Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

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 þ                    Form 40-F o

     [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 o                    No þ

     [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.

*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, 2006
2.		Notice Regarding Partial Amendment to Articles of Incorporation
3.		Canon Inc. to Delist Shares from the Frankfurt Stock Exchange

January 29, 2007

RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2006

CONSOLIDATED RESULTS

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

		Actual																Projected
		Year ended				Year ended								Year ended				Year ending
		December 31, 2006				December 31, 2005				Change(%)				December 31, 2006				December 31, 2007				Change(%)
Net sales		¥	4,156,759			¥	3,754,191			+	10.7			$	34,930,748			¥	4,450,000			+	7.1
Operating profit			707,033				583,043			+	21.3				5,941,454				765,000			+	8.2
Income before income taxes and minority interests			719,143				612,004			+	17.5				6,043,218				775,000			+	7.8
Net income		¥	455,325			¥	384,096			+	18.5			$	3,826,261			¥	495,000			+	8.7
Net income per share:
- Basic		¥	341.95			¥	288.63			+	18.5			$	2.87			¥	371.72			+	8.7
- Diluted			341.84				288.36			+	18.5				2.87				—				—

		Actual
		As of				As of								As of
		December 31, 2006				December 31, 2005				Change(%)				December 31, 2006
Total assets		¥	4,521,915			¥	4,043,553			+	11.8			$	37,999,286
Stockholders’ equity		¥	2,986,606			¥	2,604,682			+	14.7			$	25,097,529

NON-CONSOLIDATED RESULTS				(Millions of yen, thousand of U.S. dollars, except per share amounts)

		Actual																Projected
		Year ended				Year ended								Year ended				Year ending
		December 31, 2006				December 31, 2005				Change(%)				December 31, 2006				December 31, 2007				Change(%)
Net sales		¥	2,729,657			¥	2,481,481			+	10.0			$	22,938,294			¥	2,930,000			+	7.3
Operating profit			511,157				416,517			+	22.7				4,295,437				551,000			+	7.8
Ordinary profit			523,996				440,711			+	18.9				4,403,328				565,000			+	7.8
Net income		¥	337,520			¥	289,294			+	16.7			$	2,836,303			¥	370,000			+	9.6
Net income per share:
- Basic		¥	253.48			¥	325.83				—			$	2.13			¥	277.85			+	9.6
- Diluted			253.39				325.52				—				2.13				—				—
Dividend per share			100.00				100.00				—				0.84				100.00				—
		Actual
		As of				As of								As of
		December 31, 2006				December 31, 2005				Change(%)				December 31, 2006
Total assets		¥	2,938,072			¥	2,652,847			+	10.8			$	24,689,681
Net assets		¥	2,109,283			¥	1,875,433			+	12.5			$	17,725,067

 

 

Canon Inc.		30-2, Shimomaruko 3-chome, Ohta-ku,
Headquarter office		Tokyo 146-8501, Japan
		Phone: +81-3-3758-2111

Management Policy

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 corporate group targeting continued growth and development.

Management goals

     Based on this basic management policy, Canon launched two consecutive five-year management plans—Phase I of its Excellent Global Corporation Plan in 1996 and Phase II in 2001—with the aim of becoming a truly excellent global corporation. Through these two five-year management plans, the company promoted a range of management reforms, thoroughly strengthening its product competitiveness and financial base. Since 2006, under a new five-year management plan—Phase III, which targets further growth and improved corporate value, Canon has started to pursue “Sound Growth” by making use of the solid management foundation achieved through the two five-year plans and further expanding its corporate scale while maintaining a high level of profitability. In particular, the company is focusing on the following five important management objectives.

1)		Achieving the overwhelming No. 1 position worldwide in all current core businesses, and firmly establishing three display technologies as businesses
2)		Establishing new production systems to sustain international competitiveness
3)		Expanding business operations through diversification and establishing a Three Regional Headquarters System
4)		Identifying new business domains and accumulating required technologies
5)		Nurturing truly autonomous and strong individuals promoting everlasting corporate reforms

Mid- to long-term management strategies

     In order to realize the above objectives, we are implementing the following mid- to long-term management strategies:

1)

Achieving the overwhelming No. 1 position worldwide in all current core businesses

     In order to realize our objective of obtaining the No. 1 market share position for all of our core products, Canon is focusing on thoroughly enhancing each business’s product development capabilities and product price competitiveness. Furthermore, in order to realize our objective of becoming No. 1 in each of our businesses, we are carrying out the following measures.

     As for copying machines and laser beam printers, in line with growing demand for color output in the office, we are applying Canon proprietary technology to actively launch competitive new products that are differentiated by their performance capabilities. In 2006, we launched six new color office-copying machines and are now prepared to expand our market share. Furthermore, we are taking advantage of changes in the office network environment due to the spread of broadband networks and aim to get a jump on the competition with the development of a new-concept multifunction device that maximizes the functionality of each device connected to a network. Also, to satisfy the various needs of our customers, we are actively promoting expansion of our solutions business through the use of our platform architecture, which makes possible expanded functionality, and by supplying software and services, while entering the so call POD (Print on Demand) or light production segment. Furthermore, going forward, we aim to launch products with improved price competitiveness in emerging markets, which are expected to grow significantly, capitalizing on underlying demand to raise our market share.

     With regard to inkjet printers, we are aiming to expand our market share by utilizing Canon-developed high-precision inkjet print heads, which offer a competitive advantage in printing high-quality photo images, and strengthen our lineup of multifunction products, which have become a core segment of the market, in addition to single-function products.

     In the digital camera segment, through the timely launch of competitive products that capitalize on our expertise in optical and image-processing technologies, we are further solidifying our top market share position. Especially in the expanding market for digital SLR cameras, we are aiming to expand our market share even further by taking advantage of our strong product lineup, spanning the range from professional

accompanies the launch of new businesses, we believe that it is important to further improve the profit-earning ability of our current businesses. To facilitate this, we are promoting the development of new products and actively pursue cost-reduction activities.

     We also view our approach to the environment as an important management issue. From the product development stage through to production, sales, use, recovery and recycling, we focus our energies on creating environmentally conscious products that realize energy efficiency, resource efficiency, and eliminate the use of hazardous substances. Additionally, we actively promote the development of recycling systems, the expansion of green procurement policies, the disclosure of environmental information, and participation in environmental conservation activities at the community level.

Basic policy regarding share trading unit

     Canon maintains a basic policy of regularly reviewing its share trading unit from the standpoint of enhancing liquidity of its shares in the stock market and stimulating broader investor participation.

     In view of this policy, the company changed the number of shares that constitute one trading unit from 1,000 to 100, effective May 6, 2004. Furthermore, the company initiated a 3-for-2 forward stock split with a Record Date of June 30, 2006, to expand the investor base by establishing an environment that will make its shares even more accessible to a broader range of potential shareholders.

Basic policy regarding profit distribution

     With regard to returning profits to shareholders, Canon has worked to raise its dividend per share in accordance with the company’s policy of providing a stable dividend. Under the new policy, Canon will actively work to return profits to shareholders, mainly through the distribution of dividends, taking into consideration planned future investments, free cash flow, and its consolidated business performance.

     Specifically, the mid- to long-term objective is to strive to raise the consolidated shareholder return ratio to around 30 percent.

     In accordance with this policy, Canon raised its full-year per-share dividend from 65 yen in 2004, to 100 yen in 2005. And for the period ended December 2006, to further enhance shareholder return, in addition to the interim dividend of 50 yen (already distributed), Canon plans to pay a year-end dividend of 50 yen (post stock-split basis). Calculated on a pre-stock-split basis, the year-end dividend would be 75 yen per share, equivalent to a full-year dividend of 125 yen per share, which is an increase of 25 yen per share compared to 2005.

Matters regarding the parent company, etc.

     Canon does not have a parent company.

Operating Results and Financial Conditions

2006 in Review

Looking back at the global economy in 2006, in the United States, despite a decrease in housing investment, the economy continued to display growth with healthy employment conditions and continued growth in consumer spending, along with an increase in corporate capital investment. In Europe, while exports appeared somewhat sluggish due to the appreciation of the euro, the region indicated a trend toward moderate recovery as domestic demand expanded in major European countries, boosted by such factors as increased consumer spending owing to improvements in the employment environment. Within Asia, the Chinese economy maintained a high growth rate while other economies in the region also enjoyed generally favorable conditions. In Japan, although consumer spending has yet to fully regain its strength, the economy maintained a trend toward recovery amid increased capital spending fueled by strong corporate performances.

As for the markets in which the Canon Group operates, within the camera segment demand for digital single-lens reflex (SLR) cameras and compact digital cameras continued to realize healthy growth during the term. Within the office imaging product market, demand for network digital multifunction devices (MFDs) remained solid as the office market moved toward color and multifunctionality. As for computer peripherals, including printers, although demand grew for color as well as monochrome laser beam printers, and shifted rapidly within the inkjet printer market from single-function to multifunction models, the segment suffered amid severe price competition. In the optical equipment segment, although demand for projection aligners, which are used to produce liquid crystal display (LCD) panels, declined due to restrained investment by LCD manufacturers, demand for steppers, used in the production of semiconductors, was strong, supported by increased investment by manufacturers. The average value of the yen for the year was ¥116.43 to the U.S. dollar and ¥146.51 to the euro, representing year-on-year decreases of about 5% against the U.S. dollar, and 7% against the euro.

Amid these conditions, Canon’s consolidated net sales in 2006 increased by 10.7% from the year-ago period to ¥4,156.8 billion (U.S.$34,931 million), boosted by a solid rise in sales of digital cameras, color network MFDs, and laser beam printers, along with the positive effects of the depreciation of the yen. In 2006, the first year of a new five-year management plan—Phase III of Canon’s Excellent Global Corporation Plan—net income increased by 18.5% year on year to ¥455.3 billion (U.S.$3,826 million), marking all-time highs for both net sales and net income, and the seventh consecutive year of sales and profit growth. The gross profit ratio improved 1.1 points year on year to reach 49.6%. The improved gross profit ratio was mainly the result of such factors as the introduction of automated production lines, and the in-house manufacturing of key components and key devices, in addition to cost-reduction efforts realized through ongoing production-reform and procurement-reform activities, which absorbed the negative effects of severe price competition in the consumer product market. As for operating expenses, while R&D expenditures grew by ¥21.8 billion (U.S.$183 million) from the year-ago period to ¥308.3 billion (U.S.$2,591 million), the operating expense to net sales ratio improved 0.4 points year on year. This was achieved by limiting growth in selling, general and administrative expenses, with the exception of a temporary increase in expenses related to the relocation of operation bases. Consequently, operating profit in 2006 totaled ¥707.0 billion (U.S.$5,941 million), a year-on-year increase of 21.3%, and the operating profit ratio improved 1.5 points year on year to reach 17.0%. Other income (deductions) declined ¥16.9 billion (U.S.$142 million) due to an increase in currency exchange losses and a decrease in gains on sales of securities, although interest income grew in line with the rise in the interest rate. Income before income taxes and minority interests in 2006 totaled ¥719.1 billion (U.S.$6,043 million), a year-on-year increase of 17.5%, while net income for the year totaled ¥455.3 billion (U.S.$3,826 million), a year-on-year increase of 18.5%.

Basic net income per share for the year was ¥341.95 (U.S.$2.87), a year-on-year increase of ¥53.32 (U.S.$0.45). (Note: The basic net income per share calculation is based on the number of outstanding shares following the implementation of the stock split executed on July 1, 2006.)

Results by Product Segment

In the business machine segment, sales of color network digital MFDs, which are grouped in the office imaging products sub-segment, recorded significant growth with the launch of such new models as the mid to high-speed office-use iR C5180 series, the low-power-consumption iR C3380 series, and the high-image-quality imagePRESS C1 for commercial printing. Among monochrome network digital MFDs, while the launch of such models as the new high-speed iR7105 contributed to the maintaining of sales

levels in the U.S. market, sales of monochrome models declined in other markets as demand shifted toward color models. Overall, sales of office imaging products in 2006 realized a year-on-year increase of 2.8%. In the field of computer peripherals, laser beam printers enjoyed a year-on-year increase in unit sales, with color models growing more than 50% and monochrome machines, particularly low-end models, also recording growth of over 10%. Sales in value terms also rose significantly. As for inkjet printers, despite a decline in demand for single-function models and severe price competition in the market, sales in value terms increased along with unit sales. Sales performance was boosted by the introduction of 24 new models—13 single-function models and 11 multifunction models—including the high-speed user-friendly PIXMA MP600 and overseas entry-level-model PIXMA MP160 all-in-ones, which contributed to a stronger product lineup while also supporting favorable sales growth for consumables. As a result, sales of computer peripherals for the year realized a year-on-year increase of 12.3%. Within the field of business information products, demand for document scanners grew, contributing to a sales increase of 2.4%. Collectively, sales of business machines for the year totaled ¥2,691.1 billion (U.S.$22,614 million), a year-on-year increase of 7.5%. Operating profit for the business machines segment totaled ¥599.2 billion (U.S.$5,036 million), an increase of 10.6% year on year, lifted by active efforts to reduce costs as a means of limiting the decline in sales price amid severe price competition, as well as efforts to curtail expenses. The operating profit ratio was 22.3%, a year-on-year improvement of 0.6 points from the year-ago period.

Within the camera segment, strong demand for digital SLR cameras has fueled continued growth with particularly strong sales for the advanced-amateur-model EOS 30D, launched in the first half of 2006, and the EOS DIGITAL REBEL XTi, launched in the second half. This, in turn, led to expanded sales of interchangeable lenses for SLR cameras. Sales of compact digital cameras also continued to expand steadily with the introduction of 16 new models in 2006, including six stylish ELPH-series models and 10 PowerShot-series models that cater to a diverse range of shooting styles. As a result, unit sales of digital cameras for the year increased by more than 20% from the year-ago period. In the field of digital video camcorders, the launch of consumer-market HDV models equipped with Canon HD CMOS sensors contributed to expanded sales, filling out the company’s digital camcorder lineup along with MiniDV and DVD models. Consequently, camera sales surpassed the ¥1,000.0 billion mark for the first time, achieving total sales of ¥1,041.9 billion (U.S.$8,755 million), a year-on-year increase of 18.5%. The gross profit ratio for the camera segment also rose considerably, boosted by such factors as substantially increased sales of new products and cost reduction efforts. As a result, operating profit for the camera segment increased by a substantial 54.7% year on year to ¥268.7 billion (U.S.$2,258 million).

In the optical and other products segment, while steppers, used in the production of semiconductors, enjoyed steady demand due to a significant increase in investment by manufacturers, sales of optical products decreased amid declining demand for aligners, used to produce LCD panels, due to restrained investment by LCD manufacturers. As for the other products included in the segment, the newly consolidated subsidiaries last year contributed to significant sales growth. As a result, sales for the segment totaled ¥423.8 billion (U.S.$3,561 million), a year-on-year increase of 13.7%. Operating profit for the segment grew by 6.8% year on year to ¥41.5 billion (U.S.$349 million).

Cash Flow

In the twelve months ended December 31, 2006, Canon generated cash flow from operating activities of ¥695.2 billion (U.S.$5,842 million), a year-on-year increase of ¥89.6 billion (U.S.$753 million), reflecting a significant increase in net income. Cash flow from investing activities totaled ¥460.8 billion (U.S.$3,872 million), a year-on-year increase of ¥59.7 billion (U.S.$501 million), due to a combination of factors, including a ¥424.9 billion (U.S.$3,570 million) capital expenditure, which was used mainly to expand production capabilities in Japan and overseas regions and to bolster the company’s R&D-related infrastructure. As a result, free cash flow surpassed ¥200.0 billion for the fifth consecutive year, totaling positive ¥234.4 billion (U.S.$1,970 million), an improvement of ¥29.9 billion (U.S.$252 million) from the year-ago period.

Cash flow from financing activities recorded an outlay of ¥107.5 billion (U.S.$903 million), mainly resulting from an increase of ¥40.0 billion (U.S.$336 million) in the dividend payout. Consequently, cash and cash equivalents totaled ¥1,155.6 billion (U.S.$9,711 million), a year-on-year increase of ¥150.7 billion (U.S.$1,266 million), including the impact of currency exchange rates.

Non-consolidated Results

Canon Inc.’s non-consolidated net sales in 2006 grew by 10.0% to ¥2,729.7 billion (U.S.$22,938 million) while ordinary profit increased by a substantial 18.9% to ¥524.0 billion (U.S.$4,403 million). Non-consolidated net income also increased by 16.7% to ¥337.5 billion (U.S.$2,836 million), marking all-time highs for both net sales and net income, and the seventh consecutive year of sales and profit growth, as was also the case with Canon’s consolidated performance.

Outlook

Regarding the outlook for the global economy, although there are concerns over such issues as currency exchange rates, interest rates, and pricing of raw materials, crude oil prices appear to have stabilized for the time being and the global economy is expected to continue recording favorable growth.

In the businesses in which Canon is involved, demand in the digital-camera market is expected to continue expanding, fueled by high growth in emerging markets. As for network digital MFDs and laser beam printers, while demand is projected to continue for full-color models, severe price competition and shifting demand toward lower-priced models is expected to adversely affect sales. Within the semiconductor-production equipment market, while there is a possibility that demand for steppers will decline somewhat in the first half, indications for the full-year point to a trend toward moderate recovery. In the market for projection aligners used in the production of LCD panels, demand is expected to decline due to restrained investment by LCD manufacturers.

In fiscal 2007 Canon anticipates consolidated net sales of ¥4,450.0 billion (U.S.$37,395 million), consolidated income before income taxes of ¥775.0 billion (U.S.$6,513 million), and consolidated net income of ¥495.0 billion (U.S.$4,160 million). The company also forecasts non-consolidated net sales of ¥2,930.0 billion (U.S.$24,622 million), non-consolidated ordinary profit of ¥565.0 billion (U.S.$4,748 million), and non-consolidated net income of ¥370.0 billion (U.S.$3,109 million), anticipating its eighth consecutive year of increased consolidated and non-consolidated sales and profit. These forecasts assume currency exchange rates of ¥115 to the U.S. dollar and ¥150 to the euro, representing a slight appreciation of the yen against the U.S. dollar, and a slight depreciation against the euro compared with 2006.

Other information

Canon has decided to purchase from Toshiba Corporation (“Toshiba”) all of Toshiba’s outstanding shares of SED Inc., a Canon subsidiary. On completion of the purchase, SED Inc. will become a wholly owned subsidiary of Canon, effective January 29, 2007.

In accordance with this decision, which was based on the assumption of prolonged litigation pending against Canon in the United States with respect to SED technology, Canon will carry out the SED panel business independently in order to facilitate the earliest possible launch of a commercial SED television business.

Canon, with the necessary cooperation from Toshiba, will make every effort for the smooth launch of its television business based on the high image quality achieved by SED technology.

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

GROUP POSITION

1. NUMBER OF GROUP COMPANIES

			December 31, 2006					December 31, 2005					Change
Subsidiaries				219					200					19
Affiliated Companies				14					13					1
Total				233					213					20

2. GROUP STRUCTURE AND MAJOR GROUP COMPANIES

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

1. CONSOLIDATED STATEMENTS OF INCOME

Result for the fourth quarter		Millions of yen												Thousands of
														U.S. dollars
		Three months				Three months								Three months
		ended				ended				Change(%)				ended
		December 31, 2006				December 31, 2005								December 31, 2006
Net sales		¥	1,216,535			¥	1,119,848			+	8.6			$	10,222,983
Cost of sales			622,809				580,697								5,233,689
Gross profit			593,726				539,151			+	10.1				4,989,294
Selling, general and administrative expenses			306,768				284,786								2,577,882
Research and development expenses			91,088				85,076								765,446
			397,856				369,862								3,343,328
Operating profit			195,870				169,289			+	15.7				1,645,966
Other income (deductions):
Interest and dividend income			8,711				4,709								73,202
Interest expense			(1,005	)			(601	)							(8,445	)
Other, net			(5,804	)			(438	)							(48,773	)
			1,902				3,670								15,984
Income before income taxes and minority interests			197,772				172,959			+	14.3				1,661,950
Income taxes			68,388				60,241								574,689
Income before minority interests			129,384				112,718								1,087,261
Minority interests			3,820				4,507								32,101
Net income		¥	125,564			¥	108,211			+	16.0			$	1,055,160

Note:		Canon’s comprehensive income consists of net income, change in foreign currency translation adjustments, change in net unrealized gains (losses) on securities, change in net gains (losses) on derivative financial instruments, change in minimum pension liability adjustments and change in pension liability adjustment. Comprehensive income for the three months ended December 31, 2006 and 2005 were JPY133,418 million (U.S.$1,121,160 thousand) and JPY155,175 million, respectively.

Result for the fiscal year		Millions of yen												Thousands of
														U.S. dollars
		Year ended				Year ended				Change(%)				Year ended
		December 31, 2006				December 31, 2005								December 31, 2006
Net sales		¥	4,156,759			¥	3,754,191			+	10.7			$	34,930,748
Cost of sales			2,096,279				1,935,148								17,615,790
Gross profit			2,060,480				1,819,043			+	13.3				17,314,958
Selling, general and administrative expenses			1,045,140				949,524								8,782,689
Research and development expenses			308,307				286,476								2,590,815
			1,353,447				1,236,000								11,373,504
Operating profit			707,033				583,043			+	21.3				5,941,454
Other income (deductions):
Interest and dividend income			27,153				14,252								228,176
Interest expense			(2,190	)			(1,741	)							(18,403	)
Other, net			(12,853	)			16,450								(108,009	)
			12,110				28,961								101,764
Income before income taxes and minority interests			719,143				612,004			+	17.5				6,043,218
Income taxes			248,233				212,785								2,085,991
Income before minority interests			470,910				399,219								3,957,227
Minority interests			15,585				15,123								130,966
Net income		¥	455,325			¥	384,096			+	18.5			$	3,826,261

Note:		Canon’s comprehensive income consists of net income, change in foreign currency translation adjustments, change in net unrealized gains (losses) on securities, change in net gains (losses) on derivative financial instruments and change in minimum pension liability adjustments and change in pension liability adjustment. Comprehensive income for the years ended December 31, 2006 and 2005 were JPY486,255 million (U.S.$4,086,176 thousand) and JPY457,196 million, respectively.

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. DETAILS OF SALES

Result for the fourth quarter		Millions of yen												Thousands of
														U.S. dollars
		Three months				Three months								Three months
Sales by product		ended				ended				Change(%)				ended
		December 31, 2006				December 31, 2005								December 31, 2006
Business machines:
Office imaging products		¥	330,505			¥	310,104			+	6.6			$	2,777,353
Computer peripherals			405,955				367,308			+	10.5				3,411,387
Business information products			28,535				29,773			−	4.2				239,789
			764,995				707,185			+	8.2				6,428,529
Cameras			346,439				296,874			+	16.7				2,911,252
Optical and other products			105,101				115,789			−	9.2				883,202
Total		¥	1,216,535			¥	1,119,848			+	8.6			$	10,222,983

		Millions of yen												Thousands of
														U.S. dollars
Sales by region		Three months				Three months								Three months
		ended				ended				Change(%)				ended
		December 31, 2006				December 31, 2005								December 31, 2006
Japan		¥	266,741			¥	244,767			+	9.0			$	2,241,521
Overseas:
Americas			389,362				353,647			+	10.1				3,271,950
Europe			405,600				358,971			+	13.0				3,408,403
Other areas			154,832				162,463			−	4.7				1,301,109
			949,794				875,081			+	8.5				7,981,462
Total		¥	1,216,535			¥	1,119,848			+	8.6			$	10,222,983

Result for the fiscal year		Millions of yen												Thousands of
														U.S. dollars
Sales by product		Year ended				Year ended				Change(%)				Year ended
		December 31, 2006				December 31, 2005								December 31, 2006
Business machines:
Office imaging products		¥	1,185,925			¥	1,153,240			+	2.8			$	9,965,756
Computer peripherals			1,398,408				1,244,906			+	12.3				11,751,328
Business information products			106,754				104,255			+	2.4				897,092
			2,691,087				2,502,401			+	7.5				22,614,176
Cameras			1,041,865				879,186			+	18.5				8,755,168
Optical and other products			423,807				372,604			+	13.7				3,561,404
Total		¥	4,156,759			¥	3,754,191			+	10.7			$	34,930,748

		Millions of yen												Thousands of
														U.S. dollars
Sales by region		Year ended				Year ended				Change(%)				Year ended
		December 31, 2006				December 31, 2005								December 31, 2006
Japan		¥	932,290			¥	856,205			+	8.9			$	7,834,370
Overseas:
Americas			1,283,646				1,145,950			+	12.0				10,786,941
Europe			1,314,305				1,181,258			+	11.3				11,044,580
Other areas			626,518				570,778			+	9.8				5,264,857
			3,224,469				2,897,986			+	11.3				27,096,378
Total		¥	4,156,759			¥	3,754,191			+	10.7			$	34,930,748

Notes:		1. The primary products included in each of the product segments are as follows:
		Business machines:
		Office imaging products :		Office network digital multifunction devices (MFDs) / Color network digital MFDs /
				Office copying machines / Personal-use copying machines / Full-color copying machines / etc.
		Computer peripherals : Laser beam printers / Single function inkjet printers / Inkjet multifunction peripherals / Image scanners / etc.
		Business information products : Computer information systems / Document scanner / Personal information products / etc.
		Cameras : SLR cameras / Compact cameras / Digital cameras / Digital video camcorders / etc.
		Optical and other products :		Semiconductor production equipment / Mirror projection mask aligners for LCD panels /
				Broadcasting equipment / Medical equipment / Components / etc.
		2. The principal countries and regions included in each regional category are as follows:
		Americas: United States of America, Canada, Latin America / Europe: England, Germany, France, Netherlands /
		Other Areas: Asian regions, China, Oceania

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. SEGMENT INFORMATION BY PRODUCT

 

Result for the fourth quarter		Millions of yen												Thousands of
														U.S. dollars
		Three months				Three months								Three months
		ended				ended				Change(%)				ended
		December 31, 2006				December 31, 2005								December 31, 2006
Business machines
Net sales:
Unaffiliated customers		¥	764,995			¥	707,185			+	8.2			$	6,428,529
Intersegment			—				—				—				—
Total			764,995				707,185			+	8.2				6,428,529
Operating cost and expenses			599,430				556,989			+	7.6				5,037,226
Operating profit			165,565				150,196			+	10.2				1,391,303
Cameras
Net sales:
Unaffiliated customers		¥	346,439			¥	296,874			+	16.7			$	2,911,252
Intersegment			—				—				—				—
Total			346,439				296,874			+	16.7				2,911,252
Operating cost and expenses			253,827				233,817			+	8.6				2,133,000
Operating profit			92,612				63,057			+	46.9				778,252
Optical and other products
Net sales:
Unaffiliated customers		¥	105,101			¥	115,789			−	9.2			$	883,202
Intersegment			52,102				44,575			+	16.9				437,832
Total			157,203				160,364			−	2.0				1,321,034
Operating cost and expenses			153,282				151,811			+	1.0				1,288,084
Operating profit			3,921				8,553			−	54.2				32,950
Corporate and Eliminations
Net sales:
Unaffiliated customers		¥	—			¥	—				—			$	—
Intersegment			(52,102	)			(44,575	)			—				(437,832	)
Total			(52,102	)			(44,575	)			—				(437,832	)
Operating cost and expenses			14,126				7,942				—				118,707
Operating profit			(66,228	)			(52,517	)			—				(556,539	)
Consolidated
Net sales:
Unaffiliated customers		¥	1,216,535			¥	1,119,848			+	8.6			$	10,222,983
Intersegment			—				—				—				—
Total			1,216,535				1,119,848			+	8.6				10,222,983
Operating cost and expenses			1,020,665				950,559			+	7.4				8,577,017
Operating profit			195,870				169,289			+	15.7				1,645,966

-11-

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

		Millions of yen																Thousands of
Result for the fiscal year																		U.S. dollars
		Year ended				Year ended				Change(%)								Year ended
		December 31, 2006				December 31, 2005												December 31, 2006
Business Machines
Net sales:
Unaffiliated customers		¥	2,691,087			¥	2,502,401				+				7.5			$	22,614,176
Intersegment			—				—								—				—
Total			2,691,087				2,502,401				+				7.5				22,614,176
Operating cost and expenses			2,091,858				1,960,373				+				6.7				17,578,638
Operating profit			599,229				542,028				+				10.6				5,035,538
Assets			1,617,198				1,427,277				+				13.3				13,589,899
Depreciation and amortization			127,873				123,037				+				3.9				1,074,563
Capital expenditure			154,259				201,887				−				23.6				1,296,294
Cameras
Net sales:
Unaffiliated customers		¥	1,041,865			¥	879,186				+				18.5			$	8,755,168
Intersegment			—				—								—				—
Total			1,041,865				879,186				+				18.5				8,755,168
Operating cost and expenses			773,127				705,480				+				9.6				6,496,865
Operating profit			268,738				173,706				+				54.7				2,258,303
Assets			542,866				480,957				+				12.9				4,561,899
Depreciation and amortization			28,756				27,662				+				4.0				241,647
Capital expenditure			31,517				57,678				−				45.4				264,849
Optical and Other Products
Net sales:
Unaffiliated customers		¥	423,807			¥	372,604				+				13.7			$	3,561,404
Intersegment			190,687				158,114				+				20.6				1,602,411
Total			614,494				530,718				+				15.8				5,163,815
Operating cost and expenses			573,019				491,898				+				16.5				4,815,286
Operating profit			41,475				38,820				+				6.8				348,529
Assets			501,008				517,527				−				3.2				4,210,151
Depreciation and amortization			37,018				28,011				+				32.2				311,076
Capital expenditure			36,272				15,955				+				127.3				304,807
Corporate and Eliminations
Net sales:
Unaffiliated customers		¥	—			¥	—								—			$	—
Intersegment			(190,687	)			(158,114	)							—				(1,602,411	)
Total			(190,687	)			(158,114	)							—				(1,602,411	)
Operating cost and expenses			11,722				13,397								—				98,505
Operating profit			(202,409	)			(171,511	)							—				(1,700,916	)
Assets			1,860,843				1,617,792				+				15.0				15,637,337
Depreciation and amortization			68,647				47,231				+				45.3				576,865
Capital expenditure			157,609				108,264				+				45.6				1,324,445
Consolidated
Net sales:
Unaffiliated customers		¥	4,156,759			¥	3,754,191				+				10.7			$	34,930,748
Intersegment			—				—								—				—
Total			4,156,759				3,754,191				+				10.7				34,930,748
Operating cost and expenses			3,449,726				3,171,148				+				8.8				28,989,294
Operating profit			707,033				583,043				+				21.3				5,941,454
Assets			4,521,915				4,043,553				+				11.8				37,999,286
Depreciation and amortization			262,294				225,941				+				16.1				2,204,151
Capital expenditure			379,657				383,784				−				1.1				3,190,395

Notes:			1.			General corporate expenses of JPY202,328 million (U.S.$1,700,235 thousand) and JPY171,522 million in the years ended December 31, 2006 and 2005, respectively, are included in “Corporate and Eliminations.”
			2.			Corporate assets of JPY1,860,933 million (U.S.$15,638,092 thousand) and JPY1,239,255 million as of December 31, 2006 and 2005, respectively, which mainly consist of cash and cash equivalents, marketable securities, investments and corporate properties, are included in “Corporate and Eliminations.”

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. SEGMENT INFORMATION BY GEOGRAPHIC AREA

		Millions of yen												Thousands of
Result for the fiscal year														U.S. dollars
		Year ended				Year ended				Change(%)				Year ended
		December 31, 2006				December 31, 2005								December 31, 2006
Japan
Net sales:
Unaffiliated customers		¥	1,037,657			¥	979,748			+	5.9			$	8,719,807
Intersegment			2,311,482				2,046,173			+	13.0				19,424,218
Total			3,349,139				3,025,921			+	10.7				28,144,025
Operating cost and expenses			2,558,685				2,362,019			+	8.3				21,501,554
Operating profit			790,454				663,902			+	19.1				6,642,471
Assets			2,644,116				2,419,012			+	9.3				22,219,462
Americas
Net sales:
Unaffiliated customers		¥	1,277,867			¥	1,139,784			+	12.1			$	10,738,378
Intersegment			4,764				7,424			–	35.8				40,034
Total			1,282,631				1,147,208			+	11.8				10,778,412
Operating cost and expenses			1,236,138				1,110,415			+	11.3				10,387,715
Operating profit			46,493				36,793			+	26.4				390,697
Assets			432,001				406,101			+	6.4				3,630,261
Europe
Net sales:
Unaffiliated customers		¥	1,313,919			¥	1,178,672			+	11.5			$	11,041,336
Intersegment			3,586				2,206			+	62.6				30,135
Total			1,317,505				1,180,878			+	11.6				11,071,471
Operating cost and expenses			1,272,463				1,147,658			+	10.9				10,692,967
Operating profit			45,042				33,220			+	35.6				378,504
Assets			682,381				569,750			+	19.8				5,734,294
Others
Net sales:
Unaffiliated customers		¥	527,316			¥	455,987			+	15.6			$	4,431,227
Intersegment			792,018				646,530			+	22.5				6,655,613
Total			1,319,334				1,102,517			+	19.7				11,086,840
Operating cost and expenses			1,275,817				1,071,155			+	19.1				10,721,151
Operating profit			43,517				31,362			+	38.8				365,689
Assets			339,314				312,472			+	8.6				2,851,378
Corporate and Eliminations
Net sales:
Unaffiliated customers		¥	—			¥	—				—			$	—
Intersegment			(3,111,850	)			(2,702,333	)			—				(26,150,000	)
Total			(3,111,850	)			(2,702,333	)			—				(26,150,000	)
Operating cost and expenses			(2,893,377	)			(2,520,099	)			—				(24,314,093	)
Operating profit			(218,473	)			(182,234	)			—				(1,835,907	)
Assets			424,103				336,218			+	26.1				3,563,891
Consolidated
Net sales:
Unaffiliated customers		¥	4,156,759			¥	3,754,191			+	10.7			$	34,930,748
Intersegment			—				—				—				—
Total			4,156,759				3,754,191			+	10.7				34,930,748
Operating cost and expenses			3,449,726				3,171,148			+	8.8				28,989,294
Operating profit			707,033				583,043			+	21.3				5,941,454
Assets			4,521,915				4,043,553			+	11.8				37,999,286