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 ….		October		……………………………………………………  ,		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….		October 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 FINANCIAL RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2011

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CONSOLIDATED RESULTS FOR THE THIRD QUARTER AND

THE NINE MONTHS ENDED SEPTEMBER 30, 2011

October 25, 2011

CONSOLIDATED RESULTS FOR THE THIRD QUARTER

 

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

		Actual
		Three months ended September 30, 2011				Three months ended September 30, 2010				Change(%)				Three months ended September 30, 2011
Net sales		¥	916,911			¥	913,151			+	0.4			$	11,907,935
Operating profit			122,548				104,424			+	17.4				1,591,532
Income before income taxes			118,265				108,826			+	8.7				1,535,909
Net income attributable to Canon Inc.		¥	77,864			¥	68,195			+	14.2			$	1,011,221
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	64.43			¥	55.07			+	17.0			$	0.84
- Diluted			64.42				55.07			+	17.0				0.84

CONSOLIDATED RESULTS FOR THE NINE MONTHS

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

 

			Actual																Projected
		Nine  months ended September 30, 2011				Nine months ended September 30, 2010				Change(%)				Nine  months ended September 30, 2011				Year ending December 31, 2011				Change(%)
Net sales		¥	2,592,676			¥	2,639,035			-	1.8			$	33,671,117			¥	3,650,000			-	1.5
Operating profit			283,461				304,705			-	7.0				3,681,312				360,000			-	7.1
Income before income taxes			281,924				310,329			-	9.2				3,661,351				350,000			-	10.9
Net income attributable to Canon Inc.		¥	187,187			¥	192,644			-	2.8			$	2,431,000			¥	230,000			-	6.7
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	153.42			¥	155.79			-	1.5			$	1.99			¥	191.43			-	4.1
- Diluted			153.41				155.79			-	1.5				1.99				-				-
		Actual
		As of September 30, 2011				As of December 31, 2010				Change(%)				As of September 30, 2011
Total assets		¥	3,910,019			¥	3,983,820			-	1.9			$	50,779,468
Canon Inc. stockholders’ equity		¥	2,521,160			¥	2,645,782			-	4.7			$	32,742,338

 

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 JPY77=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of September 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

 

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I. Operating Results and Financial Conditions

2011 Third Quarter in Review

Looking back at the global economy in the third quarter of 2011, the pace of economic recovery further decelerated due to downward pressure on the economies of Europe and the United States. In the United States, a lack of progress in alleviating the high unemployment rate and housing problems led to a decline in the growth rate, while in Europe, as the peripheral countries confront the debt crisis, the major economies of the region also slowed down. In contrast, emerging Asian countries, such as China and India, continued to achieve solid economic growth fueled by stable domestic demand. In Japan, although the economy continued to face severe challenges, progress was made in restoring the supply chain and indications pointed to a recovery in production in the aftermath of the Great East Japan Earthquake.

As for the markets in which Canon operates amid these conditions, within the office equipment market, demand for network digital multifunction devices (MFDs) continued to recover moderately. The laser printer market continued to display solid growth boosted by emerging economies. With regard to the consumer products market, demand for digital single-lens reflex (SLR) cameras maintained significant growth in all regions, while the market for compact digital cameras grew steadily in emerging markets. Demand for inkjet printers achieved healthy growth in emerging markets and a recovery of demand was also felt in Japan, resulting in stable growth overall. In the industry and others sector, investment in semiconductor lithography equipment used to manufacture DRAM memory devices was partially restrained due to a slowdown in the PC market. Despite solid growth in liquid crystal display (LCD) lithography equipment for the manufacture of mid- and small-size LCD panels used in smartphones, demand for equipment used to manufacture large LCD panels has remained sluggish since the beginning of the year.

The average values of the yen during the third quarter and first nine months of the year were ¥77.75 and ¥80.39 to the U.S. dollar, respectively, year-on-year appreciations of approximately ¥8 and ¥9, and ¥109.98 and ¥113.23 to the euro, respectively, year-on-year appreciations of approximately ¥1 and ¥3.

In the third quarter, owing to recovery efforts following the earthquake through increased production and expanded sales, net sales of digital SLR cameras recorded significant year-on-year growth. As for network digital MFDs and laser printers, despite the signs of recovery from the previous quarter, third-quarter net sales declined from the year-ago period. Additionally, the Industry and Others Business Unit recorded an increase in net sales during the three-month period. Amid the impact of the strong yen against the U.S. dollar, which led to significantly reduced sales, overall net sales for the third quarter totaled ¥916.9 billion (U.S.$11,908 million), an increase of 0.4% from the year-ago period. Net sales for the nine months ended September 30, 2011 totaled ¥2,592.7 billion (U.S.$33,671 million), slipping 1.8% year on year, reflecting the effects of the earthquake in the first half of the year. The gross profit ratio for the third quarter improved by 0.5 points to 49.4%, thanks to ongoing cost-cutting efforts that absorbed the impact of the appreciation of the yen to the U.S. dollar, while the ratio for the first nine months of the year rose 0.4 points to 49.3%. Gross profit for the third quarter totaled ¥452.5 billion (U.S.$5,877 million), a year-on-year increase of 1.3%, and totaled ¥1,277.2 billion (U.S.$16,588 million) for the first nine months, a year-on-year decline of 1.1%, due to reduced sales. Operating expenses decreased by ¥12.5 billion (U.S.$163 million) for the quarter owing to Group-wide efforts to thoroughly reduce spending. For the nine months ended September 30, 2011, however, the amount increased by ¥7.6 billion (U.S.$99 million), mainly stemming from the effects of new consolidation arising from the acquisition of Océ N.V. in the previous year. Consequently, third-quarter operating profit totaled ¥122.5 billion (U.S.$1,592 million), jumping 17.4% year on year, income before income taxes totaled ¥118.3 billion (U.S.$1,536 million), an increase of 8.7% from the year-ago period, and net income attributable to Canon Inc. totaled ¥77.9 billion (U.S.$1,011 million) for the quarter, an increase of 14.2%, achieving year-on-year increases in both sales and profit for the first time in four quarters. As for the first nine months of the year, operating profit decreased by 7.0% to ¥283.5 billion (U.S.$3,681 million), income before income taxes declined 9.2% to ¥281.9 billion (U.S.$3,661 million), and net income attributable to Canon Inc. dipped 2.8% to ¥187.2 billion (U.S.$2,431 million).

Basic net income attributable to Canon Inc. stockholders per share for the third quarter was ¥64.43 (U.S.$0.84), an increase of ¥9.36 (U.S.$0.12) compared with the corresponding quarter for the previous year, and ¥153.42 (U.S.$1.99) for the first nine months of 2011, a year-on-year decrease of ¥2.37 (U.S.$0.03).

 

- 2 -

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Results by Segment

Looking at Canon’s quarterly performance by business unit, within the Office Business Unit, amid stable demand for color network digital MFDs, particularly the imageRUNNER ADVANCE C5000/C2000-series, efforts to restore production following the earthquake led to a year-on-year increase in overall sales volumes. In addition, sales of imagePRESS C7010VPS/C6010VPS/C6010S-series color MFDs for production printing, which were launched in March this year and are the first products to be jointly developed by Canon and Océ, gained momentum and contributed to increased unit sales of digital commercial printing and production printing devices for corporate clients. As for laser printers, hearty demand centered on emerging countries boosted unit sales volume, mainly for monochrome models, resulting in nearly double-digit growth compared with the corresponding period of the previous year. These performances, however, were affected by the appreciation of the yen against the U.S. dollar along with a shift in demand to lower-priced products. As a result, third-quarter sales for the segment dropped 6.7% year on year to ¥472.9 billion (U.S.$6,142 million), while operating profit for the quarter decreased 11.2% to ¥67.8 billion (U.S.$880 million) due to the appreciation of the yen against the U.S. dollar along with the decline in gross profit accompanying reduced sales. Sales for the first nine months of the year totaled ¥1,419.6 billion (U.S.$18,436 million), slipping 1.3% year on year, while operating profit decreased by 17.9% to ¥190.7 billion (U.S.$2,476 million).

Within the Consumer Business Unit, active efforts to boost production and expand sales in response to robust demand for digital SLR cameras resulted in significant increases in sales volumes over the corresponding year-ago period for such models as the entry-level EOS Rebel T3i/T2i/T3 and the advanced-amateur EOS 5D Mark II and EOS 60D. As for compact digital cameras, sales of the PowerShot ELPH 100 HS/300 HS and PowerShot SX230 HS, which were launched this spring, remained solid while sales of the PowerShot ELPH 310 HS introduced in September recorded a healthy start, resulting in a year-on-year increase of unit sales overall. With regard to inkjet printers, despite the impact of severe price competition among market players in Europe and elsewhere, unit sales increased year on year, fueled by sales growth for the mid- to high-end PIXMA MG6220/6120/5120, mainly in Japan, and for the entry-level PIXMA MP280, mainly in emerging markets. Accordingly, amid the effects of the strong yen to the U.S. dollar, third-quarter sales for the Consumer Business Unit increased 7.0% year on year to ¥347.4 billion (U.S.$4,512 million), and quarterly operating profit climbed 27.9% to ¥75.2 billion (U.S.$976 million), reflecting the effects of increased sales along with cost-reduction and expense-cutting efforts. Having not fully recovered from the negative effects of the earthquake in the first half and the impact of the appreciation of the yen, net sales for the first nine months totaled ¥939.3 billion (U.S.$12,198 million), a decline of 4.1% year on year, while operating profit totaled ¥160.4 billion (U.S.$2,083 million), a decrease of 7.3% year on year.

In the Industry and Others Business Unit, owing to active investment in semiconductor lithography equipment for the manufacture of NAND flash memories and digital-imaging sensors, which are used in smartphones, and power devices utilized in environmentally friendly products, sales of i-line steppers remained solid. Unit sales of LCD lithography equipment dropped substantially in the face of shrinking demand for equipment to produce large-size panels, an area in which Canon is particularly strong. In addition to these factors, sales of equipment used to manufacture organic light-emitting panels, which applies vacuum technologies and is sold by a Canon Group company, increased significantly, contributing to third-quarter sales for the segment, which totaled ¥123.8 billion (U.S.$1,608 million), an increase of 12.8%. Operating profit was ¥9.1 billion (U.S.$118 million), a surge of 106.9%, owing to the improved gross profit ratio along with efforts to curb expenses. Sales for the first nine months of the year totaled ¥306.8 billion (U.S.$3,985 million), rising 1.9% year on year, while operating profit was ¥20.5 billion (U.S.$267 million).

Cash Flow

During the first nine months of 2011, cash flow from operating activities totaled ¥342.6 billion (U.S.$4,449 million), a decrease of ¥176.8 billion (U.S.$2,297 million) compared with the year-ago period, as the amounts of accounts payable and accrued income tax increased in the previous year amid the recovery following the collapse of Lehman Brothers. Cash out flow from investing activities decreased ¥41.2 billion (U.S.$535 million) year on year, mainly as a result of corporate acquisition activities implemented in the year-ago period, totaling ¥202.0 billion (U.S.$2,623 million). Accordingly, free cash flow totaled ¥140.6 billion (U.S.$1,826 million), a decrease of ¥135.6 billion (U.S.$1,762 million) from the corresponding period of the previous year.

Cash flow from financing activities recorded an outlay of ¥251.6 billion (U.S.$3,267 million), mainly arising from the dividend payout and repurchases of treasury stock. This, along with the negative impact of foreign currency translation adjustments, resulted in cash and cash equivalents of ¥711.6 billion (U.S.$9,242 million), a decrease of ¥128.9 billion (U.S.$1,675 million) year on year.

 

- 3 -

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Outlook

As for the outlook in the fourth quarter of 2011, the global economy is expected to realize low growth and also faces increasing downward risks due to public finance and financial market problems. Amid lingering concerns over high unemployment and housing issues in the United States, coupled with the debt crisis in Europe, the pace of recovery in these economies is expected to be weak. As for emerging economies such as China and India, which are expected to continue enjoying robust growth, there is concern over weakening export growth to Europe and the United States and the economic impact of tighter financial measures. Despite signs of recovery in Japan following the earthquake, the negative effects of the current historically strong yen on exports and the impact on production activities are expected to continue to have a negative influence on the Japanese economy.

In the businesses in which Canon is involved, within the office equipment market, demand for such products as network digital MFDs is anticipated to recover modestly. Although the slowdown in European economies and the United States is cause for concern, overall demand for laser printers is growing steadily. With regard to the consumer products market, demand for digital SLR cameras is expected to achieve robust growth. Amid the slowed growth for compact digital cameras due to weak consumer spending in developed countries, demand in emerging markets continues to grow steadily. Despite the fierce price competition within the inkjet printer segment, which is expected to continue, demand is projected to grow steadily. However, due to the floods in Thailand in this month, the company anticipates delays in production for select inkjet printer and digital camera products. In the industry and others market, although chip manufacturers are expected to further curb investment in semiconductor lithography equipment for the manufacture of DRAM memory devices, solid demand is projected for i-line steppers, a segment in which Canon excels. Demand for LCD lithography equipment targeting mid- and small-size LCD panels is also expected to grow in contrast to the sluggish demand for lithography equipment targeting large-size panels.

With regard to currency exchange rates for the last quarter in 2011, on which Canon’s performance outlook is based, despite the uncertain prospects of the current historically strong yen amid the instability in financial markets, Canon anticipates exchange rates for the period of ¥77 to the U.S. dollar and ¥105 to the euro. The annual average exchange rates are ¥79.41 to the U.S. dollar and ¥110.83 to the euro, representing appreciation of approximately ¥8 against the U.S. dollar and ¥4 against the euro compared with the annual average rates for the previous year.

Upon taking into consideration the abovementioned foreign exchange rate assumptions along with the current economic forecasts and market prospects, and incorporating the predicted impact of the floods in Thailand, Canon projects full-year consolidated net sales of ¥3,650.0 billion (U.S.$47,403 million), a year-on-year decrease of 1.5%; operating profit of ¥360.0 billion (U.S.$4,675 million), a year-on-year decrease of 7.1%; income before income taxes of ¥350.0 billion (U.S.$4,545 million), a year-on-year decrease of 10.9%; and net income attributable to Canon Inc. of ¥230.0 billion (U.S.$2,987 million), a year-on-year decrease of 6.7%.

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		¥	3,780,000			¥	3,650,000			¥	(130,000)			¥	3,706,901				-1.5%
Operating profit			380,000				360,000				(20,000)				387,552				-7.1%
Income before income taxes			380,000				350,000				(30,000)				392,863				-10.9%
Net income attributable to Canon Inc.		¥	260,000			¥	230,000			¥	(30,000)			¥	246,603				-6.7%

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

II. Financial Statements

1.  CONSOLIDATED BALANCE SHEETS

 

			$50,779,468				$50,779,468				$50,779,468				$50,779,468
		Millions of yen												Thousands of U.S. dollars
		As of September 30, 2011				As of December 31, 2010				Change				As of September 30, 2011
ASSETS
Current assets:
Cash and cash equivalents		¥	711,631			¥	840,579			¥	(128,948	)		$	9,241,961
Short-term investments			146,447				96,815				49,632				1,901,909
Trade receivables, net			480,436				557,504				(77,068	)			6,239,429
Inventories			518,039				384,777				133,262				6,727,779
Prepaid expenses and other current assets			266,208				250,754				15,454				3,457,247
Total current assets			2,122,761				2,130,429				(7,668	)			27,568,325
Noncurrent receivables			16,811				16,771				40				218,325
Investments			56,531				81,529				(24,998	)			734,169
Property, plant and equipment, net			1,188,765				1,201,968				(13,203	)			15,438,506
Intangible assets, net			139,497				153,021				(13,524	)			1,811,649
Other assets			385,654				400,102				(14,448	)			5,008,494
Total assets		¥	3,910,019			¥	3,983,820			¥	(73,801	)		$	50,779,468
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt		¥	11,877			¥	7,200			¥	4,677			$	154,247
Trade payables			423,347				383,251				40,096				5,498,013
Accrued income taxes			68,345				72,482				(4,137	)			887,597
Accrued expenses			308,843				299,710				9,133				4,010,948
Other current liabilities			146,014				134,298				11,716				1,896,286
Total current liabilities			958,426				896,941				61,485				12,447,091
Long-term debt, excluding current installments			4,954				4,131				823				64,338
Accrued pension and severance cost			192,353				197,609				(5,256	)			2,498,091
Other noncurrent liabilities			69,529				75,502				(5,973	)			902,974
Total liabilities			1,225,262				1,174,183				51,079				15,912,494
Equity:
Canon Inc. stockholders’ equity:
Common stock			174,762				174,762				-				2,269,636
Additional paid-in capital			401,410				400,425				985				5,213,117
Legal reserve			58,988				57,930				1,058				766,078
Retained earnings			2,998,013				2,965,237				32,776				38,935,234
Accumulated other comprehensive income (loss)			(450,172	)			(390,459	)			(59,713	)			(5,846,390	)
Treasury stock, at cost			(661,841	)			(562,113	)			(99,728	)			(8,595,337	)
Total Canon Inc. stockholders’ equity			2,521,160				2,645,782				(124,622	)			32,742,338
Noncontrolling interests			163,597				163,855				(258	)			2,124,636
Total equity			2,684,757				2,809,637				(124,880	)			34,866,974
Total liabilities and equity		¥	3,910,019			¥	3,983,820			¥	(73,801	)		$	50,779,468
		Millions of yen												Thousands of U.S. dollars
		As of September 30, 2011				As of December 31, 2010								As of September 30, 2011
Notes:
1. Allowance for doubtful receivables		¥	11,880			¥	14,920							$	154,286
2. Accumulated depreciation			2,034,757				1,909,703								26,425,416
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments			(383,160	)			(325,612	)							(4,976,104	)
Net unrealized gains and losses on securities			(1,034	)			3,020								(13,429	)
Net gains and losses on derivative instruments			2,042				917								26,519
Pension liability adjustments			(68,020	)			(68,784	)							(883,376	)

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2.  CONSOLIDATED STATEMENTS OF INCOME

 

Results for the third quarter		Millions of yen																Thousands of U.S. dollars
		Three months ended September 30, 2011				Three months ended September 30, 2010				Change(%)								Three months ended September 30, 2011
Net sales		¥	916,911			¥	913,151				+				0.4			$	11,907,935
Cost of sales			464,405				466,240												6,031,234
Gross profit			452,506				446,911				+				1.3				5,876,701
Operating expenses:
Selling, general and administrative expenses			251,974				265,413												3,272,390
Research and development expenses			77,984				77,074												1,012,779
			329,958				342,487												4,285,169
Operating profit			122,548				104,424				+				17.4				1,591,532
Other income (deductions):
Interest and dividend income			2,056				1,544												26,701
Interest expense			(155	)			(207	)											(2,013	)
Other, net			(6,184	)			3,065												(80,311	)
			(4,283	)			4,402												(55,623	)
Income before income taxes			118,265				108,826				+				8.7				1,535,909
Income taxes			39,733				39,904												516,013
Consolidated net income			78,532				68,922												1,019,896
Less: Net income attributable to noncontrolling interests			668				727												8,675
Net income attributable to Canon Inc.		¥	77,864			¥	68,195				+				14.2			$	1,011,221

 

Note:		Consolidated comprehensive loss for the three months ended September 30, 2011 was JPY 1,723 million (U.S.$ 22,377 thousand) and consolidated comprehensive income for the three months ended September 30, 2010 was JPY 52,105 million.

 

Results for the nine months		Millions of yen																Thousands of U.S. dollars
		Nine  months ended September 30, 2011				Nine months ended September 30, 2010				Change(%)								Nine months ended September 30, 2011
Net sales		¥	2,592,676			¥	2,639,035				-				1.8			$	33,671,117
Cost of sales			1,315,434				1,348,193												17,083,559
Gross profit			1,277,242				1,290,842				-				1.1				16,587,558
Operating expenses:
Selling, general and administrative expenses			769,623				756,238												9,995,103
Research and development expenses			224,158				229,899												2,911,143
			993,781				986,137												12,906,246
Operating profit			283,461				304,705				-				7.0				3,681,312
Other income (deductions):
Interest and dividend income			5,816				4,287												75,532
Interest expense			(827	)			(1,160	)											(10,740	)
Other, net			(6,526	)			2,497												(84,753	)
			(1,537	)			5,624												(19,961	)
Income before income taxes			281,924				310,329				-				9.2				3,661,351
Income taxes			91,992				113,879												1,194,702
Consolidated net income			189,932				196,450												2,466,649
Less: Net income attributable to noncontrolling interests			2,745				3,806												35,649
Net income attributable to Canon Inc.		¥	187,187			¥	192,644				-				2.8			$	2,431,000

 

Note:		Consolidated comprehensive income for the nine months ended September 30, 2011 and 2010 was JPY 130,161 million (U.S.$ 1,690,403 thousand) and JPY 104,852 million, respectively.

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3.  DETAILS OF SALES

 

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

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

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4.  CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Millions of yen								Thousands of U.S. dollars
		Nine months ended September 30, 2011				Nine months ended September 30, 2010				Nine months ended September 30, 2011
Cash flows from operating activities:
Consolidated net income		¥	189,932			¥	196,450			$	2,466,649
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			190,528				198,033				2,474,390
Loss on disposal of fixed assets			6,946				8,240				90,208
Deferred income taxes			(8,017	)			3,588				(104,117	)
Decrease in trade receivables			62,847				26,584				816,195
Increase in inventories			(151,547	)			(93,981	)			(1,968,143	)
Increase in trade payables			71,560				110,507				929,351
Increase (decrease) in accrued income taxes			(3,242	)			37,405				(42,104	)
Increase in accrued expenses			17,475				9,062				226,948
Increase (decrease) in accrued (prepaid) pension and severance cost			(941	)			4,451				(12,221	)
Other, net			(32,958	)			19,088				(428,026	)
Net cash provided by operating activities			342,583				519,427				4,449,130
Cash flows from investing activities:
Purchases of fixed assets			(159,319	)			(136,735	)			(2,069,078	)
Proceeds from sale of fixed assets			2,695				1,666				35,000
Purchases of available-for-sale securities			(1,939	)			(10,882	)			(25,182	)
Proceeds from sale and maturity of available-for-sale securities			1,586				241				20,597
Increase in time deposits, net			(57,144	)			(40,132	)			(742,130	)
Acquisitions of subsidiaries, net of cash acquired			17				(55,604	)			221
Purchases of other investments			(147	)			(851	)			(1,909	)
Other, net			12,251				(905	)			159,104
Net cash used in investing activities			(202,000	)			(243,202	)			(2,623,377	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			712				3,856				9,247
Repayments of long-term debt			(4,053	)			(4,134	)			(52,636	)
Increase (decrease) in short-term loans, net			7,479				(74,002	)			97,130
Dividends paid			(152,784	)			(136,103	)			(1,984,208	)
Repurchases of treasury stock, net			(99,835	)			(32,903	)			(1,296,558	)
Other, net			(3,088	)			(24,672	)			(40,105	)
Net cash used in financing activities			(251,569	)			(267,958	)			(3,267,130	)
Effect of exchange rate changes on cash and cash equivalents			(17,962	)			(43,902	)			(233,272	)
Net change in cash and cash equivalents			(128,948	)			(35,635	)			(1,674,649	)
Cash and cash equivalents at beginning of period			840,579				795,034				10,916,610
Cash and cash equivalents at end of period		¥	711,631			¥	759,399			$	9,241,961

 

- 8 -

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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 third quarter				Millions of yen												Thousands of U.S. dollars
				Three months ended September 30, 2011				Three months ended September 30, 2010				Change(%)				Three months ended September 30, 2011
Office
Net sales:
		External customers		¥	471,302			¥	505,049			-	6.7			$	6,120,805
		Intersegment			1,639				1,866			-	12.2				21,286
		Total			472,941				506,915			-	6.7				6,142,091
Operating cost and expenses					405,164				430,615			-	5.9				5,261,870
Operating profit				¥	67,777			¥	76,300			-	11.2			$	880,221
Consumer
Net sales:
		External customers		¥	347,167			¥	324,450			+	7.0			$	4,508,662
		Intersegment			275				323			-	14.9				3,572
		Total			347,442				324,773			+	7.0				4,512,234
Operating cost and expenses					272,270				265,996			+	2.4				3,535,974
Operating profit				¥	75,172			¥	58,777			+	27.9			$	976,260
Industry and Others
Net sales:
		External customers		¥	98,442			¥	83,652			+	17.7			$	1,278,468
		Intersegment			25,342				26,122			-	3.0				329,116
		Total			123,784				109,774			+	12.8				1,607,584
Operating cost and expenses					114,698				105,382			+	8.8				1,489,584
Operating profit				¥	9,086			¥	4,392			+	106.9			$	118,000
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(27,256	)			(28,311	)			-				(353,974	)
		Total			(27,256	)			(28,311	)			-				(353,974	)
Operating cost and expenses					2,231				6,734				-				28,975
Operating profit				¥	(29,487	)		¥	(35,045	)			-			$	(382,949	)
Consolidated
Net sales:
		External customers		¥	916,911			¥	913,151			+	0.4			$	11,907,935
		Intersegment			-				-				-				-
		Total			916,911				913,151			+	0.4				11,907,935
Operating cost and expenses					794,363				808,727			-	1.8				10,316,403
Operating profit				¥	122,548			¥	104,424			+	17.4			$	1,591,532

 

- 9 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the nine months				Millions of yen												Thousands of U.S. dollars
				Nine months ended September 30, 2011				Nine months ended September 30, 2010				Change(%)				Nine months ended September 30, 2011
Office
Net sales:
		External customers		¥	1,414,654			¥	1,431,626			-	1.2			$	18,372,130
		Intersegment			4,948				6,366			-	22.3				64,260
		Total			1,419,602				1,437,992			-	1.3				18,436,390
Operating cost and expenses					1,228,931				1,205,821			+	1.9				15,960,143
Operating profit				¥	190,671			¥	232,171			-	17.9			$	2,476,247
Consumer
Net sales:
		External customers		¥	938,528			¥	977,741			-	4.0			$	12,188,675
		Intersegment			751				1,346			-	44.2				9,754
		Total			939,279				979,087			-	4.1				12,198,429
Operating cost and expenses					778,883				806,044			-	3.4				10,115,364
Operating profit				¥	160,396			¥	173,043			-	7.3			$	2,083,065
Industry and Others
Net sales:
		External customers		¥	239,494			¥	229,668			+	4.3			$	3,110,312
		Intersegment			67,339				71,364			-	5.6				874,532
		Total			306,833				301,032			+	1.9				3,984,844
Operating cost and expenses					286,310				305,019			-	6.1				3,718,312
Operating profit (loss)				¥	20,523			¥	(3,987	)			-			$	266,532
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(73,038	)			(79,076	)			-				(948,546	)
		Total			(73,038	)			(79,076	)			-				(948,546	)
Operating cost and expenses					15,091				17,446				-				195,986
Operating profit				¥	(88,129	)		¥	(96,522	)			-			$	(1,144,532	)
Consolidated
Net sales:
		External customers		¥	2,592,676			¥	2,639,035			-	1.8			$	33,671,117
		Intersegment			-				-				-				-
		Total			2,592,676				2,639,035			-	1.8				33,671,117
Operating cost and expenses					2,309,215				2,334,330			-	1.1				29,989,805
Operating profit				¥	283,461			¥	304,705			-	7.0			$	3,681,312

 

- 10 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2)  SEGMENT INFORMATION BY GEOGRAPHIC AREA

 

Results for the third quarter				Millions of yen												Thousands of U.S.  dollars
				Three months ended September 30, 2011				Three months ended September 30, 2010				Change(%)				Three  months ended September 30, 2011
Japan
Net sales:
		External customers		¥	213,453			¥	199,912			+	6.8			$	2,772,117
		Intersegment			541,707				504,522			+	7.4				7,035,156
		Total			755,160				704,434			+	7.2				9,807,273
Operating cost and expenses					644,963				596,566			+	8.1				8,376,143
Operating profit				¥	110,197			¥	107,868			+	2.2			$	1,431,130
Americas
Net sales:
		External customers		¥	237,761			¥	244,674			-	2.8			$	3,087,805
		Intersegment			5,291				4,022			+	31.6				68,714
		Total			243,052				248,696			-	2.3				3,156,519
Operating cost and expenses					230,767				242,572			-	4.9				2,996,974
Operating profit				¥	12,285			¥	6,124			+	100.6			$	159,545
Europe
Net sales:
		External customers		¥	273,314			¥	285,550			-	4.3			$	3,549,532
		Intersegment			1,472				462			+	218.6				19,117
		Total			274,786				286,012			-	3.9				3,568,649
Operating cost and expenses					260,120				273,649			-	4.9				3,378,181
Operating profit				¥	14,666			¥	12,363			+	18.6			$	190,468
Asia and Oceania
Net sales:
		External customers		¥	192,383			¥	183,015			+	5.1			$	2,498,481
		Intersegment			225,350				192,854			+	16.9				2,926,623
		Total			417,733				375,869			+	11.1				5,425,104
Operating cost and expenses					398,688				361,404			+	10.3				5,177,766
Operating profit				¥	19,045			¥	14,465			+	31.7			$	247,338
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(773,820	)			(701,860	)			-				(10,049,610	)
		Total			(773,820	)			(701,860	)			-				(10,049,610	)
Operating cost and expenses					(740,175	)			(665,464	)			-				(9,612,661	)
Operating profit				¥	(33,645	)		¥	(36,396	)			-			$	(436,949	)
Consolidated
Net sales:
		External customers		¥	916,911			¥	913,151			+	0.4			$	11,907,935
		Intersegment			-				-				-				-
		Total			916,911				913,151			+	0.4				11,907,935
Operating cost and expenses					794,363				808,727			-	1.8				10,316,403
Operating profit				¥	122,548			¥	104,424			+	17.4			$	1,591,532

 

- 11 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the nine months				Millions of yen												Thousands of U.S. dollars
				Nine  months ended September 30, 2011				Nine months ended September 30, 2010				Change(%)				Nine  months ended September 30, 2011
Japan
Net sales:
		External customers		¥	572,347			¥	604,374			-	5.3			$	7,433,078
		Intersegment			1,419,806				1,457,204			-	2.6				18,439,039
		Total			1,992,153				2,061,578			-	3.4				25,872,117
Operating cost and expenses					1,699,616				1,743,505			-	2.5				22,072,935
Operating profit				¥	292,537			¥	318,073			-	8.0			$	3,799,182
Americas
Net sales:
		External customers		¥	682,176			¥	711,328			-	4.1			$	8,859,429
		Intersegment			12,352				5,134			+	140.6				160,415
		Total			694,528				716,462			-	3.1				9,019,844
Operating cost and expenses					677,833				698,834			-	3.0				8,803,026
Operating profit				¥	16,695			¥	17,628			-	5.3			$	216,818
Europe
Net sales:
		External customers		¥	818,803			¥	823,886			-	0.6			$	10,633,805
		Intersegment			3,483				2,650			+	31.4				45,234
		Total			822,286				826,536			-	0.5				10,679,039
Operating cost and expenses					788,977				794,215			-	0.7				10,246,455
Operating profit				¥	33,309			¥	32,321			+	3.1			$	432,584
Asia and Oceania
Net sales:
		External customers		¥	519,350			¥	499,447			+	4.0			$	6,744,805
		Intersegment			560,780				528,637			+	6.1				7,282,857
		Total			1,080,130				1,028,084			+	5.1				14,027,662
Operating cost and expenses					1,036,900				988,666			+	4.9				13,466,233
Operating profit				¥	43,230			¥	39,418			+	9.7			$	561,429
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-			$	-
		Intersegment			(1,996,421	)			(1,993,625	)			-				(25,927,545	)
		Total			(1,996,421	)			(1,993,625	)			-				(25,927,545	)
Operating cost and expenses					(1,894,111	)			(1,890,890	)			-				(24,598,844	)
Operating profit				¥	(102,310	)		¥	(102,735	)			-			$	(1,328,701	)
Consolidated
Net sales:
		External customers		¥	2,592,676			¥	2,639,035			-	1.8			$	33,671,117
		Intersegment			-				-				-				-
		Total			2,592,676				2,639,035			-	1.8				33,671,117
Operating cost and expenses					2,309,215				2,334,330			-	1.1				29,989,805
Operating profit				¥	283,461			¥	304,705			-	7.0			$	3,681,312

 

- 12 -

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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

 

		September 30, 2011				December 31, 2010				Change
Subsidiaries			291				294				(3	)
Affiliates			13				14				(1	)
Total			304				308				(4	)

 

2.

Change in Group Entities

 

Subsidiaries
Addition:		6 companies
Removal:		9 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.

(2) SIGNIFICANT ACCOUNTING POLICIES

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

 

- 13 -

---

Canon Inc.

Oct. 25, 2011

CONSOLIDATED FINANCIAL RESULTS FOR

THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 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
				3rd quarter				YTD				Year (P)				3rd quarter				YTD				Year						3rd quarter				YTD				Year
Japan
		Office			85,879				265,336				-				88,935				280,695				376,928						-3.4	%			-5.5	%			-
		Consumer			46,033				125,807				-				49,080				145,711				216,509						-6.2	%			-13.7	%			-
		Industry and Others			37,614				101,987				-				21,904				71,174				102,312						+71.7	%			+43.3	%			-
		Total			169,526				493,130				703,000				159,919				497,580				695,749						+6.0	%			-0.9	%			+1.0	%
Overseas
		Office			385,423				1,149,318				-				416,114				1,150,931				1,602,017						-7.4	%			-0.1	%			-
		Consumer			301,134				812,721				-				275,370				832,030				1,173,113						+9.4	%			-2.3	%			-
		Industry and Others			60,828				137,507				-				61,748				158,494				236,022						-1.5	%			-13.2	%			-
		Total			747,385				2,099,546				2,947,000				753,232				2,141,455				3,011,152						-0.8	%			-2.0	%			-2.1	%
Americas
		Office			148,509				434,253				-				156,538				431,267				601,090						-5.1	%			+0.7	%			-
		Consumer			82,218				225,396				-				80,142				260,710				379,522						+2.6	%			-13.5	%			-
		Industry and Others			9,871				28,002				-				10,015				29,212				42,687						-1.4	%			-4.1	%			-
		Total			240,598				687,651				970,600				246,695				721,189				1,023,299						-2.5	%			-4.7	%			-5.1	%
Europe
		Office			165,340				516,538				-				189,412				524,562				733,216						-12.7	%			-1.5	%			-
		Consumer			103,556				286,735				-				91,500				284,073				407,994						+13.2	%			+0.9	%			-
		Industry and Others			4,927				19,144				-				7,100				21,024				31,264						-30.6	%			-8.9	%			-
		Total			273,823				822,417				1,146,600				288,012				829,659				1,172,474						-4.9	%			-0.9	%			-2.2	%
Asia and Oceania
		Office			71,574				198,527				-				70,164				195,102				267,711						+2.0	%			+1.8	%			-
		Consumer			115,360				300,590				-				103,728				287,247				385,597						+11.2	%			+4.6	%			-
		Industry and Others			46,030				90,361				-				44,633				108,258				162,071						+3.1	%			-16.5	%			-
		Total			232,964				589,478				829,800				218,525				590,607				815,379						+6.6	%			-0.2	%			+1.8	%
Intersegment
		Office			1,639				4,948				-				1,866				6,366				8,324						-12.2	%			-22.3	%			-
		Consumer			275				751				-				323				1,346				1,705						-14.9	%			-44.2	%			-
		Industry and Others			25,342				67,339				-				26,122				71,364				94,624						-3.0	%			-5.6	%			-
		Eliminations			(27,256	)			(73,038	)			-				(28,311	)			(79,076	)			(104,653	)					-				-				-
		Total			0				0				0				0				0				0						-				-				-
Total
		Office			472,941				1,419,602				1,968,200				506,915				1,437,992				1,987,269						-6.7	%			-1.3	%			-1.0	%
		Consumer			347,442				939,279				1,340,900				324,773				979,087				1,391,327						+7.0	%			-4.1	%			-3.6	%
		Industry and Others			123,784				306,833				430,100				109,774				301,032				432,958						+12.8	%			+1.9	%			-0.7	%
		Eliminations			(27,256	)			(73,038	)			(89,200	)			(28,311	)			(79,076	)			(104,653	)					-				-				-
		Total			916,911				2,592,676				3,650,000				913,151				2,639,035				3,706,901						+0.4	%			-1.8	%			-1.5	%

(P)=Projection

 

- S1 -

---

Canon Inc.

 

2. SEGMENT INFORMATION BY BUSINESS UNIT

(Millions of yen)

				2011												2010														Change year over year
				3rd quarter				YTD				Year (P)				3rd quarter				YTD				Year						3rd quarter				YTD				Year
Office
		External customers			471,302				1,414,654				1,962,000				505,049				1,431,626				1,978,945						-6.7%				-1.2%				-0.9%
		Intersegment			1,639				4,948				6,200				1,866				6,366				8,324						-12.2%				-22.3%				-25.5%
		Total sales			472,941				1,419,602				1,968,200				506,915				1,437,992				1,987,269						-6.7%				-1.3%				-1.0%
		Operating profit			67,777				190,671				254,000				76,300				232,171				293,322						-11.2%				-17.9%				-13.4%
		% of sales			14.3%				13.4%				12.9%				15.1%				16.1%				14.8%						-				-				-
Consumer
		External customers			347,167				938,528				1,339,900				324,450				977,741				1,389,622						+7.0%				-4.0%				-3.6%
		Intersegment			275				751				1,000				323				1,346				1,705						-14.9%				-44.2%				-41.3%
		Total sales			347,442				939,279				1,340,900				324,773				979,087				1,391,327						+7.0%				-4.1%				-3.6%
		Operating profit			75,172				160,396				208,500				58,777				173,043				238,065						+27.9%				-7.3%				-12.4%
		% of sales			21.6%				17.1%				15.5%				18.1%				17.7%				17.1%						-				-				-
Industry and Others
		External customers			98,442				239,494				348,100				83,652				229,668				338,334						+17.7%				+4.3%				+2.9%
		Intersegment			25,342				67,339				82,000				26,122				71,364				94,624						-3.0%				-5.6%				-13.3%
		Total sales			123,784				306,833				430,100				109,774				301,032				432,958						+12.8%				+1.9%				-0.7%
		Operating profit			9,086				20,523				29,300				4,392				(3,987	)			(9,831	)					+106.9%				-				-
		% of sales			7.3%				6.7%				6.8%				4.0%				-1.3%				-2.3%						-				-				-
Corporate and Eliminations
		External customers			-				-				-				-				-				-						-				-				-
		Intersegment			(27,256	)			(73,038	)			(89,200	)			(28,311	)			(79,076	)			(104,653	)					-				-				-
		Total sales			(27,256	)			(73,038	)			(89,200	)			(28,311	)			(79,076	)			(104,653	)					-				-				-
		Operating profit			(29,487	)			(88,129	)			(131,800	)			(35,045	)			(96,522	)			(134,004	)					-				-				-
Consolidated
		External customers			916,911				2,592,676				3,650,000				913,151				2,639,035				3,706,901						+0.4%				-1.8%				-1.5%
		Intersegment			-				-				-				-				-				-						-				-				-
		Total sales			916,911				2,592,676				3,650,000				913,151				2,639,035				3,706,901						+0.4%				-1.8%				-1.5%
		Operating profit			122,548				283,461				360,000				104,424				304,705				387,552						+17.4%				-7.0%				-7.1%
		% of sales			13.4%				10.9%				9.9%				11.4%				11.5%				10.5%						-				-				-
(P)=Projection
3. OTHER INCOME / DEDUCTIONS																														(Millions of yen)
				2011												2010														Change year over year
				3rd quarter				YTD				Year (P)				3rd quarter				YTD				Year						3rd quarter				YTD				Year
		Interest and dividend, net			1,901				4,989				6,500				1,337				3,127				4,091						+564				+1,862				+2,409
		Forex gain (loss)			(6,496	)			(5,659	)			(9,500	)			1,340				3,535				3,089						(7,836	)			(9,194	)			(12,589	)
		Equity earnings (loss) of affiliated companies			(277	)			(5,654	)			(6,500	)			(1,853	)			11,022				10,471						+1,576				(16,676	)			(16,971	)
		Other, net			589				4,787				(500	)			3,578				(12,060	)			(12,340	)					(2,989	)			+16,847				+11,840
		Total			(4,283	)			(1,537	)			(10,000	)			4,402				5,624				5,311						(8,685	)			(7,161	)			(15,311	)

(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
		3rd quarter				YTD				Year (P)				3rd quarter				YTD				Year
Office
Monochrome copiers			15	%			15	%			15	%			15	%			16	%			15	%
Color copiers			17	%			17	%			17	%			16	%			17	%			17	%
Other printing devices			49	%			48	%			47	%			50	%			51	%			50	%
Others			19	%			20	%			21	%			19	%			16	%			18	%
Consumer
Cameras			74	%			71	%			71	%			71	%			70	%			70	%
Inkjet printers			21	%			24	%			24	%			24	%			24	%			24	%
Others			5	%			5	%			5	%			5	%			6	%			6	%
Industry and Others
Lithography equipment			17	%			17	%			20	%			26	%			22	%			23	%
Others			83	%			83	%			80	%			74	%			78	%			77	%

(P)=Projection

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

		2nd quarter			2nd quarter				2nd quarter				2nd quarter
				2011
				3rd quarter				YTD				Year (P)
Office
		Japan			-3.4	%			-5.5	%			-
		Overseas			-1.6	%			+7.0	%			-
		Total			-2.0	%			+4.4	%			+4.7%
Consumer
		Japan			-6.2	%			-13.7	%			-
		Overseas			+14.8	%			+4.1	%			-
		Total			+11.6	%			+1.4	%			+1.8%
Industry and Others
		Japan			+71.7	%			+43.3	%			-
		Overseas			+0.1	%			-10.7	%			-
		Total			+13.6	%			+3.3	%			+0.6%
Total
		Japan			+6.0	%			-0.9	%			+1.0%
		Overseas			+4.5	%			+4.6	%			+4.3%
		Americas			+6.6	%			+4.7	%			+3.5%
		Europe			-2.7	%			+3.6	%			+2.9%
		Asia and Oceania			+11.8	%			+5.7	%			+7.3%
		Total			+4.8	%			+3.5	%			+3.7%

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

 

- S3 -

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Canon Inc.

6. PROFITABILITY

				2011								2010
				YTD				Year (P)				YTD				Year
ROE *1					9.7	%			8.7	%			9.6	%			9.2	%
ROA *2					6.3	%			5.8	%			6.5	%			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
				3rd quarter				4th quarter (P)				Year (P)				3rd quarter				Year
Yen/US$					77.75				77.00				79.41				85.79				87.40
Yen/Euro					109.98				105.00				110.83				110.61				114.97
																					(P)=Projection
(2) Impact of foreign exchange rates on sales (Year over year)								(Billions of yen)
				2011
				3rd quarter				Year (P)
		US$			(29.7	)			(121.7	)
		Euro			(1.7	)			(37.9	)
		Other currencies			(2.1	)			(10.0	)
		Total			(33.5	)			(169.6	)
									(P)=Projection
(3) Impact of foreign exchange rates per yen				(Billions of yen)
				2011
				4th quarter (P)
On sales
		US$			5.2
		Euro			2.9
On operating profit
		US$			2.4
		Euro			1.7
					(P)=Projection
8. STATEMENTS OF CASH FLOWS					(Millions of yen)
				2011								2010
				3rd quarter				Year (P)				3rd quarter				Year
Net cash provided by operating activities					151,758				470,000				170,852				744,413
Net cash used in investing activities					(128,692	)			(340,000	)			(66,220	)			(342,133	)
Free cash flow					23,066				130,000				104,632				402,280
Net cash used in financing activities					(125,135	)			(254,000	)			(117,353	)			(279,897	)
Effect of exchange rate changes on cash and cash equivalents					(34,919	)			(16,600	)			423				(76,838	)
Net change in cash and cash equivalents					(136,988	)			(140,600	)			(12,298	)			45,545
Cash and cash equivalents at end of period					711,631				700,000				759,399				840,579
																	(P)=Projection

 

- S4 -

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Canon Inc.

 

9. R&D EXPENDITURE		(Millions of yen)

				2011								2010
				3rd quarter				Year (P)				3rd quarter				Year
Office					24,182				-				23,789				96,156
Consumer					20,801				-				20,382				82,843
Industry and Others					8,100				-				5,360				21,062
Corporate and Eliminations					24,901				-				27,543				115,756
		Total			77,984				310,000				77,074				315,817
% of sales					8.5%				8.5%				8.4%				8.5%
													(P)=Projection
10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION				(Millions of yen)
				2011								2010
				3rd quarter				Year (P)				3rd quarter				Year
		Increase in PP&E			54,545				250,000				32,417				158,976
		Depreciation and amortization			62,941				280,000				72,065				276,193
																	(P)=Projection
11. INVENTORIES
(1) Inventories				(Millions of yen)
				2011				2010				Difference
				Sep.30				Dec.31
Office					224,160				186,817				+37,343
Consumer					173,746				107,261				+66,485
Industry and Others					120,133				90,699				+29,434
		Total			518,039				384,777				+133,262
(2) Inventory turnover*				(Days)
				2011				2010				Difference
				Sep.30				Dec.31
		Office			44				32				+12
		Consumer			49				27				+22
		Industry and Others			133				88				+45
		Total			54				35				+19
		*Index based on the previous six months sales.
12. DEBT RATIO
				2011				2010				Difference
				Sep.30				Dec.31
		Total debt / Total assets			0.4	%			0.3	%			+0.1	%
13. OVERSEAS PRODUCTION RATIO
				2011				2010
				YTD				Year
		Overseas production ratio			52	%			49	%
14. NUMBER OF EMPLOYEES
				2011				2010				Difference
				Sep.30				Dec.31
		Japan			70,410				71,954				(1,544)
		Overseas			129,410				125,432				+3,978
		Total			199,820				197,386				+2,434

 

- S5 -