Edgar Filing: CANON INC

Form 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934


For the month of ….		July		……………………………………………… ,		2014



		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 25, 2014	By ……/s/…………… Shinichi Aoyama ………
		(Signature)*




		Shinichi Aoyama General Manager Consolidated Accounting Div. 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, 2014

LOGO

CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND

THE FIRST HALF ENDED JUNE 30, 2014

July 24, 2014

CONSOLIDATED RESULTS FOR THE SECOND QUARTER

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


		Actual
	Three months ended June 30, 2014		Three months ended June 30, 2013		Change(%)			Three months ended June 30, 2014

Net sales	¥	926,796	¥	966,880		-	4.1	$	9,176,198
Operating profit		110,549		98,354		+	12.4		1,094,545
Income before income taxes		116,975		98,868		+	18.3		1,158,168
Net income attributable to Canon Inc.	¥	80,848	¥	66,496		+	21.6	$	800,475


Net income attributable to Canon Inc. stockholders per share:

- Basic	¥	72.61	¥	57.68		+	25.9	$	0.72
- Diluted		72.61		57.68		+	25.9		0.72

CONSOLIDATED RESULTS FOR THE FIRST HALF (Millions of yen, thousands of U.S. dollars, except per share amounts)
		Actual									Projected
	Six months ended June 30, 2014		Six months ended June 30, 2013		Change(%)			Six months ended June 30, 2014		Year ending December 31, 2014		Change(%)

Net sales	¥	1,795,108	¥	1,783,533		+	0.6	$	17,773,347	¥	3,780,000		+	1.3
Operating profit		193,188		153,127		+	26.2		1,912,752		365,000		+	8.2
Income before income taxes		196,166		159,123		+	23.3		1,942,238		370,000		+	6.4
Net income attributable to Canon Inc.	¥	128,458	¥	107,409		+	19.6	$	1,271,861	¥	240,000		+	4.1


Net income attributable to Canon Inc. stockholders per share:

- Basic	¥	114.47	¥	93.17		+	22.9	$	1.13	¥	215.31		+	7.2
- Diluted		114.47		93.17		+	22.9		1.13		-			-


	Actual
	As of June 30, 2014		As of December 31, 2013		Change(%)			As of June 30, 2014

Total assets	¥	4,093,780	¥	4,242,710		-	3.5	$	40,532,475


Canon Inc. stockholders’ equity	¥	2,827,052	¥	2,910,262		-	2.9	$	27,990,614


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 JPY101=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of June 30, 2014, 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

2014 Second Quarter in Review

Looking back at the global economy in the second quarter of 2014, in the United States, although the economy has recovered steadily from the impact of the major cold wave that struck the country at the beginning of the year, the improvement has yet to stimulate consumer spending. In Europe, although uncertainty remained due to the political unrest in Ukraine, Germany and the U.K. have realized moderate economic recoveries. China and other emerging countries faced modest economic growth. As for Japan, the economy experienced a rebound following the rush in demand leading up to the hike in the country’s consumption tax. As a result, the growth of global economy overall during the second quarter continued to be sluggish.

As for the markets in which Canon operates amid these conditions, demand for office multifunction devices (MFDs) and laser printers maintained steady growth. Demand for interchangeable-lens digital cameras decreased in Japan as a result of the rebound in the wake of the rush in demand prior to the consumption tax increase, while demand overseas showed signs of recovery in China. As for digital compact cameras, demand continued to shrink in both developed countries as well as emerging markets. Looking at the overall market for inkjet printers, demand decreased from the previous year. In the industry and others sector, a rebound in capital investment for both image sensors and memory devices led to a pickup in demand for semiconductor lithography equipment, while demand for lithography equipment used in the production of FPD recovered for large-size panels.

The average values of the yen during the second quarter and first half of the year were ¥102.13 and ¥102.40 to the U.S. dollar, respectively, year-on-year depreciations of approximately ¥3 and ¥6, and ¥139.94 and ¥140.35 to the euro, respectively, year-on-year depreciations of approximately ¥11 and ¥14.

During the second quarter, sales of MFDs remained firm while sales in the industrial equipment increased significantly. Conversely, demand for digital compact cameras continued to shrink while net sales of inkjet printers decreased owing to the increase in consumption tax in Japan. Consequently, second-quarter net sales decreased 4.1% year on year to ¥926.8 billion (U.S.$9,176 million), while net sales for the six months ended June 30, 2014 totaled ¥1,795.1 billion (U.S.$17,773 million), a year-on-year increase of 0.6% owing to the sales increase in the first quarter. The gross profit ratio for the second quarter rose 2.8 points year on year to 52.2% thanks to the production shift to highly profitable high-added-value products and improvement of factory utilization by optimizing production along with the depreciation of the yen. The gross profit ratio for the first half of the year also increased by 2.6 points to 51.0%. Despite an increase in foreign-currency-denominated operating expenses due to the depreciation of the yen, Group-wide efforts to thoroughly reduce spending contributed to reduce operating expenses to ¥373.0 billion (U.S.$3,693 million), a decrease of 1.6% year on year. As a result, operating profit increased by 12.4% to ¥110.5 billion (U.S.$1,095 million). Other income increased by ¥5.9 billion (U.S.$59 million) due to foreign currency exchange gains while income before income taxes increased by 18.3% year on year to ¥117.0 billion (U.S.$1,158 million). Net income attributable to Canon Inc. increased by 21.6% to ¥80.8 billion (U.S.$800 million). Operating profit for the first half of the year increased by 26.2% to ¥193.2 billion (U.S.$1,913 million) while income before income taxes increased 23.3% year on year to ¥196.2 billion (U.S.$1,942 million). First-half net income attributable to Canon Inc. increased by 19.6% to ¥128.5 billion (U.S.$1,272 million).

Basic net income attributable to Canon Inc. stockholders per share for the second quarter was ¥72.61 (U.S.$0.72), an increase of ¥14.93 (U.S.$0.15) compared with the corresponding quarter of the previous year, and ¥114.47 (U.S.$1.13) for the first half, a year-on-year increase of ¥21.30 (U.S.$0.21).

- 2 -

Results by Segment

Looking at Canon’s quarterly performance by business unit, within the Office Business Unit, sales of the color office MFDs, remained the same level as the year-ago period led by the healthy growth of imageRUNNER ADVANCE C5200 series. As for high-speed continuous-feed printers and wide-format printers, sales of the Océ ColorStream 3000 series showed solid growth. Among laser printers, although the sales of monochrome model remained sluggish, color multifunction models recorded growth. As a result, sales for the business unit totaled ¥522.5 billion (U.S.$5,173 million), a year-on-year increase of 0.5%, while operating profit totaled ¥88.1 billion (U.S.$872 million), increasing 15.7%. Sales for the combined first six months of the year totaled ¥1,031.7 billion (U.S.$10,215 million), growing 4.8% year on year, while operating profit increased by 17.8% to ¥160.6 billion (U.S.$1,590 million).

Within the Imaging System Business Unit, although sales volume of interchangeable-lens digital cameras declined owing to the shrinking market in Japan and other markets—in Japan as a result of the rebound following the rush in demand prior to the consumption tax increase—the advanced-amateur-model EOS 70D realized healthy growth, enabling Canon to maintain the top share in major markets such as Europe, the U.S. and Japan. As for digital compact cameras, despite a decline in total sales volume due to the contraction of the market and the increasing popularity of smartphones, sales of high-added-value models featuring high image quality and high-magnification zoom capabilities recorded solid growth, maintaining high market shares. As for inkjet printers, while sales volume declined from the same period of the previous year owing to the market contraction in Japan caused by the rebound in the wake of the rush in demand leading up to the consumption tax hike, sales of consumables remained at the same level as the previous year. As a result, sales for the business unit decreased by 13.9% to ¥332.4 billion (U.S.$3,291 million) year on year, while operating profit totaled ¥51.0 billion (U.S.$505 million), a decrease of 9.4%. Sales for the first six months totaled ¥625.2 billion (U.S.$6,190 million), decreasing 8.6% year on year, while operating profit totaled ¥93.0 billion (U.S.$921 million), an increase of 9.7% year on year.

In the Industry and Others Business Unit, with regard to the semiconductor lithography equipment, ongoing investment by memory device manufactures in response to healthy growing demand for smartphones and tablets led to increased second-quarter unit sales of lithography equipment while a recovery in investment for large-size panels, which had been restricted until now, boosted unit sales of FPD lithography equipment. Consequently, second-quarter sales for the business unit totaled ¥95.3 billion (U.S.$944 million), an increase of 10.9% year on year, while operating profit recorded a loss of ¥2.5 billion (U.S.$25 million) owing to the upfront investment, a improvement of ¥3.3 billion (U.S.$33 million) from the year-ago period. Sales for the first half of the year totaled ¥185.1 billion (U.S.$1,833 million), growing 15.0% year on year, while operating profit posted a loss of ¥10.1 billion (U.S.$100 million).

Cash Flow

During the first half of 2014, cash flow from operating activities totaled ¥294.5 billion (U.S.$2,916 million), an increase of ¥76.6 billion (U.S.$758 million) compared with the previous year owing to the increase in profit. Although capital investment focused on new products, cash flow from investing activities increased ¥2.8 billion (U.S.$28 million) year on year to ¥142.1 billion (U.S.$1,407 million) as a result of an increase in the amount of time deposits included in short-term investments. Accordingly, free cash flow totaled ¥152.4 billion (U.S.$1,509 million), an increase of ¥73.8 billion (U.S.$730 million) compared with the corresponding year-ago period.

Cash flow from financing activities recorded an outlay of ¥176.4 billion (U.S.$1,746 million), mainly arising from the dividend payout and the repurchasing of treasury stock.

Owing to these factors, as well as the impact of foreign currency translation adjustments, cash and cash equivalents decreased by ¥44.2 billion (U.S.$438 million) to ¥744.7 billion (U.S.$7,373 million) from the end of the previous year.

- 3 -

Outlook

As for the outlook in the third quarter onward, there are signs of brightness among developed countries with the U.S. projected to realize steady economic growth and the European economy centering on Germany and the U.K. expected to continue its moderate recovery. Although uncertainties remain in China and other emerging countries, they are expected to continue to realize economic expansion. As for Japan, the economy has been recovering from the rebound following the increase in the consumption tax, and is projected to continue to realize healthy growth for the full year. The global economy is also expected to continue its moderate recovery.

In the businesses in which Canon is involved, demand for MFDs is projected to expand moderately, mainly for color models. Likewise, demand in the laser printer market is also expected to continue growing moderately, centered on multifunction models. As for interchangeable-lens digital cameras, while the demand remains unstable in Europe and Southeast Asia owing to the delayed economic recovery and political uncertainty, recovery is expected in the U.S. and Chinese market. Within the digital compact camera market, although projections point to market contraction, mainly among low-end models due to the popularity of smartphones, demand for high-added-value models featuring high image quality and high-magnification zoom capabilities, is expected to grow steadily. As for inkjet printers, the gradual recovery of the global economy is expected to bring an end to dwindling demand, with sales leveling off to remain in line with the previous year. As for the industrial equipment market, although the demand is expected to increase for semiconductor lithography equipment with manufacturers expected to continue making capital outlays amid growing demand projected for memory devices and sensors, as well as for FPDs owing to a stable supply-and-demand balance for panels, uncertainties remain in installment of certain equipment resulting from cautious forecast.

With regard to currency exchange rates for the third quarter onward, on which Canon’s performance outlook is based, taking into account the uncertainties in the future, Canon anticipates exchange rates of ¥100 to the U.S. dollar and ¥135 to the euro, representing depreciations of approximately ¥3 against the U.S. dollar, and approximately ¥8 against the euro compared with the annual average rates of the previous year.

Upon taking into consideration these foreign exchange rate assumptions and delay in the installment of semiconductor lithography equipment along with sluggish overseas camera market, Canon projects full-year consolidated net sales in 2014 of ¥3,780.0 billion (U.S.$37,426 million), a year on year increase of 1.3%; operating profit of ¥365.0 billion (U.S.$3,614 million), a year-on-year increase of 8.2%; income before income taxes of ¥370.0 billion (U.S.$3,663 million), a year-on-year increase of 6.4%; and net income attributable to Canon Inc. of ¥240.0 billion (U.S.$2,376 million), a year-on-year increase of 4.1%.

Consolidated Outlook

Fiscal year


	Millions of yen
	Year ending				Change (B - A)		Year ended		Change (%) (B - C) / C
	December 31, 2014						December 31, 2013
	Previous Outlook (A)		Revised Outlook (B)				Results (C)
Net sales	¥	3,860,000	¥	3,780,000	¥	(80,000)	¥	3,731,380		+1.3%
Operating profit		365,000		365,000		-		337,277		+8.2%
Income before income taxes		370,000		370,000		-		347,604		+6.4%
Net income attributable to Canon Inc.	¥	240,000	¥	240,000	¥	-	¥	230,483		+4.1%

- 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 medium-term profit forecasts along with planned future investments, cash flow and other factors.

Canon Inc. plans to distribute an interim dividend of ¥65.00 (U.S.$0.64) per share for the fiscal year 2014, half the amount of the annual dividend paid out in fiscal 2013, to provide a stable return to shareholders. The year-end dividend, however, has yet to be decided.

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


	Millions of yen						Thousands of U.S. dollars
	As of June 30, 2014		As of December 31, 2013		Change		As of June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	¥	744,684	¥	788,909	¥	(44,225)	$	7,373,109
Short-term investments		77,007		47,914		29,093		762,446
Trade receivables, net		533,770		608,741		(74,971)		5,284,851
Inventories		533,445		553,773		(20,328)		5,281,634
Prepaid expenses and other current assets		288,154		286,605		1,549		2,853,010

Total current assets		2,177,060		2,285,942		(108,882)		21,555,050

Noncurrent receivables		29,533		19,276		10,257		292,406
Investments		57,795		70,358		(12,563)		572,228
Property, plant and equipment, net		1,243,881		1,278,730		(34,849)		12,315,653
Intangible assets, net		141,855		145,075		(3,220)		1,404,505
Other assets		443,656		443,329		327		4,392,633

Total assets	¥	4,093,780	¥	4,242,710	¥	(148,930)	$	40,532,475

LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt	¥	993	¥	1,299	¥	(306)	$	9,832
Trade payables		300,572		307,157		(6,585)		2,975,960
Accrued income taxes		61,601		53,196		8,405		609,911
Accrued expenses		284,242		315,536		(31,294)		2,814,277
Other current liabilities		163,528		171,119		(7,591)		1,619,089

Total current liabilities		810,936		848,307		(37,371)		8,029,069
Long-term debt, excluding current installments		1,164		1,448		(284)		11,525
Accrued pension and severance cost		203,463		229,664		(26,201)		2,014,485
Other noncurrent liabilities		92,358		96,514		(4,156)		914,436

Total liabilities		1,107,921		1,175,933		(68,012)		10,969,515


Equity:
Canon Inc. stockholders’ equity:
Common stock		174,762		174,762		-		1,730,317
Additional paid-in capital		401,970		402,029		(59)		3,979,901
Legal reserve		63,837		63,091		746		632,050
Retained earnings		3,266,514		3,212,692		53,822		32,341,723
Accumulated other comprehensive income (loss)		(118,368)		(80,646)		(37,722)		(1,171,960)
Treasury stock, at cost		(961,663)		(861,666)		(99,997)		(9,521,417)

Total Canon Inc. stockholders’ equity		2,827,052		2,910,262		(83,210)		27,990,614

Noncontrolling interests		158,807		156,515		2,292		1,572,346

Total equity		2,985,859		3,066,777		(80,918)		29,562,960

Total liabilities and equity	¥	4,093,780	¥	4,242,710	¥	(148,930)	$	40,532,475


	Millions of yen						Thousands of U.S. dollars
	As of June 30, 2014		As of December 31, 2013				As of June 30, 2014
Notes:
1. Allowance for doubtful receivables	¥	12,304	¥	12,730			$	121,822
2. Accumulated depreciation		2,407,898		2,383,530				23,840,574
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments		(50,951)		1,734				(504,465)
Net unrealized gains and losses on securities		8,841		10,242				87,535
Net gains and losses on derivative instruments		609		(2,408)				6,030
Pension liability adjustments		(76,867)		(90,214)				(761,060)

- 6 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Consolidated statements of income

Results for the second quarter

Millions of yen

Thousands of
U.S. dollars

Three months
ended
June 30, 2014

Three months
ended
June 30, 2013

Change(%)

Three months
ended
June 30, 2014

Net sales

926,796

966,880

4.1

9,176,198

Cost of sales

443,286

489,522

4,388,970

Gross profit

483,510

477,358

1.3

4,787,228

Operating expenses:

Selling, general and administrative expenses

296,074

301,359

2,931,426

Research and development expenses

76,887

77,645

761,257

372,961

379,004

3,692,683

Operating profit

110,549

98,354

12.4

1,094,545

Other income (deductions):

Interest and dividend income

2,313

1,705

22,901

Interest expense

(131)

(146)

(1,297)

Other, net

4,244

(1,045)

42,019

6,426

514

63,623

Income before income taxes

116,975

98,868

18.3

1,158,168

Income taxes

34,567

30,242

342,247

Consolidated net income

82,408

68,626

815,921

Less: Net income attributable to noncontrolling interests

1,560

2,130

15,446

Net income attributable to Canon Inc.

80,848

66,496

21.6

800,475

Results for the first half

Millions of yen

Thousands of
U.S. dollars

Six months
ended
June 30, 2014

Six months
ended
June 30, 2013

Change(%)

Six months
ended
June 30, 2014

Net sales

1,795,108

1,783,533

0.6

17,773,347

Cost of sales

880,116

920,262

8,714,020

Gross profit

914,992

863,271

6.0

9,059,327

Operating expenses:

Selling, general and administrative expenses

570,099

558,983

5,644,545

Research and development expenses

151,705

151,161

1,502,030

721,804

710,144

7,146,575

Operating profit

193,188

153,127

26.2

1,912,752

Other income (deductions):

Interest and dividend income

3,917

2,741

38,782

Interest expense

(234)

(251)

(2,317)

Other, net

(705)

3,506

(6,979)

2,978

5,996

29,486

Income before income taxes

196,166

159,123

23.3

1,942,238

Income taxes

63,180

48,770

625,545

Consolidated net income

132,986

110,353

1,316,693

Less: Net income attributable to noncontrolling interests

4,528

2,944

44,832

Net income attributable to Canon Inc.

128,458

107,409

19.6

1,271,861

- 7 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

Consolidated statements of comprehensive income

Results for the second quarter

Millions of yen

Thousands of
U.S. dollars

Three months
ended
June 30, 2014

Three months
ended
June 30, 2013

Change(%)

Three months
ended
June 30, 2014

Consolidated net income

82,408

68,626

20.1

815,921

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

(20,254)

51,534

(200,535)

Net unrealized gains and losses on securities

(69)

1,029

(683)

Net gains and losses on derivative instruments

639

2,672

6,327

Pension liability adjustments

(576)

935

(5,703)

(20,260)

56,170

(200,594)

Comprehensive income

62,148

124,796

50.2

615,327

Less: Comprehensive income attributable to noncontrolling interests

1,509

2,769

14,941

Comprehensive income attributable to Canon Inc.

60,639

122,027

50.3

600,386

Results for the first half

Millions of yen

Thousands of
U.S. dollars

Six months
ended
June 30, 2014

Six months
ended
June 30, 2013

Change(%)

Six months
ended
June 30, 2014

Consolidated net income

132,986

110,353

20.5

1,316,693

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

(52,990)

137,134

(524,653)

Net unrealized gains and losses on securities

(1,388)

2,155

(13,743)

Net gains and losses on derivative instruments

3,017

3,607

29,871

Pension liability adjustments

13,361

(81)

132,287

(38,000)

142,815

(376,238)

Comprehensive income

94,986

253,168

62.5

940,455

Less: Comprehensive income attributable to noncontrolling interests

4,242

4,397

42,000

Comprehensive income attributable to Canon Inc.

90,744

248,771

63.5

898,455

- 8 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES


Results for the second quarter	Millions of yen							Thousands of U.S. dollars
Sales by business unit	Three months ended June 30, 2014		Three months ended June 30, 2013		Change(%)			Three months ended June 30, 2014
Office	¥	522,493	¥	520,032		+	0.5	$	5,173,198
Imaging System		332,387		386,013		-	13.9		3,290,960
Industry and Others		95,317		85,948		+	10.9		943,733
Eliminations		(23,401)		(25,113)			-		(231,693)

Total	¥	926,796	¥	966,880		-	4.1	$	9,176,198


	Millions of yen							Thousands of U.S. dollars
Sales by region	Three months ended June 30, 2014		Three months ended June 30, 2013		Change(%)			Three months ended June 30, 2014
Japan	¥	164,554	¥	175,654		-	6.3	$	1,629,248
Overseas:
Americas		253,170		282,082		-	10.2		2,506,634
Europe		272,348		295,944		-	8.0		2,696,515
Asia and Oceania		236,724		213,200		+	11.0		2,343,801

		762,242		791,226		-	3.7		7,546,950

Total	¥	926,796	¥	966,880		-	4.1	$	9,176,198


Results for the first half	Millions of yen							Thousands of U.S. dollars
Sales by business unit	Six months ended June 30, 2014		Six months ended June 30, 2013		Change(%)			Six months ended June 30, 2014
Office	¥	1,031,669	¥	984,238		+	4.8	$	10,214,545
Imaging System		625,196		684,120		-	8.6		6,190,059
Industry and Others		185,087		161,015		+	15.0		1,832,545
Eliminations		(46,844)		(45,840)			-		(463,802)

Total	¥	1,795,108	¥	1,783,533		+	0.6	$	17,773,347


	Millions of yen							Thousands of U.S. dollars
Sales by region	Six months ended June 30, 2014		Six months ended June 30, 2013		Change(%)			Six months ended June 30, 2014
Japan	¥	356,267	¥	335,372		+	6.2	$	3,527,396
Overseas:
Americas		481,701		514,084		-	6.3		4,769,317
Europe		534,259		542,309		-	1.5		5,289,693
Asia and Oceania		422,881		391,768		+	7.9		4,186,941

		1,438,841		1,448,161		-	0.6		14,245,951

Total	¥	1,795,108	¥	1,783,533		+	0.6	$	17,773,347

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


Office Business Unit :
Office multifunction devices (MFDs) / Laser multifunction printers (MFPs) / Laser printers / Digital production printing systems / High speed continuous feed printers / Wide-format printers / Document solutions


Imaging System Business Unit :
Interchangeable lens digital cameras / Digital compact cameras / Digital camcorders / Digital cinema cameras / Interchangeable lenses / Inkjet printers / Large-format inkjet printers / Commercial photo printers / Image scanners / Multimedia projectors / Broadcast equipment / Calculators


Industry and Others Business Unit :
Semiconductor lithography equipment / FPD (Flat panel display) lithography equipment / Digital radiography systems / Ophthalmic equipment / Vacuum thin-film deposition equipment / Organic LED (OLED) panel manufacturing equipment / Die bonders / Micromotors / Network cameras / Handy terminals / Document scanners

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


Americas: United States of America, Canada, Latin America


Europe: United Kingdom, Germany, France, Netherlands, European countries, Middle East and Africa


Asia and Oceania: China, Asian countries, Australia

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions of yen

Thousands of
U.S. dollars

Six months
ended
June 30, 2014

Six months
ended
June 30, 2013

Six months
ended
June 30, 2014

Cash flows from operating activities:

Consolidated net income

132,986

110,353

1,316,693

Adjustments to reconcile consolidated net income to net cash
provided by operating activities:

Depreciation and amortization

123,515

131,653

1,222,921

Loss on disposal of fixed assets

5,442

4,386

53,881

Deferred income taxes

(316)

(339)

(3,129)

Decrease in trade receivables

60,413

71,357

598,149

Decrease in inventories

2,603

18,269

25,772

Increase (decrease) in trade payables

11,141

(55,633)

110,307

Increase (decrease) in accrued income taxes

8,851

(7,416)

87,634

Decrease in accrued expenses

(23,657)

(38,616)

(234,228)

Decrease in accrued (prepaid) pension and severance cost

(6,827)

(874)

(67,594)

Other, net

(19,664)

(15,251)

(194,693)

Net cash provided by operating activities

294,487

217,889

2,915,713

Cash flows from investing activities:

Purchases of fixed assets

(112,613)

(119,809)

(1,114,980)

Proceeds from sale of fixed assets

2,487

1,062

24,624

Purchases of available-for-sale securities

(226)

(2,654)

(2,238)

Proceeds from sale and maturity of available-for-sale securities

3,141

505

Increase in time deposits, net

(31,044)

(15,745)

(307,366)

Acquisitions of subsidiaries, net of cash acquired

(11,301)

(4,914)

(111,891)

Purchases of other investments

(209)

Other, net

10,579

(138)

104,742

Net cash used in investing activities

(142,067)

(139,266)

(1,406,604)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

700

1,101

6,931

Repayments of long-term debt

(1,126)

(1,345)

(11,149)

Decrease in short-term loans, net

(48)

(563)

(475)

Dividends paid

(73,905)

(80,695)

(731,733)

Repurchases of treasury stock, net

(100,001)

(990,109)

Other, net

(2,007)

(3,865)

(19,871)

Net cash used in financing activities

(176,387)

(85,354)

(1,746,406)

Effect of exchange rate changes on cash and cash equivalents

(20,258)

47,827

(200,574)

Net change in cash and cash equivalents

(44,225)

41,096

(437,871)

Cash and cash equivalents at beginning of period

788,909

666,678

7,810,980

Cash and cash equivalents at end of period

744,684

707,774

7,373,109

- 10 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. NOTE FOR GOING CONCERN ASSUMPTION

Not applicable.

6. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY BUSINESS UNIT


Results for the second quarter		Millions of yen						Thousands of U.S. dollars
		Three months ended June 30, 2014		Three months ended June 30, 2013		Change(%)		Three months ended June 30, 2014
Office
Net sales:
	External customers	¥	521,719	¥	517,455	+	0.8	$	5,165,535
	Intersegment		774		2,577	-	70.0		7,663

	Total		522,493		520,032	+	0.5		5,173,198

Operating cost and expenses			434,374		443,840	-	2.1		4,300,733

Operating profit		¥	88,119	¥	76,192	+	15.7	$	872,465


Imaging System
Net sales:
	External customers	¥	332,272	¥	385,833	-	13.9	$	3,289,822
	Intersegment		115		180	-	36.1		1,138

	Total		332,387		386,013	-	13.9		3,290,960

Operating cost and expenses			281,425		329,735	-	14.7		2,786,386

Operating profit		¥	50,962	¥	56,278	-	9.4	$	504,574


Industry and Others
Net sales:
	External customers	¥	72,805	¥	63,592	+	14.5	$	720,841
	Intersegment		22,512		22,356	+	0.7		222,892

	Total		95,317		85,948	+	10.9		943,733

Operating cost and expenses			97,804		91,778	+	6.6		968,357

Operating profit		¥	(2,487)	¥	(5,830)		-	$	(24,624)


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(23,401)		(25,113)		-		(231,693)

	Total		(23,401)		(25,113)		-		(231,693)

Operating cost and expenses			2,644		3,173		-		26,177

Operating profit		¥	(26,045)	¥	(28,286)		-	$	(257,870)


Consolidated
Net sales:
	External customers	¥	926,796	¥	966,880	-	4.1	$	9,176,198
	Intersegment		-		-		-		-

	Total		926,796		966,880	-	4.1		9,176,198

Operating cost and expenses			816,247		868,526	-	6.0		8,081,653

Operating profit		¥	110,549	¥	98,354	+	12.4	$	1,094,545

- 11 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


Results for the first half		Millions of yen						Thousands of U.S. dollars
		Six months ended June 30, 2014		Six months ended June 30, 2013		Change(%)		Six months ended June 30, 2014
Office
Net sales:
	External customers	¥	1,029,818	¥	979,585	+	5.1	$	10,196,218
	Intersegment		1,851		4,653	-	60.2		18,327

	Total		1,031,669		984,238	+	4.8		10,214,545

Operating cost and expenses			871,093		847,975	+	2.7		8,624,684

Operating profit		¥	160,576	¥	136,263	+	17.8	$	1,589,861


Imaging System
Net sales:
	External customers	¥	624,885	¥	683,760	-	8.6	$	6,186,980
	Intersegment		311		360	-	13.6		3,079

	Total		625,196		684,120	-	8.6		6,190,059

Operating cost and expenses			532,208		599,361	-	11.2		5,269,386

Operating profit		¥	92,988	¥	84,759	+	9.7	$	920,673


Industry and Others
Net sales:
	External customers	¥	140,405	¥	120,188	+	16.8	$	1,390,149
	Intersegment		44,682		40,827	+	9.4		442,396

	Total		185,087		161,015	+	15.0		1,832,545

Operating cost and expenses			195,195		174,381	+	11.9		1,932,624

Operating profit		¥	(10,108)	¥	(13,366)		-	$	(100,079)


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(46,844)		(45,840)		-		(463,802)

	Total		(46,844)		(45,840)		-		(463,802)

Operating cost and expenses			3,424		8,689		-		33,901

Operating profit		¥	(50,268)	¥	(54,529)		-	$	(497,703)


Consolidated
Net sales:
	External customers	¥	1,795,108	¥	1,783,533	+	0.6	$	17,773,347
	Intersegment		-		-		-		-

	Total		1,795,108		1,783,533	+	0.6		17,773,347

Operating cost and expenses			1,601,920		1,630,406	-	1.7		15,860,595

Operating profit		¥	193,188	¥	153,127	+	26.2	$	1,912,752

- 12 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA


Results for the second quarter		Millions of yen						Thousands of U.S. dollars
		Three months ended June 30, 2014		Three months ended June 30, 2013		Change(%)		Three months ended June 30, 2014
Japan
Net sales:
	External customers	¥	212,549	¥	187,085	+	13.6	$	2,104,446
	Intersegment		430,486		473,150	-	9.0		4,262,237

	Total		643,035		660,235	-	2.6		6,366,683

Operating cost and expenses			531,906		563,567	-	5.6		5,266,396

Operating profit		¥	111,129	¥	96,668	+	15.0	$	1,100,287


Americas
Net sales:
	External customers	¥	252,634	¥	281,609	-	10.3	$	2,501,327
	Intersegment		1,808		4,067	-	55.5		17,901

	Total		254,442		285,676	-	10.9		2,519,228

Operating cost and expenses			250,214		277,724	-	9.9		2,477,367

Operating profit		¥	4,228	¥	7,952	-	46.8	$	41,861


Europe
Net sales:
	External customers	¥	272,004	¥	296,132	-	8.1	$	2,693,109
	Intersegment		14,517		14,370	+	1.0		143,733

	Total		286,521		310,502	-	7.7		2,836,842

Operating cost and expenses			286,152		311,449	-	8.1		2,833,188

Operating profit		¥	369	¥	(947)		-	$	3,654


Asia and Oceania
Net sales:
	External customers	¥	189,609	¥	202,054	-	6.2	$	1,877,316
	Intersegment		196,288		227,645	-	13.8		1,943,446

	Total		385,897		429,699	-	10.2		3,820,762

Operating cost and expenses			369,843		414,334	-	10.7		3,661,812

Operating profit		¥	16,054	¥	15,365	+	4.5	$	158,950


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(643,099)		(719,232)		-		(6,367,317)

	Total		(643,099)		(719,232)		-		(6,367,317)

Operating cost and expenses			(621,868)		(698,548)		-		(6,157,110)

Operating profit		¥	(21,231)	¥	(20,684)		-	$	(210,207)


Consolidated
Net sales:
	External customers	¥	926,796	¥	966,880	-	4.1	$	9,176,198
	Intersegment		-		-		-		-

	Total		926,796		966,880	-	4.1		9,176,198

Operating cost and expenses			816,247		868,526	-	6.0		8,081,653

Operating profit		¥	110,549	¥	98,354	+	12.4	$	1,094,545

- 13 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED



Results for the first half		Millions of yen						Thousands of U.S. dollars
		Six months ended June 30, 2014		Six months ended June 30, 2013		Change(%)		Six months ended June 30, 2014
Japan
Net sales:
	External customers	¥	421,194	¥	358,959	+	17.3	$	4,170,238
	Intersegment		837,577		898,876	-	6.8		8,292,841

	Total		1,258,771		1,257,835	+	0.1		12,463,079

Operating cost and expenses			1,070,703		1,097,394	-	2.4		10,601,020

Operating profit		¥	188,068	¥	160,441	+	17.2	$	1,862,059


Americas
Net sales:
	External customers	¥	480,834	¥	510,984	-	5.9	$	4,760,733
	Intersegment		2,501		6,645	-	62.4		24,762

	Total		483,335		517,629	-	6.6		4,785,495

Operating cost and expenses			474,539		506,351	-	6.3		4,698,406

Operating profit		¥	8,796	¥	11,278	-	22.0	$	87,089


Europe
Net sales:
	External customers	¥	533,577	¥	542,861	-	1.7	$	5,282,941
	Intersegment		25,993		26,101	-	0.4		257,356

	Total		559,570		568,962	-	1.7		5,540,297

Operating cost and expenses			554,170		575,923	-	3.8		5,486,832

Operating profit		¥	5,400	¥	(6,961)		-	$	53,465


Asia and Oceania
Net sales:
	External customers	¥	359,503	¥	370,729	-	3.0	$	3,559,435
	Intersegment		387,922		418,173	-	7.2		3,840,813

	Total		747,425		788,902	-	5.3		7,400,248

Operating cost and expenses			714,483		759,348	-	5.9		7,074,090

Operating profit		¥	32,942	¥	29,554	+	11.5	$	326,158


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(1,253,993)		(1,349,795)		-		(12,415,772)

	Total		(1,253,993)		(1,349,795)		-		(12,415,772)

Operating cost and expenses			(1,211,975)		(1,308,610)		-		(11,999,753)

Operating profit		¥	(42,018)	¥	(41,185)		-	$	(416,019)


Consolidated
Net sales:
	External customers	¥	1,795,108	¥	1,783,533	+	0.6	$	17,773,347
	Intersegment		-		-		-		-

	Total		1,795,108		1,783,533	+	0.6		17,773,347

Operating cost and expenses			1,601,920		1,630,406	-	1.7		15,860,595

Operating profit		¥	193,188	¥	153,127	+	26.2	$	1,912,752

- 14 -

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

Number of Group Companies


	June 30, 2014	December 31, 2013	Change
Subsidiaries	253	257	(4)
Affiliates	10	11	(1)
Total	263	268	(5)

Change in Group Entities


Subsidiaries
Addition:		5 companies
Removal:		9 companies


Affiliates (Carried at Equity Basis)
Removal:		1 company

Subsidiaries Listed on Domestic Stock Exchange

Tokyo

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

(2)	SIGNIFICANT ACCOUNTING POLICIES

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

- 15 -

Canon Inc.

July 24, 2014

CONSOLIDATED FINANCIAL RESULTS FOR THE SECOND QUARTER

AND THE FIRST HALF ENDED JUNE 30, 2014

SUPPLEMENTARY REPORT

TABLE OF CONTENTS


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

Canon Inc.


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


		2014									2013									Change year over year
		2nd quarter			1st half			Year (P)			2nd quarter			1st half			Year			2nd quarter		1st half		Year
Japan
	Office		94,670			196,690			-			95,105			185,639			368,308			-0.5%		+6.0%	-
	Imaging System		39,913			93,256			-			47,590			87,684			215,970			-16.1%		+6.4%	-
	Industry and Others		29,971			66,321			-			32,959			62,049			131,585			-9.1%		+6.9%	-
	Total		164,554			356,267			761,500			175,654			335,372			715,863			-6.3%		+6.2%	+6.4%
Overseas
	Office		427,049			833,128			-			422,350			793,946			1,625,590			+1.1%		+4.9%	-
	Imaging System		292,359			531,629			-			338,243			596,076			1,232,216			-13.6%		-10.8%	-
	Industry and Others		42,834			74,084			-			30,633			58,139			157,711			+39.8%		+27.4%	-
	Total		762,242			1,438,841			3,018,500			791,226			1,448,161			3,015,517			-3.7%		-0.6%	+0.1%
	Americas
	Office		155,822			311,988			-			163,280			306,263			629,472			-4.6%		+1.9%	-
	Imaging System		90,473			156,370			-			109,143			188,617			392,373			-17.1%		-17.1%	-
	Industry and Others		6,875			13,343			-			9,659			19,204			37,656			-28.8%		-30.5%	-
	Total		253,170			481,701			1,031,000			282,082			514,084			1,059,501			-10.2%		-6.3%	-2.7%
	Europe
	Office		170,435			343,967			-			178,318			342,127			694,563			-4.4%		+0.5%	-
	Imaging System		94,597			176,148			-			111,750			189,320			404,390			-15.3%		-7.0%	-
	Industry and Others		7,316			14,144			-			5,876			10,862			25,976			+24.5%		+30.2%	-
	Total		272,348			534,259			1,114,100			295,944			542,309			1,124,929			-8.0%		-1.5%	-1.0%
	Asia and Oceania
	Office		100,792			177,173			-			80,752			145,556			301,555			+24.8%		+21.7%	-
	Imaging System		107,289			199,111			-			117,350			218,139			435,453			-8.6%		-8.7%	-
	Industry and Others		28,643			46,597			-			15,098			28,073			94,079			+89.7%		+66.0%	-
	Total		236,724			422,881			873,400			213,200			391,768			831,087			+11.0%		+7.9%	+5.1%
Intersegment
	Office		774			1,851			-			2,577			4,653			6,175			-70.0%		-60.2%	-
	Imaging System		115			311			-			180			360			752			-36.1%		-13.6%	-
	Industry and Others		22,512			44,682			-			22,356			40,827			85,574			+0.7%		+9.4%	-
	Eliminations		(23,401	)		(46,844	)		-			(25,113	)		(45,840	)		(92,501	)		-		-	-
	Total		0			0			0			0			0			0			-		-	-
Total
	Office		522,493			1,031,669			2,099,400			520,032			984,238			2,000,073			+0.5%		+4.8%	+5.0%
	Imaging System		332,387			625,196			1,368,000			386,013			684,120			1,448,938			-13.9%		-8.6%	-5.6%
	Industry and Others		95,317			185,087			404,400			85,948			161,015			374,870			+10.9%		+15.0%	+7.9%
	Eliminations		(23,401	)		(46,844	)		(91,800	)		(25,113	)		(45,840	)		(92,501	)		-		-	-
	Total		926,796			1,795,108			3,780,000			966,880			1,783,533			3,731,380			-4.1%		+0.6%	+1.3%

(P)=Projection

- S1 -

Canon Inc.

2. SEGMENT INFORMATION BY BUSINESS UNIT

(Millions of yen)


		2014									2013									Change year over year
			2nd quarter			1st half			Year (P)			2nd quarter			1st half			Year			2nd quarter			1st half		Year
Office
	External customers		521,719			1,029,818			2,095,400			517,455			979,585			1,993,898			+0.8%			+5.1%		+5.1%
	Intersegment		774			1,851			4,000			2,577			4,653			6,175			-70.0%			-60.2%		-35.2%
	Total sales		522,493			1,031,669			2,099,400			520,032			984,238			2,000,073			+0.5%			+4.8%		+5.0%
	Operating profit		88,119			160,576			289,600			76,192			136,263			266,908			+15.7%			+17.8%		+8.5%
	% of sales		16.9%			15.6%			13.8%			14.7%			13.8%			13.3%			-			-		-
Imaging System
	External customers		332,272			624,885			1,367,200			385,833			683,760			1,448,186			-13.9%			-8.6%		-5.6%
	Intersegment		115			311			800			180			360			752			-36.1%			-13.6%		+6.4%
	Total sales		332,387			625,196			1,368,000			386,013			684,120			1,448,938			-13.9%			-8.6%		-5.6%
	Operating profit		50,962			92,988			207,900			56,278			84,759			203,794			-9.4%			+9.7%		+2.0%
	% of sales		15.3%			14.9%			15.2%			14.6%			12.4%			14.1%			-			-		-
Industry and Others
	External customers		72,805			140,405			317,400			63,592			120,188			289,296			+14.5%			+16.8%		+9.7%
	Intersegment		22,512			44,682			87,000			22,356			40,827			85,574			+0.7%			+9.4%		+1.7%
	Total sales		95,317			185,087			404,400			85,948			161,015			374,870			+10.9%			+15.0%		+7.9%
	Operating profit		(2,487	)		(10,108	)		(28,800	)		(5,830	)		(13,366	)		(25,331	)		-			-		-
	% of sales		-2.6%			-5.5%			-7.1%			-6.8%			-8.3%			-6.8%			-			-		-
Corporate and Eliminations
	External customers		-			-			-			-			-			-			-			-		-
	Intersegment		(23,401	)		(46,844	)		(91,800	)		(25,113	)		(45,840	)		(92,501	)		-			-		-
	Total sales		(23,401	)		(46,844	)		(91,800	)		(25,113	)		(45,840	)		(92,501	)		-			-		-
	Operating profit		(26,045	)		(50,268	)		(103,700	)		(28,286	)		(54,529	)		(108,094	)		-			-		-
Consolidated
	External customers		926,796			1,795,108			3,780,000			966,880			1,783,533			3,731,380			-4.1%			+0.6%		+1.3%
	Intersegment		-			-			-			-			-			-			-			-		-
	Total sales		926,796			1,795,108			3,780,000			966,880			1,783,533			3,731,380			-4.1%			+0.6%		+1.3%
	Operating profit		110,549			193,188			365,000			98,354			153,127			337,277			+12.4%			+26.2%		+8.2%
	% of sales		11.9%			10.8%			9.7%			10.2%			8.6%			9.0%			-			-		-
																					(P)=Projection

3. OTHER INCOME / DEDUCTIONS																							(Millions of yen)
			2014									2013									Change year over year
		2nd quarter			1st half			Year (P)			2nd quarter			1st half			Year			2nd quarter			1st half			Year
	Interest and dividend, net		2,182			3,683			5,700			1,559			2,490			6,029			+623			+1,193		(329)
	Forex gain (loss)		(1,848	)		(7,655	)		(10,300	)		(5,326	)		(2,144	)		(1,992	)		+3,478			(5,511	)	(8,308)
	Equity earnings (loss) of affiliated companies		119			212			400			211			125			(664	)		(92	)		+87		+1,064
	Other, net		5,973			6,738			9,200			4,070			5,525			6,954			+1,903			+1,213		+2,246
	Total		6,426			2,978			5,000			514			5,996			10,327			+5,912			(3,018	)	(5,327)
																					(P)=Projection

- S2 -

Canon Inc.


4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT
		2014			2013
		2nd quarter	1st half	Year (P)	2nd quarter	1st half	Year
Office
	Monochrome copiers	16%	15%	16%	15%	16%	16%
	Color copiers	19%	19%	20%	20%	19%	19%
	Printers	43%	43%	41%	43%	43%	42%
	Others	22%	23%	23%	22%	22%	23%
Imaging System
	Cameras	67%	64%	64%	70%	68%	67%
	Inkjet printers	25%	27%	28%	23%	24%	25%
	Others	8%	9%	8%	7%	8%	8%
Industry and Others
	Lithography equipment	28%	22%	22%	13%	11%	17%
	Others	72%	78%	78%	87%	89%	83%
							(P)=Projection

5. SALES GROWTH IN LOCAL CURRENCY (Year over year)
		2014
		2nd quarter	1st half	Year (P)
Office
	Japan	-0.5%	+6.0%	-
	Overseas	-3.3%	-2.8%	-
	Total	-3.1%	-1.4%	+1.8%
Imaging System
	Japan	-16.1%	+6.4%	-
	Overseas	-17.5%	-17.4%	-
	Total	-17.4%	-14.4%	-8.4%
Industry and Others
	Japan	-9.1%	+6.9%	-
	Overseas	+37.1%	+23.0%	-
	Total	+9.9%	+13.3%	+7.2%
Total
	Japan	-6.3%	+6.2%	+6.4%
	Overseas	-7.8%	-7.8%	-3.4%
	Americas	-13.3%	-12.3%	-5.7%
	Europe	-14.5%	-11.1%	-5.9%
	Asia and Oceania	+8.7%	+2.8%	+2.8%
	Total	-7.5%	-5.1%	-1.5%
				(P)=Projection

- S3 -


						Canon Inc.
6. PROFITABILITY
		2014		2013
		1st half	Year (P)	1st half	Year
ROE *1		9.0%	8.3%	8.1%	8.4%
ROA *2		6.2%	5.7%	5.3%	5.6%
*1 Return on Equity ; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Stockholders’ Equity					(P)=Projection
*2 Return on Assets ; Based on Net Income attributable to Canon Inc.

7. IMPACT OF FOREIGN EXCHANGE RATES
	(1) Exchange rates							(Yen)
		2014				2013
		2nd quarter	1st half	2nd half (P)	Year (P)	2nd quarter	1st half	Year
	Yen/US$	102.13	102.40	100.00	101.14	98.80	95.96	97.84
	Yen/Euro	139.94	140.35	135.00	137.57	129.02	125.90	130.01
								(P)=Projection

	(2) Impact of foreign exchange rates on sales (Year over year)			(Billions of yen)
		2014
		2nd quarter	1st half	Year (P)
	US$	+7.2	+30.4	+28.5
	Euro	+17.7	+45.4	+47.8
	Other currencies	+1.8	+7.4	+6.2
	Total	+26.7	+83.2	+82.5
				(P)=Projection

	(3) Impact of foreign exchange rates per yen	(Billions of yen)
		2014
		2nd half (P)
On sales
	US$	8.4
	Euro	3.5
On operating profit
	US$	3.1
	Euro	1.7
		(P)=Projection

8. STATEMENTS OF CASH FLOWS							(Millions of yen)
		2014			2013
		2nd quarter	1st half	Year (P)	2nd quarter	1st half	Year
Net cash provided by operating activities		162,233	294,487	525,000	162,475	217,889	507,642
Net cash used in investing activities		(85,592)	(142,067)	(290,000)	(65,863)	(139,266)	(250,212)
Free cash flow		76,641	152,420	235,000	96,612	78,623	257,430
Net cash used in financing activities		(50,643)	(176,387)	(245,300)	(1,293)	(85,354)	(222,181)
Effect of exchange rate changes on cash and cash equivalents		(8,405)	(20,258)	(28,600)	19,463	47,827	86,982
Net change in cash and cash equivalents		17,593	(44,225)	(38,900)	114,782	41,096	122,231
Cash and cash equivalents at end of period		744,684	744,684	750,000	707,774	707,774	788,909
							(P)=Projection

- S4 -

Canon Inc.


9. R&D EXPENDITURE													(Millions of yen)
		2014							2013
		2nd quarter		1st half		Year (P)			2nd quarter		1st half		Year
	Office		26,013		50,699		-			26,852		51,510	105,246
	Imaging System		21,026		41,966		-			21,549		41,586	84,377
	Industry and Others		6,549		12,743		-			6,335		12,149	25,701
	Corporate and Eliminations		23,299		46,297		-			22,909		45,916	91,000
	Total		76,887		151,705		305,000			77,645		151,161	306,324
% of sales			8.3%		8.5%		8.1%			8.0%		8.5%	8.2%
													(P)=Projection

10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION													(Millions of yen)
		2014							2013
		2nd quarter		1st half		Year (P)			2nd quarter		1st half		Year
Increase in PP&E			46,963		85,017		205,000			45,015		95,808	188,826
Depreciation and amortization			62,163		123,515		265,000			67,313		131,653	275,173
													(P)=Projection

11. INVENTORIES
(1) Inventories						(Millions of yen)
		2014		2013		Difference
		Jun.30		Dec.31		Difference
	Office		216,919		227,413		(10,494	)
	Imaging System		208,439		221,368		(12,929	)
	Industry and Others		108,087		104,992		+3,095
	Total		533,445		553,773		(20,328	)

(2) Inventories/Sales*						(Days)
		2014		2013		Difference
		Jun.30		Dec.31		Difference
	Office		38		41		(3	)
	Imaging System		61		53		+8
	Industry and Others		143		115		+28
	Total		54		52		+2
*Index based on the previous six months sales.

12. DEBT RATIO
		2014		2013		Difference
		Jun.30		Dec.31		Difference
	Total debt / Total assets		0.1%		0.1%		0.0%

13. OVERSEAS PRODUCTION RATIO
		2014		2013
		1st half		Year
	Overseas production ratio		60%		57%

14. NUMBER OF EMPLOYEES
		2014		2013		Difference
		Jun.30		Dec.31		Difference
	Japan		70,005		69,825		+180
	Overseas		124,123		124,326		(203	)
	Total		194,128		194,151		(23	)

- S5 -