FORM 6-K
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of            July                                                                                       , 2009    
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           July     28,     2009          
  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. CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND THE FIRST HALF ENDED JUNE 30, 2009

 


 

(CANON LOGO)
CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND
THE FIRST HALF ENDED JUNE 30, 2009
July 28, 2009
CONSOLIDATED RESULTS FOR THE SECOND QUARTER
(Millions of yen, thousands of U.S. dollars, except per share amounts)           
                                                 
    Actual                
    Three months   Three months           Three months                
    ended   ended   Change(%)   ended                
    June 30, 2009   June 30, 2008       June 30, 2009                
Net sales
   ¥ 793,785      ¥ 1,105,894     - 28.2      $ 8,268,594  
Operating profit
    44,906       160,153     - 72.0       467,771  
Income before income taxes
    35,492       172,603     - 79.4       369,708  
Net income attributable to Canon Inc.
   ¥ 15,605      ¥ 107,841     - 85.5      $ 162,552  
                   
 
                               
Net income attributable to Canon Inc. stockholders per share:
- Basic
   ¥ 12.64      ¥ 85.52     - 85.2      $ 0.13  
- Diluted
    12.64       85.51     - 85.2       0.13  
                   
 
                               
CONSOLIDATED RESULTS FOR THE FIRST HALF
 
 
                               
(Millions of yen, thousands of U.S. dollars, except per share amounts)         
 
                               
    Actual   Projected
    Six months   Six months           Six months   Year ending    
    ended   ended   Change(%)   ended   December 31,   Change(%)
    June 30, 2009   June 30, 2008       June 30, 2009   2009    
Net sales
   ¥ 1,480,819      ¥ 2,113,432     - 29.9      $ 15,425,198      ¥   3,200,000     - 21.8  
Operating profit
    64,938       330,983     - 80.4       676,438       190,000     - 61.7  
Income before income taxes
    57,886       339,245     - 82.9       602,979       180,000     - 62.6  
Net income attributable to Canon Inc.
   ¥ 33,349      ¥ 214,485     - 84.5      $ 347,385      ¥ 110,000     - 64.4  
                             
 
                                               
Net income attributable to Canon Inc. stockholders per share:
- Basic
   ¥ 27.01      ¥ 170.08     - 84.1      $ 0.28      ¥ 89.11     - 63.8  
- Diluted
    27.01       170.07     - 84.1       0.28       -         -    
                           
                       
    Actual                
    As of   As of   Change(%)   As of          
    June 30, 2009   December 31, 2008     June 30, 2009                
 
                                               
Total assets
   ¥ 3,744,669      ¥ 3,969,934     - 5.7      $  39,006,969                  
                                   
 
                                               
Canon Inc. stockholders’ equity
   ¥ 2,683,183      ¥ 2,659,792     + 0.9      $ 27,949,823                  
                                   
           
Notes:
  1. 
Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.
 
  2. 
U.S. dollar amounts are translated from yen at the rate of JPY96=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of June 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 Second Quarter in Review
Looking back at the global economy in the second quarter of 2009, conditions continued to be severe. In the United States, despite signs of a slight improvement in exports and consumer spending, capital spending dropped significantly and the economic slowdown continued. In Europe, the economic recession intensified due to declines in capital investment along with depressed consumer spending. Across Asia, while economic conditions for the region overall remained weak, the Chinese economy began showing signs of a turnaround as the economic stimulus measures began taking effect. In Japan, the impact of the worsening global economy continued to be felt, resulting in drops in both exports and capital investment along with flagging consumer spending due to deteriorating employment conditions and other factors.
As for the markets in which Canon operates amid these conditions, within the office imaging products market, demand for network digital multifunction devices (MFDs) decreased in each region, leading to continued sluggish sales for monochrome and color models. In the computer peripherals market, demand was weak for color and low-end laser beam printers, which had been driving recent demand, resulting in a drop below the year-ago level. With regard to inkjet printers, demand continued to decrease for both single-function and multifunction models, resulting in a contraction of the market compared with the same period for the previous year. As for the cameras segment, while demand for digital single-lens reflex (SLR) cameras achieved solid growth, demand for compact digital cameras remained sluggish amid further price declines. In the optical equipment segment, demand dramatically diminished for steppers, utilized in the production of semiconductors, while demand for aligners, used to produce liquid crystal display (LCD) panels, reversed to negative growth due to falling prices of LCD panels. The average value of the yen during the second-quarter was ¥97.19 to the U.S. dollar, a year-on-year appreciation of about ¥7, and ¥132.90 to the euro, a year-on-year appreciation of approximately ¥31.
Net sales for the second quarter totaled ¥793.8 billion (U.S.$8,269 million), a year-on-year decline of 28.2%, mainly due to the effects of significantly reduced sales volumes due to decreased demand for office equipment and other products, a trend that continued from the previous quarter, along with the substantial rise in the value of the yen. Net sales for the six months ended June 30, 2009 decreased by 29.9% to ¥1,480.8 billion (U.S.$15,425 million). Despite the launch of new products and ongoing cost-cutting efforts targeting an improved gross profit ratio, such factors as the appreciation of the yen, reduction in sales volumes and falling product prices led to a 5.5 point decline in the ratio to 43.5% for the quarter and 43.5% for the first six months. Consequently, gross profit decreased by 36.2% to ¥345.5 billion (U.S.$3,599 million) for the quarter and by 38.1% to ¥644.3 billion (U.S.$6,711 million) for the six-month period. Although operating expenses declined by 21.2% owing to a Group-wide effort to thoroughly curtail expenses, operating profit dropped 72.0% to ¥44.9 billion (U.S.$468 million) for the second quarter and 80.4% to ¥64.9 billion (U.S.$676 million) for the combined first and second quarter period. Other income (deductions) deteriorated by ¥21.9 billion (U.S.$228 million), mainly due to currency exchange losses and losses on investments in equity method affiliates. As a result, income before income taxes totaled ¥35.5 billion (U.S.$370 million) for the quarter, a decline of 79.4%, and ¥57.9 billion (U.S.$603 million) for the six months ended June 30, 2009, a decline of 82.9%. Net income attributable to Canon Inc. also recorded a decrease of 85.5% to ¥15.6 billion (U.S.$163 million) for the quarter, and a decrease of 84.5% to ¥33.3 billion (U.S.$347 million) for the six-month period.
Basic net income attributable to Canon Inc. stockholders per share was ¥12.64 (U.S.$0.13), a year-on-year decline of ¥72.88 (U.S.$0.76), while the indicator for the six months ended June 30, 2009 decreased by ¥143.07 (U.S.$1.49) to ¥27.01 (U.S.$0.28).

- 2 -


 

Results by Product Segment
Looking at Canon’s second-quarter performance by business sector, within the business machines segment, demand for office equipment continued to recede amid the rapid deterioration of economic conditions. With respect to office imaging products, while demand for digital commercial printers remained relatively solid, flagging sales in major regions for network digital MFDs along with the strong yen resulted in a year-on-year decline in sales of 30.6% for the quarter and 30.9% for the first six months of the year. In the field of computer peripherals, shrinking sales stemming from continued regulation of shipment volumes to optimize laser beam printer inventories within the market, combined with the impact of appreciation of the yen, resulted in a 36.3% decrease in second-quarter sales year on year, and a 39.2% decrease for the first and second quarters combined. As for inkjet printers, while the global market remains stagnant, sales volume displayed healthy growth in the Americas, which contributed to a year-on-year increase in sales volume for the segment, although the impact of the yen’s appreciation and falling prices resulted in a 16.1% reduction in sales for the quarter, and 21.2% decrease for the first six months of the year. Consequently, sales for the computer peripherals segment overall dropped by 30.9% year on year for the second quarter, and by 34.6% for the first half of the year. As for business information products, reduced sales of personal computers in the Japanese domestic market and other factors led to a sales decline of 16.0% for the quarter, and of 20.1% for the first six months of the year. Collectively, sales of business machines overall totaled ¥486.0 billion (U.S.$5,062 million), down 30.3% for the quarter, and down 32.5% to ¥937.6 billion (U.S.$9,767 million) for the six months ended June 30, 2009. Operating profit totaled ¥55.1 billion (U.S.$573 million) in the second quarter, falling 60.6% mainly due to the significant decrease in gross profit stemming from the reduction in sales for the quarter, and ¥114.2 billion (U.S.$1,189 million) for the first half, falling 62.3%.
Within the cameras segment, the high-resolution, competitively priced EOS Digital Rebel T1i (EOS 500D) and advanced-amateur model EOS 5D Mark II digital SLR cameras continued to enjoy robust sales during the quarter, contributing to growth in sales volume. As for compact digital cameras, although the introduction of four new ELPH (IXUS)-series models and four PowerShot-series models was well received, sales volume overall contracted amid stagnant market conditions. Consequently, along with the impact of the appreciation of the yen, sales for the cameras segment overall declined by 20.7% to ¥246.1 billion (U.S.$2,563 million) for the quarter, and by 22.3% to ¥411.6 billion (U.S.$4,288 million) for the first half of the year. Additionally, operating profit for the sector decreased by 42.0% to ¥38.8 billion (U.S.$404 million) for the quarter, mainly as a result of the drop in sales value coupled with the decline in the gross profit ratio, and declined by 58.6% to ¥46.6 billion (U.S.$486 million) for the first six months of the year.
In the optical and other products segment, sales of steppers remained sluggish due to the worsening of market conditions for memory chips and sales of aligners fell, recording a decline in unit sales compared with the relatively high level of sales volume in the previous year. As a result, second-quarter sales for the segment totaled ¥61.7 billion (U.S.$643 million), a decrease of 37.2%, and ¥131.6 billion (U.S.$1,371 million) for the first six months of the year, a decrease of 32.5%. Operating profit dropped to negative ¥6.4 billion (U.S.$67 million) for the quarter and ¥17.8 billion (U.S.$185 million) for the first half due to the significant drop in sales and other factors.
Cash Flow
In the second quarter of 2009, Canon generated cash flow from operating activities of ¥188.7 billion (U.S.$1,966 million), a decrease of ¥146.9 billion (U.S.$1,530 million) compared with the previous year, mainly reflecting the reduction in consolidated net income. As capital investment was focused on items relevant to introducing new products and achieving cost reductions, cash flow from investing activities totaled ¥218.3 billion (U.S.$2,274 million), a year-on-year decrease of ¥71.2 billion (U.S.$742 million). Accordingly, free cash flow totaled negative ¥29.6 billion (U.S.$309 million), a decrease of ¥75.7 billion (U.S.$788 million) from the year-ago period.
Cash flow from financing activities recorded an outlay of ¥71.4 billion (U.S.$743 million), mainly arising from the dividend payout of ¥67.9 billion (U.S.$707 million). Consequently, cash and cash equivalents decreased by ¥75.6 billion (U.S.$788 million) to ¥603.6 billion (U.S.$6,287 million) from the end of the previous year.

- 3 -


 

Outlook
As for the outlook for the global economy in the third quarter and thereafter, some positive signs have begun to appear as various economic stimulus packages and financial policies launched at the national level in response to the current global recession have yielded a degree of results with some leading indicators pointing to a bottoming out. Taking into account such future concerns as climbing unemployment rates in developed countries, considerable time will likely be needed before the global economy realizes a turnaround, but conditions are likely to gradually ease off toward the end of the year.
In the businesses in which Canon is involved, demand for network digital MFDs and laser beam printers is projected to remain sluggish for both color and monochrome models due to market reluctance in purchasing office equipment. Demand for inkjet printers and compact digital cameras is expected to remain stagnant for the time being due to the drop in consumer sentiment resulting from the weak economy, whereas demand for digital SLR cameras is expected to remain strong. With respect to steppers, demand is expected to decline significantly as device makers reassess their capital expenditure plans. As for aligners, although demand will likely fall below the year-ago level, it is anticipated to modestly recover due to an expected increase in production by LCD panel manufacturers.
Amid this environment, Canon will introduce competitive new digital-camera and inkjet-printer products along with other products, and strengthen sales of network MFDs through the launch in the second half of the year of a new brand—imageRUNNER ADVANCE—which incorporates a file server to enable sophisticated interaction with personal computers and realizes enhanced performance in networked office environments.
With regard to currency exchange rates for the third quarter onward, on which Canon’s performance outlook for the full year is based, despite the continued uncertainty over future interest rate policies, economic prospects and other factors for major countries, Canon anticipates exchange rates for the period of ¥95 to the U.S. dollar and ¥130 to the euro, representing an appreciation of approximately ¥7 against the U.S. dollar, and about ¥12 against the euro compared with the previous year. Upon taking into consideration first-quarter and second-quarter business results along with current market conditions based on these foreign exchange rate assumptions, Canon now anticipates net sales of ¥3,200.0 billion (U.S.$33,333 million) and operating profit of ¥190.0 billion (U.S.$1,979 million) for the full year, revising its previously announced projections. Full-year projections for income before income taxes and net income attributable to Canon Inc. remained unchanged at ¥180.0 billion (U.S.$1,875 million) and ¥110.0 billion (U.S.$1,146 million), respectively.
Consolidated Outlook
                                         
Fiscal year   Millions of yen      
    Year ending             Year ended        
    December 31, 2009   Change   December 31, 2008   Change (%)
    Previous Outlook (A)   Revised Outlook (B)   (B - A)   Results (C)   (B - C) / C
Net sales
   ¥ 3,330,000      ¥ 3,200,000     ¥ (130,000)    ¥ 4,094,161       - 21.8
Operating profit
    180,000       190,000       10,000        496,074       - 61.7 %
Income before income taxes
    180,000       180,000       -       481,147       - 62.6 %
Net income attributable to Canon Inc.
   ¥ 110,000      ¥ 110,000       -      ¥ 309,148       - 64.4 %
                     
Basic Policy Regarding Profit Distribution
Canon is being more proactive in returning profits to shareholders, mainly in the form of a dividend, taking into consideration planned future investments, free cash flow, and the company’s consolidated business performance. Specifically, Canon’s medium- to long-term objective is to continuously strive to raise its consolidated payout ratio to approximately 30%.
Despite the current harsh environment and reduced profits, the company plans to distribute an interim dividend of ¥55.00 (U.S.$0.57) per share for fiscal 2009, the same amount per share as fiscal 2008, to provide a stable return to shareholders. The year-end dividend, however, has yet to be decided.

- 4 -


 

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.

- 5 -


 

CANON INC. AND SUBSIDIARIES  
CONSOLIDATED
II. Financial Statements
1. CONSOLIDATED BALANCE SHEETS
                                 
                            Thousands of
    Millions of yen

  U.S. dollars
    As of   As of           As of
    June 30,   December 31,   Change   June 30,
    2009   2008       2009
ASSETS
                               
Current assets:
                               
Cash and cash equivalents
   ¥ 603,565      ¥ 679,196      ¥ (75,631 )    $ 6,287,135  
Short-term investments
    27,215       7,651       19,564       283,490  
Trade receivables, net
    512,858       595,422       (82,564 )     5,342,271  
Inventories
    423,989       506,919       (82,930 )     4,416,552  
Prepaid expenses and other current assets
    263,136       275,660       (12,524 )     2,741,000  
                 
Total current assets
    1,830,763       2,064,848       (234,085 )     19,070,448  
Noncurrent receivables
    14,892       14,752       140       155,125  
Investments
    86,620       88,825       (2,205 )     902,292  
Property, plant and equipment, net
    1,353,089       1,357,186       (4,097 )     14,094,677  
Intangible assets, net
    122,903       119,140       3,763       1,280,240  
Other assets
    336,402       325,183       11,219       3,504,187  
                 
Total assets
   ¥  3,744,669      ¥ 3,969,934      ¥ (225,265 )    $  39,006,969  
 
                 
 
                               
LIABILITIES AND EQUITY
                               
Current liabilities:
                               
Short-term loans and current portion of long-term debt
   ¥ 5,193      ¥ 5,540      ¥ (347 )    $ 54,094  
Trade payables
    281,360       406,746       (125,386 )     2,930,833  
Accrued income taxes
    18,094       69,961       (51,867 )     188,479  
Accrued expenses
    245,296       277,117       (31,821 )     2,555,167  
Other current liabilities
    146,622       184,636       (38,014 )     1,527,312  
                 
Total current liabilities
    696,565       944,000       (247,435 )     7,255,885  
Long-term debt, excluding current installments
    6,797       8,423       (1,626 )     70,802  
Accrued pension and severance cost
    112,675       110,784       1,891       1,173,698  
Other noncurrent liabilities
    56,871       55,745       1,126       592,407  
                 
Total liabilities
    872,908       1,118,952       (246,044 )     9,092,792  
 
                 
 
                               
Equity:
                               
Canon Inc. stockholders’ equity:
                               
Common stock
    174,762       174,762       -       1,820,438  
Additional paid-in capital
    403,926       403,790       136       4,207,563  
Legal reserve
    54,351       53,706       645       566,156  
Retained earnings
    2,841,375       2,876,576       (35,201 )     29,597,656  
Accumulated other comprehensive income (loss)
    (234,999 )     (292,820 )     57,821       (2,447,906 )
Treasury stock, at cost
    (556,232 )     (556,222 )     (10 )     (5,794,084 )
                 
 
Total Canon Inc. stockholders’ equity
    2,683,183       2,659,792       23,391       27,949,823  
 
                 
 
Noncontrolling interests
    188,578       191,190       (2,612 )     1,964,354  
 
                               
Total equity
    2,871,761       2,850,982       20,779       29,914,177  
 
                 
Total liabilities and equity
   ¥ 3,744,669      ¥ 3,969,934      ¥ (225,265 )    $ 39,006,969  
 
                 
 
                            Thousands of  
    Millions of yen
            U.S. dollars  
    As of     As of             As of  
    June 30,     December 31,             June 30,  
    2009     2008             2009  
Notes:
                               
 
1. Allowance for doubtful receivables
   ¥ 11,259      ¥ 9,318              $ 117,281  
2. Accumulated depreciation
    1,755,596       1,635,601               18,287,458  
3. Accumulated other comprehensive income (loss):
                               
Foreign currency translation adjustments
    (176,987 )     (235,968 )             (1,843,615 )
Net unrealized gains and losses on securities
    2,747       1,135               28,615  
Net gains and losses on derivative instruments
    (183 )     1,493               (1,906 )
Pension liability adjustments
    (60,576 )     (59,480 )             (631,000 )

- 6 -


 

CANON INC. AND SUBSIDIARIES  
CONSOLIDATED
2. CONSOLIDATED STATEMENTS OF INCOME
                                 
                            Thousands of
Results for the second quarter   Millions of yen

          U.S. dollars
    Three months   Three months           Three months
    ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008       June 30, 2009
Net sales
   ¥ 793,785     ¥ 1,105,894        - 28.2      $ 8,268,594  
Cost of sales
    448,320       564,304               4,670,000  
 
                   
Gross profit
    345,465       541,590        - 36.2       3,598,594  
Operating expenses:
                               
Selling, general and administrative expenses
    219,742       285,529               2,288,979  
Research and development expenses
    80,817       95,908               841,844  
 
                   
 
    300,559       381,437               3,130,823  
 
                   
Operating profit
    44,906       160,153        - 72.0       467,771  
Other income (deductions):
                               
Interest and dividend income
    1,357       4,773               14,135  
Interest expense
    (137 )     (251 )             (1,427 )
Other, net
    (10,634 )     7,928               (110,771 )
 
                   
 
    (9,414 )     12,450               (98,063 )
 
                   
Income before income taxes
    35,492       172,603        - 79.4       369,708  
 
                               
Income taxes
    17,346       61,304               180,687  
 
                   
Consolidated net income
    18,146       111,299               189,021  
Less: Net income attributable to noncontrolling interests
    2,541       3,458               26,469  
 
                   
Net income attributable to Canon Inc.
   ¥ 15,605      ¥ 107,841        - 85.5      $ 162,552  
 
                 
 
Note: Consolidated comprehensive income for the three months ended June 30, 2009 and 2008 was JPY 37,400 million (increase) (U.S. $389,583 thousand (increase)) and JPY 163,706 million (increase), respectively.
 
                            Thousands of
Results for the first half   Millions of yen

          U.S. dollars
    Six months   Six months           Six months
    ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008       June 30, 2009
Net sales
   ¥ 1,480,819     ¥ 2,113,432     -        29.9      $ 15,425,198  
Cost of sales
    836,540       1,071,977               8,713,958  
 
                   
Gross profit
    644,279       1,041,455        - 38.1       6,711,240  
Operating expenses:
                               
Selling, general and administrative expenses
    425,735       535,009               4,434,739  
Research and development expenses
    153,606       175,463               1,600,063  
 
                   
 
    579,341       710,472               6,034,802  
 
                   
Operating profit
    64,938       330,983        - 80.4       676,438  
Other income (deductions):
                               
Interest and dividend income
    2,791       10,966               29,073  
Interest expense
    (221 )     (663 )             (2,302 )
Other, net
    (9,622 )     (2,041 )             (100,230 )
 
                   
 
    (7,052 )     8,262               (73,459 )
 
                   
Income before income taxes
    57,886       339,245        - 82.9       602,979  
 
                               
Income taxes
    24,105       117,338               251,094  
 
                   
Consolidated net income
    33,781       221,907               351,885  
Less: Net income attributable to noncontrolling interests
    432       7,422               4,500  
 
                   
Net income attributable to Canon Inc.
   ¥ 33,349     ¥ 214,485        - 84.5      $ 347,385  
 
                   
     Note:   Consolidated comprehensive income for the six months ended June 30, 2009 and 2008 was JPY 91,273 million (increase) (U.S. $950,760 thousand (increase)) and JPY 167,466 million (increase), respectively.

- 7 -


 

CANON INC. AND SUBSIDIARIES    
    CONSOLIDATED    
3. DETAILS OF SALES
                                 
Results for the second quarter   Millions of yen

          Thousands of
U.S. dollars
    Three months   Three months           Three months
     Sales by product   ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008       June 30, 2009
Business machines:
                               
Office imaging products
   ¥ 216,346     ¥ 311,575        - 30.6      $ 2,253,604  
Computer peripherals
    251,177       363,652        - 30.9       2,616,427  
Business information products
    18,466       21,981        - 16.0       192,355  
 
               
 
    485,989       697,208        - 30.3       5,062,386  
Cameras
    246,056       310,416        - 20.7       2,563,083  
Optical and other products
    61,740       98,270        - 37.2       643,125  
 
               
Total
   ¥ 793,785     ¥ 1,105,894        - 28.2      $ 8,268,594  
 
               
                                 
    Millions of yen

          Thousands of
U.S. dollars
    Three months   Three months           Three months
     Sales by region   ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008       June 30, 2009
Japan
   ¥ 173,378     ¥ 218,818        - 20.8      $ 1,806,021  
Overseas:
                               
Americas
    225,529       314,785        - 28.4       2,349,260  
Europe
    239,108       379,508        - 37.0       2,490,708  
Other areas
    155,770       192,783        - 19.2       1,622,605  
 
               
 
    620,407       887,076        - 30.1       6,462,573  
 
               
Total
   ¥ 793,785     ¥ 1,105,894        - 28.2      $ 8,268,594  
 
               
                                 
  Results for the first half   Millions of yen

          Thousands of
U.S. dollars
    Six months   Six months           Six months
     Sales by product   ended     ended     Change(%)     ended  
    June 30, 2009   June 30, 2008       June 30, 2009
Business machines:
                               
Office imaging products
   ¥ 413,866     ¥ 599,099        - 30.9      $ 4,311,104  
Computer peripherals
    486,385       743,161        - 34.6       5,066,511  
Business information products
    37,344       46,734        - 20.1       389,000  
 
               
 
    937,595       1,388,994        - 32.5       9,766,615  
Cameras
    411,605       529,411        - 22.3     4,287,552  
Optical and other products
    131,619       195,027        - 32.5     1,371,031  
 
               
Total
   ¥ 1,480,819     ¥ 2,113,432        - 29.9      $ 15,425,198  
 
               
                                 
    Millions of yen

          Thousands of
U.S. dollars
    Six months   Six months           Six months
     Sales by region   ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008       June 30, 2009  
Japan
   ¥ 342,882     ¥ 446,599        - 23.2      $ 3,571,688  
Overseas:
                               
Americas
    401,860       585,449        - 31.4       4,186,042  
Europe
    449,175       716,624        - 37.3       4,678,906  
Other areas
    286,902       364,760        - 21.3       2,988,562  
 
               
 
    1,137,937       1,666,833        - 31.7       11,853,510  
 
               
Total
   ¥ 1,480,819     ¥ 2,113,432        - 29.9      $ 15,425,198  
 
               
         
Notes:  
1. The primary products included in each of the product segments are as follows:
       
Business machines:
       
Office imaging products : Office network digital multifunction devices (MFDs) / Color network digital MFDs /
       
Office copying machines / Personal-use copying machines / Full-color copying machines
       
Computer peripherals : Laser beam printers / Inkjet multifunction peripherals / Single function inkjet printers / Image scanners
       
Business information products : Computer information systems / Document scanners / Personal information products
       
Cameras : Digital SLR cameras / Compact digital cameras / Interchangeable lenses / Digital video camcorders
       
Optical and other products : Semiconductor production equipment / Mirror projection mask aligners for LCD panels /
       
Broadcasting equipment / Medical equipment / Large format printers / Components
 
       
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 CASH FLOWS
                         
                    Thousands of
    Millions of yen

  U.S. dollars
    Six months   Six months   Six months
    ended   ended   ended
    June 30, 2009   June 30, 2008   June 30, 2009
 
Cash flows from operating activities:
                       
Consolidated net income
   ¥ 33,781     ¥ 221,907      $ 351,885  
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Depreciation and amortization
    155,003       163,690       1,614,615  
(Gain) loss on disposal of property, plant and equipment
    (2,977 )     4,452       (31,010 )
Deferred income taxes
    11,367       2,057       118,406  
Decrease in trade receivables
    101,401       75,641       1,056,260  
(Increase) decrease in inventories
    98,766       (55,714 )     1,028,813  
Increase (decrease) in trade payables
    (146,775 )     19,430       (1,528,906 )
Decrease in accrued income taxes
    (52,879 )     (43,889 )     (550,823 )
Decrease in accrued expenses
    (40,676 )     (33,727 )     (423,708 )
Increase (decrease) in accrued (prepaid) pension and severance cost
    824       (4,811 )     8,583  
Other, net
    30,866       (13,438 )     321,520  
 
           
 
                       
Net cash provided by operating activities
    188,701       335,598       1,965,635  
Cash flows from investing activities:
                       
Purchases of fixed assets
    (195,449 )     (236,641 )     (2,035,927 )
Proceeds from sale of fixed assets
    8,450       4,192       88,021  
Purchases of available-for-sale securities
    (50 )     (7,014 )     (521 )
Proceeds from sale and maturity of available-for-sale securities
    241       4,062       2,510  
Increase in time deposits
    (20,153 )     (204 )     (209,927 )
Acquisitions of subsidiaries, net of cash acquired
    (2,979 )     (209 )     (31,031 )
Purchases of other investments
    (10,133 )     (44,509 )     (105,552 )
Other, net
    1,741       (9,218 )     18,135  
 
           
 
                       
Net cash used in investing activities
    (218,332 )     (289,541 )     (2,274,292 )
 
                       
Cash flows from financing activities:
                       
Proceeds from issuance of long-term debt
    2,228       5,866       23,208  
Repayments of long-term debt
    (3,232 )     (3,646 )     (33,667 )
Decrease in short-term loans
    (204 )     (2,670 )     (2,125 )
Dividends paid
    (67,897 )     (75,663 )     (707,260 )
Repurchases of treasury stock, net
    (18 )     (33 )     (188 )
Other, net
    (2,237 )     (8,824 )     (23,301 )
 
           
 
                       
Net cash used in financing activities
    (71,360 )     (84,970 )     (743,333 )
 
                       
Effect of exchange rate changes on cash and cash equivalents
    25,360       (39,155 )     264,167  
 
           
 
                       
Net change in cash and cash equivalents
    (75,631 )     (78,068 )     (787,823 )
 
                       
Cash and cash equivalents at beginning of period
    679,196       944,463       7,074,958  
 
                       
 
           
 
                       
Cash and cash equivalents at end of period
   ¥ 603,565     ¥ 866,395      $ 6,287,135  
 
                       
 
           

- 9 -


 

CANON INC. AND SUBSIDIARIES    
    CONSOLIDATED
 
5. NOTE FOR GOING CONCERN ASSUMPTION    
     Not applicable.
6. SEGMENT INFORMATION
(1) SEGMENT INFORMATION BY PRODUCT
                                 
                            Thousands of
Results for the second quarter
 
Millions of yen
         
U.S. dollars
    Three months   Three months           Three months
    ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008           June 30, 2009
                 
Business Machines
                               
Net sales:
                               
Unaffiliated customers
   ¥ 485,989      ¥ 697,208         - 30.3      $ 5,062,386  
Intersegment
    -       -       -       -  
 
               
Total
    485,989       697,208         - 30.3       5,062,386  
                 
Operating cost and expenses
    430,937       557,349         - 22.7       4,488,927  
                 
Operating profit
   ¥ 55,052      ¥ 139,859         - 60.6      $ 573,459  
                 
 
                               
Cameras
                               
Net sales:
                               
Unaffiliated customers
   ¥ 246,056      ¥ 310,416         - 20.7      $ 2,563,083  
Intersegment
    -       -       -       -  
 
               
Total
    246,056       310,416         - 20.7       2,563,083  
                 
Operating cost and expenses
    207,276       243,557         - 14.9       2,159,125  
                 
Operating profit
   ¥ 38,780      ¥ 66,859         - 42.0      $ 403,958  
                 
 
                               
Optical and Other Products
                               
Net sales:
                               
Unaffiliated customers
   ¥ 61,740      ¥ 98,270         - 37.2      $ 643,125  
Intersegment
    48,470       65,702         - 26.2       504,896  
 
               
Total
    110,210       163,972         - 32.8       1,148,021  
                 
Operating cost and expenses
    116,627       163,785         - 28.8       1,214,865  
                 
Operating profit (loss)
   ¥ (6,417 )    ¥ 187       -      $ (66,844 )
                 
 
                               
Corporate and Eliminations
                               
Net sales:
                               
Unaffiliated customers
   ¥ -      ¥ -       -      $ -  
Intersegment
    (48,470 )     (65,702 )     -       (504,896 )
 
               
Total
    (48,470 )     (65,702 )     -       (504,896 )
                 
Operating cost and expenses
    (5,961 )     (18,950 )     -       (62,094 )
                 
Operating profit (loss)
   ¥ (42,509 )    ¥ (46,752 )     -      $ (442,802 )
                 
 
                               
Consolidated
                               
Net sales:
                               
Unaffiliated customers
   ¥ 793,785      ¥ 1,105,894         - 28.2      $ 8,268,594  
Intersegment
    -       -       -       -  
 
               
Total
    793,785       1,105,894         - 28.2       8,268,594  
                 
Operating cost and expenses
    748,879       945,741         - 20.8       7,800,823  
                 
Operating profit
   ¥ 44,906      ¥ 160,153         - 72.0      $ 467,771  
                 
 
 Note:   General corporate expenses of JPY42,509 million (U.S.$442,802 thousand) and JPY46,542 million in the three months ended June 30, 2009 and 2008, respectively, are included in “Corporate and Eliminations.”

- 10 -


 

CANON INC. AND SUBSIDIARIES    
    CONSOLIDATED
 
                                 
                            Thousands of
Results for the first half
 
Millions of yen
         
U.S. dollars
    Six months   Six months           Six months
    ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008           June 30, 2009
                 
Business Machines
                               
Net sales:
                               
Unaffiliated customers
   ¥ 937,595      ¥ 1,388,994         - 32.5      $ 9,766,615  
Intersegment
    -       -       -       -  
 
               
Total
    937,595       1,388,994         - 32.5       9,766,615  
                 
Operating cost and expenses
    823,439       1,085,956         - 24.2       8,577,490  
                 
Operating profit
   ¥ 114,156      ¥ 303,038         - 62.3      $ 1,189,125  
                 
 
                               
Cameras
                               
Net sales:
                               
Unaffiliated customers
   ¥ 411,605      ¥ 529,411         - 22.3      $ 4,287,552  
Intersegment
    -       -       -       -  
 
               
Total
    411,605       529,411         - 22.3       4,287,552  
                 
Operating cost and expenses
    364,995       416,826         - 12.4       3,802,031  
                 
Operating profit
   ¥ 46,610      ¥ 112,585         - 58.6      $ 485,521  
                 
 
                               
Optical and Other Products
                               
Net sales:
                               
Unaffiliated customers
   ¥ 131,619      ¥ 195,027         - 32.5      $ 1,371,031  
Intersegment
    89,684       121,917         - 26.4       934,208  
 
               
Total
    221,303       316,944         - 30.2       2,305,239  
                 
Operating cost and expenses
    239,069       311,427         - 23.2       2,490,302  
                 
Operating profit (loss)
   ¥ (17,766 )    ¥ 5,517       -      $ (185,063 )
                 
 
                               
Corporate and Eliminations
                               
Net sales:
                               
Unaffiliated customers
   ¥ -      ¥ -       -      $ -  
Intersegment
    (89,684 )     (121,917 )     -       (934,208 )
 
               
Total
    (89,684 )     (121,917 )     -       (934,208 )
                 
Operating cost and expenses
    (11,622 )     (31,760 )     -       (121,063 )
                 
Operating profit (loss)
   ¥ (78,062 )    ¥ (90,157 )     -      $ (813,145 )
                 
 
                               
Consolidated
                               
Net sales:
                               
Unaffiliated customers
   ¥ 1,480,819      ¥ 2,113,432         - 29.9      $ 15,425,198  
Intersegment
    -       -       -       -  
 
               
Total
    1,480,819       2,113,432         - 29.9       15,425,198  
                 
Operating cost and expenses
    1,415,881       1,782,449         - 20.6       14,748,760  
                 
Operating profit
   ¥ 64,938      ¥ 330,983         - 80.4      $ 676,438  
                 
 
Note:   General corporate expenses of JPY78,062 million (U.S.$813,146 thousand) and JPY89,837 million in the six months ended June 30, 2009 and 2008, respectively, are included in “Corporate and Eliminations.”

- 11 -


 

CANON INC. AND SUBSIDIARIES    
    CONSOLIDATED
 
(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA    
                                 
                            Thousands of
Results for the second quarter
 
Millions of yen
         
U.S. dollars
    Three months   Three months           Three months
    ended   ended   Change(%)   ended
    June 30, 2009   June 30, 2008           June 30, 2009
                 
Japan
                               
Net sales:
                               
Unaffiliated customers
   ¥ 202,506      ¥ 252,580         - 19.8      $ 2,109,438  
Intersegment
    415,184       606,674         - 31.6       4,324,833  
 
               
Total
    617,690       859,254         - 28.1       6,434,271  
                 
Operating cost and expenses
    545,801       671,841         - 18.8       5,685,427  
                 
Operating profit
   ¥ 71,889      ¥ 187,413         - 61.6      $ 748,844  
                 
 
                               
Americas
                               
Net sales:
                               
Unaffiliated customers
   ¥ 220,095      ¥ 311,800         - 29.4      $ 2,292,656  
Intersegment
    187       1,360         - 86.3       1,948  
 
               
Total
    220,282       313,160         - 29.7       2,294,604  
                 
Operating cost and expenses
    218,374       305,558         - 28.5       2,274,729  
                 
Operating profit
   ¥ 1,908      ¥ 7,602         - 74.9      $ 19,875  
                 
 
                               
Europe
                               
Net sales:
                               
Unaffiliated customers
   ¥ 238,750      ¥ 379,211         - 37.0      $ 2,486,979  
Intersegment
    502       1,545         - 67.5       5,229  
 
               
Total
    239,252       380,756         - 37.2       2,492,208  
                 
Operating cost and expenses
    234,078       376,243         - 37.8       2,438,312  
                 
Operating profit
   ¥ 5,174      ¥ 4,513         + 14.6      $ 53,896  
                 
 
                               
Others
                               
Net sales:
                               
Unaffiliated customers
   ¥ 132,434      ¥ 162,303         - 18.4      $ 1,379,521  
Intersegment
    117,943       222,080         - 46.9       1,228,573  
 
               
Total
    250,377       384,383         - 34.9       2,608,094  
                 
Operating cost and expenses
    240,985       375,296         - 35.8       2,510,261  
                 
Operating profit
   ¥ 9,392      ¥ 9,087         + 3.4      $ 97,833  
                 
 
                               
Corporate and Eliminations
                               
Net sales:
                               
Unaffiliated customers
   ¥ -      ¥ -       -      $ -  
Intersegment
    (533,816 )     (831,659 )     -       (5,560,583 )
 
               
Total
    (533,816 )     (831,659 )     -       (5,560,583 )
                 
Operating cost and expenses
    (490,359 )     (783,197 )     -       (5,107,906 )
                 
Operating profit (loss)
   ¥ (43,457 )    ¥ (48,462 )     -      $ (452,677 )
                 
 
                               
Consolidated
                               
Net sales:
                               
Unaffiliated customers
   ¥ 793,785      ¥ 1,105,894         - 28.2      $ 8,268,594  
Intersegment
    -       -       -       -  
 
               
Total
    793,785       1,105,894         - 28.2       8,268,594  
                 
Operating cost and expenses
    748,879       945,741         - 20.8       7,800,823  
                 
Operating profit
   ¥ 44,906      ¥ 160,153         - 72.0      $ 467,771  
                 
 
Note:   General corporate expenses of JPY42,509 million (U.S.$442,802 thousand) and JPY46,542 million in the three months ended June 30, 2009 and 2008, respectively, are included in “Corporate and Eliminations.”

- 12 -


 

CANON INC. AND SUBSIDIARIES    
    CONSOLIDATED
 
(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA    
                                   
Results for the first half   Millions of yen             Thousands of
U.S. dollars
 
    Six months     Six months             Six months  
    ended     ended     Change(%)     ended  
    June 30, 2009     June 30, 2008           June 30, 2009  
  Japan
                               
  Net sales:
                               
  Unaffiliated customers
   ¥ 416,201      ¥ 501,874      - 17.1      $ 4,335,427  
  Intersegment
    719,475       1,193,604      - 39.7       7,494,531  
 
 
 
 
  Total
    1,135,676       1,695,478      - 33.0       11,829,958  
                 
  Operating cost and expenses
    1,029,739       1,330,652      - 22.6       10,726,448  
                 
  Operating profit
   ¥ 105,937      ¥ 364,826      - 71.0      $ 1,103,510  
                 
   
                               
  Americas
                               
  Net sales:
                               
  Unaffiliated customers
   ¥ 391,236      ¥ 581,309      - 32.7      $ 4,075,375  
  Intersegment
    965       1,698      - 43.2       10,052  
 
 
 
 
  Total
    392,201       583,007      - 32.7       4,085,427  
                 
  Operating cost and expenses
    390,432       570,535      - 31.6       4,067,000  
                 
  Operating profit
   ¥ 1,769      ¥ 12,472      - 85.8      $ 18,427  
                 
   
                               
  Europe
                               
  Net sales:
                               
  Unaffiliated customers
   ¥ 447,612      ¥ 715,716      - 37.5      $ 4,662,625  
  Intersegment
    937       2,378      - 60.6       9,760  
 
 
 
 
  Total
    448,549       718,094      - 37.5       4,672,385  
                 
  Operating cost and expenses
    435,064       700,913      - 37.9       4,531,916  
                 
  Operating profit
   ¥ 13,485      ¥ 17,181      - 21.5      $ 140,469  
                 
   
                               
  Others
                               
  Net sales:
                               
  Unaffiliated customers
   ¥ 225,770      ¥ 314,533      - 28.2      $ 2,351,771  
  Intersegment
    208,295       386,513      - 46.1       2,169,739  
 
 
 
 
  Total
    434,065       701,046      - 38.1       4,521,510  
                 
  Operating cost and expenses
    420,583       674,447      - 37.6       4,381,072  
                 
  Operating profit
   ¥ 13,482      ¥ 26,599      - 49.3      $ 140,438  
                 
   
                               
  Corporate and Eliminations
                               
  Net sales:
                               
  Unaffiliated customers
   ¥ -      ¥ -       -      $ -  
  Intersegment
    (929,672 )      (1,584,193     -       (9,684,082 ) 
               
  Total
    (929,672 )     (1,584,193 )     -       (9,684,082 )
                 
  Operating cost and expenses
    (859,937 )     (1,494,098 )     -       (8,957,676 )
                 
  Operating profit (loss)
   ¥ (69,735 )    ¥ (90,095 )     -      $ (726,406 )
                 
   
                               
  Consolidated
                               
  Net sales:
                               
  Unaffiliated customers
   ¥ 1,480,819      ¥ 2,113,432      - 29.9      $ 15,425,198  
  Intersegment
    -       -       -       -  
               
  Total
    1,480,819       2,113,432      - 29.9       15,425,198  
                 
  Operating cost and expenses
    1,415,881       1,782,449      - 20.6       14,748,760  
                 
  Operating profit
   ¥ 64,938      ¥ 330,983      - 80.4      $ 676,438  
                 
Note:   General corporate expenses of JPY78,062 million (U.S.$813,146 thousand) and JPY89,837 million in the six months ended June 30, 2009 and 2008, respectively, are included in “Corporate and Eliminations.”

- 13 -


 

CANON INC. AND SUBSIDIARIES    
    CONSOLIDATED
7. SIGNIFICANT CHANGES IN CANON INC. STOCKHOLDERS’ EQUITY    
     None.
8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(1) GROUP POSITION
  1.   Number of Group Companies
                                   
                       
        June 30, 2009       December 31, 2008       Change  
                       
 
Subsidiaries
      240         245           (5)  
 
Affiliates
      16         18           (2)  
                       
 
Total
      256         263           (7)  
                       
  2.   Change in Group Entities
     
Subsidiaries
Addition:
   6 companies
Removal:
  11 companies
 
   
Affiliates (Carried at Equity Basis)
Addition:
  1 company
Removal:
  3 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
The accompanying consolidated financial statements reflect the adjustments which management believes are necessary to conform them with U.S. generally accepted accounting principles, except for the segment information, as required by Statement of Financial Accounting Standards No.131, “Disclosures about Segments of an Enterprise and Related Information.”
New Accounting Standard
Canon adopted SFAS 160 “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No.51” in the first quarter beginning January 1, 2009. Upon the adoption of SFAS 160, 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 SFAS 160.

- 14 -


 

Canon Inc.
July 28, 2009
CONSOLIDATED FINANCIAL RESULTS FOR THE SECOND QUARTER
AND THE FIRST HALF ENDED JUNE 30, 2009
SUPPLEMENTARY REPORT
TABLE OF CONTENTS
                         
                  PAGE  
  1.    
SALES BY REGION AND PRODUCT
        S   1  
       
 
               
  2.    
SEGMENT INFORMATION BY PRODUCT
        S   2  
       
 
               
  3.    
OTHER INCOME / DEDUCTIONS
        S   2  
       
 
               
  4.    
SALES COMPOSITION BY PRODUCT
        S   3  
       
 
               
  5.    
SALES GROWTH IN LOCAL CURRENCY (Year over year)
        S   3  
       
 
               
  6.    
PROFITABILITY
        S   4  
       
 
               
  7.    
IMPACT OF FOREIGN EXCHANGE RATES
        S   4  
       
 
               
  8.    
STATEMENTS OF CASH FLOWS
        S   4  
       
 
               
  9.    
R&D EXPENDITURE
        S   5  
       
 
               
  10.    
CAPITAL EXPENDITURE & DEPRECIATION AND AMORTIZATION
        S   5  
       
 
               
  11.    
INVENTORIES
        S   5  
       
 
               
  12.    
DEBT RATIO
        S   5  
       
 
               
  13.    
OVERSEAS PRODUCTION RATIO
        S   5  
       
 
               
  14.    
NUMBER OF EMPLOYEES
        S   5  

  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   (Millions of yen)
                                                                                                   
                   
       
2009

     
2008

         
Change year over year

   
        2nd quarter       1st half       Year
(P)
      2nd quarter       1st half       Year           2nd quarter     1st half     Year    
                                                               
 
Japan
                                                                                               
 
Business machines
      129,075         251,735         -         153,984         309,484         607,015             -16.2 %       -18.7 %       -    
 
 
                                                           
 
Office imaging products
      73,313         147,944         -         95,927         194,330         370,901             -23.6 %       -23.9 %       -    
 
Computer peripherals
      44,116         79,738         -         45,175         86,585         184,945             -2.3 %       -7.9 %       -    
 
Business information products
      11,646         24,053         -         12,882         28,569         51,169             -9.6 %       -15.8 %       -    
 
 
                                                           
 
Cameras
      27,805         51,146         -         34,284         67,632         136,791             -18.9 %       -24.4 %       -    
 
 
                                                           
 
Optical and other products
      16,498         40,001         -         30,550         69,483         124,474             -46.0 %       -42.4 %       -    
 
 
                                                           
 
Total
      173,378         342,882         723,300         218,818         446,599         868,280             -20.8 %       -23.2 %       -16.7%    
                                                               
 
Overseas
                                                                                               
 
Business machines
      356,914         685,860         -         543,224         1,079,510         2,053,004             -34.3 %       -36.5 %       -    
 
 
                                                           
 
Office imaging products
      143,033         265,922         -         215,648         404,769         748,622             -33.7 %       -34.3 %       -    
 
Computer peripherals
      207,061         406,647         -         318,477         656,576         1,269,823             -35.0 %       -38.1 %       -    
 
Business information products
      6,820         13,291         -         9,099         18,165         34,559             -25.0 %       -26.8 %       -    
 
 
                                                           
 
Cameras
      218,251         360,459         -         276,132         461,779         905,156             -21.0 %       -21.9 %       -    
 
 
                                                           
 
Optical and other products
      45,242         91,618         -         67,720         125,544         267,721             -33.2 %       -27.0 %       -    
 
 
                                                           
 
Total
      620,407         1,137,937         2,476,700         887,076         1,666,833         3,225,881             -30.1 %       -31.7 %       -23.2%    
                                                               
 
Americas
                                                                                               
 
Business machines
      135,767         255,246         -         197,333         391,114         759,864             -31.2 %       -34.7 %       -    
 
 
                                                           
 
Office imaging products
      49,495         93,486         -         81,019         151,898         287,319             -38.9 %       -38.5 %       -    
 
Computer peripherals
      83,191         155,929         -         112,461         231,146         457,816             -26.0 %       -32.5 %       -    
 
Business information products
      3,081         5,831         -         3,853         8,070         14,729             -20.0 %       -27.7 %       -    
 
 
                                                           
 
Cameras
      75,949         121,274         -         103,248         167,514         339,141             -26.4 %       -27.6 %       -    
 
 
                                                           
 
Optical and other products
      13,813         25,340         -         14,204         26,821         55,566             -2.8 %       -5.5 %       -    
 
 
                                                           
 
Total
      225,529         401,860         903,200         314,785         585,449         1,154,571             -28.4 %       -31.4 %       -21.8%    
                                                               
 
Europe
                                                                                               
 
Business machines
      154,248         309,003         -         257,620         515,385         964,782             -40.1 %       -40.0 %       -    
 
 
                                                           
 
Office imaging products
      72,776         134,356         -         106,645         201,060         364,288             -31.8 %       -33.2 %       -    
 
Computer peripherals
      78,387         168,412         -         146,867         306,103         584,247             -46.6 %       -45.0 %       -    
 
Business information products
      3,085         6,235         -         4,108         8,222         16,247             -24.9 %       -24.2 %       -    
 
 
                                                           
 
Cameras
      77,601         125,635         -         110,325         179,416         333,069             -29.7 %       -30.0 %       -    
 
 
                                                           
 
Optical and other products
      7,259         14,537         -         11,563         21,823         43,549             -37.2 %       -33.4 %       -    
 
 
                                                           
 
Total
      239,108         449,175         986,400         379,508         716,624         1,341,400             -37.0 %       -37.3 %       -26.5%    
                                                               
 
Other areas
                                                                                               
 
Business machines
      66,899         121,611         -         88,271         173,011         328,358             -24.2 %       -29.7 %       -    
 
 
                                                           
 
Office imaging products
      20,762         38,080         -         27,984         51,811         97,015             -25.8 %       -26.5 %       -    
 
Computer peripherals
      45,483         82,306         -         59,149         119,327         227,760             -23.1 %       -31.0 %       -    
 
Business information products
      654         1,225         -         1,138         1,873         3,583             -42.5 %       -34.6 %       -    
 
 
                                                           
 
Cameras
      64,701         113,550         -         62,559         114,849         232,946             +3.4 %       -1.1 %       -    
 
 
                                                           
 
Optical and other products
      24,170         51,741         -         41,953         76,900         168,606             -42.4 %       -32.7 %       -    
 
 
                                                           
 
Total
      155,770         286,902         587,100         192,783         364,760         729,910             -19.2 %       -21.3 %       -19.6%    
                                                               
 
Total
                                                                                               
 
Business machines
      485,989         937,595         2,032,700         697,208         1,388,994         2,660,019             -30.3 %       -32.5 %       -23.6%    
 
 
                                                           
 
Office imaging products
      216,346         413,866         814,800         311,575         599,099         1,119,523             -30.6 %       -30.9 %       -27.2%    
 
Computer peripherals
      251,177         486,385         1,142,300         363,652         743,161         1,454,768             -30.9 %       -34.6 %       -21.5%    
 
Business information products
      18,466         37,344         75,600         21,981         46,734         85,728             -16.0 %       -20.1 %       -11.8%    
 
 
                                                           
 
Cameras
      246,056         411,605         907,600         310,416         529,411         1,041,947             -20.7 %       -22.3 %       -12.9%    
 
 
                                                           
 
Optical and other products
      61,740         131,619         259,700         98,270         195,027         392,195             -37.2 %       -32.5 %       -33.8%    
 
 
                                                           
 
Total
      793,785         1,480,819         3,200,000         1,105,894         2,113,432         4,094,161             -28.2 %       -29.9 %       -21.8%    
                                                               
(P)=Projection

- S1 -


 

Canon Inc.                 
     
2. SEGMENT INFORMATION BY PRODUCT   (Millions of yen)
                                                                                                 
       
2009

      2008         Change year over year    
        2nd quarter       1st half       Year
(P)
      2nd quarter       1st half       Year         2nd quarter       1st half       Year    
                                                             
Business machines
                                                                                             
 
Unaffiliated customers
      485,989         937,595         2,032,700         697,208         1,388,994         2,660,019           -30.3%         -32.5%         -23.6%    
 
Intersegment
      -         -         -         -         -         -           -         -         -    
                                                             
 
Total sales
      485,989         937,595         2,032,700         697,208         1,388,994         2,660,019           -30.3%         -32.5%         -23.6%    
                                                             
 
Operating profit
      55,052         114,156         277,800         139,859         303,038         544,644           -60.6%         -62.3%         -49.0%    
 
% of sales
      11.3%         12.2%         13.7%         20.1%         21.8%         20.5%           -         -         -    
                                                             
Cameras
                                                                                             
 
Unaffiliated customers
      246,056         411,605         907,600         310,416         529,411         1,041,947           -20.7%         -22.3%         -12.9%    
 
Intersegment
      -         -         -         -         -         -           -         -         -    
                                                             
 
Total sales
      246,056         411,605         907,600         310,416         529,411         1,041,947           -20.7%         -22.3%         -12.9%    
                                                             
 
Operating profit
      38,780         46,610         97,400         66,859         112,585         187,787           -42.0%         -58.6%         -48.1%    
 
% of sales
      15.8%         11.3%         10.7%         21.5%         21.3%         18.0%           -         -         -    
                                                             
Optical and other products
                                                                                             
 
Unaffiliated customers
      61,740         131,619         259,700         98,270         195,027         392,195           -37.2%         -32.5%         -33.8%    
 
Intersegment
      48,470         89,684         181,300         65,702         121,917         235,690           -26.2%         -26.4%         -23.1%    
                                                             
 
Total sales
      110,210         221,303         441,000         163,972         316,944         627,885           -32.8%         -30.2%         -29.8%    
                                                             
 
Operating profit
      (6,417 )       (17,766 )       (30,200 )       187         5,517         (45,490 )         -         -         -    
 
% of sales
      -5.8%         -8.0%         -6.8%         0.1%         1.7%         -7.2%           -         -         -    
                                                             
Corporate and Eliminations
                                                                                             
 
Unaffiliated customers
      -         -         -         -         -         -           -         -         -    
 
Intersegment
      (48,470 )       (89,684 )       (181,300 )       (65,702 )       (121,917 )       (235,690 )         -         -         -    
                                                             
 
Total sales
      (48,470 )       (89,684 )       (181,300 )       (65,702 )       (121,917 )       (235,690 )         -         -         -    
                                                             
 
Operating profit
      (42,509 )       (78,062 )       (155,000 )       (46,752 )       (90,157 )       (190,867 )         -         -         -    
                                                             
Consolidated
                                                                                             
 
Unaffiliated customers
      793,785         1,480,819         3,200,000         1,105,894         2,113,432         4,094,161           -28.2%         -29.9%         -21.8%    
 
Intersegment
      -         -         -         -         -         -           -         -         -    
                                                             
 
Total sales
      793,785         1,480,819         3,200,000         1,105,894         2,113,432         4,094,161           -28.2%         -29.9%         -21.8%    
                                                             
 
Operating profit
      44,906         64,938         190,000         160,153         330,983         496,074           -72.0%         -80.4%         -61.7%    
 
% of sales
      5.7%         4.4%         5.9%         14.5%         15.7%         12.1%           -         -         -    
                                                             
(P)=Projection     
 
3. OTHER INCOME / DEDUCTIONS   (Millions of yen)     
                                                                                                 
       
2009

      2008         Change year over year    
        2nd quarter       1st half       Year
(P)
      2nd quarter       1st half       Year         2nd quarter       1st half       Year    
                                                             
 
Interest and dividend, net
      1,220         2,570         3,000         4,522         10,303         18,605           (3,302 )       (7,733 )       (15,605 )  
 
Forex gain / loss
      (5,708 )       (1,953 )       (3,100 )       5,462         (5,114 )       (11,212 )         (11,170 )       +3,161         +8,112    
 
Equity earnings / loss of affiliated companies
      (6,707 )       (12,013 )       (15,300 )       (1,217 )       (1,053 )       (20,047 )         (5,490 )       (10,960 )       +4,747    
 
Other, net
      1,781         4,344         5,400         3,683         4,126         (2,273 )         (1,902 )       +218         +7,673    
                                                             
 
Total
      (9,414 )       (7,052 )       (10,000 )       12,450         8,262         (14,927 )         (21,864 )       (15,314 )       +4,927    
                                                             
(P)=Projection

- S2 -


 

Canon Inc.      
4. SALES COMPOSITION BY PRODUCT
                                                                 
   
        2009     2008  
        2nd quarter     1st half     Year

(P)
    2nd quarter     1st half     Year  
                                         
Office imaging products                                                               
 
Monochrome copying machines
      40%         40%         38%         42%         42%         41%    
 
Color copying machines
      38%         37%         37%         37%         37%         37%    
 
Others
      22%         23%         25%         21%         21%         22%    
                                         
Computer peripherals                                                               
 
Laser beam printers
      68%         69%         70%         73%         74%         73%    
 
Inkjet printers
      31%         30%         29%         26%         25%         26%    
 
Others
      1%         1%         1%         1%         1%         1%    
                                         
Business information products                                                              
 
Personal computers
      65%         65%         64%         58%         60%         60%    
 
Others
      35%         35%         36%         42%         40%         40%    
                                         
Cameras                                                               
 
Digital cameras
      78%         78%         79%         75%         75%         75%    
 
Video cameras
      7%         7%         8%         9%         8%         9%    
 
Interchangeable lenses and others
      15%         15%         13%         16%         17%         16%    
                                         
Optical and other products                                                              
 
Semiconductor production equipment
      34%         34%         28%         47%         47%         46%    
 
Others
      66%         66%         72%         53%         53%         54%    
                                         
 
 
                                                  (P)=Projection
 
5. SALES GROWTH IN LOCAL CURRENCY (Year over year)
     
2009

        2nd quarter     1st half     Year

(P)
 
                       
Business machines
                               
 
Japan
      -16.2%         -18.7%         -    
 
Overseas
      -25.7%         -26.8%         -    
                       
 
Total
      -23.6%         -25.0%         -17.2%    
                       
Cameras
                               
 
Japan
      -18.9%         -24.4%         -    
 
Overseas
      -10.3%         -9.9%         -    
                       
 
Total
      -11.3%         -11.8%         -4.7%    
                       
Optical and other products
                               
 
Japan
      -46.0%         -42.4%         -    
 
Overseas
      -28.4%         -21.4%         -    
                       
 
Total
      -33.9%         -28.9%         -30.8%    
                       
Total
                               
 
Japan
      -20.8%         -23.2%         -16.7%    
 
Overseas
      -21.1%         -21.7%         -15.0%    
 
Americas
      -23.0%         -25.1%         -15.7%    
 
Europe
      -24.2%         -23.2%         -15.6%    
 
Other areas
      -12.0%         -13.2%         -12.7%    
                       
 
Total
      -21.0%         -22.0%         -15.3%    
                       
 
 
                    (P)=Projection

- S3 -


 

Canon Inc.
6. PROFITABILITY
   
      2009 2008
      1st half Year (P) 1st half Year
                             
ROE *1
      2.5%       4.2%       14.5%       11.1%  
                             
ROA *2
      1.7%       2.8%       9.6%       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.  
 
7. IMPACT OF FOREIGN EXCHANGE RATES
 
     (1) Exchange rates   (Yen)
      2009 2008
      1st half 2nd half (P) Year (P) 1st half Year
                                   
Yen/US$
      95.74         95.00         95.33         104.69         103.23    
Yen/Euro
      127.50         130.00         128.85         160.69         151.46    
                                   
(P)=Projection
 
     (2) Impact of foreign exchange rates on sales (Year over year)   (Billions of yen)
      2009
      1st half Year (P)
                 
US$
      (48.5)         (98.4)    
Euro
      (88.8)         (123.7)    
Other currencies
      (13.3)         (21.4)    
                 
Total
      (150.6)         (243.5)    
                 
(P)=Projection
     
     (3) Impact of foreign exchange rates per yen   (Billions of yen)
      2009
      2nd half (P)
           
On sales
           
US$
      7.7    
Euro
      3.1    
           
On operating profit
           
US$
      4.2    
Euro
      2.3    
           
(P)=Projection
     
8. STATEMENTS OF CASH FLOWS   (Millions of yen)
 
      2009 2008
      1st half Year (P) 1st half Year
 
Net cash provided by operating activities
      188,701         465,000         335,598         616,684    
 
Net cash used in investing activities
      (218,332)         (355,000)         (289,541)         (472,480)    
 
Free cash flow
      (29,631)         110,000         46,057         144,204    
 
Net cash used in financing activities
      (71,360)         (144,000)         (84,970)         (277,565)    
 
Effect of exchange rate changes on cash and cash equivalents
      25,360         4,800         (39,155)         (131,906)    
 
Net change in cash and cash equivalents
      (75,631)         (29,200)         (78,068)         (265,267)    
 
Cash and cash equivalents at end of period
      603,565         650,000         866,395         679,196    
(P)=Projection
 
*   In connection with the adoption of SFAS No. 160, only the total of “net cash provided by operating activities” will be provided from first-quarter 2009.

- S4 -


 

Canon Inc.
                                                 
9. R&D EXPENDITURE                               (Millions of yen)
         
2009

 
2008

 
          1st half   Year (P)   1st half   Year  
                             
  Business machines       49,653         -         60,838         123,531    
  Cameras       22,146         -         23,628         45,458    
  Optical and other products       81,807         -         90,997         205,036    
                             
 
Total
      153,606         310,000         175,463         374,025    
                             
of sales       10.4%         9.7%         8.3%         9.1%    
                             
                              (P)=Projection  
 
 
                                             
10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION  
 
 
                                             
                        (Millions of yen)
                             
          2009   2008  
      1st half   Year (P)   1st half   Year  
                             
  Increase in PP&E       133,379         280,000         174,677         361,988    
  Depreciation and amortization       155,003         325,000         163,690         341,337    
                             
                              (P)=Projection  
 
 
                                             
11. INVENTORIES  
 
 
                                             
  (1) Inventories             (Millions of yen)          
                             
      2009   2008     Difference            
                         
      Jun.30   Dec.31                
                             
  Business machines       200,627         234,958         (34,331)              
  Cameras       79,490         115,852         (36,362)              
  Optical and other products       143,872         156,109         (12,237)              
                             
 
Total
      423,989         506,919         (82,930)              
                             
 
 
                                             
      (2) Inventories/Sales*                   (Days)            
                             
      2009  2008     Difference            
                           
      Jun.30   Dec.31                
                             
  Business machines       39         34         +5              
  Cameras       35         41         (6)              
  Optical and other products       199         144         +55              
                             
 
Total
      52         47         +5              
                             
  *Index based on the previous six months sales.                                    
 
 
                                             
12. DEBT RATIO  
 
 
                                             
                             
      2009  2008     Difference            
                           
      Jun.30   Dec.31                
                             
  Total debt / Total assets       0.3%         0.4%         -0.1%              
                             
 
 
                                             
13. OVERSEAS PRODUCTION RATIO  
 
 
                                             
                             
      2009  2008                      
                             
      1st half   Year                          
                             
  Overseas production ratio       36%         39%                        
                             
 
 
                                             
14. NUMBER OF EMPLOYEES  
 
 
                                             
                             
      2009  2008     Difference            
                           
      Jun.30   Dec.31                
                             
  Japan       74,831         72,445         +2,386              
  Overseas       90,487         94,535         (4,048            
                             
 
Total
      165,318         166,980         (1,662            
                             

- S5 -