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

Table of Contents

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.

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

The following materials are included.

March 4, 2005   

TO OUR SHAREHOLDERS

NOTICE OF CONVOCATION
OF
THE ORDINARY GENERAL MEETING OF SHAREHOLDERS
FOR THE 104TH BUSINESS TERM

Notice is hereby given that the Ordinary General Meeting of Shareholders for the 104th Business Term of the Company will be held as described below and that you are requested to attend the Meeting.

If you do not expect to attend the Meeting, you may exercise your voting rights in writing. After reviewing the following Reference Materials, please indicate your consent/dissent and affix your seal on the enclosed CARD FOR EXERCISE OF VOTING RIGHTS, and return it to us.

          Matters to be Reported:

     Matters to be Resolved upon:

(The enclosed “Report for the 104th Business Term” is the accompanying document relating to Matters to be Reported and Item No. 1 of the Propositions.)

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REFERENCE MATERIALS FOR EXERCISE OF VOTING RIGHTS

Item No.1: Approval of the Proposal of Profit Appropriation for the 104th Business Term

Item No.2: Partial Amendment of the Articles of Incorporation

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(The amended parts are underlined.)

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Item No.3: Election of Twenty-Five Directors

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Item No. 4: Grant of Retiring Allowances to Directors to be Retired

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The map of the place of
the General Meeting of Shareholders

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To Our Shareholders

     We are pleased to present our business report for the 104th business term (from January 1, 2004 to December 31, 2004)

     The global economy trended strongly during the first half of the year, supported by strength in the United States and China. However, during the latter half of the year, fears arising from rising crude oil prices and the U.S. “twin deficits” contributed to a weaker dollar and a slow-down in business activities. Amidst this operating environment, the Canon Group’s continuous efforts to implement reforms in product development, manufacturing and marketing allowed us to consecutively achieve record-high levels of sales and profits on both a consolidated and a non-consolidated basis during the term.

     At our 104th Ordinary General Meeting of Shareholders, in consideration of our business results for this term, we will propose a dividend payment of 40 yen per share as of the end of the fiscal year to show our sincere appreciation for your loyal support. This is in addition to the interim dividend of 25 yen per share, which will bring the full-year dividend to a total of 65 yen per share, or 15 yen more than in the previous term.

     We have now entered the final year of Phase II (2001 to 2005) of our “Excellent Global Corporation Plan.” In order to create an enduring management platform, we will continue our efforts to implement reforms throughout our businesses.

     We look forward to your continued support and encouragement in the future.

March 2005

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(Materials attached to the Notice of Convocation of the Ordinary General Meeting of Shareholders for the 104th Business Term)

BUSINESS REPORT
(From January 1, 2004 to December 31, 2004)

n  General Business Conditions

     With regard to markets relevant to Canon, demand for our digital cameras and digital video cameras continued to grow strongly. In the area of computer peripherals, notably such devices as networked multifunctional devices and printers, demand for color-capable and multifunctional equipment grew steadily. However, overall business conditions remained severe due to intensified price competition. At the same time, with regard to optical equipment, recoveries in capital investments by semiconductor manufacturers led to growth in demand for semiconductor production equipment. Additionally, an expansion in the large-format liquid crystal display (LCD) television market contributed to increased demand for mirror projection mask aligners for LCDs.

     Amid this business environment, the Canon Group entered the fourth year of Phase II (2001 to 2005) of its “Excellent Global Corporation Plan.” In line with its goals under this plan, it continued to promote measures to establish a

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highly profitable structure that can withstand the current volatile business environment.

     Together with other Group companies, Canon actively pressed ahead with reforms in development and production processes to speed up development time. In addition, Canon implemented procurement reform designed to reduce costs. In particular, we enhanced our common technological foundations in regard to measuring, analysis and simulation, and promoted the in-house manufacture of key devices and core components. These efforts enabled us to strengthen our management structure, allowing us to timely bring to market highly competitive products differentiated by our unique technologies. Canon also supplemented its infrastructure, both inside and outside Japan, to strengthen its R&D and production technologies, as well as to expand production capacity.

     Reforms undertaken by the Group’s marketing companies throughout the world have led to improved marketing strategies in each country we serve, and as a result, our sales have shown robust growth.

     In October of 2004, we established a joint venture company with Toshiba Corporation and have started preparations for the full-scale launch of our new Surface-condition Electron-emitter Display (SED) flat-screen display business. Even before the official start of this business, we have already received a favorable response to a prototype flat-screen TV using this SED panel exhibited at a trade show.

     As a result, the Canon Group recorded positive results in each of our business segments in both Japanese and overseas markets. During the term we attained, on a consolidated basis, net sales of 3,467.9 billion yen (an 8.4% increase over the previous term), income before income taxes and minority interests of 552.1 billion yen (a 23.2% increase), and net income of 343.3 billion yen (a 24.5% increase). Also, on a non-consolidated basis, we recorded net sales of 2,278.4 billion yen (a 12.6% increase), ordinary profit of 396.3 billion yen (a 23.6% increase), and net income of 249.3 billion yen (a 9.0% increase). All of these figures were record highs.

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n  Sales by Operations

Consolidated

Non-Consolidated

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l   Business Machines Operations

Office Imaging Products

     Fierce competition continued in both domestic and overseas markets for products targeting business offices, small business owners, and individual users, due to further progress in the switchover to color machines, high performance and price reduction.

     In office-use color machines, we endeavored to expand sales of the “iR C3100” medium-speed multifunction device and the “iR C6800” high-speed multifunction device launched on overseas markets (they had been launched on the Japanese market in the second half of 2003), as well as the “iR C3200/C3200N” which remained strong worldwide. In addition, we fortified our product line-up by releasing new products such as the “iR C3220/C2620” series. As a result, we were able to increase our sales substantially. In office-use digital black and white machines, we continued to enjoy good sales thanks to persistently strong sales of the “iR1600/2000” series, and during the second half of the year, also thanks to our efforts to strengthen our product line-up (from low- to high-speed machines) through the introduction of eight new models (including our high-performance, medium-speed “iR4570/3570/2870/2270” series) which feature Canon’s unique high-speed on-demand fixing, low power consumption and compact size.

     In addition, by taking advantage of our Multifunctional Embedded Application Platform (MEAP) incorporated in our “imageRUNNER” series machines, and our line-up of “imageWARE” series software, which offer users an expanded range of functions, we were able to strengthen our solutions business by aggressively developing workflow solutions to match client needs.

     In the field of products targeting individuals and small-business owners, we saw the shift in customer demand to multifunctional digital devices as a good business opportunity, to which we responded by launching our “Satera MF5730/5750” and “Satera MF3110” black and white machines (for the Japanese market), and the “imageCLASS MF8170c,” the world’s first A4-size-capable color machine (for the North American market), in addition to other efforts to fortify our product line-up and to increase sales.

     As a result of the above-described measures, sales for this segment grew by 3.6% on a consolidated basis and 5.3% on a non-consolidated basis, compared with the previous term.

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Computer Peripherals

     In inkjet printers, amid a market in which demand is polarized between high-performance printers dedicated to digital photo printing and low-priced products, Canon aggressively marketed new products that incorporated new technologies under the brand name of “PIXUS” for the Japanese market and “PIXMA” for overseas markets. These technologies included “FINE,” a high-precision print head that enables the use of extremely fine ink droplets; “ChromaLife 100,” an ink with improved print quality and longer life; and “PictBridge,” an industry standard that enables easy printing directly from digital cameras. Furthermore, as there was a notable demand shift to multifunctional inkjet machines in major markets, the strength of well-received “PIXUS MP300” series, introduced in the previous year, and the market launching of “PIXUS MP900/770” (for the Japanese market) and “PIXUS MP790/780” resulted in favorable sales of multifunctional inkjet machines.

     Turning to laser beam printers, our OEM-brand color printers grew strongly in volume, and sales of black-and-white printers increased due to strong demand stimulated by declining prices. As for Canon-brand products, sales of black-and-white printers, such as the newly-introduced A3-size-capable “Satera LBP-3600,” were strong in Japan, and we actively promoted color printers like the “Satera LBP-2410” and “Satera LBP5000” series.

     With regard to image scanners, our efforts to increase sales in various global markets by the introduction of our flagship model “CanoScan 9950F” and the slim “CanoScan LiDE35” (for overseas markets) with a contact image sensor, resulted in bigger shares in the major overseas markets. However, our sales volumes fell, due partly to the shift in demand towards multifunctional printers.

     As a result, this segment recorded an increase in sales of 5.6% on a consolidated basis and 6.3% on a non-consolidated basis, compared with the previous term.

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Business Information Products

     The demand for commercial-use document scanners marketed by Canon Electronics, Inc. is expanding in major markets around the world due to the trend toward the replacement of paper documents by electronic ones. In particular, we recorded strong sales of our “DR Scanner” series, including the high-speed “DR-9080C/6080” launched on the market in the second half of 2003.

     Sales of calculators marketed by Canon Electronics Business Machines (H.K.) Co., Ltd. remained flat due to the negative impact of price declines, despite retaining the top share in the U.S. market for print-capable calculators and the launching on the Japanese market of a desktop calculator that can also function as a plug-in 10-key pad for laptops and notebook computers. Sales of electronic dictionaries targeting the Japanese market increased through the new introduction of “wordtank V80” (Chinese) and “wordtank V30” (English), incorporating unique functions for learners such as pen-touch input, animation displays of how to write Chinese characters, and pronunciation.

     With regard to servers and personal computers handled by Canon Sales Co., Inc., demand from corporate clients on the Japanese market held steady, but a decline in sales was caused by our change in marketing strategy from selling single products to a solutions business involving the proposal of unique combinations of various products.

     Consequently, sales decreased 5.2% on a consolidated basis from the previous term.

Note:  For this segment, there were no sales on a non-consolidated basis.

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l  Camera Operations

     In digital cameras, we enjoyed a large sales increase, thanks particularly to expanded demand in the area of single lens reflex (SLR) cameras. We expanded sales of the newly introduced, “EOS-1Ds Mark II” and “EOS-1D Mark II,” our flagship models, and the “EOS-20D” for high-end amateur demand, in addition to our affordable “EOS Kiss Digital,” which enjoyed a favorable market response. Demand for our EF lens series of products was also firm. In compact digital cameras, growth in the Japanese market subsided, but it remained high in overseas markets, and the introduction of ten new products in our “PowerShot” series including the “PowerShot Pro1,” and six new products in the “IXY DIGITAL” series including the “IXY DIGITAL 50,” during the reporting term caused a strong growth in sales. In response to market needs for digital photo printers, we adopted a strategy of seeking synergies with our digital cameras. With this aim in mind, we introduced five new products in the “SELPHY” series, including the “CP-330” compact photo printer, which utilizes the industry-standard “PictBridge” technology.

     In digital video cameras, we fortified our lineup worldwide and expanded sales with the addition of our “XL2 KIT,” professional-use flagship model, and the “IXY DV M3 KIT” and “FV M20 KIT” which feature sophisticated video and still-image recording functions.

     In film cameras, we launched two new affordable SLR cameras, including the “EOS Kiss 7,” and three new compact cameras, including the high-end “Autoboy 180.” In spite of these initiatives, however, film camera sales declined as global demand continued its shift toward digital cameras.

     We saw strong sales of our newly-released “Power Projector SX50” LCD projector, which utilizes our “AISYS” reflective liquid crystal optical engine to achieve high resolution and brightness in a compact, low-cost unit.

     As a result, this segment recorded an increase in sales of 16.8% on a consolidated basis and 24.3% on a non-consolidated basis, compared with the previous term.

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l  Optical and Other Products Operations

     Strength was seen in the semiconductor devices markets, mostly due to strong demand for cellular phones and digital consumer products, as well as replacement demand for personal computers. Device manufacturers made large investments in production facilities, primarily in Japan and other parts of Asia. Amidst this trend, demand for our semiconductor production equipment grew briskly and sales rose significantly, partly due to the introduction of new products like “FPA-6000ES6,” which uses krypton fluoride (KrF) excimer lasers as the light source. In the LCD panel market, growth in demand for panels used in television and personal computer applications has stimulated panel makers to continue panel manufacturers’ vigorous capital investments. In particular, many inquiries were made by manufacturers in Taiwan and Korea for mirror projection mask aligners for large panels. Our efforts to sell more units of our “MPA-8000,” which is capable of handling sixth-generation-sized panels (1,500 by 1,850 mm) and the “MPA-7800” series, capable of handling fifth-generation panels, proved successful, with sales volume increasing dramatically.

     Although there were no significant changes in the size of the market for television broadcasting lenses, the shift towards digital broadcasting equipment, which began in 2002, has contributed to replacement demand and recoveries in capital investments, allowing sales to stay firm. During this term, we introduced 13 new products, including lenses for High Definition Television (HDTV) cameras, and we focused on increasing sales of “J17ex7.7B” and other handy-type products in our high-grade “ENG” lens series. As a result, we successfully expanded sales not only in Japan and the United States, but also in many countries in Europe and Asia as well.

     In medical equipment, sales of X-ray digital cameras in our “CXDI” series — utilizing Canon’s unique sensor technology — achieved solid growth, not only in Europe and the United States, but also in Asia. Furthermore, sales of our “CR-DGi” non-mydriatic retinal digital camera – introduced during the previous term – remained robust.

     Our sales efforts caused this business segment to record an increase in sales of 26.9% on a consolidated basis and 37.7% on a non-consolidated basis, compared with the previous term.

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Note:  The products mentioned above may have different names in other areas.

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n  Facilities Investment by the Canon Group
     The investment in facilities during this term totaled 318.7 billion yen (209.5 billion yen by the Company).

Main facilities completed during this term

Main facilities under construction for establishment/expansion as of the end of this term

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     The world economy is expected to expand gradually, but we must be prepared to deal with a number of factors surrounding the Canon Group that may create an unpredictable operating environment, such as signs of a slowdown in economic growth observed since the latter half of 2004, and the uncertain situation in the Middle East.

     Against this backdrop, the Canon Group is entering the final year of Phase II (2001 to 2005) of its “Excellent Global Corporation Plan,” and we will emphasize the implementation of the following measures.

     In order for the Group to be able to maintain sustained growth despite rapid changes in the global situation, we need to be acutely conscious of manufacturing processes when developing products. We also need to exhaustively strengthen the manufacturing technologies used in our production facilities and raise the level of employees’ manufacturing skills. To this end, we will strengthen collaboration between development and manufacturing departments. In addition to implementing reforms that will enable us to create products without the need for prototypes throughout the various stages of the product development process, we need to expand the in-house manufacture of key components of our products, and also the devices and molds used to manufacture them and to automate our assembly processes. In this way, we aim to further lower our manufacturing cost rate and accumulate our manufacturing technologies.

     We plan to create and strengthen new businesses for the next generation. Among these, we have selected the display business, commencing with SED (Surface-condition Electron-emitter Display), as the next main earnings driver. In order to achieve quick realization of mass production, we have to establish its manufacturing technologies and reduce costs as soon as possible. Furthermore, we plan to bolster our ability to develop key components to supply sophisticated products that depend on our unique technologies, which can be unrivaled. At the same time, we are fostering new business developments by subsidiaries, by supporting their technologies.

     We also need to develop an infrastructure that will contribute to the creation of highly advanced and efficient R & D and manufacturing operations.

     Finally, because our ability to achieve these goals will depend upon the capabilities of each and every one of our employees, we will place even greater emphasis on the cultivation of human resources and the development of individual skills. With regard to compliance issues, we will make our best efforts to ensure a full understanding of the issues by all employees of Canon Group companies.

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     Canon Group is engaged in the manufacture and sales of the following products.

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n  Major Domestic Bases

Name [Location]

Canon Inc., Headquarters     [Tokyo]

Manufacturing

Marketing

R&D, Manufacturing and Marketing

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n  Major Overseas Bases

Name [Location]

R&D

Manufacturing

Marketing

R&D, Manufacturing and Marketing

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n  Shares

Total Number of Shares Issuable          2,000,000,000 shares

Total Outstanding Shares, Capital Stock and Number of Shareholders

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Main Shareholders (Top ten shareholders)

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Shareholding by Category

Shareholding Ratio

n  Convertible Debentures

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n  Consolidated

n  Non-Consolidated

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n  Principal Subsidiaries

n  Consolidated Financial Summary

The number of consolidated subsidiaries of this term was 184, and the number of companies accounted for on equity basis was 17.
The consolidated financial summary of this term are as shown in pages 34 to 35.

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Directors

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Corporate Auditors

     Amount of payment by the Company and its subsidiaries as compensation for the accounting auditor (Shin Nihon & Co.: Hibiya Kokusai Bldg., 2-3 Uchisaiwai-cho 2-chome, Chiyoda-ku, Tokyo) is as follows:

     There is nothing to be mentioned specifically.

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Consolidated Balance Sheets