2nd quarter				1st half				Year
		Interest and dividend, net			1,890				3,088				4,800				855				1,790				4,091						+1,035				+1,298				+709
		Forex gain (loss)			(2,056	)			837				(1,400	)			(551	)			2,195				3,089						(1,505	)			(1,358	)			(4,489	)
		Equity earnings (loss) of affiliated companies			(2,499	)			(5,377	)			(7,800	)			16,056				12,875				10,471						(18,555	)			(18,252	)			(18,271	)
		Other, net			5,881				4,198				4,400				(17,147	)			(15,638	)			(12,340	)					+23,028				+19,836				+16,740
		Total			3,216				2,746				0				(787	)			1,222				5,311						+4,003				+1,524				(5,311	)
		(P)=Projection

 

- S2 -

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Canon Inc.

4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT

			2nd quarter				2nd quarter				2nd quarter				2nd quarter				2nd quarter				2nd quarter
		2011												2010
		2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year
Office
Monochrome copiers			15	%			15	%			15	%			15	%			16	%			15	%
Color copiers			17	%			17	%			17	%			17	%			18	%			17	%
Other printing devices			47	%			47	%			48	%			49	%			51	%			50	%
Others			21	%			21	%			20	%			19	%			15	%			18	%
Consumer
Cameras			69	%			69	%			71	%			71	%			69	%			70	%
Inkjet printers			26	%			26	%			24	%			23	%			24	%			24	%
Others			5	%			5	%			5	%			6	%			7	%			6	%
Industry and Others
Lithography equipment			15	%			17	%			21	%			28	%			20	%			23	%
Others			85	%			83	%			79	%			72	%			80	%			77	%

(P)=Projection

5. SALES GROWTH IN LOCAL CURRENCY (Year over year)

		2nd quarter			2nd quarter				2nd quarter				2nd quarter
				2011
				2nd quarter				1st half				Year (P)
Office
		Japan			-8.2	%			-6.4	%			-
		Overseas			-5.5	%			+11.8	%			-
		Total			-5.8	%			+7.9	%			+5.7%
Consumer
		Japan			-18.5	%			-17.4	%			-
		Overseas			-11.7	%			-1.2	%			-
		Total			-12.7	%			-3.7	%			+4.9%
Industry and Others
		Japan			+53.6	%			+30.7	%			-
		Overseas			-42.9	%			-17.6	%			-
		Total			-15.0	%			-2.7	%			-6.0%
Total
		Japan			-2.7	%			-4.2	%			+2.8%
		Overseas			-10.8	%			+4.6	%			+5.7%
		Americas			-5.0	%			+3.8	%			+3.6%
		Europe			-12.1	%			+7.0	%			+4.9%
		Asia and Oceania			-16.3	%			+2.0	%			+9.6%
		Total			-9.4	%			+2.9	%			+5.2%

		2nd quarter		2nd quarter			2nd quarter
							(P	)=Projection

 

- S3 -

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Canon Inc.

6. PROFITABILITY

		2011								2010
		1st half				Year (P)				1st half				Year
ROE *1			8.3	%			9.7	%			9.2	%			9.2	%
ROA *2			5.5	%			6.4	%			6.3	%			6.3	%

(P)=Projection                                             

*1 Based on Net Income attributable to Canon Inc. and Total Canon Inc. Stockholders’ Equity

*2 Based on Net Income attributable to Canon Inc.

7. IMPACT OF FOREIGN EXCHANGE RATES

(1) Exchange rates                                                                                                                                                                                                                                (Yen)

		2011												2010
		1st half				2nd half (P)				Year (P)				1st half				Year
Yen/US$			81.92				80.00				80.86				91.35				87.40
Yen/Euro			114.95				115.00				114.97				120.20				114.97

(P)=Projection

 

(2) Impact of foreign exchange rates on sales (Year over year)				(Billions of yen)
				2011
				1st half				Year (P)
US$					(62.0	)			(95.3	)
Euro					(17.8	)			(3.1	)
Other currencies					(5.5	)			(1.3	)
		Total			(85.3	)			(99.7	)

(P)=Projection                                                                        

 

(3) Impact of foreign exchange rates per yen				(Billions of yen)
				2011
				2nd half (P)
On sales
		US$			10.2
		Euro			5.3
On operating profit
		US$			4.8
		Euro			3.0
					(P)=Projection

 

8. STATEMENTS OF CASH FLOWS

(Millions of yen)

		2011								2010
		1st half				Year (P)				1st half				Year
Net cash provided by operating activities			190,825				510,000				348,575				744,413
Net cash used in investing activities			(73,308	)			(360,000	)			(176,982	)			(342,133	)
Free cash flow			117,517				150,000				171,593				402,280
Net cash used in financing activities			(126,434	)			(200,600	)			(150,605	)			(279,897	)
Effect of exchange rate changes on cash and cash equivalents			16,957				10,000				(44,325	)			(76,838	)
Net change in cash and cash equivalents			8,040				(40,600	)			(23,337	)			45,545
Cash and cash equivalents at end of period			848,619				800,000				771,697				840,579

(P)=Projection                         

 

- S4 -

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Canon Inc.

 

9. R&D EXPENDITURE		(Millions of yen)

				2011								2010
				1st half				Year (P)				1st half				Year
Office					50,580				-				44,127				96,156
Consumer					38,943				-				40,498				82,843
Industry and Others					10,767				-				10,083				21,062
Corporate and Eliminations					45,884				-				58,117				115,756
		Total			146,174				320,000				152,825				315,817
		% of sales			8.7%				8.5%				8.9%				8.5%
													(P)=Prection
10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION				(Millions of yen)
				2011								2010
				1st half				Year (P)				1st half				Year
		Increase in PP&E			99,750				260,000				70,051				158,976
		Depreciation and amortization			127,587				300,000				125,968				276,193
																	(P)=Projection
11. INVENTORIES
(1) Inventories				(Millions of yen)
				2011				2010				Difference
				Jun.30				Dec.31
Office					214,288				186,817				+27,471
Consumer					134,220				107,261				+26,959
Industry and Others					130,211				90,699				+39,512
		Total			478,719				384,777				+93,942
(2) Inventory turnover*				(Days)
				2011				2010				Difference
				Jun.30				Dec.31
		Office			41				32				+9
		Consumer			41				27				+14
		Industry and Others			173				88				+85
		Total			52				35				+17
		*Index based on the previous six months sales.
12. DEBT RATIO
				2011				2010				Difference
				Jun.30				Dec.31
		Total debt / Total assets			0.4	%			0.3	%			+0.1	%
13. OVERSEAS PRODUCTION RATIO
				2011				2010
				1st half				Year
		Overseas production ratio			52	%			49	%
14. NUMBER OF EMPLOYEES
				2011				2010				Difference
				Jun.30				Dec.31
		Japan			71,324				71,954				(630)
		Overseas			127,248				125,432				+1,816
		Total			198,572				197,386				+1,186

 

- S5 -