Edgar Filing: CANON INC

Form 6-K

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 ..... April........................................................ , 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.... April 26, 2010....		By....../s/...... Masashiro Kobayashi .........................
Date.... April 26, 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. CONSOLIDATED RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2010

CONSOLIDATED RESULTS FOR
THE FIRST QUARTER ENDED MARCH 31, 2010

April 26, 2010

CONSOLIDATED RESULTS


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

	Actual								Projected
	Three months		Three months		Change(%)		Three months		Year ending		Change(%)
	ended		ended				ended		December 31,
	March 31, 2010		March 31, 2009				March 31, 2010		2010

Net sales	¥	755,526	¥	687,034	+	10.0	$	8,123,935	¥	3,750,000	+	16.9
Operating profit		86,843		20,032	+	333.5		933,796		360,000	+	65.9
Income before income taxes		88,852		22,394	+	296.8		955,398		360,000	+	64.1
Net income attributable to Canon Inc.	¥	56,811	¥	17,744	+	220.2	$	610,871	¥	240,000	+	82.3


Net income attributable to Canon Inc. stockholders per share:

- Basic	¥	46.02	¥	14.37	+	220.3	$	0.49	¥	194.42	+	82.3
- Diluted		46.02		14.37	+	220.3		0.49		-		-


	Actual
	As of		As of		Change(%)		As of
	March 31,		December 31,				March 31,
	2010		2009				2010

Total assets	¥	4,032,810	¥	3,847,557	+	4.8	$	43,363,548


Canon Inc. stockholders’ equity	¥	2,675,909	¥	2,688,109	-	0.5	$	28,773,215

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 JPY93 = U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of March 31, 2010, 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

2010

First Quarter in Review

Looking back at the global economy in the first quarter of 2010, economic conditions have gradually begun to improve globally amid the recovery trend from the second half of 2009. Although the economic recovery in Europe has lagged mainly due to the financial concerns of the Greek government, the United States has recorded a steady revival in consumer spending and Japan has seen a sharp increase in exports, mainly to Asian countries. The economies of the Asian region, such as China and India, along with other emerging countries, continued to achieve robust growth.

As for the markets in which Canon operates amid these conditions, within the office equipment market, while demand for monochrome models of network digital multifunction devices (MFDs) remained sluggish, demand for color models steadily recovered. Demand for laser printers also gained momentum compared with the stagnant sales of the previous year. As for the consumer products market, demand for digital single-lens reflex (SLR) cameras displayed solid growth throughout global markets, whereas demand for compact digital cameras maintained growth in emerging markets, such as those in Asia, but remained relatively sluggish in developed countries. With regard to inkjet printers, demand recovered gradually and the market size expanded from the year-ago period. In the industry and others market, the markets for semiconductor lithography equipment and liquid crystal display (LCD) lithography equipment showed positive signs with an upturn in order placements, owing to improved conditions within the semiconductor device and LCD panel markets. The average value of the yen during the year was ¥90.63 to the U.S. dollar, a year-on-year appreciation of approximately ¥3, and ¥125.07 to the euro, a year-on-year depreciation of approximately ¥3.

Net sales for the quarter totaled ¥755.5 billion (U.S.$8,124 million), an increase of 10.0% from the year-ago period, thanks to robust sales of such consumer products as digital cameras and inkjet printers, along with a sales rebound for office products such as laser printers and other factors. The gross profit ratio rose 5.3 points year on year to 48.8%, mainly owing to the launch of new products and ongoing cost-cutting efforts, along with the rise in production turnover accompanying an increase in production. Consequently, gross profit rose by 23.3% to ¥368.6 billion (U.S.$3,963 million). Operating expenses increased by just 1.1% owing to continued Group-wide efforts to thoroughly cut spending, resulting in a climb in operating profit of approximately 4.3 fold to ¥86.8 billion (U.S.$934 million). Other income (deductions) recorded a decrease of ¥0.4 billion (U.S.$4 million), reflecting a deterioration in currency exchange losses and other factors. As a result, income before income taxes totaled ¥88.9 billion (U.S.$955 million), a year-on-year jump of approximately 4.0 fold, while net income attributable to Canon Inc. also surged approximately 3.2 fold to ¥56.8 billion (U.S.$611 million).

Basic net income attributable to Canon Inc. stockholders per share was ¥46.02 (U.S.$0.49), an increase of ¥31.65 (U.S.$0.34) compared with the corresponding period of the previous year.

- 2 -

Results by Segment

Looking at Canon’s quarterly performance by business sector, within the Office Business Unit, while sales volume of color network digital MFDs increased in major regions boosted by the introduction of new products and the recovery in demand, sales volume for laser printers, which suffered flagging sales in the previous year largely due to an adjustment of inventory levels, more than doubled, resulting in a substantial increase of 131%. Consequently, sales for the segment totaled ¥409.1 billion (U.S.$4,399 million), an increase of 8.0% year on year, and operating profit increased 50.5% to ¥72.1 billion (U.S.$775 million), mainly as a result of expanded sales and the rise in the gross profit ratio.

Within the Consumer Business Unit, sales volumes of such new digital SLR cameras as the competitively priced EOS Digital Rebel T1i (EOS 500D) and the new EOS Digital Rebel T2i (EOS 550D), along with the EOS 5D Mark II and EOS 7D advanced-amateur models, achieved healthy growth. As for compact digital cameras, the Company launched three new ELPH (IXUS)-series models and five new PowerShot-series models, boosting sales volumes especially in emerging markets. Consequently, sales volume for digital cameras recorded a year-on-year increase of 11%. As for inkjet printers, the market realized a turnaround and sales, particularly in Asia, displayed solid growth, contributing to an increase in sales volume of 8%. As a result, sales for the segment rose 19.8% year on year to ¥290.3 billion (U.S.$3,121 million). Operating profit increased by 166.6% to ¥47.3 billion (U.S.$509 million), largely reflecting the substantial rise in the gross profit ratio.

In the Industry and Others Business Unit, while the independent business-related sales of Group subsidiaries increased in line with the turnaround in business conditions, sales of both semiconductor lithography equipment and LCD lithography equipment remained slack due to the lingering effects of the stagnant market from the previous year, resulting in a decline in sales of 4.1% to ¥82.3 billion (U.S.$885 million). Operating loss improved by ¥12.7 billion (U.S.$136 million) to ¥3.0 billion (U.S.$32 million), owing to the rise in the gross profit ratio combined with a reduction in expenses.

Cash Flow

In the first quarter of 2010, cash flow from operating activities totaled ¥161.7 billion (U.S.$1,738 million), an increase of ¥109.2 billion (U.S.$1,174 million) year on year, mainly due to the significant increase in profit. Although investments to subsidiaries increased significantly, such as for the acquisition of shares of Océ N.V. to strengthen the printing business, capital investment was focused on items relevant to introducing new products, restraining the year-on-year increase of cash flow from investing activities slightly by ¥9.1 billion (U.S.$98 million) to a total of ¥111.1 billion (U.S.$1,195 million). Accordingly, free cash flow totaled positive ¥50.6 billion (U.S.$544 million), a turnaround of ¥100.1 billion (U.S.$1,077 million) from the corresponding year-ago period.

Cash flow from financing activities recorded an outlay of ¥124.3 billion (U.S.$1,336 million), mainly arising from the dividend payout coupled with the partial repayment of borrowings of Océ N.V., which was made a subsidiary of Canon. Consequently, cash and cash equivalents decreased by ¥79.5 billion (U.S.$855 million) to ¥715.5 billion (U.S.$7,694 million) from the end of the previous year.

- 3 -

Outlook

As for the outlook in the second quarter and thereafter, although developed countries face uncertainty regarding future prospects due to such factors as fiscal challenges and employment problems, those economies appear to be steadily headed for recovery with China and other emerging nations, which are expected to fuel global growth, likely to continue enjoying healthy expansion.

In the businesses in which Canon is involved, within the office equipment market, demand for such products as color network digital MFDs and laser printers is projected to lead toward a gradual recovery. With respect to the consumer products market, demand for digital SLR cameras is expected to achieve solid growth while sales of compact digital cameras and inkjet printers will likely expand gradually in response to the economic turnaround. As for the industry and others market, demand for semiconductor lithography equipment is expected to recover strongly as device makers begin investing again and demand for LCD lithography equipment is also expected to increase as LCD panel manufacturers gear up to boost production.

With regard to currency exchange rates for the second quarter onward, 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 ¥125 to the euro, representing an appreciation of approximately ¥3 against the U.S. dollar, and approximately ¥5 against 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 ¥3,750.0 billion (U.S.$40,323 million), a year-on-year increase of 16.9%; operating profit of ¥360.0 billion (U.S.$3,871 million), a year-on-year increase of 65.9%; income before income taxes of ¥360.0 billion (U.S.$3,871 million), a year-on-year increase of 64.1%; and net income attributable to Canon Inc. of ¥240.0 billion (U.S.$2,581 million), a year-on-year increase of 82.3%.

Consolidated Outlook

Fiscal year


	Millions of yen
	Year ending				Change		Year ended		Change (%)
	December 31, 2010						December 31, 2009
	Previous Outlook (A)		Revised Outlook (B)		(B - A)		Results (C)		(B - C) / C
Net sales	¥	3,450,000	¥	3,750,000	¥	300,000	¥	3,209,201		+ 16.9	%
Operating profit		330,000		360,000		30,000		217,055		+ 65.9	%
Income before income taxes		320,000		360,000		40,000		219,355		+ 64.1	%
Net income attributable to Canon Inc.	¥	200,000	¥	240,000	¥	40,000	¥	131,647		+ 82.3	%

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 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

II. Financial Statements

1. CONSOLIDATED BALANCE SHEETS


	Millions of yen									Thousands of
	Millions of yen									U.S. dollars
	As of			As of						As of
	March 31,			December 31,			Change			March 31,
	2010			2009						2010
ASSETS
Current assets:
Cash and cash equivalents	¥	715,541		¥	795,034		¥	(79,493	)	$	7,693,989
Short-term investments		19,705			19,089			616			211,882
Trade receivables, net		544,976			556,572			(11,596	)		5,859,957
Inventories		456,292			373,241			83,051			4,906,366
Prepaid expenses and other current assets		286,360			273,843			12,517			3,079,139

Total current assets		2,022,874			2,017,779			5,095			21,751,333

Noncurrent receivables		14,896			14,936			(40	)		160,172
Investments		94,357			114,066			(19,709	)		1,014,591
Property, plant and equipment, net		1,300,755			1,269,785			30,970			13,986,613
Intangible assets, net		119,448			117,396			2,052			1,284,387
Other assets		480,480			313,595			166,885			5,166,452


Total assets	¥	4,032,810		¥	3,847,557		¥	185,253		$	43,363,548



LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt	¥	30,636		¥	4,869		¥	25,767		$	329,419
Trade payables		371,122			339,113			32,009			3,990,559
Accrued income taxes		41,987			50,105			(8,118	)		451,473
Accrued expenses		322,650			274,300			48,350			3,469,355
Other current liabilities		114,180			115,303			(1,123	)		1,227,742

Total current liabilities		880,575			783,690			96,885			9,468,548
Long-term debt, excluding current installments		5,414			4,912			502			58,215
Accrued pension and severance cost		187,151			115,904			71,247			2,012,376
Other noncurrent liabilities		72,366			63,651			8,715			778,129


Total liabilities		1,145,506			968,157			177,349			12,317,268




Equity:
Canon Inc. stockholders’ equity:
Common stock		174,762			174,762			-			1,879,161
Additional paid-in capital		404,387			404,293			94			4,348,247
Legal reserve		55,313			54,687			626			594,764
Retained earnings		2,859,701			2,871,437			(11,736	)		30,749,473
Accumulated other comprehensive income (loss)		(261,990	)		(260,818	)		(1,172	)		(2,817,097	)
Treasury stock, at cost		(556,264	)		(556,252	)		(12	)		(5,981,333	)

Total Canon Inc. stockholders’ equity		2,675,909			2,688,109			(12,200	)		28,773,215

Noncontrolling interests		211,395			191,291			20,104			2,273,065



Total equity		2,887,304			2,879,400			7,904			31,046,280



Total liabilities and equity	¥	4,032,810		¥	3,847,557		¥	185,253		$	43,363,548



	Millions of yen									Thousands of
	Millions of yen									U.S. dollars
	As of			As of						As of
	March 31,			December 31,						March 31,
	2010			2009						2010
Notes:

1. Allowance for doubtful receivables	¥	11,929		¥	11,343					$	128,269
2. Accumulated depreciation		1,853,695			1,815,982						19,932,204
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments		(204,706	)		(202,628	)					(2,201,140	)
Net unrealized gains and losses on securities		3,930			3,285						42,258
Net gains and losses on derivative instruments		330			71						3,548
Pension liability adjustments		(61,544	)		(61,546	)					(661,763	)

- 5 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME

Millions of yen

Thousands of

U.S. dollars

Three months

Three months

Three months

ended

ended

Change(%)

ended

March 31, 2010

March 31, 2009

March 31, 2010

Net sales

755,526

687,034

10.0

8,123,935

Cost of sales

386,958

388,220

4,160,838

Gross profit

368,568

298,814

23.3

3,963,097

Operating expenses:

Selling, general and administrative expenses

210,792

205,993

2,266,581

Research and development expenses

70,933

72,789

762,720

281,725

278,782

3,029,301

Operating profit

86,843

20,032

333.5

933,796

Other income (deductions):

Interest and dividend income

1,021

1,434

10,978

Interest expense

(86

)

(84

)

(925

)

Other, net

1,074

1,012

11,549

2,009

2,362

21,602

Income before income taxes

88,852

22,394

296.8

955,398

Income taxes

30,117

6,759

323,839

Consolidated net income

58,735

15,635

631,559

Less: Net income (loss) attributable to noncontrolling interests

1,924

(2,109

)

20,688

Net income attributable to Canon Inc.

56,811

17,744

220.2

610,871

Note: Consolidated comprehensive income for the three months ended March 31, 2010 and 2009 was JPY 57,842 million
(U.S.$621,957 thousand) and JPY 53,873 million, respectively.

3. DETAILS OF SALES

Sales by business unit

Millions of yen

Thousands of

U.S. dollars

Three months

Three months

Three months

ended

ended

Change(%)

ended

March 31, 2010

March 31, 2009

March 31, 2010

Office

409,134

378,670

8.0

4,399,290

Consumer

290,287

242,392

19.8

3,121,366

Industry and Others

82,328

85,854

4.1

885,247

Eliminations

(26,223

)

(19,882

)

(281,968

)

Total

755,526

687,034

10.0

8,123,935

Sales by region

Millions of yen

Thousands of

U.S. dollars

Three months

Three months

Three months

ended

ended

Change(%)

ended

March 31, 2010

March 31, 2009

March 31, 2010

Japan

167,516

169,504

1.2

1,801,247

Overseas:

Americas

204,555

176,331

16.0

2,199,516

Europe

230,678

210,067

9.8

2,480,409

Other areas

152,777

131,132

16.5

1,642,763

588,010

517,530

13.6

6,322,688

Total

755,526

687,034

10.0

8,123,935

Notes:

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

Office :

Office network digital multifunction devices (MFDs) / Color network digital MFDs / Personal-use network digital MFDs /
Office copying machines / Full-color copying machines / Personal-use 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 lithography equipment / LCD lithography equipment / Medical image recording equipment /
Magnetic heads / Micromotors / Computers / Handy terminals / Document scanners / Calculators

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

- 6 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF CASH FLOWS


	Millions of yen						Thousands of
	Millions of yen						U.S. dollars
	Three months			Three months			Three months
	ended			ended			ended
	March 31, 2010			March 31, 2009			March 31, 2010
Cash flows from operating activities:
Consolidated net income	¥	58,735		¥	15,635		$	631,559
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		60,253			75,523			647,882
Loss on disposal of property, plant and equipment		1,741			1,176			18,720
Deferred income taxes		(664	)		(6,312	)		(7,140	)
Decrease in trade receivables		67,093			121,931			721,430
(Increase) decrease in inventories		(50,862	)		18,290			(546,903	)
Increase (decrease) in trade payables		14,303			(129,424	)		153,796
Decrease in accrued income taxes		(6,309	)		(54,352	)		(67,839	)
Increase (decrease) in accrued expenses		3,322			(8,687	)		35,720
Increase (decrease) in accrued (prepaid) pension and severance cost		1,291			(140	)		13,882
Other, net		12,751			18,806			137,108


Net cash provided by operating activities		161,654			52,446			1,738,215

Cash flows from investing activities:
Purchases of fixed assets		(50,518	)		(105,084	)		(543,204	)
Proceeds from sale of fixed assets		631			1,339			6,785
Purchases of available-for-sale securities		(8,842	)		(6	)		(95,075	)
Proceeds from sale and maturity of available-for-sale securities		24			214			258
Decrease in time deposits, net		937			2,885			10,075
Acquisitions of subsidiaries, net of cash acquired		(52,959	)		(168	)		(569,452	)
Purchases of other investments		(505	)		(54	)		(5,430	)
Other, net		127			(1,152	)		1,366


Net cash used in investing activities		(111,105	)		(102,026	)		(1,194,677	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,815			593			19,516
Repayments of long-term debt		(1,213	)		(1,532	)		(13,043	)
Increase (decrease) in short-term loans, net		(55,590	)		96			(597,742	)
Dividends paid		(67,897	)		(67,897	)		(730,075	)
Repurchases of treasury stock, net		(12	)		(9	)		(129	)
Other, net		(1,370	)		(2,209	)		(14,731	)


Net cash used in financing activities		(124,267	)		(70,958	)		(1,336,204	)

Effect of exchange rate changes on cash and cash equivalents		(5,775	)		18,535			(62,097	)

Net change in cash and cash equivalents		(79,493	)		(102,003	)		(854,763	)
Cash and cash equivalents at beginning of period		795,034			679,196			8,548,752

Cash and cash equivalents at end of period	¥	715,541		¥	577,193		$	7,693,989

- 7 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. NOTE FOR GOING CONCERN ASSUMPTION

Not applicable.

6. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY BUSINESS UNIT


	Millions of yen								Thousands of
	Millions of yen								U.S. dollars
	Three months			Three months					Three months
	ended			ended			Change(%)		ended
	March 31, 2010			March 31, 2009					March 31, 2010

Office
Net sales:
External customers	¥	405,516		¥	376,162			+ 7.8	$	4,360,387
Intersegment		3,618			2,508			+ 44.3		38,903

Total		409,134			378,670			+ 8.0		4,399,290

Operating cost and expenses		337,047			330,768			+ 1.9		3,624,161

Operating profit	¥	72,087		¥	47,902			+ 50.5	$	775,129


Consumer
Net sales:
External customers	¥	289,729		¥	241,893			+ 19.8	$	3,115,366
Intersegment		558			499			+ 11.8		6,000

Total		290,287			242,392			+ 19.8		3,121,366

Operating cost and expenses		242,954			224,638			+ 8.2		2,612,409

Operating profit	¥	47,333		¥	17,754			+ 166.6	$	508,957


Industry and Others
Net sales:
External customers	¥	60,281		¥	68,979			- 12.6	$	648,182
Intersegment		22,047			16,875			+ 30.6		237,065

Total		82,328			85,854			- 4.1		885,247

Operating cost and expenses		85,283			101,495			- 16.0		917,021

Operating profit (loss)	¥	(2,955	)	¥	(15,641	)		-	$	(31,774	)


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(26,223	)		(19,882	)		-		(281,968	)

Total		(26,223	)		(19,882	)		-		(281,968	)

Operating cost and expenses		3,399			10,101			-		36,548

Operating profit	¥	(29,622	)	¥	(29,983	)		-	$	(318,516	)


Consolidated
Net sales:
External customers	¥	755,526		¥	687,034			+ 10.0	$	8,123,935
Intersegment		-			-			-		-

Total		755,526			687,034			+ 10.0		8,123,935

Operating cost and expenses		668,683			667,002			+ 0.3		7,190,139

Operating profit	¥	86,843		¥	20,032			+ 333.5	$	933,796

- 8 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2) SEGMENT INFORMATION BY GEOGRAPHIC AREA



	Millions of yen								Thousands of U.S. dollars
	Three months			Three months					Three months
	ended			ended			Change(%)		ended
	March 31, 2010			March 31, 2009					March 31, 2010

Japan
Net sales:
External customers	¥	189,383		¥	213,695			- 11.4	$	2,036,376
Intersegment		434,195			304,291			+ 42.7		4,668,764

Total		623,578			517,986			+ 20.4		6,705,140

Operating cost and expenses		528,433			485,672			+ 8.8		5,682,075

Operating profit	¥	95,145		¥	32,314			+ 194.4	$	1,023,065


Americas
Net sales:
External customers	¥	201,047		¥	171,141			+ 17.5	$	2,161,796
Intersegment		324			778			- 58.4		3,484

Total		201,371			171,919			+ 17.1		2,165,280

Operating cost and expenses		197,425			172,058			+ 14.7		2,122,850

Operating profit (loss)	¥	3,946		¥	(139	)		-	$	42,430


Europe
Net sales:
External customers	¥	228,850		¥	208,862			+ 9.6	$	2,460,753
Intersegment		1,256			435			+ 188.7		13,505

Total		230,106			209,297			+ 9.9		2,474,258

Operating cost and expenses		223,272			200,986			+ 11.1		2,400,774

Operating profit	¥	6,834		¥	8,311			- 17.8	$	73,484


Others
Net sales:
External customers	¥	136,246		¥	93,336			+ 46.0	$	1,465,010
Intersegment		151,761			90,352			+ 68.0		1,631,839

Total		288,007			183,688			+ 56.8		3,096,849

Operating cost and expenses		277,192			179,598			+ 54.3		2,980,559

Operating profit	¥	10,815		¥	4,090			+ 164.4	$	116,290


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(587,536	)		(395,856	)		-		(6,317,592	)

Total		(587,536	)		(395,856	)		-		(6,317,592	)

Operating cost and expenses		(557,639	)		(371,312	)		-		(5,996,119	)

Operating profit	¥	(29,897	)	¥	(24,544	)		-	$	(321,473	)


Consolidated
Net sales:
External customers	¥	755,526		¥	687,034			+ 10.0	$	8,123,935
Intersegment		-			-			-		-

Total		755,526			687,034			+ 10.0		8,123,935

Operating cost and expenses		668,683			667,002			+ 0.3		7,190,139

Operating profit	¥	86,843		¥	20,032			+ 333.5	$	933,796

- 9 -

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

7. SIGNIFICANT CHANGES IN CANON INC. STOCKHOLDERS’ EQUITY

None.

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

Number of Group Companies



	March 31, 2010		December 31, 2009		Net Change
Subsidiaries		307		241		66
Affiliates		15		15		-
Total		322		256		66

Change in Group Entities


Subsidiaries
	Addition:	77 companies
	Removal:	11 companies

Affiliates (Carried at Equity Basis)
	Addition:	2 companies
	Removal:	2 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
  Osaka Securities Exchange (Hercules): e-System Corporation

(2) SIGNIFICANT ACCOUNTING POLICIES

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

- 10 -

Canon Inc.

April 26, 2010

CONSOLIDATED FINANCIAL RESULTS FOR
THE FIRST QUARTER ENDED MARCH 31, 2010

SUPPLEMENTARY REPORT

TABLE OF CONTENTS


						PAGE


	1.			SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT			S 1


	2.			SEGMENT INFORMATION BY BUSINESS UNIT			S 2


	3.			OTHER INCOME / DEDUCTIONS			S 2


	4.			BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT			S 3


	5.			SALES GROWTH IN LOCAL CURRENCY (Year over year)			S 3


	6.			PROFITABILITY			S 4


	7.			IMPACT OF FOREIGN EXCHANGE RATES			S 4


	8.			STATEMENTS OF CASH FLOWS			S 4


	9.			R&D EXPENDITURE			S 5


	10.			INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION			S 5


	11.			INVENTORIES			S 5


	12.			DEBT RATIO			S 5


	13.			OVERSEAS PRODUCTION RATIO			S 5


	14.			NUMBER OF EMPLOYEES			S 5

Canon Inc.



1. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT		(Millions of yen)



		2010						2009						Change year over year
		1st quarter			Year (P)			1st quarter			Year			1st quarter			Year

Japan
	Office		95,514			-			97,417			374,275			-2.0	%			-

	Consumer		46,177			-			44,954			219,036			+2.7	%			-

	Industry and Others		25,825			-			27,133			109,033			-4.8	%			-

	Total		167,516			716,700			169,504			702,344			-1.2	%		+2.0	%

Overseas
	Office		310,002			-			278,745			1,260,781			+11.2	%			-

	Consumer		243,552			-			196,939			1,080,158			+23.7	%			-

	Industry and Others		34,456			-			41,846			165,918			-17.7	%			-

	Total		588,010			3,033,300			517,530			2,506,857			+13.6	%		+21.0	%

	Americas
	Office		119,557			-			104,981			485,180			+13.9	%			-

	Consumer		76,165			-			62,684			367,035			+21.5	%			-

	Industry and Others		8,833			-			8,666			41,939			+1.9	%			-

	Total		204,555			1,040,300			176,331			894,154			+16.0	%		+16.3	%

	Europe
	Office		137,852			-			129,873			565,656			+6.1	%			-

	Consumer		86,183			-			73,929			405,173			+16.6	%			-

	Industry and Others		6,643			-			6,265			24,321			+6.0	%			-

	Total		230,678			1,230,500			210,067			995,150			+9.8	%		+23.6	%

	Other areas
	Office		52,593			-			43,891			209,945			+19.8	%			-

	Consumer		81,204			-			60,326			307,950			+34.6	%			-

	Industry and Others		18,980			-			26,915			99,658			-29.5	%			-

	Total		152,777			762,500			131,132			617,553			+16.5	%		+23.5	%

	Intersegment
	Office		3,618			-			2,508			10,020			+44.3	%			-

	Consumer		558			-			499			1,966			+11.8	%			-

	Industry and Others		22,047			-			16,875			83,047			+30.6	%			-

	Eliminations		(26,223	)		-			(19,882	)		(95,033	)			-			-

	Total		0			0			0			0				-			-

Total
	Office		409,134			2,043,000			378,670			1,645,076			+8.0	%		+24.2	%

	Consumer		290,287			1,385,000			242,392			1,301,160			+19.8	%		+6.4	%

	Industry and Others		82,328			398,000			85,854			357,998			-4.1	%		+11.2	%

	Eliminations		(26,223	)		(76,000	)		(19,882	)		(95,033	)			-			-

	Total		755,526			3,750,000			687,034			3,209,201			+10.0	%		+16.9	%

- S1 -

Canon Inc.


2. SEGMENT INFORMATION BY BUSINESS UNIT		(Millions of yen)



		2010						2009						Change year over year
		1st quarter			Year (P)			1st quarter			Year			1st quarter			Year

	Office
	External customers		405,516			2,035,900			376,162			1,635,056			+7.8%			+24.5%
	Intersegment		3,618			7,100			2,508			10,020			+44.3%			-29.1%

	Total sales		409,134			2,043,000			378,670			1,645,076			+8.0%			+24.2%

	Operating profit		72,087			298,000			47,902			229,396			+50.5%			+29.9%

	% of sales		17.6%			14.6%			12.7%			13.9%			-			-

	Consumer
	External customers		289,729			1,382,600			241,893			1,299,194			+19.8%			+6.4%
	Intersegment		558			2,400			499			1,966			+11.8%			+22.1%

	Total sales		290,287			1,385,000			242,392			1,301,160			+19.8%			+6.4%

	Operating profit		47,333			224,000			17,754			183,492			+166.6%			+22.1%

	% of sales		16.3%			16.2%			7.3%			14.1%			-			-

	Industry and Others
	External customers		60,281			331,500			68,979			274,951			-12.6%			+20.6%
	Intersegment		22,047			66,500			16,875			83,047			+30.6%			-19.9%

	Total sales		82,328			398,000			85,854			357,998			-4.1%			+11.2%

	Operating profit		(2,955	)		(5,300	)		(15,641	)		(75,956	)		-			-

	% of sales		-3.6%			-1.3%			-18.2%			-21.2%			-			-

	Corporate and Eliminations
	External customers		-			-			-			-			-			-
	Intersegment		(26,223	)		(76,000	)		(19,882	)		(95,033	)		-			-

	Total sales		(26,223	)		(76,000	)		(19,882	)		(95,033	)		-			-

	Operating profit		(29,622	)		(156,700	)		(29,983	)		(119,877	)		-			-


	Consolidated
	External customers		755,526			3,750,000			687,034			3,209,201			+10.0%			+16.9%
	Intersegment		-			-			-			-			-			-

	Total sales		755,526			3,750,000			687,034			3,209,201			+10.0%			+16.9%

	Operating profit		86,843			360,000			20,032			217,055			+333.5%			+65.9%

	% of sales		11.5%			9.6%			2.9%			6.8%			-			-

(P)=Projection

3. OTHER INCOME / DEDUCTIONS													(Millions of yen)


		2010						2009						Change year over year
		1st quarter			Year (P)			1st quarter			Year			1st quarter			Year

	Interest and dividend, net		935			3,300			1,350			4,866			(415	)		(1,566	)
	Forex gain / loss		2,746			2,200			3,755			1,842			(1,009	)		+358
	Equity earnings / loss of affiliated companies		(3,181	)		(9,700	)		(5,306	)		(12,649	)		+2,125			+2,949
	Other, net		1,509			4,200			2,563			8,241			(1,054	)		(4,041	)

	Total		2,009			0			2,362			2,300			(353	)		(2,300	)

(P)=Projection

- S2 -

Canon Inc.

4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT



		2010								2009

		1st quarter				Year (P)				1st quarter			Year

Office
	Monochrome copiers		18	%			16	%			20	%		20	%
	Color copiers		20	%			17	%			20	%		19	%
	Other printing devices		54	%			47	%			51	%		53	%
	Others		8	%			20	%			9	%		8	%

Consumer
	Cameras		67	%			68	%			64	%		68	%
	Inkjet printers		27	%			25	%			28	%		25	%
	Others		6	%			7	%			8	%		7	%

Industry and Others
	Lithography equipment		9	%			22	%			27	%		19	%
	Others		91	%			78	%			73	%		81	%

									(P)=Projection



5. SALES GROWTH IN LOCAL CURRENCY (Year over year)

		2010

		1st quarter				Year (P)

Office
	Japan		-2.0	%				-
	Overseas		+13.2	%				-

	Total		+9.5	%			+27.3	%

Consumer
	Japan		+2.7	%				-
	Overseas		+23.6	%				-

	Total		+19.7	%			+9.2	%

Industry and Others
	Japan		-4.8	%				-
	Overseas		-18.0	%				-

	Total		-4.3	%			+11.7	%

Total
	Japan		-1.2	%			+2.0	%
	Overseas		+14.7	%			+24.6	%
	Americas		+20.8	%			+20.2	%
	Europe		+8.9	%			+28.4	%
	Other areas		+15.7	%			+24.8	%

	Total		+10.8	%			+19.7	%

					(P)=Projection

- S3 -

Canon Inc.

6. PROFITABILITY



		2010								2009
			1st quarter			Year (P) *					1st quarter			Year

	ROE *1			8.5%			8.7%					2.7%			4.9%

	ROA *2			5.8%			6.2%					1.8%			3.4%

*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.
* Excludes portion attributable to newly consolidated companies

7. IMPACT OF FOREIGN EXCHANGE RATES

	(1) Exchange rates																(Yen)

			2010											2009

			1st quarter			2nd-4th quarter (P)					Year (P)			1st quarter			Year

	Yen/US$			90.63			90.00					90.14			93.86			93.21
	Yen/Euro			125.07			125.00					125.01			121.85			130.46

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

			2010

			1st quarter			Year (P)

	US$			(11.5)			(50.1)
	Euro			+4.1			(35.8)
	Other currencies			+2.7			+2.7

	Total			(4.7)			(83.2)

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

		2010

			2nd-4th quarter (P)

On sales
	US$			13.7
	Euro			6.4

On operating profit
	US$			6.8
	Euro			4.1

	(P)=Projection

8. STATEMENTS OF CASH FLOWS														(Millions of yen)

			2010								2009

			1st quarter			Year (P) *					1st quarter			Year

Net cash provided by operating activities				161,654			590,000					52,446			611,235

Net cash used in investing activities				(111,105	)		(350,000		)			(102,026	)		(370,244	)

Free cash flow				50,549			240,000					(49,580	)		240,991

Net cash used in financing activities				(124,267	)		(225,000		)			(70,958	)		(142,379	)

Effect of exchange rate changes on cash and cash equivalents				(5,775	)		(10,000		)			18,535			17,226

Net change in cash and cash equivalents				(79,493	)		5,000					(102,003	)		115,838

Cash and cash equivalents at end of period				715,541			800,000					577,193			795,034

*Excludes portion attributable to newly consolidated companies								(P)=Projection

- S4 -

Canon Inc.


9. R&D EXPENDITURE							(Millions of yen)

		2010				2009

		1st quarter *		Year (P) *		1st quarter		Year

	Office		18,299		-		19,376		78,872
	Consumer		19,952		-		17,997		74,131
	Industry and Others		4,524		-		5,921		23,300
	Corporate and Eliminations		28,158		-		29,495		128,297

	Total		70,933		315,000		72,789		304,600

% of sales			9.4%		9.1%		10.6%		9.5%

	*Excludes portion attributable to newly consolidated companies						(P)=Projection


10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION							(Millions of yen)

		2010				2009

		1st quarter *		Year (P) *		1st quarter		Year

	Increase in PP&E		38,572		210,000		61,917		216,128
	Depreciation and amortization		60,253		295,000		75,523		315,393

	*Excludes portion attributable to newly consolidated companies						(P)=Projection

11. INVENTORIES



(1) Inventories		(Millions of yen)



	2010		2009		Difference
	Mar.31		Dec.31		Difference

Office		191,668		144,941		+46,727
Consumer		131,733		113,975		+17,758
Industry and Others		132,891		114,325		+18,566

Total		456,292		373,241		+83,051


(2) Inventories/Sales*		(Days)



	2010		2009		Difference
	Mar.31		Dec.31		Difference

Office		40		30		+10
Consumer		34		29		+5
Industry and Others		183		158		+25

Total		49		39		+10

*Index based on the previous six months sales.

12. DEBT RATIO



	2010		2009		Difference
	Mar.31		Dec.31		Difference

Total debt / Total assets		0.9%		0.3%		+0.6%

13. OVERSEAS PRODUCTION RATIO



	2010		2009
	1st quarter *		Year

Overseas production ratio		45%		40%

*Excludes portion attributable to newly consolidated companies

14. NUMBER OF EMPLOYEES



	2010		2009		Difference
	Mar.31		Dec.31		Difference

Japan		72,936		73,635		(699	)
Overseas		113,961		95,244		+18,717

Total		186,897		168,879		+18,018

- S5 -