Edgar Filing: CANON INC

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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the month of .... April.........................................................................., 2011

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, 2011....	By	....../s/...... Masashiro Kobayashi ..........................
		(Signature)*

		Masashiro Kobayashi Deputy Senior 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. Quarterly Report filed with the Japanese government pursuant to the Financial Instruments and Exchange Law of Japan For the first quarter ended March 31, 2011

CONSOLIDATED RESULTS FOR
THE FIRST QUARTER ENDED MARCH 31, 2011

April 26, 2011

CONSOLIDATED RESULTS

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


	Actual								Projected
	Three months		Three months				Three months		Year ending
	ended		ended		Change(%)		ended		December 31,		Change(%)
	March 31, 2011		March 31, 2010				March 31, 2011		2011

Net sales	¥	839,191	¥	755,526	+	11.1	$	10,110,735	¥	3,730,000	+	0.6
Operating profit		82,502		86,843	-	5.0		994,000		335,000	-	13.6
Income before income taxes		82,032		88,852	-	7.7		988,337		330,000	-	16.0
Net income attributable
to Canon Inc.	¥	55,462	¥	56,811	-	2.4	$	668,217	¥	220,000	-	10.8



Net income attributable to Canon Inc. stockholders per share:

- Basic	¥	45.15	¥	46.02	-	1.9	$	0.54	¥	179.09	-	10.3
- Diluted		45.14		46.02	-	1.9		0.54		-		-



	Actual
	As of		As of				As of
	March 31,		December 31,		Change(%)		March 31,
	2011		2010				2011

Total assets	¥	3,964,735	¥	3,983,820	-	0.5	$	47,767,892


Canon Inc. stockholders’ equity	¥	2,659,422	¥	2,645,782	+	0.5	$	32,041,229


Notes:	1.	Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.

	2.	U.S. dollar amounts are translated from yen at the rate of JPY 83 = U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of March 31, 2011, 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

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I. Operating Results and Financial Conditions

2011 First Quarter in Review

Looking back at the global economy in the first quarter of 2011, economic conditions continued to improve modestly throughout the world. The United States continued to recover steadily thanks to solid growth in production and improved employment rates, while in Europe, although trends varied by country, the region overall continued to realize a modest recovery, driven mainly by exports. Emerging markets, such as China and India, continued to grow through stable domestic demand, and in Japan, while the economy has been recovering gradually, the earthquake and resulting tsunami that struck northeastern Japan on March 11, 2011 lead to a decrease in production activity and consumer spending.

As for the markets in which Canon operates amid these conditions, within the office equipment market, demand recovered for network digital multifunction devices (MFDs) and laser printers continuing the same trend as the previous year. As for the consumer products market, demand for compact digital cameras maintained healthy growth mainly in emerging markets, while sales of digital single-lens reflex (SLR) cameras continued to realize robust growth across global markets. Demand for inkjet printers also maintained solid growth. In the Industry and others market, although demand for semiconductor lithography equipment grew modestly, the market for liquid crystal display (LCD) lithography equipment was marked by a downturn owing to decreases in investment by LCD panel manufacturers following the large-scale outlays made in the previous year. In addition, production was partially affected due to a shortage of components caused by the earthquake and its aftermath.

The average value of the yen during the quarter was ¥82.28 against the U.S. dollar, a year-on-year appreciation of approximately ¥8, and ¥112.86 against the euro, a year-on-year appreciation of approximately ¥12.

Despite the impact of the sharp appreciation of the yen along with the earthquake that struck northeastern Japan, net sales for the quarter totaled ¥839.2 billion (U.S.$10,111 million), an increase of 11.1% from the year-ago period, owing to such factors as increased sales of laser printers among office products, and the effects of consolidation arising from the acquisition of Océ N.V. in March 2010. Additional factors include the continued robust sales of digital SLR cameras and the significant turnaround achieved within the Industry and others segment. Despite the strong yen and such adverse affects attributable to the earthquake as losses from damaged inventory and decreased production turnover, the decline in the gross profit ratio was limited to 0.4 points from the year-ago period resulting in a ratio of 48.4% for the quarter, mainly reflecting the launch of new products and ongoing cost-cutting efforts. As a result, gross profit rose by 10.2% to ¥406.2 billion (U.S.$4,894 million) for the period. Despite ongoing Group-wide efforts to thoroughly reduce spending, operating expenses increased by ¥42.0 billion (U.S.$506 million) due to the impact of the acquisition of Océ N.V. Consequently, operating profit decreased by 5.0% to ¥82.5 billion (U.S.$994 million) for the quarter. Income before income taxes for the period totaled ¥82.0 billion (U.S.$988 million), a decrease of 7.7% year on year, while net income attributable to Canon Inc. decreased by 2.4% to ¥55.5 billion (U.S.$669 million) for the period.

Basic net income attributable to Canon Inc. stockholders per share for the quarter was ¥45.15 (U.S.$0.54), a decrease of ¥0.87 (U.S.$0.01) compared with the previous year.

Results by Segment

Looking at Canon’s quarterly performance by business sector, within the Office Business Unit, imageRUNNER ADVANCE-series products performed admirably, contributing to boosted sales volume of color network digital MFDs. Laser printers recorded an increase in sales volume, maintaining the momentum of the strong recovery realized in the previous year. Consequently, despite the effects of the strong appreciation of the yen and the impact of newly consolidated companies, first-quarter net sales for the segment totaled ¥480.9 billion (U.S.$5,794 million), growing 17.5% year on year. Operating profit decreased by 12.5% to ¥63.1 billion (U.S.$760 million) for the period, mainly due to the appreciation of the yen and the earthquake in northeastern Japan.

Within the Consumer Business Unit, sales volumes continued to increase significantly in Asia and other regions for such digital SLR cameras as the competitively priced EOS Digital Rebel T2i (EOS 550D), along with the EOS 5D Mark II, and EOS 60D advanced-amateur models. As for compact digital cameras, the Company launched ten new

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ELPH (IXUS)-series and PowerShot-series models, contributing to a boost in sales volumes particularly in emerging markets.

With respect to inkjet printers, sales volume increased from the year-ago level fueled by the healthy sales of PIXMA-series models, particularly in emerging markets. Sales for the Consumer Business Unit overall, however, declined by 0.2% year on year to ¥289.6 billion (U.S.$3,489 million) due to the adverse effects of the earthquake on sales and production as well as price competition and the impact of strong yen. Operating profit decreased by 15.7% to ¥39.9 billion (U.S.$481 million) also reflecting the negative impact from the earthquake and the appreciation of the yen.

In the Industry and Others Business Unit, while unit sales of LCD lithography equipment remained at the same level as the year-ago period, the MPAsp series, which supports sixth-generation substrates and above, recorded healthy sales growth. Semiconductor lithography equipment realized a boost in sales volume, resulting in an increase in sales for the segment of 11.7% to ¥91.9 billion (U.S.$1,107 million) for the quarter. Operating profit realized a turnaround, totaling ¥6.6 billion (U.S.$80 million) for the quarter, an increase of ¥9.6 billion (U.S.$116 million) from the year-ago period.

Cash Flow

During the first quarter, cash flow from operating activities totaled ¥71.9 billion (U.S.$867 million), a decrease of ¥89.7 billion (U.S.$1,081 million) compared with the previous year as a result of such factors as increased tax payments and a decrease in accounts payable. Due to ongoing capital investment focused on higher priority items and the corporate acquisition activities from the year-ago period, cash flow from investing activities decreased ¥64.6 billion (U.S.$778 million) year on year, totaling ¥46.5 billion (U.S.$560 million). Accordingly, free cash flow totaled ¥25.4 billion (U.S.$306 million), a decrease of ¥25.1 billion (U.S.$303 million) from the previous year.

Cash flow from financing activities recorded an outlay of ¥73.9 billion (U.S.$890 million), mainly arising from the dividend payout of ¥79.9 billion (U.S.$962 million). Owing to these factors as well as the positive impact of ¥24.5 billion (U.S.$295 million) by foreign currency translation adjustments, cash and cash equivalents decreased by ¥24.0 billion (U.S.$289 million) year on year to ¥816.6 billion (U.S.$9,839 million).

Outlook

As for the outlook in the second quarter onward, many uncertainties remain such as the negative impact of the earthquake in northeastern Japan, further appreciation of fuel prices and the financial crises in some European countries. On the other hand, Asia beginning with China and India, and other emerging markets are expected to continue to realize healthy growth; the United States is projected to maintain its upward momentum; and major European markets will continue to grow steadily. Taking into account these conditions, the world economy is likely to continue a self-sustained recovery. As for the Japanese economy, for the time being, it is expected to demonstrate continued weakness due to the earthquake in northeastern Japan. With the recovery in production activity, however, we expect the situation to improve.

In the businesses in which Canon is involved, within the office equipment market, demand for such products as network digital MFDs and laser printers is projected to grow steadily. With respect to the consumer products market, demand for digital SLR cameras is expected to display robust growth, while demand for compact digital cameras and inkjet printers will grow steadily. As a result of the earthquake in northeastern Japan, however, shortages in the supply capacity for certain products are expected to continue, for the time being. In the Industry and others market, while uncertainty remains for the future, demand for semiconductor lithography equipment will likely increase steadily, whereas demand for LCD lithography equipment is projected to decline from the year-ago period.

Canon has been directly affected by the earthquake including losses from damaged buildings and inventory, and has incurred such indirect effects as electricity restrictions, supply shortages of components and a decline in consumer spending in the Japanese market. These factors and others would negatively affect Canon’s operating results and financial position. Canon seeks the restoration of production facilities and rebuilding of production systems.

With regard to currency exchange rates for the second quarter onward, on which Canon’s performance outlook is based, despite the uncertainty over such factors as future interest rate policies for major countries and the speed and degree of the economic recovery, Canon anticipates exchange rates for the period of ¥85 to the U.S. dollar and

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¥120 to the euro, representing appreciations of approximately ¥3 against the U.S. dollar, and depreciation of approximately ¥3 against the euro compared with the previous year. Upon taking into consideration these foreign exchange rate assumptions, current economic forecasts, the foreseeable impact of the earthquake in the short term and the recovery plan Canon sees as being achievable at this stage, Canon projects full-year consolidated net sales in 2011 of ¥3,730.0 billion (U.S.$44,940 million), a year-on-year increase of 0.6%; operating profit of ¥335.0 billion (U.S.$4,036 million), a year-on-year decrease of 13.6%; income before income taxes of ¥330.0 billion (U.S.$3,976 million), a year-on-year decrease of 16.0%; and net income attributable to Canon Inc. of ¥220.0 billion (U.S.$2,651 million), a year-on-year decrease of 10.8%.

Future prospects are quite uncertain, containing numerous variables, such as the supply of components and availability of electricity. As such, this outlook may drastically change depending on future circumstances.


Consolidated Outlook
		Millions of yen
Fiscal year		Millions of yen
	Year ending				Change			Year ended		Change (%)
	December 31, 2011				Change			December 31, 2010		Change (%)
	Previous Outlook (A)		Revised Outlook (B)		(B - A)			Results (C)		(B - C) / C

Net sales	¥	4,100,000	¥	3,730,000	¥	(370,000	)	¥	3,706,901		+0.6	%

Operating profit		470,000		335,000		(135,000	)		387,552		-13.6	%

Income before income taxes		470,000		330,000		(140,000	)		392,863		-16.0	%

Net income attributable to

Canon Inc.	¥	310,000	¥	220,000	¥	(90,000	)	¥	246,603		-10.8	%

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.

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CANON INC. AND SUBSIDIARIES II. Financial Statements		CONSOLIDATED

1. CONSOLIDATED BALANCE SHEETS



	Millions of yen									Thousands of U.S. dollars

	As of			As of						As of

	March 31,			December 31,			Change			March 31,

	2011			2010						2011

ASSETS

Current assets:

Cash and cash equivalents	¥	816,615		¥	840,579		¥	(23,964	)	$	9,838,735

Short-term investments		105,995			96,815			9,180			1,277,048

Trade receivables, net		496,608			557,504			(60,896	)		5,983,229

Inventories		435,921			384,777			51,144			5,252,060

Prepaid expenses and other current assets		254,322			250,754			3,568			3,064,121


Total current assets		2,109,461			2,130,429			(20,968	)		25,415,193

Noncurrent receivables		16,840			16,771			69			202,892

Investments		65,531			81,529			(15,998	)		789,530

Property, plant and equipment, net		1,202,745			1,201,968			777			14,490,904

Intangible assets, net		155,192			153,021			2,171			1,869,783

Other assets		414,966			400,102			14,864			4,999,590


Total assets	¥	3,964,735		¥	3,983,820		¥	(19,085	)	$	47,767,892


LIABILITIES AND EQUITY

Current liabilities:

Short-term loans and current portion of long-term debt	¥	15,109		¥	7,200		¥	7,909		$	182,036

Trade payables		376,468			383,251			(6,783	)		4,535,759

Accrued income taxes		40,397			72,482			(32,085	)		486,711

Accrued expenses		300,925			299,710			1,215			3,625,602

Other current liabilities		122,832			134,298			(11,466	)		1,479,904


Total current liabilities		855,731			896,941			(41,210	)		10,310,012

Long-term debt, excluding current installments		3,856			4,131			(275	)		46,458

Accrued pension and severance cost		202,207			197,609			4,598			2,436,229

Other noncurrent liabilities		79,733			75,502			4,231			960,639


Total liabilities		1,141,527			1,174,183			(32,656	)		13,753,338


Equity:

Canon Inc. stockholders’ equity:

Common stock		174,762			174,762			—			2,105,566

Additional paid-in capital		400,598			400,425			173			4,826,482

Legal reserve		59,272			57,930			1,342			714,121

Retained earnings		2,939,507			2,965,237			(25,730	)		35,415,747

Accumulated other comprehensive income (loss)		(352,596	)		(390,459	)		37,863			(4,248,145	)

Treasury stock, at cost		(562,121	)		(562,113	)		(8	)		(6,772,542	)


Total Canon Inc. stockholders’ equity		2,659,422			2,645,782			13,640			32,041,229

Noncontrolling interests		163,786			163,855			(69	)		1,973,325


Total equity		2,823,208			2,809,637			13,571			34,014,554


Total liabilities and equity	¥	3,964,735		¥	3,983,820		¥	(19,085	)	$	47,767,892



	Millions of yen									Thousands of U.S. dollars


	As of			As of						As of

	March 31,			December 31,						March 31,

	2011			2010						2011


Notes:


1. Allowance for doubtful receivables	¥	14,925		¥	14,920					$	179,819

2. Accumulated depreciation		1,987,142			1,909,703						23,941,470

3. Accumulated other comprehensive income (loss):

Foreign currency translation adjustments		(286,538	)		(325,612	)					(3,452,265	)

Net unrealized gains and losses on securities		3,242			3,020						39,060

Net gains and losses on derivative instruments		(586	)		917						(7,060	)

Pension liability adjustments		(68,714	)		(68,784	)					(827,880	)

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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, 2011

March 31, 2010

March 31, 2011

Net sales

839,191

755,526

11.1

10,110,735

Cost of sales

432,954

386,958

5,216,313

Gross profit

406,237

368,568

10.2

4,894,422

Operating expenses:

Selling, general and administrative expenses

253,640

210,792

3,055,904

Research and development expenses

70,095

70,933

844,518

323,735

281,725

3,900,422

Operating profit

82,502

86,843

5.0

994,000

Other income (deductions):

Interest and dividend income

1,636

1,021

19,711

Interest expense

(438

)

(86

)

(5,277

)

Other, net

(1,668

)

1,074

(20,097

)

(470

)

2,009

(5,663

)

Income before income taxes

82,032

88,852

7.7

988,337

Income taxes

26,052

30,117

313,879

Consolidated net income

55,980

58,735

674,458

Less: Net income attributable to noncontrolling interests

518

1,924

6,241

Net income attributable to Canon Inc.

55,462

56,811

2.4

668,217

Note: Consolidated comprehensive income for the three months ended March 31, 2011 and 2010 was JPY 94,618 million (U.S.$ 1,139,976 thousand) and JPY 57,842 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, 2011

March 31, 2010

March 31, 2011

Office

480,862

409,134

17.5

5,793,518

Consumer

289,621

290,287

0.2

3,489,410

Industry and Others

91,936

82,328

11.7

1,107,663

Eliminations

(23,228

)

(26,223

)

—

(279,856

)

Total

839,191

755,526

11.1

10,110,735

Sales by region

Millions of yen

Thousands of
U.S. dollars

Three months

Three months

Three months

ended

ended

Change(%)

ended

March 31, 2011

March 31, 2010

March 31, 2011

Japan

158,048

167,516

5.7

1,904,193

Overseas:

Americas

216,534

204,555

5.9

2,608,843

Europe

279,953

230,678

21.4

3,372,928

Asia and Oceania

184,656

152,777

20.9

2,224,771

681,143

588,010

15.8

8,206,542

Total

839,191

755,526

11.1

10,110,735

Notes:	1.	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/ Digital production printers

		Consumer : Digital SLR cameras / Compact digital cameras / Interchangeable lenses / Digital video camcorders / Inkjet multifunction printers / Single function inkjet printers / Image scanners / Broadcast equipment / Calculators

		Industry and Others : Semiconductor lithography equipment / LCD lithography equipment / Medical image recording equipment / Ophthalmic products Magnetic heads / Micromotors / Computers / Handy terminals / Document scanners

	2.	The principal countries and regions included in each regional category are as follows:

		Americas: United States of America, Canada, Latin America / Europe: England, Germany, France, Netherlands / Asia and Oceania: China, Asian countries, Australia

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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, 2011			March 31, 2010			March 31, 2011
Cash flows from operating activities:

Consolidated net income	¥	55,980		¥	58,735		$	674,458

Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Depreciation and amortization		61,728			60,253			743,711

Loss on disposal of fixed assets		1,421			1,741			17,120

Deferred income taxes		(1,335	)		(664	)		(16,084	)

Decrease in trade receivables		88,409			67,093			1,065,169

Increase in inventories		(38,104	)		(50,862	)		(459,084	)

Increase (decrease) in trade payables		(32,317	)		14,303			(389,361	)

Decrease in accrued income taxes		(32,926	)		(6,309	)		(396,699	)

Increase (decrease) in accrued expenses		(8,880	)		3,322			(106,988	)

Increase (decrease) in accrued (prepaid) pension and severance cost		(616	)		1,291			(7,422	)

Other, net		(21,430	)		12,751			(258,193	)


Net cash provided by operating activities		71,930			161,654			866,627


Cash flows from investing activities:

Purchases of fixed assets		(50,310	)		(50,518	)		(606,145	)

Proceeds from sale of fixed assets		401			631			4,831

Purchases of available-for-sale securities		(305	)		(8,842	)		(3,675	)

Proceeds from sale and maturity of available-for-sale securities		1,148			24			13,831

(Increase) decrease in time deposits, net		(8,614	)		937			(103,783	)

Acquisitions of subsidiaries, net of cash acquired		0			(52,959	)		0

Purchases of other investments		(110	)		(505	)		(1,325	)

Other, net		11,274			127			135,832


Net cash used in investing activities		(46,516	)		(111,105	)		(560,434	)


Cash flows from financing activities:

Proceeds from issuance of long-term debt		221			1,815			2,663

Repayments of long-term debt		(1,161	)		(1,213	)		(13,988	)

Increase (decrease) in short-term loans, net		8,292			(55,590	)		99,904

Dividends paid		(79,850	)		(67,897	)		(962,048	)

Repurchases of treasury stock, net		(8	)		(12	)		(96	)

Other, net		(1,351	)		(1,370	)		(16,278	)


Net cash used in financing activities		(73,857	)		(124,267	)		(889,843	)


Effect of exchange rate changes on cash and cash equivalents		24,479			(5,775	)		294,927


Net change in cash and cash equivalents		(23,964	)		(79,493	)		(288,723	)


Cash and cash equivalents at beginning of period		840,579			795,034			10,127,458


Cash and cash equivalents at end of period	¥	816,615		¥	715,541		$	9,838,735

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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, 2011			March 31, 2010					March 31, 2011

Office
Net sales:
	External customers	¥	479,051		¥	405,516		+	18.1	$	5,771,699
	Intersegment		1,811			3,618		-	49.9		21,819

	Total		480,862			409,134		+	17.5		5,793,518

Operating cost and expenses			417,810			337,047		+	24.0		5,033,855

Operating profit		¥	63,052		¥	72,087		-	12.5	$	759,663


Consumer
Net sales:
	External customers	¥	289,368		¥	289,729		-	0.1	$	3,486,361
	Intersegment		253			558		-	54.7		3,048

	Total		289,621			290,287		-	0.2		3,489,409

Operating cost and expenses			249,712			242,954		+	2.8		3,008,578

Operating profit		¥	39,909		¥	47,333		-	15.7	$	480,831


Industry and Others
Net sales:
	External customers	¥	70,772		¥	60,281		+	17.4	$	852,675
	Intersegment		21,164			22,047		-	4.0		254,988

	Total		91,936			82,328		+	11.7		1,107,663

Operating cost and expenses			85,333			85,283		+	0.1		1,028,109

Operating profit (loss)		¥	6,603		¥	(2,955	)		-	$	79,554


Corporate and Eliminations
Net sales:
	External customers	¥	-		¥	-			-	$	-
	Intersegment		(23,228	)		(26,223	)		-		(279,855	)

	Total		(23,228	)		(26,223	)		-		(279,855	)

Operating cost and expenses			3,834			3,399			-		46,193

Operating profit		¥	(27,062	)	¥	(29,622	)		-	$	(326,048	)


Consolidated
Net sales:
	External customers	¥	839,191		¥	755,526		+	11.1	$	10,110,735
	Intersegment		-			-			-		-

	Total		839,191			755,526		+	11.1		10,110,735

Operating cost and expenses			756,689			668,683		+	13.2		9,116,735

Operating profit		¥	82,502		¥	86,843		-	5.0	$	994,000

- 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, 2011			March 31, 2010					March 31, 2011

Japan
Net sales:
External customers	¥	177,476		¥	189,383		-	6.3	$	2,138,265
Intersegment		442,932			434,195		+	2.0		5,336,530

Total		620,408			623,578		-	0.5		7,474,795

Operating cost and expenses		533,874			528,433		+	1.0		6,432,217

Operating profit	¥	86,534		¥	95,145		-	9.1	$	1,042,578


Americas
Net sales:
External customers	¥	215,677		¥	201,047		+	7.3	$	2,598,518
Intersegment		3,113			324		+	860.8		37,506

Total		218,790			201,371		+	8.7		2,636,024

Operating cost and expenses		217,745			197,425		+	10.3		2,623,434

Operating profit	¥	1,045		¥	3,946		-	73.5	$	12,590


Europe
Net sales:
External customers	¥	277,713		¥	228,850		+	21.4	$	3,345,940
Intersegment		882			1,256		-	29.8		10,626

Total		278,595			230,106		+	21.1		3,356,566

Operating cost and expenses		267,276			223,272		+	19.7		3,220,193

Operating profit	¥	11,319		¥	6,834		+	65.6	$	136,373


Asia and Oceania
Net sales:
External customers	¥	168,325		¥	136,246		+	23.5	$	2,028,012
Intersegment		185,858			151,761		+	22.5		2,239,253

Total		354,183			288,007		+	23.0		4,267,265

Operating cost and expenses		339,907			277,192		+	22.6		4,095,265

Operating profit	¥	14,276		¥	10,815		+	32.0	$	172,000


Corporate and Eliminations
Net sales:
External customers	¥	-		¥	-			-	$	-
Intersegment		(632,785	)		(587,536	)		-		(7,623,915	)

Total		(632,785	)		(587,536	)		-		(7,623,915	)

Operating cost and expenses		(602,113	)		(557,639	)		-		(7,254,374	)

Operating profit	¥	(30,672	)	¥	(29,897	)		-	$	(369,541	)


Consolidated
Net sales:
External customers	¥	839,191		¥	755,526		+	11.1	$	10,110,735
Intersegment		-			-			-		-

Total		839,191			755,526		+	11.1		10,110,735

Operating cost and expenses		756,689			668,683		+	13.2		9,116,735

Operating profit	¥	82,502		¥	86,843		-	5.0	$	994,000

- 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, 2011		December 31, 2010		Change
Subsidiaries		291		294		(3	)
Affiliates		14		14		-
Total		305		308		(3	)

	2.		Change in Group Entities

			Subsidiaries

Removal:

3 companies

Subsidiaries Listed on Domestic Stock Exchange

Tokyo Stock Exchange (1st section): Canon Marketing Japan Inc., Canon Electronics Inc.

(2) SIGNIFICANT ACCOUNTING POLICIES

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

- 10 -

Canon Inc.
April 26, 2011

CONSOLIDATED FINANCIAL RESULTS FOR

THE FIRST QUARTER ENDED MARCH 31, 2011

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)
		2011						2010							Change year over year
		1st quarter			Year			1st quarter			Year				1st quarter		Year
		1st quarter			(P)			1st quarter			Year				1st quarter		Year

Japan
	Office		91,059			-			95,514			376,928				-4.7%		-

	Consumer		38,632			-			46,177			216,509				-16.3%		-

	Industry and Others		28,357			-			25,825			102,312				+9.8%		-

	Total		158,048			681,700			167,516			695,749				-5.7%		-2.0%

Overseas
	Office		387,992			-			310,002			1,602,017				+25.2%		-

	Consumer		250,736			-			243,552			1,173,113				+2.9%		-

	Industry and Others		42,415			-			34,456			236,022				+23.1%		-

	Total		681,143			3,048,300			588,010			3,011,152				+15.8%		+1.2%

	Americas
	Office		142,410			-			119,557			601,090				+19.1%		-

	Consumer		66,136			-			76,165			379,522				-13.2%		-

	Industry and Others		7,988			-			8,833			42,687				-9.6%		-

	Total		216,534			970,600			204,555			1,023,299				+5.9%		-5.1%

	Europe
	Office		182,180			-			137,852			733,216				+32.2%		-

	Consumer		89,751			-			86,183			407,994				+4.1%		-

	Industry and Others		8,022			-			6,643			31,264				+20.8%		-

	Total		279,953			1,217,600			230,678			1,172,474				+21.4%		+3.8%

	Asia and Oceania
	Office		63,402			-			52,593			267,711				+20.6%		-

	Consumer		94,849			-			81,204			385,597				+16.8%		-

	Industry and Others		26,405			-			18,980			162,071				+39.1%		-

	Total		184,656			860,100			152,777			815,379				+20.9%		+5.5%

Intersegment
	Office		1,811			-			3,618			8,324				-49.9%		-

	Consumer		253			-			558			1,705				-54.7%		-

	Industry and Others		21,164			-			22,047			94,624				-4.0%		-

	Eliminations		(23,228	)		-			(26,223	)		(104,653	)			-		-

	Total		0			0			0			0				-		-

Total
	Office		480,862			2,038,800			409,134			1,987,269				+17.5%		+2.6%

	Consumer		289,621			1,377,700			290,287			1,391,327				-0.2%		-1.0%

	Industry and Others		91,936			391,800			82,328			432,958				+11.7%		-9.5%

	Eliminations		(23,228	)		(78,300	)		(26,223	)		(104,653	)			-		-

	Total		839,191			3,730,000			755,526			3,706,901				+11.1%		+0.6%

														(P)=Projection

- S1 -

Canon Inc.


2. SEGMENT INFORMATION BY BUSINESS UNIT															(Millions of yen)
		2011						2010							Change year over year
		1st quarter			Year			1st quarter			Year				1st quarter			Year
		1st quarter			(P)			1st quarter			Year				1st quarter			Year

Office
	External customers		479,051			2,026,000			405,516			1,978,945				+18.1%			+2.4%
	Intersegment		1,811			12,800			3,618			8,324				-49.9%			+53.8%

	Total sales		480,862			2,038,800			409,134			1,987,269				+17.5%			+2.6%

	Operating profit		63,052			240,000			72,087			293,322				-12.5%			-18.2%
	% of sales		13.1%			11.8%			17.6%			14.8%				-			-

Consumer
	External customers		289,368			1,375,700			289,729			1,389,622				-0.1%			-1.0%
	Intersegment		253			2,000			558			1,705				-54.7%			+17.3%

	Total sales		289,621			1,377,700			290,287			1,391,327				-0.2%			-1.0%

	Operating profit		39,909			215,000			47,333			238,065				-15.7%			-9.7%
	% of sales		13.8%			15.6%			16.3%			17.1%				-			-

Industry and Others
	External customers		70,772			328,300			60,281			338,334				+17.4%			-3.0%
	Intersegment		21,164			63,500			22,047			94,624				-4.0%			-32.9%

	Total sales		91,936			391,800			82,328			432,958				+11.7%			-9.5%

	Operating profit		6,603			16,000			(2,955	)		(9,831	)			-			-
	% of sales		7.2%			4.1%			-3.6%			-2.3%				-			-

Corporate and Eliminations
	External customers		-			-			-			-				-			-
	Intersegment		(23,228	)		(78,300	)		(26,223	)		(104,653	)			-			-

	Total sales		(23,228	)		(78,300	)		(26,223	)		(104,653	)			-			-

	Operating profit		(27,062	)		(136,000	)		(29,622	)		(134,004	)			-			-

Consolidated
	External customers		839,191			3,730,000			755,526			3,706,901				+11.1%			+0.6%
	Intersegment		-			-			-			-				-			-

	Total sales		839,191			3,730,000			755,526			3,706,901				+11.1%			+0.6%

	Operating profit		82,502			335,000			86,843			387,552				-5.0%			-13.6%
	% of sales		9.8%			9.0%			11.5%			10.5%				-			-

														(P)=Projection

3. OTHER INCOME / DEDUCTIONS															(Millions of yen)
		2011						2010							Change year over year
		1st quarter			Year			1st quarter			Year				1st quarter			Year
		1st quarter			(P)			1st quarter			Year				1st quarter			Year

	Interest and dividend, net		1,198			4,900			935			4,091				+263			+809
	Forex gain / loss		2,893			(2,200	)		2,746			3,089				+147			(5,289	)
	Equity earnings / loss of affiliated companies		(2,878	)		(2,200	)		(3,181	)		10,471				+303			(12,671	)
	Other, net		(1,683	)		(5,500	)		1,509			(12,340	)			(3,192	)		+6,840

	Total		(470	)		(5,000	)		2,009			5,311				(2,479	)		(10,311	)

														(P)=Projection

- S2 -

Canon Inc.

4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT



		2011						2010
		1st quarter			Year			1st quarter			Year
		1st quarter			(P)			1st quarter			Year

Office

	Monochrome copiers		15	%		14	%		18	%		15	%

	Color copiers		17	%		16	%		20	%		17	%

	Other printing devices		48	%		49	%		54	%		50	%

	Others		20	%		21	%		8	%		18	%



Consumer

	Cameras		69	%		69	%		67	%		70	%

	Inkjet printers		26	%		26	%		27	%		24	%

	Others		5	%		5	%		6	%		6	%



Industry and Others

	Lithography equipment		20	%		18	%		9	%		23	%

	Others		80	%		82	%		91	%		77	%


											(P)=Projection

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

			2011
		1st quarter			Year(P)

Office

	Japan		-4.7	%		-

	Overseas		+35.6	%		-

	Total		+25.4	%		+3.2	%


Consumer

	Japan		-16.3	%		-

	Overseas		+12.3	%		-

	Total		+7.6	%		-0.7	%


Industry and Others

	Japan		+9.8	%		-

	Overseas		+28.2	%		-

	Total		+13.8	%		-9.2	%

Total

	Japan		-5.7	%		-2.0	%

	Overseas		+25.5	%		+1.8	%

	Americas		+15.4	%		-2.4	%

	Europe		+32.7	%		+2.0	%

	Asia and Oceania		+28.2	%		+6.7	%

	Total		+18.6	%		+1.1	%

					(P)=Projection

- S3 -

Canon Inc.

6. PROFITABILITY


	2011						2010
	1st quarter			Year (P)			1st quarter			Year

ROE *1		8.4	%		8.1	%		8.5	%		9.2	%

ROA *2		5.6	%		5.4	%		5.8	%		6.3	%


*1 Return on Equity ; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Stockholders’ Equity		(P)=Projection

*2 Return on Assets ; Based on Net Income attributable to Canon Inc.

7. IMPACT OF FOREIGN EXCHANGE RATES


(1) Exchange rates		(Yen)


	2011						2010
	1st quarter		2nd-4th quarter (P)		Year (P)		1st quarter		Year

Yen/US$		82.28		85.00		84.36		90.63		87.40
Yen/Euro		112.86		120.00		118.28		125.07		114.97

(P)=Projection



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


	2011
	1st quarter			Year (P)

US$		(27.6	)		(40.0	)
Euro		(19.4	)		+29.8
Other currencies		(3.0	)		+0.9

Total		(50.0	)		(9.3	)

(P)=Projection


(3) Impact of foreign exchange rates per yen		(Billions of yen)


			2011
		2nd-4th quarter (P)

On sales
	US$			13.3
	Euro			7.3

On operating profit
	US$			6.3
	Euro			3.9

(P)=Projection



8. STATEMENTS OF CASH FLOWS		(Millions of yen)


	2011						2010
	1st quarter			Year (P)			1st quarter			Year

Net cash provided by operating activities		71,930			470,000			161,654			744,413

Net cash used in investing activities		(46,516	)		(400,000	)		(111,105	)		(342,133	)

Free cash flow		25,414			70,000			50,549			402,280

Net cash used in financing activities		(73,857	)		(143,500	)		(124,267	)		(279,897	)

Effect of exchange rate changes on cash and cash equivalents		24,479			32,900			(5,775	)		(76,838	)

Net change in cash and cash equivalents		(23,964	)		(40,600	)		(79,493	)		45,545

Cash and cash equivalents at end of period		816,615			800,000			715,541			840,579

(P)=Projection

- S4 -

Canon Inc.


9. R&D EXPENDITURE		(Millions of yen)

		2011				2010

		1st quarter		Year (P)		1st quarter			Year

	Office		23,997		-		18,299			96,156
	Consumer		18,835		-		19,952			82,843
	Industry and Others		5,080		-		4,524			21,062
	Corporate and Eliminations		22,183		-		28,158			115,756

	Total		70,095		330,000		70,933			315,817

	% of sales		8.4%		8.8%		9.4%			8.5%

	(P)=Projection

10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION

		(Millions of yen)


		2011				2010

		1st quarter		Year (P)		1st quarter			Year

	Increase in PP&E		43,694		260,000		38,572			158,976
	Depreciation and amortization		61,728		300,000		60,253			276,193

	(P)=Projection

11. INVENTORIES

	(1) Inventories	(Millions of yen)


		2011		2010		Difference

		Mar.31		Dec.31

	Office		198,281		186,817		+11,464
	Consumer		132,877		107,261		+25,616
	Industry and Others		104,763		90,699		+14,064

	Total		435,921		384,777		+51,144


	(2) Inventories/Sales*	(Days)


		2011		2010		Difference

		Mar.31		Dec.31

	Office		35		32		+3
	Consumer		35		27		+8
	Industry and Others		109		88		+21

	Total		42		35		+7

	*Index based on the previous six months sales.

12. DEBT RATIO


		2011		2010		Difference

		Mar.31		Dec.31

	Total debt / Total assets		0.5%		0.3%		+0.2%


13. OVERSEAS PRODUCTION RATIO


		2011		2010

		1st quarter		Year

	Overseas production ratio		53%		49%


14. NUMBER OF EMPLOYEES


		2011		2010		Difference

		Mar.31		Dec.31

	Japan		70,808		71,954		(1,146	)
	Overseas		125,266		125,432		(166	)

	Total		196,074		197,386		(1,312	)

- S5 -