FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the month of .....November................................................................. , 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.

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

The following materials are included.

1. Quarterly Report filed with the Japanese government pursuant to the Financial Instruments and Exchange Law of Japan For the third quarter ended September 30, 2010

[English summary with full translation of consolidated financial information]

Quarterly Report filed with the Japanese government 
pursuant to
the Financial Instruments and Exchange Law of Japan

For the third quarter ended
September 30, 2010

CANON  INC.
Tokyo, Japan

CONTENTS

				Page
I		Corporate Information
		(1)     Consolidated Financial Summary			2
		(2)     Description of Business			3
		(3)     Group Entities			3
		(4)     Number of Employees			3
II		The Business
		(1)     Production and Sales			4
		(2)     Risk Factors			5
		(3)     Significant Business Contracts Entered into in the Third Quarter of Fiscal 2010			5
		(4)     Operating Results			5
III		Property, Plant and Equipment
		(1)     Major Property, Plant and Equipment			9
		(2)     Prospect of Capital Investment in the Third Quarter of Fiscal 2010			9
IV		Company Information
		(1)     Shares			9
		(2)     Stock Price Transition			14
		(3)     Directors and Executive Officers			15
V		Financial Statements
		(1)     Consolidated Financial Statements			16
		(2)     Other Information			48

Disclaimer Regarding Forward-Looking Statements

This quarterly report includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) concerning Canon Inc. (the “Company”) and its subsidiaries (collectively “Canon”). To the extent that statements in this quarterly report do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of Canon in light of the information currently available to them, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Canon’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Canon undertakes no obligation to publicly update any forward-looking statements after the date of this quarterly report. Investors are advised to consult any further disclosures by Canon in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 and its other filings.

The risks, uncertainties and other factors referred to above include, but are not limited to, foreign exchange rate fluctuations; the uncertainty of Canon’s ability to implement its plans to localize production and other measures to reduce the impact of foreign exchange rate fluctuations; uncertainty of economic conditions in Canon’s major markets; uncertainty about continued demand for Canon’s high-value-added products; uncertainty about the recovery of computer and related markets; uncertainty about the recovery in demand for Canon’s semiconductor production equipment; Canon’s ability to continue to develop and market products that incorporate new technology on a timely basis, are competitively priced and achieve market acceptance; the possibility of losses resulting from foreign currency transactions designed to reduce financial risks from changes in foreign exchange rates; and inventory risk due to shifts in market demand.

I . Corporate Information

(1)

Consolidated Financial Summary

		Millions of yen (except per share amounts)
		Nine months				Nine months				Three months				Three months				Year ended December 31, 2009
		ended				ended				ended				ended
		September 30,				September 30,				September 30,				September 30,
		2010				2009				2010				2009
Net sales			2,639,035				2,255,143				913,151				774,324				3,209,201
Income before income taxes			310,329				121,434				108,826				63,548				219,355
Net income attributable to Canon Inc.			192,644				70,083				68,195				36,734				131,647
Canon Inc. stockholders’ equity			-				-				2,654,979				2,615,267				2,688,109
Total equity			-				-				2,831,223				2,804,905				2,879,400
Total assets			-				-				4,030,551				3,702,124				3,847,557
Canon Inc. stockholders’ equity per share (yen)			-				-				2,153.76				2,118.52				2,177.53
Net income attributable to Canon Inc.
Stockholders per share:
Basic (yen)			155.79				56.77				55.07				29.76				106.64
Diluted (yen)			155.79				56.77				55.07				29.76				106.64
Canon Inc. stockholders’ equity to total assets (%)			-				-				65.9				70.6				69.9
Cash flows from operating activities			519,427				374,527				-				-				611,235
Cash flows from investing activities			(243,202)				(286,234)				-				-				(370,244)
Cash flows from financing activities			(267,958)				(141,381)				-				-				(142,379)
Cash and cash equivalents at end of period			-				-				759,399				633,656				795,034
Number of employees			-				-				198,333				167,644				168,879

Notes:

	1.		Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.
	2.		Consumption tax is excluded from the stated amount of net sales.

(2)

Description of Business

Canon prepares quarterly consolidated financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The conformity to U.S. GAAP is also applied to sections “II. The Business” and “III. Property, Plant and Equipment”.

Canon (consisting of the Company, 299 consolidated subsidiaries and 14 affiliates accounted for using the equity method, collectively, the “Group”) is engaged in the development, manufacture, sale and service primarily in the fields of office, consumer, industry and others. No material change in Canon’s business has occurred during the three months ended September 30, 2010.

No additions or removals of significant group entities have occurred during the three months ended September 30, 2010.

(3)

Group Entities

No additions or removals of significant group entities have occurred during the three months ended September 30, 2010.

(4)

Number of Employees

Canon’s number of employees is summarized as follows:

		As of September 30, 2010
	Consolidated		198,333
	Parent-alone		25,888

Note:

The total number of employees includes seasonal workers and others who do not work full time.

(1)

Production and Sales

		Production
		Canon’s production by segment group are summarized as follows:

		Millions of yen
		Three months ended September 30, 2010
						Change from
		Production				September 30, 2009(%)
Office			483,651				+61.1
Consumer			425,792				+9.1
Industry and Others			67,772				+89.9
Total			977,215				+34.6

Notes:

1.		Amount of production is calculated by sales price.
2.		Consumption tax is excluded from the stated amount of production.

Sales

Canon’s sales by segment group are summarized as follows:

		Millions of yen
		Three months ended September 30, 2010
						Change from
		Sales				September 30, 2009(%)
Office			506,915				+25.6
Consumer			324,773				+3.3
Industry and Others			109,774				+31.7
Eliminations			(28,311)				-
Total			913,151				+17.9

Notes:

1.		Consumption tax is excluded from the stated amount of net sales.
2.		Canon’s sales to its significant customer are summarized as follows:

Millions of yen

Three months ended September 30, 2010

Three months ended September 30, 2009

Sales

Proportion (%)

Sales

Proportion (%)

Hewlett-Packard Company

201,274

22.0

169,711

21.9

(2)

Risk Factors

No additional risks related to Canon’s business have arisen during the three months ended September 30, 2010. Furthermore, no material changes are recognized pursuant to the risk factors of Canon’s business indicated in the Annual Securities Report (Yukashoken houkokusho) of the previous fiscal year.

(3)

Significant Business Contracts Entered into in the Third Quarter of 2010

No material contracts were entered into during the three months ended September 30, 2010.

Canon has renewed the stock purchase agreement with Hitachi, Ltd.:

On February 27, 2008, Canon Inc. (“The Company”) entered into a stock purchase agreement with Hitachi, Ltd. (“Hitachi”) to acquire shares of Hitachi Displays, Ltd. (“Hitachi Displays”). Based on this contract, in March 2008 the Company has acquired a 24.9% stake in Hitachi Displays from Hitachi. Since then, Hitachi and the Company have been looking at the possibility of the Company acquiring additional shares in Hitachi Displays and making it a subsidiary of the Company.

On September 30, 2010, the Company renewed the stock purchase agreement with Hitachi and announced the signing of a Memorandum of Understanding for continuing and advancing their existing alliance for the development of advanced flat-panel display technologies, centered on small and medium-sized LCD panels, and provision of products. Hitachi and the Company will also maintain their existing equity relationship in Hitachi Displays.

(4)

Operating Results

Looking back at the global economy in the third quarter of 2010, economic conditions continued to improve broadly throughout the world. In Japan, consumer spending showed signs of recovery thanks to the effects of such efforts as domestic economic stimulus measures, while in the United States, consumer spending grew steadily despite the unemployment rate remaining at a relatively high level and other concerns. While Europe recorded growth in exports, the pace of economic recovery remained modest as financial concerns within the region were not fully eased. The Asian economies, such as China and India, along with other emerging countries, recorded stable expansion.

As for the markets in which Canon operates amid these conditions, within the office equipment market, demand for network digital multifunction devices (MFDs) recovered, mainly for color models. Additionally, laser printers have rebounded steadily compared with the previous year. As for the consumer products market, demand for digital single-lens reflex (SLR) cameras maintained solid growth across global markets. Although sales of compact digital cameras grew sluggishly in developed countries, demand in emerging markets, such as those in Asia, displayed healthy growth, leading to solid expansion overall. With regard to inkjet printers, demand continued to recover at a steady pace. In the industry and others market, market conditions for semiconductor lithography equipment were marked by an upturn in order placements, owing to improved sentiment within the semiconductor device market, whereas demand for liquid crystal display (LCD) lithography equipment remained relatively unchanged compared with the previous-year level. The average values of the yen during the third quarter and first nine months of the year were ¥85.79 and ¥89.40 to the U.S. dollar, respectively, year-on-year appreciations of approximately ¥8 and ¥5, and ¥110.61 and ¥116.30 to the euro, year-on-year appreciations of approximately ¥23 and ¥13.

(4)

Operating Results (continued)

Amid the impact of the sharp appreciation of the yen, net sales for the quarter totaled ¥913.2 billion, an increase of 17.9% from the year-ago period, and ¥2,639.0 billion for the first nine months, an increase of 17.0%, owing to a substantial recovery in sales of laser printers among office products, continued robust sales of such consumer products as digital SLR cameras, the turnaround within the industry and others market, and the effects of consolidation arising from corporate acquisitions, such as that of Océ N.V. Although the strong yen had a significant impact, the quarterly gross profit ratio rose 3.8 points year on year to 48.9%, and improved 4.8 points to 48.9% for the nine-month period, mainly reflecting the launch of new products and ongoing cost-cutting efforts, along with heightened production turnover accompanying ramped up production. As a result, gross profit rose by 27.9% to ¥446.9 billion for the third quarter and increased by 29.9% to ¥1,290.8 billion for the nine months ended September 30, 2010. Despite the impact of aggressive sales-promotion spending and consolidation, continued Group-wide efforts to thoroughly reduce spending contributed to an operating expenses to sales ratio of 37.5% for the quarter, approximately the same level as for the corresponding period for the previous year, and an improvement of 1.2 points to 37.4% for the nine-month period. Consequently, operating profit recorded growth of 74.1% to ¥104.4 billion for the quarter, and increased approximately 2.4 fold to ¥304.7 billion for the nine-month period. Other income (deductions) recorded an increase largely due to an improvement in foreign currency exchange gains and losses, leading to income before income taxes for the third quarter of ¥108.8 billion, an increase of 71.3% year on year, and ¥310.3 billion for the nine months ended September 30, 2010, an approximately 2.6-fold leap from the corresponding period of the previous year. Net income attributable to Canon Inc. grew by 85.6% to ¥68.2 billion for the quarter, and jumped 2.7 fold to ¥192.6 billion for the nine-month period.

Basic net income attributable to Canon Inc. stockholders per share for the quarter was ¥55.07, an increase of ¥25.31 compared with the corresponding quarter of the previous year, and ¥155.79 for the first nine months of 2010, a year-on-year increase of ¥99.02.

Canon’s third-quarter results by business unit are summarized as follows:

Looking at Canon’s quarterly performance by business sector, within the Office Business Unit, while sales volume of color network digital MFDs increased by 38% boosted by the recovery in demand for office equipment along with the introduction of new imageRUNNER ADVANCE-series products, sales volume for monochrome models increased by 24%, reflecting the recovering market conditions. Laser printers, which suffered sluggish sales in the corresponding quarter of the previous year largely due to an adjustment of inventory levels, recorded an increase in sales volume of 61%. Consequently, despite the significant effects of the strong yen, third-quarter sales for the segment totaled ¥506.9 billion, growing 25.6% year on year, and ¥1,438.0 billion for the nine months ended September 30, 2010, an increase of 21.9%. Operating profit increased 30.3% to ¥76.3 billion for the third quarter, and 56.0% to ¥232.2 billion for the combined nine-month period, 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 new EOS Digital Rebel T2i (EOS 550D) and the competitively priced EOS Digital Rebel T1i (EOS 500D), along with the EOS 5D Mark II and EOS 7D advanced-amateur models, sustained healthy growth. As for compact digital cameras, the Company launched a new ELPH (IXUS)-series model and four new PowerShot-series models, boosting sales volumes particularly in emerging markets. Consequently, sales volume for digital cameras realized a year-on-year increase of 10%. With respect to inkjet printers, although sales displayed solid growth, particularly in Asia, sales volume decreased slightly from the year-ago level. Amid the strong yen environment, sales for the segment rose 3.3% year on year to ¥324.8 billion, and 10.2% to ¥979.1 billion for the first nine months. Operating profit increased by 14.0% to ¥58.8 billion for the quarter, and by 59.7% to ¥173.0 billion for the nine-month period, largely reflecting increased sales and the rise in the gross profit ratio owing to the effects of cost reductions.

In the Industry and Others Business Unit, semiconductor-related independent business sales by Group subsidiaries grew while sales volume of LCD lithography equipment increased appreciably. Sales volume of semiconductor lithography equipment, while remaining at a low level, also gained modestly. As a result, sales for the segment increased 31.7% to ¥109.8 billion for the quarter, and 18.2% to ¥301.0 billion for the combined nine months. Operating profit totaled ¥4.4 billion for the quarter, a turnaround of ¥21.6 billion year on year while for the nine-month period, operating loss totaled to ¥4.0 billion, a turnaround of ¥37.0 billion from the year-ago period owing to expanded sales combined with an improved gross profit ratio.

(4)

Operating Results (continued)

Third-quarter results by major geographic area are summarized as follows:

Japan

Net sales in Japan for the third quarter recorded an increase of 10.2% from the year-ago period to ¥704.4 billion, and a growth of 16.1% to ¥2,061.6 billion for the nine months ended September 30, 2010 mainly owing to the rise in production turnover accompanying an increase in production, along with a significant recovery in sales. Operating profit increased by 36.7% year on year to ¥107.9 billion for the quarter, and by 72.1% to ¥318.1 billion for the nine-month period.

Amid the effects of the strong yen, net sales outside Japan recorded growth compared with the corresponding quarter and nine months of the previous year, thanks to the healthy sales expansion of products such as digital SLR cameras and the sales rebound for laser printers, along with other factors.

Americas

Despite the sharp appreciation of the yen, third-quarter sales totaled ¥248.7 billion, an increase of 17.6% from the year-ago period, and ¥716.5 billion for the combined nine months of the year, an increase of 18.7%, largely due to solid sales of digital SLR cameras, recovery of sales for laser printers and the impact of consolidation. Operating profit for the third quarter totaled ¥6.1 billion, an increase of 31.8% year on year, and ¥17.6 billion for the nine months ended September 30, 2010, an approximately 2.7-fold leap from the corresponding period of the previous year.

Europe

Although the appreciation of the yen had a strong impact, sales for the quarter recorded ¥286.0 billion, an increase of 20.1% from the same period of the previous year, and ¥826.5 billion an increase of 20.4% compared with the first nine months of the previous year, primarily due to the significant recovery of laser-printer-sales, combined with the effects of new consolidation. Operating profit for the third quarter climbed 69.9% year on year to ¥12.4 billion, and 55.7% to ¥32.3 billion for the nine months ended September 30, 2010.

Asia and others

Amid the strong yen environment, sales for the third quarter rose by 24.2% from the year-ago period to ¥375.9 billion, and by 39.6% to ¥1,028.1 billion for the nine months ended September 30, 2010 mainly owing to expanded sales of digital SLR cameras and LCD lithography equipment. Operating profit generated in the region increased by 4.6% year on year to ¥14.5 billion for the quarter, and by 44.3% to ¥39.4 billion for the nine-month period.

Cash Flows

In the third quarter of 2010, although continued significant increase in profit was recorded, cash flows from operating activities totaled ¥170.9 billion, a decrease of ¥15.0 billion year on year largely due to increased inventories. As capital investment was focused on items relevant to introducing new products, cash flows from investing activities decreased ¥1.7 billion to a total of ¥66.2 billion. Accordingly, free cash flows totaled positive ¥104.6 billion, a decline of ¥13.3 billion from the corresponding year-ago period.

Cash flows from financing activities recorded an outlay of ¥117.4 billion, mainly arising from the payout of dividends coupled with the repurchases of treasury stock. Cash and cash equivalents decreased by ¥12.3 billion to ¥759.4 billion from the end of the previous quarter.

(4)

Operating Results (continued)

Management Issues to be Addressed

No material changes or issues with respect to business operations and finance have occurred during the three months ended September 30, 2010.

Research and Development Expenditures

Canon’s research and development expenditures for the three months ended September 30, 2010 totaled ¥77.1 billion.

Other Information

SED Inc. was established to develop next-generation flat-panel displays “SED” (Surface-conduction Electron-emitter Display) for commercialization. Canon Inc. determined to dissolve SED Inc., at the end of September 2010 and liquidate the business in December 2010. For segment reporting purposes, the results of SED Inc. are included in the Corporate column.

III . Property, Plant and Equipment

(1)

Major Property, Plant and Equipment

There were no significant changes to the status of existing major property, plant and equipment during the third quarter of 2010.

(2)

Prospect of Capital Investment in the Third Quarter of Fiscal 2010

There were no significant changes in the plans relevant to the retirement of property, plant and equipment during the third quarter of 2010. Moreover, there were no significant additional plans for new construction or retirement of property, plant and equipment during the third quarter of 2010.

IV . Company Information

(1)

Shares

Total number of authorized shares is 3,000,000,000 shares. The common stock of Canon is listed on the Tokyo, Osaka, Nagoya, Fukuoka, Sapporo and New York Stock Exchanges. Total issued shares are as follows:

		As of
		September 30, 2010
Total number of issued shares			1,333,763,464

Stock Acquisition Rights

The descriptions of the stock option plans as of September 30, 2010 are below.

The Stock Option Plan Approved on March 28, 2008

1. Number of share options

The number of share options that the Board of Directors are authorized to issue is 5,580.

2. Number of shares acquired upon exercise of a share option

The number of shares acquired upon exercise of one share option (the “Allotted Number of Shares”) is 100 common shares, and the total number of shares to be delivered due to the exercise of share options is 558,000 common shares.

3. Cash payment for share options (yen)

The cash payment required for each share option is ¥5,502.

(i)

If the Company effects a share split or a share consolidation after the date of the allotment of the share options, the Exercise Price will be adjusted by the following calculation formula, with any fractional amount of less than one yen to be rounded up to one yen:

Exercise Price after Adjustment

=Exercise Price before adjustment ×			1
	Ratio of Share Split or Share Consolidation

(ii)

If, after the date of allotment of share options, the Company issues common shares at a price lower than the then market price thereof or disposes common shares owned by it, the Exercise Price will be adjusted by the following calculation formula, with any fractional amount of less than one yen to be rounded up to one yen; however, the Exercise Price will not be adjusted in the case of the exercise of share options:

(1)

Shares (continued)

Exercise Price after Adjustment     =     Exercise Price before Adjustment ×

   Number of Issued and Outstanding Shares +

Market Price 

Number of Issued and Outstanding Shares + Number of Newly Issued Shares

			The “Number of Issued and Outstanding Shares” is the number of shares already issued by the Company after subtraction of the number of shares owned by the Company. In the case of the Company’s disposal of shares owned by it, the “Number of Newly Issued Shares” will be replaced with the “Number of Own Shares to Be Disposed.”
	(iii)		In the case of a merger, a company split or capital reduction after the date of allotment of share options, or in any other analogous case requiring the adjustment of the Exercise Price, the Exercise Price shall be appropriately adjusted within a reasonable range.

4. Period during which share options are exercisable

From May 1, 2010 to April 30, 2014.

5. Exercise price and amount of increased stated capital (yen)

The exercise price and amount of increased stated capital per share is ¥5,502 and ¥2,751, respectively.

6. Other Conditions for Exercise of Share Options

	(i)		One share option may not be exercised partially.
	(ii)		Each holder of share options must continue to be a director, executive officer or employee of the Company until the end of the Company’s general meeting of shareholders regarding the final business term within 2 years from the end of the Ordinary General Meeting of Shareholders for the 107th Business Term of the Company.
	(iii)		Holders of share options will be entitled to exercise their share options for 2 years, and during the exercisable period, even after they lose their positions as directors, executive officers or employees. However, if a holder of share options loses such position due to resignation at his/her initiative, or due to dismissal or discharge by the Company, his/her share options will immediately be forfeited.
	(iv)		No succession by inheritance is authorized for the share options.
	(v)		Any other conditions for the exercise of share options may be established by the Board of Directors.

7. Restriction on Acquisition of Share Options by Transfer

An acquisition of share options by way of transfer requires the approval of the Board of Directors.

The Stock Option Plan Approved on March 27, 2009

1. Number of share options

The number of share options that the Board of Directors are authorized to issue is 7,820.

2. Number of shares acquired upon exercise of a share option

The number of shares acquired upon exercise of one share option (the “Allotted Number of Shares”) is 100 common shares, and the total number of shares to be delivered due to the exercise of share options is 782,000 common shares.

3. Cash payment for share options (yen)

The cash payment required for each share option is ¥3,287.

(i)

If the Company effects a share split or a share consolidation after the date of the allotment of the share options, the Exercise Price will be adjusted by the following calculation formula, with any fractional amount of less than one yen to be rounded up to one yen:

(1)

Shares (continued)

Exercise Price after Adjustment

=Exercise Price before adjustment ×			1
		Ratio of Share Split or Share Consolidation

(ii)

If, after the date of allotment of share options, the Company issues common shares at a price lower than the then market price thereof or disposes common shares owned by it, the Exercise Price will be adjusted by the following calculation formula, with any fractional amount of less than one yen to be rounded up to one yen; however, the Exercise Price will not be adjusted in the case of the exercise of share options:

Exercise Price after Adjustment     =     Exercise Price before Adjustment ×

   Number of Issued and Outstanding Shares +

Market Price

Number of Issued and Outstanding Shares + Number of Newly Issued Shares

			The “Number of Issued and Outstanding Shares” is the number of shares already issued by the Company after subtraction of the number of shares owned by the Company. In the case of the Company’s disposal of shares owned by it, the “Number of Newly Issued Shares” will be replaced with the “Number of Own Shares to Be Disposed.”
	(iii)		In the case of a merger, a company split or capital reduction after the date of allotment of share options, or in any other analogous case requiring the adjustment of the Exercise Price, the Exercise Price shall be appropriately adjusted within a reasonable range.

4. Period during which share options are exercisable

From May 1, 2011 to April 30, 2015.

5. Exercise price and amount of increased stated capital (yen)

The exercise price and amount of increased stated capital per share is ¥3,287 and ¥1,644, respectively.

6. Other Conditions for Exercise of Share Options

	(i)		One share option may not be exercised partially.
	(ii)		Each holder of share options must continue to be a director, executive officer or employee of the Company until the end of the Company’s general meeting of shareholders regarding the final business term within 2 years from the end of the Ordinary General Meeting of Shareholders for the 108th Business Term of the Company.
	(iii)		Holders of share options will be entitled to exercise their share options for 2 years, and during the exercisable period, even after they lose their positions as directors, executive officers or employees. However, if a holder of share options loses such position due to resignation at his/her initiative, or due to dismissal or discharge by the Company, his/her share options will immediately be forfeited.
	(iv)		No succession by inheritance is authorized for the share options.
	(v)		Any other conditions for the exercise of share options may be established by the Board of Directors.

7. Restriction on Acquisition of Share Options by Transfer

An acquisition of share options by way of transfer requires the approval of the Board of Directors.

(1)

Shares (continued)

The Stock Option Plan Approved on March 30, 2010

1. Number of share options

The number of share options that the Board of Directors are authorized to issue is 8,800.

2. Number of shares acquired upon exercise of a share option

The number of shares acquired upon exercise of one share option (the “Allotted Number of Shares”) is 100 common shares, and the total number of shares to be delivered due to the exercise of share options is 880,000 common shares.

3. Cash payment for share options (yen)

The cash payment required for each share option is ¥4,573.

(i)

If the Company effects a share split or a share consolidation after the date of the allotment of the share options, the Exercise Price will be adjusted by the following calculation formula, with any fractional amount of less than one yen to be rounded up to one yen:

Exercise Price after Adjustment

=Exercise Price before adjustment ×			1
		Ratio of Share Split or Share Consolidation

(ii)

If, after the date of allotment of share options, the Company issues common shares at a price lower than the then market price thereof or disposes common shares owned by it, the Exercise Price will be adjusted by the following calculation formula, with any fractional amount of less than one yen to be rounded up to one yen; however, the Exercise Price will not be adjusted in the case of the exercise of share options:

Exercise Price after Adjustment     =     Exercise Price before Adjustment ×

   Number of Issued and Outstanding Shares +

Market Price

Number of Issued and Outstanding Shares + Number of Newly Issued Shares

			The “Number of Issued and Outstanding Shares” is the number of shares already issued by the Company after subtraction of the number of shares owned by the Company. In the case of the Company’s disposal of shares owned by it, the “Number of Newly Issued Shares” will be replaced with the “Number of Own Shares to Be Disposed.”
	(iii)		In the case of a merger, a company split or capital reduction after the date of allotment of share options, or in any other analogous case requiring the adjustment of the Exercise Price, the Exercise Price shall be appropriately adjusted within a reasonable range.

4. Period during which share options are exercisable

From May 1, 2012 to April 30, 2016.

5. Exercise price and amount of increased stated capital (yen)

The exercise price and amount of increased stated capital per share is ¥4,573 and ¥2,287, respectively.

6. Other Conditions for Exercise of Share Options

	(i)		One share option may not be exercised partially.
	(ii)		Each holder of share options must continue to be a director, executive officer or employee of the Company until the end of the Company’s general meeting of shareholders regarding the final business term within 2 years from the end of the Ordinary General Meeting of Shareholders for the 109th Business Term of the Company.

(1)   Shares (continued)

	(iii)		Holders of share options will be entitled to exercise their share options for 2 years, and during the exercisable period, even after they lose their positions as directors, executive officers or employees. However, if a holder of share options loses such position due to resignation at his/her initiative, or due to dismissal or discharge by the Company, his/her share options will immediately be forfeited.

	(iv)		No succession by inheritance is authorized for the share options.
	(v)		Any other conditions for the exercise of share options may be established by the Board of Directors.

7. Restriction on Acquisition of Share Options by Transfer

     An acquisition of share options by way of transfer requires the approval of the Board of Directors.

Exercise status of bonds with share subscription rights containing an adjustable exercise price clause

Not applicable.

Rights Plan

Not applicable.

Change in Issued Shares, Capital Stock and Additional Paid in Capital

		Change during this term				As of September 30, 2010
Issued Shares (share)			-				1,333,763,464
Capital Stock (millions of yen)			-				174,762
Additional Paid-in Capital (millions of yen)			-				306,288

Major Shareholders

As of September 30, 2010, the Company has identified that State Street Bank and Trust Company 505225 and Melon bank. N.A. as agent for its client melon omnibus US pension who were major shareholders of the Company as of June 30, 2010, have reduced their shareholdings and are no longer major shareholders, whereas The Chase Manhattan Bank, N.A. London S.L. Omnibus Account and SSBT 0D05 OMNIBUS ACCOUNT TREATY CLIENTS have increased their shareholdings and have become major shareholders.

		As of September 30, 2010
		Number of shares owned				Number of shares owned /
		(Number of shares)				Number of shares issued
The Chase Manhattan Bank, N.A. London S.L. Omnibus Account			19,542,060				1.47%
(Local Custodian: Mizuho Corporate Bank, Ltd.)
SSBT    0D05    OMNIBUS    ACCOUNT    TREATY    CLIENTS			19,126,200				1.43%
(Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)

(1)

Shares (continued)

Voting Rights

						As of September 30, 2010
		Number of shares				Number of voting
Classification		(shares)				rights (units)
Shares without voting rights			-				-
Shares with restricted voting rights (Treasury stock, etc.)			-				-
Shares with restricted voting rights (Others)			-				-
Shares with full voting rights (Treasury stock, etc.)			(treasury stock)   101,045,000
			(cross shareholding)     3,700				-
Shares with full voting rights (Others)			1,230,756,200				12,307,562
Fractional unit shares			1,958,564				-
Total number of issued shares			1,333,763,464				-
Total voting rights held by all shareholders			-				12,307,562

   Note:

 In “Fractional unit shares” under “Number of shares,” 27 shares of treasury stock and 50 shares of cross shareholding are included.

Treasury Stock

		Number of shares owned				Number of shares owned /
		(Number of shares)				Number of shares issued
Canon Inc.			101,045,000				7.58%
Horie Mfg. Co., Ltd.			3,700				0.00%
Total			101,048,700				7.58%

(2)

Stock Price Transition

The following table sets forth the monthly reported high and low market prices of the Company’s common stock on the First Section of Tokyo Stock Exchange for the nine months of fiscal 2010:

(Yen)

		January				February				March				April				May				June				July				August				September
High			4,040				3,865				4,400				4,520				4,240				3,905				3,815				3,875				3,995
Low			3,525				3,425				3,685				4,165				3,530				3,260				3,205				3,385				3,405

(3)

Directors and Executive Officers

There were no changes in members of directors between the filing date of the Annual Securities Report (Yukashoken Houkokusho) for the fiscal year ended December 31, 2009 and the filing date of this Quarterly Securities Report (Shihanki Houkokusho).

Changes in functions of directors are below:

Toshizo Tanaka		(Executive Vice President & CFO)
Masahiro Osawa		(Managing Director: Group Executive of Global Procurement HQ, Group Executive of General Affairs HQ)
Haruhisa Honda		(Managing Director: Group Executive of Manufacturing HQ)

The change in members of executive officers between the filing date of the Annual Securities Report (Yukashoken Houkokusho) for the fiscal year ended December 31, 2009 and the filing date of this Quarterly Securities Report (Shihanki Houkokusho) is below.

Changes in functions of executive officers are below:

Masahiro Haga		(Executive Officer: Group Executive of Finance & Accounting HQ)
Kengo Uramoto		(Executive Officer: Group Executive of Human Resources Management & Organization HQ)
Kenichi Nagasawa		(Executive Officer: Group Executive of Corporate Intellectual Property & Legal HQ)
Shigeyuki Uzawa		(Executive Officer: Deputy Chief Executive of Optical Products HQ)

V . Financial Statements (Unaudited)

(1)

Consolidated Financial Statements

     Index of Consolidated Financial Statements of Canon Inc. and Subsidiaries:

		Page
Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009			17
Consolidated Statements of Income for the nine months ended September 30, 2010 and 2009			19
Consolidated Statements of Income for the three months ended September 30, 2010 and 2009			20
Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009			21
Notes to Consolidated Financial Statements			22

CANON INC. AND SUBSIDIARIES

Consolidated Balance Sheets

		Millions of yen
		September 30, 2010				December 31, 2009
Assets
Current assets:
Cash and cash equivalents (Note 14)			759,399				795,034
Short-term investments (Note 2)			58,867				19,089
Trade receivables, net (Note 3)			541,538				556,572
Inventories (Note 4)			470,717				373,241
Prepaid expenses and other current assets (Note 10)			304,347				273,843
Total current assets			2,134,868				2,017,779
Noncurrent receivables (Note11)			17,083				14,936
Investments (Note 2)			81,301				114,066
Property, plant and equipment, net (Note 5)			1,235,385				1,269,785
Intangible assets, net			163,298				117,396
Other assets (Note 10)			398,616				313,595
Total assets			4,030,551				3,847,557

CANON INC. AND SUBSIDIARIES

Consolidated Balance Sheets (continued)

		Millions of yen
		September 30, 2010				December 31, 2009
Liabilities and equity
Current liabilities:
Short-term loans and current portion of long-term debt			7,649				4,869
Trade payables (Note 6)			400,904				339,113
Accrued income taxes			85,077				50,105
Accrued expenses (Note 11)			316,089				274,300
Other current liabilities (Note 10)			131,138				115,303
Total current liabilities			940,857				783,690
Long-term debt, excluding current installments			5,185				4,912
Accrued pension and severance cost			183,403				115,904
Other noncurrent liabilities			69,883				63,651
Total liabilities			1,199,328				968,157
Commitments and contingent liabilities (Note 11)
Equity:
Canon Inc. stockholders’ equity (Note 8):
Common stock			174,762				174,762
(Number of authorized shares)			(3,000,000,000)				(3,000,000,000)
(Number of issued shares)			(1,333,763,464)				(1,333,763,464)
Additional paid-in capital			407,087				404,293
Legal reserve			56,257				54,687
Retained earnings			2,917,861				2,871,437
Accumulated other comprehensive income (loss)			(349,989)				(260,818)
Treasury stock, at cost			(550,999)				(556,252)
(Number of shares)			(101,045,027)				(99,288,001)
Total Canon Inc. stockholders’ equity			2,654,979				2,688,109
Noncontrolling interests (Note 8)			176,244				191,291
Total equity (Note 8)			2,831,223				2,879,400
Total liabilities and equity			4,030,551				3,847,557

CANON INC. AND SUBSIDIARIES

Consolidated Statements of Income

		Millions of yen
		Nine months ended				Nine months ended
		September 30, 2010				September 30, 2009
Net sales			2,639,035				2,255,143
Cost of sales			1,348,193				1,261,541
Gross profit			1,290,842				993,602
Operating expenses:
Selling, general and administrative expenses (Note 14)			756,238				641,342
Research and development expenses			229,899				227,333
			986,137				868,675
Operating profit			304,705				124,927
Other income (deductions):
Interest and dividend income			4,287				3,761
Interest expense			(1,160)				(241)
Other, net (Notes 10, 13 and 14)			2,497				(7,013)
			5,624				(3,493)
Income before income taxes			310,329				121,434
Income taxes			113,879				48,709
Consolidated net income			196,450				72,725
Less: Net income attributable to noncontrolling interests			3,806				2,642
Net income attributable to Canon Inc.			192,644				70,083
		Yen				Yen
Net income attributable to Canon Inc. stockholders per share (Note 9):
Basic			155.79				56.77
Diluted			155.79				56.77
Cash dividends per share			55.00				55.00

CANON INC. AND SUBSIDIARIES

Consolidated Statements of Income (continued)

		Millions of yen
		Three months ended				Three months ended
		September 30, 2010				September 30, 2009
Net sales			913,151				774,324
Cost of sales			466,240				425,001
Gross profit			446,911				349,323
Operating expenses:
Selling, general and administrative expenses (Note 14)			265,413				215,607
Research and development expenses			77,074				73,727
			342,487				289,334
Operating profit			104,424				59,989
Other income (deductions):
Interest and dividend income			1,544				970
Interest expense			(207)				(20)
Other, net (Notes 10, 13 and 14)			3,065				2,609
			4,402				3,559
Income before income taxes			108,826				63,548
Income taxes			39,904				24,604
Consolidated net income			68,922				38,944
Less: Net income attributable to noncontrolling interests			727				2,210
Net income attributable to Canon Inc.			68,195				36,734
		Yen				Yen
Net income attributable to Canon Inc. stockholders per share (Note 9):
Basic			55.07				29.76
Diluted			55.07				29.76
Cash dividends per share			-				-

CANON INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

		Millions of yen
		Nine months ended				Nine months ended
		September 30, 2010				September 30, 2009
Cash flows from operating activities:
Consolidated net income			196,450				72,725
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			198,033				234,528
Loss on disposal of property, plant and equipment			8,240				2,854
Deferred income taxes			3,588				10,244
Decrease in trade receivables			26,584				105,239
(Increase) decrease in inventories			(93,981)				87,088
Increase (decrease) in trade payables			110,507				(89,518)
Increase (decrease) in accrued income taxes			37,405				(38,160)
Increase (decrease) in accrued expenses			9,062				(20,647)
Increase in accrued (prepaid) pension and severance cost			4,451				2,120
Other, net			19,088				8,054
Net cash provided by operating activities			519,427				374,527
Cash flows from investing activities:
Purchases of fixed assets (Note 5)			(136,735)				(261,890)
Proceeds from sale of fixed assets (Note 5)			1,666				8,529
Purchases of available-for-sale securities			(10,882)				(324)
Proceeds from sale and maturity of available-for-sale securities			241				437
Decrease in time deposits, net			(40,132)				(17,813)
Acquisitions of subsidiaries, net of cash acquired			(55,604)				(2,979)
Purchases of other investments			(851)				(13,959)
Other, net			(905)				1,765
Net cash used in investing activities			(243,202)				(286,234)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			3,856				2,736
Repayments of long-term debt			(4,134)				(4,686)
Decrease in short-term loans, net (Note 7)			(74,002)				(174)
Dividends paid			(136,103)				(135,793)
Repurchases of treasury stock, net			(32,903)				(31)
Other, net			(24,672)				(3,433)
Net cash used in financing activities			(267,958)				(141,381)
Effect of exchange rate changes on cash and cash equivalents			(43,902)				7,548
Net change in cash and cash equivalents			(35,635)				(45,540)
Cash and cash equivalents at beginning of period			795,034				679,196
Cash and cash equivalents at end of period			759,399				633,656
Supplemental disclosure for cash flow information:
Cash paid during the period for:
Interest			911				264
Income taxes			74,052				77,530

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1)

Basis of Presentation and Significant Accounting Policies

	(a)	Basis of Presentation
		The Company issued convertible debentures in the United States in May 1969 and established a program in which its American Depositary Receipts (ADRs) were traded in the U.S. over-the-counter market. Since then, under the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934, the Company has prepared its annual consolidated financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and filed them with the U.S. Securities and Exchange Commission on Form 20-F. The Company’s ADRs were listed on the NYSE in September 2000 after being quoted on NASDAQ from February 1972 to September 2000.
		Canon’s consolidated financial statements are prepared in accordance with the recognition and measurement criteria of accounting principles generally accepted in the United States. Certain disclosures have been omitted.
		The number of consolidated subsidiaries and affiliated companies that were accounted for on the equity method basis as of September 30, 2010 and December 31, 2009 are summarized as follows:

	September 30, 2010					December 31, 2009
Consolidated subsidiaries			299				241
Affiliated companies			14				15
Total			313				256

	(b)	Principles of Consolidation
		The consolidated financial statements include the accounts of the Company, its majority owned subsidiaries and those variable interest entities where the Company or its consolidated subsidiaries are the primary beneficiaries. All significant intercompany balances and transactions have been eliminated.

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(1)

Basis of Presentation and Significant Accounting Policies (continued)

	(c)	Recently Issued Accounting Guidance
		In October 2009, the FASB issued new accounting guidance for revenue recognition under multiple-deliverable arrangements. This guidance modifies the criteria for separating consideration under multiple-deliverable arrangements and requires allocation of the overall consideration to each deliverable using the estimated selling price in the absence of vendor-specific objective evidence or third-party evidence of selling price for deliverables. As a result, the residual method of allocating arrangement consideration will no longer be permitted. The guidance also requires additional disclosures about how a vendor allocates revenue in its arrangements and about the significant judgments made and their impact on revenue recognition. This guidance is effective for fiscal years beginning on or after June 15, 2010 and is required to be adopted by Canon no later than the first quarter beginning January 1, 2011 (with early adoption permitted). The provisions are effective prospectively for revenue arrangements entered into or materially modified after the effective date, or retrospectively for all prior periods. Canon is currently evaluating the effect of the adoption of this guidance, but does not expect the adoption of this guidance to have a material impact on Canon’s consolidated financial statements.
		In October 2009, the FASB issued new accounting guidance for software revenue recognition. This guidance modifies the scope of the software revenue recognition guidance to exclude from its requirements non-software components of tangible products and software components of tangible products that are sold, licensed, or leased with tangible products when the software components and non-software components of the tangible product function together to deliver the tangible product’s essential functionality. This guidance is effective for fiscal years beginning on or after June 15, 2010 and is required to be adopted by Canon no later than the first quarter beginning January 1, 2011 (with early adoption permitted) using the same effective date and the same transition method used to adopt the guidance for revenue recognition under multiple-deliverable arrangements. Canon is currently evaluating the effect of the adoption of this guidance, but does not expect the adoption of this guidance to have a material impact on Canon’s consolidated financial statements.

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(2)		Investments
		The cost, gross unrealized holding gains, gross unrealized holding losses and fair value for available-for-sale securities by major security types are as follows:

		Millions of yen
		September 30, 2010
						Gross				Gross
						unrealized				unrealized
						holding				holding
		Cost				gains				losses				Fair value
Current:
Government bonds			1				-				-				1
Corporate bonds			1,000				-				-				1,000
			1,001				-				-				1,001
Noncurrent:
Government bonds			195				-				18				177
Corporate bonds			621				25				57				589
Fund trusts			3,167				159				20				3,306
Equity securities			20,058				4,972				4,012				21,018
			24,041				5,156				4,107				25,090

		Millions of yen
		December 31, 2009
						Gross				Gross
						unrealized				unrealized
						holding				holding
		Cost				gains				losses				Fair value
Current:
Government bonds			222				-				-				222
Noncurrent:
Government bonds			225				-				21				204
Corporate bonds			1,397				27				55				1,369
Fund trusts			2,275				300				7				2,568
Equity securities			11,932				7,295				1,501				17,726
			15,829				7,622				1,584				21,867

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(2)

Investments (continued)

Maturities of available-for-sale debt securities and fund trusts included in short-term investments and investments in the accompanying consolidated balance sheets were as follows at September 30, 2010:

		Millions of yen
		Cost				Fair value
Due within one year			1,001				1,001
Due after one year through five years			2,273				2,413
Due after five years through ten years			1,710				1,659
			4,984				5,073

Realized gains and losses are determined using the average cost method and are reflected in earnings. The gross realized losses, including write-downs for impairments that were other than temporary, were not significant for the nine and three months ended September 30, 2010 and ¥2,378 million and ¥494 million for the nine and three months ended September 30, 2009, respectively. The gross realized gains were not significant for the nine and three months ended September 30, 2010 and 2009.

At September 30, 2010, substantially all of the available-for-sale securities with unrealized losses had been in a continuous unrealized loss position for less than 12 months.

Time deposits with original maturities of more than three months are ¥57,866 million and ¥18,852 million at September 30, 2010 and December 31, 2009, respectively, and are included in short-term investments in the accompanying consolidated balance sheets.

The aggregate cost of non-marketable equity securities accounted for under the cost method totaled ¥25,920 million and ¥28,567 million at September 30, 2010 and December 31, 2009, respectively. Investments with an aggregate cost of ¥23,498 million were not evaluated for impairment as of September 30, 2010, because (a) Canon did not estimate the fair value of those investments as it was not practicable to estimate the fair value of such investments and (b) Canon did not identify any events or changes in circumstances that might have had significant adverse effects on the fair value of those investments.

Reclassifications from accumulated other comprehensive loss for gains and losses realized in net income was not significant for the nine and three months ended September 30, 2010, and ¥1,867 million and ¥373 million for the nine and three months ended September 30, 2009, respectively.

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(3)		Trade Receivables
		Trade receivables are summarized as follows:

		Millions of yen
		September 30, 2010				December 31, 2009
Notes			27,302				13,037
Accounts			529,936				554,878
Less allowance for doubtful receivables			(15,700)				(11,343)
			541,538				556,572

(4)		Inventories
		Inventories are summarized as follows:

		Millions of yen
		September 30, 2010				December 31, 2009
Finished goods			284,378				228,161
Work in process			148,659				129,824
Raw materials			37,680				15,256
			470,717				373,241

(5)		Property, Plant and Equipment
		Property, plant and equipment are stated at cost less accumulated depreciation and are summarized as follows:

		Millions of yen
		September 30, 2010				December 31, 2009
Land			268,237				258,824
Buildings			1,315,733				1,299,154
Machinery and equipment			1,483,555				1,422,076
Construction in progress			88,764				105,713
			3,156,289				3,085,767
Less accumulated depreciation			(1,920,904)				(1,815,982)
			1,235,385				1,269,785

		Fixed assets presented in the consolidated statements of cash flows includes property, plant and equipment and intangible assets.
(6)		Trade Payables
		Trade payables are summarized as follows:

		Millions of yen
		September 30, 2010				December 31, 2009
Notes			10,997				7,608
Accounts			389,907				331,505
			400,904				339,113

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(7)		Acquisition
		In March 2010, Canon acquired 45.2% of the total outstanding shares of Océ N.V. (“Océ”), which is listed on NYSE Euronext Amsterdam, through mainly a fully self-funded public cash tender offer for consideration of ¥50,374 million, in addition to the 22.9% interest Canon held before the public cash tender offer. In addition, Canon acquired Océ’s convertible cumulative financing preference shares representing 19.1% of the total outstanding shares of Océ for consideration of ¥8,027 million. As a result, Canon’s aggregate interest represents 87.2 % of the total outstanding shares of Océ. The fair value of the 12.8% noncontrolling interest in Océ of ¥18,245 million was measured mainly based on the quoted price of Océ’s common stock on the acquisition date.
		The acquisition was accounted for using the acquisition method. Prior to the March 2010 acquisition date, Canon accounted for its 22.9% interest in Océ using the equity method. The acquisition-date fair value of the previous equity interest of ¥25,508 million was remeasured using the quoted price of Océ’s common stock on the acquisition date and included in the measurement of the total acquisition consideration. In connection with the acquisition, Canon repaid ¥55,378 million of Océ’s existing bank debt and ¥22,936 million of Océ’s existing United States Private Placements notes, which are included in decrease in short-term loans in the consolidated statement of cash flows.
		Océ is engaged in research and development, manufacture and sale of document management systems, printing systems for professionals and high-speed, wide format digital printing systems. Canon and Océ have complementary technologies and products and would benefit from this strong business relationship. Amid the increasingly competitive printing industry, Canon is further strengthening its business foundation in order to solidify its position as one of the global leaders. Canon aims to provide diversified solutions to its customers in the printing industry by making Océ a consolidated subsidiary.
		The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at acquisition date. Purchase price allocation at September 30, 2010 reflects immaterial adjustments from the June 30, 2010 balances.

		Millions of yen
Current assets			122,248
Property, plant and equipment			51,156
Intangible assets			56,297
Goodwill			77,253
Other noncurrent assets			42,658
Non-current assets			227,364
Total acquired assets			349,612
Total assumed liabilities			247,458
Net assets acquired			102,154

Intangible assets acquired, which are subject to amortization, consist of customer relationships of ¥32,747 million, patented technologies of ¥11,316 million, and other intangible assets of ¥12,234 million. Canon has estimated the amortization period for the customer relationships and patented technologies to be 5 years and 3 years, respectively. The weighted average amortization period for all intangible assets is approximately 4.4 years.

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(7)		Acquisition (continued)
		Goodwill recognized, which is assigned to the Office Business Unit for impairment testing, is attributable primarily to expected synergies from combining operations of Océ and Canon. None of the goodwill is expected to be deductible for income tax purposes.
		The amounts of net sales of Océ included in the Canon’s consolidated statement of income from the acquisition date to the period ended September 30, 2010 were ¥145,896 million.
		The unaudited pro forma net sales as if Océ had been included in Canon’s consolidated statements of income from the beginning of fiscal 2010 and 2009 were ¥2,723,513 million and ¥2,509,683 million, respectively.
		Pro forma net income was not disclosed because the impact on the Canon’s consolidated statements of income was not material.

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(8)		Equity
		The change in the carrying amount of total equity, equity attributable to Canon Inc. stockholders and equity attributable to noncontrolling interests in the consolidated balance sheets for the nine months ended September 30, 2010 and 2009 are as follows:

		Millions of yen
		Canon Inc.
		stockholders’				Noncontrolling
		equity				interests				Total equity
Balance at December 31, 2009			2,688,109				191,291				2,879,400
Dividends paid to stockholders of Canon Inc.			(136,103)				-				(136,103)
Dividends paid to noncontrolling interests			-				(2,546)				(2,546)
Acquisition of subsidiaries			-				19,168				19,168
Capital transactions with noncontrolling interests and other			31,822				(32,467)				(645)
Comprehensive income (loss):
Net income			192,644				3,806				196,450
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments			(84,967)				(3,088)				(88,055)
Net unrealized gains and losses on securities			(3,113)				58				(3,055)
Net gains and losses on derivative instruments			(358)				(57)				(415)
Pension liability adjustments			(152)				79				(73)
Total comprehensive income			104,054				798				104,852
Repurchase of treasury stock, net			(32,903)				-				(32,903)
Balance at September 30, 2010			2,654,979				176,244				2,831,223
Balance at December 31, 2008			2,659,792				191,190				2,850,982
Dividends paid to stockholders of Canon Inc.			(135,793)				-				(135,793)
Dividends paid to noncontrolling interests			-				(3,417)				(3,417)
Capital transactions by consolidated subsidiaries and affiliated companies and other			292				(1,277)				(985)
Comprehensive income (loss):
Net income			70,083				2,642				72,725
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments			18,270				49				18,319
Net unrealized gains and losses on securities			3,034				107				3,141
Net gains and losses on derivative instruments			910				3				913
Pension liability adjustments			(1,321)				341				(980)
Total comprehensive income			90,976				3,142				94,118
Balance at September 30, 2009			2,615,267				189,638				2,804,905

CANON INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (continued)

(9)		Net Income Attributable to Canon Inc. Stockholders per Share
		A reconciliation of basic and diluted net income per share computations for the nine months ended September 30, 2010 and 2009 is as follows:

		Millions of yen
			Nine months ended				Nine months ended
			September 30, 2010				September 30, 2009
Net income attributable to Canon Inc.			192,644				70,083
		Number of shares
			Nine months ended				Nine months ended
			September 30, 2010				September 30, 2009
Average common shares outstanding			1,236,558,240				1,234,483,430
Effect of dilutive securities:
Stock options			33,371				-
Diluted common shares outstanding			1,236,591,611				1,234,483,430
		Yen
			Nine months ended				Nine months ended
			September 30, 2010				September 30, 2009
Net income attributable to Canon Inc. stockholders per share:
Basic			155.79				56.77
Diluted			155.79				56.77
A reconciliation of basic and diluted net income per share computations for the three months ended September 30, 2010 and 2009 is as follows:
		Millions of yen
			Three months ended				Three months ended
			September 30, 2010				September 30, 2009
Net income attributable to Canon Inc.			68,195				36,734
		Number of shares
			Three months ended				Three months ended
			September 30, 2010				September 30, 2009
Average common shares outstanding			1,238,263,553				1,234,480,343
Effect of dilutive securities:
Stock options			13,574				-
Diluted common shares outstanding			1,238,277,127				1,234,480,343
		Yen
			Three months ended				Three months ended
			September 30, 2010				September 30, 2009
Net income attributable to Canon Inc. stockholders per share:
Basic			55.07				29.76
Diluted			55.07				29.76