FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

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

the Securities Exchange Act of 1934

 

For the month of ….		January		…………………………………………… ,		2015

 

		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-.………………..

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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.

 

 

Date….		January 29, 2015						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.	RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR ENDED DECEMBER 31, 2014

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RESULTS FOR THE FOURTH QUARTER

AND THE FISCAL YEAR ENDED DECEMBER 31, 2014

January 28, 2015

CONSOLIDATED RESULTS

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

 

							Actual																Projected
						Year ended December 31, 2014				Year ended December 31, 2013				Change(%)				Year ended December 31, 2014				Year ending December 31, 2015				Change(%)
Net sales						¥	3,727,252			¥	3,731,380			-	0.1			$	30,803,736			¥	3,900,000			+	4.6
Operating profit							363,489				337,277			+	7.8				3,004,041				380,000			+	4.5
Income before income taxes							383,239				347,604			+	10.3				3,167,264				390,000			+	1.8
Net income attributable                      to Canon Inc.						¥	254,797			¥	230,483			+	10.5			$	2,105,760			¥	260,000			+	2.0
Net income attributable to Canon Inc. stockholders per share:
- Basic						¥	229.03			¥	200.78			+	14.1			$	1.89			¥	238.13			+	4.0
- Diluted							229.03				200.78			+	14.1				1.89				-				-
						Actual
						As of December 31, 2014				As of December 31, 2013				Change(%)				As of December 31, 2014
Total assets						¥	4,460,618			¥	4,242,710			+	5.1			$	36,864,612
Canon Inc. stockholders’ equity						¥	2,978,184			¥	2,910,262			+	2.3			$	24,613,091
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 JPY 121= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2014, solely for the convenience of the reader.
NON-CONSOLIDATED RESULTS
(Millions of yen, thousands of U.S. dollars, except per share amounts)
						Actual
						Year ended December 31, 2014				Year ended December 31, 2013				Change(%)				Year ended December 31, 2014
Net sales						¥	2,084,200			¥	2,152,743			-	3.2			$	17,224,793
Operating profit							204,937				212,436			-	3.5				1,693,694
Ordinary profit							249,348				236,695			+	5.3				2,060,727
Net income						¥	175,471			¥	170,383			+	3.0			$	1,450,174
Net income per share:
- Basic						¥	157.72			¥	148.43			+	6.3			$	1.30
- Diluted							157.72				148.43			+	6.3				1.30
Dividend per share							150.00				130.00			+	15.4				1.24
						Actual
						As of December 31, 2014				As of December 31, 2013				Change(%)				As of December 31, 2014
Total assets						¥	2,315,680			¥	2,385,892			-	2.9			$	19,137,851
Net assets						¥	1,447,322			¥	1,567,030			-	7.6			$	11,961,339

 

Notes:		U.S. dollar amounts are translated from yen at the rate of JPY 121= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 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

 

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I. Operating Results and Financial Conditions

2014 in Review

Looking back at the global economy in 2014, although the United States and other developed countries were initially expected to bring about a return to a path of full-fledged growth, such expectations came up short due to the ongoing occurrence of such unforeseen circumstances as the conflict between Russia and Ukraine. In the U.S., despite the negative impact of the major cold wave that struck at the beginning of the year, the economy showed steady signs of recovery, buoyed by the improvement in employment conditions and healthy growth in consumer spending. In Europe, the economy remained sluggish due to such factors as the negative impact of Russia’s deteriorating economy on 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 previous year.

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 continued to face harsh conditions due to the economic slowdown. 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 due to the sluggish economies of Asia and Europe. In the industry and others sector, a rebound in capital investment for both memory devices and image sensors led to a pickup in demand for semiconductor lithography equipment. Additionally, demand for lithography equipment used in the production of FPDs (flat panel displays) increased for large-size panels.

The average value of the yen during the year was ¥106.18 against the U.S. dollar, a year-on-year depreciation of approximately ¥8, and ¥140.62 against the euro, a year-on-year depreciation of approximately ¥11.

MFDs and laser printers enjoyed solid demand during the year and industrial equipment sales increased significantly. Within the shrinking market for interchangeable-lens digital cameras and digital compact cameras, less-than-expected demand during the year-end shopping season led to a decline in net sales. As a result, despite the positive effects of favorable currency exchange rates, net sales for the year decreased by 0.1% year on year to ¥3,727.3 billion. The gross profit ratio, however, rose 1.7 points year on year to 49.9% thanks to the effects of ongoing cost-cutting efforts along with the depreciation of the yen. 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 operating expenses to ¥1,498.0 billion, an increase of just 2.5% year on year. As a result, operating profit increased by 7.8% year on year to ¥363.5 billion. Other income increased by ¥9.4 billion due to foreign currency exchange gains while income before income taxes increased by 10.3% to ¥383.2 billion. Net income attributable to Canon Inc. increased by 10.5% to ¥254.8 billion. Accordingly, despite the slight decline in net sales, Canon achieved profit growth.

Basic net income attributable to Canon Inc. stockholders per share for the year was ¥229.03, a year-on-year increase of ¥28.25.

 

- 2 -

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Results by Segment

Looking at Canon’s full-year performance by business unit, within the Office Business Unit, as for office MFDs, sales increased steadily from the year-ago period led by healthy demand for new imageRUNNER ADVANCE C350/C250-series models, Canon’s first color A4 (letter and legal-sized)-model imageRUNNER ADVANCE machines, and the imagePRESS C800/C700, Canon’s first color models targeting the light production market, along with the A3 (12” x 18”)-model imageRUNNER ADVANCE C5200 series, which continues to be well accepted in the market. As for high-speed continuous-feed printers, the Océ ColorStream 3000 series continued to enjoy solid sales growth from the previous year. Among laser printers, although color models and multifunction models recorded sales growth, total sales volume decreased slightly from the year-ago period owing to the decrease in demand for monochrome models in European and other markets that have suffered prolonged economic stagnation. As a result, coupled with the positive effects of favorable currency exchange rates, sales for the business unit totaled ¥2,078.7 billion, a year-on-year increase of 3.9%, while operating profit totaled ¥292.1 billion, an increase of 9.4%.

Within the Imaging System Business Unit, although sales volume of interchangeable-lens digital cameras declined owing to the shrinking market—in Japan as a result of the reaction following the rush in demand prior to the consumption tax increase, and in Europe and other markets due to worsening economic conditions—the advanced-amateur-model EOS 7D Mark II achieved healthy growth, enabling Canon to maintain the market’s top share. 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, such as the PowerShot G7 X and PowerShot SX60 HS/SX700 HS, recorded solid growth, contributing to an improvement in profitability. Looking at inkjet printers, although sales volume of hardware for the fourth quarter increased from the year-ago period thanks to efforts to boost sales through the introduction of new products for the year-end shopping season and marketing tailored to geographical characteristics, sales volume for the year decreased due to economic sluggishness in Asia and Europe. Sales of consumable supplies increased from the previous year owing to the steady accumulation of printer units currently operating in the market. As a result, sales for the business unit decreased by 7.3% to ¥1,343.2 billion year on year, while operating profit declined 4.5% to ¥194.6 billion.

In the Industry and Others Business Unit, ongoing investment following the recovery in the second half of the previous year by memory device manufacturers led to increased unit sales of semiconductor lithography equipment for memory devices and image sensors. As for FPD lithography equipment, amid increasing market demand for higher definition tools, lithography systems for the creation of high-definition mid- and small-size panels, in addition to a model introduced in the second half of the previous year for large panels, recorded healthy growth, contributing to the boosting of both sales volume and market share. With regard to medical equipment, sales volume of new digital radiography systems, including wireless static-image models and models capable of capturing dynamic images, grew steadily, fueling sales growth. Consequently, sales for the business unit totaled ¥398.8 billion, an increase of 6.4% year on year, while operating profit, although showing an improvement from the previous year, recorded a loss of ¥21.8 billion owing to investment, including R&D expenses, into next-generation technologies.

Cash Flow

During 2014, cash flow from operating activities totaled ¥583.9 billion, an increase of ¥76.3 billion 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 by ¥19.1 billion year on year to ¥269.3 billion as a result of an outlay for the acquisition of Milestone Systems aimed at enhancing Canon’s network camera business and several other companies. Accordingly, free cash flow totaled ¥314.6 billion, an increase of ¥57.2 billion compared with the previous year.

Cash flow from financing activities recorded an outlay of ¥300.9 billion, 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 increased by ¥55.7 billion to ¥844.6 billion from the end of the previous year.

 

- 3 -

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Non-consolidated Results

Non-consolidated net sales totaled ¥2,084.2 billion, a year-on-year decrease of 3.2%, ordinary profit increased by 5.3% to ¥249.3 billion, and net income increased by 3.0% to ¥175.5 billion.

Outlook

As for the outlook in 2015, the U.S. economy is expected to grow steadily as employment conditions continue to improve and consumer spending picks up. Projections for the European economy point to continued weak growth due to such ongoing destabilizing factors as the significant slowdown in the Russian economy and the resurgent financial crisis among EU member nations. Looking at China’s economy, the country is expected to gradually shift from high economic growth toward a period of stable growth. In Japan, amid an improvement in employment conditions, consumer spending is expected to gradually recover. As for the outlook for the global economy as a whole, while we will likely see differences in each region, indications point to gradual acceleration toward stable growth as the latter half of the year approaches.

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 the digital camera market, although projections indicate continued market contraction mainly for low-priced compact models, demand for interchangeable-lens digital cameras is expected to recover gradually. Looking at inkjet printers, with Asian markets gradually recovering following their extended period of stagnation, demand is expected to remain in line with the previous year. As for the industrial equipment market, with manufacturers expected to continue making capital outlays for semiconductor lithography equipment in response to increasing demand for memory devices and image sensors, demand is expected to remain at the same level as the previous year. And as for FPD lithography equipment, demand is projected to increase as device manufacturers boost capital investment amid growing panel demand projected for 4K televisions and mobile devices.

With regard to currency exchange rates for the year, on which Canon’s performance outlook is based, taking into account the current depreciation of the yen, Canon anticipates exchange rates of ¥120 to the U.S. dollar and ¥135 to the euro, representing a depreciation of approximately ¥14 against the U.S. dollar and an appreciation of approximately ¥6 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 2015 of ¥3,900.0 billion, a year-on-year increase of 4.6%; operating profit of ¥380.0 billion, a year-on-year increase of 4.5%; income before income taxes of ¥390.0 billion, a year-on-year increase of 1.8%; and net income attributable to Canon Inc. of ¥260.0 billion, a year-on-year increase of 2.0%.

Basic Policy Regarding Profit Distribution and Dividends for the Current Fiscal Year

Canon is being more proactive in returning profits to shareholders, mainly in the form of a dividend, taking into consideration mid-term profit forecasts, planned future investments, cash flow and other factors.

In 2014, the business environment remained challenging, characterized by, among other factors, prolonged global economic weakness. Thanks, however, to efforts to strengthen product competitiveness and the Company’s financial position through a management focus on profitability and cash flow, Canon was able to generate ample cash reserves. Taking this into consideration while seeking to actively provide a stable return to shareholders, Canon has decided to distribute a full-year dividend of ¥150 per share, (interim dividend of ¥65 per share [already distributed], and year-end dividend of ¥85), which represents a ¥20 increase from the previous year’s dividend.

 

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- 5 -

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II. Management Policy

(1) Basic Policy

Under the corporate philosophy of kyosei—living and working together for the common good—Canon’s basic management policy is to contribute to the prosperity and well-being of the world while endeavoring to become a truly excellent global corporation targeting continued growth and development.

(2) Management Goals

Based on this basic management policy, Canon launched the Excellent Global Corporation Plan in 1996. Through three phases, a period spanning 15 years, Canon worked to strengthen its management base. In Phase IV, which started in 2011, Canon established a goal of “sound business growth,” which entails the maintenance of high profitability and further expansion of corporate scale.

Over the past four years, such unforeseen events as the Great East Japan Earthquake, the extreme appreciation of the yen, the financial crisis in Europe and the Russia-Ukraine conflict have led to frequent and dramatic changes that have created a very difficult business environment. Canon sees significant opportunity in this kind of dramatic change and has been working to realize sound business growth, overcome these adversities and ensure a return to a growth trajectory by swiftly transforming itself ahead of the changing times.

In 2015, the final year of Phase IV, the Canon Group will work in a concerted effort to improve performance and build a solid foundation that will support further expansion in the future.

(3) Business Challenges and Countermeasures

As for the future of the global economy, although challenging conditions are expected to remain for some time in certain countries and regions, Canon anticipates sustained economic growth in countries such as the U.S. among developed countries, and India and ASEAN countries among emerging markets. Overall, the global economy is expected to gradually move toward stable growth.

Amid these conditions, 2015 is the final year of Phase IV of the Excellent Global Corporation Plan and the year in which the Canon EXPO will be held as the culmination of the efforts carried out during Phase IV. In addition to returning to a path of growth, Canon aims to bring Phase IV to a successful close, further reinforcing its business foundation to enable great strides beginning from next year. Toward this objective, Canon will undertake the following various measures.

 

1.	Reinforcing Existing Businesses Through the Introduction of Innovative Products and Services

For MFDs and other office products, in addition to improving hardware performance, efforts will be made to build a framework that will enable the Company to service as a one-stop shop that provides a broad range of high-quality services. For cameras, efforts will be made to comprehensively raise aspects such as image-quality, visual expression, and operability. At the same time, Canon will work to further strengthen the network capabilities of these products. Additionally, to facilitate the Company’s aim of becoming the all around leader in printing, it will leverage its strength, derived from having prepared a broad lineup, spanning consumer printers to industrial printing. In the Industrial equipment area, Canon will devise and execute concrete plans to concentrate technologies and strengthen the competitiveness of Canon Group companies.

 

2.	Expanding New and Future Businesses and Further Cultivating Technologies that will Pave the Way to the Future

Canon aims to produce next-generation lithography equipment in volume by strengthening nanoimprint technology that realizes further reduction in process geometries. In the area of network camera systems, Canon will work to enhance its product lineup and develop solutions that address customer needs. With regard to the MR (Mixed Reality) System, Canon will identify industries that can leverage the strength of this system, and will strive to make the system the de facto standard design tool in those industries. In the medical field, the Company will accelerating develop, focusing on promising themes such as photoacoustic tomography, which facilitates the viewing of vascular conditions in 3D. The Company will work to expand and steadily cultivate new businesses mainly targeting the B2B field, such as Super Machine Vision, a system capable of high-accuracy three-dimensional recognition of objects for potential use in production sites, and 4K reference displays.

 

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3.	Strengthening Global Marketing Capabilities Through Unified Effort Between Product Operations and Sales Companies

In developed countries, Canon aims to gain share in both consumer and office segments. In the consumer segment, Canon will address the popularity of online shopping and other trends that are contributing to the diversification of sales channels. In the office segment, Canon will strengthen its response towards centralized procurement of office equipment by global corporations. In emerging markets, Canon will promote enhancement of its various sales networks and product lineup, in line with situations in each country and region.

 

4.	Accelerating a New Dimension of Cost-reduction Activities

In the area of procurement, Canon aims to reduce total costs, further deploying measures focused on reducing costs from the stage of product development. In the prototyping process, Canon will create next-generation development methodologies, through such means as expanding the application of simulation technologies as well as employing 3D printing. In production, Canon will realize further cost reduction by expanding the application of automation equipment and through measures aimed at the in-house production of molded parts and production equipment.

 

5.	Building a Globally Optimized Production System

To maintain an optimized production system, Canon will take steps to revive domestic production, promoting measures such as automation and in-house production, while building new structural dimensions of cost reduction. At the same time, Canon will promote localized production of through the use of automation equipment in the U.S. and Europe.

In addition to these measures, Canon will promote other initiatives such as product quality reforms to win top customer approval, information security improvement, and human resource development.

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

III. Financial Statements

1. CONSOLIDATED BALANCE SHEETS

 

		Millions of yen
		As of      December 31, 2014				As of    December 31, 2013				Change
ASSETS
Current assets:
Cash and cash equivalents		¥	844,580			¥	788,909			¥	55,671
Short-term investments			71,863				47,914				23,949
Trade receivables, net			625,675				608,741				16,934
Inventories			528,167				553,773				(25,606)
Prepaid expenses and other current assets			321,648				286,605				35,043
Total current assets			2,391,933				2,285,942				105,991
Noncurrent receivables			29,785				19,276				10,509
Investments			65,176				70,358				(5,182)
Property, plant and equipment, net			1,269,529				1,278,730				(9,201)
Intangible assets, net			177,288				145,075				32,213
Other assets			526,907				443,329				83,578
Total assets		¥	4,460,618			¥	4,242,710			¥	217,908
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt		¥	1,018			¥	1,299			¥	(281)
Trade payables			310,214				307,157				3,057
Accrued income taxes			57,212				53,196				4,016
Accrued expenses			345,237				315,536				29,701
Other current liabilities			207,698				171,119				36,579
Total current liabilities			921,379				848,307				73,072
Long-term debt, excluding current installments			1,148				1,448				(300)
Accrued pension and severance cost			280,928				229,664				51,264
Other noncurrent liabilities			116,405				96,514				19,891
Total liabilities			1,319,860				1,175,933				143,927
Equity:
Canon Inc. stockholders’ equity:
Common stock			174,762				174,762				-
Additional paid-in capital			401,563				402,029				(466)
Legal reserve			64,599				63,091				1,508
Retained earnings			3,320,392				3,212,692				107,700
Accumulated other comprehensive income (loss)			28,286				(80,646)				108,932
Treasury stock, at cost			(1,011,418)				(861,666)				(149,752)
Total Canon Inc. stockholders’ equity			2,978,184				2,910,262				67,922
Noncontrolling interests			162,574				156,515				6,059
Total equity			3,140,758				3,066,777				73,981
Total liabilities and equity		¥	4,460,618			¥	4,242,710			¥	217,908
		Millions of yen
		As of December 31, 2014				As of December 31, 2013
Notes:
1. Allowance for doubtful receivables		¥	12,122			¥	12,730
2. Accumulated depreciation			2,519,259				2,383,530
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments			144,557				1,734
Net unrealized gains and losses on securities			12,546				10,242
Net gains and losses on derivative instruments			(2,603)				(2,408)
Pension liability adjustments			(126,214)				(90,214)

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

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

Consolidated statements of income

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

Consolidated statements of comprehensive income

 

Results for the fourth quarter		Millions of yen
		Three months ended     December 31, 2014				Three months ended     December 31, 2013				Change(%)
Consolidated net income		¥	72,315			¥	68,322				+				5.8
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			120,573				109,297
Net unrealized gains and losses on securities			1,879				2,700
Net gains and losses on derivative instruments			(1,569)				(2,384)
Pension liability adjustments			(50,765)				29,850
			70,118				139,463
Comprehensive income			142,433				207,785				-				31.5
Less: Comprehensive income attributable to noncontrolling interests			3,127				7,892
Comprehensive income attributable to Canon Inc.		¥	139,306			¥	199,893				-				30.3
Results for the fiscal year		Millions of yen
		Year ended     December 31, 2014				Year ended     December 31, 2013				Change(%)
Consolidated net income		¥	265,239			¥	239,516				+				10.7
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			143,834				251,576
Net unrealized gains and losses on securities			2,524				6,612
Net gains and losses on derivative instruments			(195)				2,056
Pension liability adjustments			(37,985)				32,669
			108,178				292,913
Comprehensive income			373,417				532,429				-				29.9
Less: Comprehensive income attributable to noncontrolling interests			9,666				14,688
Comprehensive income attributable to Canon Inc.		¥	363,751			¥	517,741				-				29.7

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES

 

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF EQUITY

Millions of yen

		Common Stock				Additional paid-in capital				Legal reserve				Retained earnings				Accumulated other comprehensive income (loss)				Treasury stock				Total Canon Inc. stockholders’ equity				Noncontrolling interests				Total equity
Balance at December 31, 2012		¥	174,762			¥	401,547			¥	61,663			¥	3,138,976			¥	(367,249	)		¥	(811,673	)		¥	2,598,026			¥	156,276			¥    2,754,302
Equity transactions with noncontrolling interests and other							489								295				(655	)							129				(11,182	)		(11,053)
Dividends to Canon Inc. stockholders															(155,627	)											(155,627	)						(155,627)
Dividends to noncontrolling interests																															(3,267	)		(3,267)
Transfers to legal reserve											1,428				(1,428	)											-							-
Comprehensive income:
Net income															230,483												230,483				9,033			239,516
Other comprehensive income, net of tax:
Foreign currency translation adjustments																			249,791								249,791				1,785			251,576
Net unrealized gains and losses on securities																			6,097								6,097				515			6,612
Net gains and losses on derivative instruments																			2,056								2,056				-			2,056
Pension liability adjustments																			29,314								29,314				3,355			32,669
Total comprehensive income																											517,741				14,688			532,429
Repurchase of treasury stock, net							(7	)							(7	)							(49,993	)			(50,007	)						(50,007)
Balance at December 31, 2013		¥	174,762			¥	402,029			¥	63,091			¥	3,212,692			¥	(80,646	)		¥	(861,666	)		¥	2,910,262			¥	156,515			¥    3,066,777
Equity transactions with noncontrolling interests and other							(420	)							216				(22	)							(226	)			(658	)		(884)
Dividends to Canon Inc. stockholders															(145,790	)											(145,790	)						(145,790)
Dividends to noncontrolling interests																															(2,949	)		(2,949)
Transfers to legal reserve											1,508				(1,508	)											-							-
Comprehensive income:
Net income															254,797												254,797				10,442			265,239
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments																			142,813								142,813				1,021			143,834
Net unrealized gains and losses on securities																			2,301								2,301				223			2,524
Net gains and losses on derivative instruments																			(195	)							(195	)			-			(195)
Pension liability adjustments																			(35,965	)							(35,965	)			(2,020	)		(37,985)
Total comprehensive income																											363,751				9,666			373,417
Repurchase of treasury stock, net							(46	)							(15	)							(149,752	)			(149,813	)						(149,813)
Balance at December 31, 2014		¥	174,762			¥	401,563			¥	64,599			¥	3,320,392			¥	28,286			¥	(1,011,418	)		¥	2,978,184			¥	162,574			¥    3,140,758

 

- 12 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Millions of yen
		Year ended   December 31, 2014				Year ended   December 31, 2013
Cash flows from operating activities:
Consolidated net income		¥	265,239			¥	239,516
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			263,480				275,173
Loss on disposal of fixed assets			12,429				10,638
Deferred income taxes			8,929				16,791
Decrease in trade receivables			9,323				45,040
Decrease in inventories			59,004				85,577
Decrease in trade payables			(24,620)				(108,622)
Increase (decrease) in accrued income taxes			3,586				(9,432)
Increase (decrease) in accrued expenses			11,124				(15,635)
Decrease in accrued (prepaid) pension and severance cost			(6,305)				(15,568)
Other, net			(18,262)				(15,836)
Net cash provided by operating activities			583,927				507,642
Cash flows from investing activities:
Purchases of fixed assets			(218,362)				(233,175)
Proceeds from sale of fixed assets			3,994				1,763
Purchases of available-for-sale securities			(311)				(5,771)
Proceeds from sale and maturity of available-for-sale securities			2,606				4,528
Increase in time deposits, net			(14,223)				(12,483)
Acquisitions of subsidiaries, net of cash acquired			(54,772)				(4,914)
Purchases of other investments			-				(296)
Other, net			11,770				136
Net cash used in investing activities			(269,298)				(250,212)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			1,377				1,483
Repayments of long-term debt			(2,152)				(2,334)
Decrease in short-term loans, net			(54)				(547)
Dividends paid			(145,790)				(155,627)
Repurchases of treasury stock, net			(149,813)				(50,007)
Other, net			(4,454)				(15,149)
Net cash used in financing activities			(300,886)				(222,181)
Effect of exchange rate changes on cash and cash equivalents			41,928				86,982
Net change in cash and cash equivalents			55,671				122,231
Cash and cash equivalents at beginning of year			788,909				666,678
Cash and cash equivalents at end of year		¥	844,580			¥	788,909

 

- 13 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

6. NOTE FOR GOING CONCERN ASSUMPTION

Not applicable.

7. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY BUSINESS UNIT

 

Results for the fourth quarter				Millions of yen
				Three months ended     December 31, 2014				Three months ended     December 31, 2013				Change(%)
Office
Net sales:
		External customers		¥	564,349			¥	521,283			+	8.3
		Intersegment			464				687			-	32.5
		Total			564,813				521,970			+	8.2
Operating cost and expenses					491,224				458,419			+	7.2
Operating profit				¥	73,589			¥	63,551			+	15.8
Imaging System
Net sales:
		External customers		¥	401,958			¥	416,003			-	3.4
		Intersegment			207				178			+	16.3
		Total			402,165				416,181			-	3.4
Operating cost and expenses					343,898				354,085			-	2.9
Operating profit				¥	58,267			¥	62,096			-	6.2
Industry and Others
Net sales:
		External customers		¥	93,629			¥	97,412			-	3.9
		Intersegment			23,066				21,369			+	7.9
		Total			116,695				118,781			-	1.8
Operating cost and expenses					123,436				122,608			+	0.7
Operating profit				¥	(6,741)			¥	(3,827)				-
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-				-
		Intersegment			(23,737)				(22,234)				-
		Total			(23,737)				(22,234)				-
Operating cost and expenses					2,909				6,046				-
Operating profit				¥	(26,646)			¥	(28,280)				-
Consolidated
Net sales:
		External customers		¥	1,059,936			¥	1,034,698			+	2.4
		Intersegment			-				-				-
		Total			1,059,936				1,034,698			+	2.4
Operating cost and expenses					961,467				941,158			+	2.2
Operating profit				¥	98,469			¥	93,540			+	5.3

 

- 14 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the fiscal year				Millions of yen
				Year ended     December 31, 2014				Year ended     December 31, 2013				Change(%)
Office
Net sales:
		External customers		¥	2,075,788			¥	1,993,898			+					4.1
		Intersegment			2,944				6,175			-					52.3
		Total			2,078,732				2,000,073			+					3.9
Operating cost and expenses					1,786,675				1,733,165			+					3.1
Operating profit					292,057				266,908			+					9.4
Total assets					1,025,499				954,803			+					7.4
Depreciation and amortization					87,058				88,344			-					1.5
Capital expenditures				¥	69,704			¥	54,644			+					27.6
Imaging System
Net sales:
		External customers		¥	1,342,501			¥	1,448,186			-					7.3
		Intersegment			693				752			-					7.8
		Total			1,343,194				1,448,938			-					7.3
Operating cost and expenses					1,148,593				1,245,144			-					7.8
Operating profit					194,601				203,794			-					4.5
Total assets					517,524				584,856			-					11.5
Depreciation and amortization					53,912				56,564			-					4.7
Capital expenditures				¥	31,124			¥	44,112			-					29.4
Industry and Others
Net sales:
		External customers		¥	308,963			¥	289,296			+					6.8
		Intersegment			89,802				85,574			+					4.9
		Total			398,765				374,870			+					6.4
Operating cost and expenses					420,566				400,201			+					5.1
Operating profit					(21,801)				(25,331)								-
Total assets					342,695				328,202			+					4.4
Depreciation and amortization					37,544				37,072			+					1.3
Capital expenditures				¥	15,976			¥	27,040			-					40.9
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-								-
		Intersegment			(93,439)				(92,501)								-
		Total			(93,439)				(92,501)								-
Operating cost and expenses					7,929				15,593								-
Operating profit					(101,368)				(108,094)								-
Total assets					2,574,900				2,374,849			+					8.4
Depreciation and amortization					84,966				93,193			-					8.8
Capital expenditures				¥	107,956			¥	101,682			+					6.2
Consolidated
Net sales:
		External customers		¥	3,727,252			¥	3,731,380			-					0.1
		Intersegment			-				-								-
		Total			3,727,252				3,731,380			-					0.1
Operating cost and expenses					3,363,763				3,394,103			-					0.9
Operating profit					363,489				337,277			+					7.8
Total assets					4,460,618				4,242,710			+					5.1
Depreciation and amortization					263,480				275,173			-					4.2
Capital expenditures				¥	224,760			¥	227,478			-					1.2

 

- 15 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2)  SEGMENT INFORMATION BY GEOGRAPHIC AREA

 

Results for the fourth quarter				Millions of yen
					Three months ended    December 31, 2014				Three months ended    December 31, 2013			Change(%)
Japan
Net sales:
		External customers		¥	232,313			¥	246,242			-			5.7
		Intersegment			472,681				457,411			+			3.3
		Total			704,994				703,653			+			0.2
Operating cost and expenses					614,103				614,352			-			0.0
Operating profit				¥	90,891			¥	89,301			+			1.8
Americas
Net sales:
		External customers		¥	308,536			¥	287,576			+			7.3
		Intersegment			3,541				3,191			+			11.0
		Total			312,077				290,767			+			7.3
Operating cost and expenses					303,655				286,926			+			5.8
Operating profit				¥	8,422			¥	3,841			+			119.3
Europe
Net sales:
		External customers		¥	311,270			¥	319,384			-			2.5
		Intersegment			18,591				13,431			+			38.4
		Total			329,861				332,815			-			0.9
Operating cost and expenses					320,771				321,495			-			0.2
Operating profit				¥	9,090			¥	11,320			-			19.7
Asia and Oceania
Net sales:
		External customers		¥	207,817			¥	181,496			+			14.5
		Intersegment			220,317				219,181			+			0.5
		Total			428,134				400,677			+			6.9
Operating cost and expenses					416,437				393,538			+			5.8
Operating profit				¥	11,697			¥	7,139			+			63.8
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-						-
		Intersegment			(715,130)				(693,214)						-
		Total			(715,130)				(693,214)						-
Operating cost and expenses					(693,499)				(675,153)						-
Operating profit				¥	(21,631)			¥	(18,061)						-
Consolidated
Net sales:
		External customers		¥	1,059,936			¥	1,034,698			+			2.4
		Intersegment			-				-						-
		Total			1,059,936				1,034,698			+			2.4
Operating cost and expenses					961,467				941,158			+			2.2
Operating profit				¥	98,469			¥	93,540			+			5.3

 

- 16 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the fiscal year				Millions of yen
					Year ended    December 31, 2014				Year ended     December 31, 2013			Change(%)
Japan
Net sales:
		External customers		¥	836,801			¥	797,501			+			4.9
		Intersegment			1,752,378				1,855,181			-			5.5
		Total			2,589,179				2,652,682			-			2.4
Operating cost and expenses					2,245,930				2,326,351			-			3.5
Operating profit					343,249				326,331			+			5.2
Total assets				¥	1,134,484			¥	1,152,398			-			1.6
Americas
Net sales:
		External customers		¥	1,033,797			¥	1,056,096			-			2.1
		Intersegment			8,738				11,774			-			25.8
		Total			1,042,535				1,067,870			-			2.4
Operating cost and expenses					1,018,661				1,043,487			-			2.4
Operating profit					23,874				24,383			-			2.1
Total assets				¥	531,122			¥	447,039			+			18.8
Europe
Net sales:
		External customers		¥	1,088,293			¥	1,124,603			-			3.2
		Intersegment			59,493				53,281			+			11.7
		Total			1,147,786				1,177,884			-			2.6
Operating cost and expenses					1,135,515				1,171,357			-			3.1
Operating profit					12,271				6,527			+			88.0
Total assets				¥	484,858			¥	496,549			-			2.4
Asia and Oceania
Net sales:
		External customers		¥	768,361			¥	753,180			+			2.0
		Intersegment			821,600				881,765			-			6.8
		Total			1,589,961				1,634,945			-			2.8
Operating cost and expenses					1,522,244				1,574,125			-			3.3
Operating profit					67,717				60,820			+			11.3
Total assets				¥	674,672			¥	631,827			+			6.8
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-						-
		Intersegment			(2,642,209)				(2,802,001)						-
		Total			(2,642,209)				(2,802,001)						-
Operating cost and expenses					(2,558,587)				(2,721,217)						-
Operating profit					(83,622)				(80,784)						-
Total assets				¥	1,635,482			¥	1,514,897						-
Consolidated
Net sales:
		External customers		¥	3,727,252			¥	3,731,380			-			0.1
		Intersegment			-				-						-
		Total			3,727,252				3,731,380			-			0.1
Operating cost and expenses					3,363,763				3,394,103			-			0.9
Operating profit					363,489				337,277			+			7.8
Total assets				¥	4,460,618			¥	4,242,710			+			5.1

 

- 17 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

 

1.

Number of Group Companies

 

		December 31, 2014		December 31, 2013		Change
Subsidiaries		261		257		4
Affiliates		7		11		(4)
Total		268		268		-

 

2.

Change in Group Entities

 

Subsidiaries
Addition:		24 companies
Removal:		20 companies

 

Affiliates (Carried at Equity Basis)
Removal:		4 companies

 

3.

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.

 

- 18 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

9. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

(1)	NET INCOME ATTRIBUTABLE TO CANON INC. STOCKHOLDERS PER SHARE

 

Results for the fiscal year		Millions of yen
		Year ended   December 31, 2014				Year ended   December 31, 2013
Net income attributable to Canon Inc.
-Basic		¥	254,797			¥	230,483
-Diluted			254,797				230,483
		Number of shares
Average common shares outstanding
-Basic			1,112,509,931				1,147,933,835
-Diluted			1,112,514,324				1,147,942,301
		Yen
Net income attributable to
Canon Inc. stockholders per share:
-Basic		¥	229.03			¥	200.78
-Diluted			229.03				200.78

 

 

(2)	FINANCE RECEIVABLES AND OPERATING LEASES, ACQUISITIONS, MARKETABLE SECURITIES, DEFERRED TAX ACCOUNTING, EMPLOYEE RETIREMENT AND SEVERANCE BENEFITS, STOCK OPTIONS, DERIVATIVE CONTRACTS AND OTHERS

The disclosure is omitted as it is not considered significant in this report.

 

 

(3)	SUBSEQUENT EVENT

There is no significant subsequent event.

 

- 19 -

---

CANON INC.

NON-CONSOLIDATED

10. NON-CONSOLIDATED BALANCE SHEETS

( Parent company only )

 

				Millions of yen
				As of December 31, 2014								As of December 31, 2013
		ASSETS
		Current assets:
		Cash		¥					34,362			¥					34,054
		Trade receivables							596,293								582,012
		Marketable securities							54,740								100,660
		Inventories							151,272								166,244
		Prepaid expenses and other current assets							187,930								191,698
		Allowance for doubtful receivables							(86)								(66)
		Total current assets							1,024,511								1,074,602
		Fixed assets:
		Net property, plant and equipment							666,588								685,526
		Intangibles							31,152								30,955
		Investments and other fixed assets							593,502								594,885
		Allowance for doubtful receivables-noncurrent							(73)								(76)
		Total fixed assets							1,291,169								1,311,290
		Total assets		¥					2,315,680			¥					2,385,892
		LIABILITIES AND NET ASSETS
		Current liabilities:
		Trade payables		¥					291,693			¥					302,068
		Short-term loans							365,441								322,653
		Accrued income taxes							32,028								32,285
		Accrued warranty expenses							2,622								1,487
		Accrued bonuses for employees							4,476								4,549
		Accrued bonuses for directors							199								206
		Other current liabilities							132,163								113,717
		Total current liabilities							828,622								776,965
		Noncurrent liabilities:
		Accrued pension and severance cost							34,690								35,044
		Reserve for environmental provision							2,075								3,437
		Accrued long service rewards for employees							1,304								1,442
		Other noncurrent liabilities							1,667								1,974
		Total noncurrent liabilities							39,736								41,897
		Total liabilities							868,358								818,862
		Net assets:
		Stockholders’ equity							1,438,668								1,558,754
		Valuation and translation adjustments							7,101								5,888
		Subscription right to shares							1,553								2,388
		Total net assets							1,447,322								1,567,030
		Total liabilities and net assets		¥					2,315,680			¥					2,385,892

 

- 20 -

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CANON INC.

NON-CONSOLIDATED

11. NON-CONSOLIDATED STATEMENTS OF INCOME

      ( Parent company only )

 

				Millions of yen
				Year ended December 31, 2014				Year ended December 31, 2013
		Net sales		¥	2,084,200			¥	2,152,743
		Cost of sales			1,441,204				1,510,014
		Gross profit			642,996				642,729
		Selling, general and administrative expenses			438,059				430,293
		Operating profit			204,937				212,436
		Other income (deductions):
		Interest and dividend income			36,837				19,454
		Interest expense			(1,687)				(1,659)
		Other, net			9,261				6,464
					44,411				24,259
		Ordinary profit			249,348				236,695
		Non-ordinary gain (loss), net			(7,326)				(1,302)
		Income before income taxes			242,022				235,393
		Income taxes			66,551				65,010
		Net income		¥	175,471			¥	170,383

Notes: Royalty income originally included in Other income was reclassified into Net Sales this year and corresponding amount of last year has been reclassified to conform with current year presentation.

 

- 21 -

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CANON INC.

NON-CONSOLIDATED

12.  NON-CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

( Parent company only )

 

Year ended December 31, 2014

(Millions of yen)

			Stockholders’ equity																																				Valuation and translation adjustments								Subscription rights to shares				Total net assets
			Common stock				Capital surplus				Retained earnings																				Treasury stock				Total stockholders’ equity				Net unrealized gains (losses) on securities				Net deferred profits (losses) on hedges
							Additional paid-in capital				Legal reserve				Other retained earnings
															Reserve for special depreciation				Reserve for deferral of capital gain on property				Special reserves				Retained earnings brought forward
Balance at the beginning of current period		¥	174,762			¥	306,288			¥	22,114			¥	294			¥	3,369			¥	1,249,928			¥	663,665			¥	(861,666	)		¥	1,558,754			¥	7,239			¥	(1,351	)		¥	2,388			¥	1,567,030
Changes of items during the period
Transfer to reserve for special depreciation															148												(148	)							-																-
Reversal of reserve for special depreciation															(101	)											101								-																-
Transfer to reserve for deferral of capital gain on property																			443								(443	)							-																-
Reversal of reserve for deferral of capital gain on property																			(119	)							119								-																-
Dividends paid																											(145,790	)							(145,790	)															(145,790	)
Net income																											175,471								175,471																175,471
Purchase of treasury stock																															(150,039	)			(150,039	)															(150,039	)
Disposal of treasury stock																											(15	)			287				272																272
Net changes of items other than stockholders’ equity																																			-				541				672				(835	)			378
Total changes of items during the period			-				-				-				47				324				-				29,295				(149,752	)			(120,086	)			541				672				(835	)			(119,708	)
Balance at the end of current period		¥	174,762			¥	306,288			¥	22,114			¥	341			¥	3,693			¥	1,249,928			¥	692,960			¥	(1,011,418	)		¥	1,438,668			¥	7,780			¥	(679	)		¥	1,553			¥	1,447,322

 

- 22 -

---

CANON INC.

NON-CONSOLIDATED

 

Year ended December 31, 2013

(Millions of yen

)

			Stockholders’ equity																																				Valuation and translation adjustments								Subscription rights to shares				Total net assets
			Common stock				Capital surplus				Retained earnings																				Treasury stock				Total stockholders’ equity				Net unrealized gains (losses) on securities				Net deferred profits (losses) on hedges
							Additional paid-in capital				Legal reserve				Other retained earnings
															Reserve for special depreciation				Reserve for deferral of capital gain on property				Special reserves				Retained earnings brought forward
Balance at the beginning of current period		¥	174,762			¥	306,288			¥	22,114			¥	434			¥	3,089			¥	1,249,928			¥	649,056			¥	(811,673)			¥	1,593,998			¥	699			¥	(2,368	)		¥	2,359			¥	1,594,688
Changes of items during the period
Transfer to reserve for special depreciation																																			-																-
Reversal of reserve for special depreciation															(140	)											140								-																-
Transfer to reserve for deferral of capital gain on property																			386								(386	)							-																-
Reversal of reserve for deferral of capital gain on property																			(106	)							106								-																-
Dividends paid																											(155,627	)							(155,627	)															(155,627	)
Net income																											170,383								170,383																170,383
Purchase of treasury stock																															(50,043	)			(50,043	)															(50,043	)
Disposal of treasury stock																											(7	)			50				43																43
Net changes of items other than stockholders’ equity																																			-				6,540				1,017				29				7,586
Total changes of items during the period			-				-				-				(140	)			280				-				14,609				(49,993	)			(35,244	)			6,540				1,017				29				(27,658	)
Balance at the end of current period		¥	174,762			¥	306,288			¥	22,114			¥	294			¥	3,369			¥	1,249,928			¥	663,665			¥	(861,666	)		¥	1,558,754			¥	7,239			¥	(1,351	)		¥	2,388			¥	1,567,030

 

- 23 -

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CANON INC.

NON-CONSOLIDATED

13.   NOTE FOR GOING CONCERN ASSUMPTION

         ( Parent company only )

     Not applicable.

 

- 24 -

---

NON-CONSOLIDATED

(Current Titles are Shown in the Parentheses)

Effective Date: March 27, 2015

 

Directors

 

(1)  Candidate for Directors to be promoted

 

(2)  Candidate for new Director to be appointed

 

(3)  Directors to be retired

 

(4)  Candidate for new Audit & Supervisory Board Member to be appointed

 

(5)  Audit & Supervisory Board Member to be retired

 

 

- 25 -

---

NON-CONSOLIDATED

  (Current Titles are Shown in the Parentheses)

 

Executive Officers

 

(1) New Executive Officers to be appointed

Effective date: April 1, 2015

 

(2) Executive Officer to be retired

Effective date: March 27, 2015

 

 

- 26 -

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Canon Inc.

January 28, 2015

CONSOLIDATED RESULTS FOR THE FOURTH QUARTER

AND THE FISCAL YEAR ENDED DECEMBER 31, 2014

SUPPLEMENTARY REPORT

TABLE OF CONTENTS

 

				PAGE
1.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2014)			S    1
2.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2015/Projection)			S    2
3.		SEGMENT INFORMATION BY BUSINESS UNIT (2014)			S    3
4.		OTHER INCOME / DEDUCTIONS (2014)			S    3
5.		SEGMENT INFORMATION BY BUSINESS UNIT (2015/Projection)			S    4
6.		OTHER INCOME / DEDUCTIONS (2015/Projection)			S    4
7.		BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT			S    5
8.		SALES GROWTH IN LOCAL CURRENCY			S    5
9.		PROFITABILITY			S    6
10.		IMPACT OF FOREIGN EXCHANGE RATES			S    6
11.		STATEMENTS OF CASH FLOWS			S    6
12.		R&D EXPENDITURE			S    7
13.		INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION			S    7
14.		INVENTORIES			S    7
15.		DEBT RATIO			S    7
16.		OVERSEAS PRODUCTION RATIO			S    7
17.		NUMBER OF EMPLOYEES			S    7

 

---

Canon Inc.

 

1. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2014)

(Millions of yen)

				2014								2013										Change year over year
				4th quarter				Year				4th quarter				Year						4th quarter				Year
Japan
		Office			97,336				380,594				97,488				368,308						-0.2%				+3.3%
		Imaging System			70,815				207,281				76,103				215,970						-6.9%				-4.0%
		Industry and Others			39,603				136,442				38,932				131,585						+1.7%				+3.7%
		Total			207,754				724,317				212,523				715,863						-2.2%				+1.2%
Overseas
		Office			467,013				1,695,194				423,795				1,625,590						+10.2%				+4.3%
		Imaging System			331,143				1,135,220				339,900				1,232,216						-2.6%				-7.9%
		Industry and Others			54,026				172,521				58,480				157,711						-7.6%				+9.4%
		Total			852,182				3,002,935				822,175				3,015,517						+3.6%				-0.4%
		Americas
		Office			183,816				656,783				158,481				629,472						+16.0%				+4.3%
		Imaging System			113,156				345,707				118,193				392,373						-4.3%				-11.9%
		Industry and Others			12,883				34,010				11,066				37,656						+16.4%				-9.7%
		Total			309,855				1,036,500				287,740				1,059,501						+7.7%				-2.2%
		Europe
		Office			191,573				689,275				188,760				694,563						+1.5%				-0.8%
		Imaging System			109,440				367,050				122,291				404,390						-10.5%				-9.2%
		Industry and Others			11,362				34,159				8,616				25,976						+31.9%				+31.5%
		Total			312,375				1,090,484				319,667				1,124,929						-2.3%				-3.1%
		Asia and Oceania
		Office			91,624				349,136				76,554				301,555						+19.7%				+15.8%
		Imaging System			108,547				422,463				99,416				435,453						+9.2%				-3.0%
		Industry and Others			29,781				104,352				38,798				94,079						-23.2%				+10.9%
		Total			229,952				875,951				214,768				831,087						+7.1%				+5.4%
Intersegment
		Office			464				2,944				687				6,175						-32.5%				-52.3%
		Imaging System			207				693				178				752						+16.3%				-7.8%
		Industry and Others			23,066				89,802				21,369				85,574						+7.9%				+4.9%
		Eliminations			(23,737	)			(93,439	)			(22,234	)			(92,501	)					-				-
		Total			0				0				0				0						-				-
Total
		Office			564,813				2,078,732				521,970				2,000,073						+8.2%				+3.9%
		Imaging System			402,165				1,343,194				416,181				1,448,938						-3.4%				-7.3%
		Industry and Others			116,695				398,765				118,781				374,870						-1.8%				+6.4%
		Eliminations			(23,737	)			(93,439	)			(22,234	)			(92,501	)					-				-
		Total			1,059,936				3,727,252				1,034,698				3,731,380						+2.4%				-0.1%

 

- S1 -

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Canon Inc.

2. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2015/Projection)

 

(1) Sales by business unit						(Millions of yen)

				2015 (P)						2014								Change year over year
				Year						Year								Year
		Office					2,177,000						2,078,732							+4.7%
		Imaging System					1,399,000						1,343,194							+4.2%
		Industry and Others					416,700						398,765							+4.5%
		Eliminations					(92,700	)					(93,439	)						-
		Total					3,900,000						3,727,252							+4.6%
																				(P)=Projection
(2) Sales by region																				(Millions of yen)
				2015 (P)						2014								Change year over year
				Year						Year								Year
		Japan					729,700						724,317							+0.7%
		Overseas					3,170,300						3,002,935							+5.6%
		Americas					1,153,900						1,036,500							+11.3%
		Europe					1,041,100						1,090,484							-4.5%
		Asia and Oceania					975,300						875,951							+11.3%
		Total					3,900,000						3,727,252							+4.6%
																				(P)=Projection

 

- S2 -

---

Canon Inc.

 

3. SEGMENT INFORMATION BY BUSINESS UNIT (2014)

(Millions of yen)

					2014								2013										Change year over year
					4th quarter				Year				4th quarter				Year						4th quarter			Year
Office
		External customers			564,349				2,075,788				521,283				1,993,898						+8.3%			+4.1%
		Intersegment			464				2,944				687				6,175						-32.5%			-52.3%
		Total sales			564,813				2,078,732				521,970				2,000,073						+8.2%			+3.9%
		Operating profit			73,589				292,057				63,551				266,908						+15.8%			+9.4%
		% of sales			13.0%				14.0%				12.2%				13.3%						-			-
Imaging System
		External customers			401,958				1,342,501				416,003				1,448,186						-3.4%			-7.3%
		Intersegment			207				693				178				752						+16.3%			-7.8%
		Total sales			402,165				1,343,194				416,181				1,448,938						-3.4%			-7.3%
		Operating profit			58,267				194,601				62,096				203,794						-6.2%			-4.5%
		% of sales			14.5%				14.5%				14.9%				14.1%						-			-
Industry and Others
		External customers			93,629				308,963				97,412				289,296						-3.9%			+6.8%
		Intersegment			23,066				89,802				21,369				85,574						+7.9%			+4.9%
		Total sales			116,695				398,765				118,781				374,870						-1.8%			+6.4%
		Operating profit			(6,741)				(21,801)				(3,827)				(25,331)						-			-
		% of sales			-5.8%				-5.5%				-3.2%				-6.8%						-			-
Corporate and Eliminations
		External customers			-				-				-				-						-			-
		Intersegment			(23,737)				(93,439)				(22,234)				(92,501)						-			-
		Total sales			(23,737)				(93,439)				(22,234)				(92,501)						-			-
		Operating profit			(26,646)				(101,368)				(28,280)				(108,094)						-			-
Consolidated
		External customers			1,059,936				3,727,252				1,034,698				3,731,380						+2.4%			-0.1%
		Intersegment			-				-				-				-						-			-
		Total sales			1,059,936				3,727,252				1,034,698				3,731,380						+2.4%			-0.1%
		Operating profit			98,469				363,489				93,540				337,277						+5.3%			+7.8%
		% of sales			9.3%				9.8%				9.0%				9.0%						-			-
4. OTHER INCOME / DEDUCTIONS (2014)																							(Millions of yen)
					2014								2013										Change year over year
					4th quarter				Year				4th quarter				Year						4th quarter			Year
		Interest and dividend, net			2,017				7,406				2,147				6,029						(130)			+1,377
		Forex gain (loss)			4,599				2,628				4,091				(1,992)						+508			+4,620
		Equity earnings (loss) of affiliated companies			168				478				(308)				(664)						+476			+1,142
		Other, net			1,656				9,238				955				6,954						+701			+2,284
		Total			8,440				19,750				6,885				10,327						+1,555			+9,423

 

- S3 -

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Canon Inc.

5. SEGMENT INFORMATION BY BUSINESS UNIT (2015/Projection)										(Millions of yen)
				2015 (P)		2014				Change year over year
				Year		Year				Year
Office
		External customers		2,172,200		2,075,788				+4.6%
		Intersegment		4,800		2,944				+63.0%
		Total sales		2,177,000		2,078,732				+4.7%
		Operating profit		307,200		292,057				+5.2%
		% of sales		14.1%		14.0%				-
Imaging System
		External customers		1,398,200		1,342,501				+4.1%
		Intersegment		800		693				+15.4%
		Total sales		1,399,000		1,343,194				+4.2%
		Operating profit		225,400		194,601				+15.8%
		% of sales		16.1%		14.5%				-
Industry and Others
		External customers		329,600		308,963				+6.7%
		Intersegment		87,100		89,802				-3.0%
		Total sales		416,700		398,765				+4.5%
		Operating profit		(32,000)		(21,801)				-
		% of sales		-7.7%		-5.5%				-
Corporate and Eliminations
		External customers		-		-				-
		Intersegment		(92,700)		(93,439)				-
		Total sales		(92,700)		(93,439)				-
		Operating profit		(120,600)		(101,368)				-
Consolidated
		External customers		3,900,000		3,727,252				+4.6%
		Intersegment		-		-				-
		Total sales		3,900,000		3,727,252				+4.6%
		Operating profit		380,000		363,489				+4.5%
		% of sales		9.7%		9.8%				-
										(P)=Projection
6. OTHER INCOME / DEDUCTIONS (2015/Projection)										(Millions of yen)
				2015 (P)		2014				Change year over year
				Year		Year				Year
		Interest and dividend, net		3,800		7,406				(3,606)
		Forex gain (loss)		(4,600)		2,628				(7,228)
		Equity earnings of affiliated companies		1,000		478				+522
		Other, net		9,800		9,238				+562
		Total		10,000		19,750				(9,750)
										(P)=Projection

 

- S4 -

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Canon Inc.

 

7. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT
				2015 (P)				2014								2013
				Year				4th quarter				Year				4th quarter				Year
Office
		Monochrome copiers			16%				15%				16%				16%				16%
		Color copiers			20%				21%				19%				20%				19%
		Printers			41%				40%				42%				39%				42%
		Others			23%				24%				23%				25%				23%
Imaging System
		Cameras			64%				63%				64%				65%				67%
		Inkjet printers			28%				29%				27%				27%				25%
		Others			8%				8%				9%				8%				8%
Industry and Others
		Lithography equipment			25%				21%				23%				30%				17%
		Others			75%				79%				77%				70%				83%
																					(P)=Projection
8. SALES GROWTH IN LOCAL CURRENCY (Year over year)
				2015 (P)				2014
				Year				4th quarter				Year
Office
		Japan			-				-0.2%				+3.3%
		Overseas			-				-0.5%				-3.5%
		Total			-1.0%				-0.5%				-2.4%
Imaging System
		Japan			-				-6.9%				-4.0%
		Overseas			-				-11.6%				-14.6%
		Total			-1.8%				-10.7%				-13.1%
Industry and Others
		Japan			-				+1.7%				+3.7%
		Overseas			-				-12.4%				+5.3%
		Total			+3.1%				-4.1%				+4.6%
Total
		Japan			+0.7%				-2.2%				+1.2%
		Overseas			-1.2%				-5.9%				-7.6%
		Americas			-1.3%				-5.7%				-9.9%
		Europe			-3.0%				-7.7%				-10.3%
		Asia and Oceania			+1.1%				-3.5%				-0.9%
		Total			-0.8%				-5.2%				-5.9%
									(P)=Projection

 

- S5 -

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Canon Inc.

 

9. PROFITABILITY
				2015 (P)			2014			2013
				Year			Year			Year
		ROE *1		8.6%			8.7	%		8.4%
		ROA *2		5.8%			5.9	%		5.6%
										(P)=Projection
		*1 Return on Equity; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Stockholders’ Equity
		*2 Return on Assets; Based on Net Income attributable to Canon Inc.
10. IMPACT OF FOREIGN EXCHANGE RATES
(1) Exchange rates														(Yen)
				2015 (P)			2014					2013
				Year			4th quarter			Year		4th quarter		Year
		Yen/US$		120.00			114.78			106.18		100.50		97.84
		Yen/Euro		135.00			143.41			140.62		136.69		130.01
														(P)=Projection
(2) Impact of foreign exchange rates on sales (Year over year)										(Billions of yen)
				2015 (P)			2014
				Year			4th quarter			Year
		US$		+171.8			+51.6			+98.2
		Euro		(39.9)			+11.7			+66.8
		Other currencies		+35.2			+8.9			+21.0
		Total		+167.1			+72.2			+186.0
										(P)=Projection
(3) Impact of foreign exchange rates per yen				(Billions of yen)
				2015 (P)
				Year
		On sales
		US$		15.8
		Euro		6.5
		On operating profit
		US$		5.7
		Euro		2.9
				(P)=Projection
11. STATEMENTS OF CASH FLOWS												(Millions of yen)
				2015 (P)			2014					2013
				Year			4th quarter			Year		4th quarter		Year
		Net cash provided by operating activities		515,000			185,377			583,927		164,316		507,642
		Net cash used in investing activities		(305,000)			(37,908	)		(269,298)		(42,603)		(250,212)
		Free cash flow		210,000			147,469			314,629		121,713		257,430
		Net cash used in financing activities		(175,800)			(50,185	)		(300,886)		(10,114)		(222,181)
		Effect of exchange rate changes on cash and cash equivalents		(18,800)			39,970			41,928		36,789		86,982
		Net change in cash and cash equivalents		15,400			137,254			55,671		148,388		122,231
		Cash and cash equivalents at end of period		860,000			844,580			844,580		788,909		788,909
														(P)=Projection

 

- S6 -

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Canon Inc.

12. R&D EXPENDITURE				(Millions of yen)
				2015 (P)		2014		2013
				Year		Year		Year
		Office		-		104,391		105,246
		Imaging System		-		87,510		84,377
		Industry and Others		-		26,516		25,701
		Corporate and Eliminations		-		90,562		91,000
		Total		320,000		308,979		306,324
% of sales				8.2%		8.3%		8.2%
						(P)=Projection
13. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION
				(Millions of yen)
				2015 (P)		2014		2013
				Year		Year		Year
		Increase in PP&E
		Office		-		65,662		51,457
		Imaging System		-		29,200		41,853
		Industry and Others		-		13,856		25,662
		Corporate and Eliminations		-		73,625		69,854
		Total		205,000		182,343		188,826
		Depreciation and amortization
		Office		-		87,058		88,344
		Imaging System		-		53,912		56,564
		Industry and Others		-		37,544		37,072
		Corporate and Eliminations		-		84,966		93,193
		Total		275,000		263,480		275,173
						(P)=Projection
14. INVENTORIES
		(1) Inventories		(Millions of yen)
				2014		2013		Difference
				Dec.31		Dec.31
		Office		238,344		227,413		+10,931
		Imaging System		168,802		221,368		(52,566)
		Industry and Others		121,021		104,992		+16,029
		Total		528,167		553,773		(25,606)
		(2) Inventories/Sales*						(Days)
				2014		2013		Difference
				Dec.31		Dec.31
		Office		42		41		+1
		Imaging System		43		53		(10)
		Industry and Others		132		115		+17
		Total		50		52		(2)
		*Index based on the previous six months sales.
15. DEBT RATIO
				2014		2013		Difference
				Dec.31		Dec.31
		Total debt / Total assets		0.0%		0.1%		-0.1%
16. OVERSEAS PRODUCTION RATIO
				2014		2013
				Year		Year
		Overseas production ratio		60%		57%
17. NUMBER OF EMPLOYEES
				2014		2013		Difference
				Dec.31		Dec.31
		Japan		69,201		69,825		(624)
		Overseas		122,688		124,326		(1,638)
		Total		191,889		194,151		(2,262)

 

- S7 -