Edgar Filing: CANON INC

Form 6-K

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 .....January................................................................. , 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-....................

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.


		CANON INC.
		(Registrant)

Date.... January 27, 2011...		By....../s/...... Masashiro Kobayashi .............
Date.... January 27, 2011...		(Signature)*



		Masashiro Kobayashi General Manager Global Finance Management Center Canon Inc.

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

The following materials are included.

CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR ENDED DECEMBER 31, 2010

RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2010

January 27, 2011

CONSOLIDATED RESULTS


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

	Actual								Projected
	Year ended		Year ended			Change(%)	Year ended		Year ending		Change(%)
	December 31, 2010		December 31, 2009			Change(%)	December 31, 2010		December 31, 2011		Change(%)

Net sales	¥	3,706,901	¥	3,209,201	+	15.5	$	45,764,210	¥	4,100,000	+	10.6
Operating profit		387,552		217,055	+	78.6		4,784,593		470,000	+	21.3
Income before income taxes		392,863		219,355	+	79.1		4,850,160		470,000	+	19.6
Net income attributable to Canon Inc.
	¥	246,603	¥	131,647	+	87.3	$	3,044,481	¥	310,000	+	25.7


Net income attributable to Canon Inc. stockholders per share:
- Basic	¥	199.71	¥	106.64	+	87.3	$	2.47	¥	252.35	+	26.4
- Diluted		199.70		106.64	+	87.3		2.47		-		-



	Actual
	As of		As of		Change(%)		As of
	December 31, 2010		December 31, 2009		Change(%)		December 31, 2010

Total assets	¥	3,983,820	¥	3,847,557	+	3.5	$	49,182,963

Canon Inc. stockholders’ equity	¥	2,645,782	¥	2,688,109	-	1.6	$	32,663,975


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 JPY 81= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2010, solely for the convenience of the reader.

NON-CONSOLIDATED RESULTS

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

Actual

Year ended

Year ended

Change(%)

Year ended

December 31, 2010

December 31, 2009

December 31, 2010

Net sales

2,317,043

2,025,546

14.4

28,605,469

Operating profit

240,365

97,777

145.8

2,967,469

Ordinary profit

274,742

142,684

92.6

3,391,877

Net income

152,498

80,778

88.8

1,882,691

Net income per share:

- Basic

123.50

65.44

88.7

1.52

- Diluted

123.49

65.43

88.7

1.52

Dividend per share

120.00

110.00

9.1

1.48

Actual

As of

As of

Change(%)

As of

December 31, 2010

December 31, 2009

December 31, 2010

Total assets

2,603,429

2,551,100

2.1

32,141,099

Net assets

1,811,901

1,812,718

0.0

22,369,148

Note:

U.S. dollar amounts are translated from yen at the rate of JPY 81= U.S.$1, the approximate exchange rate on the Tokyo Foreign
Exchange Market as of December 30, 2010, 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 -

I. Operating Results and Financial Conditions

2010 Fourth Quarter in Review

Looking back at the global economy in 2010, economic conditions continued to improve broadly throughout the world, led by the economic growth of such emerging markets as China and India. In the United States, despite the unemployment rate remaining at a relatively high level and other concerns, economic conditions continued to recover gradually thanks in part to economic measures by the government. As for Europe, in spite of lingering financial and employment concerns along with the emergence of financial crises in some countries, the region overall managed to realize a recovery. China, which quickly recovered its growth pace through major economic stimulus measures, and the rest of Asia, along with other emerging nations, continued to achieve economic expansion. And in Japan, although signs began to appear indicating a turnaround, the recovery came to a standstill at the end of 2010 due to prolonged deflation and other factors.

As for the markets in which Canon operates amid these conditions, within the office equipment market, demand for network digital multifunction devices (MFDs) recovered, mainly for color models, while laser printers also realized a steady rebound compared with the previous year. As for the consumer products market, demand for digital single-lens reflex (SLR) cameras maintained healthy growth across global markets. As for compact digital cameras, although sales were sluggish in developed countries, demand in emerging markets grew favorably resulting in a slight increase overall. With regard to inkjet printers, demand continued on a track to recovery. In the industry and others market, demand for semiconductor lithography equipment and liquid crystal display (LCD) lithography equipment grew steadily, owing to improved investment by semiconductor device and LCD panel manufacturers.

The average value of the yen during the year was ¥87.40 against the U.S. dollar, a year-on-year appreciation of approximately ¥6, and ¥114.97 against the euro, a year-on-year appreciation of approximately ¥15.

Amid the impact of the sharp appreciation of the yen, net sales for the year totaled ¥3,706.9 billion (U.S.$45,764 million), an increase of 15.5% from the previous year, owing to a substantial recovery in sales of laser printers among office products, continued robust sales of such consumer products as digital SLR cameras, the increase in sales within the industry and others segment, and the effects of consolidation arising from corporate acquisitions, such as that of Océ N.V. Although the strong yen had a significant impact, the gross profit ratio rose 3.6 points year on year to 48.1% mainly reflecting the launch of new products and ongoing cost-cutting efforts, along with heightened production turnover accompanying ramped-up production. As a result, gross profit rose by 24.9% to ¥1,783.1 billion (U.S.$22,104 million) for the year. Despite the impact of consolidation, continued Group-wide efforts to thoroughly reduce spending contributed to an operating expenses to sales ratio of 37.6% for the year, an improvement of 0.1 points. Consequently, operating profit recorded growth of 78.6% to ¥387.6 billion (U.S.$4,785 million) for the year. Other income (deductions) recorded an increase of ¥3 billion (U.S.$37 million) due to an improvement in equity earnings of affiliated companies, leading to income before income taxes for the year of ¥392.9 billion (U.S.$4,851 million), an increase of 79.1% year on year. Net income attributable to Canon Inc. grew by 87.3% to ¥246.6 billion (U.S.$3,044 million) for the year.

Basic net income attributable to Canon Inc. stockholders per share for the year was ¥199.71 (U.S.$2.47), an increase of ¥93.07 (U.S.$1.15) compared with the previous year.

- 2 -

Results by Segment

Looking at Canon’s quarterly performance by business sector, within the Office Business Unit, sales volume of both color and monochrome network digital MFDs increased, boosted by the recovery in demand for office equipment along with the introduction of new imageRUNNER ADVANCE-series products.

Laser printers, which suffered sluggish sales in the previous year, recorded a substantial increase in sales volume. Consequently, despite the effects of the strong appreciation of the yen, the sales for the segment totaled ¥1,987.3 billion (U.S.$24,534 million), growing 20.8% year on year. Operating profit increased by 27.9% to ¥293.3 billion (U.S.$3,621 million) for the year, mainly as a result of expanded sales and the rise in the gross profit ratio.

Within the Consumer Business Unit, sales volumes increased significantly for such digital SLR cameras as EOS Digital Rebel T1i (EOS 500D) and the new EOS Digital Rebel T2i (EOS 550D) the competitively priced models, along with the EOS 5D Mark II, EOS 7D and the new EOS 60D advanced-amateur models. As for compact digital cameras, the Company launched five new ELPH (IXUS)-series models and seven new PowerShot-series models, boosting sales volumes particularly in emerging markets.

With respect to inkjet printers, sales volume increased from the year-ago level, fueled by healthy sales growth, particularly in Asia. As a result, despite the strong yen, sales for the segment rose 6.9% year on year to ¥1,391.3 billion (U.S.$17,177 million), while operating profit increased by 29.7% to ¥238.1 billion (U.S.$2,939 million) , largely reflecting increased sales and gross profit ratio.

In the Industry and Others Business Unit, in addition to an appreciable increase in sales volume of LCD lithography equipment and a rebound in sales volume of semiconductor lithography, semiconductor-related independent business sales by Group subsidiaries also grew, resulting in an increase in sales for the segment of 20.9% to ¥433.0 billion (U.S.$5,345 million) for the year. Operating loss totaled ¥9.8 billion (U.S.$121 million) for the year, despite a turnaround of ¥66.1 billion (U.S.$816 million), made possible through increased sales and an improved gross profit ratio.

Cash Flow

During the year 2010, cash flows from operating activities totaled ¥744.4billion (U.S.$9,190 million), an increase of ¥133.2 billion (U.S.$1,644 million) from the previous year, mainly due to the significant increase of profit. Although investments, such as for the acquisition of shares of Océ N.V., increased substantially, purchases of fixed assets decreased, which led to a year-on-year decrease in cash flows from investing activities of ¥28.1 billion (U.S.$347 million) to ¥342.1 billion (U.S.$4,223 million). Accordingly, free cash flows totaled ¥402.3 billion (U.S.$4,967 million), an increase of ¥161.3 billion (U.S.$1,991 million) from the corresponding previous year.

Cash flows from financing activities recorded an outlay of ¥279.9billion (U.S.$3,456 million), mainly arising from the dividend payout of ¥136.1billion (U.S.$1,680 million), repurchases of treasury stock, and the repayment of substantially all borrowings of Océ N.V. Consequently, cash and cash equivalents increased by ¥45.5 billion (U.S.$562 million) to ¥840.6 billion (U.S.$10,378 million) from the end of the previous year despite foreign currency translation adjustments stemming from the strong yen.

Non-consolidated Results

Non-consolidated net sales totaled ¥2,317.0 billion (U.S.$28,605 million), a year-on-year increase of 14.4%, ordinary profit increased by 92.6% to ¥274.7 billion (U.S.$3,391 million), and net income increased by 88.8% to ¥152.5 billion (U.S.$1,883 million).

- 3 -

Outlook

As for the outlook in 2011, emerging nations such as China and India are expected to maintain healthy expansion. Developed countries, by comparison, while expected to be headed toward modest recovery, will face uncertainty regarding future prospects due to such factors as employment problems in the United States, financial concerns in European countries, and continued domestic deflation.

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 achieve solid growth amid increasingly intense competition. With respect to the consumer products market, demand for digital SLR cameras, compact digital cameras and inkjet printers is expected to expand, although competition is also expected to become more severe. In the industry and others market, while demand for semiconductor and LCD lithography equipment will likely increase steadily, uncertainty remains regarding the future.

With regard to currency exchange rates for the next year, on which Canon’s performance outlook is based, despite the uncertainty over such factors as future interest rate policies for major countries and the speed and degree realized by the economic recovery, Canon anticipates exchange rates for the period of ¥85 to the U.S. dollar and ¥110 to the euro, representing appreciations of approximately ¥2 against the U.S. dollar, and approximately ¥5 against the euro compared with the previous year. Upon taking into consideration these foreign exchange rate assumptions and current economic forecasts, Canon projects full-year consolidated net sales in 2011 of ¥4,100.0 billion (U.S.$50,617 million), a year-on-year increase of 10.6%; operating profit of ¥470.0 billion (U.S.$5,802 million), a year-on-year increase of 21.3%; income before income taxes of ¥470.0 billion (U.S.$5,802 million), a year-on-year increase of 19.6%; and net income attributable to Canon Inc. of ¥310.0 billion (U.S.$3,827 million), a year-on-year increase of 25.7%.

Basic Policy Regarding Profit Distribution and Dividends for the Current Fiscal Year

Canon is being more proactive in returning profits to shareholders, mainly in the form of a dividend, taking into consideration planned future investments, free cash flow, and the Company’s consolidated business performance. Specifically, the Company’s medium- to long-term objective is a consolidated payout ratio of approximately 30%.

In 2010, a year viewed by Canon as the first in a new era of growth, the Company achieved its goal to significantly expand profits despite the yen’s appreciation. Additionally, thanks to comprehensive cash flow management, the Company realized further improvements in management efficiency and adequate cash on hand. In light of this situation, the Company comprehensively evaluated such factors as its outlook for future performance, planned investments, and cash flow without focusing solely on the performance of this fiscal year in its decision to provide a stable return and actively return profits to shareholders. As a result, the Company plans to distribute a full-year dividend totaling ¥120.00 (U.S.$1.48) per share (interim dividend of ¥55.00 [U.S.$0.68] per share [already distributed], and year-end dividend of ¥65.00 [U.S.$0.80]), an increase of ¥10.00 (U.S.$0.12) per share compared with fiscal year 2010.

Until our performance returns to a trend of stable expansion, we will not declare numerical targets such as a targeted dividend payout ratio. Instead, we will take a more comprehensive approach taking into consideration, such factors as our outlook for medium-term profits, planned future investments and free cash flow as we works to provide a stable return and actively return profits to shareholders.

This document contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect management’s views and assumptions formed by available information. All statements other than statements of historical fact are statements that could be considered forward-looking statements. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” or “should” and similar expressions, as they relate to Canon, are intended to identify forward-looking statements. Many factors could cause the actual results, performance or achievements of Canon to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by Canon’s targeted customers, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this document. A detailed description of these and other risk factors is included in Canon’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Canon does not intend or assume any obligation to update these forward-looking statements.

- 4 -

II. Management Policy

(1) Basic Policy

Under the corporate philosophy of kyosei—living and working together for the common good—Canon’s basic management policy is to contribute to the prosperity and well-being of the world while endeavoring to become a truly excellent global corporation targeting continued growth and development.

(2) Management Goals

Based on this basic management policy, Canon launched two consecutive five-year management plans—Phase I of the Excellent Global Corporation Plan in 1996, and Phase II in 2001. Through these two management plans, we worked to thoroughly strengthen our product competitiveness and our financial base. From 2006, under a new five-year management plan—Phase III, which targeted further growth and improved corporate value—Canon pursued “sound growth,”—the further expansion of corporate scale while maintaining a high level of profitability.

In 2009, however, due to the global recession triggered by the collapse of Lehman Brothers, we were forced to temporarily shift our strategic direction from expansion to establishing a “muscular” business constitution and enhancing corporate strength to agilely respond to changes in our business environment. After working to further expense reductions, capital-investment efficiencies and the establishment of advanced supply-chain management enabling inventory reduction, in 2010, we realized a quick recovery in performance, employing a new growth strategy, capitalizing on the turnaround to post results that outpaced the speed of the economic recovery.

In 2011, Canon embarks on a new five-year plan under the slogan “Aiming for the Summit — Speed & Sound Growth — ” which aims to leverage the Company’s solid management base developed during Phases I, II and III.

The global economy’s engine of growth has largely shifted from developed countries to emerging countries, which is expected to lead to volatility in the business environment. Canon will take advantage of these dramatic changes and will again tackle the challenge of achieving sound growth through timely transformations tailored to the changes of the times.

In particular, the Company is focusing on the following six important management objectives.

1)		Achieving the overwhelming No. 1 position in all core businesses and expanding related and peripheral businesses

2)		Developing new business through globalized diversification and establishing the Three Regional Headquarters management system

3)		Establishing a world-leading global optimized production system

4)		Comprehensively reinforcing global sales capabilities

5)		Building the foundations of an environmentally advanced corporation

6)		Imparting a corporate culture, and cultivating human resources befitting a truly excellent global company

By realizing these strategies, we aim to achieve net sales of more than ¥5 trillion, an operating profit ratio of more than 20%, a net income ratio of more than 10%, and a shareholders’ equity ratio of more than 75% by 2015, the final year of Phase IV. In this way, we will again aim to realize our goal of joining the ranks of the world’s top 100 companies in terms of all major management indicators.

(3) Business Challenges

As for the global economy, in the U.S., despite the risk of a slowdown due to the ongoing credit crisis and high unemployment, we expect the trend toward gradual recovery to continue. In Europe, while concerns remain regarding an economic slump due to financial instability, we believe the economy will make steady progress towards recovery.

In Asia, the overall trend toward economic recovery is expected to continue, fueled by such factors as continued strong economic expansion in such countries as China and India. We believe the pattern of emerging markets, such as China and India, leading the global economy will become increasingly prominent over the near future.

As for Japan, while the economy will likely continue to realize a gradual economic rebound against the backdrop of a global economic recovery, we also expect the current trend of economic deflation to continue for the time being due to weak domestic consumption.

- 5 -

Amid this climate, the Canon Group has launched its latest five-year plan: Phase IV of the Excellent Global Corporation Plan (2011-2015).

In order to achieve our targets, we aim to transform into a different company in terms of scale and business operations, further strengthening our imaging-related businesses and working to expand business domains by cultivating such areas as medical and industrial equipment into new business pillars. At the same time, as a manufacturer, we will make efforts to significantly transform ourselves in keeping with the changing times through the reinforcement of such basic functions as research and development, production, and sales and marketing. Specifically, we will strive to change to a situation where products developed in each region are sold globally, accelerating transition to a three regional headquarters management system, which includes R&D centers in Japan, the U.S. and Europe, as we solicit the world’s great minds and innovative power.

Targeting this kind of change and transformation, we will also make active use of M&As. For this, we set up a special organization in charge of further promoting M&As, effective January 1, 2011.

At the same time, we will work to solidify our foundation as a leading environmental company that aims for both growth and environmental conservation, by further raising the environmental performance of our products and reducing the impact of all corporate activities on the environment.

In 2011, the first year of Phase IV, under the theme “Launching a Full-Scale Offensive with the Courage to Change,” Canon will be taking measures to realize its basic policy of ensuring that financial results in 2012 exceed those of its record-high performance of 2007.

One important measure addresses the continuous introduction of innovative products and services. Through the timely launch of products displayed at last year’s Canon EXPO, we will work to comprehensively strengthen the Company’s existing core businesses. In the office equipment segment, we aim to expand our lineup by accelerating joint product development efforts with Océ N.V.. In the consumer products segment, we aim to strengthen, among other areas, digital SLR movie capabilities. In addition, in our display business, for special applications such as high-resolution, high-image-quality medical displays, as well as OLED display, we will swiftly restructure our strategy as a new way to enter this area.

Next, we will work to reinforce our global sales capabilities. In order to further improve our performance in Asia, where an increasing proportion of group sales each year is generated, in addition to further strengthening our sales organization in China, we will also further our reach into the markets of Southeast Asia and India. In developed countries, in addition to accelerating our integration with Océ N.V. and leveraging Océ N.V.’s sales network to expand product sales, we will also work to strengthen our solutions business.

Additionally, we will pursue thorough cost reductions to further lower the cost of sales ratio. In this regard, we will accelerate activities to establish an optimized global production system, finalizing our roadmap of reform for the ideal production system from a comprehensive viewpoint taking into account such aspects as logistics, procurement, labor and country risks. In addition to accelerating new product development through computer simulation and thorough cost reductions, we will also promote the further automation of production and the in-house production of manufacturing equipment. We will establish a highly efficient and advanced manufacturing business model, promoting “man-machine cells” that allow for further productivity improvements. An example of this can be found in our domestic production, where automation and testing equipment have been incorporated into the cell production system.

We also aim to accelerate the establishment of new core businesses through globalized diversification, based on a three regional headquarters approach focusing on bases where innovation is created. In the medical field, we will expand our product lineup with a focus on digital radiography, expand our industrial equipment business, and swiftly draw up plans to actively establish research and development functions in the U.S. and Europe.

In addition, we will thoroughly leverage the integrated systems we have in place that facilitate the sharing and utilization of product design information on a company-wide basis as we work for efficiencies in product development and further improvements in product quality.

Furthermore, with the understanding that product quality represents the lifeblood of a manufacturer, we will make further efforts towards our commitment to “quality first.”

In order to realize further advancements for the Canon Group and become a truly excellent global corporation that continues to thrive and prosper, we will strive to foster global human resources that can exercise their abilities around the world. We will also devote more effort towards CSR (corporate social responsibility) activities.

- 6 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

III. Financial Statements

1. CONSOLIDATED BALANCE SHEETS


	Millions of yen									Thousands of
	Millions of yen									U.S. dollars
	As of			As of						As of
	December 31,			December 31,			Change			December 31,
	2010			2009						2010
ASSETS
Current assets:
Cash and cash equivalents	¥	840,579		¥	795,034		¥	45,545		$	10,377,519
Short-term investments		96,815			19,089			77,726			1,195,247
Trade receivables, net		557,504			556,572			932			6,882,765
Inventories		384,777			373,241			11,536			4,750,333
Prepaid expenses and other current assets		250,754			273,843			(23,089	)		3,095,729

Total current assets		2,130,429			2,017,779			112,650			26,301,593

Noncurrent receivables		16,771			14,936			1,835			207,049
Investments		81,529			114,066			(32,537	)		1,006,531
Property, plant and equipment, net		1,201,968			1,269,785			(67,817	)		14,839,111
Intangible assets, net		153,021			117,396			35,625			1,889,148
Other assets		400,102			313,595			86,507			4,939,531


Total assets	¥	3,983,820		¥	3,847,557		¥	136,263		$	49,182,963


LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt	¥	7,200		¥	4,869		¥	2,331		$	88,889
Trade payables		383,251			339,113			44,138			4,731,494
Accrued income taxes		72,482			50,105			22,377			894,840
Accrued expenses		299,710			274,300			25,410			3,700,123
Other current liabilities		134,298			115,303			18,995			1,658,000

Total current liabilities		896,941			783,690			113,251			11,073,346
Long-term debt, excluding current installments		4,131			4,912			(781	)		51,000
Accrued pension and severance cost		197,609			115,904			81,705			2,439,617
Other noncurrent liabilities		75,502			63,651			11,851			932,123


Total liabilities		1,174,183			968,157			206,026			14,496,086



Equity:
Canon Inc. stockholders’ equity:
Common stock		174,762			174,762			-			2,157,556
Additional paid-in capital		400,425			404,293			(3,868	)		4,943,518
Legal reserve		57,930			54,687			3,243			715,185
Retained earnings		2,965,237			2,871,437			93,800			36,607,864
Accumulated other comprehensive income (loss)		(390,459	)		(260,818	)		(129,641	)		(4,820,481	)
Treasury stock, at cost		(562,113	)		(556,252	)		(5,861	)		(6,939,667	)

Total Canon Inc. stockholders’ equity		2,645,782			2,688,109			(42,327	)		32,663,975

Noncontrolling interests		163,855			191,291			(27,436	)		2,022,902


Total equity		2,809,637			2,879,400			(69,763	)		34,686,877


Total liabilities and equity	¥	3,983,820		¥	3,847,557		¥	136,263		$	49,182,963


	Millions of yen									Thousands of
	Millions of yen									U.S. dollars
	As of			As of						As of
	December 31,			December 31,						December 31,
	2010			2009						2010
Notes:

1. Allowance for doubtful receivables	¥	14,920		¥	11,343					$	184,198
2. Accumulated depreciation		1,909,703			1,815,982						23,576,580
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments		(325,612	)		(202,628	)					(4,019,901	)
Net unrealized gains and losses on securities		3,020			3,285						37,284
Net gains and losses on derivative instruments		917			71						11,321
Pension liability adjustments		(68,784	)		(61,546	)					(849,185	)

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME

Results for the fourth quarter

Millions of yen

Thousands of

U.S. dollars

Three months

Three months

Three months

ended

ended

Change(%)

ended

December 31, 2010

December 31, 2009

December 31, 2010

Net sales

1,067,866

954,058

11.9

13,183,531

Cost of sales

575,620

520,267

7,106,420

Gross profit

492,246

433,791

13.5

6,077,111

Operating expenses:

Selling, general and administrative expenses

323,481

264,396

3,993,593

Research and development expenses

85,918

77,267

1,060,716

409,399

341,663

5,054,309

Operating profit

82,847

92,128

10.1

1,022,802

Other income (deductions):

Interest and dividend income

1,735

1,441

21,420

Interest expense

(771

)

(95

)

(9,519

)

Other, net

(1,277

)

4,447

(15,765

)

(313

)

5,793

(3,864

)

Income before income taxes

82,534

97,921

15.7

1,018,938

Income taxes

26,281

35,413

324,457

Consolidated net income

56,253

62,508

694,481

Less: Net income attributable to noncontrolling interests

2,294

944

28,321

Net income attributable to Canon Inc.

53,959

61,564

12.4

666,160

Note: Consolidated comprehensive income for the three months ended December 31, 2010 and 2009 was JPY 12,227 million
(U.S.$150,951 thousand ) and JPY 74,334 million , respectively.

Millions of yen

Thousands of

Results for the fiscal year

U.S. dollars

Year ended

Year ended

Change(%)

Year ended

December 31, 2010

December 31, 2009

December 31, 2010

Net sales

3,706,901

3,209,201

15.5

45,764,210

Cost of sales

1,923,813

1,781,808

23,750,778

Gross profit

1,783,088

1,427,393

24.9

22,013,432

Operating expenses:

Selling, general and administrative expenses

1,079,719

905,738

13,329,864

Research and development expenses

315,817

304,600

3,898,975

1,395,536

1,210,338

17,228,839

Operating profit

387,552

217,055

78.6

4,784,593

Other income (deductions):

Interest and dividend income

6,022

5,202

74,346

Interest expense

(1,931

)

(336

)

(23,840

)

Other, net

1,220

(2,566

)

15,061

5,311

2,300

65,567

Income before income taxes

392,863

219,355

79.1

4,850,160

Income taxes

140,160

84,122

1,730,370

Consolidated net income

252,703

135,233

3,119,790

Less: Net income attributable to noncontrolling interests

6,100

3,586

75,309

Net income attributable to Canon Inc.

246,603

131,647

87.3

3,044,481

Note:

Consolidated comprehensive income for the year ended December 31, 2010 and 2009 was JPY 117,079 million
(U.S.$1,445,420 thousand ) and JPY 168,452 million , respectively.

- 8 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES

Millions of yen

Thousands of

Results for the fourth quarter

U.S. dollars

Three months

Three months

Three months

Sales by business unit

ended

ended

Change(%)

ended

December 31, 2010

December 31, 2009

December 31, 2010

Office

549,277

465,131

18.1

6,781,198

Consumer

412,240

412,729

0.1

5,089,383

Industry and Others

131,926

103,318

27.7

1,628,716

Eliminations

(25,577

)

(27,120

)

(315,766

)

Total

1,067,866

954,058

11.9

13,183,531

Millions of yen

Thousands of

U.S. dollars

Three months

Three months

Three months

Sales by region

ended

ended

Change(%)

ended

December 31, 2010

December 31, 2009

December 31, 2010

Japan

198,169

197,599

0.3

2,446,531

Overseas:

Americas

302,110

274,782

9.9

3,729,753

Europe

342,815

308,523

11.1

4,232,284

Asia and Oceania

224,772

173,154

29.8

2,774,963

869,697

756,459

15.0

10,737,000

Total

1,067,866

954,058

11.9

13,183,531

Millions of yen

Thousands of

Results for the fiscal year

U.S. dollars

Sales by business unit

Year ended

Year ended

Change(%)

Year ended

December 31, 2010

December 31, 2009

December 31, 2010

Office

1,987,269

1,645,076

20.8

24,534,185

Consumer

1,391,327

1,301,160

6.9

17,176,877

Industry and Others

432,958

357,998

20.9

5,345,160

Eliminations

(104,653

)

(95,033

)

(1,292,012

)

Total

3,706,901

3,209,201

15.5

45,764,210

Millions of yen

Thousands of

U.S. dollars

Sales by region

Year ended

Year ended

Change(%)

Year ended

December 31, 2010

December 31, 2009

December 31, 2010

Japan

695,749

702,344

0.9

8,589,494

Overseas:

Americas

1,023,299

894,154

14.4

12,633,321

Europe

1,172,474

995,150

17.8

14,474,988

Asia and Oceania

815,379

617,553

32.0

10,066,407

3,011,152

2,506,857

20.1

37,174,716

Total

3,706,901

3,209,201

15.5

45,764,210

Notes:

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 Printer

Consumer :

Digital SLR cameras / Compact digital cameras / Interchangeable lenses / Digital video camcorders /
Inkjet multifunction peripherals / Single function inkjet printers / Image scanners / Broadcasting equipment

Industry and Others :

Semiconductor lithography equipment / LCD lithography equipment / Medical image recording equipment /
Magnetic heads / Micromotors / Computers / Handy terminals / Document scanners / Calculators / Ophthalmic products

The principal countries and regions included in each regional category are as follows:
Americas: United States of America, Canada, Latin America / Europe: England, Germany, France, Netherlands /
Asia and Oceania: China, Australia, Asian countries

- 9 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF EQUITY

Millions of yen



											Accumulated						Total Canon
	Common		Additional			Legal		Retained			other			Treasury stock			Inc.			Noncontrolling
	Stock		paid-in capital			reserve		earnings			comprehensive			Treasury stock			stockholders’			interests			Total equity
											income (loss)						equity

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 transaction 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	)
Transfers to legal reserve							981		(981	)								-						-

Comprehensive income:
Net income									131,647									131,647			3,586			135,233
Other comprehensive income (loss), net of tax
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


Aquitition of subsidiaries																					19,168			19,168
Equity transaction with noncontrolling interests and other				(3,787	)				(13,453	)		(680	)		55,250			37,330			(43,214	)		(5,884	)
Dividends paid to Canon Inc. stockholders									(136,103	)								(136,103	)					(136,103	)
Dividends paid to noncontrolling interests																					(2,827	)		(2,827	)
Transfers to legal reserve							3,243		(3,243	)								-						-

Comprehensive income:
Net income									246,603									246,603			6,100			252,703
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments												(122,667	)					(122,667	)		(4,251	)		(126,918	)
Net unrealized gains and losses on securities												(222	)					(222	)		76			(146	)
Net gains and losses on derivative instruments												833						833			(66	)		767
Pension liability adjustments												(6,905	)					(6,905	)		(2,422	)		(9,327	)

Total comprehensive income(loss)																		117,642			(563	)		117,079


Repurchase of treasury stock, net				(81	)				(4	)					(61,111	)		(61,196	)					(61,196	)

Balance at December 31, 2010	¥	174,762	¥	400,425		¥	57,930	¥	2,965,237		¥	(390,459	)	¥	(562,113	)	¥	2,645,782		¥	163,855		¥	2,809,637



Thousands of U.S. dollars

Balance at December 31, 2009	$	2,157,556	$	4,991,272		$	675,148	$	35,449,840		$	(3,219,975	)	$	(6,867,310	)	$	33,186,531		$	2,361,617		$	35,548,148

Aquitition of subsidiaries																					236,642			236,642
Equity transaction with noncontrolling interests and other				(46,754	)				(166,087	)		(8,395	)		682,100			460,864			(533,506	)		(72,642	)
Dividends paid to Canon Inc. stockholders									(1,680,284	)								(1,680,284	)					(1,680,284	)
Dividends paid to noncontrolling interests																					(34,901	)		(34,901	)
Transfers to legal reserve							40,037		(40,037	)								-						-

Comprehensive income:
Net income									3,044,481									3,044,481			75,309			3,119,790
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments												(1,514,407	)					(1,514,407	)		(52,481	)		(1,566,888	)
Net unrealized gains and losses on securities												(2,741	)					(2,741	)		938			(1,803	)
Net gains and losses on derivative instruments												10,284						10,284			(815	)		9,469
Pension liability adjustments												(85,247	)					(85,247	)		(29,901	)		(115,148	)

Total comprehensive income(loss)																		1,452,370			(6,950	)		1,445,420


Repurchase of treasury stock, net				(1,000	)				(49	)					(754,457	)		(755,506	)					(755,506	)

Balance at December 31, 2010	$	2,157,556	$	4,943,518		$	715,185	$	36,607,864		$	(4,820,481	)	$	(6,939,667	)	$	32,663,975		$	2,022,902		$	34,686,877

- 10 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. CONSOLIDATED STATEMENTS OF CASH FLOWS


	Millions of yen						Thousands of
	Millions of yen						U.S. dollars
	Year ended			Year ended			Year ended
	December 31, 2010			December 31, 2009			December 31, 2010
Cash flows from operating activities:
Consolidated net income	¥	252,703		¥	135,233		$	3,119,790
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		276,193			315,393			3,409,790
Loss on disposal of property, plant and equipment		21,120			8,215			260,741
Deferred income taxes		29,381			20,712			362,728
(Increase) decrease in trade receivables		(6,671	)		48,244			(82,358	)
(Increase) decrease in inventories		(17,532	)		143,580			(216,444	)
Increase (decrease) in trade payables		115,726			(76,843	)		1,428,716
Increase (decrease) in accrued income taxes		25,228			(21,023	)		311,457
Increase (decrease) in accrued expenses		77			(9,827	)		951
Increase in accrued (prepaid) pension and severance cost		4,147			4,765			51,198
Other, net		44,041			42,786			543,715

Net cash provided by operating activities		744,413			611,235			9,190,284
Cash flows from investing activities:
Purchases of fixed assets		(199,152	)		(327,983	)		(2,458,667	)
Proceeds from sale of fixed assets		3,303			8,893			40,778
Purchases of available-for-sale securities		(10,891	)		(3,253	)		(134,457	)
Proceeds from sale and maturity of available-for-sale securities		3,910			2,460			48,272
Increase in time deposits, net		(80,904	)		(11,345	)		(998,815	)
Acquisitions of subsidiaries, net of cash acquired		(55,686	)		(2,979	)		(687,481	)
Purchases of other investments		(1,955	)		(37,981	)		(24,136	)
Other, net		(758	)		1,944			(9,358	)

Net cash used in investing activities		(342,133	)		(370,244	)		(4,223,864	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		5,902			3,361			72,864
Repayments of long-term debt		(5,739	)		(6,282	)		(70,852	)
Decrease in short-term loans, net		(74,933	)		(280	)		(925,099	)
Dividends paid		(136,103	)		(135,793	)		(1,680,284	)
Repurchases of treasury stock, net		(61,196	)		(42	)		(755,506	)
Other, net		(7,828	)		(3,343	)		(96,642	)

Net cash used in financing activities		(279,897	)		(142,379	)		(3,455,519	)
Effect of exchange rate changes on cash and cash equivalents		(76,838	)		17,226			(948,617	)

Net change in cash and cash equivalents		45,545			115,838			562,284
Cash and cash equivalents at beginning of year		795,034			679,196			9,815,235

Cash and cash equivalents at end of year	¥	840,579		¥	795,034		$	10,377,519

- 11 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

6. NOTE FOR GOING CONCERN ASSUMPTION

Not applicable.

7. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY BUSINESS UNIT


Results for the fourth quarter	Millions of yen								Thousands of
Results for the fourth quarter	Millions of yen								U.S. dollars
	Three months			Three months					Three months
	ended			ended			Change(%)		ended
	December 31, 2010			December 31, 2009					December 31, 2010
Office
Net sales:
External customers	¥	547,319		¥	462,149		+	18.4	$	6,757,025
Intersegment		1,958			2,982		-	34.3		24,173

Total		549,277			465,131		+	18.1		6,781,198

Operating cost and expenses		488,126			384,517		+	26.9		6,026,247

Operating profit	¥	61,151		¥	80,614		-	24.1	$	754,951


Consumer
Net sales:
External customers	¥	411,881		¥	412,087		-	0.0	$	5,084,951
Intersegment		359			642		-	44.1		4,432

Total		412,240			412,729		-	0.1		5,089,383

Operating cost and expenses		347,218			337,586		+	2.9		4,286,642

Operating profit	¥	65,022		¥	75,143		-	13.5	$	802,741


Industry and Others
Net sales:
External customers	¥	108,666		¥	79,822		+	36.1	$	1,341,555
Intersegment		23,260			23,496		-	1.0		287,161

Total		131,926			103,318		+	27.7		1,628,716

Operating cost and expenses		137,770			138,278		-	0.4		1,700,864

Operating profit (loss)	¥	(5,844	)	¥	(34,960	)		-	$	(72,148	)


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(25,577	)		(27,120	)		-		(315,766	)

Total		(25,577	)		(27,120	)		-		(315,766	)

Operating cost and expenses		11,905			1,549			-		146,976

Operating profit (loss)	¥	(37,482	)	¥	(28,669	)		-	$	(462,742	)


Consolidated
Net sales:
External customers	¥	1,067,866		¥	954,058		+	11.9	$	13,183,531
Intersegment		-			-			-		-

Total		1,067,866			954,058		+	11.9		13,183,531

Operating cost and expenses		985,019			861,930		+	14.3		12,160,729

Operating profit	¥	82,847		¥	92,128		-	10.1	$	1,022,802

- 12 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


Results for the fiscal year	Millions of yen								Thousands of
Results for the fiscal year	Millions of yen								U.S. dollars
	Year ended			Year ended			Change(%)		Year ended
	December 31, 2010			December 31, 2009			Change(%)		December 31, 2010

Office
Net sales:
External customers	¥	1,978,945		¥	1,635,056		+	21.0	$	24,431,420
Intersegment		8,324			10,020		-	16.9		102,765

Total		1,987,269			1,645,076		+	20.8		24,534,185

Operating cost and expenses		1,693,947			1,415,680		+	19.7		20,912,926

Operating profit		293,322			229,396		+	27.9		3,621,259

Total assets		855,893			745,646		+	14.8		10,566,580
Depreciation and amortization		103,548			90,878		+	13.9		1,278,370
Capital expenditures	¥	53,115		¥	96,718		-	45.1	$	655,741


Consumer
Net sales:
External customers	¥	1,389,622		¥	1,299,194		+	7.0	$	17,155,827
Intersegment		1,705			1,966		-	13.3		21,050

Total		1,391,327			1,301,160		+	6.9		17,176,877

Operating cost and expenses		1,153,262			1,117,668		+	3.2		14,237,803

Operating profit		238,065			183,492		+	29.7		2,939,074

Total assets		414,022			437,160		-	5.3		5,111,383
Depreciation and amortization		41,665			48,701		-	14.4		514,383
Capital expenditures	¥	36,266		¥	27,503		+	31.9	$	447,728


Industry and Others
Net sales:
External customers	¥	338,334		¥	274,951		+	23.1	$	4,176,963
Intersegment		94,624			83,047		+	13.9		1,168,197

Total		432,958			357,998		+	20.9		5,345,160

Operating cost and expenses		442,789			433,954		+	2.0		5,466,530

Operating profit (loss)		(9,831	)		(75,956	)		-		(121,370	)

Total assets		307,029			359,635		-	14.6		3,790,481
Depreciation and amortization		37,387			60,770		-	38.5		461,568
Capital expenditures	¥	27,105		¥	25,644		+	5.7	$	334,630


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(104,653	)		(95,033	)		-		(1,292,012	)

Total		(104,653	)		(95,033	)		-		(1,292,012	)

Operating cost and expenses		29,351			24,844			-		362,358

Operating profit (loss)		(134,004	)		(119,877	)		-		(1,654,370	)

Total assets		2,406,876			2,305,116		+	4.4		29,714,519
Depreciation and amortization		93,593			115,044		-	18.6		1,155,469
Capital expenditures	¥	77,061		¥	108,387		-	28.9	$	951,370


Consolidated
Net sales:
External customers	¥	3,706,901		¥	3,209,201		+	15.5	$	45,764,210
Intersegment		-			-			-		-

Total		3,706,901			3,209,201		+	15.5		45,764,210

Operating cost and expenses		3,319,349			2,992,146		+	10.9		40,979,617

Operating profit		387,552			217,055		+	78.6		4,784,593

Total assets		3,983,820			3,847,557		+	3.5		49,182,963
Depreciation and amortization		276,193			315,393		-	12.4		3,409,790
Capital expenditures	¥	193,547		¥	258,252		-	25.1	$	2,389,469

- 13 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA


									Thousands of
Results for the fourth quarter	Millions of yen								U.S. dollars
	Three months			Three months					Three months
	ended			ended			Change(%)		ended
	December 31, 2010			December 31, 2009					December 31, 2010
Japan
Net sales:
External customers	¥	249,834		¥	227,939		+	9.6	$	3,084,370
Intersegment		517,387			539,255		-	4.1		6,387,494

Total		767,221			767,194		+	0.0		9,471,864

Operating cost and expenses		654,934			667,146		-	1.8		8,085,605

Operating profit	¥	112,287		¥	100,048		+	12.2	$	1,386,259

Americas
Net sales:
External customers	¥	296,872		¥	268,797		+	10.4	$	3,665,086
Intersegment		2,841			392		+	624.7		35,074

Total		299,713			269,189		+	11.3		3,700,160

Operating cost and expenses		294,476			263,571		+	11.7		3,635,506

Operating profit	¥	5,237		¥	5,618		-	6.8	$	64,654

Europe
Net sales:
External customers	¥	339,566		¥	306,949		+	10.6	$	4,192,173
Intersegment		839			(1,313	)		-		10,358

Total		340,405			305,636		+	11.4		4,202,531

Operating cost and expenses		332,306			298,750		+	11.2		4,102,543

Operating profit	¥	8,099		¥	6,886		+	17.6	$	99,988

Asia and Oceania
Net sales:
External customers	¥	181,594		¥	150,373		+	20.8	$	2,241,902
Intersegment		194,786			165,586		+	17.6		2,404,765

Total		376,380			315,959		+	19.1		4,646,667

Operating cost and expenses		368,997			309,860		+	19.1		4,555,519

Operating profit	¥	7,383		¥	6,099		+	21.1	$	91,148

Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(715,853	)		(703,920	)		-		(8,837,691	)

Total		(715,853	)		(703,920	)		-		(8,837,691	)

Operating cost and expenses		(665,694	)		(677,397	)		-		(8,218,444	)

Operating profit (loss)	¥	(50,159	)	¥	(26,523	)		-	$	(619,247	)

Consolidated
Net sales:
External customers	¥	1,067,866		¥	954,058		+	11.9	$	13,183,531
Intersegment		-			-			-		-

Total		1,067,866			954,058		+	11.9		13,183,531

Operating cost and expenses		985,019			861,930		+	14.3		12,160,729

Operating profit	¥	82,847		¥	92,128		-	10.1	$	1,022,802

-14-

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


									Thousands of
Results for the fiscal year	Millions of yen								U.S. dollars
	Year ended			Year ended			Change(%)		Year ended
	December 31, 2010			December 31, 2009					December 31, 2010
Japan
Net sales:
External customers	¥	854,208		¥	827,762		+	3.2	$	10,545,778
Intersegment		1,974,591			1,714,375		+	15.2		24,377,666

Total		2,828,799			2,542,137		+	11.3		34,923,444

Operating cost and expenses		2,398,439			2,288,471		+	4.8		29,610,358

Operating profit		430,360			253,666		+	69.7		5,313,086

Total assets	¥	1,321,572		¥	1,386,511		-	4.7	$	16,315,704

Americas
Net sales:
External customers	¥	1,008,200		¥	871,633		+	15.7	$	12,446,914
Intersegment		7,975			1,263		+	531.4		98,456

Total		1,016,175			872,896		+	16.4		12,545,370

Operating cost and expenses		993,310			860,863		+	15.4		12,263,086

Operating profit		22,865			12,033		+	90.0		282,284

Total assets	¥	251,587		¥	198,094		+	27.0	$	3,106,012

Europe
Net sales:
External customers	¥	1,163,452		¥	991,336		+	17.4	$	14,363,605
Intersegment		3,489			919		+	279.7		43,074

Total		1,166,941			992,255		+	17.6		14,406,679

Operating cost and expenses		1,126,521			964,606		+	16.8		13,907,667

Operating profit		40,420			27,649		+	46.2		499,012

Total assets	¥	472,785		¥	378,477		+	24.9	$	5,836,852

Asia and Oceania
Net sales:
External customers	¥	681,041		¥	518,470		+	31.4	$	8,407,913
Intersegment		723,423			534,147		+	35.4		8,931,149

Total		1,404,464			1,052,617		+	33.4		17,339,062

Operating cost and expenses		1,357,663			1,019,208		+	33.2		16,761,272

Operating profit		46,801			33,409		+	40.1		577,790

Total assets	¥	421,250		¥	384,795		+	9.5	$	5,200,617

Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(2,709,478	)		(2,250,704	)		-		(33,450,345	)

Total		(2,709,478	)		(2,250,704	)		-		(33,450,345	)

Operating cost and expenses		(2,556,584	)		(2,141,002	)		-		(31,562,766	)

Operating profit (loss)		(152,894	)		(109,702	)		-		(1,887,579	)

Total assets	¥	1,516,626		¥	1,499,680		+	1.1	$	18,723,778

Consolidated
Net sales:
External customers	¥	3,706,901		¥	3,209,201		+	15.5	$	45,764,210
Intersegment		-			-			-		-

Total		3,706,901			3,209,201		+	15.5		45,764,210

Operating cost and expenses		3,319,349			2,992,146		+	10.9		40,979,617

Operating profit		387,552			217,055		+	78.6		4,784,593

Total assets	¥	3,983,820		¥	3,847,557		+	3.5	$	49,182,963

-15-

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

Number of Group Companies



	December 31, 2010		December 31, 2009		Change
Subsidiaries		294		241		+53
Affiliates		14		15		(1	)
Total		308		256		+52

Change in Group Entities


Subsidiaries
	Addition:	86 companies
	Removal:	33 companies

Affiliates (Carried at Equity Basis)
	Addition:	3 companies
	Removal:	4 companies

Subsidiaries Listed on Domestic Stock Exchange

Tokyo Stock Exchange (1st section): Canon Marketing Japan Inc., Canon Electronics Inc.

(2) SIGNIFICANT ACCOUNTING POLICIES

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

- 16 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

9. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) NET INCOME ATTRIBUTABLE TO CANON INC. STOCKHOLDERS PER SHARE

Results for the fiscal year

Millions of yen

Thousands of

U.S. dollars

Year ended

Year ended

Year ended

December 31,

December 31,

December 31,

2010

2009

2010

Net income attributable to Canon Inc.

-Basic

246,603

131,647

3,044,481

-Diluted

246,603

131,647

3,044,481

Number of shares

Average common shares outstanding

-Basic

1,234,817,511

1,234,481,836

-Diluted

1,234,868,114

1,234,481,836

Yen

U.S. dollars

Net income attributable to
Canon Inc. stockholders per share:

-Basic

199.71

106.64

2.47

-Diluted

199.70

106.64

2.47

(2)

FINANCE RECEIVABLES AND OPERATING LEASES, ACQUISITIONS, MARKETABLE SECURITIES,
DEFERRED TAX ACCOUNTING, EMPLOYEE RETIREMENT AND SEVERANCE BENEFITS,
STOCK OPTIONS, DERIVATIVE CONTRACTS AND OTHERS

The disclosure is omitted as it is not considered significant in this report.

(3) SUBSEQUENT EVENT

There is no significant subsequent event.

- 17 -

CANON INC.

NON-CONSOLIDATED

10. NON-CONSOLIDATED BALANCE SHEETS

( Parent company only )


	Millions of yen
	As of			As of
	December 31,			December 31,			Change
	2010			2009
ASSETS
Current assets:
Cash	¥	56,923		¥	6,855		¥	50,068
Trade receivables		636,098			649,594			(13,496	)
Marketable securities		135,290			92,740			42,550
Inventories		117,306			147,938			(30,632	)
Prepaid expenses and other current assets		229,757			215,657			14,100
Allowance for doubtful receivables		-			(1	)		1

Total current assets		1,175,374			1,112,783			62,591

Fixed assets:
Net property, plant and equipment		784,520			862,901			(78,381	)
Intangibles		36,191			32,444			3,747
Investments and other fixed assets		607,398			543,027			64,371
Allowance for doubtful receivables-noncurrent		(54	)		(55	)		1

Total fixed assets		1,428,055			1,438,317			(10,262	)

Total assets	¥	2,603,429		¥	2,551,100		¥	52,329


LIABILITIES AND NET ASSETS
Current liabilities:
Trade payables	¥	334,299		¥	332,219		¥	2,080
Short-term loans		260,662			226,749			33,913
Accrued income taxes		41,027			27,639			13,388
Accrued warranty expenses		3,404			3,043			361
Accrued bonuses for employees		4,594			4,129			465
Accrued bonuses for directors		218			127			91
Other current liabilities		101,502			105,774			(4,272	)

Total current liabilities		745,706			699,680			46,026

Noncurrent liabilities:
Accrued pension and severance cost		36,701			34,524			2,177
Accrued directors’ retirement benefits		1,572			1,786			(214	)
Reserve for environmental provision		6,141			1,170			4,971
Accrued long service rewards for employees		1,399			1,176			223
Other noncurrent liabilities		9			46			(37	)

Total noncurrent liabilities		45,822			38,702			7,120

Total liabilities		791,528			738,382			53,146

Net assets:
Stockholders’ equity		1,807,975			1,810,900			(2,925	)
Valuation and translation adjustments		2,485			1,008			1,477
Subscription right to shares		1,441			810			631

Total net assets		1,811,901			1,812,718			(817	)

Total liabilities and net assets	¥	2,603,429		¥	2,551,100		¥	52,329



Notes:	As of			As of
	December 31,			December 31,
	2010			2009
1.Accumulated depreciation	¥	1,196,703		¥	1,122,921
Accumulated impairment loss	¥	20,019		¥	21,606
2.Cautionary obligation and other
Cautionary obligation contract	¥	13,818		¥	16,256

- 18 -



CANON INC.		NON-CONSOLIDATED

11. NON-CONSOLIDATED STATEMENTS OF INCOME

( Parent company only )

Millions of yen

Year ended

Year ended

December 31,

December 31,

Change(%)

2010

2009

Net sales

2,317,043

2,025,546

+ 14.4

Cost of sales

1,602,918

1,471,056

Gross profit

714,125

554,490

+ 28.8

Selling, general and administrative expenses

473,760

456,713

Operating profit

240,365

97,777

+ 145.8

Other income (deductions):

Interest and dividend income

21,227

16,314

Interest expense

(2,811

)

(3,916

)

Other, net

15,961

32,509

34,377

44,907

Ordinary profit

274,742

142,684

+ 92.6

Non-ordinary gain (loss), net

(41,539

)

(20,396

)

Income before income taxes

233,203

122,288

+ 90.7

Income taxes

80,705

41,510

Net income

152,498

80,778

+ 88.8

12. DETAILS OF SALES

( Parent company only )

Sales by product

Millions of yen

Year ended

Year ended

December 31,

December 31,

Change(%)

2010

2009

Office

1,185,103

1,021,285

+ 16.0

Consumer

1,024,674

950,554

+ 7.8

Industrial and others

107,266

53,707

+ 99.7

Total

2,317,043

2,025,546

+ 14.4

Sales by region

Millions of yen

Year ended

Year ended

December 31,

December 31,

Change(%)

2010

2009

Japan

283,291

276,385

+ 2.5

Overseas:

Americas

703,622

645,174

+ 9.1

Europe

745,208

677,162

+ 10.0

Asia and Oceania

584,922

426,825

+ 37.0

2,033,752

1,749,161

+ 16.3

Total

2,317,043

2,025,546

+ 14.4

- 19 -

CANON INC.

NON-CONSOLIDATED

13. NON-CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

( Parent company only )


Year ended December 31, 2010																				(Millions of yen)
		Stockholders’ equity																													Valuation and translation adjustments						Subscription rights to shares		Total net assets
		Common stock			Capital surplus					Retained earnings															Treasury stock			Total stockholders’ equity			Net unrealized gains (losses) on securities			Net Deferred profits (losses) on hedges
					Additional paid-in capital			Other capital surplus		Legal reserve			Other retained earnings
					Additional paid-in capital			Other capital surplus		Legal reserve			Reserve for special depreciation			Reserve for deferral of capital gain on property			Special reserves			Retained earnings
	Balance as of December 31, 2009	¥	174,762		¥	306,288			-	¥	22,114		¥	1,566		¥	2,701		¥	1,249,928		¥	609,793		¥	(556,252	)	¥	1,810,900		¥	1,384		¥	(376	)	¥	810	¥	1,812,718
	Changes in the term
	Transfer to reserve for special depreciation													83									(83	)					-												-
	Reversal of reserve for special depreciation													(853	)								853						-												-
	Transfer to reserve for deferral of capital gain on property																304						(304	)					0												0
	Reversal of reserve for deferral of capital gain on property																(92	)					92						0												0
	Dividends paid																						(136,103	)					(136,103	)										(136,103	)
	Net income																						152,498						152,498											152,498
	Purchase of treasury stock																									(61,436	)		(61,436	)										(61,436	)
	Disposal of treasury stock																						(6	)		18			12											12
	Changes by share exchanges																						(13,453	)		55,557			42,104											42,104
	Net change of items other than stockholders’ equity																													0		(26	)		1,503			631		2,108
	Total changes in the term			-			-		-			-		(770	)		212				0		3,494			(5,861	)		(2,925	)		(26	)		1,503			631		(817	)
	Balance as of December 31, 2010	¥	174,762		¥	306,288			-	¥	22,114		¥	796		¥	2,913		¥	1,249,928		¥	613,287		¥	(562,113	)	¥	1,807,975		¥	1,358		¥	1,127		¥	1,441	¥	1,811,901

Notes:


1.Number of issued shares as of December 31, 2010			1,333,763,464
2.Classes and number of treasury stock

(Shares)

Classes of stock

Balance as of
December 31, 2009

Increase

Decrease

Balance as of
December 31, 2010

common stock

99,288,001

16,012,063

10,004,089

105,295,975

3.Payment for dividends

Decision

Classes of stock

Cash dividend
(Millions of yen)

Dividend per share (yen)

Base date

Effective date

March 30, 2010
Annual meeting of stockholders

common stock

67,896

55.00

December 31, 2009

March 31, 2010

July 27, 2010
Board of directors’ meeting

common stock

68,206

55.00

June 30, 2010

August 27, 2010

Scheduled

Classes of stock

Cash dividend
(Millions of yen)

A source of
dividend

Dividend per
share (yen)

Base date

Effective date

March 30, 2011
Annual meeting of stockholders

common stock

79,850

Retained
earnings

65.00

December 31, 2010

March 31, 2011

- 20 -

CANON INC.

NON-CONSOLIDATED


Year ended December 31, 2009																					(Millions of yen)
		Stockholders’ equity																														Valuation and translation adjustments						Subscription rights to shares			Total net assets
		Common stock			Capital surplus						Retained earnings															Treasury stock			Total stockholders’ equity			Net unrealized gains (losses) on securities			Net Deferred profits (losses) on hedges
					Additional paid-in capital			Other capital surplus			Legal reserve			Other retained earnings
					Additional paid-in capital			Other capital surplus			Legal reserve			Reserve for special depreciation			Reserve for deferral of capital gain on property			Special reserves			Retained earnings
	Balance as of December 31, 2008	¥	174,762		¥	306,288			–		¥	22,114		¥	4,664		¥	2,578		¥	1,249,928		¥	661,843		¥	(556,222	)	¥	1,865,955		¥	(1,048	)	¥	(148	)	¥		246	¥	1,865,005
	Changes in the term

	Transfer to reserve for special depreciation														146									(146	)					–													-
	Reversal of reserve for special depreciation														(3,244	)								3,244						–													-
	Transfer to reserve for deferral of capital gain on property																	199						(199	)					0													0
	Reversal of reserve for deferral of capital gain on property																	(76	)					76							0												0
	Dividends paid																							(135,793	)					(135,793	)											(135,793	)
	Net income																							80,778						80,778												80,778
	Purchase of treasury stock																										(51	)		(51	)											(51	)
	Disposal of treasury stock																							(10	)		21			11												11
	Net change of items other than stockholders’ equity																														0		2,432			(228	)		564			2,768
	Total changes in the term			-			-			-			-		(3,098	)		123				-		(52,050	)		(30	)		(55,055	)		2,432			(228	)		564			(52,287	)
	Balance as of December 31, 2009	¥	174,762		¥	306,288				-	¥	22,114		¥	1,566		¥	2,701		¥	1,249,928		¥	609,793		¥	(556,252	)	¥	1,810,900		¥	1,384		¥	(376	)	¥	810		¥	1,812,718


Notes:

1. Number of issued shares as of December 31, 2009			1,333,763,464
2. Classes and number of treasury stock

(Shares)

Classes of stock

Balance as of

Increase

Decrease

Balance as of

December 31, 2008

December 31, 2009

common stock

99,275,245

16,518

3,762

99,288,001

3. Payment for dividends

Decision

Classes of stock

Cash dividend

Dividend per share (yen)

Base date

Effective date

(Millions of yen)

March 27, 2009
Annual meeting of stockholders

common stock

67,897

55.00

December 31, 2008

March 30, 2009

July 28, 2009
Board of directors’ meeting

common stock

67,896

55.00

June 30, 2009

August 28, 2009

- 21 -

CANON INC.

NON-CONSOLIDATED

14. NOTE FOR GOING CONCERN ASSUMPTION

( Parent company only )

Not applicable.

- 22 -

NON-CONSOLIDATED

Directors

(Current titles are shown in the parentheses)

(1)

Candidate for new Representative Director


		Representative Director & Executive Vice President		Toshiaki Ikoma		(Executive Vice President, Group Executive of Corporate R&D Headquarters)

(2)

Candidates for Director to be promoted


		Senior Managing Director		Shigeyuki Matsumoto		(Managing Director, Group Executive of Device Technology Development Headquarters)

(3)

Candidates for new Directors to be appointed


		Yasuhiro Tani		(Executive Officer, Group Executive of Digital Platform Technology Development Headquarters)
		Makoto Araki		(Executive Officer, Group Executive of Information & Communication Systems Headquarters)

Executive Officers

(1)

Candidates for new Executive Officers


		Akiyoshi Kimura		(Group Executive of OIP Production System Group)

		Kazuto Ogawa		(President of Canon Canada Inc.)

		Naoji Otsuka		(Group Executive of Inkjet Products Development Group)

		Kenji Kobayashi		(President of Canon Australia Pty Ltd.)

		Ryuichi Ebinuma		(Group Executive of Core Technology Development Group)

- 23 -

Canon Inc.
January 27, 2011

CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2010

SUPPLEMENTARY REPORT

TABLE OF CONTENTS


		PAGE
1.	SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2010)		S 1
2.	SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2011/Projection)		S 2
3.	SEGMENT INFORMATION BY PRODUCT (2010)		S 3
4.	OTHER INCOME / DEDUCTIONS (2010)		S 3
5.	SEGMENT INFORMATION BY PRODUCT (2011/Projection)		S 4
6.	OTHER INCOME / DEDUCTIONS (2011/Projection)		S 4
7.	BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT		S 5
8.	SALES GROWTH IN LOCAL CURRENCY		S 5
9.	PROFITABILITY		S 6
10.	IMPACT OF FOREIGN EXCHANGE RATES		S 6
11.	STATEMENTS OF CASH FLOWS		S 6
12.	R&D EXPENDITURE		S 7
13.	INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION		S 7
14.	INVENTORIES		S 7
15.	DEBT RATIO		S 7
16.	OVERSEAS PRODUCTION RATIO		S 7
17.	NUMBER OF EMPLOYEES		S 7

Canon Inc.



1. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2010)		(Millions of yen)



		2010						2009						Change year over year
		4th quarter			Year			4th quarter			Year			4th quarter			Year

Japan
	Office		96,233			376,928			92,303			374,275			+4.3	%		+0.7	%

	Consumer		70,798			216,509			69,731			219,036			+1.5	%		-1.2	%

	Industry and Others		31,138			102,312			35,565			109,033			-12.4	%		-6.2	%

	Total		198,169			695,749			197,599			702,344			+0.3	%		-0.9	%

Overseas
	Office		451,086			1,602,017			369,846			1,260,781			+22.0	%		+27.1	%

	Consumer		341,083			1,173,113			342,356			1,080,158			-0.4	%		+8.6	%

	Industry and Others		77,528			236,022			44,257			165,918			+75.2	%		+42.3	%

	Total		869,697			3,011,152			756,459			2,506,857			+15.0	%		+20.1	%

	Americas
	Office		169,823			601,090			138,949			485,180			+22.2	%		+23.9	%

	Consumer		118,812			379,522			125,209			367,035			-5.1	%		+3.4	%

	Industry and Others		13,475			42,687			10,624			41,939			+26.8	%		+1.8	%

	Total		302,110			1,023,299			274,782			894,154			+9.9	%		+14.4	%

	Europe
	Office		208,654			733,216			168,917			565,656			+23.5	%		+29.6	%

	Consumer		123,921			407,994			132,398			405,173			-6.4	%		+0.7	%

	Industry and Others		10,240			31,264			7,208			24,321			+42.1	%		+28.5	%

	Total		342,815			1,172,474			308,523			995,150			+11.1	%		+17.8	%

	Asia and Oceania
	Office		72,609			267,711			61,980			209,945			+17.1	%		+27.5	%

	Consumer		98,350			385,597			84,749			307,950			+16.0	%		+25.2	%

	Industry and Others		53,813			162,071			26,425			99,658			+103.6	%		+62.6	%

	Total		224,772			815,379			173,154			617,553			+29.8	%		+32.0	%

	Intersegment
	Office		1,958			8,324			2,982			10,020			-34.3	%		-16.9	%

	Consumer		359			1,705			642			1,966			-44.1	%		-13.3	%

	Industry and Others		23,260			94,624			23,496			83,047			-1.0	%		+13.9	%

	Eliminations		(25,577	)		(104,653	)		(27,120	)		(95,033	)			-			-

	Total		0			0			0			0				-			-

Total
	Office		549,277			1,987,269			465,131			1,645,076			+18.1	%		+20.8	%

	Consumer		412,240			1,391,327			412,729			1,301,160			-0.1	%		+6.9	%

	Industry and Others		131,926			432,958			103,318			357,998			+27.7	%		+20.9	%

	Eliminations		(25,577	)		(104,653	)		(27,120	)		(95,033	)			-			-

	Total		1,067,866			3,706,901			954,058			3,209,201			+11.9	%		+15.5	%

- S1 -

Canon Inc.

2. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2011/Projection)


(1) Sales by business unit							(Millions of yen)

	2011 (P)			2010			Change year over year
	Year			Year			Year

Office		2,180,000			1,987,269			+9.7	%

Consumer		1,535,000			1,391,327			+10.3	%

Industry and Others		465,000			432,958			+7.4	%

Eliminations		(80,000	)		(104,653	)		-

Total		4,100,000			3,706,901			+10.6	%

							(P)=Projection

(2) Sales by region							(Millions of yen)

	2011 (P)			2010			Change year over year
	Year			Year			Year

Japan		737,700			695,749			+6.0	%
Overseas		3,362,300			3,011,152			+11.7	%

Americas		1,074,400			1,023,299			+5.0	%
Europe		1,278,100			1,172,474			+9.0	%
Asia and Oceania		1,009,800			815,379			+23.8	%

Total		4,100,000			3,706,901			+10.6	%

							(P)=Projection

- S2 -

Canon Inc.


3. SEGMENT INFORMATION BY PRODUCT (2010)		(Millions of yen)



		2010						2009						Change year over year
		4th quarter			Year			4th quarter			Year			4th quarter			Year

	Office
	External customers		547,319			1,978,945			462,149			1,635,056			+18.4%			+21.0%
	Intersegment		1,958			8,324			2,982			10,020			-34.3%			-16.9%

	Total sales		549,277			1,987,269			465,131			1,645,076			+18.1%			+20.8%

	Operating profit		61,151			293,322			80,614			229,396			-24.1%			+27.9%

	% of sales		11.1%			14.8%			17.3%			13.9%			-			-

	Consumer
	External customers		411,881			1,389,622			412,087			1,299,194			-0.0%			+7.0%
	Intersegment		359			1,705			642			1,966			-44.1%			-13.3%

	Total sales		412,240			1,391,327			412,729			1,301,160			-0.1%			+6.9%

	Operating profit		65,022			238,065			75,143			183,492			-13.5%			+29.7%

	% of sales		15.8%			17.1%			18.2%			14.1%			-			-

	Industry and Others
	External customers		108,666			338,334			79,822			274,951			+36.1%			+23.1%
	Intersegment		23,260			94,624			23,496			83,047			-1.0%			+13.9%

	Total sales		131,926			432,958			103,318			357,998			+27.7%			+20.9%

	Operating profit		(5,844	)		(9,831	)		(34,960	)		(75,956	)		-			-

	% of sales		-4.4%			-2.3%			-33.8%			-21.2%			-			-

	Corporate and Eliminations
	External customers		-			-			-			-			-			-
	Intersegment		(25,577	)		(104,653	)		(27,120	)		(95,033	)		-			-

	Total sales		(25,577	)		(104,653	)		(27,120	)		(95,033	)		-			-

	Operating profit		(37,482	)		(134,004	)		(28,669	)		(119,877	)		-			-


	Consolidated
	External customers		1,067,866			3,706,901			954,058			3,209,201			+11.9%			+15.5%
	Intersegment		-			-			-			-			-			-

	Total sales		1,067,866			3,706,901			954,058			3,209,201			+11.9%			+15.5%

	Operating profit		82,847			387,552			92,128			217,055			-10.1%			+78.6%

	% of sales		7.8%			10.5%			9.7%			6.8%			-			-


4. OTHER INCOME / DEDUCTIONS (2010)													(Millions of yen)


		2010						2009						Change year over year
		4th quarter			Year			4th quarter			Year			4th quarter			Year

	Interest and dividend, net		964			4,091			1,346			4,866			(382	)		(775	)
	Forex gain / loss		(446	)		3,089			3,485			1,842			(3,931	)		+1,247
	Equity earnings / loss of affiliated companies		(551	)		10,471			(527	)		(12,649	)		(24	)		+23,120
	Other, net		(280	)		(12,340	)		1,489			8,241			(1,769	)		(20,581	)

	Total		(313	)		5,311			5,793			2,300			(6,106	)		+3,011

- S3 -

Canon Inc.


5. SEGMENT INFORMATION BY PRODUCT (2011/Projection)		(Millions of yen)



	2011 (P)			2010		Change year over year
	Year			Year		Year
Office
External customers		2,196,700			1,978,945		+11.0%
Intersegment		(16,700	)		8,324		-

Total sales		2,180,000			1,987,269		+9.7%

Operating profit		322,000			293,322		+9.8%
% of sales		14.8%			14.8%		-

Consumer
External customers		1,533,000			1,389,622		+10.3%
Intersegment		2,000			1,705		+17.3%

Total sales		1,535,000			1,391,327		+10.3%

Operating profit		265,000			238,065		+11.3%
% of sales		17.3%			17.1%		-

Industry and Others
External customers		370,300			338,334		+9.4%
Intersegment		94,700			94,624		+0.1%

Total sales		465,000			432,958		+7.4%

Operating profit		18,500			(9,831)		-
% of sales		4.0%			-2.3%		-

Corporate and Eliminations
External customers		-			-		-
Intersegment		(80,000)			(104,653)		-

Total sales		(80,000)			(104,653)		-

Operating profit		(135,500)			(134,004)		-


Consolidated
External customers		4,100,000			3,706,901		+10.6%
Intersegment		-			-		-

Total sales		4,100,000			3,706,901		+10.6%

Operating profit		470,000			387,552		+21.3%
% of sales		11.5%			10.5%		-

(P)=Projection


6. OTHER INCOME / DEDUCTIONS (2011/Projection)		(Millions of yen)



	2011 (P)			2010			Change year over year
	Year			Year			Year
Interest and dividend, net		5,000			4,091			+909
Forex gain / loss		0			3,089			(3,089	)
Equity earnings / loss of affiliated companies		0			10,471			(10,471	)
Other, net		(5,000	)		(12,340	)		+7,340

Total		0			5,311			(5,311	)

(P)=Projection

- S4 -

Canon Inc.

7. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT



		2011 (P)			2010								2009

		Year			4th quarter				Year				4th quarter			Year

Office
	Monochrome copiers		15	%		14	%			15	%			17	%		20	%
	Color copiers		18	%		16	%			17	%			19	%		19	%
	Other printing devices		49	%		46	%			50	%			57	%		53	%
	Others		18	%		24	%			18	%			7	%		8	%

Consumer
	Cameras		70	%		70	%			70	%			68	%		68	%
	Inkjet printers		25	%		25	%			24	%			26	%		25	%
	Others		5	%		5	%			6	%			6	%		7	%

Industry and Others
	Lithography equipment		20	%		25	%			23	%			14	%		19	%
	Others		80	%		75	%			77	%			86	%		81	%

												(P)=Projection



8. SALES GROWTH IN LOCAL CURRENCY

		2011 (P)			2010

		Year			4th quarter				Year

Office
	Japan			-		+4.3	%			+0.7	%
	Overseas			-		+32.3	%			+35.9	%

	Total		+12.8	%		+26.3	%			+27.6	%

Consumer
	Japan			-		+1.5	%			-1.2	%
	Overseas			-		+10.9	%			+17.5	%

	Total		+13.4	%		+9.2	%			+14.3	%

Industry and Others
	Japan			-		-12.4	%			-6.2	%
	Overseas			-		+80.3	%			+45.7	%

	Total		+8.2	%		+29.9	%			+22.5	%

Total
	Japan		+6.0	%		+0.3	%			-0.9	%
	Overseas		+15.3	%		+25.4	%			+28.7	%
	Americas		+8.0	%		+18.0	%			+21.6	%
	Europe		+13.9	%		+26.2	%			+30.0	%
	Asia and Oceania		+26.3	%		+35.9	%			+36.6	%

	Total		+13.5	%		+20.2	%			+22.2	%

								(P)=Projection

- S5 -

Canon Inc.

9. PROFITABILITY



		2011 (P)			2010			2009
		Year			Year			Year

	ROE		11.3%			9.2%			4.9%

	ROA		7.6%			6.3%			3.4%

*1 Based on Net Income attributable to Canon Inc. and Total Canon Inc. Stockholders’ Equity							(P)=Projection
*2 Based on Net Income attributable to Canon Inc.

10. IMPACT OF FOREIGN EXCHANGE RATES

	(1) Exchange rates													(Yen)

		2011 (P)			2010						2009

		Year			4th quarter			Year			4th quarter			Year

	Yen/US$		85.00			82.68			87.40			89.68			93.21
	Yen/Euro		110.00			111.99			114.97			132.54			130.46

	(P)=Projection
	(2) Impact of foreign exchange rates on sales (Year over year)				(Billions of yen)

		2011 (P)			2010

		Year			4th quarter			Year

	US$		(44.5)			(28.4)			(86.7)
	Euro		(49.4)			(40.3)			(101.1)
	Other currencies		(8.6)			(3.1)			(6.1)

	Total		(102.5)			(71.8)			(193.9)

	(P)=Projection
	(3) Impact of foreign exchange rates per yen	(Billions of yen)

		2011 (P)

		Year

On sales
	US$		19.4
	Euro		10.4

On operating profit
	US$		10.1
	Euro		5.8

	(P)=Projection

	11. STATEMENTS OF CASH FLOWS													(Millions of yen)

		2011 (P)			2010						2009

		Year			4th quarter			Year			4th quarter			Year

Net cash provided by operating activities			625,000			224,986			744,413			236,708			611,235

Net cash used in investing activities			(395,000	)		(98,931	)		(342,133	)		(84,010	)		(370,244	)

Free cash flow			230,000			126,055			402,280			152,698			240,991

Net cash used in financing activities			(158,000	)		(11,939	)		(279,897	)		(998	)		(142,379	)

Effect of exchange rate changes on cash and cash equivalents			17,400			(32,936	)		(76,838	)		9,678			17,226

Net change in cash and cash equivalents			89,400			81,180			45,545			161,378			115,838

Cash and cash equivalents at end of period			930,000			840,579			840,579			795,034			795,034

	(P)=Projection

- S6 -

Canon Inc.


12. R&D EXPENDITURE		(Millions of yen)



	2011 (P)		2010		2009

	Year		Year		Year

Office		-		96,156		78,872
Consumer		-		82,843		74,131
Industry and Others		-		21,062		23,300
Corporate and Eliminations		-		115,756		128,297

Total		340,000		315,817		304,600

% of sales		8.3%		8.5%		9.5%

(P)=Projection

13. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION


		(Millions of yen)



	2011 (P)		2010		2009

	Year		Year		Year

Increase in PP&E
Office		-		48,969		91,525
Consumer		-		35,017		26,483
Industry and Others		-		26,109		22,743
Corporate and Eliminations		-		48,881		75,377

Total		260,000		158,976		216,128

Depreciation and amortization
Office		-		103,548		90,878
Consumer		-		41,665		48,701
Industry and Others		-		37,387		60,770
Corporate and Eliminations		-		93,593		115,044

Total		300,000		276,193		315,393

(P)=Projection

14. INVENTORIES



(1) Inventories		(Millions of yen)



	2010		2009		Difference
	Dec.31		Dec.31		Difference

Office		186,817		144,941		+41,876
Consumer		107,261		113,975		(6,714	)
Industry and Others		90,699		114,325		(23,626	)

Total		384,777		373,241		+11,536



(2) Inventories/Sales*		(Days)



	2010		2009		Difference
	Dec.31		Dec.31		Difference

Office		32		30		+2
Consumer		27		29		(2	)
Industry and Others		88		158		(70	)

Total		35		39		(4	)

*Index based on the previous six months sales.

15. DEBT RATIO



	2010		2009		Difference
	Dec.31		Dec.31		Difference

Total debt / Total assets		0.3%		0.3%		0.0%

16. OVERSEAS PRODUCTION RATIO



	2010		2009
	Year		Year

Overseas production ratio		49%		40%

17. NUMBER OF EMPLOYEES



	2010		2009		Difference
	Dec.31		Dec.31		Difference

Japan		71,954		73,635		(1,681	)
Overseas		125,432		95,244		+30,188

Total		197,386		168,879		+28,507

- S7 -