Edgar Filing: CANON INC

Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.

Canon adopted the guidance for noncontrolling interests in consolidated financial statements in the fiscal year beginning January 1, 2009.

In accordance with the adoption of the guidance, consolidated net income has been renamed to net income attributable to Canon Inc.

U.S. dollar amounts are translated from yen at the rate of JPY92 = U.S.$1, the approximate exchange rate on the Tokyo Foreign

Exchange Market as of December 30, 2009, solely for the convenience of the reader.

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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........................................................ , 2010

CANON INC.

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

Form 20-F X Form 40-F

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

Yes No X

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

SIGNATURES

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


		CANON INC.
		(Registrant)

Date.... January 27, 2010....		By....../s/...... Masashiro Kobayashi .........................
Date.... January 27, 2010....		(Signature)*



		Masashiro Kobayashi General Manager Global Finance Management Center Canon Inc.

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

The following materials are included.

1. RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR ENDED DECEMBER 31, 2009

RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2009

January 27, 2010

CONSOLIDATED RESULTS


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

	Actual								Projected
	Year ended		Year ended			Change(%)	Year ended		Year ending		Change(%)
	December 31, 2009		December 31, 2008			Change(%)	December 31, 2009		December 31, 2010		Change(%)

Net sales	¥	3,209,201	¥	4,094,161	-	21.6	$	34,882,620	¥	3,450,000	+	7.5
Operating profit		217,055		496,074	-	56.2		2,359,293		330,000	+	52.0
Income before income taxes		219,355		481,147	-	54.4		2,384,293		320,000	+	45.9
Net income attributable to Canon Inc.	¥	131,647	¥	309,148	-	57.4	$	1,430,946	¥	200,000	+	51.9


Net income attributable to Canon Inc. stockholders per share:
- Basic	¥	106.64	¥	246.21	-	56.7	$	1.16	¥	162.01	+	51.9
- Diluted		106.64		246.20	-	56.7		1.16		-		-



	Actual
	As of		As of		Change(%)		As of
	December 31, 2009		December 31, 2008		Change(%)		December 31, 2008

Total assets	¥	3,847,557	¥	3,969,934	-	3.1	$	41,821,272

Canon Inc. stockholders’ equity	¥	2,688,109	¥	2,659,792	+	1.1	$	29,218,576

NON-CONSOLIDATED RESULTS


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

	Actual
	Year ended		Year ended		Change(%)			Year ended
	December 31, 2009		December 31, 2008		Change(%)		December 31, 2009

Net sales	¥	2,025,546	¥	2,721,094	-	25.6	$	22,016,804
Operating profit		97,777		358,706	-	72.7		1,062,793
Ordinary profit		142,684		359,086	-	60.3		1,550,913
Net income	¥	80,778	¥	224,135	-	64.0	$	878,022


Net income per share:
- Basic	¥	65.44	¥	178.50	-	63.3	$	0.71
- Diluted		65.43		178.49	-	63.3		0.71
Dividend per share		110.00		110.00		-		1.20



	Actual
	As of		As of		Change(%)			As of
	December 31, 2009		December 31, 2008		Change(%)		December 31, 2009

Total assets	¥	2,551,100	¥	2,618,998	-	2.6	$	27,729,348

Net assets	¥	1,812,718	¥	1,865,005	-	2.8	$	19,703,457

Note:

U.S. dollar amounts are translated from yen at the rate of JPY 92= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange
Market as of December 30, 2009, solely for the convenience of the reader.


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

- 1 -

I. Operating Results and Financial Conditions

2009 in Review

Looking back at the global economy in fiscal 2009, although the year began amid an unprecedentedly harsh business climate, economic stimulus measures implemented by different countries have started to yield results, leading to moderate recoveries as the second half of the year approached. Although countries such as China and India, whose economies have rapidly grown in prominence, maintained their stable growth largely owing to increased consumer spending, developed countries such as Japan, the United States and European nations all recorded negative growth for the first time since the end of World War II, leading to negative growth overall around the globe.

As for the markets in which Canon operates amid these conditions, within the office equipment market, demand for both color and monochrome models of network digital multifunction devices (MFDs) decreased in each region. While sales for laser printers also remained weak, dropping below the year-ago level, the rate of decline gradually narrowed toward the second half of the year. As for the consumer products market, while demand for compact digital cameras remained sluggish and prices continued to decline, demand for digital single-lens reflex (SLR) cameras displayed solid growth especially in overseas markets. With regard to inkjet printers, although demand continued to be slack, which led to a reduction in market size compared with the previous year, conditions started to improve toward the end of the year. In the industry and others market, demand for steppers, utilized in the production of semiconductors, declined significantly while demand for aligners, used to produce liquid crystal display (LCD) panels, also slowed but showed signs of a recovery heading into the next fiscal year. The average value of the yen during the year was ¥93.21 to the U.S. dollar, a year-on-year appreciation of approximately ¥10, and ¥130.46 to the euro, a year-on-year appreciation of approximately ¥21.

Although the markets for such consumer products as cameras and inkjet printers are clearly bottoming out amid the significantly stronger yen, which has had an impact on all of the company’s businesses, net sales for the year totaled ¥3,209.2 billion (U.S.$34,883 million), a year-on-year decline of 21.6%, mainly due to the effects of reduced sales volumes of office products throughout the year. Despite the launch of new products and ongoing cost-cutting efforts aimed at an improved gross profit ratio, the impact of such factors as the substantial appreciation of the yen and the drop in sales value led to a 2.8 point decline in the ratio to 44.5%. Consequently, gross profit decreased by 26.3% to ¥1,427.4 billion (U.S.$15,515 million) for the full year. While operating expenses decreased by 16.1% owing to continued Group-wide efforts to thoroughly cut spending, operating profit dropped 56.2% to ¥217.1 billion (U.S.$2,359 million). Despite the decreased interest income due to the lower rate of return on cash and cash equivalents, other income (deductions) recorded a positive turnaround of ¥17.2 billion (U.S.$187 million), mainly reflecting an improvement in currency exchange losses and earnings on investments in affiliates accounted for by the equity method. As a result, income before income taxes totaled ¥219.4 billion (U.S.$2,384 million), a year-on-year decline of 54.4%, while net income attributable to Canon Inc. also decreased by 57.4% to ¥131.6 billion (U.S.$1,431 million).

Basic net income attributable to Canon Inc. stockholders per share was ¥106.64 (U.S.$1.16), a year-on-year decline of ¥139.57 (U.S.$1.52) compared with the previous year.

- 2 -

Results by Product Segment

Looking at Canon’s full-year performance by business sector, within the office business unit, demand for office equipment decreased overall amid the deterioration of economic conditions. Sales of network digital MFDs remained low in all regions while demand for laser printers decreased substantially compared with the previous year despite the optimization of inventory levels being in sight. Consequently, sales for the segment, including the impact of the strong yen, totaled ¥1,645.1 billion (U.S.$17,881 million), a drop of 26.8% year on year. Operating profit fell 49.8% to ¥229.4 billion (U.S.$2,493 million), mainly due to the decrease in gross profit stemming from the significant reduction in sales.

Within the consumer business unit, sales volumes of such new products as the competitively priced EOS Digital Rebel T1i (EOS 500D) and advanced-amateur model EOS 7D digital SLR cameras recorded solid growth. As for compact digital cameras, although stagnant market conditions led to a contraction in sales volume, the Company reinforced its product lineup through the launch of six new ELPH (IXUS)-series models and nine new PowerShot-series models. As for inkjet printers, although the market overall remained sluggish, sales in the Americas and Asia displayed healthy growth, contributing to a year-on-year increase in sales volume. Sales for the segment as a whole, however, declined 10.6% year on year to ¥1,301.2 billion (U.S.$14,143 million) due to the significant impact of the yen’s appreciation. Operating profit decreased by 17.8% to ¥183.5 billion (U.S.$1,994 million), largely reflecting the decrease in gross profit arising from the reduction in sales.

In the industry and others business unit, sales of steppers remained sluggish amid worsening market conditions for memory chips, while sales of aligners dropped due to restrained capital investment by LCD panel manufacturers. As a result, sales for the segment totaled ¥358.0 billion (U.S.$3,891 million), a decrease of 31.5%, while operating profit dropped to negative ¥76.0 billion (U.S.$826 million), due to the significant drop in sales along with the early disposal of assets, including excess production equipment, based on a fundamental reassessment of the business structure for steppers.

Cash Flow

Although Canon recorded a decline in profits in 2009, cash flow from operating activities totaled ¥611.2 billion (U.S.$6,644 million), a slight decrease of ¥5.4 billion (U.S.$59 million) compared with the previous year, as a result of the substantial progress achieved in inventory-reduction efforts. As capital investment was focused on items relevant to introducing new products in principal, cash flow from investing activities totaled ¥370.2 billion (U.S.$4,024 million), a year-on-year decrease of ¥102.2 billion (U.S.$1,111 million). Accordingly, free cash flow totaled ¥241.0 billion (U.S.$2,619 million), an increase of ¥96.8 billion (U.S.$1,052 million) from the previous year.

Cash flow from financing activities recorded an outlay of ¥142.4 billion (U.S.$1,548 million), mainly arising from the dividend payout of ¥135.8 billion (U.S.$1,476 million). Consequently, cash and cash equivalents increased by ¥115.8 billion (U.S.$1,259 million) to ¥795.0 billion (U.S.$8,642 million) from the end of the previous year.

Non-consolidated Results

Non-consolidated net sales totaled ¥2,025.5 billion (U.S.$22,017 million), a year-on-year decrease of 25.6%, ordinary profit declined by 60.3% to ¥142.7 billion (U.S.$1,551 million), and net income fell by 64.0% to ¥80.8 billion (U.S.$878 million).

- 3 -

Outlook

As for the outlook for the global economy in fiscal 2010, although China and other emerging nations with significantly expanding economies are expected to continue enjoying steady growth, deteriorating employment conditions and other factors make it difficult to predict the economic prospects for developed countries even though they are projected to realize positive growth. While some leading indicators have pointed to a bottoming out and conditions are expected to slowly head toward a path of recovery as a result of various economic stimulus packages and financial policies launched at the national level, considerable time will likely be needed before the global economy realizes a full-fledged turnaround.

In the businesses in which Canon is involved, with regard to network digital MFDs and laser printers in the office equipment market, demand is expected to gradually increase following the bottoming out of the segment. With respect to the consumer products market, demand for digital SLR cameras is forecasted to achieve solid growth, whereas demand for compact digital cameras and inkjet printers will also head toward a recovery trend. As for the industry and others market, projections call for a modest recovery in demand for steppers as device makers reassess their capital expenditure plans, and demand for aligners is also expected to increase as LCD panel manufacturers gear up to boost production.

With regard to currency exchange rates for the full year, on which Canon’s performance outlook is based, despite the continued uncertainty over future interest rate policies for major countries along with the speed and level of economic recovery and other factors, Canon anticipates exchange rates for the period of ¥90 to the U.S. dollar and ¥130 to the euro, representing an appreciation of approximately ¥3 against the U.S. dollar, and relatively the same value for the euro compared with the previous year. Upon taking into consideration current business sentiment based on these foreign exchange rate assumptions, Canon projects net sales of ¥3,450.0 billion (U.S.$37,500 million), a year-on-year increase of 7.5%; operating profit of ¥330.0 billion (U.S.$3,587 million), a year-on-year increase of 52.0%; income before income taxes of ¥320.0 billion (U.S.$3,478 million), a year-on-year increase of 45.9%; and net income attributable to Canon Inc. of ¥200.0 billion (U.S.$2,174 million), a year-on-year increase of 51.9%.

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 planned future investments, free cash flow, and reflecting the company’s consolidated business performance. Specifically, Canon’s basic policy is to continuously strive to raise its consolidated payout ratio to approximately 30% over the medium to long term.

The company recorded a decrease in profits amid extremely severe economic conditions but, prioritizing stable returns to shareholders, plans to distribute a full-year dividend totaling ¥110.00 (U.S.$1.20) per share (interim dividend of ¥55.00 [U.S.$0.60] per share [already distributed], and year-end dividend of ¥55.00 [U.S.$0.60]), the same amount per share as was paid out in 2008.

This document contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect management’s views and assumptions formed by available information. All statements other than statements of historical fact are statements that could be considered forward-looking statements. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” or “should” and similar expressions, as they relate to Canon, are intended to identify forward-looking statements. Many factors could cause the actual results, performance or achievements of Canon to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by Canon’s targeted customers, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this document. A detailed description of these and other risk factors is included in Canon’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Canon does not intend or assume any obligation to update these forward-looking statements.

- 4 -

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

2)		Expanding business operations through diversification

3)		Identifying new business domains and accumulating required technologies

4)		Establishing new production systems to sustain international competitiveness

5)		Nurturing truly autonomous and strong individuals promoting everlasting corporate reforms

In 2009, however, due to the global recession triggered by the “Lehman Shock,” Canon was forced to temporarily shift its strategic direction, changing course from a focus on “sound growth” to “improved management quality.” Through such efforts as the promotion of thorough expense and capital-investment efficiencies and the establishment of advanced supply-chain management enabling inventory reductions, the Company made progress in establishing a “muscular” business constitution and enhancing corporate strength to agilely respond to changes in its business environment.

While the global economy currently appears to be on track for a recovery, because it appears that it will take the form of an L-shaped recovery, we expect the surrounding business environment will continue to prove difficult. Faced with these circumstances, Canon will again aim to realize sound growth, capitalizing on the future turnaround to post results that outpace the speed of the economic recovery, employing a new growth strategy in this, the final year of the Company’s Excellent Global Corporation Plan Phase III, which is being viewed as the first year in a new era of growth.

(3) Business Challenges and Countermeasures

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

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

With regard to maintaining the Company’s current 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 competitive new businesses, Canon believes that it is important to further improve the profit-earning ability of current businesses. To facilitate this, the Company is promoting the development of competitive new products and actively carrying out cost-reduction activities.

Canon also views its approach to the environment as an important management issue. From the product planning stage through to design, development, production, sales, use, recovery and recycling, the Company focuses its energies on such areas as creating environmentally conscious products that realize energy efficiency, resource efficiency, and eliminate the use of hazardous substances. Additionally, Canon actively promotes 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.

- 5 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

III. Financial Statements

1. CONSOLIDATED BALANCE SHEETS


	Millions of yen									Thousands of
	Millions of yen									U.S. dollars
	As of			As of						As of
	December 31,			December 31,			Change			December 31,
	2009			2008						2009
ASSETS
Current assets:
Cash and cash equivalents	¥	795,034		¥	679,196		¥	115,838		$	8,641,674
Short-term investments		19,089			7,651			11,438			207,489
Trade receivables, net		556,572			595,422			(38,850	)		6,049,696
Inventories		373,241			506,919			(133,678	)		4,056,967
Prepaid expenses and other current assets		273,843			275,660			(1,817	)		2,976,554

Total current assets		2,017,779			2,064,848			(47,069	)		21,932,380

Noncurrent receivables		14,936			14,752			184			162,348
Investments		114,066			88,825			25,241			1,239,848
Property, plant and equipment, net		1,269,785			1,357,186			(87,401	)		13,802,011
Intangible assets, net		117,396			119,140			(1,744	)		1,276,043
Other assets		313,595			325,183			(11,588	)		3,408,642


Total assets	¥	3,847,557		¥	3,969,934		¥	(122,377	)	$	41,821,272



LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt	¥	4,869		¥	5,540		¥	(671	)	$	52,924
Trade payables		339,113			406,746			(67,633	)		3,686,011
Accrued income taxes		50,105			69,961			(19,856	)		544,620
Accrued expenses		274,300			277,117			(2,817	)		2,981,522
Other current liabilities		115,303			184,636			(69,333	)		1,253,293

Total current liabilities		783,690			944,000			(160,310	)		8,518,370
Long-term debt, excluding current installments		4,912			8,423			(3,511	)		53,391
Accrued pension and severance cost		115,904			110,784			5,120			1,259,826
Other noncurrent liabilities		63,651			55,745			7,906			691,859


Total liabilities		968,157			1,118,952			(150,795	)		10,523,446




Equity:
Canon Inc. stockholders’ equity:
Common stock		174,762			174,762			-			1,899,587
Additional paid-in capital		404,293			403,790			503			4,394,489
Legal reserve		54,687			53,706			981			594,424
Retained earnings		2,871,437			2,876,576			(5,139	)		31,211,272
Accumulated other comprehensive income (loss)		(260,818	)		(292,820	)		32,002			(2,834,978	)
Treasury stock, at cost		(556,252	)		(556,222	)		(30	)		(6,046,218	)

Total Canon Inc. stockholders’ equity		2,688,109			2,659,792			28,317			29,218,576

Noncontrolling interests		191,291			191,190			101			2,079,250



Total equity		2,879,400			2,850,982			28,418			31,297,826



Total liabilities and equity	¥	3,847,557		¥	3,969,934		¥	(122,377	)	$	41,821,272



	Millions of yen									Thousands of
	Millions of yen									U.S. dollars
	As of			As of						As of
	December 31,			December 31,						December 31,
	2009			2008						2009
Notes:

1. Allowance for doubtful receivables	¥	11,343		¥	9,318					$	123,293
2. Accumulated depreciation		1,815,982			1,635,601						19,738,935
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments		(202,628	)		(235,968	)					(2,202,478	)
Net unrealized gains and losses on securities		3,285			1,135						35,706
Net gains and losses on derivative instruments		71			1,493						772
Pension liability adjustments		(61,546	)		(59,480	)					(668,978	)

- 6 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME

Results for the fourth quarter

Millions of yen

Thousands of

U.S. dollars

Three months

Three months

Three months

ended

ended

Change(%)

ended

December 31, 2009

December 31, 2008

December 31, 2009

Net sales

954,058

994,740

4.1

10,370,196

Cost of sales

520,267

573,343

5,655,076

Gross profit

433,791

421,397

2.9

4,715,120

Operating expenses:

Selling, general and administrative expenses

264,396

273,681

2,873,870

Research and development expenses

77,267

111,891

839,859

341,663

385,572

3,713,729

Operating profit

92,128

35,825

157.2

1,001,391

Other income (deductions):

Interest and dividend income

1,441

3,849

15,663

Interest expense

(95

)

(164

)

(1,032

)

Other, net

4,447

(22,597

)

48,337

5,793

(18,912

)

62,968

Income before income taxes

97,921

16,913

479.0

1,064,359

Income taxes

35,413

3,816

384,924

Consolidated net income

62,508

13,097

679,435

Less: Net income attributable to noncontrolling interests

944

1,475

10,261

Net income attributable to Canon Inc.

61,564

11,622

429.7

669,174

Note: Consolidated comprehensive income for the three months ended December 31, 2009 and 2008 was JPY 74,334 million (increase)
(U.S.$807,978 thousand (increase)) and JPY 204,647 million (decrease), respectively.

Millions of yen

Thousands of

Results for the fiscal year

U.S. dollars

Year ended

Year ended

Change(%)

Year ended

December 31, 2009

December 31, 2008

December 31, 2009

Net sales

3,209,201

4,094,161

21.6

34,882,620

Cost of sales

1,781,808

2,156,153

19,367,479

Gross profit

1,427,393

1,938,008

26.3

15,515,141

Operating expenses:

Selling, general and administrative expenses

905,738

1,067,909

9,844,978

Research and development expenses

304,600

374,025

3,310,870

1,210,338

1,441,934

13,155,848

Operating profit

217,055

496,074

56.2

2,359,293

Other income (deductions):

Interest and dividend income

5,202

19,442

56,543

Interest expense

(336

)

(837

)

(3,652

)

Other, net

(2,566

)

(33,532

)

(27,891

)

2,300

(14,927

)

25,000

Income before income taxes

219,355

481,147

54.4

2,384,293

Income taxes

84,122

160,788

914,369

Consolidated net income

135,233

320,359

1,469,924

Less: Net income attributable to noncontrolling interests

3,586

11,211

38,978

Net income attributable to Canon Inc.

131,647

309,148

57.4

1,430,946

Note:

Consolidated comprehensive income for the year ended December 31, 2009 and 2008 was JPY 168,452 million (increase)
(U.S.$1,831,000 thousand (increase)) and JPY 18,681 million (decrease), respectively.

- 7 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES


	Millions of yen								Thousands of
Results for the fourth quarter	Millions of yen								U.S. dollars
	Three months			Three months					Three months
Sales by product	ended			ended			Change(%)		ended
	December 31, 2009			December 31, 2008					December 31, 2009
Office		465,131			507,955		-	8.4		5,055,772
Consumer		412,729			376,588		+	9.6		4,486,185
Industry and Others		117,070			137,681		-	15.0		1,272,500
Eliminations		(40,872	)		(27,484	)		-		(444,261	)

Total	¥	954,058		¥	994,740		-	4.1	$	10,370,196


	Millions of yen								Thousands of
	Millions of yen								U.S. dollars
	Three months			Three months					Three months
Sales by region	ended			ended			Change(%)		ended
	December 31, 2009			December 31, 2008					December 31, 2009
Japan	¥	197,599		¥	224,710		-	12.1	$	2,147,815
Overseas:
Americas		274,782			283,002		-	2.9		2,986,761
Europe		308,523			308,121		+	0.1		3,353,511
Other areas		173,154			178,907		-	3.2		1,882,109

		756,459			770,030		-	1.8		8,222,381

Total	¥	954,058		¥	994,740		-	4.1	$	10,370,196


	Millions of yen								Thousands of
Results for the fiscal year	Millions of yen								U.S. dollars
Sales by product	Year ended			Year ended			Change(%)		Year ended
Sales by product	December 31, 2009			December 31, 2008			Change(%)		December 31, 2009
Office		1,645,076			2,246,609		-	26.8		17,881,261
Consumer		1,301,160			1,456,075		-	10.6		14,143,043
Industry and Others		357,998			522,405		-	31.5		3,891,283
Eliminations		(95,033	)		(130,928	)		-		(1,032,967	)

Total	¥	3,209,201		¥	4,094,161		-	21.6	$	34,882,620


	Millions of yen								Thousands of
	Millions of yen								U.S. dollars
Sales by region	Year ended			Year ended			Change(%)		Year ended
Sales by region	December 31, 2009			December 31, 2008			Change(%)		December 31, 2009
Japan	¥	702,344		¥	868,280		-	19.1	$	7,634,174
Overseas:
Americas		894,154			1,154,571		-	22.6		9,719,065
Europe		995,150			1,341,400		-	25.8		10,816,848
Other areas		617,553			729,910		-	15.4		6,712,533

		2,506,857			3,225,881		-	22.3		27,248,446

Total	¥	3,209,201		¥	4,094,161		-	21.6	$	34,882,620

Notes:

The primary products included in each of the product segments are as follows:

Office :

Office network digital multifunction devices (MFDs) /Color network digital MFDs /
Office copying machines /Personal-use copying machines /Full-color copying machines /
Laser printers /Large format inkjet printers

Consumer :

Digital SLR cameras /Compact digital cameras /Interchangeable lenses /Digital video camcorders /
Inkjet multifunction peripherals /Single function inkjet printers /Image scanners /Broadcasting equipment

Industry and Others :

Semiconductor production equipment /Mirror projection mask aligners for LCD panels /
Medical equipment /Components /Computer information systems /Document scanners /
Personal information products

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

- 8 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF EQUITY

Millions of yen



												Accumulated						Total Canon
		Common		Additional			Legal		Retained			other			Treasury			Inc.			Noncontrolling
		Stock		paid-in capital			reserve		earnings			comprehensive			stock			stockholders’			interests			Total equity
												income (loss)						equity

	Balance at December 31, 2007	¥	174,698	¥	402,991		¥	46,017	¥	2,720,146		¥	34,670		¥	(456,186	)	¥	2,922,336		¥	222,870		¥	3,145,206

	Conversion of convertible debt		64		63														127						127
	Equity transaction with noncontrolling interests and other				761														761			(26,218	)		(25,457	)
	Dividends paid to Canon Inc. stockholders									(145,024	)								(145,024	)					(145,024	)
	Dividends paid to noncontrolling interests																					(5,123	)		(5,123	)
	Transfers to legal reserve							7,689		(7,689	)								-						-

	Comprehensive income:
	Net income									309,148									309,148			11,211			320,359
	Other comprehensive income (loss), net of tax
	Foreign currency translation adjustments												(258,764	)					(258,764	)		(1,911	)		(260,675	)
	Net unrealized gains and losses on securities												(5,152	)					(5,152	)		(690	)		(5,842	)
	Net gains and losses on derivative instruments												2,342						2,342			-			2,342
	Pension liability adjustments												(65,916	)					(65,916	)		(8,949	)		(74,865	)

	Total comprehensive income (loss)																		(18,342	)		(339	)		(18,681	)


	Repurchase of treasury stock, net				(25	)				(5	)					(100,036	)		(100,066	)					(100,066	)


	Balance at December 31, 2008	¥	174,762	¥	403,790		¥	53,706	¥	2,876,576		¥	(292,820	)	¥	(556,222	)	¥	2,659,792		¥	191,190		¥	2,850,982

	Equity transaction with noncontrolling interests and other				503														503			(1,376	)		(873	)
	Dividends paid to Canon Inc. stockholders									(135,793	)								(135,793	)					(135,793	)
	Dividends paid to noncontrolling interests																					(3,326	)		(3,326	)
	Transfers to legal reserve							981		(981	)								-						-

	Comprehensive income:
	Net income									131,647									131,647			3,586			135,233
	Other comprehensive income (loss), net of tax
	Foreign currency translation adjustments												33,340						33,340			30			33,370
	Net unrealized gains and losses on securities												2,150						2,150			67			2,217
	Net gains and losses on derivative instruments												(1,422	)					(1,422	)		(1	)		(1,423	)
	Pension liability adjustments												(2,066	)					(2,066	)		1,121			(945	)

	Total comprehensive income																		163,649			4,803			168,452


	Repurchase of treasury stock, net									(12	)					(30	)		(42	)					(42	)


	Balance at December 31, 2009	¥	174,762	¥	404,293		¥	54,687	¥	2,871,437		¥	(260,818	)	¥	(556,252	)	¥	2,688,109		¥	191,291		¥	2,879,400


Thousands of U.S. dollars


	Balance at December 31, 2008	$	1,899,587	$	4,389,022		$	583,761	$	31,267,130		$	(3,182,825	)	$	(6,045,892	)	$	28,910,783		$	2,078,152		$	30,988,935


	Equity transaction with noncontrolling interests and other				5,467														5,467			(14,956	)		(9,489	)
	Dividends paid to Canon Inc. stockholders									(1,476,011	)								(1,476,011	)					(1,476,011	)
	Dividends paid to noncontrolling interests																					(36,152	)		(36,152	)
	Transfers to legal reserve							10,663		(10,663	)								-						-

	Comprehensive income:
	Net income									1,430,946									1,430,946			38,978			1,469,924
	Other comprehensive income (loss), net of tax
	Foreign currency translation adjustments												362,391						362,391			326			362,717
	Net unrealized gains and losses on securities												23,370						23,370			728			24,098
	Net gains and losses on derivative instruments												(15,457	)					(15,457	)		(11	)		(15,468	)
	Pension liability adjustments												(22,457	)					(22,457	)		12,185			(10,272	)

	Total comprehensive income																		1,778,793			52,206			1,830,999


	Repurchase of treasury stock, net									(130	)					(326	)		(456	)					(456	)


	Balance at December 31, 2009	$	1,899,587	$	4,394,489		$	594,424	$	31,211,272		$	(2,834,978	)	$	(6,046,218	)	$	29,218,576		$	2,079,250		$	31,297,826

- 9 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. CONSOLIDATED STATEMENTS OF CASH FLOWS


	Millions of yen						Thousands of
	Millions of yen						U.S. dollars
	Year ended			Year ended			Year ended
	December 31, 2009			December 31, 2008			December 31, 2009
Cash flows from operating activities:
Consolidated net income	¥	135,233		¥	320,359		$	1,469,924
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		315,393			341,337			3,428,185
Loss on disposal of property, plant and equipment		8,215			11,811			89,294
Deferred income taxes		20,712			(32,497	)		225,130
Decrease in trade receivables		48,244			83,521			524,391
Decrease in inventories		143,580			49,547			1,560,652
Decrease in trade payables		(76,843	)		(36,719	)		(835,250	)
Decrease in accrued income taxes		(21,023	)		(77,340	)		(228,511	)
Decrease in accrued expenses		(9,827	)		(30,694	)		(106,815	)
Increase (decrease) in accrued (prepaid) pension and severance cost		4,765			(12,128	)		51,793
Other, net		42,786			(513	)		465,066


Net cash provided by operating activities		611,235			616,684			6,643,859

Cash flows from investing activities:
Purchases of fixed assets		(327,983	)		(428,168	)		(3,565,033	)
Proceeds from sale of fixed assets		8,893			7,453			96,663
Purchases of available-for-sale securities		(3,253	)		(7,307	)		(35,359	)
Proceeds from sale and maturity of available-for-sale securities		2,460			4,320			26,739
Proceeds from maturity of held-to-maturity securities		-			10,000			-
(Increase) decrease in time deposits, net		(11,345	)		2,892			(123,315	)
Acquisitions of subsidiaries, net of cash acquired		(2,979	)		(5,999	)		(32,380	)
Purchases of other investments		(37,981	)		(45,473	)		(412,837	)
Other, net		1,944			(10,198	)		21,131


Net cash used in investing activities		(370,244	)		(472,480	)		(4,024,391	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		3,361			6,841			36,533
Repayments of long-term debt		(6,282	)		(15,397	)		(68,283	)
Decrease in short-term loans		(280	)		(2,643	)		(3,043	)
Dividends paid		(135,793	)		(145,024	)		(1,476,011	)
Repurchases of treasury stock, net		(42	)		(100,066	)		(457	)
Other, net		(3,343	)		(21,276	)		(36,337	)


Net cash used in financing activities		(142,379	)		(277,565	)		(1,547,598	)

Effect of exchange rate changes on cash and cash equivalents		17,226			(131,906	)		187,239

Net change in cash and cash equivalents		115,838			(265,267	)		1,259,109
Cash and cash equivalents at beginning of period		679,196			944,463			7,382,565

Cash and cash equivalents at end of period	¥	795,034		¥	679,196		$	8,641,674

- 10 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

6. NOTE FOR GOING CONCERN ASSUMPTION

Not applicable.

7. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY PRODUCT


Results for the fourth quarter	Millions of yen								Thousands of
	Millions of yen								U.S. dollars
	Three months			Three months					Three months
	ended			ended			Change(%)		ended
	December 31, 2009			December 31, 2008					December 31, 2009

Office
Net sales:
External customers	¥	462,149		¥	502,389			- 8.0	$	5,023,359
Intersegment		2,982			5,566			- 46.4		32,413

Total		465,131			507,955			- 8.4		5,055,772

Operating cost and expenses		384,517			423,226			- 9.1		4,179,533

Operating profit	¥	80,614		¥	84,729			- 4.9	$	876,239


Consumer
Net sales:
External customers	¥	412,087		¥	375,941			+ 9.6	$	4,479,207
Intersegment		642			647			- 0.8		6,978

Total		412,729			376,588			+ 9.6		4,486,185

Operating cost and expenses		337,586			335,715			+ 0.6		3,669,413

Operating profit	¥	75,143		¥	40,873			+ 83.8	$	816,772


Industry and Others
Net sales:
External customers	¥	79,822		¥	116,410			- 31.4	$	867,630
Intersegment		37,248			21,271			+ 75.1		404,870

Total		117,070			137,681			- 15.0		1,272,500

Operating cost and expenses		152,030			189,957			- 20.0		1,652,500

Operating profit (loss)	¥	(34,960	)	¥	(52,276	)		-	$	(380,000	)


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(40,872	)		(27,484	)		-		(444,261	)

Total		(40,872	)		(27,484	)		-		(444,261	)

Operating cost and expenses		(12,203	)		10,017			-		(132,641	)

Operating profit (loss)	¥	(28,669	)	¥	(37,501	)		-	$	(311,620	)


Consolidated
Net sales:
External customers	¥	954,058		¥	994,740			- 4.1	$	10,370,196
Intersegment		-			-			-		-

Total		954,058			994,740			- 4.1		10,370,196

Operating cost and expenses		861,930			958,915			- 10.1		9,368,805

Operating profit	¥	92,128		¥	35,825			+ 157.2	$	1,001,391

- 11 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


Results for the fiscal year	Millions of yen								Thousands of
Results for the fiscal year	Millions of yen								U.S. dollars
	Year ended			Year ended			Change(%)		Year ended
	December 31, 2009			December 31, 2008			Change(%)		December 31, 2009


Office
Net sales:
External customers	¥	1,635,056		¥	2,223,253			- 26.5	$	17,772,348
Intersegment		10,020			23,356			- 57.1		108,913

Total		1,645,076			2,246,609			- 26.8		17,881,261

Operating cost and expenses		1,415,680			1,789,263			- 20.9		15,387,826

Operating profit		229,396			457,346			- 49.8		2,493,435

Total assets		745,646			822,660			- 9.4		8,104,848
Depreciation and amortization		90,878			99,962			- 9.1		987,804
Capital Expenditures	¥	96,718		¥	139,046			- 30.4	$	1,051,283


Consumer
Net sales:
External customers	¥	1,299,194		¥	1,453,647			- 10.6	$	14,121,674
Intersegment		1,966			2,428			- 19.0		21,369

Total		1,301,160			1,456,075			- 10.6		14,143,043

Operating cost and expenses		1,117,668			1,232,951			- 9.4		12,148,565

Operating profit		183,492			223,124			- 17.8		1,994,478

Total assets		437,160			502,927			- 13.1		4,751,739
Depreciation and amortization		48,701			58,082			- 16.2		529,359
Capital Expenditures	¥	27,503		¥	52,641			- 47.8	$	298,946


Industry and Others
Net sales:
External customers	¥	274,951		¥	417,261			- 34.1	$	2,988,598
Intersegment		83,047			105,144			- 21.0		902,685

Total		357,998			522,405			- 31.5		3,891,283

Operating cost and expenses		433,954			570,281			- 23.9		4,716,892

Operating profit (loss)		(75,956	)		(47,876	)		-		(825,609	)

Total assets		359,635			453,581			- 20.7		3,909,076
Depreciation and amortization		60,770			71,557			- 15.1		660,543
Capital Expenditures	¥	25,644		¥	31,445			- 18.4	$	278,739


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(95,033	)		(130,928	)		-		(1,032,967	)

Total		(95,033	)		(130,928	)		-		(1,032,967	)

Operating cost and expenses		24,844			5,592			-		270,044

Operating profit (loss)		(119,877	)		(136,520	)		-		(1,303,011	)

Total assets		2,305,116			2,190,766			+ 5.2		25,055,609
Depreciation and amortization		115,044			111,736			+ 3.0		1,250,479
Capital Expenditures	¥	108,387		¥	180,268			- 39.9	$	1,178,119


Consolidated
Net sales:
External customers	¥	3,209,201		¥	4,094,161			- 21.6	$	34,882,620
Intersegment		-			-			-		-

Total		3,209,201			4,094,161			- 21.6		34,882,620

Operating cost and expenses		2,992,146			3,598,087			- 16.8		32,523,327

Operating profit		217,055			496,074			- 56.2		2,359,293

Total assets		3,847,557			3,969,934			- 3.1		41,821,272
Depreciation and amortization		315,393			341,337			- 7.6		3,428,185
Capital Expenditures	¥	258,252		¥	403,400			- 36.0	$	2,807,087

- 12 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA



Results for the fourth quarter	Millions of yen								Thousands of U.S. dollars
	Three months			Three months					Three months
	ended			ended			Change(%)		ended
	December 31, 2009			December 31, 2008					December 31, 2009

Japan
Net sales:
External customers	¥	227,939		¥	270,681			- 15.8	$	2,477,598
Intersegment		539,255			492,810			+ 9.4		5,861,467

Total		767,194			763,491			+ 0.5		8,339,065

Operating cost and expenses		667,146			759,005			- 12.1		7,251,587

Operating profit	¥	100,048		¥	4,486			+2,130.2	$	1,087,478


Americas
Net sales:
External customers	¥	268,797		¥	276,764			- 2.9	$	2,921,707
Intersegment		392			895			- 56.2		4,260

Total		269,189			277,659			- 3.1		2,925,967

Operating cost and expenses		263,571			279,180			- 5.6		2,864,902

Operating profit (loss)	¥	5,618		¥	(1,521	)		-	$	61,065


Europe
Net sales:
External customers	¥	306,949		¥	305,330			+ 0.5	$	3,336,402
Intersegment		(1,313	)		826			-		(14,272	)

Total		305,636			306,156			- 0.2		3,322,130

Operating cost and expenses		298,750			297,897			+ 0.3		3,247,282

Operating profit	¥	6,886		¥	8,259			- 16.6	$	74,848


Others
Net sales:
External customers	¥	150,373		¥	141,965			+ 5.9	$	1,634,489
Intersegment		165,586			137,565			+ 20.4		1,799,848

Total		315,959			279,530			+ 13.0		3,434,337

Operating cost and expenses		309,860			279,329			+ 10.9		3,368,044

Operating profit	¥	6,099		¥	201			+2,934.3	$	66,293


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(703,920	)		(632,096	)		-		(7,651,303	)

Total		(703,920	)		(632,096	)		-		(7,651,303	)

Operating cost and expenses		(677,397	)		(656,496	)		-		(7,363,010	)

Operating profit (loss)	¥	(26,523	)	¥	24,400			-	$	(288,293	)


Consolidated
Net sales:
External customers	¥	954,058		¥	994,740			- 4.1	$	10,370,196
Intersegment		-			-			-		-

Total		954,058			994,740			- 4.1		10,370,196

Operating cost and expenses		861,930			958,915			- 10.1		9,368,805

Operating profit	¥	92,128		¥	35,825			+ 157.2	$	1,001,391

- 13 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED


Results for the fiscal year	Millions of yen								Thousands of
Results for the fiscal year	Millions of yen								U.S. dollars
	Year ended			Year ended			Change(%)		Year ended
	December 31, 2009			December 31, 2008			Change(%)		December 31, 2009

Japan
Net sales:
External customers	¥	827,762		¥	998,676			- 17.1	$	8,997,413
Intersegment	1,714,375			2,318,521			- 26.1		18,634,511

Total		2,542,137			3,317,197			- 23.4		27,631,924

Operating cost and expenses		2,288,471			2,812,645			- 18.6		24,874,685

Operating profit		253,666			504,552			- 49.7		2,757,239

Total assets	¥	1,386,511		¥	1,607,653			- 13.8	$	15,070,772


Americas
Net sales:
External customers	¥	871,633		¥	1,141,560			- 23.6	$	9,474,272
Intersegment	1,263			3,758			- 66.4		13,728

Total		872,896			1,145,318			- 23.8		9,488,000

Operating cost and expenses		860,863			1,136,288			- 24.2		9,357,207

Operating profit		12,033			9,030			+ 33.3		130,793

Total assets	¥	198,094		¥	203,255			- 2.5	$	2,153,196


Europe
Net sales:
External customers	¥	991,336		¥	1,337,147			- 25.9	$	10,775,391
Intersegment	919			4,329			- 78.8		9,989

Total		992,255			1,341,476			- 26.0		10,785,380

Operating cost and expenses		964,606			1,314,942			- 26.6		10,484,847

Operating profit		27,649			26,534			+ 4.2		300,533

Total assets	¥	378,477		¥	417,562			- 9.4	$	4,113,880


Others
Net sales:
External customers	¥	518,470		¥	616,778			- 15.9	$	5,635,544
Intersegment	534,147			670,678			- 20.4		5,805,945

Total		1,052,617			1,287,456			- 18.2		11,441,489

Operating cost and expenses		1,019,208			1,247,156			- 18.3		11,078,348

Operating profit		33,409			40,300			- 17.1		363,141

Total assets	¥	384,795		¥	344,638			+ 11.7	$	4,182,554


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment	(2,250,704		)	(2,997,286		)	-		(24,464,173		)

Total		(2,250,704	)		(2,997,286	)		-		(24,464,173	)

Operating cost and expenses		(2,141,002	)		(2,912,944	)		-		(23,271,760	)

Operating profit (loss)		(109,702	)		(84,342	)		-		(1,192,413	)

Total assets	¥	1,499,680		¥	1,396,826			+ 7.4	$	16,300,870


Consolidated
Net sales:
External customers	¥	3,209,201		¥	4,094,161			- 21.6	$	34,882,620
Intersegment	-			-			-		-

Total		3,209,201			4,094,161			- 21.6		34,882,620

Operating cost and expenses		2,992,146			3,598,087			- 16.8		32,523,327

Operating profit		217,055			496,074			- 56.2		2,359,293

Total assets	¥	3,847,557		¥	3,969,934			- 3.1	$	41,821,272

- 14 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

Number of Group Companies



	December 31, 2009		December 31, 2008		Change
Subsidiaries		241		245		(4	)
Affiliates		15		18		(3	)
Total		256		263		(7	)

Change in Group Entities


Subsidiaries
	Addition:	12 companies
	Removal:	16 companies

Affiliates (Carried at Equity Basis)
	Addition:	2 companies
	Removal:	5 companies

Subsidiaries Listed on Domestic Stock Exchange

  Tokyo Stock Exchange (1st section): Canon Marketing Japan Inc., Canon Electronics Inc., Canon Finetech Inc.
  Tokyo Stock Exchange (2nd section): Canon Software Inc.
  Osaka Securities Exchange (2nd section): Canon Machinery Inc.
  JASDAQ: Tokki Corporation, Asia Pacific System Research Co., Ltd.
  Osaka Securities Exchange (Hercules): e-System Corporation

(2) SIGNIFICANT ACCOUNTING POLICIES

		While previous segment information has been presented in accordance with accounting guidance generally accepted in Japan, Canon adopted the guidance for segment reporting under U.S. generally accepted accounting principles (“U.S. GAAP”) in the fiscal year beginning January 1, 2009. Accordingly, prior year segment information has been adjusted to conform to this guidance under U.S. GAAP.

		Recently Issued Accounting Guidance

Canon adopted new guidance for noncontrolling interests in consolidated financial statements in the first quarter beginning January 1, 2009. Upon the adoption of this guidance, noncontrolling interests, which were previously referred to as minority interests and classified between total liabilities and stockholders’ equity on the consolidated balance sheets, are now included as a separate component of total equity. In addition, consolidated net income on the consolidated statements of income now includes the net income (loss) attributable to noncontrolling interests. These financial statement presentation requirements have been adopted retrospectively and prior year amounts in the consolidated financial statements including the consolidated statements of cash flows have been reclassified or adjusted to conform to this guidance.

- 15 -

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

Year ended

Year ended

December 31,

December 31,

December 31,

2009

2008

2009

Net income attributable to Canon Inc.

-Basic

131,647

309,148

1,430,946

-Diluted

131,647

309,150

1,430,946

Number of shares

Average common shares outstanding

-Basic

1,234,481,836

1,255,626,490

-Diluted

1,234,481,836

1,255,706,419

Yen

U.S. dollars

Net income attributable to
Canon Inc. stockholders per share:

-Basic

106.64

246.21

1.16

-Diluted

106.64

246.20

1.16

(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.

- 16 -

CANON INC.

NON-CONSOLIDATED

10. NON-CONSOLIDATED BALANCE SHEETS

( Parent company only )


	Millions of yen
	As of			As of
	December 31,			December 31,			Change
	2009			2008
ASSETS
Current assets:
Cash	¥	6,855		¥	10,674		¥	(3,819	)
Trade receivables		649,594			608,047			41,547
Marketable securities		92,740			93,899			(1,159	)
Inventories		147,938			221,668			(73,730	)
Prepaid expenses and other current assets		215,657			204,645			11,012
Allowance for doubtful receivables		(1	)		(1	)		-

Total current assets		1,112,783			1,138,932			(26,149	)

Fixed assets:
Net property, plant and equipment		862,901			929,217			(66,316	)
Intangibles		32,444			40,431			(7,987	)
Investments and other fixed assets		543,027			510,476			32,551
Allowance for doubtful receivables-noncurrent		(55	)		(58	)		3

Total fixed assets		1,438,317			1,480,066			(41,749	)

Total assets	¥	2,551,100		¥	2,618,998		¥	(67,898	)


LIABILITIES AND NET ASSETS
Current liabilities:
Trade payables	¥	332,219		¥	323,980		¥	8,239
Short-term loans		226,749			156,148			70,601
Accrued income taxes		27,639			47,825			(20,186	)
Accrued warranty expenses		3,043			6,077			(3,034	)
Accrued bonuses for employees		4,129			4,972			(843	)
Accrued bonuses for directors		127			244			(117	)
Other current liabilities		105,774			176,255			(70,481	)

Total current liabilities		699,680			715,501			(15,821	)

Noncurrent liabilities:
Accrued pension and severance cost		34,524			34,456			68
Accrued directors’ retirement benefits		1,786			1,576			210
Reserve for environmental provision		1,170			1,300			(130	)
Accrued long service rewards for employees		1,176			1,160			16
Other noncurrent liabilities		46			-			46

Total noncurrent liabilities		38,702			38,492			210

Total liabilities		738,382			753,993			(15,611	)

Net assets:
Stockholders’ equity		1,810,900			1,865,955			(55,055	)
Valuation and translation adjustments		1,008			(1,196	)		2,204
Subscription right to shares		810			246			564

Total net assets		1,812,718			1,865,005			(52,287	)

Total liabilities and net assets	¥	2,551,100		¥	2,618,998		¥	(67,898	)



Notes:	As of			As of
	December 31,			December 31,
	2009			2008
1.Accumulated depreciation	¥	1,122,921		¥	988,205
Accumulated impairment loss	¥	21,606		¥	10,197
2.Cautionary obligation and other
Cautionary obligation contract	¥	16,256		¥	19,323
3.Issuance of new stock	¥	-		¥	127
(Those capitalized)	¥	-		¥	64
Those due to conversion of convertible debentures	¥	-		¥	127
(Those capitalized)	¥	-		¥	64
4.Number of stock newly issued (Thousand shares)		-			127
Those due to conversion of convertible debentures
(Thousand shares)		-			127

- 17 -



CANON INC.		NON-CONSOLIDATED

11. NON-CONSOLIDATED STATEMENTS OF INCOME

( Parent company only )


	Millions of yen
	Year ended			Year ended
	December 31,			December 31,			Change(%)
	2009			2008
Net sales	¥	2,025,546		¥	2,721,094			- 25.6
Cost of sales		1,471,056			1,801,801

Gross profit		554,490			919,293			- 39.7
Selling, general and administrative expenses		456,713			560,587

Operating profit		97,777			358,706			- 72.7
Other income (deductions):
Interest and dividend income		16,314			14,931
Interest expense		(3,916	)		(3,844	)
Other, net		32,509			(10,707	)

		44,907			380

Ordinary profit		142,684			359,086			- 60.3

Non-ordinary gain (loss), net		(20,396	)		(26,084	)

Income before income taxes		122,288			333,002			- 63.3
Income taxes		41,510			108,867

Net income	¥	80,778		¥	224,135			- 64.0

12. DETAILS OF SALES

( Parent company only )


Sales by product	Millions of yen
	Year ended		Year ended
	December 31,		December 31,		Change(%)
	2009		2008

Office	¥	1,021,285	¥	1,466,975		- 30.4
Consumer		950,554		1,105,067		- 14.0
Industrial and others		53,707		149,052		- 64.0

Total	¥	2,025,546	¥	2,721,094		- 25.6


Sales by region	Millions of yen
	Year ended		Year ended
	December 31,		December 31,		Change(%)
	2009		2008
Japan	¥	276,385	¥	350,094		- 21.1
Overseas:
Americas		645,174		883,911		- 27.0
Europe		677,162		935,449		- 27.6
Other areas		426,825		551,640		- 22.6

		1,749,161		2,371,000		- 26.2

Total	¥	2,025,546	¥	2,721,094		- 25.6

Note: Upon the adoption of FASB ASC 280, “Segment Reporting” for consolidation statements, details of sales for non-consolidated statements is now based on the same segments as consolidation statements from the current fiscal year. The presentation of prior year amounts in details of sales has been reclassified to conform to the current presentation.

- 18 -

CANON INC.

NON-CONSOLIDATED

13. NON-CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
( Parent company only )


Year ended December 31, 2009																				(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			Other capital surplus		Legal reserve			Other retained earnings
					Additional paid-in capital			Other capital surplus		Legal reserve			Reserve for special depreciation			Reserve for deferral of capital gain on property			Special reserves			Retained earnings
	Balance as of December 31, 2008	¥	174,762		¥	306,288			-	¥	22,114		¥	4,664		¥	2,578		¥	1,249,928		¥	661,843		¥	(556,222	)	¥	1,865,955		¥	(1,048	)	¥	(148	)	¥	246	¥	1,865,005
	Changes in the term
	Transfer to reserve for special depreciation													146									(146	)					-												-
	Reversal of reserve for special depreciation													(3,244	)								3,244						-												-
	Transfer to reserve for deferral of capital gain on property																199						(199	)					-												-
	Reversal of reserve for deferral of capital gain on property																(76	)					76						-												-
	Dividends paid																						(135,793	)					(135,793	)										(135,793	)
	Net income																						80,778						80,778											80,778
	Purchase of treasury stock																									(51	)		(51	)										(51	)
	Disposal of treasury stock																						(10	)		21			11											11
	Net change of items other than stockholders’ equity																													-		2,432			(228	)		564		2,768
	Total changes in the term			-			-		-			-		(3,098	)		123				-		(52,050	)		(30	)		(55,055	)		2,432			(228	)		564		(52,287	)
	Balance as of December 31, 2009	¥	174,762		¥	306,288			-	¥	22,114		¥	1,566		¥	2,701		¥	1,249,928		¥	609,793		¥	(556,252	)	¥	1,810,900		¥	1,384		¥	(376	)	¥	810	¥	1,812,718

Notes:


1.Number of issued shares as of December 31, 2009			1,333,763,464
2.Classes and number of treasury stock

(Shares)

Classes of stock

Balance as of
December 31, 2008

Increase

Decrease

Balance as of
December 31, 2009

common stock

99,275,245

16,518

3,762

99,288,001

3.Payment for dividends

Decision

Classes of stock

Cash dividend
(Millions of yen)

Dividend per share (yen)

Base date

Effective date

March 27, 2009
Annual meeting of stockholders

common stock

67,897

55.00

December 31, 2008

March 30, 2009

July 28, 2009
Board of directors’ meeting

common stock

67,896

55.00

June 30, 2009

August 28, 2009

Scheduled

Classes of stock

Cash dividend
(Millions of yen)

A source of
dividend

Dividend
per
share (yen)

Base date

Effective date

March 30, 2010
Annual meeting of stockholders

common stock

67,896

Retained
earnings

55.00

December 31, 2009

March 31, 2010

- 19 -

CANON INC.

NON-CONSOLIDATED


Year ended December 31, 2008																			(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		Other capital surplus			Legal reserve			Other retained earnings
				Additional paid-in capital		Other capital surplus			Legal reserve			Reserve for special depreciation			Reserve for deferral of capital gain on property			Special reserves			Retained earnings
	Balance as of December 31, 2007	¥	174,698	¥	306,225	¥	25		¥	22,114		¥	7,694		¥	1,255		¥	1,249,928		¥	581,031		¥	(456,186	)	¥	1,886,784		¥	5,028		¥	(1,246	)			-	¥	1,890,566
	Changes in the term
	Conversion of convertible debentures		64		63																							127												127
	Transfer to reserve for special depreciation												632									(632	)						-												-
	Reversal of reserve for special depreciation												(3,662	)								3,662							-												-
	Transfer to reserve for deferral of capital gain on property															1,396						(1,396	)						-												-
	Reversal of reserve for deferral of capital gain on property															(73	)					73							-												-
	Dividends paid																					(145,024	)					(145,024	)											(145,024	)
	Net income																					224,135						224,135												224,135
	Purchase of treasury stock																								(100,122	)		(100,122	)											(100,122	)
	Disposal of treasury stock						(25	)														(5	)		86			56												56
	Net change of items other than stockholders’ equity																												-		(6,076	)		1,098			246			(4,732	)
	Total changes in the term		64		63		(25	)			-		(3,030	)		1,323				-		80,812			(100,036	)		(20,829	)		(6,076	)		1,098			246			(25,561	)
	Balance as of December 31, 2008	¥	174,762	¥	306,288			-	¥	22,114		¥	4,664		¥	2,578		¥	1,249,928		¥	661,843		¥	(556,222	)	¥	1,865,955		¥	(1,048	)	¥	(148	)	¥	246		¥	1,865,005


Notes:

1. Number of issued shares as of December 31, 2008			1,333,763,464
2. Classes and number of treasury stock

(Shares)

Classes of stock

Balance as of

Increase

Decrease

Balance as of

December 31, 2007

December 31, 2008

common stock

72,588,428

26,701,146

14,329

99,275,245

3. Payment for dividends

Decision

Classes of stock

Cash dividend

Dividend per share (yen)

Base date

Effective date

(Millions of yen)

March 28, 2008
Annual meeting of stockholders

common stock

75,663

60.00

December 31, 2007

March 31, 2008

July 24, 2008
Board of directors’ meeting

common stock

69,361

55.00

June 30, 2008

August 26, 2008

- 20 -

CANON INC.

NON-CONSOLIDATED

14. NOTE FOR GOING CONCERN ASSUMPTION

( Parent company only )

Not applicable.

15. CHANGES OF BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

( Parent company only )

Note to changes in Accounting Policies

(Measurement standard and valuation method of inventories)

Previously, the inventories held by the company were primarily valued at cost, determined by periodic average method.

Effective from the current fiscal year, the company has applied “Accounting Standard for Measurement of Inventories” (Accounting standards Board of Japan (ASBJ) Statement No.9, issued July 5, 2006). Accordingly, from the current fiscal year, such inventories are mainly valued at cost, determined by periodic average method (amount shown in the balance sheet is devaluated due to decline in profitability) .

The effect of this change, operating profit, ordinary profit and income before taxes decreased by JPY 2,034 million for the fiscal year ended December 31, 2009.

Further, devaluation loss and disposal loss of inventories were previously recorded as “Other, net”, whereas currently recorded as “Cost of sales”.

The effect of this change, operating profit decreased by JPY 19,382 million for the fiscal year ended December 31, 2009.

(Lease transactions)

Previously, finance lease transactions that do not transfer ownership were accounted for in a manner of operating lease. Effective from the current fiscal year, the company has applied “Accounting Standard for Lease Transactions” (ASBJ Statement No.13, issued March 30, 2007, revised from original standard issued by Corporate Accounting Council on June 17, 1993) and “Guidance on Accounting Standards for Lease Transactions” (ASBJ Guidance No.16, issued March 30, 2007, revised from original guidance issued by The Japanese Institute of Certified Public Accountants on January 18, 1994). Accordingly, from the current fiscal year, such lease transactions are accounted for in a similar manner with ordinary sale and purchase transactions. The change of this accounting standard has no impact on the statements of income for the fiscal year ended December 31, 2009.

- 21 -

CANON INC.

NON-CONSOLIDATED

Directors

(Current titles are shown in the parentheses)

(1) Candidates for Directors to be promoted


Managing Director	Hideki Ozawa	(Director, President of Canon (China) Co., Ltd.)

Managing Director	Masaya Maeda	(Director, Chief Executive of Image Communication Products Operations)

(2) Directors to be retired


Advisor to be appointed	Nobuyoshi Tanaka	(Senior Managing Director)

Chairman and President of Canon Anelva Corporation to be continued	Junji Ichikawa	(Senior Managing Director)

Advisor to be appointed	Akiyoshi Moroe	(Senior Managing Director)

President of Canon Components, Inc. to be appointed	Toshiyuki Komatsu	(Director)

Managing Director of Canon Electronics, Inc. to be appointed	Tetsuro Tahara	(Director)

	Seijiro Sekine	(Director)

Corporate Auditor to be appointed	Shunji Onda	(Director)

President of SED Inc. to be continued	Kazunori Fukuma	(Director)

(3) Corporate Auditors to be retired

Kunihiro Nagata

Yoshinobu Shimizu

Minoru Shishikura

(4) Candidates for new Corporate Auditors to be appointed


Shunji Onda		(Director)

Kazunori Watanabe		(Certified Public Accountant)

Kuniyoshi Kitamura		(General Manager of The Dai-ichi Mutual Life Insurance Company)

- 22 -

CANON INC.

NON-CONSOLIDATED

Executive Officers

(1) Candidates for new Executive Officers


Shigeyuki Uzawa		(Group Executive of Semiconductor Production Equipment Operations)

Makoto Araki		(Group Executive of Information & Communication Systems Headquarters)

Kenichi Nagasawa		(Senior Director of Canon U.S.A., Inc.)

(2) Executive Officer to be retired


Kazuhiro Akiyama		(Director of Canon Anelva Corporation)

- 23 -

Canon Inc.
January 27, 2010

CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER
AND THE FISCAL YEAR ENDED DECEMBER 31, 2009

SUPPLEMENTARY REPORT

TABLE OF CONTENTS


		PAGE
1.	SALES BY REGION AND PRODUCT (2009)		S 1
2.	SALES BY REGION AND PRODUCT (2010/Projection)		S 2
3.	SEGMENT INFORMATION BY PRODUCT (2009)		S 3
4.	OTHER INCOME / DEDUCTIONS (2009)		S 3
5.	SEGMENT INFORMATION BY PRODUCT (2010/Projection)		S 4
6.	OTHER INCOME / DEDUCTIONS (2010/Projection)		S 4
7.	SALES COMPOSITION BY PRODUCT		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 REGION AND PRODUCT (2009)		(Millions of yen)



		2009						2008						Change year over year
		4th quarter			Year			4th quarter			Year			4th quarter			Year

Japan
	Office		92,303			374,275			109,717			448,367			-15.9	%		-16.5	%

	Consumer		69,731			219,036			76,320			249,997			-8.6	%		-12.4	%

	Industry and Others		35,565			109,033			38,673			169,916			-8.0	%		-35.8	%

	Total		197,599			702,344			224,710			868,280			-12.1	%		-19.1	%

Overseas
	Office		369,846			1,260,781			392,672			1,774,886			-5.8	%		-29.0	%

	Consumer		342,356			1,080,158			299,621			1,203,650			+14.3	%		-10.3	%

	Industry and Others		44,257			165,918			77,737			247,345			-43.1	%		-32.9	%

	Total		756,459			2,506,857			770,030			3,225,881			-1.8	%		-22.3	%

	Americas
	Office		138,949			485,180			155,250			687,691			-10.5	%		-29.4	%

	Consumer		125,209			367,035			117,391			422,458			+6.7	%		-13.1	%

	Industry and Others		10,624			41,939			10,361			44,422			+2.5	%		-5.6	%

	Total		274,782			894,154			283,002			1,154,571			-2.9	%		-22.6	%

	Europe
	Office		168,917			565,656			180,057			820,387			-6.2	%		-31.1	%

	Consumer		132,398			405,173			117,832			487,268			+12.4	%		-16.8	%

	Industry and Others		7,208			24,321			10,232			33,745			-29.6	%		-27.9	%

	Total		308,523			995,150			308,121			1,341,400			+0.1	%		-25.8	%

	Other areas
	Office		61,980			209,945			57,365			266,808			+8.0	%		-21.3	%

	Consumer		84,749			307,950			64,398			293,924			+31.6	%		+4.8	%

	Industry and Others		26,425			99,658			57,144			169,178			-53.8	%		-41.1	%

	Total		173,154			617,553			178,907			729,910			-3.2	%		-15.4	%

	Intersegment
	Office		2,982			10,020			5,566			23,356			-46.4	%		-57.1	%

	Consumer		642			1,966			647			2,428			-0.8	%		-19.0	%

	Industry and Others		37,248			83,047			21,271			105,144			+75.1	%		-21.0	%

	Eliminations		(40,872	)		(95,033	)		(27,484	)		(130,928	)			-			-

	Total		0			0			0			0				-			-

Total
	Office		465,131			1,645,076			507,955			2,246,609			-8.4	%		-26.8	%

	Consumer		412,729			1,301,160			376,588			1,456,075			+9.6	%		-10.6	%

	Industry and Others		117,070			357,998			137,681			522,405			-15.0	%		-31.5	%

	Eliminations		(40,872	)		(95,033	)		(27,484	)		(130,928	)			-			-

	Total		954,058			3,209,201			994,740			4,094,161			-4.1	%		-21.6	%

- S1 -

Canon Inc.

2. SALES BY REGION AND PRODUCT (2010/Projection)


(1) Sales by product							(Millions of yen)

	2010 (P)			2009			Change year over year
	Year			Year			Year

Office		1,760,900			1,645,076			+7.0	%

Consumer		1,369,500			1,301,160			+5.3	%

Industry and Others		401,300			357,998			+12.1	%

Eliminations		(81,700	)		(95,033	)		-

Total		3,450,000			3,209,201			+7.5	%

							(P)=Projection





(2) Sales by region							(Millions of yen)

	2010 (P)			2009			Change year over year
	Year			Year			Year

Japan		731,050			702,344			+4.1	%
Overseas		2,718,950			2,506,857			+8.5	%

Americas		924,750			894,154			+3.4	%
Europe		1,086,550			995,150			+9.2	%
Other areas		707,650			617,553			+14.6	%

Total		3,450,000			3,209,201			+7.5	%

							(P)=Projection

- S2 -

Canon Inc.


3. SEGMENT INFORMATION BY PRODUCT (2009)		(Millions of yen)



		2009						2008						Change year over year
		4th quarter			Year			4th quarter			Year			4th quarter			Year

	Office
	External customers		462,149			1,635,056			502,389			2,223,253			-8.0%			-26.5%
	Intersegment		2,982			10,020			5,566			23,356			-46.4%			-57.1%

	Total sales		465,131			1,645,076			507,955			2,246,609			-8.4%			-26.8%

	Operating profit		80,614			229,396			84,729			457,346			-4.9%			-49.8%

	% of sales		17.3%			13.9%			16.7%			20.4%			-			-

	Consumer
	External customers		412,087			1,299,194			375,941			1,453,647			+9.6%			-10.6%
	Intersegment		642			1,966			647			2,428			-0.8%			-19.0%

	Total sales		412,729			1,301,160			376,588			1,456,075			+9.6%			-10.6%

	Operating profit		75,143			183,492			40,873			223,124			+83.8%			-17.8%

	% of sales		18.2%			14.1%			10.9%			15.3%			-			-

	Industry and Others
	External customers		79,822			274,951			116,410			417,261			-31.4%			-34.1%
	Intersegment		37,248			83,047			21,271			105,144			+75.1%			-21.0%

	Total sales		117,070			357,998			137,681			522,405			-15.0%			-31.5%

	Operating profit		(34,960	)		(75,956	)		(52,276	)		(47,876	)		-			-

	% of sales		-29.9%			-21.2%			-38.0%			-9.2%			-			-

	Corporate and Eliminations
	External customers		-			-			-			-			-			-
	Intersegment		(40,872	)		(95,033	)		(27,484	)		(130,928	)		-			-

	Total sales		(40,872	)		(95,033	)		(27,484	)		(130,928	)		-			-

	Operating profit		(28,669	)		(119,877	)		(37,501	)		(136,520	)		-			-


	Consolidated
	External customers		954,058			3,209,201			994,740			4,094,161			-4.1%			-21.6%
	Intersegment		-			-			-			-			-			-

	Total sales		954,058			3,209,201			994,740			4,094,161			-4.1%			-21.6%

	Operating profit		92,128			217,055			35,825			496,074			+157.2%			-56.2%

	% of sales		9.7%			6.8%			3.6%			12.1%			-			-


4. OTHER INCOME / DEDUCTIONS (2009)													(Millions of yen)


		2009						2008						Change year over year
		4th quarter			Year			4th quarter			Year			4th quarter			Year

	Interest and dividend, net		1,346			4,866			3,685			18,605			(2,339	)		(13,739	)
	Forex gain / loss		3,485			1,842			2,932			(11,212	)		+553			+13,054
	Equity earnings / loss of affiliated companies		(527	)		(12,649	)		(18,485	)		(20,047	)		+17,958			+7,398
	Other, net		1,489			8,241			(7,044	)		(2,273	)		+8,533			+10,514

	Total		5,793			2,300			(18,912	)		(14,927	)		+24,705			+17,227

- S3 -

Canon Inc.


5. SEGMENT INFORMATION BY PRODUCT (2010/Projection)		(Millions of yen)



	2010 (P)		2009		Change year over year
	Year		Year		Year
Office
External customers		1,750,700		1,635,056		+7.1%
Intersegment		10,200		10,020		+1.8%

Total sales		1,760,900		1,645,076		+7.0%

Operating profit		287,000		229,396		+25.1%
% of sales		16.3%		13.9%		-

Consumer
External customers		1,367,700		1,299,194		+5.3%
Intersegment		1,800		1,966		-8.4%

Total sales		1,369,500		1,301,160		+5.3%

Operating profit		213,900		183,492		+16.6%
% of sales		15.6%		14.1%		-

Industry and Others
External customers		331,600		274,951		+20.6%
Intersegment		69,700		83,047		-16.1%

Total sales		401,300		357,998		+12.1%

Operating profit		(15,700)		(75,956)		-
% of sales		-3.9%		-21.2%		-

Corporate and Eliminations
External customers		-		-		-
Intersegment		(81,700)		(95,033)		-

Total sales		(81,700)		(95,033)		-

Operating profit		(155,200)		(119,877)		-


Consolidated
External customers		3,450,000		3,209,201		+7.5%
Intersegment		-		-		-

Total sales		3,450,000		3,209,201		+7.5%

Operating profit		330,000		217,055		+52.0%
% of sales		9.6%		6.8%		-

(P)=Projection


6. OTHER INCOME / DEDUCTIONS (2010/Projection)		(Millions of yen)



	2010 (P)			2009			Change year over year
	Year			Year			Year
Interest and dividend, net		2,700			4,866			(2,166	)
Forex gain / loss		(2,100	)		1,842			(3,942	)
Equity earnings / loss of affiliated companies		(8,600	)		(12,649	)		+4,049
Other, net		(2,000	)		8,241			(10,241	)

Total		(10,000	)		2,300			(12,300	)

(P)=Projection

- S4 -

Canon Inc.

7. SALES COMPOSITION BY PRODUCT



		2010 (P)			2009								2008

		Year			4th quarter				Year				4th quarter			Year

Office
	Monochrome copiers		19	%		17	%			20	%			20	%		21	%
	Color copiers		20	%		19	%			19	%			19	%		19	%
	Other printing devices		53	%		57	%			53	%			54	%		54	%
	Others		8	%		7	%			8	%			7	%		6	%

Consumer
	Cameras		67	%		68	%			68	%			64	%		66	%
	Inkjet printers		26	%		26	%			25	%			28	%		26	%
	Others		7	%		6	%			7	%			8	%		8	%

Industry and Others
	Semiconductor production equipment		21	%		12	%			19	%			40	%		32	%
	Others		79	%		88	%			81	%			60	%		68	%

												(P)=Projection



8. SALES GROWTH IN LOCAL CURRENCY

		2010 (P)			2009

		Year			4th quarter				Year

Office
	Japan			-		-15.9	%			-16.5	%
	Overseas			-		-3.5	%			-20.7	%

	Total		+9.2	%		-6.6	%			-20.2	%

Consumer
	Japan			-		-8.6	%			-12.4	%
	Overseas			-		+16.1	%			+0.4	%

	Total		+7.2	%		+11.1	%			-1.8	%

Industry and Others
	Japan			-		-8.0	%			-35.8	%
	Overseas			-		-42.8	%			-28.3	%

	Total		+12.5	%		-12.3	%			-25.5	%

Total
	Japan		+4.2	%		-12.1	%			-19.1	%
	Overseas		+10.9	%		+0.2	%			-13.4	%
	Americas		+7.3	%		+4.0	%			-14.9	%
	Europe		+10.5	%		-2.4	%			-15.4	%
	Other areas		+16.6	%		-1.4	%			-7.3	%

	Total		+9.4	%		-2.6	%			-14.6	%

								(P)=Projection

- S5 -

Canon Inc.

9. PROFITABILITY



		2010 (P)			2009			2008
		Year			Year			Year

	ROE *1		7.4%			4.9%			11.1%

	ROA *2		5.1%			3.4%			7.3%

*1 Based on Net Income attributable to Canon Inc. and Total Canon Inc. stockholders’ equity							(P)=Projection
*2 Based on Net Income attributable to Canon Inc.

10. IMPACT OF FOREIGN EXCHANGE RATES

	(1) Exchange rates													(Yen)

		2010 (P)			2009						2008

		Year			4th quarter			Year			4th quarter			Year

	Yen/US		90.00			89.68			93.21			96.22			103.23
	Yen/Euro		130.00			132.54			130.46			126.46			151.46

	(P)=Projection
	(2) Impact of foreign exchange rates on sales (Year over year)				(Billions of yen)

		2010 (P)			2009

		Year			4th quarter			Year

	US$		(49.8)			(20.5)			(116.8)
	Euro		(2.9)			+12.0			(114.8)
	Other currencies		(2.5)			+6.1			(17.9)

	Total		(55.2)			(2.4)			(249.5)

	(P)=Projection
	(3) Impact of foreign exchange rates per yen	(Billions of yen)

		2010 (P)

		Year

On sales
	US$		15.5
	Euro		6.4

On operating profit
	US$		8.2
	Euro		4.6

	(P)=Projection

	11. STATEMENTS OF CASH FLOWS													(Millions of yen)

		2010 (P)			2009						2008

		Year			4th quarter			Year			4th quarter			Year

Net cash provided by operating activities			520,000			236,708			611,235			181,249			616,684

Net cash used in investing activities			(360,000	)		(84,010	)		(370,244	)		(86,857	)		(472,480	)

Free cash flow			160,000			152,698			240,991			94,392			144,204

Net cash used in financing activities			(240,000	)		(998	)		(142,379	)		(85,592	)		(277,565	)

Effect of exchange rate changes on cash and cash equivalents			(15,000	)		9,678			17,226			(66,923	)		(131,906	)

Net change in cash and cash equivalents			(95,000	)		161,378			115,838			(58,123	)		(265,267	)

Cash and cash equivalents at end of period			700,000			795,034			795,034			679,196			679,196

	(P)=Projection


*	In connection with the adoption of the guidance for noncotrolling interests in consolidated financial statements, only the total of “net cash provided by operating activities” will be provided from first-quarter 2009.

- S6 -

Canon Inc.


12.R&D EXPENDITURE		(Millions of yen)



	2010 (P)		2009		2008

	Year		Year		Year

Office		-		78,872		106,247
Consumer		-		74,131		76,645
Industry and Others		-		151,597		191,133

Total		320,000		304,600		374,025

% of sales		9.3%		9.5%		9.1%

(P)=Projection

13. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION


		(Millions of yen)



	2010 (P)		2009		2008

	Year		Year		Year

Increase in PP&E
Office		-		91,525		131,165
Consumer		-		26,483		51,985
Industry and Others		-		22,743		25,555
Corporate and eliminations		-		75,377		153,283

Total		220,000		216,128		361,988

Depreciation and amortization
Office		-		90,878		99,962
Consumer		-		48,701		58,082
Industry and Others		-		60,770		71,557
Corporate and eliminations		-		115,044		111,736

Total		300,000		315,393		341,337

(P)=Projection

14. INVENTORIES



(1) Inventories		(Millions of yen)



	2009		2008		Difference
	Dec.31		Dec.31		Difference

Office		144,941		185,859		(40,918	)
Consumer		113,975		160,861		(46,886	)
Industry and Others		114,325		160,199		(45,874	)

Total		373,241		506,919		(133,678	)



(2) Inventories/Sales*		(Days)



	2009		2008		Difference
	Dec.31		Dec.31		Difference

Office		30		32		(2	)
Consumer		29		41		(12	)
Industry and Others		158		151		+7

Total		39		47		(8	)

*Index based on the previous six months sales.

15. DEBT RATIO



	2009		2008		Difference
	Dec.31		Dec.31		Difference

Total debt / Total assets		0.3%		0.4%		-0.1%

16. OVERSEAS PRODUCTION RATIO



	2009		2008
	Year		Year

Overseas production ratio		40%		39%

17. NUMBER OF EMPLOYEES



	2009		2008		Difference
	Dec.31		Dec.31		Difference

Japan		73,635		72,445		+1,190
Overseas		95,244		94,535		+709

Total		168,879		166,980		+1,899

- S7 -