FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the month of	July	, 2007

CANON INC.

(Translation of registrant’s name into English)

30-2, Shimomaruko 3-Chome, Ohta-ku, Tokyo 146-8501, Japan

(Address of principal executive offices)

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

	Form 20-F	X	Form 40-F

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

	Yes		No	X

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

 

 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

*Print the name and title of the signing officer under his signature.

The following material is included.

1.  RESULTS FOR THE SECOND QUARTER AND THE FIRST HALF ENDED JUNE 30, 2007

RESULTS FOR THE SECOND QUARTER
AND THE FIRST HALF ENDED JUNE 30, 2007

July 26, 2007

CONSOLIDATED RESULTS FOR THE FIRST HALF

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

		Actual																				Projected
		Six months				Six months								Six months				Year ended				Year ending
		ended				ended				Change(%)				ended				December 31,				December 31,				Change(%)
		June 30, 2007				June 30, 2006								June 30, 2007				2006				2007
		(Unaudited)				(Unaudited)								(Unaudited)
Net sales		¥	2,166,724			¥	1,952,255			+	11.0			$	17,615,642			¥	4,156,759			¥	4,580,000			+	10.2
Operating profit			388,876				338,477			+	14.9				3,161,593				707,033				766,000			+	8.3
Income before income taxes and minority interests			406,141				341,045			+	19.1				3,301,959				719,143				788,000			+	9.6
Net income		¥	255,183			¥	214,174			+	19.1			$	2,074,659			¥	455,325			¥	500,000			+	9.8
Net income per share:
- Basic		¥	194.38			¥	160.85			+	20.8			$	1.58			¥	341.95			¥	384.44			+	12.4
- Diluted			194.33				160.79			+	20.9				1.58				341.84				—				—
		Actual
										Change(%)								As of
		As of				As of								As of				December 31,
		June 30, 2007				June 30, 2006								June 30, 2007				2006
		(Unaudited)				(Unaudited)								(Unaudited)
Total assets		¥	4,608,514			¥	4,107,366			+	12.2			$	37,467,593			¥	4,521,915
Stockholders’ equity		¥	3,074,367			¥	2,762,380			+	11.3			$	24,994,854			¥	2,986,606
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 JPY123 = U.S.$1, the approximate exchange rate on the                 Tokyo Foreign Exchange Market as of June 29, 2007, solely for the convenience of the reader.
3. Canon made a three-for-two stock split on July 1, 2006, all per share information has been adjusted to reflect the                 stock split.
NON-CONSOLIDATED RESULTS FOR THE FIRST HALF
(Millions of yen, thousands of U.S. dollars, except per share amounts)
		Actual
		Six months				Six months								Six months				Year ended
		ended				ended				Change(%)				ended				December 31,
		June 30, 2007				June 30, 2006								June 30, 2007					2006
		(Unaudited)				(Unaudited)								(Unaudited)
Net sales		¥	1,370,988			¥	1,266,000			+	8.3			$	11,146,244			¥	2,729,657
Operating profit			280,363				240,422			+	16.6				2,279,374				511,157
Ordinary profit			302,276				246,101			+	22.8				2,457,528				523,996
Net income		¥	200,925			¥	155,548			+	29.2			$	1,633,537			¥	337,520
Net income per share		¥	153.05			¥	175.23				—			$	1.24			¥	253.48
Dividend per share			50.00				50.00				—				0.41				100.00
		Actual
										Change(%)								As of
		As of				As of								As of				December 31,
		June 30, 2007				June 30, 2006								June 30, 2007				2006
		(Unaudited)				(Unaudited)								(Unaudited)
Total assets		¥	2,808,645			¥	2,673,501			+	5.1			$	22,834,512			¥	2,938,072
Net assets		¥	2,042,600			¥	1,970,766			+	3.6			$	16,606,504			¥	2,109,283

Notes:

1.  U.S. dollar amounts are translated from yen at the rate of JPY123 = U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of June 29, 2007, solely for the convenience of the reader.

2.  Canon made a three-for-two stock split on July 1, 2006, though per share information for first half ended June 30, 2006 and fiscal year ended December 31, 2006 has not been adjusted to reflect the stock split. The amount recast based on the stock split is as follows.

Six months

Year ended

ended June 30, 2006

December 31, 2006

(Unaudited)

Net income per share

$

116.82

¥

—

Dividend per share

33.33

83.33

Canon Inc. Headquarter office		30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan

I. Operating Results and Financial Conditions

2007 First Half in Review

Looking back at the global economy in the first half of 2007, economic expansion was fairly steady during the term. The U.S. economy continued to display growth, supported by healthy consumer spending, despite a decrease in housing investment and a moderate slowdown 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 rate of growth while other economies in the region also enjoyed generally favorable conditions. In Japan, the economy maintained a trend toward recovery thanks to such factors as increased capital spending fueled by strong corporate performances and gradual improvements in consumer spending.

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 amid the shift in all regions toward color models and advanced functionality. In the computer peripherals segment, which includes printers, while demand for laser beam printers grew for both color and monochrome models, and demand for inkjet printers shifted from single-function to all-in-one models, multifunctional models in particular suffered amid severe price competition. In the optical equipment segment, while demand for steppers, used in the production of semiconductors, indicated a moderate recovery, the market for projection aligners, which are used to produce liquid crystal display (LCD) panels, declined due to restrained investment by LCD manufacturers. The average value of the yen in the first half was ¥120.07 to the U.S. dollar and ¥159.77 to the euro, representing year-on-year decreases of about 4% against the U.S. dollar, and about 12% against the euro.

Amid these conditions, Canon’s consolidated net sales for the first half increased by 11.0% from the year-ago period to ¥2,166.7 billion (U.S.$17,616 million), boosted by a solid rise in sales of digital cameras, color network MFDs and laser beam printers, along with the positive effect of favorable currency exchange rates. The gross profit ratio improved 1.0 point year on year to reach 51.1%. The improved gross profit ratio was mainly the result of such factors as suppressing price decline through the launch of new products and cost-reduction efforts realized through ongoing production-reform and procurement-reform activities, along with the in-house production of key components, which absorbed the effects of escalating raw material costs and severe price competition in the consumer product market. Owing to the increase in sales and the improved gross profit ratio, first-half gross profit rose by 13.2% to ¥1,107.6 billion (U.S.$9,005 million). As for operating expenses, while first-half R&D spending grew by 16.2% from the year-ago period to ¥170.3 billion (U.S.$1,384 million), the selling, general and administrative (SG&A) expenses to net sales ratio was approximately the same level as for the corresponding period of last year, with SG&A expense increasing 11.1% year on year, almost the same rate of growth as for net sales. In addition, from the second quarter of this year, the company implemented a change in the accounting method used to estimate depreciation of fixed assets, which resulted in a combined increase of ¥19.3 billion (U.S.$157 million) in cost of sales and operating expenses compared with the previously used method. Consequently, operating profit in the first half totaled ¥388.9 billion (U.S.$3,162 million), a year-on-year increase of 14.9%. Other income (deductions) improved by ¥14.7 billion (U.S.$119 million), due to such factors as an increase in surplus funds and interest income accompanying the rise in the interest rate, as well as a decrease in currency exchange losses on foreign-currency-denominated trade receivables. Income before income taxes and minority interests in the first half totaled ¥406.1 billion (U.S.$3,302 million), a year-on-year increase of 19.1%, and first-half income totaled ¥255.2 billion (U.S.$2,075 million), both recording all-time highs on a first-half basis.

Basic net income per share for the first half was ¥194.38 (U.S.$1.58), a year-on-year increase of ¥33.53 (U.S.$0.27).

Results by Product Segment

In the business machine segment, demand for network digital MFDs, which are grouped in the office imaging products sub-segment, has continued to expand for color models in both domestic and overseas markets. Additionally, among color network digital MFDs, the competitively priced iR C2880 series and the new high-end iR C5185 series continued to enjoy strong demand. Among monochrome network digital MFDs, the iR5055 series and the new energy-saving iR3025 series contributed to expanded sales. Overall, sales of office imaging products for the first half realized a year-on-year increase of 8.0%. In the field of computer peripherals, laser beam printers achieved a year-on-year unit sales growth of almost 40%, with both color and monochrome low-end models selling particularly well. In addition, consumables also recorded healthy sales growth, contributing to an increase of 19.2% in value terms for the segment. As for inkjet printers, despite a continuing decline in unit sales for single-function models and severe price competition in the market, sales in value terms increased by 14.0%, boosted by such factors as increased unit sales of multifunction models, such as the PIXMA MP600, and favorable sales growth for consumables. As a result, sales of computer peripherals for the first half realized a year-on-year increase of 17.6%. Sales of business information products, however, decreased by 1.9% due to a decline in sales of personal computers in the Japanese market. Collectively, sales of business machines for the first half totaled ¥1,446.6 billion (U.S.$11,761 million), a year-on-year increase of 12.4%. Operating profit for the business machine segment totaled ¥335.5 billion (U.S.$2,727 million), a year-on-year increase of 13.9%, made possible by such factors as an increase in gross profit and an improvement in the expense to net sales ratio.

Within the camera segment, demand for digital SLR cameras fueled growth, with the EOS DIGITAL REBEL XTi model, launched in September 2006, selling particularly well. This, in turn, led to expanded sales of interchangeable lenses for SLR cameras. As for compact digital cameras, the company strengthened its lineup with the launch of ten new models, including three stylish ELPH-series models and seven PowerShot-series models that cater to a diverse range of shooting styles. Accordingly, unit sales of digital cameras for the first half expanded nearly 20% compared with the year-ago period. As a result, camera sales overall for the first half increased by 12.9% from the year-ago period to ¥519.6 billion (U.S.$4,224 million). The gross profit ratio for the camera segment also rose substantially, boosted by such factors as strong sales of newly introduced products, which served to suppress declines in prices, along with cost-reduction efforts realized through production-reform and procurement-reform activities. As a result, operating profit for the camera segment increased by 26.3% year on year to ¥137.3 billion (U.S.$1,116 million).

In the optical and other products segment, while steppers, used in the production of semiconductors, enjoyed steady demand, sales of optical products decreased in the first half amid declining demand for aligners, used to produce LCD panels, as investment by LCD manufacturers remains at a low level. As a result, sales for the segment totaled ¥200.5 billion (U.S.$1,631 million), a year-on-year decrease of 2.3%. Operating profit for the segment decreased by 7.8% year on year to ¥21.4 billion (U.S.$174 million).

Cash Flow

In the first half of 2007, Canon generated cash flow from operating activities of ¥440.3 billion (U.S.$3,580 million), a year-on-year increase of ¥116.4 billion (U.S.$947 million), reflecting the substantial growth in net sales and net income. Cash flow from investing activities totaled ¥209.3 billion (U.S.$1,702 million), due to such factors as active capital investment, used mainly to expand the company’s production capabilities. As a result, free cash flow totaled ¥231.0 billion (U.S.$1,878 million), representing a ¥117.4 billion (U.S.$954 million) improvement from ¥113.6 billion for the year-ago period.

Cash flow from financing activities recorded an outlay of ¥279.8 billion (U.S.$2,275 million), mainly resulting from the dividend payout of ¥66.6 billion (U.S.$541 million) in accordance with the company’s basic policy regarding profit distribution and the ¥200.0 billion (U.S.$1,626 million) purchase of treasury stock with the aim of improving capital efficiency and ensuring a flexible capital strategy. Consequently, cash and cash equivalents, which totaled ¥1,108.7 billion (U.S.$9,014 million), although representing a ¥46.9 billion (U.S.$381 million) decrease from the end of the previous year, remained at a high level.

Non-consolidated Results

Canon Inc.’s non-consolidated net sales during the first half totaled ¥1,371.0 billion (U.S.$11,146 million), a year-on-year increase of 8.3%. Ordinary profit grew by 22.8% to ¥302.3 billion (U.S.$2,458 million) and net income increased 29.2% to ¥200.9 billion (U.S.$1,634 million), marking all-time highs for both first-half ordinary profit and net income.

Outlook

As for the global economic outlook in the third quarter and thereafter, although uncertainty surrounds such factors as the future direction of crude-oil and raw-material prices and a slowdown in the U.S. economy, the global economy is expected to continue growing steadily.

In the businesses in which Canon is involved, demand for both digital SLR cameras and compact digital cameras is expected to continue enjoying robust growth. As for network digital MFDs and laser beam printers, while additional demand is projected for full-color models, severe price competition and shifting demand toward lower-priced models are expected to continue. Within the semiconductor-production equipment market, demand for steppers indicates a trend toward steady performance supported by increasing orders from chip manufacturers, while demand for projection aligners used in the production of LCD panels is expected to continue being sluggish as investment by LCD manufacturers remains at a low level.

Following a review of the current business climate and currency exchange trends, the company has revised upward its consolidated net sales forecast for the 2007 fiscal year to ¥4,580.0 billion (U.S.$37,236 million), while revising downward its forecasts for consolidated income before income taxes and minority interests to ¥788.0 billion (U.S.$6,407 million), and consolidated net income to ¥500.0 billion (U.S.$4,065 million). These revisions assume an increase in depreciation expense of around ¥67.0 billion (U.S.$545 million) as a result of the change in the accounting method used to estimate depreciation of fixed assets that was implemented from the second quarter of 2007. Although uncertainty over such factors as future interest rates in major countries makes it difficult to predict the direction of currency exchange rates, these forecasts assume exchange rates of ¥120 to the U.S. dollar and ¥160 to the euro, representing year-on-year decreases of approximately 2% against the U.S. dollar, and approximately 6% against the euro.

Consolidated Outlook

Fiscal year

						Millions of yen
		Year ending								Change				Year ended				Change (%)
		December 31, 2007												December 31, 2006
		Previous Outlook (A)				Revised Outlook (B)				(B - A)				Results (C)				(B - C) / C
Net sales		¥	4,540,000			¥	4,580,000			¥	40,000			¥	4,156,759			+	10.2	%
Income before income taxes and minority interests			800,000				788,000				(12,000	)			719,143			+	9.6	%
Net income			505,000				500,000				(5,000	)			455,325			+	9.8	%

Basic policy regarding profit distribution

With regard to returning profits to shareholders, the company will actively work to do so mainly through the distribution of dividends, taking into consideration planned future investment, free cash flow, and consolidated business performance. Specifically, the mid- to long-term objective is to strive to raise the payout ratio to approximately 30% on a consolidated basis.

In accordance with this policy, the company plans to pay an interim dividend of ¥50.00 (U.S.$0.41) and a year-end dividend of ¥50.00 (U.S.$0.41) for a full-year dividend total of ¥100.00 (U.S.$0.81) in 2007.

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 corporate group targeting continued growth and development.

(2) 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 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 is pursuing “sound growth,” making use of the solid management foundation achieved through the two preceding 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

(3) Business Challenges and Countermeasures

At Canon, the creation of new businesses and maintaining our high profitability structure represent two very important management objectives to ensure continuous future growth.

     As for new businesses, we are promoting research based on leading-edge technologies in the company’s areas of expertise, such as biotechnology, nanotechnology and life sciences. At the same time, we are also looking into M&A opportunities and business tie-ups toward launching such businesses. Additionally, we aim to enter the display business, moving away from a focus on still images as we strengthen our ability to deliver video images, which will play an increasingly important role in the broadband era.

     With regard to maintaining our high profitability structure, in order to effectively respond to the intensifying price competition centered on the consumer goods market and the investment burden that 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 carrying out cost-reduction activities.

     We also view our approach to the environment as an important management issue. From the product planning stage through to design, development, production, sales, use, recovery and recycling, we focus our energies on such areas as 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.

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

III. Financial Statements

1. CONSOLIDATED STATEMENTS OF INCOME

Results for the second quarter

														Thousands of
		Millions of yen												U.S. dollars
		Three months				Three months								Three months
		ended				ended				Change(%)				ended
		June 30, 2007				June 30, 2006								June 30, 2007
		(Unaudited)				(Unaudited)								(Unaudited)
Net sales		¥	1,126,931			¥	1,028,983			+	9.5			$	9,162,041
Cost of sales			553,054				518,788								4,496,374
Gross profit			573,877				510,195			+	12.5				4,665,667
Operating expenses:
Selling, general and administrative expenses			295,067				262,476								2,398,919
Research and development expenses			97,337				79,377								791,358
			392,404				341,853								3,190,277
Operating profit			181,473				168,342			+	7.8				1,475,390
Other income (deductions):
Interest and dividend income			9,112				6,155								74,081
Interest expense			(402	)			(244	)							(3,268	)
Other, net			8,114				(2,799	)							65,968
			16,824				3,112								136,781
Income before income taxes and minority interests			198,297				171,454			+	15.7				1,612,171
Income taxes			70,289				60,985								571,456
Income before minority interests			128,008				110,469								1,040,715
Minority interests			4,075				4,564								33,130
Net income		¥	123,933			¥	105,905			+	17.0			$	1,007,585
Note: Comprehensive income for the three months ended June 30, 2007 and 2006 were JPY 172,538 million (U.S.$1,402,748 thousand) and JPY 103,418 million, respectively.
Results for the first half
		Millions of yen												Thousands of U.S. dollars				Millions of yen
		Six months				Six months								Six months				Year ended
		ended				ended				Change(%)				ended				December 31,
		June 30, 2007				June 30, 2006								June 30, 2007					2006
		(Unaudited)				(Unaudited)								(Unaudited)
Net sales		¥	2,166,724			¥	1,952,255			+	11.0			$	17,615,642			¥	4,156,759
Cost of sales			1,059,170				973,542								8,611,138				2,096,279
Gross profit			1,107,554				978,713			+	13.2				9,004,504				2,060,480
Operating expenses:
Selling, general and administrative expenses			548,411				493,709								4,458,626				1,045,140
Research and development expenses			170,267				146,527								1,384,285				308,307
			718,678				640,236								5,842,911				1,353,447
Operating profit			388,876				338,477			+	14.9				3,161,593				707,033
Other income (deductions):
Interest and dividend income			17,367				11,143								141,195				27,153
Interest expense			(795	)			(625	)							(6,463	)			(2,190	)
Other, net			693				(7,950	)							5,634				(12,853	)
			17,265				2,568								140,366				12,110
Income before income taxes and minority interests			406,141				341,045			+	19.1				3,301,959				719,143
Income taxes			142,836				118,814								1,161,268				248,233
Income before minority interests			263,305				222,231								2,140,691				470,910
Minority interests			8,122				8,057								66,032				15,585
Net income		¥	255,183			¥	214,174			+	19.1			$	2,074,659			¥	455,325
Note: Comprehensive income for the six months ended June 30, 2007 and 2006 were JPY 356,634 million (U.S.$2,899,463 thousand) and JPY 217,475 million, respectively.

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

														Thousands of
		Millions of yen												U.S. dollars
		Three months				Three months								Three months
Sales by product		ended				ended				Change(%)				ended
		June 30, 2007				June 30, 2006								June 30, 2007
		(Unaudited)				(Unaudited)								(Unaudited)
Business machines:
Office imaging products		¥	326,866			¥	298,949			+	9.3			$	2,657,447
Computer peripherals			377,590				329,867			+	14.5				3,069,837
Business information products			26,740				26,627			+	0.4				217,399
			731,196				655,443			+	11.6				5,944,683
Cameras			297,131				268,224			+	10.8				2,415,699
Optical and other products			98,604				105,316			–	6.4				801,659
Total		¥	1,126,931			¥	1,028,983			+	9.5			$	9,162,041
														Thousands of
		Millions of yen												U.S. dollars
		Three months				Three months								Three months
Sales by region		ended				ended				Change(%)				ended
		June 30, 2007				June 30, 2006								June 30, 2007
		(Unaudited)				(Unaudited)								(Unaudited)
Japan		¥	225,843			¥	232,604			–	2.9			$	1,836,122
Overseas:
Americas			335,325				309,406			+	8.4				2,726,220
Europe			384,588				329,322			+	16.8				3,126,732
Other areas			181,175				157,651			+	14.9				1,472,967
			901,088				796,379			+	13.1				7,325,919
Total		¥	1,126,931			¥	1,028,983			+	9.5			$	9,162,041

														Thousands of
		Millions of yen												U.S. dollars				Millions of yen
		Six months				Six months								Six months				Year ended
Sales by product		ended				ended				Change(%)				ended				December 31,
		June 30, 2007				June 30, 2006								June 30, 2007				2006
		(Unaudited)				(Unaudited)								(Unaudited)
Business machines:
Office imaging products		¥	632,428			¥	585,437			+	8.0			$	5,141,691			¥	1,185,925
Computer peripherals			760,687				646,663			+	17.6				6,184,447				1,398,408
Business information products			53,472				54,496			–	1.9				434,732				106,754
			1,446,587				1,286,596			+	12.4				11,760,870				2,691,087
Cameras			519,574				460,285			+	12.9				4,224,179				1,041,865
Optical and other products			200,563				205,374			–	2.3				1,630,593				423,807
Total		¥	2,166,724			¥	1,952,255			+	11.0			¥	17,615,642			¥	4,156,759
														Thousands of
		Millions of yen												U.S. dollars				Millions of yen
		Six months				Six months								Six months				Year ended
Sales by region		ended				ended				Change(%)				ended				December 31,
		June 30, 2007				June 30, 2006								June 30, 2007				2006
		(Unaudited)				(Unaudited)								(Unaudited)
Japan		¥	458,302			¥	446,298			+	2.7			$	3,726,033			¥	932,290
Overseas:
Americas			641,949				594,473			+	8.0				5,219,098				1,283,646
Europe			722,379				610,943			+	18.2				5,873,000				1,314,305
Other areas			344,094				300,541			+	14.5				2,797,511				626,518
			1,708,422				1,505,957			+	13.4				13,889,609				3,224,469
Total		¥	2,166,724			¥	1,952,255			+	11.0			$	17,615,642			¥	4,156,759

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 / Inkjet multifunction peripherals / Single function inkjet printers / Image scanners / etc.
		Business information products : Computer information systems / Document scanners / Personal information products / etc.

		Cameras : Digital SLR cameras / Compact digital cameras / Interchangeable lenses / Digital video camcorders / etc.
		Optical and other products : Semiconductor production equipment / Mirror projection mask aligners for LCD panels / Broadcasting equipment / Medical equipment / Large format printers / 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

														Thousands of
		Millions of yen												U.S. dollars
		Three months				Three months								Three months
		ended				ended				Change(%)				ended
		June 30, 2007				June 30, 2006								June 30, 2007
		(Unaudited)				(Unaudited)								(Unaudited)
Business machines
Net sales:
Unaffiliated customers		¥	731,196			¥	655,443			+	11.6			$	5,944,683
Intersegment			—				—				—				—
Total			731,196				655,443			+	11.6				5,944,683
Operating cost and expenses			572,236				513,046			+	11.5				4,652,325
Operating profit			158,960				142,397			+	11.6				1,292,358
Cameras
Net sales:
Unaffiliated customers		¥	297,131			¥	268,224			+	10.8			$	2,415,699
Intersegment			—				—				—				—
Total			297,131				268,224			+	10.8				2,415,699
Operating cost and expenses			220,358				203,527			+	8.3				1,791,528
Operating profit			76,773				64,697			+	18.7				624,171
Optical and other products
Net sales:
Unaffiliated customers		¥	98,604			¥	105,316			-	6.4			$	801,659
Intersegment			56,258				47,309			+	18.9				457,382
Total			154,862				152,625			+	1.5				1,259,041
Operating cost and expenses			151,469				143,956			+	5.2				1,231,456
Operating profit			3,393				8,669			–	60.9				27,585
Corporate and Eliminations
Net sales:
Unaffiliated customers		¥	—			¥	—				—			$	—
Intersegment			(56,258	)			(47,309	)			—				(457,382	)
Total			(56,258	)			(47,309	)			—				(457,382	)
Operating cost and expenses			1,395				112				—				11,342
Operating profit			(57,653	)			(47,421	)			—				(468,724	)
Consolidated
Net sales:
Unaffiliated customers		¥	1,126,931			¥	1,028,983			+	9.5			$	9,162,041
Intersegment			—				—				—				—
Total			1,126,931				1,028,983			+	9.5				9,162,041
Operating cost and expenses			945,458				860,641			+	9.9				7,686,651
Operating profit			181,473				168,342			+	7.8				1,475,390

Note:		General corporate expenses of JPY 57,663 million (U.S.$468,805 thousand) and JPY 47,421 million in the three months ended June 30, 2007 and 2006, respectively, are included in “Corporate and Eliminations.”

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

														Thousands of
		Millions of yen												U.S. dollars				Millions of yen
		Six months				Six months								Six months				Year ended
		ended				ended								ended				December 31,
		June 30, 2007				June 30, 2006				Change(%)				June 30, 2007				2006
		(Unaudited)				(Unaudited)								(Unaudited)
Business machines
Net sales:
Unaffiliated customers		¥	1,446,587			¥	1,286,596			+	12.4			$	11,760,870			¥	2,691,087
Intersegment			—				—				—				—				—
Total			1,446,587				1,286,596			+	12.4				11,760,870				2,691,087
Operating cost and expenses			1,111,116				992,031			+	12.0				9,033,463				2,091,858
Operating profit			335,471				294,565			+	13.9				2,727,407				599,229
Cameras
Net sales:
Unaffiliated customers		¥	519,574			¥	460,285			+	12.9			$	4,224,179			¥	1,041,865
Intersegment			—				—				—				—				—
Total			519,574				460,285			+	12.9				4,224,179				1,041,865
Operating cost and expenses			382,271				351,549			+	8.7				3,107,894				773,127
Operating profit			137,303				108,736			+	26.3				1,116,285				268,738
Optical and other products
Net sales:
Unaffiliated customers		¥	200,563			¥	205,374			–	2.3			$	1,630,593			¥	423,807
Intersegment			107,917				88,706			+	21.7				877,374				190,687
Total			308,480				294,080			+	4.9				2,507,967				614,494
Operating cost and expenses			287,095				270,885			+	6.0				2,334,105				573,019
Operating profit			21,385				23,195			–	7.8				173,862				41,475
Corporate and Eliminations
Net sales:
Unaffiliated customers		¥	—			¥	—				—			$	—			¥	—
Intersegment			(107,917	)			(88,706	)			—				(877,374	)			(190,687	)
Total			(107,917	)			(88,706	)			—				(877,374	)			(190,687	)
Operating cost and expenses			(2,634	)			(687	)			—				(21,413	)			11,722
Operating profit			(105,283	)			(88,019	)			—				(855,961	)			(202,409	)
Consolidated
Net sales:
Unaffiliated customers		¥	2,166,724			¥	1,952,255			+	11.0			$	17,615,642			¥	4,156,759
Intersegment			—				—				—				—				—
Total			2,166,724				1,952,255			+	11.0				17,615,642				4,156,759
Operating cost and expenses			1,777,848				1,613,778			+	10.2				14,454,049				3,449,726
Operating profit			388,876				338,477			+	14.9				3,161,593				707,033