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 ….		October		…………………………………………… ,		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….	October 28, 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 THIRD QUARTER AND THE NINE MONTHS ENDED SEPTEMBER 30, 2014

LOGO

CONSOLIDATED RESULTS FOR THE THIRD QUARTER AND

THE NINE MONTHS ENDED SEPTEMBER 30, 2014

October 27, 2014

CONSOLIDATED RESULTS FOR THE THIRD QUARTER

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


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

Net sales	¥	872,208	¥	913,149		-	4.5	$	8,001,908
Operating profit		71,832		90,610		-	20.7		659,009
Income before income taxes		80,164		88,056		-	9.0		735,450
Net income attributable to Canon Inc.	¥	58,249	¥	58,822		-	1.0	$	534,394


Net income attributable to Canon Inc. stockholders per share:

- Basic	¥	52.67	¥	51.20		+	2.9	$	0.48
- Diluted		52.67		51.20		+	2.9		0.48

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

Net sales	¥	2,667,316	¥	2,696,682		-	1.1	$	24,470,789	¥	3,740,000		+	0.2
Operating profit		265,020		243,737		+	8.7		2,431,376		370,000		+	9.7
Income before income taxes		276,330		247,179		+	11.8		2,535,138		380,000		+	9.3
Net income attributable to Canon Inc.	¥	186,707	¥	166,231		+	12.3	$	1,712,908	¥	250,000		+	8.5


Net income attributable to Canon Inc. stockholders per share:

- Basic	¥	167.10	¥	144.40		+	15.7	$	1.53	¥	224.28		+	11.7
- Diluted		167.10		144.39		+	15.7		1.53		-			-


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

Total assets	¥	4,172,718	¥	4,242,710		-	1.6	$	38,281,817


Canon Inc. stockholders’ equity	¥	2,888,720	¥	2,910,262		-	0.7	$	26,502,018


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 JPY109=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of September 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 Third Quarter in Review

Looking back at the global economy in the third quarter of 2014, the U.S. economy, buoyed by strong consumer spending, recovered steadily. In Europe, the economy remained sluggish, with deteriorating conditions in Russia potentially having a negative effect on the recovery in neighboring euro area countries. The pace of economic expansion in China was modest while other emerging countries in Southeast Asia and South America faced slowdowns in market growth due to economic stagnation. As for Japan, with the economy yet to recover from the decline following the rush in demand leading up to the hike in the country’s consumption tax, growth fell short of the rate recorded in the same period of the previous year. As global growth projections get revised downward with each passing quarter, the outlook for the global economy grows increasingly uncertain.

Looking at 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 remained sluggish due to the delayed economic recovery in Europe and the still depressed demand in Japan following the rush in demand prior to the consumption tax increase, while in China demand showed hearty signs of recovery. As for digital compact cameras, demand continued to shrink in both developed countries and emerging markets. Looking at the market for inkjet printers, demand decreased slightly 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 flat panel displays (FPDs) for tablets and TV screens increased, fueling continued customer investment.

The average values of the yen during the third quarter and first nine months of the year were ¥104.22 and ¥103.01 to the U.S. dollar, respectively, year-on-year depreciations of approximately ¥5 and ¥6, and ¥137.78 and ¥139.53 to the euro, respectively, year-on-year depreciations of approximately ¥7 and ¥12.

During the third quarter, although MFDs enjoyed hearty demand and industrial equipment sales increased, the delayed recovery in demand for interchangeable-lens digital cameras and the continued shrinking of the market for digital compact cameras led to reduced net sales. As a result, third-quarter net sales decreased 4.5% year on year to ¥872.2 billion (U.S.$8,002 million). Net sales for the nine months ended September 30, 2014, totaled ¥2,667.3 billion (U.S.$24,471 million), a year-on-year decline of 1.1%. The gross profit ratio for the third quarter rose 0.5 points year on year to 49.5% thanks to a production shift to highly profitable high-added-value products and ongoing cost-cutting activities at production sites along with the depreciation of the yen. The gross profit ratio for the first nine months of the year also increased by 1.9 points to 50.5%. 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 limiting the increase in operating expenses to just ¥359.6 billion (U.S.$3,299 million), an increase of 0.9% year on year. As a result, third-quarter operating profit decreased by 20.7% year on year to ¥71.8 billion (U.S.$659 million). Other income for the quarter increased by ¥10.9 billion (U.S.$100 million) due to foreign currency exchange gains while income before income taxes decreased by 9.0% to ¥80.2 billion (U.S.$735 million). Net income attributable to Canon Inc. decreased by 1.0% to ¥58.2 billion (U.S.$534 million). Operating profit for the first nine months of the year increased by 8.7% to ¥265.0 billion (U.S.$2,431 million) owing to the increased profit in the first half while income before income taxes increased 11.8% year on year to ¥276.3 billion (U.S.$2,535 million). Net income attributable to Canon Inc. for the first nine months increased by 12.3% to ¥186.7 billion (U.S.$1,713 million) .

Basic net income attributable to Canon Inc. stockholders per share for the third quarter was ¥52.67 (U.S.$0.48), an increase of ¥1.47 (U.S.$0.01) compared with the corresponding quarter of the previous year, and ¥167.10 (U.S.$1.53) for the first nine months of 2014, a year-on-year increase of ¥22.70 (U.S.$0.21).

- 2 -

Results by Segment

Looking at Canon’s quarterly performance by business unit, within the Office Business Unit, although sales of color office MFDs increased significantly from the year-ago period, led by healthy growth of the imageRUNNER ADVANCE C5200 series along with well-received new models, total sales volume remained at the same level as the previous year due to sluggish demand for monochrome models. As for high-speed continuous-feed printers, the Océ ColorStream 3000 series enjoyed solid sales. Among laser printers, although color multifunction models recorded sales growth, total sales volume decreased slightly from the year-ago period owing to the decrease in demand for monochrome models. Sales of consumables declined from the year-ago period, which had recorded strong sales. As a result, sales for the business unit totaled ¥482.3 billion (U.S.$4,424 million), a year-on-year decline of 2.4%, while operating profit totaled ¥57.9 billion (U.S.$531 million), decreasing 13.7%. Sales for the combined first nine months of the year totaled ¥1,513.9 billion (U.S.$13,889 million), growing 2.4% year on year, while operating profit increased by 7.4% to ¥218.5 billion (U.S.$2,004 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 regional markets due to the delayed economic recovery, the advanced-amateur-model EOS 70D realized healthy growth, enabling Canon to maintain the top share in such major markets as Europe, the U.S. and Japan. As for digital compact cameras, despite a decline in total sales volume, sales of high-added-value models featuring high image quality and high-magnification zoom capabilities recorded solid growth, enabling the maintaining of a high market share. Looking at inkjet printers, amid the market contraction due to the delay in economic recovery, especially in Europe and Asia, sales volume for the quarter remained at the same level as the previous year while sales of consumable supplies increased from the year-ago period. As a result, third-quarter sales for the business unit decreased by 9.4% to ¥315.8 billion (U.S.$2,898 million) year on year, while operating profit declined 23.9% to ¥43.3 billion (U.S.$398 million). Sales for the first nine months totaled ¥941.0 billion (U.S.$8,633 million), decreasing 8.9% year on year, while operating profit totaled ¥136.3 billion (U.S.$1,251 million), a decrease of 3.8% year on year.

In the Industry and Others Business Unit, ongoing investment by memory device manufacturers in response to the healthy growth in demand for smartphones and tablets led to increased third-quarter unit sales of semiconductor lithography equipment while a recovery in investment for panels used for tablets and TV screens, boosted unit sales of FPD lithography equipment. Consequently, third-quarter sales for the business unit totaled ¥97.0 billion (U.S.$890 million), an increase of 2.0% year on year, while operating profit recorded a loss of ¥5.0 billion (U.S.$45 million) owing to investment into next-generation technologies, an improvement of ¥3.2 billion (U.S.$29 million) from the year-ago period. Sales for the first nine months of the year grew 10.1% year on year to ¥282.1 billion (U.S.$2,588 million), while operating profit posted a loss of ¥15.1 billion (U.S.$138 million).

Cash Flow

During the first nine months of 2014, cash flow from operating activities totaled ¥398.6 billion (U.S.$3,656 million), an increase of ¥55.2 billion (U.S.$507 million) compared with the previous year owing to the increase in profit as well as an improvement in working capital. Although capital investment was focused on new products, cash flow from investing activities increased ¥23.8 billion (U.S.$218 million) year on year to ¥231.4 billion (U.S.$2,123 million) as a result of an outlay for the acquisition of Milestone Systems aimed at enhancing the network camera business. Accordingly, free cash flow totaled ¥167.2 billion (U.S.$1,533 million), an increase of ¥31.4 billion (U.S.$289 million) compared with the corresponding year-ago period.

Cash flow from financing activities recorded an outlay of ¥250.7 billion (U.S.$2,300 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 ¥81.6 billion (U.S.$748 million) to ¥707.3 billion (U.S.$6,489 million) from the end of the previous year.

- 3 -

Outlook

As for the outlook in the fourth quarter, with the economies of Europe and emerging countries appearing to be at a standstill, prospects for the future remain uncertain. As for the Japanese economy, projections indicate that more time will be needed to recover fully from the decline that followed the raising of the country’s consumption tax. Looking at the U.S. economy, however, improved employment conditions and a steady recovery in consumer spending, offer a promising outlook for the year-end shopping season.

In the businesses in which Canon operates, demand for MFDs is projected to continue to expand moderately, mainly for color models, while demand in the laser printer market is expected to remain at the same level as the previous year. As for interchangeable-lens digital cameras, while Europe and Japan still await a market recovery, an upturn in demand is expected in the U.S. and Chinese markets. Within the digital compact camera market, although projections point to continued market contraction for low-end models, demand is expected to grow steadily for high-added-value models featuring high image quality and high-magnification zoom capabilities. Looking at inkjet printers, demand is expected to contract from last year’s level due to the delayed recovery of the global economy. As for the industrial equipment market, manufacturers are expected to continue making capital outlays for semiconductor lithography equipment amid growing demand projected for memory devices and image sensors, as well as for FPD lithography equipment owing to a stable supply-and-demand balance for panels.

With regard to currency exchange rates for the fourth quarter, on which Canon’s performance outlook is based, Canon anticipates exchange rates of ¥108 to the U.S. dollar and ¥137 to the euro, representing depreciations of approximately ¥7 against the U.S. dollar, and approximately ¥9 against the euro compared with the annual average rates of the previous year.

Upon taking into consideration these foreign exchange rate assumptions, Canon projects full-year consolidated net sales in 2014 of ¥3,740.0 billion (U.S.$34,312 million), a year on year increase of 0.2%; operating profit of ¥370.0 billion (U.S.$3,394 million), a year-on-year increase of 9.7%; income before income taxes of ¥380.0 billion (U.S.$3,486 million), a year-on-year increase of 9.3%; and net income attributable to Canon Inc. of ¥250.0 billion (U.S.$2,294 million), a year-on-year increase of 8.5%.

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	¥	3,780,000	¥	3,740,000	¥	(40,000)	¥	3,731,380		+0.2%
Operating profit		365,000		370,000		5,000		337,277		+9.7%
Income before income taxes		370,000		380,000		10,000		347,604		+9.3%
Net income attributable to Canon Inc.	¥	240,000	¥	250,000	¥	10,000	¥	230,483		+8.5%

- 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


	Millions of yen						Thousands of U.S. dollars
	As of September 30, 2014		As of December 31, 2013		Change		As of September 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	¥	707,326	¥	788,909	¥	(81,583)	$	6,489,229
Short-term investments		84,483		47,914		36,569		775,073
Trade receivables, net		531,571		608,741		(77,170)		4,876,798
Inventories		568,800		553,773		15,027		5,218,349
Prepaid expenses and other current assets		300,505		286,605		13,900		2,756,927

Total current assets		2,192,685		2,285,942		(93,257)		20,116,376
Noncurrent receivables		30,071		19,276		10,795		275,881
Investments		61,608		70,358		(8,750)		565,211
Property, plant and equipment, net		1,247,839		1,278,730		(30,891)		11,448,064
Intangible assets, net		144,015		145,075		(1,060)		1,321,239
Other assets		496,500		443,329		53,171		4,555,046

Total assets	¥	4,172,718	¥	4,242,710	¥	(69,992)	$	38,281,817


LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt	¥	1,333	¥	1,299	¥	34	$	12,229
Trade payables		306,060		307,157		(1,097)		2,807,890
Accrued income taxes		42,399		53,196		(10,797)		388,982
Accrued expenses		316,061		315,536		525		2,899,642
Other current liabilities		156,613		171,119		(14,506)		1,436,817

Total current liabilities		822,466		848,307		(25,841)		7,545,560
Long-term debt, excluding current installments		1,365		1,448		(83)		12,523
Accrued pension and severance cost		206,352		229,664		(23,312)		1,893,138
Other noncurrent liabilities		94,832		96,514		(1,682)		870,018

Total liabilities		1,125,015		1,175,933		(50,918)		10,321,239


Equity:
Canon Inc. stockholders’ equity:
Common stock		174,762		174,762		-		1,603,321
Additional paid-in capital		401,631		402,029		(398)		3,684,688
Legal reserve		64,095		63,091		1,004		588,028
Retained earnings		3,252,817		3,212,692		40,125		29,842,358
Accumulated other comprehensive income (loss)		(42,927)		(80,646)		37,719		(393,826)
Treasury stock, at cost		(961,658)		(861,666)		(99,992)		(8,822,551)

Total Canon Inc. stockholders’ equity		2,888,720		2,910,262		(21,542)		26,502,018

Noncontrolling interests		158,983		156,515		2,468		1,458,560

Total equity		3,047,703		3,066,777		(19,074)		27,960,578

Total liabilities and equity	¥	4,172,718	¥	4,242,710	¥	(69,992)	$	38,281,817


	Millions of yen						Thousands of U.S. dollars
	As of September 30, 2014		As of December 31, 2013				As of September 30, 2014
Notes:

1. Allowance for doubtful receivables	¥	12,040	¥	12,730			$	110,459
2. Accumulated depreciation		2,461,832		2,383,530				22,585,615
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments		24,752		1,734				227,083
Net unrealized gains and losses on securities		10,827		10,242				99,330
Net gains and losses on derivative instruments		(1,037)		(2,408)				(9,514)
Pension liability adjustments		(77,469)		(90,214)				(710,725)

- 6 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

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

Consolidated statements of income

Results for the third quarter

Millions of yen

Thousands of
U.S. dollars

Three months
ended
September 30, 2014

Three months
ended
September 30, 2013

Change(%)

Three months
ended
September 30, 2014

Net sales

872,208

913,149

4.5

8,001,908

Cost of sales

440,742

466,017

4,043,504

Gross profit

431,466

447,132

3.5

3,958,404

Operating expenses:

Selling, general and administrative expenses

284,507

279,124

2,610,156

Research and development expenses

75,127

77,398

689,239

359,634

356,522

3,299,395

Operating profit

71,832

90,610

20.7

659,009

Other income (deductions):

Interest and dividend income

1,832

1,498

16,807

Interest expense

(126)

(106)

(1,156)

Other, net

6,626

(3,946)

60,790

8,332

(2,554)

76,441

Income before income taxes

80,164

88,056

9.0

735,450

Income taxes

20,226

27,215

185,560

Consolidated net income

59,938

60,841

549,890

Less: Net income attributable to noncontrolling interests

1,689

2,019

15,496

Net income attributable to Canon Inc.

58,249

58,822

1.0

534,394

Results for the nine months

Millions of yen

Thousands of
U.S. dollars

Nine months
ended
September 30, 2014

Nine months
ended
September 30, 2013

Change(%)

Nine months
ended
September 30, 2014

Net sales

2,667,316

2,696,682

1.1

24,470,789

Cost of sales

1,320,858

1,386,279

12,117,963

Gross profit

1,346,458

1,310,403

2.8

12,352,826

Operating expenses:

Selling, general and administrative expenses

854,606

838,107

7,840,422

Research and development expenses

226,832

228,559

2,081,028

1,081,438

1,066,666

9,921,450

Operating profit

265,020

243,737

8.7

2,431,376

Other income (deductions):

Interest and dividend income

5,749

4,239

52,743

Interest expense

(360)

(357)

(3,303)

Other, net

5,921

(440)

54,322

11,310

3,442

103,762

Income before income taxes

276,330

247,179

11.8

2,535,138

Income taxes

83,406

75,985

765,193

Consolidated net income

192,924

171,194

1,769,945

Less: Net income attributable to noncontrolling interests

6,217

4,963

57,037

Net income attributable to Canon Inc.

186,707

166,231

12.3

1,712,908

- 7 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

Consolidated statements of comprehensive income

Results for the third quarter

Millions of yen

Thousands of
U.S. dollars

Three months
ended
September 30, 2014

Three months
ended
September 30, 2013

Change(%)

Three months
ended
September 30, 2014

Consolidated net income

59,938

60,841

1.5

549,890

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

76,251

5,145

699,550

Net unrealized gains and losses on securities

2,033

1,757

18,651

Net gains and losses on derivative instruments

(1,643)

833

(15,073)

Pension liability adjustments

(581)

2,900

(5,330)

76,060

10,635

697,798

Comprehensive income

135,998

71,476

90.3

1,247,688

Less: Comprehensive income attributable to noncontrolling interests

2,297

2,399

21,073

Comprehensive income attributable to Canon Inc.

133,701

69,077

93.6

1,226,615

Results for the nine months

Millions of yen

Thousands of
U.S. dollars

Nine months
ended
September 30, 2014

Nine months
ended
September 30, 2013

Change(%)

Nine months
ended
September 30, 2014

Consolidated net income

192,924

171,194

12.7

1,769,945

Other comprehensive income, net of tax

Foreign currency translation adjustments

23,261

142,279

213,404

Net unrealized gains and losses on securities

645

3,912

5,917

Net gains and losses on derivative instruments

1,374

4,440

12,606

Pension liability adjustments

12,780

2,819

117,247

38,060

153,450

349,174

Comprehensive income

230,984

324,644

28.9

2,119,119

Less: Comprehensive income attributable to noncontrolling interests

6,539

6,796

59,991

Comprehensive income attributable to Canon Inc.

224,445

317,848

29.4

2,059,128

- 8 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES


Results for the third quarter	Millions of yen							Thousands of U.S. dollars
Sales by business unit	Three months ended September 30, 2014		Three months ended September 30, 2013		Change(%)			Three months ended September 30, 2014
Office	¥	482,250	¥	493,865		-	2.4	$	4,424,312
Imaging System		315,833		348,637		-	9.4		2,897,550
Industry and Others		96,983		95,074		+	2.0		889,752
Eliminations		(22,858)		(24,427)			-		(209,706)

Total	¥	872,208	¥	913,149		-	4.5	$	8,001,908


	Millions of yen							Thousands of U.S. dollars
Sales by region	Three months ended September 30, 2014		Three months ended September 30, 2013		Change(%)			Three months ended September 30, 2014
Japan	¥	160,296	¥	167,968		-	4.6	$	1,470,606
Overseas:
Americas		244,944		257,677		-	4.9		2,247,193
Europe		243,850		262,953		-	7.3		2,237,156
Asia and Oceania		223,118		224,551		-	0.6		2,046,953

		711,912		745,181		-	4.5		6,531,302

Total	¥	872,208	¥	913,149		-	4.5	$	8,001,908


Results for the nine months	Millions of yen							Thousands of U.S. dollars
Sales by business unit	Nine months ended September 30, 2014		Nine months ended September 30, 2013		Change(%)			Nine months ended September 30, 2014
Office	¥	1,513,919	¥	1,478,103		+	2.4	$	13,889,165
Imaging System		941,029		1,032,757		-	8.9		8,633,294
Industry and Others		282,070		256,089		+	10.1		2,587,798
Eliminations		(69,702)		(70,267)			-		(639,468)

Total	¥	2,667,316	¥	2,696,682		-	1.1	$	24,470,789


	Millions of yen							Thousands of U.S. dollars
Sales by region	Nine months ended September 30, 2014		Nine months ended September 30, 2013		Change(%)			Nine months ended September 30, 2014
Japan	¥	516,563	¥	503,340		+	2.6	$	4,739,110
Overseas:
Americas		726,645		771,761		-	5.8		6,666,468
Europe		778,109		805,262		-	3.4		7,138,615
Asia and Oceania		645,999		616,319		+	4.8		5,926,596

		2,150,753		2,193,342		-	1.9		19,731,679

Total	¥	2,667,316	¥	2,696,682		-	1.1	$	24,470,789


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

- 9 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions of yen

Thousands of
U.S. dollars

Nine months
ended
September 30, 2014

Nine months
ended
September 30, 2013

Nine months
ended
September 30, 2014

Cash flows from operating activities:

Consolidated net income

192,924

171,194

1,769,945

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

Depreciation and amortization

190,089

201,052

1,743,936

Loss on disposal of fixed assets

7,936

7,409

72,807

Deferred income taxes

(2,802)

(1,998)

(25,706)

Decrease in trade receivables

76,748

100,044

704,110

Increase in inventories

(14,179)

(4,746)

(130,083)

Increase (decrease) in trade payables

3,196

(59,605)

29,321

Decrease in accrued income taxes

(10,722)

(22,683)

(98,367)

Decrease in accrued expenses

(120)

(13,799)

(1,101)

Decrease in accrued (prepaid) pension and severance cost

(6,618)

(11,254)

(60,716)

Other, net

(37,902)

(22,288)

(347,724)

Net cash provided by operating activities

398,550

343,326

3,656,422

Cash flows from investing activities:

Purchases of fixed assets

(160,629)

(180,932)

(1,473,661)

Proceeds from sale of fixed assets

3,096

1,378

28,404

Purchases of available-for-sale securities

(266)

(3,198)

(2,440)

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

2,572

3,220

23,596

Increase in time deposits, net

(33,542)

(22,888)

(307,725)

Acquisitions of subsidiaries, net of cash acquired

(53,285)

(4,914)

(488,853)

Purchases of other investments

(244)

Other, net

10,664

(31)

97,835

Net cash used in investing activities

(231,390)

(207,609)

(2,122,844)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

848

1,248

7,780

Repayments of long-term debt

(1,430)

(1,989)

(13,119)

Increase (decrease) in short-term loans, net

(50)

176

(459)

Dividends paid

(145,790)

(155,627)

(1,337,523)

Repurchases of treasury stock, net

(100,000)

(49,992)

(917,431)

Other, net

(4,279)

(5,883)

(39,257)

Net cash used in financing activities

(250,701)

(212,067)

(2,300,009)

Effect of exchange rate changes on cash and cash equivalents

1,958

50,193

17,963

Net change in cash and cash equivalents

(81,583)

(26,157)

(748,468)

Cash and cash equivalents at beginning of period

788,909

666,678

7,237,697

Cash and cash equivalents at end of period

707,326

640,521

6,489,229

- 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 third quarter		Millions of yen						Thousands of U.S. dollars
		Three months ended September 30, 2014		Three months ended September 30, 2013		Change(%)		Three months ended September 30, 2014
Office
Net sales:
	External customers	¥	481,621	¥	493,030	-	2.3	$	4,418,541
	Intersegment		629		835	-	24.7		5,771

	Total		482,250		493,865	-	2.4		4,424,312

Operating cost and expenses			424,358		426,771	-	0.6		3,893,193

Operating profit		¥	57,892	¥	67,094	-	13.7	$	531,119


Imaging System
Net sales:
	External customers	¥	315,658	¥	348,423	-	9.4	$	2,895,945
	Intersegment		175		214	-	18.2		1,605

	Total		315,833		348,637	-	9.4		2,897,550

Operating cost and expenses			272,487		291,698	-	6.6		2,499,880

Operating profit		¥	43,346	¥	56,939	-	23.9	$	397,670


Industry and Others
Net sales:
	External customers	¥	74,929	¥	71,696	+	4.5	$	687,422
	Intersegment		22,054		23,378	-	5.7		202,330

	Total		96,983		95,074	+	2.0		889,752

Operating cost and expenses			101,935		103,212	-	1.2		935,183

Operating profit		¥	(4,952)	¥	(8,138)		-	$	(45,431)


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(22,858)		(24,427)		-		(209,706)

	Total		(22,858)		(24,427)		-		(209,706)

Operating cost and expenses			1,596		858		-		14,643

Operating profit		¥	(24,454)	¥	(25,285)		-	$	(224,349)


Consolidated
Net sales:
	External customers	¥	872,208	¥	913,149	-	4.5	$	8,001,908
	Intersegment		-		-		-		-

	Total		872,208		913,149	-	4.5		8,001,908

Operating cost and expenses			800,376		822,539	-	2.7		7,342,899

Operating profit		¥	71,832	¥	90,610	-	20.7	$	659,009

- 11 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


Results for the nine months		Millions of yen						Thousands of U.S. dollars
		Nine months ended September 30, 2014		Nine months ended September 30, 2013		Change(%)		Nine months ended September 30, 2014
Office
Net sales:
	External customers	¥	1,511,439	¥	1,472,615	+	2.6	$	13,866,413
	Intersegment		2,480		5,488	-	54.8		22,752

	Total		1,513,919		1,478,103	+	2.4		13,889,165

Operating cost and expenses			1,295,451		1,274,746	+	1.6		11,884,871

Operating profit		¥	218,468	¥	203,357	+	7.4	$	2,004,294


Imaging System
Net sales:
	External customers	¥	940,543	¥	1,032,183	-	8.9	$	8,628,835
	Intersegment		486		574	-	15.3		4,459

	Total		941,029		1,032,757	-	8.9		8,633,294

Operating cost and expenses			804,695		891,059	-	9.7		7,382,523

Operating profit		¥	136,334	¥	141,698	-	3.8	$	1,250,771


Industry and Others
Net sales:
	External customers	¥	215,334	¥	191,884	+	12.2	$	1,975,541
	Intersegment		66,736		64,205	+	3.9		612,257

	Total		282,070		256,089	+	10.1		2,587,798

Operating cost and expenses			297,130		277,593	+	7.0		2,725,963

Operating profit		¥	(15,060)	¥	(21,504)		-	$	(138,165)


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(69,702)		(70,267)		-		(639,468)

	Total		(69,702)		(70,267)		-		(639,468)

Operating cost and expenses			5,020		9,547		-		46,056

Operating profit		¥	(74,722)	¥	(79,814)		-	$	(685,524)


Consolidated
Net sales:
	External customers	¥	2,667,316	¥	2,696,682	-	1.1	$	24,470,789
	Intersegment		-		-		-		-

	Total		2,667,316		2,696,682	-	1.1		24,470,789

Operating cost and expenses			2,402,296		2,452,945	-	2.1		22,039,413

Operating profit		¥	265,020	¥	243,737	+	8.7	$	2,431,376

- 12 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA


Results for the third quarter		Millions of yen						Thousands of U.S. dollars
		Three months ended September 30, 2014		Three months ended September 30, 2013		Change(%)		Three months ended September 30, 2014
Japan
Net sales:
	External customers	¥	183,294	¥	192,300	-	4.7	$	1,681,596
	Intersegment		442,120		498,894	-	11.4		4,056,147

	Total		625,414		691,194	-	9.5		5,737,743

Operating cost and expenses			561,124		614,605	-	8.7		5,147,926

Operating profit		¥	64,290	¥	76,589	-	16.1	$	589,817


Americas
Net sales:
	External customers	¥	244,427	¥	257,536	-	5.1	$	2,242,450
	Intersegment		2,696		1,938	+	39.1		24,733

	Total		247,123		259,474	-	4.8		2,267,183

Operating cost and expenses			240,467		250,210	-	3.9		2,206,119

Operating profit		¥	6,656	¥	9,264	-	28.2	$	61,064


Europe
Net sales:
	External customers	¥	243,446	¥	262,358	-	7.2	$	2,233,450
	Intersegment		14,909		13,749	+	8.4		136,779

	Total		258,355		276,107	-	6.4		2,370,229

Operating cost and expenses			260,574		273,939	-	4.9		2,390,587

Operating profit		¥	(2,219)	¥	2,168		-	$	(20,358)


Asia and Oceania
Net sales:
	External customers	¥	201,041	¥	200,955	+	0.0	$	1,844,412
	Intersegment		213,361		244,411	-	12.7		1,957,441

	Total		414,402		445,366	-	7.0		3,801,853

Operating cost and expenses			391,324		421,239	-	7.1		3,590,128

Operating profit		¥	23,078	¥	24,127	-	4.3	$	211,725


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(673,086)		(758,992)		-		(6,175,100)

	Total		(673,086)		(758,992)		-		(6,175,100)

Operating cost and expenses			(653,113)		(737,454)		-		(5,991,861)

Operating profit		¥	(19,973)	¥	(21,538)		-	$	(183,239)


Consolidated
Net sales:
	External customers	¥	872,208	¥	913,149	-	4.5	$	8,001,908
	Intersegment		-		-		-		-

	Total		872,208		913,149	-	4.5		8,001,908

Operating cost and expenses			800,376		822,539	-	2.7		7,342,899

Operating profit		¥	71,832	¥	90,610	-	20.7	$	659,009

- 13 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


Results for the nine months		Millions of yen						Thousands of U.S. dollars
		Nine months ended September 30, 2014		Nine months ended September 30, 2013		Change(%)		Nine months ended September 30, 2014
Japan
Net sales:
	External customers	¥	604,488	¥	551,259	+	9.7	$	5,545,761
	Intersegment		1,279,697		1,397,770	-	8.4		11,740,340

	Total		1,884,185		1,949,029	-	3.3		17,286,101

Operating cost and expenses			1,631,827		1,711,999	-	4.7		14,970,890

Operating profit		¥	252,358	¥	237,030	+	6.5	$	2,315,211


Americas
Net sales:
	External customers	¥	725,261	¥	768,520	-	5.6	$	6,653,771
	Intersegment		5,197		8,583	-	39.5		47,679

	Total		730,458		777,103	-	6.0		6,701,450

Operating cost and expenses			715,006		756,561	-	5.5		6,559,689

Operating profit		¥	15,452	¥	20,542	-	24.8	$	141,761


Europe
Net sales:
	External customers	¥	777,023	¥	805,219	-	3.5	$	7,128,651
	Intersegment		40,902		39,850	+	2.6		375,248

	Total		817,925		845,069	-	3.2		7,503,899

Operating cost and expenses			814,744		849,862	-	4.1		7,474,716

Operating profit		¥	3,181	¥	(4,793)		-	$	29,183


Asia and Oceania
Net sales:
	External customers	¥	560,544	¥	571,684	-	1.9	$	5,142,606
	Intersegment		601,283		662,584	-	9.3		5,516,357

	Total		1,161,827		1,234,268	-	5.9		10,658,963

Operating cost and expenses			1,105,807		1,180,587	-	6.3		10,145,018

Operating profit		¥	56,020	¥	53,681	+	4.4	$	513,945


Corporate and Eliminations
Net sales:
	External customers	¥	-	¥	-		-	$	-
	Intersegment		(1,927,079)		(2,108,787)		-		(17,679,624)

	Total		(1,927,079)		(2,108,787)		-		(17,679,624)

Operating cost and expenses			(1,865,088)		(2,046,064)		-		(17,110,900)

Operating profit		¥	(61,991)	¥	(62,723)		-	$	(568,724)


Consolidated
Net sales:
	External customers	¥	2,667,316	¥	2,696,682	-	1.1	$	24,470,789
	Intersegment		-		-		-		-

	Total		2,667,316		2,696,682	-	1.1		24,470,789

Operating cost and expenses			2,402,296		2,452,945	-	2.1		22,039,413

Operating profit		¥	265,020	¥	243,737	+	8.7	$	2,431,376

- 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


	September 30, 2014	December 31, 2013	Change
Subsidiaries	261	257	4
Affiliates	9	11	(2)
Total	270	268	2

Change in Group Entities


Subsidiaries
Addition:		18 companies
Removal:		14 companies


Affiliates (Carried at Equity Basis)
Removal:		2 companies

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.

Oct. 27, 2014

CONSOLIDATED FINANCIAL RESULTS FOR

THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 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
		3rd quarter			YTD			Year (P)			3rd quarter			YTD			Year			3rd quarter		YTD		Year
Japan
	Office		86,568			283,258			-			85,181			270,820			368,308			+1.6%		+4.6%	-
	Imaging System		43,210			136,466			-			52,183			139,867			215,970			-17.2%		-2.4%	-
	Industry and Others		30,518			96,839			-			30,604			92,653			131,585			-0.3%		+4.5%	-
	Total		160,296			516,563			738,600			167,968			503,340			715,863			-4.6%		+2.6%	+3.2%
Overseas
	Office		395,053			1,228,181			-			407,849			1,201,795			1,625,590			-3.1%		+2.2%	-
	Imaging System		272,448			804,077			-			296,240			892,316			1,232,216			-8.0%		-9.9%	-
	Industry and Others		44,411			118,495			-			41,092			99,231			157,711			+8.1%		+19.4%	-
	Total		711,912			2,150,753			3,001,400			745,181			2,193,342			3,015,517			-4.5%		-1.9%	-0.5%
	Americas
	Office		160,979			472,967			-			164,728			470,991			629,472			-2.3%		+0.4%	-
	Imaging System		76,181			232,551			-			85,563			274,180			392,373			-11.0%		-15.2%	-
	Industry and Others		7,784			21,127			-			7,386			26,590			37,656			+5.4%		-20.5%	-
	Total		244,944			726,645			1,036,400			257,677			771,761			1,059,501			-4.9%		-5.8%	-2.2%
	Europe
	Office		153,735			497,702			-			163,676			505,803			694,563			-6.1%		-1.6%	-
	Imaging System		81,462			257,610			-			92,779			282,099			404,390			-12.2%		-8.7%	-
	Industry and Others		8,653			22,797			-			6,498			17,360			25,976			+33.2%		+31.3%	-
	Total		243,850			778,109			1,083,000			262,953			805,262			1,124,929			-7.3%		-3.4%	-3.7%
	Asia and Oceania
	Office		80,339			257,512			-			79,445			225,001			301,555			+1.1%		+14.4%	-
	Imaging System		114,805			313,916			-			117,898			336,037			435,453			-2.6%		-6.6%	-
	Industry and Others		27,974			74,571			-			27,208			55,281			94,079			+2.8%		+34.9%	-
	Total		223,118			645,999			882,000			224,551			616,319			831,087			-0.6%		+4.8%	+6.1%
Intersegment
	Office		629			2,480			-			835			5,488			6,175			-24.7%		-54.8%	-
	Imaging System		175			486			-			214			574			752			-18.2%		-15.3%	-
	Industry and Others		22,054			66,736			-			23,378			64,205			85,574			-5.7%		+3.9%	-
	Eliminations		(22,858	)		(69,702	)		-			(24,427	)		(70,267	)		(92,501	)		-		-	-
	Total		0			0			0			0			0			0			-		-	-
Total
	Office		482,250			1,513,919			2,071,700			493,865			1,478,103			2,000,073			-2.4%		+2.4%	+3.6%
	Imaging System		315,833			941,029			1,360,000			348,637			1,032,757			1,448,938			-9.4%		-8.9%	-6.1%
	Industry and Others		96,983			282,070			398,500			95,074			256,089			374,870			+2.0%		+10.1%	+6.3%
	Eliminations		(22,858	)		(69,702	)		(90,200	)		(24,427	)		(70,267	)		(92,501	)		-		-	-
	Total		872,208			2,667,316			3,740,000			913,149			2,696,682			3,731,380			-4.5%		-1.1%	+0.2%

(P)=Projection

- S1 -

Canon Inc.

2. SEGMENT INFORMATION BY BUSINESS UNIT

(Millions of yen)


		2014									2013									Change year over year
			3rd quarter			YTD			Year (P)			3rd quarter			YTD			Year			3rd quarter		YTD	Year
Office
	External customers		481,621			1,511,439			2,068,400			493,030			1,472,615			1,993,898			-2.3%		+2.6%	+3.7%
	Intersegment		629			2,480			3,300			835			5,488			6,175			-24.7%		-54.8%	-46.6%
	Total sales		482,250			1,513,919			2,071,700			493,865			1,478,103			2,000,073			-2.4%		+2.4%	+3.6%
	Operating profit		57,892			218,468			293,200			67,094			203,357			266,908			-13.7%		+7.4%	+9.9%
	% of sales		12.0%			14.4%			14.2%			13.6%			13.8%			13.3%			-		-	-
Imaging System
	External customers		315,658			940,543			1,359,300			348,423			1,032,183			1,448,186			-9.4%		-8.9%	-6.1%
	Intersegment		175			486			700			214			574			752			-18.2%		-15.3%	-6.9%
	Total sales		315,833			941,029			1,360,000			348,637			1,032,757			1,448,938			-9.4%		-8.9%	-6.1%
	Operating profit		43,346			136,334			204,600			56,939			141,698			203,794			-23.9%		-3.8%	+0.4%
	% of sales		13.7%			14.5%			15.0%			16.3%			13.7%			14.1%			-		-	-
Industry and Others
	External customers		74,929			215,334			312,300			71,696			191,884			289,296			+4.5%		+12.2%	+8.0%
	Intersegment		22,054			66,736			86,200			23,378			64,205			85,574			-5.7%		+3.9%	+0.7%
	Total sales		96,983			282,070			398,500			95,074			256,089			374,870			+2.0%		+10.1%	+6.3%
	Operating profit		(4,952	)		(15,060	)		(26,200	)		(8,138	)		(21,504	)		(25,331	)		-		-	-
	% of sales		-5.1%			-5.3%			-6.6%			-8.6%			-8.4%			-6.8%			-		-	-
Corporate and Eliminations
	External customers		-			-			-			-			-			-			-		-	-
	Intersegment		(22,858	)		(69,702	)		(90,200	)		(24,427	)		(70,267	)		(92,501	)		-		-	-
	Total sales		(22,858	)		(69,702	)		(90,200	)		(24,427	)		(70,267	)		(92,501	)		-		-	-
	Operating profit		(24,454	)		(74,722	)		(101,600	)		(25,285	)		(79,814	)		(108,094	)		-		-	-
Consolidated
	External customers		872,208			2,667,316			3,740,000			913,149			2,696,682			3,731,380			-4.5%		-1.1%	+0.2%
	Intersegment		-			-			-			-			-			-			-		-	-
	Total sales		872,208			2,667,316			3,740,000			913,149			2,696,682			3,731,380			-4.5%		-1.1%	+0.2%
	Operating profit		71,832			265,020			370,000			90,610			243,737			337,277			-20.7%		+8.7%	+9.7%
	% of sales		8.2%			9.9%			9.9%			9.9%			9.0%			9.0%			-		-	-
																							(P)=Projection

3. OTHER INCOME / DEDUCTIONS																						(Millions of yen)
			2014									2013									Change year over year
		3rd quarter			YTD			Year (P)			3rd quarter			YTD			Year			3rd quarter		YTD		Year
	Interest and dividend, net		1,706			5,389			6,600			1,392			3,882			6,029			+314		+1,507	+571
	Forex gain (loss)		5,684			(1,971	)		(2,300	)		(3,939	)		(6,083	)		(1,992	)		+9,623		+4,112	(308)
	Equity earnings (loss) of affiliated companies		98			310			400			(481	)		(356	)		(664	)		+579		+666	+1,064
	Other, net		844			7,582			5,300			474			5,999			6,954			+370		+1,583	(1,654)
	Total		8,332			11,310			10,000			(2,554	)		3,442			10,327			+10,886		+7,868	(327)
																					(P)=Projection

- S2 -

Canon Inc.


4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT
		2014			2013
		3rd quarter	YTD	Year (P)	3rd quarter	YTD	Year
Office
	Monochrome copiers	16%	16%	16%	16%	16%	16%
	Color copiers	19%	19%	20%	18%	19%	19%
	Printers	42%	42%	41%	44%	44%	42%
	Others	23%	23%	23%	22%	21%	23%
Imaging System
	Cameras	65%	65%	64%	68%	68%	67%
	Inkjet printers	27%	27%	27%	24%	24%	25%
	Others	8%	8%	9%	8%	8%	8%
Industry and Others
	Lithography equipment	25%	23%	22%	9%	10%	17%
	Others	75%	77%	78%	91%	90%	83%
							(P)=Projection

5. SALES GROWTH IN LOCAL CURRENCY (Year over year)
		2014
		3rd quarter	YTD	Year (P)
Office
	Japan	+1.6%	+4.6%	-
	Overseas	-8.0%	-4.6%	-
	Total	-6.4%	-3.1%	-1.5%
Imaging System
	Japan	-17.2%	-2.4%	-
	Overseas	-12.6%	-15.8%	-
	Total	-13.3%	-14.0%	-10.8%
Industry and Others
	Japan	-0.3%	+4.5%	-
	Overseas	+5.5%	+15.7%	-
	Total	+0.9%	+8.7%	+5.0%
Total
	Japan	-4.6%	+2.6%	+3.2%
	Overseas	-9.1%	-8.2%	-6.2%
	Americas	-9.9%	-11.5%	-8.3%
	Europe	-11.8%	-11.4%	-9.7%
	Asia and Oceania	-5.0%	-0.0%	+1.1%
	Total	-8.3%	-6.2%	-4.4%
				(P)=Projection

- S3 -


								Canon Inc.

6. PROFITABILITY
		2014		2013
		YTD	Year (P)	YTD	Year
ROE *1		8.6%	8.5%	8.4%	8.4%
ROA *2		5.9%	5.9%	5.5%	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
		3rd quarter	YTD	4th quarter (P)	Year (P)	3rd quarter	YTD	Year
	Yen/US$	104.22	103.01	108.00	104.39	98.91	96.92	97.84
	Yen/Euro	137.78	139.53	137.00	138.83	131.09	127.54	130.01
								(P)=Projection

	(2) Impact of foreign exchange rates on sales (Year over year)			(Billions of yen)
		2014
		3rd quarter	YTD	Year (P)
	US$	+16.0	+46.4	+74.0
	Euro	+9.6	+55.0	+53.5
	Other currencies	+4.9	+12.3	+17.7
	Total	+30.5	+113.7	+145.2
				(P)=Projection

	(3) Impact of foreign exchange rates per yen	(Billions of yen)
		2014
		4th quarter (P)
On sales
	US$	4.3
	Euro	1.9
On operating profit
	US$	1.6
	Euro	1.0
		(P)=Projection

8. STATEMENTS OF CASH FLOWS							(Millions of yen)
		2014			2013
		3rd quarter	YTD	Year (P)	3rd quarter	YTD	Year
Net cash provided by operating activities		104,063	398,550	545,000	125,437	343,326	507,642
Net cash used in investing activities		(89,323)	(231,390)	(290,000)	(68,343)	(207,609)	(250,212)
Free cash flow		14,740	167,160	255,000	57,094	135,717	257,430
Net cash used in financing activities		(74,314)	(250,701)	(249,600)	(126,713)	(212,067)	(222,181)
Effect of exchange rate changes on cash and cash equivalents		22,216	1,958	(4,300)	2,366	50,193	86,982
Net change in cash and cash equivalents		(37,358)	(81,583)	1,100	(67,253)	(26,157)	122,231
Cash and cash equivalents at end of period		707,326	707,326	790,000	640,521	640,521	788,909
							(P)=Projection

- S4 -

Canon Inc.


9. R&D EXPENDITURE											(Millions of yen)
		2014					2013
		3rd quarter		YTD		Year (P)	3rd quarter		YTD		Year
	Office		23,758		74,457	-		26,117		77,627	105,246
	Imaging System		20,262		62,228	-		20,638		62,224	84,377
	Industry and Others		6,402		19,145	-		6,703		18,852	25,701
	Corporate and Eliminations		24,705		71,002	-		23,940		69,856	91,000
	Total		75,127		226,832	305,000		77,398		228,559	306,324
	% of sales		8.6%		8.5%	8.2%		8.5%		8.5%	8.2%
											(P)=Projection

10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION											(Millions of yen)
		2014					2013
		3rd quarter		YTD		Year (P)	3rd quarter		YTD		Year
	Increase in PP&E		42,277		127,294	195,000		47,076		142,884	188,826
	Depreciation and amortization		66,574		190,089	265,000		69,399		201,052	275,173
											(P)=Projection

11. INVENTORIES
(1) Inventories		(Millions of yen)
		2014		2013		Difference
		Sep.30		Dec.31		Difference
	Office		235,814		227,413	+8,401
	Imaging System		214,146		221,368	(7,222)
	Industry and Others		118,840		104,992	+13,848
	Total		568,800		553,773	+15,027

(2) Inventories/Sales*		(Days)
		2014		2013		Difference
		Sep.30		Dec.31		Difference
	Office		43		41	+2
	Imaging System		60		53	+7
	Industry and Others		149		115	+34
	Total		58		52	+6
	*Index based on the previous six months sales.

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

13. OVERSEAS PRODUCTION RATIO
		2014		2013
		YTD		Year
	Overseas production ratio		61%		57%

14. NUMBER OF EMPLOYEES
		2014		2013		Difference
		Sep.30		Dec.31		Difference
	Japan		69,549		69,825	(276)
	Overseas		122,388		124,326	(1,938)
	Total		191,937		194,151	(2,214)

- S5 -