e6vk
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........................................................ , 2010  
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,     2010....
 
By....../s/...... Masashiro    Kobayashi  .........................         
 
 
(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.
1. RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR ENDED DECEMBER 31, 2009

 


 

(CANON LOGO)
RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2009
January 27, 2010
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, 2009     December 31, 2008           December 31, 2009   December 31, 2010
 
Net sales
    ¥ 3,209,201      ¥ 4,094,161       - 21.6       $ 34,882,620       ¥ 3,450,000       + 7.5  
Operating profit
    217,055       496,074     - 56.2       2,359,293       330,000       + 52.0  
Income before income taxes
    219,355       481,147     - 54.4       2,384,293       320,000       + 45.9  
Net income attributable to Canon Inc.
  ¥ 131,647     ¥ 309,148     - 57.4     $ 1,430,946     ¥ 200,000       + 51.9  
 
                       
                                     
Net income attributable to Canon Inc. stockholders per share:                
- Basic
  ¥ 106.64     ¥ 246.21     - 56.7     $ 1.16     ¥ 162.01       + 51.9  
- Diluted
    106.64       246.20     - 56.7       1.16       -       -  
 
                       
                                                 
 
    Actual            
    As of     As of     Change(%)   As of          
    December 31, 2009     December 31, 2008       December 31, 2008      
 
Total assets
  ¥ 3,847,557     ¥ 3,969,934     - 3.1     $ 41,821,272  
 
                       
Canon Inc. stockholders’ equity
  ¥ 2,688,109     ¥ 2,659,792     + 1.1     $ 29,218,576  
 
               
             
Notes:
    1.     Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.
 
    2.     Canon adopted the guidance for noncontrolling interests in consolidated financial statements in the fiscal year beginning January 1, 2009.
 
          In accordance with the adoption of the guidance, consolidated net income has been renamed to net income attributable to Canon Inc.
 
    3.     U.S. dollar amounts are translated from yen at the rate of JPY92 = U.S.$1, the approximate exchange rate on the Tokyo Foreign
 
          Exchange Market as of December 30, 2009, 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, 2009     December 31, 2008       December 31, 2009              
 
Net sales
    ¥ 2,025,546       ¥ 2,721,094       - 25.6       $ 22,016,804                  
Operating profit
    97,777       358,706       - 72.7       1,062,793                  
Ordinary profit
    142,684       359,086       - 60.3       1,550,913                  
Net income
  ¥ 80,778     ¥ 224,135       - 64.0     $ 878,022                  
 
                           
 
Net income per share:
                                               
- Basic
  ¥ 65.44     ¥ 178.50       - 63.3     $ 0.71                  
- Diluted
    65.43       178.49       - 63.3       0.71                  
Dividend per share
    110.00       110.00       -       1.20                  
 
                           
                                                 
 
 
    Actual              
    As of     As of     Change(%)     As of              
    December 31, 2009     December 31, 2008       December 31, 2009              
 
Total assets
  ¥ 2,551,100     ¥ 2,618,998       - 2.6     $ 27,729,348                  
 
                           
Net assets
  ¥ 1,812,718     ¥ 1,865,005       - 2.8     $ 19,703,457                  
 
                           
Note:   U.S. dollar amounts are translated from yen at the rate of JPY 92= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange
Market as of December 30, 2009, 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
2009 in Review
Looking back at the global economy in fiscal 2009, although the year began amid an unprecedentedly harsh business climate, economic stimulus measures implemented by different countries have started to yield results, leading to moderate recoveries as the second half of the year approached. Although countries such as China and India, whose economies have rapidly grown in prominence, maintained their stable growth largely owing to increased consumer spending, developed countries such as Japan, the United States and European nations all recorded negative growth for the first time since the end of World War II, leading to negative growth overall around the globe.
As for the markets in which Canon operates amid these conditions, within the office equipment market, demand for both color and monochrome models of network digital multifunction devices (MFDs) decreased in each region. While sales for laser printers also remained weak, dropping below the year-ago level, the rate of decline gradually narrowed toward the second half of the year. As for the consumer products market, while demand for compact digital cameras remained sluggish and prices continued to decline, demand for digital single-lens reflex (SLR) cameras displayed solid growth especially in overseas markets. With regard to inkjet printers, although demand continued to be slack, which led to a reduction in market size compared with the previous year, conditions started to improve toward the end of the year. In the industry and others market, demand for steppers, utilized in the production of semiconductors, declined significantly while demand for aligners, used to produce liquid crystal display (LCD) panels, also slowed but showed signs of a recovery heading into the next fiscal year. The average value of the yen during the year was ¥93.21 to the U.S. dollar, a year-on-year appreciation of approximately ¥10, and ¥130.46 to the euro, a year-on-year appreciation of approximately ¥21.
Although the markets for such consumer products as cameras and inkjet printers are clearly bottoming out amid the significantly stronger yen, which has had an impact on all of the company’s businesses, net sales for the year totaled ¥3,209.2 billion (U.S.$34,883 million), a year-on-year decline of 21.6%, mainly due to the effects of reduced sales volumes of office products throughout the year. Despite the launch of new products and ongoing cost-cutting efforts aimed at an improved gross profit ratio, the impact of such factors as the substantial appreciation of the yen and the drop in sales value led to a 2.8 point decline in the ratio to 44.5%. Consequently, gross profit decreased by 26.3% to ¥1,427.4 billion (U.S.$15,515 million) for the full year. While operating expenses decreased by 16.1% owing to continued Group-wide efforts to thoroughly cut spending, operating profit dropped 56.2% to ¥217.1 billion (U.S.$2,359 million). Despite the decreased interest income due to the lower rate of return on cash and cash equivalents, other income (deductions) recorded a positive turnaround of ¥17.2 billion (U.S.$187 million), mainly reflecting an improvement in currency exchange losses and earnings on investments in affiliates accounted for by the equity method. As a result, income before income taxes totaled ¥219.4 billion (U.S.$2,384 million), a year-on-year decline of 54.4%, while net income attributable to Canon Inc. also decreased by 57.4% to ¥131.6 billion (U.S.$1,431 million).
Basic net income attributable to Canon Inc. stockholders per share was ¥106.64 (U.S.$1.16), a year-on-year decline of ¥139.57 (U.S.$1.52) compared with the previous year.

- 2 -


 

Results by Product Segment
Looking at Canon’s full-year performance by business sector, within the office business unit, demand for office equipment decreased overall amid the deterioration of economic conditions. Sales of network digital MFDs remained low in all regions while demand for laser printers decreased substantially compared with the previous year despite the optimization of inventory levels being in sight. Consequently, sales for the segment, including the impact of the strong yen, totaled ¥1,645.1 billion (U.S.$17,881 million), a drop of 26.8% year on year. Operating profit fell 49.8% to ¥229.4 billion (U.S.$2,493 million), mainly due to the decrease in gross profit stemming from the significant reduction in sales.
Within the consumer business unit, sales volumes of such new products as the competitively priced EOS Digital Rebel T1i (EOS 500D) and advanced-amateur model EOS 7D digital SLR cameras recorded solid growth. As for compact digital cameras, although stagnant market conditions led to a contraction in sales volume, the Company reinforced its product lineup through the launch of six new ELPH (IXUS)-series models and nine new PowerShot-series models. As for inkjet printers, although the market overall remained sluggish, sales in the Americas and Asia displayed healthy growth, contributing to a year-on-year increase in sales volume. Sales for the segment as a whole, however, declined 10.6% year on year to ¥1,301.2 billion (U.S.$14,143 million) due to the significant impact of the yen’s appreciation. Operating profit decreased by 17.8% to ¥183.5 billion (U.S.$1,994 million), largely reflecting the decrease in gross profit arising from the reduction in sales.
In the industry and others business unit, sales of steppers remained sluggish amid worsening market conditions for memory chips, while sales of aligners dropped due to restrained capital investment by LCD panel manufacturers. As a result, sales for the segment totaled ¥358.0 billion (U.S.$3,891 million), a decrease of 31.5%, while operating profit dropped to negative ¥76.0 billion (U.S.$826 million), due to the significant drop in sales along with the early disposal of assets, including excess production equipment, based on a fundamental reassessment of the business structure for steppers.
Cash Flow
Although Canon recorded a decline in profits in 2009, cash flow from operating activities totaled ¥611.2 billion (U.S.$6,644 million), a slight decrease of ¥5.4 billion (U.S.$59 million) compared with the previous year, as a result of the substantial progress achieved in inventory-reduction efforts. As capital investment was focused on items relevant to introducing new products in principal, cash flow from investing activities totaled ¥370.2 billion (U.S.$4,024 million), a year-on-year decrease of ¥102.2 billion (U.S.$1,111 million). Accordingly, free cash flow totaled ¥241.0 billion (U.S.$2,619 million), an increase of ¥96.8 billion (U.S.$1,052 million) from the previous year.
Cash flow from financing activities recorded an outlay of ¥142.4 billion (U.S.$1,548 million), mainly arising from the dividend payout of ¥135.8 billion (U.S.$1,476 million). Consequently, cash and cash equivalents increased by ¥115.8 billion (U.S.$1,259 million) to ¥795.0 billion (U.S.$8,642 million) from the end of the previous year.
Non-consolidated Results
Non-consolidated net sales totaled ¥2,025.5 billion (U.S.$22,017 million), a year-on-year decrease of 25.6%, ordinary profit declined by 60.3% to ¥142.7 billion (U.S.$1,551 million), and net income fell by 64.0% to ¥80.8 billion (U.S.$878 million).

- 3 -


 

Outlook
As for the outlook for the global economy in fiscal 2010, although China and other emerging nations with significantly expanding economies are expected to continue enjoying steady growth, deteriorating employment conditions and other factors make it difficult to predict the economic prospects for developed countries even though they are projected to realize positive growth. While some leading indicators have pointed to a bottoming out and conditions are expected to slowly head toward a path of recovery as a result of various economic stimulus packages and financial policies launched at the national level, considerable time will likely be needed before the global economy realizes a full-fledged turnaround.
In the businesses in which Canon is involved, with regard to network digital MFDs and laser printers in the office equipment market, demand is expected to gradually increase following the bottoming out of the segment. With respect to the consumer products market, demand for digital SLR cameras is forecasted to achieve solid growth, whereas demand for compact digital cameras and inkjet printers will also head toward a recovery trend. As for the industry and others market, projections call for a modest recovery in demand for steppers as device makers reassess their capital expenditure plans, and demand for aligners is also expected to increase as LCD panel manufacturers gear up to boost production.
With regard to currency exchange rates for the full year, on which Canon’s performance outlook is based, despite the continued uncertainty over future interest rate policies for major countries along with the speed and level of economic recovery and other factors, Canon anticipates exchange rates for the period of ¥90 to the U.S. dollar and ¥130 to the euro, representing an appreciation of approximately ¥3 against the U.S. dollar, and relatively the same value for the euro compared with the previous year. Upon taking into consideration current business sentiment based on these foreign exchange rate assumptions, Canon projects net sales of ¥3,450.0 billion (U.S.$37,500 million), a year-on-year increase of 7.5%; operating profit of ¥330.0 billion (U.S.$3,587 million), a year-on-year increase of 52.0%; income before income taxes of ¥320.0 billion (U.S.$3,478 million), a year-on-year increase of 45.9%; and net income attributable to Canon Inc. of ¥200.0 billion (U.S.$2,174 million), a year-on-year increase of 51.9%.
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 reflecting the company’s consolidated business performance. Specifically, Canon’s basic policy is to continuously strive to raise its consolidated payout ratio to approximately 30% over the medium to long term.
The company recorded a decrease in profits amid extremely severe economic conditions but, prioritizing stable returns to shareholders, plans to distribute a full-year dividend totaling ¥110.00 (U.S.$1.20) per share (interim dividend of ¥55.00 [U.S.$0.60] per share [already distributed], and year-end dividend of ¥55.00 [U.S.$0.60]), the same amount per share as was paid out in 2008.

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 corporate group 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 its Excellent Global Corporation Plan in 1996, and Phase II in 2001— with the aim of becoming a truly excellent global corporation. Through these two management plans, the Company promoted a range of management reforms, thoroughly strengthening its product competitiveness and financial base. Since 2006, under a new five-year management plan—Phase III, which targets further growth and improved corporate value—Canon is pursuing “sound growth,” making use of the solid management foundation achieved through the two preceding plans, and further expanding its corporate scale while maintaining a high level of profitability. In particular, the Company is focusing on the following five important management objectives.
1)   Achieving the overwhelming No. 1 position worldwide in all current core businesses
 
2)   Expanding business operations through diversification
 
3)   Identifying new business domains and accumulating required technologies
 
4)   Establishing new production systems to sustain international competitiveness
 
5)   Nurturing truly autonomous and strong individuals promoting everlasting corporate reforms
In 2009, however, due to the global recession triggered by the “Lehman Shock,” Canon was forced to temporarily shift its strategic direction, changing course from a focus on “sound growth” to “improved management quality.” Through such efforts as the promotion of thorough expense and capital-investment efficiencies and the establishment of advanced supply-chain management enabling inventory reductions, the Company made progress in establishing a “muscular” business constitution and enhancing corporate strength to agilely respond to changes in its business environment.
While the global economy currently appears to be on track for a recovery, because it appears that it will take the form of an L-shaped recovery, we expect the surrounding business environment will continue to prove difficult. Faced with these circumstances, Canon will again aim to realize sound growth, capitalizing on the future turnaround to post results that outpace the speed of the economic recovery, employing a new growth strategy in this, the final year of the Company’s Excellent Global Corporation Plan Phase III, which is being viewed as the first year in a new era of growth.
   (3) Business Challenges and Countermeasures
At Canon, the creation of new businesses and maintaining a high profitability structure represent two very important management objectives to ensure continuous future growth.
As for new businesses, the Company is promoting research based on leading-edge technologies in its areas of expertise, such as biotechnology, nanotechnology and life sciences. At the same time, Canon is also looking into M&A opportunities and business tie-ups toward launching such businesses. Additionally, the Company aims to enter the display business, moving away from a focus on still images while strengthening the ability to deliver video images, which will play an increasingly important role in the broadband era.
With regard to maintaining the Company’s current high profitability structure, in order to effectively respond to the intensifying price competition centered on the consumer goods market and the investment burden that accompanies the launch of competitive new businesses, Canon believes that it is important to further improve the profit-earning ability of current businesses. To facilitate this, the Company is promoting the development of competitive new products and actively carrying out cost-reduction activities.
Canon also views its approach to the environment as an important management issue. From the product planning stage through to design, development, production, sales, use, recovery and recycling, the Company focuses its energies on such areas as creating environmentally conscious products that realize energy efficiency, resource efficiency, and eliminate the use of hazardous substances. Additionally, Canon actively promotes the development of recycling systems, the expansion of green procurement policies, the disclosure of environmental information, and participation in environmental conservation activities at the community level.

- 5 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
III. Financial Statements
1.  CONSOLIDATED BALANCE SHEETS
                                 
    Millions of yen   Thousands of
      U.S. dollars
    As of   As of           As of
    December 31,   December 31,   Change     December 31,
    2009   2008       2009
ASSETS
                               
Current assets:
                               
Cash and cash equivalents
  ¥ 795,034     ¥ 679,196     ¥ 115,838     $ 8,641,674  
Short-term investments
    19,089       7,651       11,438       207,489  
Trade receivables, net
    556,572       595,422       (38,850 )     6,049,696  
Inventories
    373,241       506,919       (133,678 )     4,056,967  
Prepaid expenses and other current assets
    273,843       275,660       (1,817 )     2,976,554  
 
               
Total current assets
    2,017,779       2,064,848       (47,069 )     21,932,380  
 
                               
Noncurrent receivables
    14,936       14,752       184       162,348  
Investments
    114,066       88,825       25,241       1,239,848  
Property, plant and equipment, net
    1,269,785       1,357,186       (87,401 )     13,802,011  
Intangible assets, net
    117,396       119,140       (1,744 )     1,276,043  
Other assets
    313,595       325,183       (11,588 )     3,408,642  
 
               
 
                               
Total assets
  ¥ 3,847,557     ¥ 3,969,934     ¥ (122,377 )   $ 41,821,272  
 
                               
 
               
 
                               
LIABILITIES AND EQUITY
                               
Current liabilities:
                               
Short-term loans and current portion of long-term debt
  ¥ 4,869     ¥ 5,540     ¥ (671 )   $ 52,924  
Trade payables
    339,113       406,746       (67,633 )     3,686,011  
Accrued income taxes
    50,105       69,961       (19,856 )     544,620  
Accrued expenses
    274,300       277,117       (2,817 )     2,981,522  
Other current liabilities
    115,303       184,636       (69,333 )     1,253,293  
 
               
Total current liabilities
    783,690       944,000       (160,310 )     8,518,370  
Long-term debt, excluding current installments
    4,912       8,423       (3,511 )     53,391  
Accrued pension and severance cost
    115,904       110,784       5,120       1,259,826  
Other noncurrent liabilities
    63,651       55,745       7,906       691,859  
 
               
 
                               
Total liabilities
    968,157       1,118,952       (150,795 )     10,523,446  
 
                               
 
               
 
                               
 
                               
Equity:
                               
Canon Inc. stockholders’ equity:
                               
Common stock
    174,762       174,762       -         1,899,587  
Additional paid-in capital
    404,293       403,790       503       4,394,489  
Legal reserve
    54,687       53,706       981       594,424  
Retained earnings
    2,871,437       2,876,576       (5,139 )     31,211,272  
Accumulated other comprehensive income (loss)
    (260,818 )     (292,820 )     32,002       (2,834,978 )
Treasury stock, at cost
    (556,252 )     (556,222 )     (30 )     (6,046,218 )
 
               
Total Canon Inc. stockholders’ equity
    2,688,109       2,659,792       28,317       29,218,576  
 
                               
Noncontrolling interests
    191,291       191,190       101       2,079,250  
 
                               
 
               
 
                               
Total equity
    2,879,400       2,850,982       28,418       31,297,826  
 
                               
 
               
 
                               
Total liabilities and equity
  ¥ 3,847,557     ¥ 3,969,934     ¥ (122,377 )   $ 41,821,272  
 
                               
 
               
 
                           
    Millions of yen           Thousands of
              U.S. dollars
    As of   As of           As of
    December 31,   December 31,           December 31,
    2009   2008           2009
Notes:
                               
 
                               
1. Allowance for doubtful receivables
  ¥ 11,343     ¥ 9,318             $ 123,293  
2. Accumulated depreciation
    1,815,982       1,635,601               19,738,935  
3. Accumulated other comprehensive income (loss):
                               
Foreign currency translation adjustments
    (202,628 )     (235,968 )             (2,202,478 )
Net unrealized gains and losses on securities
    3,285       1,135               35,706  
Net gains and losses on derivative instruments
    71       1,493               772  
Pension liability adjustments
    (61,546 )     (59,480 )             (668,978 )

- 6 -


 

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, 2009     December 31, 2008         December 31, 2009 
 
                               
Net sales
  ¥ 954,058     ¥ 994,740       -  4.1     $ 10,370,196  
Cost of sales
    520,267       573,343               5,655,076  
 
                 
Gross profit
    433,791       421,397     2.9       4,715,120  
Operating expenses:
                               
Selling, general and administrative expenses
    264,396       273,681               2,873,870  
Research and development expenses
    77,267       111,891               839,859  
 
                 
 
    341,663       385,572               3,713,729  
 
                 
Operating profit
    92,128       35,825     157.2       1,001,391  
Other income (deductions):
                               
Interest and dividend income
    1,441       3,849               15,663  
Interest expense
    (95 )     (164 )             (1,032 )
Other, net
    4,447       (22,597 )             48,337  
 
                 
 
    5,793       (18,912 )             62,968  
 
                 
Income before income taxes
    97,921       16,913     479.0       1,064,359  
                                 
Income taxes
    35,413       3,816               384,924  
 
                 
Consolidated net income
    62,508       13,097               679,435  
Less: Net income attributable to noncontrolling interests
    944       1,475               10,261  
 
                 
Net income attributable to Canon Inc.
  ¥ 61,564     ¥ 11,622       +  429.7     $ 669,174  
 
               
 
 
Note:   Consolidated comprehensive income for the three months ended December 31, 2009 and 2008 was JPY 74,334 million (increase)
             (U.S.$807,978 thousand (increase)) and JPY 204,647 million (decrease), respectively.
 
 
    Millions of yen           Thousands of
Results for the fiscal year             U.S. dollars
    Year ended   Year ended   Change(%)     Year ended
    December 31, 2009   December 31, 2008     December 31, 2009
 
                               
Net sales
  ¥ 3,209,201     ¥ 4,094,161       -  21.6     $ 34,882,620  
Cost of sales
    1,781,808       2,156,153               19,367,479  
 
                 
Gross profit
    1,427,393       1,938,008     26.3       15,515,141  
Operating expenses:
                               
Selling, general and administrative expenses
    905,738       1,067,909               9,844,978  
Research and development expenses
    304,600       374,025               3,310,870  
 
                 
 
    1,210,338       1,441,934               13,155,848  
 
                 
Operating profit
    217,055       496,074     56.2       2,359,293  
Other income (deductions):
                               
Interest and dividend income
    5,202       19,442               56,543  
Interest expense
    (336 )       (837 )               (3,652 )
Other, net
    (2,566 )     (33,532 )             (27,891 )
 
                 
 
    2,300       (14,927 )             25,000  
 
                 
Income before income taxes
    219,355       481,147     54.4       2,384,293  
 
                               
Income taxes
    84,122       160,788               914,369  
 
                 
Consolidated net income
    135,233       320,359               1,469,924  
Less: Net income attributable to noncontrolling interests
    3,586       11,211               38,978  
 
                 
Net income attributable to Canon Inc.
  ¥ 131,647     ¥ 309,148       -  57.4     $ 1,430,946  
 
                 
Note:   Consolidated comprehensive income for the year ended December 31, 2009 and 2008 was JPY 168,452 million (increase)
(U.S.$1,831,000 thousand (increase)) and JPY 18,681 million (decrease), respectively.

- 7 -


 

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 product
  ended     ended     Change(%)     ended  
    December 31, 2009     December 31, 2008           December 31, 2009  
Office
    465,131       507,955     - 8.4       5,055,772  
Consumer
    412,729       376,588     + 9.6       4,486,185  
Industry and Others
    117,070       137,681     - 15.0       1,272,500  
Eliminations
    (40,872 )     (27,484 )     -       (444,261 )
 
                       
Total
  ¥ 954,058     ¥ 994,740     - 4.1     $ 10,370,196  
 
                       
                                 
    Millions of yen             Thousands of  
                U.S. dollars  
    Three months     Three months             Three months  
Sales by region
  ended     ended     Change(%)     ended  
    December 31, 2009     December 31, 2008           December 31, 2009  
Japan
  ¥ 197,599     ¥ 224,710     - 12.1     $ 2,147,815  
Overseas:
                               
Americas
    274,782       283,002     - 2.9       2,986,761  
Europe
    308,523       308,121     + 0.1       3,353,511  
Other areas
    173,154       178,907     - 3.2       1,882,109  
 
                       
 
    756,459       770,030     - 1.8       8,222,381  
 
                       
Total
  ¥ 954,058     ¥ 994,740     - 4.1     $ 10,370,196  
 
                       
                                 
    Millions of yen             Thousands of  
Results for the fiscal year               U.S. dollars  
Sales by product
  Year ended     Year ended     Change(%)     Year ended  
  December 31, 2009     December 31, 2008         December 31, 2009  
Office
    1,645,076       2,246,609     - 26.8       17,881,261  
Consumer
    1,301,160       1,456,075     - 10.6       14,143,043  
Industry and Others
    357,998       522,405     - 31.5       3,891,283  
Eliminations
    (95,033 )     (130,928 )          -       (1,032,967 )
 
                       
Total
  ¥ 3,209,201     ¥ 4,094,161     - 21.6     $ 34,882,620  
 
                       
                                 
    Millions of yen             Thousands of  
                U.S. dollars  
Sales by region
  Year ended     Year ended     Change(%)     Year ended  
  December 31, 2009     December 31, 2008         December 31, 2009  
Japan
  ¥ 702,344     ¥ 868,280     - 19.1     $ 7,634,174  
Overseas:
                               
Americas
    894,154       1,154,571     - 22.6       9,719,065  
Europe
    995,150       1,341,400     - 25.8       10,816,848  
Other areas
    617,553       729,910     - 15.4       6,712,533  
 
                       
 
    2,506,857       3,225,881     - 22.3       27,248,446  
 
                       
Total
  ¥ 3,209,201     ¥ 4,094,161     - 21.6     $ 34,882,620  
 
                       
Notes:
  1. The primary products included in each of the product segments are as follows:
  Office :      Office network digital multifunction devices (MFDs) /Color network digital MFDs /
Office copying machines /Personal-use copying machines /Full-color copying machines /
Laser printers /Large format inkjet printers
  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 production equipment /Mirror projection mask aligners for LCD panels /
Medical equipment /Components /Computer information systems /Document scanners /
Personal information products
  2.   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 /
Other Areas: Asian regions, China, Oceania

- 8 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
4. CONSOLIDATED STATEMENTS OF EQUITY
Millions of yen
                                                                                               
                                                           
                                                Accumulated                 Total Canon                  
        Common       Additional       Legal       Retained       other       Treasury       Inc.     Noncontrolling            
        Stock       paid-in capital       reserve       earnings       comprehensive       stock       stockholders’     interests       Total equity    
                                                income (loss)                 equity                      
                                                           
 
Balance at December 31, 2007
    ¥ 174,698       ¥ 402,991       ¥ 46,017       ¥ 2,720,146       ¥ 34,670       ¥ (456,186 )     ¥ 2,922,336       ¥ 222,870       ¥ 3,145,206    
                                                           
 
Conversion of convertible debt
      64         63                                                 127                   127    
 
Equity transaction with noncontrolling interests and other
                761                                                 761         (26,218 )       (25,457 )  
 
Dividends paid to Canon Inc. stockholders
                                    (145,024 )                           (145,024 )                 (145,024 )  
 
Dividends paid to noncontrolling interests
                                                                            (5,123 )       (5,123 )  
 
Transfers to legal reserve
                          7,689         (7,689 )                           -                   -    
 
 
                                                                                           
 
Comprehensive income:
                                                                                           
 
Net income
                                    309,148                             309,148         11,211         320,359    
 
Other comprehensive income (loss), net of tax
                                                                                           
 
Foreign currency translation adjustments
                                              (258,764 )                 (258,764 )       (1,911 )       (260,675 )  
 
Net unrealized gains and losses on securities
                                              (5,152 )                 (5,152 )       (690 )       (5,842 )  
 
Net gains and losses on derivative instruments
                                              2,342                   2,342         -         2,342    
 
Pension liability adjustments
                                              (65,916 )                 (65,916 )       (8,949 )       (74,865 )  
                                                                                   
 
Total comprehensive income (loss)
                                                                  (18,342 )       (339 )       (18,681 )  
                                                                                   
 
 
                                                                                           
 
Repurchase of treasury stock, net
                (25 )                 (5 )                 (100,036 )       (100,066 )                 (100,066 )  
 
 
                                                                                           
                                                           
 
Balance at December 31, 2008
    ¥ 174,762       ¥ 403,790       ¥ 53,706       ¥ 2,876,576       ¥ (292,820 )     ¥ (556,222 )     ¥ 2,659,792       ¥ 191,190       ¥ 2,850,982    
                                                           
 
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    
                                                           
 
Thousands of U.S. dollars
                                                                                               
                                                           
 
Balance at December 31, 2008
    $ 1,899,587       $ 4,389,022       $ 583,761       $ 31,267,130       $ (3,182,825 )     $ (6,045,892 )     $ 28,910,783       $ 2,078,152       $ 30,988,935    
                                                           
 
 
                                                                                           
 
Equity transaction with noncontrolling interests and other
                5,467                                                 5,467         (14,956 )       (9,489 )  
 
Dividends paid to Canon Inc. stockholders
                                    (1,476,011 )                           (1,476,011 )                 (1,476,011 )  
 
Dividends paid to noncontrolling interests
                                                                            (36,152 )       (36,152 )  
 
Transfers to legal reserve
                          10,663         (10,663 )                           -                   -    
 
 
                                                                                           
 
Comprehensive income:
                                                                                           
 
Net income
                                    1,430,946                             1,430,946         38,978         1,469,924    
 
Other comprehensive income (loss), net of tax
                                                                                           
 
Foreign currency translation adjustments
                                              362,391                   362,391         326         362,717    
 
Net unrealized gains and losses on securities
                                              23,370                   23,370         728         24,098    
 
Net gains and losses on derivative instruments
                                              (15,457 )                 (15,457 )       (11 )       (15,468 )  
 
Pension liability adjustments
                                              (22,457 )                 (22,457 )       12,185         (10,272 )  
                                                                                   
 
Total comprehensive income
                                                                  1,778,793         52,206         1,830,999    
                                                                                   
 
 
                                                                                           
 
Repurchase of treasury stock, net
                                    (130 )                 (326 )       (456 )                 (456 )  
 
 
                                                                                           
                                                           
 
Balance at December 31, 2009
    $ 1,899,587       $ 4,394,489       $ 594,424       $ 31,211,272       $ (2,834,978 )     $ (6,046,218 )     $ 29,218,576       $ 2,079,250       $ 31,297,826    
                                                           

- 9 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
5.  CONSOLIDATED STATEMENTS OF CASH FLOWS
                         
    Millions of yen     Thousands of  
        U.S. dollars
    Year ended     Year ended     Year ended  
      December 31, 2009       December 31, 2008       December 31, 2009  
Cash flows from operating activities:
                       
Consolidated net income
  ¥ 135,233     ¥ 320,359     $ 1,469,924  
Adjustments to reconcile net income to net cash
provided by operating activities:
                       
Depreciation and amortization
    315,393       341,337       3,428,185  
Loss on disposal of property, plant and equipment
    8,215       11,811       89,294  
Deferred income taxes
    20,712       (32,497 )     225,130  
Decrease in trade receivables
    48,244       83,521       524,391  
Decrease in inventories
    143,580       49,547       1,560,652  
Decrease in trade payables
    (76,843 )     (36,719 )     (835,250 )
Decrease in accrued income taxes
    (21,023 )     (77,340 )     (228,511 )
Decrease in accrued expenses
    (9,827 )     (30,694 )     (106,815 )
Increase (decrease) in accrued (prepaid) pension and severance cost
    4,765       (12,128 )     51,793  
Other, net
    42,786       (513 )     465,066  
 
           
 
Net cash provided by operating activities
    611,235       616,684       6,643,859  
 
Cash flows from investing activities:
                       
Purchases of fixed assets
    (327,983 )     (428,168 )     (3,565,033 )
Proceeds from sale of fixed assets
    8,893       7,453       96,663  
Purchases of available-for-sale securities
    (3,253 )     (7,307 )     (35,359 )
Proceeds from sale and maturity of available-for-sale securities
    2,460       4,320       26,739  
Proceeds from maturity of held-to-maturity securities
    -       10,000       -  
(Increase) decrease in time deposits, net
    (11,345 )     2,892       (123,315 )
Acquisitions of subsidiaries, net of cash acquired
    (2,979 )     (5,999 )     (32,380 )
Purchases of other investments
    (37,981 )     (45,473 )     (412,837 )
Other, net
    1,944       (10,198 )     21,131  
 
           
 
Net cash used in investing activities
    (370,244 )     (472,480 )     (4,024,391 )
 
Cash flows from financing activities:
                       
Proceeds from issuance of long-term debt
    3,361       6,841       36,533  
Repayments of long-term debt
    (6,282 )     (15,397 )     (68,283 )
Decrease in short-term loans
    (280 )     (2,643 )     (3,043 )
Dividends paid
    (135,793 )     (145,024 )     (1,476,011 )
Repurchases of treasury stock, net
    (42 )     (100,066 )     (457 )
Other, net
    (3,343 )     (21,276 )     (36,337 )
 
           
 
Net cash used in financing activities
    (142,379 )     (277,565 )     (1,547,598 )
 
Effect of exchange rate changes on cash and cash equivalents
    17,226       (131,906 )     187,239  
 
           
Net change in cash and cash equivalents
    115,838       (265,267 )     1,259,109  
Cash and cash equivalents at beginning of period
    679,196       944,463       7,382,565  
 
           
Cash and cash equivalents at end of period
  ¥ 795,034     ¥ 679,196     $ 8,641,674  
 
           

- 10 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
6. NOTE FOR GOING CONCERN ASSUMPTION
      Not applicable.
7.  SEGMENT INFORMATION
(1) SEGMENT INFORMATION BY PRODUCT
                                               
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, 2009       December 31, 2008             December 31, 2009  
 
               
Office
                               
Net sales:
                               
External customers
  ¥ 462,149   ¥ 502,389       -       8.0     $ 5,023,359
Intersegment
  2,982     5,566       -     46.4     32,413
 
               
Total
  465,131     507,955       -       8.4     5,055,772
 
               
Operating cost and expenses
  384,517     423,226       -       9.1     4,179,533
 
               
Operating profit
  ¥ 80,614   ¥ 84,729       -       4.9     $ 876,239
 
               
 
                   
Consumer
                   
Net sales:
                   
External customers
  ¥ 412,087   ¥ 375,941       +       9.6     $ 4,479,207
Intersegment
  642     647       -       0.8     6,978
 
               
Total
  412,729     376,588       +       9.6     4,486,185
 
               
Operating cost and expenses
  337,586     335,715       +       0.6     3,669,413
 
               
Operating profit
  ¥ 75,143   ¥ 40,873       +     83.8     $ 816,772
 
               
 
                   
Industry and Others
                   
Net sales:
                   
External customers
  ¥ 79,822   ¥ 116,410       -     31.4     $ 867,630
Intersegment
  37,248     21,271       +     75.1     404,870
 
               
Total
  117,070     137,681       -     15.0     1,272,500
 
               
Operating cost and expenses
  152,030     189,957       -     20.0     1,652,500
 
               
Operating profit (loss)
  ¥ (34,960 )   ¥ (52,276 )     -     $ (380,000 )
 
               
 
                   
Corporate and Eliminations
                   
Net sales:
                   
External customers
  ¥ -   ¥ -       -     $ -
Intersegment
  (40,872 )     (27,484 )     -     (444,261 )
 
               
Total
  (40,872 )     (27,484 )     -     (444,261 )
 
               
Operating cost and expenses
  (12,203 )     10,017       -     (132,641 )
 
               
Operating profit (loss)
  ¥ (28,669 )   ¥ (37,501 )     -     $ (311,620 )
 
               
 
                   
Consolidated
                   
Net sales:
                   
External customers
  ¥ 954,058   ¥ 994,740       -       4.1     $ 10,370,196
Intersegment
  -     -       -     -
 
               
Total
  954,058     994,740       -       4.1     10,370,196
 
               
Operating cost and expenses
  861,930     958,915       -     10.1     9,368,805
 
               
Operating profit
  ¥ 92,128   ¥ 35,825       +   157.2     $ 1,001,391
 
               

- 11 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
                                               
Results for the fiscal year
  Millions of yen             Thousands of  
              U.S. dollars  
    Year ended     Year ended        Change(%)        Year ended  
      December 31, 2009       December 31, 2008           December 31, 2009  
 
               
 
                               
Office
                               
Net sales:
                               
External customers
  ¥ 1,635,056   ¥ 2,223,253       -     26.5     $ 17,772,348  
Intersegment
  10,020     23,356       -     57.1     108,913  
 
               
Total
  1,645,076     2,246,609       -     26.8     17,881,261  
 
               
Operating cost and expenses
  1,415,680     1,789,263       -     20.9     15,387,826  
 
               
Operating profit
  229,396     457,346       -     49.8     2,493,435  
 
               
Total assets
  745,646     822,660       -       9.4     8,104,848  
Depreciation and amortization
  90,878     99,962       -       9.1     987,804  
Capital Expenditures
  ¥ 96,718   ¥ 139,046       -     30.4     $ 1,051,283  
 
               
 
                     
Consumer
                     
Net sales:
                     
External customers
  ¥ 1,299,194   ¥ 1,453,647       -     10.6     $ 14,121,674  
Intersegment
  1,966     2,428       -     19.0     21,369  
 
               
Total
  1,301,160     1,456,075       -     10.6     14,143,043  
 
               
Operating cost and expenses
  1,117,668     1,232,951       -       9.4     12,148,565  
 
               
Operating profit
  183,492     223,124       -     17.8     1,994,478  
 
               
Total assets
  437,160     502,927       -     13.1     4,751,739  
Depreciation and amortization
  48,701     58,082       -     16.2     529,359  
Capital Expenditures
  ¥ 27,503   ¥ 52,641       -     47.8     $ 298,946  
 
               
 
                     
Industry and Others
                     
Net sales:
                     
External customers
  ¥ 274,951   ¥ 417,261       -     34.1     $ 2,988,598  
Intersegment
  83,047     105,144       -     21.0     902,685  
 
               
Total
  357,998     522,405       -     31.5     3,891,283  
 
               
Operating cost and expenses
  433,954     570,281       -     23.9     4,716,892  
 
               
Operating profit (loss)
  (75,956 )     (47,876 )     -     (825,609 )
 
               
Total assets
  359,635     453,581       -     20.7     3,909,076  
Depreciation and amortization
  60,770     71,557       -     15.1     660,543  
Capital Expenditures
  ¥ 25,644   ¥ 31,445       -     18.4     $ 278,739  
 
               
 
                     
Corporate and Eliminations
                     
Net sales:
                     
External customers
  ¥ -   ¥ -       -     $ -  
Intersegment
  (95,033 )     (130,928 )     -     (1,032,967 )
 
               
Total
  (95,033 )     (130,928 )     -     (1,032,967 )
 
               
Operating cost and expenses
  24,844     5,592       -     270,044  
 
               
Operating profit (loss)
  (119,877 )     (136,520 )     -     (1,303,011 )
 
               
Total assets
  2,305,116     2,190,766       +     5.2     25,055,609  
Depreciation and amortization
  115,044     111,736       +     3.0     1,250,479  
Capital Expenditures
  ¥ 108,387   ¥ 180,268       -   39.9     $ 1,178,119  
 
               
 
                     
Consolidated
                     
Net sales:
                     
External customers
  ¥ 3,209,201   ¥ 4,094,161       -     21.6     $ 34,882,620  
Intersegment
  -     -       -     -  
 
               
Total
  3,209,201     4,094,161       -     21.6     34,882,620  
 
               
Operating cost and expenses
  2,992,146     3,598,087       -     16.8     32,523,327  
 
               
Operating profit
  217,055     496,074       -     56.2     2,359,293  
 
               
Total assets
  3,847,557     3,969,934       -       3.1     41,821,272  
Depreciation and amortization
  315,393     341,337       -       7.6     3,428,185  
Capital Expenditures
  ¥ 258,252   ¥ 403,400       -     36.0     $ 2,807,087  
 
               

- 12 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA
                                               
                             
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, 2009      December 31, 2008            December 31, 2009  
                 
Japan
                               
Net sales:
                               
External customers
  ¥ 227,939   ¥ 270,681       -     15.8     $ 2,477,598
Intersegment
    539,255     492,810       +       9.4       5,861,467
 
               
Total
    767,194     763,491       +       0.5       8,339,065
 
               
Operating cost and expenses
    667,146     759,005       -     12.1       7,251,587
 
               
Operating profit
  ¥ 100,048   ¥ 4,486       +2,130.2     $ 1,087,478
 
               
 
                       
Americas
                       
Net sales:
                       
External customers
  ¥ 268,797   ¥ 276,764       -       2.9     $ 2,921,707
Intersegment
    392     895       -     56.2       4,260
 
               
Total
    269,189     277,659       -       3.1       2,925,967
 
               
Operating cost and expenses
    263,571     279,180       -       5.6       2,864,902
 
               
Operating profit (loss)
  ¥ 5,618   ¥ (1,521 )     -     $ 61,065
 
               
 
                       
Europe
                       
Net sales:
                       
External customers
  ¥ 306,949   ¥ 305,330       +       0.5     $ 3,336,402
Intersegment
    (1,313 )     826       -       (14,272 )
 
               
Total
    305,636     306,156       -        0.2       3,322,130
 
               
Operating cost and expenses
    298,750     297,897       +        0.3       3,247,282
 
               
Operating profit
  ¥ 6,886   ¥ 8,259       -      16.6     $ 74,848
 
               
 
                       
Others
                       
Net sales:
                       
External customers
  ¥ 150,373   ¥ 141,965       +       5.9     $ 1,634,489
Intersegment
    165,586     137,565       +     20.4       1,799,848
 
               
Total
    315,959     279,530       +     13.0       3,434,337
 
               
Operating cost and expenses
    309,860     279,329       +     10.9       3,368,044
 
               
Operating profit
  ¥ 6,099   ¥ 201       +2,934.3     $ 66,293
 
               
 
                       
Corporate and Eliminations
                       
Net sales:
                       
External customers
  ¥ -   ¥ -       -     $ -
Intersegment
    (703,920 )     (632,096 )     -       (7,651,303 )
 
               
Total
    (703,920 )     (632,096 )     -       (7,651,303 )
 
               
Operating cost and expenses
    (677,397 )     (656,496 )     -       (7,363,010 )
 
               
Operating profit (loss)
  ¥ (26,523 )   ¥ 24,400       -     $ (288,293 )
 
               
 
                       
Consolidated
                       
Net sales:
                       
External customers
  ¥ 954,058   ¥ 994,740       -       4.1     $ 10,370,196
Intersegment
    -     -       -       -
 
               
Total
    954,058     994,740       -       4.1       10,370,196
 
               
Operating cost and expenses
    861,930     958,915       -     10.1       9,368,805
 
               
Operating profit
  ¥ 92,128   ¥ 35,825       +   157.2     $ 1,001,391
 
               

- 13 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
                                               
Results for the fiscal year
  Millions of yen           Thousands of
            U.S. dollars
    Year ended   Year ended      Change(%)      Year ended
      December 31, 2009       December 31, 2008         December 31, 2009  
 
                               
Japan
                               
Net sales:
                               
External customers
  ¥ 827,762   ¥ 998,676     -     17.1     $ 8,997,413
Intersegment
 
1,714,375
   
2,318,521
   
-     26.1
   
18,634,511
 
 
               
Total
    2,542,137     3,317,197       -     23.4       27,631,924
 
               
Operating cost and expenses
    2,288,471     2,812,645       -     18.6       24,874,685
 
               
Operating profit
    253,666     504,552       -     49.7       2,757,239
 
               
Total assets
  ¥ 1,386,511   ¥ 1,607,653       -     13.8     $ 15,070,772
 
               
 
                       
Americas
                       
Net sales:
                       
External customers
  ¥ 871,633   ¥ 1,141,560       -     23.6     $ 9,474,272
Intersegment
 
1,263
 
3,758
   
-     66.4
   
13,728
 
               
Total
    872,896     1,145,318       -     23.8       9,488,000
 
               
Operating cost and expenses
    860,863     1,136,288       -     24.2       9,357,207
 
               
Operating profit
    12,033     9,030       +     33.3       130,793
 
               
Total assets
  ¥ 198,094   ¥ 203,255       -       2.5     $ 2,153,196
 
               
 
                       
Europe
                       
Net sales:
                       
External customers
  ¥ 991,336   ¥ 1,337,147       -     25.9     $ 10,775,391
Intersegment
 
919
 
4,329
   
-     78.8
   
9,989
 
               
Total
    992,255     1,341,476       -     26.0       10,785,380
 
               
Operating cost and expenses
    964,606     1,314,942       -     26.6       10,484,847
 
               
Operating profit
    27,649     26,534       +       4.2       300,533
 
               
Total assets
  ¥ 378,477   ¥ 417,562       -       9.4     $ 4,113,880
 
               
 
                       
Others
                       
Net sales:
                       
External customers
  ¥ 518,470   ¥ 616,778       -     15.9     $ 5,635,544
Intersegment
 
534,147
   
670,678
   
-     20.4
   
5,805,945
 
               
Total
    1,052,617     1,287,456       -     18.2       11,441,489
 
               
Operating cost and expenses
    1,019,208     1,247,156       -     18.3       11,078,348
 
               
Operating profit
    33,409     40,300       -     17.1       363,141
 
               
Total assets
  ¥ 384,795   ¥ 344,638       +     11.7     $ 4,182,554
 
               
 
                       
Corporate and Eliminations
                       
Net sales:
                       
External customers
  ¥ -   ¥ -       -     $ -
Intersegment
 
(2,250,704
)  
(2,997,286
)  
-
   
(24,464,173
)
 
               
Total
    (2,250,704 )     (2,997,286 )     -       (24,464,173 )
 
               
Operating cost and expenses
    (2,141,002 )     (2,912,944 )     -       (23,271,760 )
 
               
Operating profit (loss)
    (109,702 )     (84,342 )     -       (1,192,413 )
 
               
Total assets
  ¥ 1,499,680   ¥ 1,396,826       +       7.4     $ 16,300,870
 
               
 
                       
Consolidated
                       
Net sales:
                       
External customers
  ¥ 3,209,201   ¥ 4,094,161       -     21.6     $ 34,882,620
Intersegment
 
-
 
-
   
-
   
-
 
               
Total
    3,209,201     4,094,161       -     21.6       34,882,620
 
               
Operating cost and expenses
    2,992,146     3,598,087       -     16.8       32,523,327
 
               
Operating profit
    217,055     496,074       -     56.2       2,359,293
 
               
Total assets
  ¥ 3,847,557   ¥ 3,969,934       -       3.1     $ 41,821,272
 
               

- 14 -


 

CANON INC. AND SUBSIDIARIES
CONSOLIDATED
8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(1) GROUP POSITION
  1.   Number of Group Companies
                                   
 
        December 31, 2009       December 31, 2008       Change    
 
Subsidiaries
      241         245         (4 )  
 
Affiliates
      15         18         (3 )  
 
Total
      256         263         (7 )  
 
  2.   Change in Group Entities
         
Subsidiaries
 
  Addition:   12 companies
 
  Removal:   16 companies
 
       
Affiliates (Carried at Equity Basis)
 
  Addition:    2 companies
 
  Removal:    5 companies
  3.   Subsidiaries Listed on Domestic Stock Exchange
        Tokyo Stock Exchange (1st section): Canon Marketing Japan Inc., Canon Electronics Inc., Canon Finetech Inc.
  Tokyo Stock Exchange (2nd section): Canon Software Inc.
  Osaka Securities Exchange (2nd section): Canon Machinery Inc.
  JASDAQ: Tokki Corporation, Asia Pacific System Research Co., Ltd.
  Osaka Securities Exchange (Hercules): e-System Corporation
(2) SIGNIFICANT ACCOUNTING POLICIES
   
While previous segment information has been presented in accordance with accounting guidance generally accepted in Japan, Canon adopted the guidance for segment reporting under U.S. generally accepted accounting principles (“U.S. GAAP”) in the fiscal year beginning January 1, 2009. Accordingly, prior year segment information has been adjusted to conform to this guidance under U.S. GAAP.
 
    Recently Issued Accounting Guidance
   
Canon adopted new guidance for noncontrolling interests in consolidated financial statements in the first quarter beginning January 1, 2009. Upon the adoption of this guidance, noncontrolling interests, which were previously referred to as minority interests and classified between total liabilities and stockholders’ equity on the consolidated balance sheets, are now included as a separate component of total equity. In addition, consolidated net income on the consolidated statements of income now includes the net income (loss) attributable to noncontrolling interests. These financial statement presentation requirements have been adopted retrospectively and prior year amounts in the consolidated financial statements including the consolidated statements of cash flows have been reclassified or adjusted to conform to this guidance.

- 15 -


 

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,  
    2009     2008     2009  
 
                       
Net income attributable to Canon Inc.
                       
-Basic
  ¥ 131,647     ¥ 309,148     $ 1,430,946  
-Diluted
    131,647       309,150       1,430,946  
                         
    Number of shares          
Average common shares outstanding
                       
-Basic
    1,234,481,836       1,255,626,490          
-Diluted
    1,234,481,836       1,255,706,419          
                         
    Yen     U.S. dollars  
Net income attributable to
Canon Inc. stockholders per share:
                       
-Basic
  ¥ 106.64     ¥ 246.21     $ 1.16  
-Diluted
    106.64       246.20       1.16  
(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.

- 16 -


 

CANON INC.
NON-CONSOLIDATED
10. NON-CONSOLIDATED BALANCE SHEETS
      ( Parent company only )
                         
    Millions of yen
    As of   As of    
    December 31,   December 31,   Change
    2009   2008    
ASSETS
                       
Current assets:
                       
Cash
  ¥ 6,855     ¥ 10,674     ¥ (3,819 )
Trade receivables
    649,594       608,047       41,547  
Marketable securities
    92,740       93,899       (1,159 )
Inventories
    147,938       221,668       (73,730 )
Prepaid expenses and other current assets
    215,657       204,645       11,012  
Allowance for doubtful receivables
    (1 )     (1 )     -  
 
           
Total current assets
    1,112,783       1,138,932       (26,149 )
 
           
Fixed assets:
                       
Net property, plant and equipment
    862,901       929,217       (66,316 )
Intangibles
    32,444       40,431       (7,987 )
Investments and other fixed assets
    543,027       510,476       32,551  
Allowance for doubtful receivables-noncurrent
    (55 )     (58 )     3  
 
           
Total fixed assets
    1,438,317       1,480,066       (41,749 )
 
           
Total assets
  ¥ 2,551,100     ¥ 2,618,998     ¥ (67,898 )
 
           
 
                       
LIABILITIES AND NET ASSETS
                       
Current liabilities:
                       
Trade payables
  ¥ 332,219     ¥ 323,980     ¥ 8,239  
Short-term loans
    226,749       156,148       70,601  
Accrued income taxes
    27,639       47,825       (20,186 )
Accrued warranty expenses
    3,043       6,077       (3,034 )
Accrued bonuses for employees
    4,129       4,972       (843 )
Accrued bonuses for directors
    127       244       (117 )
Other current liabilities
    105,774       176,255       (70,481 )
 
           
Total current liabilities
    699,680       715,501       (15,821 )
 
           
Noncurrent liabilities:
                       
Accrued pension and severance cost
    34,524       34,456       68  
Accrued directors’ retirement benefits
    1,786       1,576       210  
Reserve for environmental provision
    1,170       1,300       (130 )
Accrued long service rewards for employees
    1,176       1,160       16  
Other noncurrent liabilities
    46       -       46  
 
           
Total noncurrent liabilities
    38,702       38,492       210  
 
           
Total liabilities
    738,382       753,993       (15,611 )
 
           
Net assets:
                       
Stockholders’ equity
    1,810,900       1,865,955       (55,055 )
Valuation and translation adjustments
    1,008       (1,196 )     2,204  
Subscription right to shares
    810       246       564  
 
           
Total net assets
    1,812,718       1,865,005       (52,287 )
 
           
Total liabilities and net assets
  ¥ 2,551,100     ¥ 2,618,998     ¥ (67,898 )
 
           
 
 
Notes:   As of     As of        
    December 31,   December 31,    
    2009   2008    
1.Accumulated depreciation
  ¥ 1,122,921     ¥ 988,205          
Accumulated impairment loss
  ¥ 21,606     ¥ 10,197          
2.Cautionary obligation and other
                       
 Cautionary obligation contract
  ¥ 16,256     ¥ 19,323          
3.Issuance of new stock
  ¥ -     ¥ 127          
(Those capitalized)
  ¥ -     ¥ 64          
Those due to conversion of convertible debentures
  ¥ -     ¥ 127          
(Those capitalized)
  ¥ -     ¥ 64          
4.Number of stock newly issued (Thousand shares)
    -       127          
Those due to conversion of convertible debentures
                       
(Thousand shares)
    -       127          

- 17 -


 

     
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(%)
    2009   2008    
Net sales
  ¥ 2,025,546     ¥ 2,721,094       -   25.6  
Cost of sales
    1,471,056       1,801,801          
 
           
Gross profit
    554,490       919,293       -   39.7  
Selling, general and administrative expenses
    456,713       560,587          
 
           
Operating profit
    97,777       358,706       -   72.7  
Other income (deductions):
                       
Interest and dividend income
    16,314       14,931          
Interest expense
    (3,916 )     (3,844 )        
Other, net
    32,509       (10,707 )        
 
           
 
    44,907       380          
 
           
Ordinary profit
    142,684       359,086       -   60.3  
 
                       
Non-ordinary gain (loss), net
    (20,396 )     (26,084 )        
 
           
Income before income taxes
    122,288       333,002       -   63.3  
Income taxes
    41,510       108,867          
 
           
Net income
  ¥ 80,778     ¥ 224,135       -   64.0  
 
           
12. DETAILS OF SALES
       ( Parent company only )
                         
Sales by product   Millions of yen

     
    Year ended   Year ended    
    December 31,   December 31,   Change(%)
    2009   2008    
 
                       
Office
  ¥ 1,021,285     ¥ 1,466,975       -   30.4  
Consumer
    950,554       1,105,067       -   14.0  
Industrial and others
    53,707       149,052       -   64.0  
 
           
Total
  ¥ 2,025,546     ¥ 2,721,094       -   25.6  
 
           
 
                       
Sales by region   Millions of yen

     
    Year ended   Year ended    
    December 31,   December 31,   Change(%)
    2009   2008    
Japan
  ¥ 276,385     ¥ 350,094       -   21.1  
Overseas:
                       
Americas
    645,174       883,911       -   27.0  
Europe
    677,162       935,449       -   27.6  
Other areas
    426,825       551,640       -   22.6  
 
           
 
    1,749,161       2,371,000       -   26.2  
 
           
Total
  ¥ 2,025,546     ¥ 2,721,094       -   25.6  
 
           
Note: Upon the adoption of FASB ASC 280, “Segment Reporting” for consolidation statements, details of sales for non-consolidated statements is now based on the same segments as consolidation statements from the current fiscal year. The presentation of prior year amounts in details of sales has been reclassified to conform to the current presentation.

- 18 -


 

CANON INC.
NON-CONSOLIDATED
13.  NON-CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
       ( Parent company only )
 
                                                                                           
  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
      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 )         -                         -
 
Reversal of
reserve for deferral
of capital gain on
property
                                    (76 )         76           -                         -
 
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
                                                              -   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
December 31, 2008
  Increase   Decrease   Balance as of
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
(Millions of yen)
    Dividend per share (yen)     Base date     Effective date  
  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  
 
 
  Scheduled     Classes of stock    
Cash dividend
(Millions of yen)
    A source of
dividend
    Dividend
per
share (yen)
    Base date     Effective date  
 
March 30, 2010
Annual meeting of stockholders
    common stock       67,896       Retained
earnings
      55.00       December 31, 2009     March 31, 2010  
 

- 19 -


 

CANON INC.
NON-CONSOLIDATED
 
                                                                                           
Year ended December 31, 2008 (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
      Reserve
for
special
depreciation
Reserve for
deferral of
capital gain
on property
Special
reserves
Retained
earnings
 
Balance as of
December 31, 2007
  ¥ 174,698   ¥ 306,225   ¥   25   ¥ 22,114   ¥ 7,694   ¥ 1,255   ¥ 1,249,928   ¥ 581,031   ¥ (456,186 ) ¥ 1,886,784   ¥ 5,028   ¥ (1,246 )     - ¥ 1,890,566  
 
Changes
in the term
                                                                                       
 
Conversion of
convertible debentures
    64     63                                                 127                       127  
 
Transfer to
reserve for special
depreciation
                              632                 (632 )           -                       -
 
Reversal of
reserve for special
depreciation
                              (3,662 )               3,662             -                       -
 
Transfer to
reserve for deferral
of capital gain on
property
                                    1,396           (1,396 )           -                       -
 
Reversal of
reserve for deferral
of capital gain on
property
                                    (73 )         73             -                       -
 
Dividends paid
                                                (145,024 )         (145,024 )                     (145,024 )
 
Net income
                                                224,135           224,135                       224,135  
 
Purchase of
treasury stock
                                                      (100,122 )   (100,122 )                     (100,122 )
 
Disposal of
treasury stock
                  (25 )                           (5 )   86     56                       56  
 
Net change of
items other than
stockholders’ equity
                                                              -   (6,076 )   1,098     246     (4,732 )
 
Total changes
in the term
    64     63       (25 )     -   (3,030 )   1,323       -   80,812     (100,036 )   (20,829 )   (6,076 )   1,098     246     (25,561 )
 
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  
 
         
Notes:
       
 
       
1. Number of issued shares as of December 31, 2008
    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, 2007 December 31, 2008    
 
common stock
      72,588,428         26,701,146         14,329         99,275,245    
   
3. Payment for dividends
                                   
 
  Decision     Classes of stock     Cash dividend     Dividend per share (yen)     Base date     Effective date  
          (Millions of yen)              
 
March 28, 2008
Annual meeting of stockholders
    common stock     75,663     60.00     December 31, 2007     March 31, 2008  
  July 24, 2008
Board of directors’ meeting
    common stock     69,361     55.00     June 30, 2008     August 26, 2008  
 

- 20 -


 

CANON INC.
NON-CONSOLIDATED
14. NOTE FOR GOING CONCERN ASSUMPTION
       ( Parent company only )
Not applicable.
15. CHANGES OF BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
       ( Parent company only )
Note to changes in Accounting Policies
(Measurement standard and valuation method of inventories)
Previously, the inventories held by the company were primarily valued at cost, determined by periodic average method.
Effective from the current fiscal year, the company has applied “Accounting Standard for Measurement of Inventories” (Accounting standards Board of Japan (ASBJ) Statement No.9, issued July 5, 2006). Accordingly, from the current fiscal year, such inventories are mainly valued at cost, determined by periodic average method (amount shown in the balance sheet is devaluated due to decline in profitability) .
The effect of this change, operating profit, ordinary profit and income before taxes decreased by JPY 2,034 million for the fiscal year ended December 31, 2009.
Further, devaluation loss and disposal loss of inventories were previously recorded as “Other, net”, whereas currently recorded as “Cost of sales”.
The effect of this change, operating profit decreased by JPY 19,382 million for the fiscal year ended December 31, 2009.
(Lease transactions)
Previously, finance lease transactions that do not transfer ownership were accounted for in a manner of operating lease. Effective from the current fiscal year, the company has applied “Accounting Standard for Lease Transactions” (ASBJ Statement No.13, issued March 30, 2007, revised from original standard issued by Corporate Accounting Council on June 17, 1993) and “Guidance on Accounting Standards for Lease Transactions” (ASBJ Guidance No.16, issued March 30, 2007, revised from original guidance issued by The Japanese Institute of Certified Public Accountants on January 18, 1994). Accordingly, from the current fiscal year, such lease transactions are accounted for in a similar manner with ordinary sale and purchase transactions. The change of this accounting standard has no impact on the statements of income for the fiscal year ended December 31, 2009.

- 21 -


 

CANON INC.
NON-CONSOLIDATED
Directors
(Current titles are shown in the parentheses)
(1) Candidates for Directors to be promoted
         
Managing Director
  Hideki Ozawa   (Director, President of Canon (China) Co., Ltd.)
 
       
Managing Director
  Masaya Maeda   (Director, Chief Executive of
  Image Communication Products Operations)
(2) Directors to be retired
         
Advisor to be appointed
  Nobuyoshi Tanaka   (Senior Managing Director)
 
       
Chairman and President of Canon
Anelva Corporation to be continued
  Junji Ichikawa   (Senior Managing Director)
 
       
Advisor to be appointed
  Akiyoshi Moroe   (Senior Managing Director)
 
       
President of Canon Components, Inc.
to be appointed
  Toshiyuki Komatsu   (Director)
 
       
Managing Director of Canon
Electronics, Inc. to be appointed
  Tetsuro Tahara   (Director)
 
       
 
  Seijiro Sekine   (Director)
 
       
Corporate Auditor to be appointed
  Shunji Onda   (Director)
 
       
President of SED Inc. to be continued
  Kazunori Fukuma   (Director)
(3) Corporate Auditors to be retired
Kunihiro Nagata
Yoshinobu Shimizu
Minoru Shishikura
(4) Candidates for new Corporate Auditors to be appointed
     
Shunji Onda
  (Director)
 
   
Kazunori Watanabe
  (Certified Public Accountant)
 
   
Kuniyoshi Kitamura
  (General Manager of The Dai-ichi Mutual Life Insurance Company)

- 22 -


 

CANON INC.
NON-CONSOLIDATED
Executive Officers
(1) Candidates for new Executive Officers
     
Shigeyuki Uzawa
  (Group Executive of Semiconductor Production Equipment Operations)
 
   
Makoto Araki
  (Group Executive of Information & Communication Systems Headquarters)
 
   
Kenichi Nagasawa
  (Senior Director of Canon U.S.A., Inc.)
(2) Executive Officer to be retired
     
Kazuhiro Akiyama
  (Director of Canon Anelva Corporation)

- 23 -


 

Canon Inc.
January 27, 2010
CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2009
SUPPLEMENTARY REPORT
TABLE OF CONTENTS
             
          PAGE  
 
1.
   
SALES BY REGION AND PRODUCT (2009)
  S     1
 
2.
   
SALES BY REGION AND PRODUCT (2010/Projection)
  S     2
 
3.
   
SEGMENT INFORMATION BY PRODUCT (2009)
  S     3
 
4.
   
OTHER INCOME / DEDUCTIONS (2009)
  S     3
 
5.
   
SEGMENT INFORMATION BY PRODUCT (2010/Projection)
  S     4
 
6.
   
OTHER INCOME / DEDUCTIONS (2010/Projection)
  S     4
 
7.
   
SALES COMPOSITION BY PRODUCT
  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

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.


 

Canon Inc.
     
1. SALES BY REGION AND PRODUCT (2009)   (Millions of yen)
                                                                       
                                             
        2009       2008           Change year over year    
        4th quarter       Year       4th quarter       Year           4th quarter       Year    
                                             
Japan                                                                  
 
Office
      92,303         374,275         109,717         448,367             -15.9 %         -16.5 %    
                                             
 
Consumer
      69,731         219,036         76,320         249,997             -8.6 %         -12.4 %    
                                             
 
Industry and Others
      35,565         109,033         38,673         169,916             -8.0 %         -35.8 %    
                                             
 
Total
      197,599         702,344         224,710         868,280             -12.1 %         -19.1 %    
                                             
Overseas                                                                  
 
Office
      369,846         1,260,781         392,672         1,774,886             -5.8 %         -29.0 %    
                                             
 
Consumer
      342,356         1,080,158         299,621         1,203,650             +14.3 %         -10.3 %    
                                             
 
Industry and Others
      44,257         165,918         77,737         247,345             -43.1 %         -32.9 %    
                                             
 
Total
      756,459         2,506,857         770,030         3,225,881             -1.8 %         -22.3 %    
                                             
 
Americas
                                                                 
 
Office
      138,949         485,180         155,250         687,691             -10.5 %         -29.4 %    
                                             
 
Consumer
      125,209         367,035         117,391         422,458             +6.7 %         -13.1 %    
                                             
 
Industry and Others
      10,624         41,939         10,361         44,422             +2.5 %         -5.6 %    
                                             
 
Total
      274,782         894,154         283,002         1,154,571             -2.9 %         -22.6 %    
                                             
 
Europe
                                                                 
 
Office
      168,917         565,656         180,057         820,387             -6.2 %         -31.1 %    
                                             
 
Consumer
      132,398         405,173         117,832         487,268             +12.4 %         -16.8 %    
                                             
 
Industry and Others
      7,208         24,321         10,232         33,745             -29.6 %         -27.9 %    
                                             
 
Total
      308,523         995,150         308,121         1,341,400             +0.1 %         -25.8 %    
                                             
 
Other areas
                                                                 
 
Office
      61,980         209,945         57,365         266,808             +8.0 %         -21.3 %    
                                             
 
Consumer
      84,749         307,950         64,398         293,924             +31.6 %         +4.8 %    
                                             
 
Industry and Others
      26,425         99,658         57,144         169,178             -53.8 %         -41.1 %    
                                             
 
Total
      173,154         617,553         178,907         729,910             -3.2 %         -15.4 %    
                                             
 
Intersegment
                                                                 
 
Office
      2,982         10,020         5,566         23,356             -46.4 %         -57.1 %    
                                             
 
Consumer
      642         1,966         647         2,428             -0.8 %         -19.0 %    
                                             
 
Industry and Others
      37,248         83,047         21,271         105,144             +75.1 %         -21.0 %    
                                             
 
Eliminations
      (40,872 )       (95,033 )       (27,484 )       (130,928 )             -           -    
                                             
 
Total
      0         0         0         0               -           -    
                                             
Total                                                                  
 
Office
      465,131         1,645,076         507,955         2,246,609             -8.4 %         -26.8 %    
                                             
 
Consumer
      412,729         1,301,160         376,588         1,456,075             +9.6 %         -10.6 %    
                                             
 
Industry and Others
      117,070         357,998         137,681         522,405             -15.0 %         -31.5 %    
                                             
 
Eliminations
      (40,872 )       (95,033 )       (27,484 )       (130,928 )             -           -    
                                             
 
Total
      954,058         3,209,201         994,740         4,094,161             -4.1 %         -21.6 %    
                                             

- S1 -


 

Canon Inc.
2. SALES BY REGION AND PRODUCT (2010/Projection)
                                       
  (1) Sales by product                             (Millions of yen)
                           
        2010 (P)       2009           Change year over year  
        Year       Year           Year  
                           
 
Office
      1,760,900         1,645,076             +7.0 %  
                           
 
Consumer
      1,369,500         1,301,160             +5.3 %  
                           
 
Industry and Others
      401,300         357,998             +12.1 %  
                           
 
Eliminations
      (81,700 )       (95,033 )           -  
                           
 
Total
      3,450,000         3,209,201             +7.5 %  
                           
 
                            (P)=Projection
 
 
 
 
 
  (2) Sales by region                     (Millions of yen)
                           
        2010 (P)       2009           Change year over year  
        Year       Year           Year  
                           
 
Japan
      731,050         702,344             +4.1 %  
 
Overseas
      2,718,950         2,506,857             +8.5 %  
                           
 
Americas
      924,750         894,154             +3.4 %  
 
Europe
      1,086,550         995,150             +9.2 %  
 
Other areas
      707,650         617,553             +14.6 %  
                           
 
Total
      3,450,000         3,209,201             +7.5 %  
                           
 
 
                            (P)=Projection

- S2 -


 

Canon Inc.
3. SEGMENT INFORMATION BY PRODUCT (2009)   (Millions of yen)
                                                                     
                                             
        2009       2008           Change year over year    
        4th quarter       Year       4th quarter       Year           4th quarter       Year    
                                             
 
Office
                                                                 
 
External customers
      462,149         1,635,056         502,389         2,223,253             -8.0%         -26.5%    
 
Intersegment
      2,982         10,020         5,566         23,356             -46.4%         -57.1%    
                                             
 
Total sales
      465,131         1,645,076         507,955         2,246,609             -8.4%         -26.8%    
                                             
 
Operating profit
      80,614         229,396         84,729         457,346             -4.9%         -49.8%    
                                             
 
% of sales
      17.3%         13.9%         16.7%         20.4%             -         -    
                                             
 
Consumer
                                                                 
 
External customers
      412,087         1,299,194         375,941         1,453,647             +9.6%         -10.6%    
 
Intersegment
      642         1,966         647         2,428             -0.8%         -19.0%    
                                             
 
Total sales
      412,729         1,301,160         376,588         1,456,075             +9.6%         -10.6%    
                                             
 
Operating profit
      75,143         183,492         40,873         223,124             +83.8%         -17.8%    
                                             
 
% of sales
      18.2%         14.1%         10.9%         15.3%             -         -    
                                             
 
Industry and Others
                                                                 
 
External customers
      79,822         274,951         116,410         417,261             -31.4%         -34.1%    
 
Intersegment
      37,248         83,047         21,271         105,144             +75.1%         -21.0%    
                                             
 
Total sales
      117,070         357,998         137,681         522,405             -15.0%         -31.5%    
                                             
 
Operating profit
      (34,960 )       (75,956 )       (52,276 )       (47,876 )           -         -    
                                             
 
% of sales
      -29.9%         -21.2%         -38.0%         -9.2%             -         -    
                                             
 
Corporate and Eliminations
                                                                 
 
External customers
      -         -         -         -             -         -    
 
Intersegment
      (40,872 )       (95,033 )       (27,484 )       (130,928 )           -         -    
                                             
 
Total sales
      (40,872 )       (95,033 )       (27,484 )       (130,928 )           -         -    
                                             
 
Operating profit
      (28,669 )       (119,877 )       (37,501 )       (136,520 )           -         -    
                                                                     
                                             
 
Consolidated
                                                                 
 
External customers
      954,058         3,209,201         994,740         4,094,161             -4.1%         -21.6%    
 
Intersegment
      -         -         -         -             -         -    
                                             
 
Total sales
      954,058         3,209,201         994,740         4,094,161             -4.1%         -21.6%    
                                             
 
Operating profit
      92,128         217,055         35,825         496,074             +157.2%         -56.2%    
                                             
 
% of sales
      9.7%         6.8%         3.6%         12.1%             -         -    
                                             
 
4. OTHER INCOME / DEDUCTIONS (2009) (Millions of yen)   
                                                                     
                                             
        2009       2008           Change year over year    
        4th quarter       Year       4th quarter       Year           4th quarter       Year    
                                             
 
Interest and dividend, net
      1,346         4,866         3,685         18,605             (2,339 )       (13,739 )  
 
Forex gain / loss
      3,485         1,842         2,932         (11,212 )           +553         +13,054    
 
Equity earnings / loss
of affiliated companies
      (527 )       (12,649 )       (18,485 )       (20,047 )           +17,958         +7,398    
 
Other, net
      1,489         8,241         (7,044 )       (2,273 )           +8,533         +10,514    
                                             
 
Total
      5,793         2,300         (18,912 )       (14,927 )           +24,705         +17,227    
                                             

- S3 -


 

Canon Inc.
5. SEGMENT INFORMATION BY PRODUCT (2010/Projection)   (Millions of yen)
                                       
                           
        2010 (P)       2009           Change year over year    
        Year       Year           Year    
 
Office
                                   
 
External customers
      1,750,700         1,635,056             +7.1%    
 
Intersegment
      10,200         10,020             +1.8%    
                           
 
Total sales
      1,760,900         1,645,076             +7.0%    
                           
 
Operating profit
      287,000         229,396             +25.1%    
 
% of sales
      16.3%         13.9%             -    
                           
 
Consumer
                                   
 
External customers
      1,367,700         1,299,194             +5.3%    
 
Intersegment
      1,800         1,966             -8.4%    
                           
 
Total sales
      1,369,500         1,301,160             +5.3%    
                           
 
Operating profit
      213,900         183,492             +16.6%    
 
% of sales
      15.6%         14.1%             -    
                           
 
Industry and Others
                                   
 
External customers
      331,600         274,951             +20.6%    
 
Intersegment
      69,700         83,047             -16.1%    
                           
 
Total sales
      401,300         357,998             +12.1%    
                           
 
Operating profit
      (15,700)         (75,956)             -    
 
% of sales
      -3.9%         -21.2%             -    
                           
 
Corporate and Eliminations
                                   
 
External customers
      -         -             -    
 
Intersegment
      (81,700)         (95,033)             -    
                           
 
Total sales
      (81,700)         (95,033)           -    
                           
 
Operating profit
      (155,200)         (119,877)             -    
 
 
                                   
                           
 
Consolidated
                                   
 
External customers
      3,450,000         3,209,201             +7.5%    
 
Intersegment
      -         -             -    
                           
 
Total sales
      3,450,000         3,209,201             +7.5%    
                           
 
Operating profit
      330,000         217,055             +52.0%    
 
% of sales
      9.6%         6.8%             -    
                           
(P)=Projection
6. OTHER INCOME / DEDUCTIONS (2010/Projection)   (Millions of yen)
                                       
                           
        2010 (P)       2009           Change year over year    
        Year       Year           Year    
 
Interest and dividend, net
      2,700         4,866             (2,166 )  
 
Forex gain / loss
      (2,100 )       1,842             (3,942 )  
 
Equity earnings / loss
of affiliated companies
      (8,600 )       (12,649 )           +4,049    
 
Other, net
      (2,000 )       8,241             (10,241 )  
                           
 
Total
      (10,000 )       2,300             (12,300 )  
                           
(P)=Projection

- S4 -


 

Canon Inc.     
7. SALES COMPOSITION BY PRODUCT
                                                                 
                                         
        2010 (P)     2009     2008        
                                         
        Year       4th quarter       Year       4th quarter       Year            
                                         
Office
                                                             
 
Monochrome copiers
      19 %       17 %       20 %       20 %       21 %            
 
Color copiers
      20 %       19 %       19 %       19 %       19 %            
 
Other printing devices
      53 %       57 %       53 %       54 %       54 %            
 
Others
      8 %       7 %       8 %       7 %       6 %            
                                         
Consumer
                                                             
 
Cameras
      67 %       68 %       68 %       64 %       66 %            
 
Inkjet printers
      26 %       26 %       25 %       28 %       26 %            
 
Others
      7 %       6 %       7 %       8 %       8 %            
                                         
Industry and Others
                                                             
 
Semiconductor production equipment
      21 %       12 %       19 %       40 %       32 %            
 
Others
      79 %       88 %       81 %       60 %       68 %            
                                         
 
 
                                (P)=Projection          
 
 
                                                         
 
 


8. SALES GROWTH IN LOCAL CURRENCY 
                                     
                                         
        2010 (P)     2009                                
                                         
        Year       4th quarter       Year                                  
                                         
Office
                                                             
 
Japan
      -       -15.9 %       -16.5 %                                
 
Overseas
      -       -3.5 %       -20.7 %                                
                                         
 
Total
      +9.2 %       -6.6 %       -20.2 %                                
                                         
Consumer
                                                             
 
Japan
      -       -8.6 %       -12.4 %                                
 
Overseas
      -       +16.1 %       +0.4 %                                
                                         
 
Total
      +7.2 %       +11.1 %       -1.8 %                                
                                         
Industry and Others
                                                             
 
Japan
      -       -8.0 %       -35.8 %                                
 
Overseas
      -       -42.8 %       -28.3 %                                
                                         
 
Total
      +12.5 %       -12.3 %       -25.5 %                                
                                         
Total
                                                             
 
Japan
      +4.2 %       -12.1 %       -19.1 %                                
 
Overseas
      +10.9 %       +0.2 %       -13.4 %                                
 
Americas
      +7.3 %       +4.0 %       -14.9 %                                
 
Europe
      +10.5 %       -2.4 %       -15.4 %                                
 
Other areas
      +16.6 %       -1.4 %       -7.3 %                                
                                         
 
Total
      +9.4 %       -2.6 %       -14.6 %                                
                                         
 
 
                    (P)=Projection                                

- S5 -


 

Canon Inc.
9. PROFITABILITY
                                                       
                                           
        2010 (P)     2009     2008                      
        Year       Year       Year                        
                                           
 
ROE *1
      7.4%       4.9%       11.1%                      
                                           
 
ROA *2
      5.1%       3.4%       7.3%                      
                                           
  *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) 
                                   
        2010 (P)     2009     2008  
                                   
        Year       4th quarter       Year       4th quarter       Year    
                                   
 
Yen/US
      90.00       89.68       93.21       96.22       103.23    
 
Yen/Euro
      130.00       132.54       130.46       126.46       151.46    
                                   
  (P)=Projection
  (2) Impact of foreign exchange rates on sales (Year over year)       (Billions of yen)                     
                                           
        2010 (P)     2009                      
                                           
        Year       4th quarter       Year                        
                                           
 
US$
      (49.8)       (20.5)       (116.8)                      
 
Euro
      (2.9)       +12.0        (114.8)                      
 
Other currencies
      (2.5)       +6.1        (17.9)                      
 
                                         
 
Total
      (55.2)       (2.4)       (249.5)                      
                                           
  (P)=Projection
                   
 
(3) Impact of foreign exchange rates per yen
   
(Billions of yen)
                                       
                                                   
        2010 (P)                                          
                                                   
        Year                                            
                                                   
 On sales                                                    
 
US$
      15.5                                          
 
Euro
      6.4                                          
 
                                                 
 On operating profit                                                    
 
US$
      8.2                                          
 
Euro
      4.6                                          
                                                   
  (P)=Projection
                                       
 
 
11. STATEMENTS OF CASH FLOWS
                                           
(Millions of yen) 
                                   
        2010 (P)     2009     2008  
                                   
        Year     4th quarter     Year     4th quarter     Year  
                                   
 Net cash provided by operating activities       520,000       236,708       611,235       181,249       616,684    
                                   
 Net cash used in investing activities       (360,000 )     (84,010 )     (370,244 )     (86,857 )     (472,480 )  
                                   
 Free cash flow       160,000       152,698       240,991       94,392       144,204    
                                   
 Net cash used in financing activities       (240,000 )     (998 )     (142,379 )     (85,592 )     (277,565 )  
                                   
 Effect of exchange rate changes on cash and cash equivalents       (15,000 )     9,678       17,226       (66,923 )     (131,906 )  
                                   
 Net change in cash and cash equivalents       (95,000 )     161,378       115,838       (58,123 )     (265,267 )  
                                   
 Cash and cash equivalents at end of period       700,000       795,034       795,034       679,196       679,196    
                                   
  (P)=Projection
* In connection with the adoption of the guidance for noncotrolling interests in consolidated financial statements, only the total of “net cash provided by operating activities”
will be provided from first-quarter 2009.

- S6 -


 

Canon Inc.
12.R&D EXPENDITURE
  (Millions of yen)  
                                             
                             
        2010 (P)       2009       2008            
                             
        Year       Year       Year            
                             
 
Office
      -         78,872         106,247              
 
Consumer
      -         74,131         76,645              
 
Industry and Others
      -         151,597         191,133              
 
 
                         
 
Total
      320,000         304,600         374,025              
                             
 
% of sales
      9.3%         9.5%         9.1%              
                             
  (P)=Projection     
13. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION
  (Millions of yen)  
                                             
                             
        2010 (P)       2009       2008            
                             
        Year       Year       Year            
                             
 
Increase in PP&E
                                         
 
Office
      -         91,525         131,165              
 
Consumer
      -         26,483         51,985              
 
Industry and Others
      -         22,743         25,555              
 
Corporate and eliminations
      -         75,377         153,283              
 
 
                         
 
Total
      220,000         216,128         361,988              
                             
 
Depreciation and amortization
                                         
 
Office
      -         90,878         99,962              
 
Consumer
      -         48,701         58,082              
 
Industry and Others
      -         60,770         71,557              
 
Corporate and eliminations
      -         115,044         111,736              
 
 
                         
 
Total
      300,000         315,393         341,337              
                             
  (P)=Projection     
14. INVENTORIES
     
 
   (1) Inventories   (Millions of yen)  
                                             
                             
        2009       2008       Difference              
        Dec.31       Dec.31                    
                             
 
Office
      144,941         185,859         (40,918 )            
 
Consumer
      113,975         160,861         (46,886 )            
 
Industry and Others
      114,325         160,199         (45,874 )            
 
 
                         
 
Total
      373,241         506,919         (133,678 )            
                             
     
   (2) Inventories/Sales*   (Days)  
                                             
                             
        2009       2008       Difference              
        Dec.31       Dec.31                    
                                 
 
Office
      30         32         (2 )            
 
Consumer
      29         41         (12 )            
 
Industry and Others
      158         151         +7              
 
 
                             
 
Total
      39         47         (8 )            
                                 
        *Index based on the previous six months sales.
15. DEBT RATIO
                                             
                             
        2009       2008       Difference              
        Dec.31       Dec.31                    
                                 
 
Total debt / Total assets
      0.3%         0.4%         -0.1%              
                                 
16. OVERSEAS PRODUCTION RATIO
                                             
                                     
        2009       2008                        
        Year       Year                        
                                     
 
Overseas production ratio
      40%         39%                        
                                     
17. NUMBER OF EMPLOYEES
                                             
                             
        2009       2008       Difference              
        Dec.31       Dec.31                    
                                 
 
Japan
      73,635         72,445         +1,190              
 
Overseas
      95,244         94,535         +709              
 
 
                             
 
Total
      168,879         166,980         +1,899              
                                 

- S7 -