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		……………………………………………… ,		2014

 

		CANON INC.
		(Translation of registrant’s name into English)
		30-2, Shimomaruko 3-Chome, Ohta-ku, Tokyo 146-8501, Japan
		(Address of principal executive offices)

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F		X		Form 40-F

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes				No		X

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-………………..

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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.

 

 

						CANON INC.
						(Registrant)
Date….		January 30, 2014				By ……/s/…… Shinichi    Aoyama ………
						(Signature)*

 

*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, 2013

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RESULTS FOR THE FOURTH QUARTER

AND THE FISCAL YEAR ENDED DECEMBER 31, 2013

January 29, 2014

CONSOLIDATED RESULTS

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

 

		Actual																				Projected
		Year ended December 31, 2013				Year ended December 31, 2012				Change(%)								Year ended December 31, 2013				Year ending December 31, 2014				Change(%)
Net sales		¥	3,731,380			¥	3,479,788				+				7.2			$	35,536,952			¥	3,850,000			+		3.2
Operating profit			337,277				323,856				+				4.1				3,212,162				360,000			+		6.7
Income before income taxes			347,604				342,557				+				1.5				3,310,514				360,000			+		3.6
Net income attributable to Canon Inc.		¥	230,483			¥	224,564				+				2.6			$	2,195,076			¥	240,000			+		4.1
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	200.78			¥	191.34				+				4.9			$	1.91			¥	211.08			+		5.1
- Diluted			200.78				191.34				+				4.9				1.91				-					-
		Actual
		As of December 31, 2013				As of December 31, 2012				Change(%)								As of December 31, 2013
Total assets		¥	4,242,710			¥	3,955,503				+				7.3			$	40,406,762
Canon Inc. stockholders’ equity		¥	2,910,262			¥	2,598,026				+				12.0			$	27,716,781
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 105= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2013, solely for the convenience of the reader.
NON-CONSOLIDATEDRESULTS
		(Millions of yen, thousands of U.S. dollars, except per share amounts)
		Actual
		Year ended December 31, 2013				Year ended December 31, 2012				Change(%)								Year ended December 31, 2013
Net sales		¥	2,128,798			¥	2,113,420				+				0.7			$	20,274,267
Operating profit			188,491				198,695				-				5.1				1,795,152
Ordinary profit			236,695				235,728				+				0.4				2,254,238
Net income		¥	170,383			¥	157,647				+				8.1			$	1,622,695
Net income per share:
- Basic		¥	148.43			¥	134.32				+				10.5			$	1.41
- Diluted			148.43				-								-				1.41
Dividend per share			130.00				130.00								-				1.24
		Actual
		As of December 31, 2013				As of December 31, 2012				Change(%)								As of December 31, 2013
Total assets		¥	2,385,892			¥	2,337,002				+				2.1			$	22,722,781
Net assets		¥	1,567,030			¥	1,594,688				-				1.7			$	14,924,095

 

Notes:				1. U.S. dollar amounts are translated from yen at the rate of JPY 105= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2013, solely for the convenience of the reader.
				2. Diluted net income per share for the year ended December 31, 2012, is not presented because there were no latent shares with a dilution effect.

 

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

2013 in Review

Looking back at the global economy in 2013, although the U.S. and Japanese economies began heading toward moderate recoveries during the latter half of the year, the economic downturn in Europe continued to drag on while the economies of emerging countries such as China faced slowdowns. As such, contrary to expectations at the beginning of the year, the global economy remained stagnant. As for exchange rates, the correction of the historic high value of the yen continued, with a trend toward a weaker yen growing increasingly clear.

As for the markets in which Canon operates amid these conditions, owing to the economic slowdown, flat demand led to a continuation of the harsh business environment especially for consumer products. Among office multifunction devices (MFDs), color models continued to drive growth while demand for laser printers realized a turnaround toward recovery. Although demand for interchangeable-lens digital cameras continued to show strong growth in Japan, demand overseas fell short of the previous year’s level as the economic rebound in such markets as Europe and China takes longer than expected. As for digital compact cameras, demand continued to shrink in both developed countries as well as emerging markets. Overall market demand for inkjet printers, hit by the prolonged economic downturn, also declined in all major markets. In the industry and others sector, a rebound in capital investment for memory devices led to a pickup in demand for semiconductor lithography equipment in the latter half of the year, while demand for lithography equipment used in the production of flat panel displays (FPD) showed healthy market growth for mid- and small-size panels used mainly in smartphones and tablet PCs, and a modest recovery for large-size panels.

The average value of the yen during the year was ¥97.84 against the U.S. dollar, a year-on-year depreciation of approximately ¥18, and ¥130.01 against the euro, a year-on-year depreciation of approximately ¥27.

Despite the decline in demand for digital compact cameras and industrial equipment, net sales for the year increased 7.2% to ¥3,731.4 billion (U.S.$35,537 million) from the previous year. This was realized through the steady sales growth for MFDs and laser printers, along with an increase in sales of inkjet printers, made possible through sales-promotion efforts despite the harsh conditions posed by the shrinking inkjet printer market, as well as the positive effects of favorable currency exchange rates. The gross profit ratio rose 0.8 points year on year to 48.2% 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 after conversion into yen due to the depreciation of the yen, Group-wide efforts to thoroughly reduce spending contributed to limiting the increase in operating expenses to just ¥1,461.1 billion (U.S.$13,916 million), an increase of 10.2% year on year. Consequently, operating profit increased by 4.1% to ¥337.3 billion (U.S.$3,212 million). Other income decreased by ¥8.4 billion (U.S.$80 million) due to foreign currency exchange losses while income before income taxes increased by 1.5% year on year to ¥347.6 billion (U.S.$3,311 million). Net income attributable to Canon Inc. increased by 2.6% to ¥230.5 billion (U.S.$2,195 million). Accordingly, Canon achieved increases in both sales and profit.

Basic net income attributable to Canon Inc. stockholders per share for the year was ¥200.78 (U.S.$ 1.91), a year-on-year increase of ¥9.44 (U.S.$ 0.09).

 

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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 of color models increased from the year-ago period led by the imageRUNNER ADVANCE C5200/C2200 series. As for high speed continuous feed printers and wide-format printers, sales of the Océ ColorStream 3000 series showed solid growth. With regard to laser printers, laser multifunction models recorded strong growth contributing to a year-on-year increase in sales volume. As a result, sales for the business unit totaled ¥2,000.1 billion (U.S.$19,048 million), an increase of 13.8% year on year, while operating profit totaled ¥266.9 billion (U.S.$2,542 million), increasing 31.1%.

Within the Imaging System Business Unit, interchangeable-lens digital cameras maintained their top market share despite the challenging environment, which was marked by a drop in demand in Europe and China due to the economic downturn, although demand in Japan continued to expand. In particular, the EOS 5D Mark III and 70D advanced-amateur-model digital SLR cameras continued to realize healthy growth. Furthermore, in Japan, the new entry-level EOS Digital Rebel SL1 and T5i cameras proved popular. As for digital compact cameras, although total sales volume declined due to the market slowdown and the increasing popularity of smartphones, sales volume increased from the previous year for high-added-value models incorporating features that differentiate them from smartphones, such as large-size image sensors and models like the PowerShot SX50 HS and SX510 HS, which feature high-magnification zoom lenses. With regard to inkjet printers, despite the harsh market environment due to the rapid fall in demand in emerging markets, sales volume enjoyed solid growth thanks to efforts to boost sales through the introduction of new products offering enhanced support for cloud services. As a result, sales for the business unit increased by 3.1% to ¥1,448.9 billion (U.S.$13,799 million) year on year, while operating profit totaled ¥203.8 billion (U.S.$1,941 million), a decrease of 3.1%.

In the Industry and Others Business Unit, within the semiconductor lithography equipment, despite an increase in sales volume for memory devices in the latter half of the year fueled by renewed investment in capital expenditure by memory manufacturers, sales volumes for the year decreased slightly owing to restrained capital expenditure in the first half. As for FPD lithography equipment, sales volume remained the same as for the previous year amid the recovery trend in investment for large-size panels. Looking at medical equipment, sales volume for Canon’s mainstay digital radiography systems steadily increased. Consequently, sales for the business unit totaled ¥374.9 billion (U.S.$3,570 million), a decrease of 8.1% year on year, while operating profit recorded a loss of ¥25.3 billion (U.S.$241 million), declining by ¥31.2 billion (U.S.$298 million) from the previous year.

Cash Flow

During 2013, cash flow from operating activities totaled ¥507.6 billion (U.S.$4,835 million), an increase of ¥123.6 billion (U.S.$1,177 million) compared with the previous year, owing to improvements in working capital through such means as increasing the collection of accounts receivable and reducing inventory. Although capital investment focused on new products, cash flow from investing activities increased ¥37.5 billion (U.S.$357 million) year on year to ¥250.2 billion (U.S.$2,383 million) as a result of an increased amount of time deposits included in short-term investments. Accordingly, free cash flow totaled ¥257.4 billion (U.S.$2,452 million), an increase of ¥86.1 billion (U.S.$820 million) compared with the previous year. Cash flow from financing activities recorded an outlay of ¥222.2 billion (U.S.$2,116 million), mainly arising from the dividend payout and the repurchasing of treasury stock.

Owing to these factors, as well as the positive impact from foreign currency translation adjustments, cash and cash equivalents increased by ¥122.2 billion (U.S.$1,164 million) to ¥788.9 billion (U.S.$7,513 million) from the end of the previous year.

Non-consolidated Results

Non-consolidated net sales totaled ¥2,128.8 billion (U.S.$20,274 million), a year-on-year increase of 0.7%, ordinary profit increased by 0.4% to ¥236.7 billion (U.S.$2,254 million), and net income increased by 8.1% to ¥170.4 billion (U.S.$1,623 million).

 

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Outlook

As for the outlook in 2014, there are signs of brightness among developed countries with steady economic growth in the U.S. and Japan, and the European economy expected to realize a turnaround toward recovery. Although uncertainties remain in emerging countries such as China, since they are expected to maintain their course of moderate expansion, the global economy, having bottomed out in 2013, is also expected to realize a moderate recovery.

In the businesses in which Canon is involved, demand for MFDs is projected to expand moderately, mainly for color models. Likewise, demand in the laser printer market is also expected to continue growing moderately. With regard to interchangeable-lens digital cameras, demand is expected to remain in line with that for the previous year. Within the digital compact camera market, projections point to market contraction, mainly among low-end models, due to the popularity of smartphones. As for inkjet printers, dwindling demand is expected to come to an end with the economic recovery, leveling off to remain in line with the previous year. Within the industrial equipment market, demand for semiconductor lithography equipment is expected to increase as device manufacturers boost capital investment in response to their improved inventory levels, while demand for FPD lithography equipment will likely pick up along with the recovery in investment for large-size panels.

With regard to currency exchange rates for the year, on which Canon’s performance outlook is based, despite the recent trend toward a weaker yen, uncertainties remain in the future and Canon anticipates exchange rates of ¥100 to the U.S. dollar and ¥135 to the euro, representing depreciations of approximately ¥2 against the U.S. dollar, and approximately ¥5 against the euro compared with the previous year. Upon taking into consideration these foreign exchange rate assumptions and the current economic forecast, Canon projects full-year consolidated net sales in 2014 of ¥3,850.0 billion (U.S.$36,667 million), a year-on-year increase of 3.2%; operating profit of ¥360.0 billion (U.S.$3,429 million), a year-on-year increase of 6.7%; income before income taxes of ¥360.0 billion (U.S.$3,429 million), a year-on-year increase of 3.6%; and net income attributable to Canon Inc. of ¥240.0 billion (U.S.$2,286 million), a year-on-year increase of 4.1%.

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 2013, despite the challenging business environment characterized by the prolonged European recession, Canon was able to generate adequate cash on hand thanks to comprehensive cash flow management and subsequent improvements in management efficiency. In light of this situation, Canon plans to distribute a full-year dividend totaling ¥130 (U.S.$1.24) per share (interim dividend of ¥65 [U.S.$0.62] per share [already distributed], and year-end dividend of ¥65 [U.S.$0.62] per share), the same dividend amount as the previous year ( including the commemorative dividend).

 

 

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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. For almost 20 years, Canon’s aim has been to exhibit strong sustainable growth and actively fulfill its social responsibilities. Through Phases I, II and III, Canon worked to build a solid management base and, in 2011, embarked on Phase IV, devoting full attention to achieving sound business growth.

At that time, the global economy was, among other things, undergoing a recovery from the global recession sparked by the collapse of Lehman Brothers. Frequent and drastic changes in the business environment were also occurring. Faced with such circumstances, Canon, regarding the drastic change to be an opportunity to swiftly transform itself ahead of the changing times, remained focused on tackling the challenge of achieving the Company’s goal of sound business growth, implementing measures aimed at maintaining high profitability and further expanding its operations.

Since then, due to such unforeseen events as the Great East Japan Earthquake and flooding in Thailand, as well as the financial crisis in Europe, there has been an extended period of instability in the business environment. Although the global economy has remained weak, it finally started to show signs of improvement in 2013, returning to a path of gradual recovery in the latter half of the year. Going forward, this growth trend is expected to continue. For Canon, 2014 represents the fourth year of Phase IV (2011–2015) of the Excellent Global Corporation Plan. The Canon Group will work in unity, taking steps to realize sound business growth and overcome challenges to firmly return to a path of growth.

(3) Business Challenges and Countermeasures

In 2014, Canon will implement various measures under a basic policy of carrying out further reforms in order to return to the growth track.

In order to achieve our targets, Canon has established and will actively pursue the following five priority goals.

 

1.	Bolstering Strengths of Existing Core Businesses by Creating Outstanding Hit Products

Canon aims to improve its market share for existing core businesses, developing appealing products that outperform the competition, not only in terms of basic performance, but also cost and usability. At the same time, Canon will strengthen the development of businesses derived from existing core businesses.

 

2.	Securely Launch and Steadily Expand New Businesses

Canon will work to accelerate the business expansion of network camera systems for which significant growth is expected. The Company will also focus on strengthening its business foundation for 4K reference displays and mixed-reality systems, while also concentrating on the commercialization of Super Machine Vision. In the medical field, Canon aims to realize the early launch of DNA diagnostic systems.

 

3.	Holistically Developing Global Sales Forces

In emerging markets, Canon will work to expand sales networks and enhance product lineups in accordance with conditions in each country. In developed countries, in addition to boosting the Company’s ability to respond to Internet-based and other direct-order sales, Canon will strengthen its response to the centralized purchasing practices used by global corporations when procuring office products.

 

4.	Optimizing the Global Production System

Based on such factors as changes in local conditions in each country, Canon will work to realize the optimized global allocation of its production assets. The Company will also work to maintain or expand its production in Japan through automation, while also accelerating localized production of mainly consumables in the Americas and Europe through automated production systems.

 

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5.	Exploring a New Dimension of Cost Reductions

Canon will strive to further accelerate procurement reforms as well as expand in-house production and promote automation. Additionally, the Company will work to significantly reduce product development times and achieve cost savings, promoting prototype-less production through the utilization of its super computer. Furthermore, it will move forward with the fundamental reform of manufacturing through the utilization of 3D printers.

In addition to the above, in order to return to a path of growth in the face of the dramatically changing business environment, Canon will select and concentrate on technological themes that will open the way to the future, further enhance product quality management, effectively make use of the Company’s workforce, and carry out reforms such as thoroughly strengthening information security.

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

III. Financial Statements

1.   CONSOLIDATED BALANCE SHEETS

 

		Millions of yen												Thousands of U.S. dollars
		As of December 31, 2013				As of December 31, 2012				Change				As of December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents		¥	788,909			¥	666,678			¥	122,231			$	7,513,419
Short-term investments			47,914				28,322				19,592				456,324
Trade receivables, net			608,741				573,375				35,366				5,797,533
Inventories			553,773				551,623				2,150				5,274,029
Prepaid expenses and other current assets			286,605				262,258				24,347				2,729,571
Total current assets			2,285,942				2,082,256				203,686				21,770,876
Noncurrent receivables			19,276				19,702				(426)				183,581
Investments			70,358				56,617				13,741				670,076
Property, plant and equipment, net			1,278,730				1,260,364				18,366				12,178,381
Intangible assets, net			145,075				135,736				9,339				1,381,667
Other assets			443,329				400,828				42,501				4,222,181
Total assets		¥	4,242,710			¥	3,955,503			¥	287,207			$	40,406,762
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt		¥	1,299			¥	1,866			¥	(567)			$	12,371
Trade payables			307,157				325,235				(18,078)				2,925,305
Accrued income taxes			53,196				60,057				(6,861)				506,629
Accrued expenses			315,536				291,348				24,188				3,005,105
Other current liabilities			171,119				165,929				5,190				1,629,704
Total current liabilities			848,307				844,435				3,872				8,079,114
Long-term debt, excluding current installments			1,448				2,117				(669)				13,790
Accrued pension and severance cost			229,664				272,131				(42,467)				2,187,276
Other noncurrent liabilities			96,514				82,518				13,996				919,182
Total liabilities			1,175,933				1,201,201				(25,268)				11,199,362
Equity:
Canon Inc. stockholders’ equity:
Common stock			174,762				174,762				-				1,664,400
Additional paid-in capital			402,029				401,547				482				3,828,848
Legal reserve			63,091				61,663				1,428				600,867
Retained earnings			3,212,692				3,138,976				73,716				30,597,067
Accumulated other comprehensive income (loss)			(80,646)				(367,249)				286,603				(768,057)
Treasury stock, at cost			(861,666)				(811,673)				(49,993)				(8,206,344)
Total Canon Inc. stockholders’ equity			2,910,262				2,598,026				312,236				27,716,781
Noncontrolling interests			156,515				156,276				239				1,490,619
Total equity			3,066,777				2,754,302				312,475				29,207,400
Total liabilities and equity		¥	4,242,710			¥	3,955,503			¥	287,207			$	40,406,762
		Millions of yen												Thousands of U.S. dollars
		As of December 31, 2013				As of December 31, 2012								As of December 31, 2013
Notes:
1. Allowance for doubtful receivables		¥	12,730			¥	12,970							$	121,238
2. Accumulated depreciation			2,383,530				2,159,453								22,700,286
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments			1,734				(247,734	)							16,514
Net unrealized gains and losses on securities			10,242				4,146								97,543
Net gains and losses on derivative instruments			(2,408)				(4,462	)							(22,933	)
Pension liability adjustments			(90,214)				(119,199	)							(859,181	)

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

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

Consolidated statements of income

 

Results for the fourth quarter		Millions of yen																Thousands of U.S. dollars
		Three months ended December 31, 2013				Three months ended December 31, 2012				Change(%)								Three months ended December 31, 2013
Net sales		¥	1,034,698			¥	951,394				+				8.8			$	9,854,267
Cost of sales			546,680				519,002												5,206,477
Gross profit			488,018				432,392				+				12.9				4,647,790
Operating expenses:
Selling, general and administrative expenses			316,713				280,052												3,016,314
Research and development expenses			77,765				74,636												740,619
			394,478				354,688												3,756,933
Operating profit			93,540				77,704				+				20.4				890,857
Other income (deductions):
Interest and dividend income			2,340				1,703												22,286
Interest expense			(193)				(509)												(1,838)
Other, net			4,738				10,210												45,124
			6,885				11,404												65,572
Income before income taxes			100,425				89,108				+				12.7				956,429
Income taxes			32,103				24,588												305,743
Consolidated net income			68,322				64,520												650,686
Less: Net income attributable to noncontrolling interests			4,070				3,347												38,762
Net income attributable to Canon Inc.		¥	64,252			¥	61,173				+				5.0			$	611,924
Results for the fiscal year		Millions of yen																Thousands of U.S. dollars
		Year ended December 31, 2013				Year ended December 31, 2012				Change(%)								Year ended December 31, 2013
Net sales		¥	3,731,380			¥	3,479,788				+				7.2			$	35,536,952
Cost of sales			1,932,959				1,829,822												18,409,133
Gross profit			1,798,421				1,649,966				+				9.0				17,127,819
Operating expenses:
Selling, general and administrative expenses			1,154,820				1,029,646												10,998,286
Research and development expenses			306,324				296,464												2,917,371
			1,461,144				1,326,110												13,915,657
Operating profit			337,277				323,856				+				4.1				3,212,162
Other income (deductions):
Interest and dividend income			6,579				6,792												62,657
Interest expense			(550)				(1,022)												(5,238)
Other, net			4,298				12,931												40,933
			10,327				18,701												98,352
Income before income taxes			347,604				342,557				+				1.5				3,310,514
Income taxes			108,088				110,112												1,029,409
Consolidated net income			239,516				232,445												2,281,105
Less: Net income attributable to noncontrolling interests			9,033				7,881												86,029
Net income attributable to Canon Inc.		¥	230,483			¥	224,564				+				2.6			$	2,195,076

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

Consolidated statements of comprehensive income

 

Results for the fourth quarter		Millions of yen																Thousands of U.S. dollars
		Three months ended December 31, 2013				Three months ended December 31, 2012				Change(%)								Three months ended December 31, 2013
Consolidated net income		¥	68,322			¥	64,520				+				5.9			$	650,686
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			109,297				127,103												1,040,924
Net unrealized gains and losses on securities			2,700				2,337												25,714
Net gains and losses on derivative instruments			(2,384)				(5,123)												(22,705)
Pension liability adjustments			29,850				(13,736)												284,286
			139,463				110,581												1,328,219
Comprehensive income			207,785				175,101				+				18.7				1,978,905
Less: Comprehensive income attributable to noncontrolling interests			7,892				6,047												75,162
Comprehensive income attributable to Canon Inc.		¥	199,893			¥	169,054				+				18.2			$	1,903,743
Results for the fiscal year		Millions of yen																Thousands of U.S. dollars
		Year ended December 31, 2013				Year ended December 31, 2012				Change(%)								Year ended December 31, 2013
Consolidated net income		¥	239,516			¥	232,445				+				3.0			$	2,281,105
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			251,576				133,735												2,395,962
Net unrealized gains and losses on securities			6,612				3,265												62,971
Net gains and losses on derivative instruments			2,056				(4,880)												19,581
Pension liability adjustments			32,669				(12,787)												311,133
			292,913				119,333												2,789,647
Comprehensive income			532,429				351,778				+				51.4				5,070,752
Less: Comprehensive income attributable to noncontrolling interests			14,688				10,824												139,885
Comprehensive income attributable to Canon Inc.		¥	517,741			¥	340,954				+				51.9			$	4,930,867

 

-9-

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3.     DETAILS OF SALES

 

Results for the fourth quarter		Millions of yen																Thousands of U.S. dollars
Sales by business unit			Three months ended   December 31, 2013				Three months ended   December 31, 2012				Change(%)								Three months ended   December 31, 2013
Office		¥	521,970			¥	456,323				+				14.4			$	4,971,143
Imaging System			416,181				410,675				+				1.3				3,963,629
Industry and Others			118,781				106,768				+				11.3				1,131,248
Eliminations			(22,234)				(22,372)								-				(211,753)
Total		¥	1,034,698			¥	951,394				+				8.8			$	9,854,267
		Millions of yen																Thousands of U.S. dollars
Sales by region			Three months ended December 31, 2013				Three months ended December 31, 2012				Change(%)								Three months ended December 31, 2013
Japan		¥	212,523			¥	198,803				+				6.9			$	2,024,029
Overseas:
Americas			287,740				266,352				+				8.0				2,740,381
Europe			319,667				288,909				+				10.6				3,044,448
Asia and Oceania			214,768				197,330				+				8.8				2,045,409
			822,175				752,591				+				9.2				7,830,238
Total		¥	1,034,698			¥	951,394				+				8.8			$	9,854,267
Results for the fiscal year		Millions of yen																Thousands of U.S. dollars
Sales by business unit			Year ended December 31, 2013				Year ended December 31, 2012				Change(%)								Year ended December 31, 2013
Office		¥	2,000,073			¥	1,757,575				+				13.8			$	19,048,314
Imaging System			1,448,938				1,405,971				+				3.1				13,799,410
Industry and Others			374,870				407,840				-				8.1				3,570,190
Eliminations			(92,501)				(91,598)								-				(880,962)
Total		¥	3,731,380			¥	3,479,788				+				7.2			$	35,536,952
		Millions of yen																Thousands of U.S. dollars
Sales by region			Year ended   December 31, 2013				Year ended December 31, 2012				Change(%)								Year ended December 31, 2013
Japan		¥	715,863			¥	720,286				-				0.6			$	6,817,743
Overseas:
Americas			1,059,501				939,873				+				12.7				10,090,486
Europe			1,124,929				1,014,038				+				10.9				10,713,609
Asia and Oceania			831,087				805,591				+				3.2				7,915,114
			3,015,517				2,759,502				+				9.3				28,719,209
Total		¥	3,731,380			¥	3,479,788				+				7.2			$	35,536,952

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

Office Business Unit :
Office multifunction devices (MFDs) / Laser multifunction printers (MFPs) / Laser printers / Digital production printing systems / High speed continuous feed printers / Wide-format printers / Document solution
Imaging System Business Unit :
Interchangeable lens digital cameras / Digital compact cameras / Digital camcorders / Digital cinema cameras / Interchangeable lenses / Inkjet printers / Large-format inkjet printers / Commercial photo printers / Image scanners / Multimedia projectors /Broadcast equipment / Calculators
Industry and Others Business Unit :
Semiconductor lithography equipment / Flat panel display (FPD) lithography equipment / Digital radiography systems /Ophthalmic equipment / Vacuum thin-film deposition equipment / Organic LED (OLED) panel manufacturing equipment /Die bonders / Micromotors /Network cameras / Handy terminals / Document scanners

2. The principal countries and regions included in each regional category are as follows:
Americas: United States of America, Canada, Latin America
Europe: United Kingdom, Germany, France, Netherlands, European countries, Middle East and Africa
Asia and Oceania: China, Asian countries, Australia

 

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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, 2011		¥	174,762			¥	401,572			¥	59,004			¥	3,059,298			¥	(481,773	)		¥	(661,731	)		¥	2,551,132			¥	162,535			¥	2,713,667
Equity transactions with noncontrolling interests and other							(16	)							152				(1,866	)							(1,730	)			(13,591	)			(15,321	)
Dividends paid to Canon Inc. stockholders															(142,362	)											(142,362	)							(142,362	)
Dividends paid to noncontrolling interests																															(3,492	)			(3,492	)
Transfers to legal reserve											2,659				(2,659	)											-								-
Comprehensive income:
Net income															224,564												224,564				7,881				232,445
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments																			132,704								132,704				1,031				133,735
Net unrealized gains and losses on securities																			3,148								3,148				117				3,265
Net gains and losses on derivative instruments																			(4,882	)							(4,882	)			2				(4,880	)
Pension liability adjustments																			(14,580	)							(14,580	)			1,793				(12,787	)
Total comprehensive income																											340,954				10,824				351,778
Repurchase of treasury stock, net							(9	)							(17	)							(149,942	)			(149,968	)							(149,968	)
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
																											Thousands of U.S. dollars
Balance at December 31, 2012		$	1,664,400			$	3,824,257			$	587,267			$	29,895,010			$	(3,497,610	)		$	(7,730,219	)		$	24,743,105			$	1,488,343			$	26,231,448
Equity transactions with noncontrolling interests and other							4,657								2,809				(6,238	)							1,228				(106,495	)			(105,267	)
Dividends to Canon Inc. stockholders															(1,482,162	)											(1,482,162	)							(1,482,162	)
Dividends to noncontrolling interests																															(31,114	)			(31,114	)
Transfers to legal reserve											13,600				(13,600	)											-								-
Comprehensive income:
Net income															2,195,076												2,195,076				86,029				2,281,105
Other comprehensive income, net of tax:
Foreign currency translation adjustments																			2,378,962								2,378,962				17,000				2,395,962
Net unrealized gains and losses on securities																			58,067								58,067				4,904				62,971
Net gains and losses on derivative instruments																			19,581								19,581				-				19,581
Pension liability adjustments																			279,181								279,181				31,952				311,133
Total comprehensive income																											4,930,867				139,885				5,070,752
Repurchase of treasury stock, net							(66	)							(66	)							(476,125	)			(476,257	)							(476,257	)
Balance at December 31, 2013		$	1,664,400			$	3,828,848			$	600,867			$	30,597,067			$	(768,057	)		$	(8,206,344	)		$	27,716,781			$	1,490,619			$	29,207,400

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5.    CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Millions of yen								Thousands of U.S. dollars
		Year ended December 31, 2013				Year ended December 31, 2012				Year ended December 31, 2013
Cash flows from operating activities:
Consolidated net income		¥	239,516			¥	232,445			$	2,281,105
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			275,173				258,133				2,620,695
Loss on disposal of fixed assets			10,638				11,242				101,314
Deferred income taxes			16,791				7,487				159,914
Decrease in trade receivables			45,040				5,030				428,952
(Increase) decrease in inventories			85,577				(24,805)				815,019
Decrease in trade payables			(108,622)				(102,293)				(1,034,495)
Increase (decrease) in accrued income taxes			(9,432)				12,427				(89,829)
Decrease in accrued expenses			(15,635)				(30,089)				(148,905)
Increase (decrease) in accrued (prepaid) pension and severance cost			(15,568)				5,515				(148,267)
Other, net			(15,836)				8,985				(150,817)
Net cash provided by operating activities			507,642				384,077				4,834,686
Cash flows from investing activities:
Purchases of fixed assets			(233,175)				(316,211)				(2,220,714)
Proceeds from sale of fixed assets			1,763				4,861				16,790
Purchases of available-for-sale securities			(5,771)				(417)				(54,962)
Proceeds from sale and maturity of available-for-sale securities			4,528				344				43,124
(Increase) decrease in time deposits, net			(12,483)				103,137				(118,886)
Acquisitions of subsidiaries, net of cash acquired			(4,914)				(704)				(46,800)
Purchases of other investments			(296)				(796)				(2,819)
Other, net			136				(2,954)				1,296
Net cash used in investing activities			(250,212)				(212,740)				(2,382,971)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			1,483				614				14,124
Repayments of long-term debt			(2,334)				(3,732)				(22,229)
Decrease in short-term loans, net			(547)				(5,055)				(5,210)
Dividends paid			(155,627)				(142,362)				(1,482,162)
Repurchases of treasury stock, net			(50,007)				(149,968)				(476,257)
Other, net			(15,149)				(19,236)				(144,276)
Net cash used in financing activities			(222,181)				(319,739)				(2,116,010)
Effect of exchange rate changes on cash and cash equivalents			86,982				41,853				828,400
Net change in cash and cash equivalents			122,231				(106,549)				1,164,105
Cash and cash equivalents at beginning of year			666,678				773,227				6,349,314
Cash and cash equivalents at end of year		¥	788,909			¥	666,678			$	7,513,419

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

6.   NOTE FOR GOING CONCERN ASSUMPTION

      Not applicable.

7.   SEGMENT INFORMATION

 

(1)  SEGMENT INFORMATION BY BUSINESS UNIT

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

 

Note:		In 2013, based on the realignment of Canon’s internal reporting structure, certain assets have been transferred from Corporate to the Office Business Unit. Corresponding amounts of total assets as of December 31, 2012 have been reclassified to conform with the current year presentation.

 

-14-

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2)  SEGMENT INFORMATION BY GEOGRAPHIC AREA

 

 

-15-

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

 

 

-16-

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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, 2013				December 31, 2012				Change
Subsidiaries			257				275				(18	)
Affiliates			11				9				2
Total			268				284				(16	)

 

2.

Change in Group Entities

 

Subsidiaries
Addition:		22 companies
Removal:		40 companies

 

Affiliates(Carried at Equity Basis)
Addition:		3 companies
Removal:		1 company

 

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.

 

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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								Thousands of U.S. dollars
		Year ended December 31, 2013				Year ended December 31, 2012				Year ended December 31, 2013
Net income attributable to Canon Inc.
-Basic		¥	230,483			¥	224,564			$	2,195,076
-Diluted			230,483				224,564				2,195,076
		Number of shares
Average common shares outstanding
-Basic			1,147,933,835				1,173,647,835
-Diluted			1,147,942,301				1,173,668,409
		Yen								U.S. dollars
Net income attributable to
Canon Inc. stockholders per share:
-Basic		¥	200.78			¥	191.34			$	1.91
-Diluted			200.78				191.34				1.91

 

(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.

 

-18-

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CANON INC.

NON-CONSOLIDATED

10.  NON-CONSOLIDATED BALANCE SHEETS

       (Parent company only)

 

		Millions of yen
		As of   December 31,   2013				As of   December 31,   2012
ASSETS
Current assets:
Cash		¥	34,054			¥	28,719
Trade receivables			580,170				552,776
Marketable securities			100,660				51,420
Inventories			166,244				183,965
Prepaid expenses and other current assets			193,540				178,881
Allowance for doubtful receivables			(66)				(398)
Total current assets			1,074,602				995,363
Fixed assets:
Net property, plant and equipment			685,526				723,256
Intangibles			30,955				31,950
Investments and other fixed assets			594,885				586,508
Allowance for doubtful receivables-noncurrent			(76)				(75)
Total fixed assets			1,311,290				1,341,639
Total assets		¥	2,385,892			¥	2,337,002
LIABILITIES AND NET ASSETS
Current liabilities:
Trade payables		¥	302,068			¥	293,627
Short-term loans			322,653				239,741
Accrued income taxes			32,285				40,868
Accrued warranty expenses			1,487				1,980
Accrued bonuses for employees			4,549				4,382
Accrued bonuses for directors			206				191
Other current liabilities			113,717				119,828
Total current liabilities			776,965				700,617
Noncurrent liabilities:
Accrued pension and severance cost			35,044				33,507
Accrued directors’ retirement benefits			-				1,575
Reserve for environmental provision			3,437				5,084
Accrued long service rewards for employees			1,442				1,522
Other noncurrent liabilities			1,974				9
Total noncurrent liabilities			41,897				41,697
Total liabilities			818,862				742,314
Net assets:
Stockholders’ equity			1,558,754				1,593,998
Valuation and translation adjustments			5,888				(1,669)
Subscription right to shares			2,388				2,359
Total net assets			1,567,030				1,594,688
Total liabilities and net assets		¥	2,385,892			¥	2,337,002

 

-19-

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CANON INC.

NON-CONSOLIDATED

11.  NON-CONSOLIDATED STATEMENTS OF INCOME

       (Parent company only)

 

		Millions of yen
		Year ended   December 31,   2013				Year ended   December 31,   2012
Net sales		¥	2,128,798			¥	2,113,420
Cost of sales			1,510,014				1,488,101
Gross profit			618,784				625,319
Selling, general and administrative expenses			430,293				426,624
Operating profit			188,491				198,695
Other income (deductions):
Interest and dividend income			19,454				12,153
Interest expense			(1,659	)			(2,214	)
Other, net			30,409				27,094
			48,204				37,033
Ordinary profit			236,695				235,728
Non-ordinary gain (loss), net			(1,302	)			(4,622	)
Income before income taxes			235,393				231,106
Income taxes			65,010				73,459
Net income		¥	170,383			¥	157,647

 

-20-

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CANON INC.

NON-CONSOLIDATED

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

(Parent company only)

 

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

 

-21-

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CANON INC.

NON-CONSOLIDATED

 

Year ended December 31, 2012

(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			¥	371			¥	2,983			¥	1,249,928			¥	633,957			¥	(661,731	)		¥	1,728,672			¥	(2,107	)		¥	388			¥	2,143			¥	1,729,096
Changes of items during the period
Transfer to reserve for special depreciation															240												(240	)							-																-
Reversal of reserve for special depreciation															(177	)											177								-																-
Transfer to reserve for deferral of capital gain on property																			201								(201	)							-																-
Reversal of reserve for deferral of capital gain on property																			(95	)							95								-																-
Dividends paid																											(142,362	)							(142,362	)															(142,362	)
Net income																											157,647								157,647																157,647
Purchase of treasury stock																															(150,020	)			(150,020	)															(150,020	)
Disposal of treasury stock																											(17	)			78				61																61
Net changes of items other than stockholders’ equity																																			-				2,806				(2,756	)			216				266
Total changes of items during the period			-				-				-				63				106				-				15,099				(149,942	)			(134,674	)			2,806				(2,756	)			216				(134,408	)
Balance at the end 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

 

-22-

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CANON INC.

NON-CONSOLIDATED

13.  NOTE FOR GOING CONCERN ASSUMPTION

       (Parent company only)

  Not applicable.

 

-23-

---

NON-CONSOLIDATED

(Current Titles are Shown in the Parentheses)

Effective Date: March 28, 2014

Directors

(1)  Candidates for Directors to be promoted

 

Senior Managing Director		Hideki Ozawa		(Managing Director, President & CEO of Canon (China) Co., Ltd.)
Senior Managing Director		Masaya Maeda		(Managing Director, Chief Executive of Image Communication Products Operations)

(2)  Candidates for new Directors to be appointed (*Outside Director)

 

Akiyoshi Kimura		(Executive Officer, Deputy Chief Executive of Office Imaging Products Operations)
Eiji Osanai		(Executive Officer, Deputy Group Executive of Production Engineering Headquarters)
Kunitaro Saida*		(Lawyer)
Haruhiko Kato*		(President & CEO of Japan Securities Depository Center, Inc.)

(3)  Candidates for new Auditors to be appointed

 

Makoto Araki		(Director, Group Executive of Information & Communication Systems Headquarters)
Osami Yoshida		(Certified Public Accountant)

(4)  Directors to be retired

 

Advisor to be appointed		Kunio Watanabe		(Executive Vice President)
Advisor to be appointed		Masaki Nakaoka		(Senior Managing Director)
Advisor to be appointed		Haruhisa Honda		(Senior Managing Director)
Corporate Auditor to be appointed		Makoto Araki		(Director)
Senior Executive Officer to be appointed		Hiroyuki Suematsu		(Director)
Senior Executive Officer to be appointed		Shigeyuki Uzawa		(Director)

(5)  Auditors to be retired

 

Shunji Onda
Kazunori Watanabe

 

-24-

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NON-CONSOLIDATED

(Current Titles are Shown in the Parentheses)

Executive Officers

(1)  Executive Officers to be promoted

    Effective Date: January 1, 2014

 

Senior Executive Officer		Yuichi Ishizuka		(Executive Officer, Executive Vice President of Canon U.S.A., Inc.)

    Effective Date: April 1, 2014

 

Senior Executive Officer		Rokus van Iperen		(Executive Officer, President & CEO of Canon Europa N.V./Canon Europe Ltd.)

(2)  New Executive Officers to be appointed

    Effective Date: April 1, 2014

 

Hiroyuki Suematsu*		(Group Executive of Quality Management Headquarters)
Shigeyuki Uzawa*		(Chief Executive of Optical Products Operations)
Masaaki Nakamura		(Deputy Group Executive of Facilities Management Headquarters)
Takashi Takeya		(Senior General Manager of Global Logistics Management Center)
Katsumi Iijima		(Senior General Manager of Global IT Administration Center)
Nobuyuki Tainaka		(Deputy Senior General Manager of Corporate Legal Center)
		*Senior Executive Officer to be appointed

(3)  Executive Officers to be retired

    Effective Date: December 31, 2013

 

Kenji Kobayashi		(President of Canon Latin America, Inc.)

    Effective Date: March 28, 2014

 

Akiyoshi Kimura		(Deputy Chief Executive of Office Imaging Products Operations)
Eiji Osanai		(Deputy Group Executive of Production Engineering Headquarters)

    Effective Date: March 31, 2014

 

Sachio Kageyama		(Group Executive of Global Manufacturing Headquarters)

 

-25-

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Canon Inc.

January 29, 2014

CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER

AND THE FISCAL YEAR ENDED DECEMBER 31, 2013

SUPPLEMENTARY REPORT

TABLE OF CONTENTS

 

				PAGE
1.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2013)			S    1
2.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2014/Projection)			S    2
3.		SEGMENT INFORMATION BY BUSINESS UNIT (2013)			S    3
4.		OTHER INCOME / DEDUCTIONS (2013)			S    3
5.		SEGMENT INFORMATION BY BUSINESS UNIT (2014/Projection)			S    4
6.		OTHER INCOME / DEDUCTIONS (2014/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 (2013)			(Millions of yen	)

				2013								2012										Change year over year
				4th quarter				Year				4th quarter				Year						4th quarter				Year
Japan
		Office			97,488				368,308				94,052				368,939						+3.7%				-0.2%
		Imaging System			76,103				215,970				74,403				213,465						+2.3%				+1.2%
		Industry and Others			38,932				131,585				30,348				137,882						+28.3%				-4.6%
		Total			212,523				715,863				198,803				720,286						+6.9%				-0.6%
Overseas
		Office			423,795				1,625,590				360,639				1,383,021						+17.5%				+17.5%
		Imaging System			339,900				1,232,216				335,889				1,190,929						+1.2%				+3.5%
		Industry and Others			58,480				157,711				56,063				185,552						+4.3%				-15.0%
		Total			822,175				3,015,517				752,591				2,759,502						+9.2%				+9.3%
		Americas
		Office			158,481				629,472				134,820				530,382						+17.6%				+18.7%
		Imaging System			118,193				392,373				120,383				366,888						-1.8%				+6.9%
		Industry and Others			11,066				37,656				11,149				42,603						-0.7%				-11.6%
		Total			287,740				1,059,501				266,352				939,873						+8.0%				+12.7%
		Europe
		Office			188,760				694,563				165,551				597,341						+14.0%				+16.3%
		Imaging System			122,291				404,390				116,522				394,612						+5.0%				+2.5%
		Industry and Others			8,616				25,976				6,836				22,085						+26.0%				+17.6%
		Total			319,667				1,124,929				288,909				1,014,038						+10.6%				+10.9%
		Asia and Oceania
		Office			76,554				301,555				60,268				255,298						+27.0%				+18.1%
		Imaging System			99,416				435,453				98,984				429,429						+0.4%				+1.4%
		Industry and Others			38,798				94,079				38,078				120,864						+1.9%				-22.2%
		Total			214,768				831,087				197,330				805,591						+8.8%				+3.2%
Intersegment
		Office			687				6,175				1,632				5,615						-57.9%				+10.0%
		Imaging System			178				752				383				1,577						-53.5%				-52.3%
		Industry and Others			21,369				85,574				20,357				84,406						+5.0%				+1.4%
		Eliminations			(22,234	)			(92,501	)			(22,372	)			(91,598	)					-				-
		Total			0				0				0				0						-				-
Total
		Office			521,970				2,000,073				456,323				1,757,575						+14.4%				+13.8%
		Imaging System			416,181				1,448,938				410,675				1,405,971						+1.3%				+3.1%
		Industry and Others			118,781				374,870				106,768				407,840						+11.3%				-8.1%
		Eliminations			(22,234	)			(92,501	)			(22,372	)			(91,598	)					-				-
		Total			1,034,698				3,731,380				951,394				3,479,788						+8.8%				+7.2%

 

- S1 -

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Canon Inc.

2. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2014/Projection)

 

		(1) Sales by business unit												(Millions of yen)
					2014 (P)				2013						Change year over year
					Year				Year						Year
		Office			2,114,900				2,000,073						+5.7%
		Imaging System			1,388,100				1,448,938						-4.2%
		Industry and Others			444,500				374,870						+18.6%
		Eliminations			(97,500	)			(92,501	)					-
		Total			3,850,000				3,731,380						+3.2%
															(P)=Projection
		(2) Sales by region												(Millions of yen)
					2014 (P)				2013						Change year over year
					Year				Year						Year
		Japan			767,500				715,863						+7.2%
		Overseas			3,082,500				3,015,517						+2.2%
		Americas			1,057,300				1,059,501						-0.2%
		Europe			1,161,600				1,124,929						+3.3%
		Asia and Oceania			863,600				831,087						+3.9%
		Total			3,850,000				3,731,380						+3.2%
															(P)=Projection

 

- S2 -

---

Canon Inc.

 

3. SEGMENT INFORMATION BY BUSINESS UNIT (2013)

(Millions of yen)

				2013								2012										Change year  over year
				4th quarter				Year				4th quarter				Year						4th quarter		Year
Office
		External customers			521,283				1,993,898				454,691				1,751,960					+14.6%		+13.8%
		Intersegment			687				6,175				1,632				5,615					-57.9%		+10.0%
		Total sales			521,970				2,000,073				456,323				1,757,575					+14.4%		+13.8%
		Operating profit			63,551				266,908				51,272				203,578					+23.9%		+31.1%
		% of sales			12.2%				13.3%				11.2%				11.6%					-		-
Imaging System
		External customers			416,003				1,448,186				410,292				1,404,394					+1.4%		+3.1%
		Intersegment			178				752				383				1,577					-53.5%		-52.3%
		Total sales			416,181				1,448,938				410,675				1,405,971					+1.3%		+3.1%
		Operating profit			62,096				203,794				54,963				210,318					+13.0%		-3.1%
		% of sales			14.9%				14.1%				13.4%				15.0%					-		-
Industry and Others
		External customers			97,412				289,296				86,411				323,434					+12.7%		-10.6%
		Intersegment			21,369				85,574				20,357				84,406					+5.0%		+1.4%
		Total sales			118,781				374,870				106,768				407,840					+11.3%		-8.1%
		Operating profit			(3,827	)			(25,331	)			(9,450	)			5,910					-		-
		% of sales			-3.2%				-6.8%				-8.9%				1.4%					-		-
Corporate and Eliminations
		External customers			-				-				-				-					-		-
		Intersegment			(22,234)				(92,501)				(22,372)				(91,598)					-		-
		Total sales			(22,234)				(92,501)				(22,372)				(91,598)					-		-
		Operating profit			(28,280)				(108,094)				(19,081)				(95,950)					-		-
Consolidated
		External customers			1,034,698				3,731,380				951,394				3,479,788					+8.8%		+7.2%
		Intersegment			-				-				-				-					-		-
		Total sales			1,034,698				3,731,380				951,394				3,479,788					+8.8%		+7.2%
		Operating profit			93,540				337,277				77,704				323,856					+20.4%		+4.1%
		% of sales			9.0%				9.0%				8.2%				9.3%					-		-
4. OTHER INCOME / DEDUCTIONS (2013)																						(Millions of yen)
				2013								2012										Change year over year
				4th quarter				Year				4th quarter				Year						4th quarter		Year
		Interest and dividend, net			2,147				6,029				1,194				5,770					+953		+259
		Forex gain ( loss)			4,091				(1,992	)			10,477				9,130					(6,386)		(11,122)
		Equity earnings ( loss) of affiliated companies			(308	)			(664	)			(64	)			610					(244)		(1,274)
		Other, net			955				6,954				(203	)			3,191					+1,158		+3,763
		Total			6,885				10,327				11,404				18,701					(4,519)		(8,374)

 

- S3 -

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Canon Inc.

 

5. SEGMENT INFORMATION BY BUSINESS UNIT (2014/Projection)					(Millions of yen	)

				2014 (P)		2013				Change year over  year
				Year		Year				Year
Office
		External customers		2,111,800		1,993,898				+5.9%
		Intersegment		3,100		6,175				-49.8%
		Total sales		2,114,900		2,000,073				+5.7%
		Operating profit		286,100		266,908				+7.2%
		% of sales		13.5%		13.3%				-
Imaging System
		External customers		1,386,500		1,448,186				-4.3%
		Intersegment		1,600		752				+112.8%
		Total sales		1,388,100		1,448,938				-4.2%
		Operating profit		196,000		203,794				-3.8%
		% of sales		14.1%		14.1%				-
Industry and Others
		External customers		351,700		289,296				+21.6%
		Intersegment		92,800		85,574				+8.4%
		Total sales		444,500		374,870				+18.6%
		Operating profit		(17,500)		(25,331)				-
		% of sales		-3.9%		-6.8%				-
Corporate and Eliminations
		External customers		-		-				-
		Intersegment		(97,500)		(92,501)				-
		Total sales		(97,500)		(92,501)				-
		Operating profit		(104,600)		(108,094)				-
Consolidated
		External customers		3,850,000		3,731,380				+3.2%
		Intersegment		-		-				-
		Total sales		3,850,000		3,731,380				+3.2%
		Operating profit		360,000		337,277				+6.7%
		% of sales		9.4%		9.0%				-
										(P)=Projection
6. OTHER INCOME / DEDUCTIONS (2014/Projection)										(Millions of yen)
				2014 (P)		2013				Change year over  year
				Year		Year				Year
		Interest and dividend, net		4,000		6,029				(2,029)
		Forex gain (loss)		(2,300)		(1,992)				(308)
		Equity earnings (loss) of affiliated companies		1,100		(664)				+1,764
		Other, net		(2,800)		6,954				(9,754)
		Total		0		10,327				(10,327)
										(P)=Projection

 

- S4 -

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Canon Inc.

 

7. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT
				2014 (P)		2013				2012
				Year		4th quarter		Year		4th quarter		Year
Office
		Monochrome copiers		16%		16%		16%		16%		16%
		Color copiers		20%		20%		19%		20%		19%
		Printers		41%		39%		42%		43%		44%
		Others		23%		25%		23%		21%		21%
Imaging System
		Cameras		64%		65%		67%		68%		70%
		Inkjet printers		28%		27%		25%		25%		22%
		Others		8%		8%		8%		7%		8%
Industry and Others
		Lithography equipment		24%		30%		17%		8%		15%
		Others		76%		70%		83%		92%		85%
												(P)=Projection
8. SALES GROWTH IN LOCAL CURRENCY (Year over year)
				2014 (P)		2013
				Year		4th quarter		Year
Office
		Japan		-		+3.7%		-0.2%
		Overseas		-		-6.4%		-4.8%
		Total		+3.5%		-4.5%		-3.8%
Imaging System
		Japan		-		+2.3%		+1.2%
		Overseas		-		-19.5%		-16.5%
		Total		-6.1%		-15.6%		-13.8%
Industry and Others
		Japan		-		+28.3%		-4.6%
		Overseas		-		-4.8%		-23.1%
		Total		+18.1%		+6.5%		-11.8%
Total
		Japan		+7.2%		+6.9%		-0.6%
		Overseas		-0.2%		-12.1%		-11.1%
		Americas		-2.2%		-13.0%		-8.1%
		Europe		-0.2%		-14.2%		-11.8%
		Asia and Oceania		+2.4%		-7.9%		-13.6%
		Total		+1.2%		-8.1%		-8.9%
								(P)=Projection

 

- S5 -

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Canon Inc.

9. PROFITABILITY

				2014 (P)				2013				2012
				Year				Year				Year
ROE *1					8.2%				8.4%				8.7%
ROA *2					5.6%				5.6%				5.7%
													(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)
				2014 (P)				2013								2012
				Year				4th quarter				Year				4th quarter				Year
		Yen/US$			100.00				100.50				97.84				81.26			79.96
		Yen/Euro			135.00				136.69				130.01				105.31			102.80
																				(P)=Projection
(2) Impact of foreign exchange rates on sales (Year over year)												(Billions of yen)
				2014 (P)				2013
				Year				4th quarter				Year
		US$			+18.7				+69.6				+257.0
		Euro			+31.9				+62.4				+193.6
		Other currencies			+4.8				+14.9				+63.4
		Total			+55.4				+146.9				+514.0
													(P)=Projection
(3) Impact of foreign exchange rates per yen				(Billions of yen)
				2014 (P)
				Year
On sales
		US$			16.8
		Euro			7.0
On operating profit
		US$			6.4
		Euro			3.4
					(P)=Projection
11. STATEMENTS OF CASH FLOWS																				(Millions of yen)
				2014 (P)				2013								2012
				Year				4th quarter				Year				4th quarter				Year
Net cash provided by operating activities					515,000				164,316				507,642				118,262			384,077
Net cash used in investing activities					(300,000	)			(42,603	)			(250,212	)			(57,707	)		(212,740)
Free cash flow					215,000				121,713				257,430				60,555			171,337
Net cash used in financing activities					(150,800	)			(10,114	)			(222,181	)			(6,629	)		(319,739)
Effect of exchange rate changes on cash and cash equivalents					(28,100	)			36,789				86,982				45,142			41,853
Net change in cash and cash equivalents					36,100				148,388				122,231				99,068			(106,549)
Cash and cash equivalents at end of period					825,000				788,909				788,909				666,678			666,678
																				(P)=Projection

 

- S6 -

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Canon Inc.

 

12. R&D EXPENDITURE								(Millions of yen)
				2014 (P)		2013		2012
				Year		Year		Year
		Office		-		105,246		99,484
		Imaging System		-		84,377		83,948
		Industry and Others		-		25,701		25,635
		Corporate and Eliminations		-		91,000		87,397
		Total		310,000		306,324		296,464
		% of sales		8.1%		8.2%		8.5%
								(P)=Projection
13. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION								(Millions of yen)
				2014 (P)		2013		2012
				Year		Year		Year
Increase in PP&E
		Office		-		51,457		54,932
		Imaging System		-		41,853		55,623
		Industry and Others		-		25,662		42,288
		Corporate and Eliminations		-		69,854		117,614
		Total		210,000		188,826		270,457
Depreciation and amortization
		Office		-		88,344		77,660
		Imaging System		-		56,564		53,664
		Industry and Others		-		37,072		34,264
		Corporate and Eliminations		-		93,193		92,545
		Total		270,000		275,173		258,133
								(P)=Projection
14. INVENTORIES
(1) Inventories								(Millions of yen)
				2013		2012		Difference
				Dec.31		Dec.31
		Office		227,413		201,661		+25,752
		Imaging System		221,368		245,973		(24,605)
		Industry and Others		104,992		103,989		+1,003
		Total		553,773		551,623		+2,150
(2) Inventories/Sales*								(Days)
				2013		2012		Difference
				Dec.31		Dec.31
		Office		41		43		(2)
		Imaging System		53		61		(8)
		Industry and Others		115		124		(9)
		Total		52		57		(5)
*Index based on the previous six months sales.
15. DEBT RATIO
				2013		2012		Difference
				Dec.31		Dec.31
		Total debt / Total assets		0.1%		0.1%		0.0%
16. OVERSEAS PRODUCTION RATIO
				2013		2012
				Year		Year
		Overseas production ratio		57%		52%
17. NUMBER OF EMPLOYEES
				2013		2012		Difference
				Dec.31		Dec.31
		Japan		69,825		70,234		(409)
		Overseas		124,326		126,734		(2,408)
		Total		194,151		196,968		(2,817)

 

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