Form 6-K CANON INC For: Jul 27

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of ….		July		……………………………………………… ,		2016

 

		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-....................

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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.

 

 

Date….		July 27, 2016						By ……/s/…………… Eiji Shimizu ………
								(Signature)*
								Eiji Shimizu                            General Manager                            Consolidated Accounting Div.                            Canon Inc.

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

The following materials are included.

 

1.	CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND THE FIRST HALF ENDED JUNE 30, 2016

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CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND

THE FIRST HALF ENDED JUNE 30, 2016

July 26, 2016

CONSOLIDATED RESULTS FOR THE SECOND QUARTER

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

 

			Actual
		Three months     ended     June 30, 2016				Three months ended June 30, 2015				Change(%)								Three months     ended     June 30, 2016
Net sales		¥	860,246			¥	974,406				-				11.7			$	8,351,903
Operating profit			68,596				104,712				-				34.5				665,981
Income before income taxes			80,992				103,235				-				21.5				786,330
Net income attributable                          to Canon Inc.		¥	53,448			¥	68,195				-				21.6			$	518,913
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	48.94			¥	62.45				-				21.6			$	0.48
- Diluted			48.94				62.44				-				21.6				0.48
CONSOLIDATED RESULTS FOR THE FIRST HALF
							(Millions of yen, thousands of U.S. dollars, except per share amounts)
			Actual																				Projected
		Six months     ended     June 30, 2016				Six months ended June 30, 2015				Change(%)								Six months ended June 30, 2016				Year ending December 31, 2016				Change(%)
Net sales		¥	1,657,476			¥	1,831,851				-				9.5			$	16,092,000			¥	3,520,000				-				7.4
Operating profit			108,683				170,909				-				36.4				1,055,175				265,000				-				25.4
Income before income taxes			126,753				164,516				-				23.0				1,230,612				280,000				-				19.4
Net income attributable                          to Canon Inc.		¥	81,439			¥	102,125				-				20.3			$	790,670			¥	180,000				-				18.3
Net income attributable to Canon Inc. stockholders per share:
- Basic		¥	74.57			¥	93.52				-				20.3			$	0.72			¥	164.82				-				18.3
- Diluted			74.57				93.52				-				20.3				0.72				-								-
		Actual
		As of         June 30, 2016				As of December 31, 2015				Change(%)								As of         June 30, 2016
Total assets		¥	4,614,823			¥	4,427,773				+				4.2			$	44,804,107
Canon Inc. stockholders’ equity		¥	2,703,453			¥	2,966,415				-				8.9			$	26,247,117

 

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 JPY103=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of June 30, 2016, solely for the convenience of the reader.

 

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

 

- 1 -

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I. Operating Results and Financial Conditions

2016 Second Quarter in Review

Looking back at the global economy in the second quarter of 2016, the U.S. economy continued recovering smoothly as consumer spending and employment conditions improved. In Europe, the economy recovered moderately centered on Germany. In contrast, the Chinese economy continued its deceleration and the economies of emerging countries, including those of Southeast Asia and Russia, remained stagnant owing to the depreciation of local currencies. In Japan, corporate capital investments showed signs of recovery and employment conditions continued to improve. As a result, the global economy overall continued to realize moderate growth.

As for the markets in which Canon operates amid these conditions, demand for office multifunction devices (MFDs) remained at around the same level as for the previous year, while the market for laser printers shrunk mainly in emerging countries. As for cameras, although demand for interchangeable-lens digital cameras continued to gradually recover in developed countries, sales volumes of digital compact cameras declined in all regions due to the increasing popularity of smartphones. Additionally, demand for inkjet printers continued to decline in all regions. Within the Industry and Others sector, however, demand for lithography equipment used in the production of flat panel displays (FPDs) and manufacturing equipment for organic LED (OLED) displays enjoyed strong growth thanks to active capital investment by panel manufacturers.

The average value of the yen during the second quarter was ¥108.08 against the U.S. dollar, a year-on-year appreciation of approximately ¥13, and ¥121.94 against the euro, a year-on-year appreciation of approximately ¥13, which had a negative impact on net sales of ¥75.8 billion and on operating profit of ¥30.2 billion. As for the first half of the year, the average value of the yen was ¥111.28 against the U.S. dollar, a year-on-year appreciation of approximately ¥9, and ¥124.33 against the euro, a year-on-year appreciation of approximately ¥10, which had a negative impact on net sales of ¥106.8 billion and on operating profit of ¥43.5 billion.

During the second quarter, although office MFDs enjoyed solid demand, mainly for color models, total sales volume of laser printers declined due to the contraction of the market. Demand for interchangeable-lens digital cameras remained firm in the U.S. and Western European nations with unit sales remaining essentially unchanged from the same period of the previous year. As for digital compact cameras, unit sales declined in all regions compared with the previous year. Looking at inkjet printers, despite the shrinking market, sales volume remained at approximately the same level as for the previous year thanks to such factors as expanded sales of models equipped with large-capacity ink tanks for emerging countries. Also, sales of industrial equipment increased, particularly systems used in the production of FPDs and OLED displays. Consequently, along with the negative impact of the appreciation of the yen, second-quarter net sales decreased 11.7% year on year to ¥860.2 billion. Net sales for the six months ended June 30, 2016 totaled ¥1,657.5 billion, a year-on-year decrease of 9.5%. The gross profit ratio decreased by 1.4 points year on year to 50.3% due to the negative effect of the yen’s appreciation. Despite a reduction in operating expenses of 8.8% year on year thanks to Group-wide efforts to reduce spending, second-quarter operating profit decreased by 34.5% to ¥68.6 billion. Other income (deductions) increased by ¥13.9 billion due to foreign currency exchange gains while income before income taxes decreased by 21.5% year on year to ¥81.0 billion and net income attributable to Canon Inc. decreased by 21.6% to ¥53.4 billion. Operating profit for the first half of the year decreased by 36.4% to ¥108.7 billion while income before income taxes decreased by 23.0% to ¥126.8 billion and first-half net income attributable to Canon Inc. decreased by 20.3% to ¥81.4 billion.

Basic net income attributable to Canon Inc. shareholders per share was ¥48.94 for the second quarter, a year-on-year decrease of ¥13.51, and ¥74.57 for the first half, a year-on-year decrease of ¥18.95.

 

- 2 -

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Results by Segment

Looking at Canon’s second-quarter performance by business unit, beginning with the Office Business Unit, unit sales for office MFDs overall increased from the same period of the previous year thanks to strong sales of color models led by small-office/home-office color A3 (12”x18”) imageRUNNER ADVANCE C3300-series models that were launched in the previous year, and the imagePRESS C10000VP series, which targets the production market. Among high-speed continuous-feed printers and wide-format printers, the Océ-produced VarioPrint i300, a high-speed sheet-fed color inkjet press, has been steadily receiving orders. As for laser printers, although sales continued to decrease significantly from the first quarter of 2016 due to the impact of economic stagnation in emerging countries, in order to ensure profitability, Canon shifted its sales strategy from a focus on expanding sales volume of low-end models to expanding sales of high-added-value models mainly in developed countries. These factors, coupled with the negative effect of unfavorable currency exchange rates, resulted in total sales for the business unit of ¥456.4 billion, a year-on-year decrease of 15.0%, while operating profit totaled ¥47.6 billion, a year-on-year decrease of 40.0%. Sales for the combined first six months of the year totaled ¥910.7 billion, a year-on-year decrease of 14.6%, while operating profit totaled ¥92.3 billion, a year-on-year decline of 38.9%.

Within the Imaging System Business Unit, unit sales of interchangeable-lens digital cameras remained at around the same level as the previous year owing to healthy demand for the professional-model EOS-1D X Mark II and advanced-amateur-model EOS 80D digital SLR cameras, which were launched this year, and an increase in sales volume in Japan and other Asian markets of the EOS M3 and M10 compact-system cameras, which were released the previous year. As for digital compact cameras, although sales volume declined amid the ongoing contraction of the market, high-added-value models that deliver high image quality, such as PowerShot G-series cameras, enjoyed solid demand. As for inkjet printers, unit sales remained at approximately the same level thanks to strong demand for models equipped with large-capacity ink tanks targeting emerging countries, which were launched in the previous year, and for the new imagePROGRAF PRO-1000 professional-model A2 photo printer. As a result of these factors, along with the negative effect of unfavorable currency exchange rates, sales for the business unit decreased by 13.5% to ¥287.5 billion, while operating profit totaled ¥43.2 billion, a year-on-year decline of 14.4%. Sales for the combined first six months of the year totaled ¥522.4 billion, a year-on-year decrease of 12.2%, while operating profit totaled ¥62.8 billion, declining 21.1% year on year.

In the Industry and Others Business Unit, although unit sales of semiconductor lithography equipment decreased from the same period of the previous year, orders continued to hold firm. As for FPD lithography equipment, unit sales increased amid sales growth for systems used in the fabrication of large-size panels. Also, sales of manufacturing equipment for OLED displays, which is sold by Canon Tokki, increased amid brisk capital investment by panel manufacturers. As for network cameras, Axis, which was newly consolidated in the second quarter of the previous year, posted healthy sales growth. Consequently, sales for the business unit increased 5.8% year on year to ¥138.0 billion while operating profit increased by ¥3.6 billion to ¥0.5 billion. Sales for the combined first six months of the year totaled ¥268.1 billion, a year-on-year increase of 22.1%. As for operating profit, despite an improvement of ¥10.8 billion compared with the previous year, the business unit was in the red by ¥0.1 billion owing to upfront investment in next-generation technologies and new businesses.

Cash Flow

During the first half of 2016, cash flow from operating activities totaled ¥241.2 billion, an increase of ¥16.5 billion compared with the previous year owing to improvements in working capital, such as trade receivables. Cash flow from investing activities increased ¥470.1 billion year on year to ¥776.1 billion due to the payment for the right to acquire all of the ordinary shares of Toshiba Medical Systems Corporation (TMSC). Accordingly, free cash flow totaled negative ¥534.9 billion, a decrease of ¥453.6 billion compared with the corresponding year-ago period.

Cash flow from financing activities recorded proceeds of ¥519.9 billion, mainly owing to a provisional bank borrowing related to TMSC.

Owing to these factors, as well as the negative impact from foreign currency translation adjustments, cash and cash equivalents decreased by ¥64.4 billion to ¥569.2 billion from the end of the previous year.

 

- 3 -

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Outlook

As for the outlook in the third quarter onward, the U.S. economy is expected to continue to lead the recovery of the global economy while the outlook for the Japanese economy indicates a recovery trend supported by improved employment conditions. Looking at China, sluggish capital investment and other factors are expected to result in a continuation of the gradual economic slowdown. As for emerging economies, such as those of Southeast Asia, Brazil and Russia, despite signs of recovery that were mainly driven by domestic demand, the outlook indicates the need for more time before a true recovery takes hold. With regard to the European economy, the victory of the “Vote Leave” campaign in the U.K.’s EU referendum has led to growing concern over an economic slowdown in the region and, consequently, rising uncertainty about the degree of recovery that can be expected for the global economy.

In the businesses in which Canon is involved, demand for office MFDs is projected to expand moderately, mainly for color models, while demand in the laser printer market is expected to remain low for the time being. Despite the expected modest recovery in demand for interchangeable-lens digital cameras centered mainly on developed countries, projections for digital compact cameras indicate continued market contraction in all regions, centered mainly on low-priced models. With regard to inkjet printers, demand is expected to continue to decline. As for industrial equipment, customers are expected to continue making capital outlays for semiconductor lithography equipment, FPD lithography equipment and OLED display manufacturing equipment, driven by increased demand for communication devices supporting the development of the IoT (Internet of Things) and for OLED displays. The network camera market is also expected to grow in response to increasing global safety and security needs.

With regard to currency exchange rates for the third quarter onward, on which Canon’s performance outlook is based, Canon anticipates exchange rates of ¥105 to the U.S. dollar and ¥115 to the euro, representing appreciations of approximately ¥13 against the U.S. dollar and approximately ¥15 against the euro compared with the annual average rates of the previous year.

Upon taking into consideration the prolonged economic slowdown in developing countries, along with the negative impact of the revised foreign exchange rate assumptions on sales and gross profit, Canon projects full-year consolidated net sales in 2016 of ¥3,520.0 billion, a year-on-year decrease of 7.4%; operating profit of ¥265.0 billion, a year-on-year decrease of 25.4%; income before income taxes of ¥280.0 billion, a year-on-year decrease of 19.4%; and net income attributable to Canon Inc. of ¥180.0 billion, a year-on-year decrease of 18.3%.

The impact of the acquisition of TMSC has not been included in the Consolidated Outlook for the reason that the clearance process by necessary competition regulatory authorities is still ongoing in some countries and regions outside Japan.

Consolidated Outlook

 

Fiscal year		Millions of yen
		Year ending December 31, 2016								Change				Year ended December 31, 2015				Change (%)
		Previous Outlook (A)				Revised Outlook (B)				(B - A)				Results (C)				(B - C) / C
Net sales			3,600,000				3,520,000				(80,000)				3,800,271				-7.4%
Operating profit			300,000				265,000				(35,000)				355,210				-25.4%
Income before income taxes			310,000				280,000				(30,000)				347,438				-19.4%
Net income attributable to Canon Inc.			200,000				180,000				(20,000)				220,209				-18.3%

 

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Basic Policy Regarding Profit Distribution

Canon is being more proactive in returning profits to shareholders, mainly in the form of a dividend, taking into consideration medium-term profit forecasts along with planned future investments, cash flow and other factors.

Canon Inc. plans to distribute an interim dividend of ¥75.00 per share for the fiscal year 2016, half the amount of the annual dividend paid out in fiscal 2015, to provide a stable return to shareholders. The year-end dividend, however, has yet to be decided.

 

 

- 5 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

II. Financial Statements

1. CONSOLIDATED BALANCE SHEETS

 

 

- 6 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME AND

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

- 7 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

- 8 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES

 

 

 

- 9 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Millions of yen
		Six months ended     June 30, 2016				Six months ended     June 30, 2015
Cash flows from operating activities:
Consolidated net income			85,296				105,732
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			122,372				131,977
Loss on disposal of fixed assets			3,163				2,396
Deferred income taxes			(2,982)				(1,740)
Decrease in trade receivables			67,738				60,974
Increase in inventories			(31,050)				(56,480)
Increase in trade payables			26,305				16,687
Decrease in accrued income taxes			(12,178)				(7,177)
Decrease in accrued expenses			(24,148)				(28,223)
Increase in accrued (prepaid) pension and severance cost			3,824				3,690
Other, net			2,867				(3,124)
Net cash provided by operating activities			241,207				224,712
Cash flows from investing activities:
Purchases of fixed assets			(100,700)				(117,501)
Proceeds from sale of fixed assets			2,095				2,103
Purchases of available-for-sale securities			(8)				(98)
Proceeds from sale and maturity of available-for-sale securities			407				183
(Increase) decrease in time deposits, net			(4,057)				51,936
Acquisitions of businesses, net of cash acquired			(9,226)				(241,386)
Purchases of other investments			(665,676)				(965)
Other, net			1,073				(278)
Net cash used in investing activities			(776,092)				(306,006)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			238				435
Repayments of long-term debt			(473)				(712)
Increase in short-term loans, net			610,000				-
Purchases of noncontrolling interests			(4,993)				(28,750)
Dividends paid			(81,905)				(92,806)
Repurchases and reissuance of treasury stock			(6)				803
Other, net			(2,978)				(2,535)
Net cash provided by (used in) financing activities			519,883				(123,565)
Effect of exchange rate changes on cash and cash equivalents			(49,431)				(12,756)
Net change in cash and cash equivalents			(64,433)				(217,615)
Cash and cash equivalents at beginning of year			633,613				844,580
Cash and cash equivalents at end of year			569,180				626,965

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. NOTE FOR GOING CONCERN ASSUMPTION

      Not applicable.

6. SEGMENT INFORMATION

  SEGMENT INFORMATION BY BUSINESS UNIT

 

 

- 11 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

 

- 12 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

Discontinue disclosure of “SEGMENT INFORMATION BY GEOGRAPHIC AREA”

In addition to the disclosure requirements under Topic 280, Canon has disclosed the segment information, “SEGMENT INFORMATION BY GEOGRAPHIC AREA”, which is based on the location of Canon Inc. and its subsidiaries. Results from a survey of a representative sample of financial statement users, however, indicated that they consider the latter to be less useful than sales information based on the location where the product is shipped to customers, which is disclosed separately. For this reason, Canon decided to discontinue the disclosure of geographical segment information based on the location of Canon Inc. and its subsidiaries from this year, in order to avoid the risk of confusing users due to disclosing two similar types of geographical information and make disclosure more concise and transparent. Sales information based on the location where the products is shipped to customers is available on page 9 “3. DETAILS OF SALES in II. Financial Statements”.

7. SIGNIFICANT CHANGES IN CANON INC. SHAREHOLDERS’ EQUITY

     None.

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1)  GROUP POSITION

 

1.

Number of Group Companies

 

		June 30, 2016		December 31, 2015		Change
Subsidiaries		327		317		10
Affiliates		5		5		-
Total		332		322		10

 

2.

Change in Group Entities

 

Subsidiaries
Addition:		13 companies
Removal:		3 companies

 

3.

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.

Recently Issued Accounting Guidance

In November 2015, the Financial Accounting Standards Board issued an amendment which requires deferred tax assets and liabilities be classified as noncurrent in the consolidated balance sheets. Canon early adopted this amended guidance from the quarter beginning January 1, 2016, on a prospective basis, and prior periods were not retrospectively adjusted. Canon’s current deferred tax assets were ¥55,108 million and current deferred tax liabilities were ¥2,682 million as of December 31, 2015.

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

9. NOTE FOR NON-GAAP FINANCIAL MEASURES

We have reported our financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In addition, we have discussed our results using “Free cash flow” which is non-GAAP measure.

We believe this measure is beneficial to an investor’s understanding on Canon’s current liquidity and the alternatives of use in financing activities because it takes into consideration its operating and investing activities.

A reconciliation of this non-GAAP financial measure and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following table.

 

				Billions of yen
				Six months ended     June 30, 2016
		Net cash provided by operating activities			241.2
		Net cash used in investing activities			(776.1)
		Free cash flow			(534.9)

 

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Canon Inc.

July 26, 2016

CONSOLIDATED RESULTS FOR THE SECOND QUARTER

AND THE FIRST HALF ENDED JUNE 30, 2016

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

 

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.

 

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

				2016												2015																Change year over year
				2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year								2nd quarter				1st half				Year
Japan
		Office			96,434				190,538				-				96,594				191,754				379,277								-0.2%				-0.6%			-
		Imaging System			42,252				77,197				-				48,582				86,736				198,739								-13.0%				-11.0%			-
		Industry and Others			29,849				69,341				-				30,361				62,190				136,264								-1.7%				+11.5%			-
		Total			168,535				337,076				731,300				175,537				340,680				714,280								-4.0%				-1.1%			+2.4%
Overseas
		Office			359,424				718,960				-				439,688				873,027				1,728,969								-18.3%				-17.6%			-
		Imaging System			245,051				444,673				-				283,626				507,821				1,063,928								-13.6%				-12.4%			-
		Industry and Others			87,236				156,767				-				75,555				110,323				293,094								+15.5%				+42.1%			-
		Total			691,711				1,320,400				2,788,700				798,869				1,491,171				3,085,991								-13.4%				-11.5%			-9.6%
		Americas
		Office			145,589				292,512				-				175,131				351,959				713,197								-16.9%				-16.9%			-
		Imaging System			80,936				139,332				-				97,489				161,469				352,946								-17.0%				-13.7%			-
		Industry and Others			20,547				39,476				-				20,204				28,371				78,279								+1.7%				+39.1%			-
		Total			247,072				471,320				1,003,700				292,824				541,799				1,144,422								-15.6%				-13.0%			-12.3%
		Europe
		Office			141,234				280,398				-				176,078				343,581				680,619								-19.8%				-18.4%			-
		Imaging System			79,444				145,805				-				86,026				157,074				335,312								-7.7%				-7.2%			-
		Industry and Others			16,096				30,456				-				15,093				22,501				58,435								+6.6%				+35.4%			-
		Total			236,774				456,659				953,700				277,197				523,156				1,074,366								-14.6%				-12.7%			-11.2%
		Asia and Oceania
		Office			72,601				146,050				-				88,479				177,487				335,153								-17.9%				-17.7%			-
		Imaging System			84,671				159,536				-				100,111				189,278				375,670								-15.4%				-15.7%			-
		Industry and Others			50,593				86,835				-				40,258				59,451				156,380								+25.7%				+46.1%			-
		Total			207,865				392,421				831,300				228,848				426,216				867,203								-9.2%				-7.9%			-4.1%
Intersegment
		Office			538				1,250				-				672				1,304				2,570								-19.9%				-4.1%			-
		Imaging System			240				489				-				326				635				1,168								-26.4%				-23.0%			-
		Industry and Others			20,886				42,034				-				24,451				47,157				95,293								-14.6%				-10.9%			-
		Eliminations			(21,664)				(43,773)				-				(25,449)				(49,096)				(99,031)								-				-			-
		Total			0				0				0				0				0				0								-				-			-
Total
		Office			456,396				910,748				1,880,100				536,954				1,066,085				2,110,816								-15.0%				-14.6%			-10.9%
		Imaging System			287,543				522,359				1,115,000				332,534				595,192				1,263,835								-13.5%				-12.2%			-11.8%
		Industry and Others			137,971				268,142				612,400				130,367				219,670				524,651								+5.8%				+22.1%			+16.7%
		Eliminations			(21,664)				(43,773)				(87,500)				(25,449)				(49,096)				(99,031)								-				-			-
		Total			860,246				1,657,476				3,520,000				974,406				1,831,851				3,800,271								-11.7%				-9.5%			-7.4%

(P)=Projection

 

- S1 -

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Canon Inc.

 

2. SEGMENT INFORMATION BY BUSINESS UNIT

(Millions of yen)

				2016												2015																Change year over year
					2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year								2nd quarter				1st half			Year
Office
		External customers			455,858				909,498				1,877,300				536,282				1,064,781				2,108,246								-15.0%				-14.6%			-11.0%
		Intersegment			538				1,250				2,800				672				1,304				2,570								-19.9%				-4.1%			+8.9%
		Total sales			456,396				910,748				1,880,100				536,954				1,066,085				2,110,816								-15.0%				-14.6%			-10.9%
		Operating profit			47,605				92,309				211,900				79,383				151,099				290,586								-40.0%				-38.9%			-27.1%
		% of sales			10.4%				10.1%				11.3%				14.8%				14.2%				13.8%								-				-			-
Imaging System
		External customers			287,303				521,870				1,113,800				332,208				594,557				1,262,667								-13.5%				-12.2%			-11.8%
		Intersegment			240				489				1,200				326				635				1,168								-26.4%				-23.0%			+2.7%
		Total sales			287,543				522,359				1,115,000				332,534				595,192				1,263,835								-13.5%				-12.2%			-11.8%
		Operating profit			43,223				62,841				140,000				50,489				79,607				183,439								-14.4%				-21.1%			-23.7%
		% of sales			15.0%				12.0%				12.6%				15.2%				13.4%				14.5%								-				-			-
Industry and Others
		External customers			117,085				226,108				528,900				105,916				172,513				429,358								+10.5%				+31.1%			+23.2%
		Intersegment			20,886				42,034				83,500				24,451				47,157				95,293								-14.6%				-10.9%			-12.4%
		Total sales			137,971				268,142				612,400				130,367				219,670				524,651								+5.8%				+22.1%			+16.7%
		Operating profit			499				(123	)			6,900				(3,077	)			(10,916	)			(13,079	)							-				-			-
		% of sales			0.4%				-0.0%				1.1%				-2.4%				-5.0%				-2.5%								-				-			-
Corporate and Eliminations
		External customers			-				-				-				-				-				-								-				-			-
		Intersegment			(21,664	)			(43,773	)			(87,500	)			(25,449	)			(49,096	)			(99,031	)							-				-			-
		Total sales			(21,664	)			(43,773	)			(87,500	)			(25,449	)			(49,096	)			(99,031	)							-				-			-
		Operating profit			(22,731	)			(46,344	)			(93,800	)			(22,083	)			(48,881	)			(105,736	)							-				-			-
Consolidated
		External customers			860,246				1,657,476				3,520,000				974,406				1,831,851				3,800,271								-11.7%				-9.5%			-7.4%
		Intersegment			-				-				-				-				-				-								-				-			-
		Total sales			860,246				1,657,476				3,520,000				974,406				1,831,851				3,800,271								-11.7%				-9.5%			-7.4%
		Operating profit			68,596				108,683				265,000				104,712				170,909				355,210								-34.5%				-36.4%			-25.4%
		% of sales			8.0%				6.6%				7.5%				10.7%				9.3%				9.3%								-				-			-
																																	(P)=Projection
3. OTHER INCOME / DEDUCTIONS																																				(Millions of yen)
					2016												2015																Change year over year
				2nd quarter				1st half				Year (P)				2nd quarter				1st half				Year								2nd quarter				1st half				Year
		Interest and dividend, net			1,084				2,011				1,700				1,426				2,912				4,917								(342	)			(901	)		(3,217)
		Forex gain (loss)			7,622				10,680				7,400				(7,600	)			(15,526	)			(22,149	)							+15,222				+26,206			+29,549
		Equity earnings of affiliated companies			242				511				800				6				307				447								+236				+204			+353
		Other, net			3,448				4,868				5,100				4,691				5,914				9,013								(1,243	)			(1,046	)		(3,913)
		Total			12,396				18,070				15,000				(1,477	)			(6,393	)			(7,772	)							+13,873				+24,463			+22,772
																																	(P)=Projection

 

- S2 -

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Canon Inc.

 

4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT
				2016						2015
				2nd quarter		1st half		Year (P)		2nd quarter		1st half		Year
Office
		Monochrome copiers		17%		16%		16%		16%		15%		16%
		Color copiers		22%		21%		22%		21%		20%		20%
		Printers		36%		37%		37%		41%		42%		41%
		Others		25%		26%		25%		22%		23%		23%
Imaging System
		Cameras		63%		61%		60%		66%		63%		62%
		Inkjet printers		28%		30%		31%		25%		28%		29%
		Others		9%		9%		9%		9%		9%		9%
Industry and Others
		Lithography equipment		20%		23%		22%		23%		21%		24%
		Others		80%		77%		78%		77%		79%		76%
														(P)=Projection
5. SALES GROWTH IN LOCAL CURRENCY (Year over year)
				2016
				2nd quarter		1st half		Year (P)
Office
		Japan		-0.2%		-0.6%		-
		Overseas		-8.4%		-10.7%		-
		Total		-6.9%		-8.9%		-2.3%
Imaging System
		Japan		-13.0%		-11.0%		-
		Overseas		-2.9%		-4.2%		-
		Total		-4.4%		-5.2%		-2.3%
Industry and Others
		Japan		-1.7%		+11.5%		-
		Overseas		+23.1%		+48.5%		-
		Total		+10.2%		+25.3%		+21.8%
Total
		Japan		-4.0%		-1.1%		+2.4%
		Overseas		-3.4%		-4.1%		+1.0%
		Americas		-4.9%		-5.7%		-1.4%
		Europe		-5.9%		-6.0%		-0.2%
		Asia and Oceania		+1.4%		+0.0%		+5.8%
		Total		-3.5%		-3.6%		+1.3%
								(P)=Projection

 

- S3 -

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														Canon Inc.
6. PROFITABILITY
						2016				2015
						1st half		Year (P)		1st half		Year
ROE *1						5.7%		6.3%		6.8%		7.4%
ROA *2						3.6%		4.0%		4.5%		5.0%
*1 Return on Equity ; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Shareholders’ 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)
						2016								2015
						2nd quarter		1st half		2nd half (P)		Year (P)		2nd quarter		1st half		Year
Yen/US$						108.08		111.28		105.00		107.96		121.47		120.39		121.13
Yen/Euro						121.94		124.33		115.00		119.39		134.47		134.19		134.20
																		(P)=Projection
(2) Impact of foreign exchange rates on sales (Year over year)										(Billions of yen)
						2016
						2nd quarter		1st half		Year (P)
US$						(41.7)		(55.9)		(157.8)
Euro						(20.9)		(31.0)		(99.5)
Other currencies						(13.2)		(19.9)		(51.6)
		______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________     Total				(75.8)		(106.8)		(308.9)
										(P)=Projection
(3) Impact of foreign exchange rates per yen						(Billions of yen)
						2016
						2nd half (P)
On sales
		US$				7.2
		Euro				3.6
On operating profit
		US$				2.6
		Euro				1.5
						(P)=Projection
8. STATEMENTS OF CASH FLOWS														(Millions of yen)
								2016						2015
						2nd quarter		1st half		Year (P)		2nd quarter		1st half		Year
Net cash provided by operating activities						126,585		241,207		477,000		125,260		224,712		474,724
Net cash used in investing activities						(55,863)		(776,092)		(892,000)		(272,285)		(306,006)		(453,619)
Free cash flow						70,722		(534,885)		(415,000)		(147,025)		(81,294)		21,105
Net cash used in financing activities						(50,835)		519,883		415,000		(28,962)		(123,565)		(210,202)
Effect of exchange rate changes on cash and cash equivalents						(31,661)		(49,431)		(43,600)		9,251		(12,756)		(21,870)
Net change in cash and cash equivalents						(11,774)		(64,433)		(43,600)		(166,736)		(217,615)		(210,967)
Cash and cash equivalents at end of period						569,180		569,180		590,000		626,965		626,965		633,613
																(P)=Projection

 

- S4 -

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Canon Inc.

 

9. R&D EXPENDITURE														(Millions of yen)
				2016						2015
				2nd quarter		1st half		Year (P)		2nd quarter		1st half		Year
		Office		23,987		49,956		-		27,246		54,618		105,298
		Imaging System		23,092		46,706		-		23,449		44,888		90,236
		Industry and Others		18,065		33,798		-		18,085		30,369		66,585
		Corporate and Eliminations		11,420		24,974		-		14,913		33,057		66,381
		Total		76,564		155,434		310,000		83,693		162,932		328,500
% of sales				8.9%		9.4%		8.8%		8.6%		8.9%		8.6%
														(P)=Projection
10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION														(Millions of yen)
				2016						2015
				2nd quarter		1st half		Year (P)		2nd quarter		1st half		Year
Increase in PP&E				40,526		90,990		195,000		58,829		104,031		195,120
Depreciation and amortization				62,162		122,372		255,000		67,561		131,977		273,327
														(P)=Projection
11. INVENTORIES
(1) Inventories								(Millions of yen)
				2016		2015		Difference
				Jun.30		Dec.31
		Office		211,026		225,327		(14,301)
		Imaging System		137,688		155,767		(18,079)
		Industry and Others		130,548		120,801		+9,747
		Total		479,262		501,895		(22,633)
(2) Inventories/Sales*								(Days)
				2016		2015		Difference
				Jun.30		Dec.31
		Office		42		39		+3
		Imaging System		48		43		+5
		Industry and Others		106		86		+20
		Total		53		47		+6
*Index based on the previous six months sales.
12. DEBT RATIO
				2016		2015		Difference
				Jun.30		Dec.31
Total debt / Total assets				13.2%		0.0%		+13.2%
13. OVERSEAS PRODUCTION RATIO
				2016		2015
				1st half		Year
Overseas production ratio				44%		48%
14. NUMBER OF EMPLOYEES
				2016		2015		Difference
				Jun.30		Dec.31
		Japan		68,509		68,325		+184
		Overseas		122,935		121,246		+1,689
		Total		191,444		189,571		+1,873

 

- S5 -