FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

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

the Securities Exchange Act of 1934

 

For the month of ….		January		…………………………………………… ,		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….		January 28, 2016						By ……/s/……… Shinichi Aoyama ………
								(Signature)*
								Shinichi Aoyama                  Deputy Senior General Manager                  Group Management Center                  Canon Inc.

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

The following materials are included.

 

1.	RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR ENDED DECEMBER 31, 2015

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RESULTS FOR THE FOURTH QUARTER

AND THE FISCAL YEAR ENDED DECEMBER 31, 2015

January 27, 2016

CONSOLIDATED RESULTS

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

 

							Actual																Projected
						Year ended December 31, 2015				Year ended December 31, 2014				Change(%)				Year ended December 31, 2015				Year ending December 31, 2016				Change(%)
Net sales						¥	3,800,271			¥	3,727,252			+	2.0			$	31,407,198			¥	3,850,000			+	1.3
Operating profit							355,210				363,489			-	2.3				2,935,620				360,000			+	1.3
Income before income taxes							347,438				383,239			-	9.3				2,871,388				360,000			+	3.6
Net income attributable                      to Canon Inc.						¥	220,209			¥	254,797			-	13.6			$	1,819,909			¥	230,000			+	4.4
Net income attributable to Canon Inc. shareholders per share:
- Basic						¥	201.65			¥	229.03			-	12.0			$	1.67			¥	210.61			+	4.4
- Diluted							201.65				229.03			-	12.0				1.67				-				-
						Actual
						As of December 31, 2015				As of December 31, 2014				Change(%)				As of December 31, 2015
Total assets						¥	4,427,773			¥	4,460,618			-	0.7			$	36,593,165
Canon Inc. shareholders’ equity						¥	2,966,415			¥	2,978,184			-	0.4			$	24,515,826
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 121= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2015, solely for the convenience of the reader.
NON-CONSOLIDATED RESULTS
(Millions of yen, thousands of U.S. dollars, except per share amounts)
						Actual
						Year ended December 31, 2015				Year ended December 31, 2014				Change(%)				Year ended December 31, 2015
Net sales						¥	2,091,139			¥	2,084,200			+	0.3			$	17,282,140
Operating profit							169,238				204,937			-	17.4				1,398,661
Ordinary profit							269,818				249,348			+	8.2				2,229,901
Net income						¥	211,963			¥	175,471			+	20.8			$	1,751,760
Net income per share:
- Basic						¥	194.10			¥	157.72			+	23.1			$	1.60
- Diluted							194.10				157.72			+	23.1				1.60
Dividend per share							150.00				150.00				-				1.24
						Actual
						As of December 31, 2015				As of December 31, 2014				Change(%)				As of December 31, 2015
Total assets						¥	2,437,924			¥	2,315,680			+	5.3			$	20,148,132
Net assets						¥	1,484,157			¥	1,447,322			+	2.5			$	12,265,760

 

Notes:		U.S. dollar amounts are translated from yen at the rate of JPY 121= U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2015, 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

2015 in Review

Looking back at the global economy in 2015, the U.S. economy continued to grow steadily as employment conditions and consumer spending progressively improved. In Europe, developed countries such as the U.K. led a moderate economic recovery. In contrast, China’s economy continued to decline, weighed down by excessive investments, and the economies of emerging countries, including those of Southeast Asia and India, slowed due to such factors as the recession in China and a decline in resource prices. As for the Japanese economy, improvements were seen in both corporate earnings and employment conditions during the year. Despite expectations at the beginning of 2015 that the global economy would realize a modest recovery led by the U.S. economy, during the second half, as the slowdown in China’s economy became evident, emerging economies also grew weaker. As a result, the global economy overall experienced its lowest level of growth since the financial crisis precipitated by Lehman Brothers’ bankruptcy in 2008.

As for the markets in which Canon operates amid these conditions, demand for office multifunction devices (MFDs) remained firm, mainly for color models. As for cameras, the interchangeable-lens digital camera market continued to face harsh conditions owing to currency depreciations in emerging countries and the slowdown in China. Likewise, demand for digital compact cameras also declined amid the shrinking market. Additionally, demand for inkjet printers decreased in emerging countries, mainly in Asia, due to the depreciations of emerging country currencies and the slowdown in China. In the industrial equipment market, ongoing strong investment by manufacturers led to healthy demand for semiconductor lithography systems for memory devices, image sensors and power semiconductor devices. Additionally, demand for lithography equipment used in the production of flat panel displays (FPDs) increased for large-size panels as device manufacturers boost capital investment for larger-size LCD panels that offer higher levels of resolution.

The average value of the yen during the year was ¥121.13 against the U.S. dollar, a year-on-year depreciation of approximately ¥15, and ¥134.20 against the euro, a year-on-year appreciation of approximately ¥6.

During 2015, sales of digital cameras and inkjet printers declined in the face of continued harsh conditions, mainly in China and emerging Asian countries. By contrast, sales of color-model office MFDs and color-model light-production printing systems increased steadily. Sales of semiconductor lithography equipment and FPD lithography equipment also largely exceeded those for the previous year thanks to favorable market conditions. Consequently, benefitting from the boost provided by the acquisition of Axis and the positive effect of favorable currency exchange rates, net sales for the year increased 2.0% year on year to ¥3,800.3 billion. The gross profit ratio for the year rose 1.0 point year on year to 50.9% thanks to ongoing cost-cutting activities and highly profitable new products. Operating expenses increased 5.4% year on year to ¥1,579.2 billion owing to such factors as the increase in foreign-currency-denominated operating expenses after conversion into yen due to the depreciation of the yen, along with the impact of the acquisition of Axis and an increase in R&D expenses related to new products. As a result, operating profit decreased by 2.3% to ¥355.2 billion. Other income (deductions) decreased by ¥27.5 billion due to foreign currency exchange losses, leading to a year-on-year decline in income before income taxes of 9.3% to ¥347.4 billion, and a decrease in net income attributable to Canon Inc. of 13.6% to ¥220.2 billion.

Basic net income attributable to Canon Inc. shareholders per share for the year was ¥201.65, a year-on-year decrease of ¥27.38.

 

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Results by Segment

Looking at Canon’s full-year performance by business unit, within the Office Business Unit, as for office MFDs, thanks to strong sales of color models led by new small-office/home-office color A3 (12”x18”) imageRUNNER ADVANCE C3300-series models and imagePRESS C800/700-series color digital presses targeting the light production market, unit sales of color models increased compared with the previous year, as did unit sales for the segment overall, including monochrome models, which had been facing decreasing demand. Among high-speed continuous-feed printers, the new Océ-produced VarioPrint i300, Canon’s first high-speed sheet-fed color inkjet press, gained favorable reviews. As for laser printers, total sales volume decreased due to declining demand in emerging countries. Those factors, coupled with the positive effect of favorable currency exchange rates, resulted in sales for the business unit totaling ¥2,110.8 billion, a year-on-year increase of 1.5%, while operating profit totaled ¥290.6 billion, a year-on-year decrease of 0.5%.

Within the Imaging System Business Unit, although total sales volume of interchangeable-lens digital cameras declined due to currency depreciations in emerging countries and the slowdown of China’s economy, there were positive signs of a recovery in sales in the U.S. and Japan. Additionally, sales have been strong for such models as the EOS 5DS and EOS 5DS R digital SLR cameras, which deliver the highest resolution of any model in the history of EOS cameras. As for digital compact cameras, while sales volume declined amid the ongoing contraction of the market, the ratio of more profitable high-added-value models increased owing to efforts to strengthen the lineup of PowerShot G-series models. As for inkjet printers, although Canon has been working to expand sales through the Company’s broad product lineup, ranging from home-use printers to MAXIFY-series business models, total sales volume declined due to the significant impact of shrinking markets, mainly in Asia. In contrast, sales of consumable supplies enjoyed solid demand. As a result, sales for the business unit totaled ¥1,263.8 billion, a year-on-year decrease of 5.9%, while operating profit totaled ¥183.4 billion, declining 5.7% year on year.

In the Industry and Others Business Unit, within the semiconductor lithography equipment segment, unit sales increased owing to strong capital investment in response to growing demand for memory devices used in mobile devices such as smartphones, and in cloud servers, along with increased demand for on-board automotive devices and for communication devices supporting the development of the IoT (Internet of Things). Unit sales of FPD lithography equipment also increased, particularly systems used in the fabrication of large-size panels. Consequently, along with the impact of the acquisition of Axis, which was consolidated in the second quarter, sales for the business unit increased 31.6% year on year to ¥524.7 billion. As for operating profit, although it improved by ¥8.7 billion compared with the previous year, the business unit was in the red by ¥13.1 billion due to upfront investment in next-generation technologies and new businesses.

Cash Flow

During 2015, cash flow from operating activities totaled ¥474.7 billion, a decrease of ¥109.2 billion compared with the previous year due to the decrease in profit along with the increase in working capital. Cash flow from investing activities increased ¥184.3 billion year on year to ¥453.6 billion, mainly due to the payment for the acquisition of Axis. Accordingly, free cash flow totaled ¥21.1 billion, a decrease of ¥293.5 billion compared with the previous year.

Cash flow from financing activities recorded an outlay of ¥210.2 billion, mainly arising from the dividend payout.

Owing to these factors, as well as the negative impact of foreign currency translation adjustments, cash and cash equivalents decreased by ¥211.0 billion to ¥633.6 billion from the end of the previous year.

 

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Non-consolidated Results

Non-consolidated net sales totaled ¥2,091.1 billion, a year-on-year increase of 0.3% while ordinary profit increased by 8.2% to ¥269.8 billion, and net income increased by 20.8% to ¥212.0 billion.

Outlook

As for the outlook in 2016, the U.S. and European economies are expected to grow moderately thanks to expanding domestic demand as employment conditions continue to improve. With regard to the Japanese economy, the outlook indicates a gradual recovery trend amid increased capital investment and wage growth supported by improved corporate earnings. Looking at China’s economy, the slowdown is expected to continue due to sluggish domestic demand and capital investment. Emerging economies, such as those of Southeast Asia, India, Brazil and Russia, are likely to face slowdowns owing to currency depreciations or declines in resource prices. Overall, the global economy is expected to face harsh economic conditions for some time.

In the businesses in which Canon is involved, although demand for color office MFDs and production printers is expected to continue growing, a recovery in sales of products that are largely sold in emerging markets, such as entry-class cameras and single-function laser printers, is expected to take time. Within the market for semiconductor lithography equipment, capital investment is expected to remain strong while forecasts for the FPD lithography equipment market also point to further future expansion. Also expected to grow is the network camera market, a market in which Axis, which became a consolidated subsidiary in 2015, is a major player.

With regard to currency exchange rates for the year, on which the Company’s performance outlook is based, taking into account the expectation of a strong U.S. dollar supported by continuous interest rates hikes in the future, Canon anticipates exchange rates of ¥120 to the U.S. dollar and ¥130 to the euro, representing appreciations of approximately ¥1 against the U.S. dollar and approximately ¥4 against the euro.

Taking these foreign exchange rate assumptions into consideration and the current economic forecast, Canon projects full-year consolidated net sales in 2016 of ¥3,850.0 billion, a year-on-year increase of 1.3%; operating profit of ¥360.0 billion, a year-on-year increase of 1.3%; income before income taxes of ¥360.0 billion, a year-on-year increase of 3.6%; and net income attributable to Canon Inc. of ¥230.0 billion, a year-on-year increase of 4.4%.

Basic Policy Regarding Profit Distribution and Dividends for the Current Fiscal Year

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

In 2015, the business environment remained challenging, characterized by, among other factors, economic slowdowns in China and emerging countries. Thanks, however, to efforts to boost product competitiveness and strengthen the Company’s financial position through a management focus on profitability and cash flow, Canon was able to generate ample cash reserves. Taking this into consideration while seeking to actively provide a stable return to shareholders, Canon has decided to distribute a full-year dividend of ¥150 per share, (interim dividend of ¥75 per share [already distributed] and year-end dividend of ¥75), which is the same as the previous year’s dividend.

 

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- 5 -

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II. Management Policy

(1) Basic Policy

Under the corporate philosophy of kyosei—living and working together for the common good—Canon’s basic management policy is to contribute to the prosperity and well-being of the world while endeavoring to become a truly excellent global corporation targeting continued growth and development.

(2) Management Goals

Based on this basic management policy, Canon launched the Excellent Global Corporation Plan in 1996 with the aim of improving corporate value, promoting management reform, raising product competitiveness and strengthening its financial base. In 2011, under the slogan “Aiming for the Summit,” Canon embarked on a new five-year initiative: Phase IV of the Excellent Global Corporation Plan. Under this initiative, Canon aimed to make large strides toward becoming a truly excellent corporation, targeting sound business growth through measures aimed at maintaining high profitability and further expanding corporate scale.

Over the five years that followed, however, the global economy proved highly challenging due to such factors as Europe’s financial crisis and further economic slowdowns in China and other emerging markets. In response, Canon charted a new course away from a management focus targeting expansion to a strategy aimed at strengthening its financial condition. In this way, the Company aimed to achieve a structure capable of withstanding the recession, while also restructuring business foundations representing new growth engines to facilitate great strides in the future.

During Phase V, launched in 2016 under the basic policy of “Embracing the challenge of new growth through a grand strategic transformation,” reforms that were promoted in Phase IV will be further expanded upon. In 2020, the final year of Phase V, Canon aims to achieve net sales of 5 trillion yen, an operating profit ratio of 15% or more, a net income ratio of 10% or more, and a shareholders’ equity ratio of 70% or more.

(3) Business Challenges and Countermeasures

Although the global economy is expected to be somewhat better than what it had been over the past five years, the situation remains unstable due to issues such as increased geopolitical risk in the Middle East and the economic slowdown in China. As such, global economic growth is expected to remain modest. From an industrial perspective, however, remarkable developments are being made in technologies in such areas as the IoT and artificial intelligence, which are leading to major changes in industry structure.

Advancements in digital technology have made it easier for startup companies to enter markets, thus fueling increased market competition. Additionally, in the markets in which Canon participates, the office equipment and digital camera markets continue to mature.

To realize new growth and overcome these changes in the market environment, Canon will work to reform all aspects of development, production and sales to further promote enhanced profitability and the rollout of new businesses.

The following key strategies have been drafted for, and will be actively implemented during, Phase V.

 

1.	Establish a new production system to achieve a cost-of-sales ratio of 45%

Strengthen domestic mother factories by further promoting the return of production to Japan and the integration of design, procurement, production engineering, and manufacturing technology operations. At the same time, pursue total cost reductions through the promotion of such advanced production engineering technologies as robotics and automation.

 

2.	Reinforce and expand new businesses while creating future businesses

Create and expand new businesses by accelerating the horizontal expansion of existing business. Additionally, concentrate management resources and make effective use of M&A to accelerate the expansion of promising business areas such as commercial printing, network cameras and life sciences.

 

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3.	Restructure the global sales network in accordance with market changes

Review existing sales organizations and reinforce omni-channel marketing that integrates online and brick-and-mortar sales routes while strengthening and expanding solutions-driven businesses with the aim of solving issues faced by customers. Additionally, continue focusing energies on developing marketing in emerging countries.

 

4.	Enhance R&D capabilities through open innovation

Discard the strict notion of self-sufficiency and construct an R&D system that proactively leverages external technologies and knowledge, promoting joint and contract research with various partners such as domestic and foreign universities and research institutes.

 

5.	Complete the Three Regional Headquarters management system capturing world dynamism

Promote the acquisition of promising businesses through active M&A and complete the Three Regional Headquarter management system, under which Japan, the U.S. and Europe will each roll out businesses globally.

Additionally, under the theme “Taking a decisive first step toward transformation,” the following key challenges will be pursued in 2016, the inaugural year of Phase V.

 

1.	Draft and implement plans to revitalize existing businesses

Raise profitability through drastic cost-cutting and work to revitalize businesses, swiftly launching future products that were exhibited at Canon EXPO 2015.

 

2.	Rapidly expand new businesses

Work to speed up the expansion and deployment of large-scale businesses such as commercial printing and network cameras.

 

3.	Accelerate efforts aimed at reducing the cost-of-sales ratio

Continue to investigate optimal locations for production sites and work to accelerate cost reductions at all stages, including product development.

 

4.	Boost sales productivity through marketing reforms

Accelerate efforts to address global growth in e-commerce and work to reinforce the solutions business.

 

5.	Improve R&D productivity through selection and concentration

Apply the selection and concentration process to development themes and boost R&D productivity.

 

6.	Promote the cultivation of global human resources

Build a structure to discover talented individuals from within the entire Canon Group to cultivate global competent human resources capable of performing duties while maintaining an all-encompassing perspective of the world map.

III. Basic Concept Regarding the Selection of Accounting Standards

Canon is listed on the New York Stock Exchange and, since registering its American Depositary Receipts on the OTC (over-the-counter) market in 1969, has prepared its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) over the long term.

Canon has continued to adopt U.S. GAAP in order to maintain the continuity of financial statements from the past and to maintain international comparability.

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

IV. Financial Statements

1. CONSOLIDATED BALANCE SHEETS

 

		Millions of yen
		As of    December 31, 2015				As of    December 31, 2014				Change
ASSETS
Current assets:
Cash and cash equivalents		¥	633,613			¥	844,580			¥	(210,967)
Short-term investments			20,651				71,863				(51,212)
Trade receivables, net			588,001				625,675				(37,674)
Inventories			501,895				528,167				(26,272)
Prepaid expenses and other current assets			313,019				321,648				(8,629)
Total current assets			2,057,179				2,391,933				(334,754)
Noncurrent receivables			29,476				29,785				(309)
Investments			67,862				65,176				2,686
Property, plant and equipment, net			1,219,652				1,269,529				(49,877)
Intangible assets, net			241,208				177,288				63,920
Goodwill			478,943				211,336				267,607
Other assets			333,453				315,571				17,882
Total assets		¥	4,427,773			¥	4,460,618			¥	(32,845)
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt		¥	688			¥	1,018			¥	(330)
Trade payables			278,255				310,214				(31,959)
Accrued income taxes			47,431				57,212				(9,781)
Accrued expenses			317,653				345,237				(27,584)
Other current liabilities			171,302				207,698				(36,396)
Total current liabilities			815,329				921,379				(106,050)
Long-term debt, excluding current installments			881				1,148				(267)
Accrued pension and severance cost			296,262				280,928				15,334
Other noncurrent liabilities			130,838				116,405				14,433
Total liabilities			1,243,310				1,319,860				(76,550)
Equity:
Canon Inc. shareholders’ equity:
Common stock			174,762				174,762				-
Additional paid-in capital			401,358				401,563				(205)
Legal reserve			65,289				64,599				690
Retained earnings			3,365,158				3,320,392				44,766
Accumulated other comprehensive income (loss)			(29,742)				28,286				(58,028)
Treasury stock, at cost			(1,010,410)				(1,011,418)				1,008
Total Canon Inc. shareholders’ equity			2,966,415				2,978,184				(11,769)
Noncontrolling interests			218,048				162,574				55,474
Total equity			3,184,463				3,140,758				43,705
Total liabilities and equity		¥	4,427,773			¥	4,460,618			¥	(32,845)
		Millions of yen
		As of December 31, 2015				As of December 31, 2014
Notes:
1. Allowance for doubtful receivables		¥	12,077			¥	12,122
2. Accumulated depreciation			2,570,806				2,519,259
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments			87,038				144,557
Net unrealized gains and losses on securities			14,055				12,546
Net gains and losses on derivative instruments			182				(2,603)
Pension liability adjustments			(131,017)				(126,214)

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME AND

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Consolidated statements of income

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

Consolidated statements of comprehensive income

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES

 

Results for the fourth quarter		Millions of yen
Sales by business unit		Three months ended   December 31, 2015				Three months ended   December 31, 2014				Change(%)
Office		¥	534,007			¥	564,813			-			5.5
Imaging System			366,183				402,165			-			8.9
Industry and Others			166,211				116,695			+			42.4
Eliminations			(23,763)				(23,737)						-
Total		¥	1,042,638			¥	1,059,936			-			1.6
		Millions of yen
Sales by region		Three months ended December 31, 2015				Three months ended December 31, 2014				Change(%)
Japan		¥	203,737			¥	207,754			-			1.9
Overseas:
Americas			311,596				309,855			+			0.6
Europe			300,727				312,375			-			3.7
Asia and Oceania			226,578				229,952			-			1.5
			838,901				852,182			-			1.6
Total		¥	1,042,638			¥	1,059,936			-			1.6
Results for the fiscal year		Millions of yen
Sales by business unit		Year ended December 31, 2015				Year ended December 31, 2014				Change(%)
Office		¥	2,110,816			¥	2,078,732			+			1.5
Imaging System			1,263,835				1,343,194			-			5.9
Industry and Others			524,651				398,765			+			31.6
Eliminations			(99,031)				(93,439)						-
Total		¥	3,800,271			¥	3,727,252			+			2.0
		Millions of yen
Sales by region		Year ended December 31, 2015				Year ended December 31, 2014				Change(%)
Japan		¥	714,280			¥	724,317			-			1.4
Overseas:
Americas			1,144,422				1,036,500			+			10.4
Europe			1,074,366				1,090,484			-			1.5
Asia and Oceania			867,203				875,951			-			1.0
			3,085,991				3,002,935			+			2.8
Total		¥	3,800,271			¥	3,727,252			+			2.0

 

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

4. CONSOLIDATED STATEMENTS OF EQUITY

Millions of yen

		Common Stock				Additional paid-in capital				Legal reserve				Retained earnings				Accumulated other comprehensive income (loss)				Treasury stock				Total Canon Inc. shareholders’ equity				Noncontrolling interests				Total equity
Balance at December 31, 2013		¥	174,762			¥	402,029			¥	63,091			¥	3,212,692			¥	(80,646	)		¥	(861,666	)		¥	2,910,262			¥	156,515			¥    3,066,777
Equity transactions with noncontrolling interests and other							(420	)							216				(22	)							(226	)			(658	)		(884)
Dividends to Canon Inc. shareholders															(145,790	)											(145,790	)						(145,790)
Dividends to noncontrolling interests																															(2,949	)		(2,949)
Transfers to legal reserve											1,508				(1,508	)											-							-
Comprehensive income:
Net income															254,797												254,797				10,442			265,239
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments																			142,813								142,813				1,021			143,834
Net unrealized gains and losses on securities																			2,301								2,301				223			2,524
Net gains and losses on derivative instruments																			(195	)							(195	)			-			(195)
Pension liability adjustments																			(35,965	)							(35,965	)			(2,020	)		(37,985)
Total comprehensive income																											363,751				9,666			373,417
Repurchases and reissuance of treasury stock							(46	)							(15	)							(149,752	)			(149,813	)						(149,813)
Balance at December 31, 2014		¥	174,762			¥	401,563			¥	64,599			¥	3,320,392			¥	28,286			¥	(1,011,418	)		¥	2,978,184			¥	162,574			¥    3,140,758
Equity transactions with noncontrolling interests and other							(29	)											73								44				(29,627	)		(29,583)
Dividends to Canon Inc. shareholders															(174,711	)											(174,711	)						(174,711)
Dividends to noncontrolling interests																															(3,958	)		(3,958)
Acquisition of subsidiaries																															77,086			77,086
Transfers to legal reserve											690				(690	)											-							-
Comprehensive income:
Net income															220,209												220,209				11,124			231,333
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments																			(57,592	)							(57,592	)			2,088			(55,504)
Net unrealized gains and losses on securities																			1,509								1,509				501			2,010
Net gains and losses on derivative instruments																			2,785								2,785				-			2,785
Pension liability adjustments																			(4,803	)							(4,803	)			(1,740	)		(6,543)
Total comprehensive income																											162,108				11,973			174,081
Repurchases and reissuance of treasury stock							(176	)							(42	)							1,008				790							790
Balance at December 31, 2015		¥	174,762			¥	401,358			¥	65,289			¥	3,365,158			¥	(29,742	)		¥	(1,010,410	)		¥	2,966,415			¥	218,048			¥    3,184,463

 

- 12 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Millions of yen
		Year ended   December 31, 2015				Year ended   December 31, 2014
Cash flows from operating activities:
Consolidated net income		¥	231,333			¥	265,239
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			273,327				263,480
Loss on disposal of fixed assets			7,975				12,429
Deferred income taxes			4,672				8,929
Decrease in trade receivables			22,720				9,323
Decrease in inventories			14,249				59,004
Decrease in trade payables			(17,288)				(24,620)
Increase (decrease) in accrued income taxes			(8,731)				3,586
Increase (decrease) in accrued expenses			(25,529)				11,124
Increase (decrease) in accrued (prepaid) pension and severance cost			4,622				(6,305)
Other, net			(32,626)				(18,262)
Net cash provided by operating activities			474,724				583,927
Cash flows from investing activities:
Purchases of fixed assets			(252,948)				(218,362)
Proceeds from sale of fixed assets			3,824				3,994
Purchases of available-for-sale securities			(98)				(311)
Proceeds from sale and maturity of available-for-sale securities			804				2,606
(Increase) decrease in time deposits, net			47,665				(14,223)
Acquisitions of businesses, net of cash acquired			(251,534)				(54,772)
Purchases of other investments			(1,220)				-
Other, net			(112)				11,770
Net cash used in investing activities			(453,619)				(269,298)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			717				1,377
Repayments of long-term debt			(1,350)				(2,152)
Decrease in short-term loans, net			-				(54)
Purchases of noncontrolling interests			(29,570)				-
Dividends paid			(174,711)				(145,790)
Repurchases and reissuance of treasury stock			790				(149,813)
Other, net			(6,078)				(4,454)
Net cash used in financing activities			(210,202)				(300,886)
Effect of exchange rate changes on cash and cash equivalents			(21,870)				41,928
Net change in cash and cash equivalents			(210,967)				55,671
Cash and cash equivalents at beginning of year			844,580				788,909
Cash and cash equivalents at end of year		¥	633,613			¥	844,580

 

- 13 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

6. NOTE FOR GOING CONCERN ASSUMPTION

Not applicable.

7. SEGMENT INFORMATION

(1) SEGMENT INFORMATION BY BUSINESS UNIT

 

Results for the fourth quarter				Millions of yen
				Three months ended     December 31, 2015				Three months ended     December 31, 2014				Change(%)
Office
Net sales:
		External customers		¥	533,366			¥	564,349			-			5.5
		Intersegment			641				464			+			38.1
		Total			534,007				564,813			-			5.5
Operating cost and expenses					461,764				491,224			-			6.0
Operating profit				¥	72,243			¥	73,589			-			1.8
Imaging System
Net sales:
		External customers		¥	365,944			¥	401,958			-			9.0
		Intersegment			239				207			+			15.5
		Total			366,183				402,165			-			8.9
Operating cost and expenses					304,057				343,898			-			11.6
Operating profit				¥	62,126			¥	58,267			+			6.6
Industry and Others
Net sales:
		External customers		¥	143,328			¥	93,629			+			53.1
		Intersegment			22,883				23,066			-			0.8
		Total			166,211				116,695			+			42.4
Operating cost and expenses					168,995				123,436			+			36.9
Operating profit				¥	(2,784)			¥	(6,741)						-
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-						-
		Intersegment			(23,763)				(23,737)						-
		Total			(23,763)				(23,737)						-
Operating cost and expenses					780				2,909						-
Operating profit				¥	(24,543)			¥	(26,646)						-
Consolidated
Net sales:
		External customers		¥	1,042,638			¥	1,059,936			-			1.6
		Intersegment			-				-						-
		Total			1,042,638				1,059,936			-			1.6
Operating cost and expenses					935,596				961,467			-			2.7
Operating profit				¥	107,042			¥	98,469			+			8.7

 

- 14 -

---

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the fiscal year				Millions of yen
				Year ended     December 31, 2015				Year ended     December 31, 2014				Change(%)
Office
Net sales:
		External customers		¥	2,108,246			¥	2,075,788			+			1.6
		Intersegment			2,570				2,944			-			12.7
		Total			2,110,816				2,078,732			+			1.5
Operating cost and expenses					1,820,230				1,786,675			+			1.9
Operating profit					290,586				292,057			-			0.5
Total assets					1,020,758				1,025,499			-			0.5
Depreciation and amortization					86,206				87,058			-			1.0
Capital expenditures				¥	73,819			¥	69,704			+			5.9
Imaging System
Net sales:
		External customers		¥	1,262,667			¥	1,342,501			-			5.9
		Intersegment			1,168				693			+			68.5
		Total			1,263,835				1,343,194			-			5.9
Operating cost and expenses					1,080,396				1,148,593			-			5.9
Operating profit					183,439				194,601			-			5.7
Total assets					452,283				517,524			-			12.6
Depreciation and amortization					52,070				53,912			-			3.4
Capital expenditures				¥	38,337			¥	31,124			+			23.2
Industry and Others
Net sales:
		External customers		¥	429,358			¥	308,963			+			39.0
		Intersegment			95,293				89,802			+			6.1
		Total			524,651				398,765			+			31.6
Operating cost and expenses					537,730				420,566			+			27.9
Operating profit					(13,079)				(21,801)						-
Total assets					332,252				342,695			-			3.0
Depreciation and amortization					45,064				37,544			+			20.0
Capital expenditures				¥	24,241			¥	15,976			+			51.7
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-						-
		Intersegment			(99,031)				(93,439)						-
		Total			(99,031)				(93,439)						-
Operating cost and expenses					6,705				7,929						-
Operating profit					(105,736)				(101,368)						-
Total assets					2,622,480				2,574,900			+			1.8
Depreciation and amortization					89,987				84,966			+			5.9
Capital expenditures				¥	106,733			¥	107,956			-			1.1
Consolidated
Net sales:
		External customers		¥	3,800,271			¥	3,727,252			+			2.0
		Intersegment			-				-						-
		Total			3,800,271				3,727,252			+			2.0
Operating cost and expenses					3,445,061				3,363,763			+			2.4
Operating profit					355,210				363,489			-			2.3
Total assets					4,427,773				4,460,618			-			0.7
Depreciation and amortization					273,327				263,480			+			3.7
Capital expenditures				¥	243,130			¥	224,760			+			8.2

 

- 15 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

(2)  SEGMENT INFORMATION BY GEOGRAPHIC AREA

 

Results for the fourth quarter				Millions of yen
					Three months ended     December 31, 2015				Three months ended     December 31, 2014			Change(%)
Japan
Net sales:
		External customers		¥	254,629			¥	232,313			+			9.6
		Intersegment			411,937				472,681			-			12.9
		Total			666,566				704,994			-			5.5
Operating cost and expenses					584,817				614,103			-			4.8
Operating profit				¥	81,749			¥	90,891			-			10.1
Americas
Net sales:
		External customers		¥	310,466			¥	308,536			+			0.6
		Intersegment			5,717				3,541			+			61.5
		Total			316,183				312,077			+			1.3
Operating cost and expenses					305,167				303,655			+			0.5
Operating profit				¥	11,016			¥	8,422			+			30.8
Europe
Net sales:
		External customers		¥	301,590			¥	311,270			-			3.1
		Intersegment			28,869				18,591			+			55.3
		Total			330,459				329,861			+			0.2
Operating cost and expenses					324,958				320,771			+			1.3
Operating profit				¥	5,501			¥	9,090			-			39.5
Asia and Oceania
Net sales:
		External customers		¥	175,953			¥	207,817			-			15.3
		Intersegment			198,596				220,317			-			9.9
		Total			374,549				428,134			-			12.5
Operating cost and expenses					365,632				416,437			-			12.2
Operating profit				¥	8,917			¥	11,697			-			23.8
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-						-
		Intersegment			(645,119)				(715,130)						-
		Total			(645,119)				(715,130)						-
Operating cost and expenses					(644,978)				(693,499)						-
Operating profit				¥	(141)			¥	(21,631)						-
Consolidated
Net sales:
		External customers		¥	1,042,638			¥	1,059,936			-			1.6
		Intersegment			-				-						-
		Total			1,042,638				1,059,936			-			1.6
Operating cost and expenses					935,596				961,467			-			2.7
Operating profit				¥	107,042			¥	98,469			+			8.7

 

- 16 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the fiscal year				Millions of yen
					Year ended     December 31, 2015				Year ended     December 31, 2014			Change(%)
Japan
Net sales:
		External customers		¥	847,669			¥	836,801			+			1.3
		Intersegment			1,765,840				1,752,378			+			0.8
		Total			2,613,509				2,589,179			+			0.9
Operating cost and expenses					2,285,780				2,245,930			+			1.8
Operating profit					327,729				343,249			-			4.5
Total assets				¥	969,805			¥	1,134,484			-			14.5
Americas
Net sales:
		External customers		¥	1,138,830			¥	1,033,797			+			10.2
		Intersegment			21,069				8,738			+			141.1
		Total			1,159,899				1,042,535			+			11.3
Operating cost and expenses					1,130,099				1,018,661			+			10.9
Operating profit					29,800				23,874			+			24.8
Total assets				¥	544,395			¥	531,122			+			2.5
Europe
Net sales:
		External customers		¥	1,077,033			¥	1,088,293			-			1.0
		Intersegment			106,675				59,493			+			79.3
		Total			1,183,708				1,147,786			+			3.1
Operating cost and expenses					1,165,218				1,135,515			+			2.6
Operating profit					18,490				12,271			+			50.7
Total assets				¥	409,357			¥	484,858			-			15.6
Asia and Oceania
Net sales:
		External customers		¥	736,739			¥	768,361			-			4.1
		Intersegment			911,395				821,600			+			10.9
		Total			1,648,134				1,589,961			+			3.7
Operating cost and expenses					1,582,113				1,522,244			+			3.9
Operating profit					66,021				67,717			-			2.5
Total assets				¥	620,090			¥	674,672			-			8.1
Corporate and Eliminations
Net sales:
		External customers		¥	-			¥	-						-
		Intersegment			(2,804,979)				(2,642,209)						-
		Total			(2,804,979)				(2,642,209)						-
Operating cost and expenses					(2,718,149)				(2,558,587)						-
Operating profit					(86,830)				(83,622)						-
Total assets				¥	1,884,126			¥	1,635,482						-
Consolidated
Net sales:
		External customers		¥	3,800,271			¥	3,727,252			+			2.0
		Intersegment			-				-						-
		Total			3,800,271				3,727,252			+			2.0
Operating cost and expenses					3,445,061				3,363,763			+			2.4
Operating profit					355,210				363,489			-			2.3
Total assets				¥	4,427,773			¥	4,460,618			-			0.7

 

- 17 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

 

1.

Number of Group Companies

 

		December 31, 2015		December 31, 2014		Change
Subsidiaries		317		261		56
Affiliates		5		7		(2)
Total		322		268		54

 

2.

Change in Group Entities

 

Subsidiaries
Addition:		61 companies
Removal:		5 companies

 

Affiliates (Carried at Equity Basis)
Removal:		2 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.

 

- 18 -

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

9. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

(1)	NET INCOME ATTRIBUTABLE TO CANON INC. SHAREHOLDERS PER SHARE

 

Results for the fiscal year		Millions of yen
		Year ended   December 31, 2015				Year ended   December 31, 2014
Net income attributable to Canon Inc.
-Basic		¥	220,209			¥	254,797
-Diluted			220,209				254,797
		Number of shares
Average common shares outstanding
-Basic			1,092,017,955				1,112,509,931
-Diluted			1,092,052,886				1,112,514,324
		Yen
Net income attributable to
Canon Inc. shareholders per share:
-Basic		¥	201.65			¥	229.03
-Diluted			201.65				229.03

 

 

(2)	FINANCE RECEIVABLES AND OPERATING LEASES, ACQUISITIONS, MARKETABLE SECURITIES, DEFERRED TAX ACCOUNTING, EMPLOYEE RETIREMENT AND SEVERANCE BENEFITS, STOCK OPTIONS, DERIVATIVE CONTRACTS AND OTHERS

The disclosure is omitted as it is not considered significant in this report.

 

 

(3)	SUBSEQUENT EVENT

There is no significant subsequent event.

 

- 19 -

---

CANON INC.

NON-CONSOLIDATED

10. NON-CONSOLIDATED BALANCE SHEETS

( Parent company only )

 

				Millions of yen
				As of December 31, 2015								As of December 31, 2014
		ASSETS
		Current assets:
		Cash		¥					100,836			¥					34,362
		Trade receivables							450,449								596,293
		Marketable securities							18,070								54,740
		Inventories							148,485								151,272
		Prepaid expenses and other current assets							154,575								187,930
		Allowance for doubtful receivables							(1)								(86)
		Total current assets							872,414								1,024,511
		Fixed assets:
		Net property, plant and equipment							659,258								666,588
		Intangibles							25,578								31,152
		Investments and other fixed assets							880,769								593,502
		Allowance for doubtful receivables-noncurrent							(95)								(73)
		Total fixed assets							1,565,510								1,291,169
		Total assets		¥					2,437,924			¥					2,315,680
		LIABILITIES AND NET ASSETS
		Current liabilities:
		Trade payables		¥					301,792			¥					291,693
		Short-term loans							461,686								365,441
		Accrued income taxes							22,805								32,028
		Accrued warranty expenses							3,920								2,622
		Accrued bonuses for employees							4,606								4,476
		Accrued bonuses for directors							144								199
		Other current liabilities							108,269								132,163
		Total current liabilities							903,222								828,622
		Noncurrent liabilities:
		Accrued pension and severance cost							45,985								34,690
		Reserve for environmental provision							1,618								2,075
		Accrued long service rewards for employees							1,449								1,304
		Other noncurrent liabilities							1,493								1,667
		Total noncurrent liabilities							50,545								39,736
		Total liabilities							953,767								868,358
		Net assets:
		Shareholders’ equity							1,473,935								1,438,668
		Valuation and translation adjustments							9,091								7,101
		Subscription rights to shares							1,131								1,553
		Total net assets							1,484,157								1,447,322
		Total liabilities and net assets		¥					2,437,924			¥					2,315,680

 

- 20 -

---

CANON INC.

NON-CONSOLIDATED

11. NON-CONSOLIDATED STATEMENTS OF INCOME

      ( Parent company only )

 

				Millions of yen
				Year ended December 31, 2015				Year ended December 31, 2014
		Net sales		¥	2,091,139			¥	2,084,200
		Cost of sales			1,461,270				1,441,204
		Gross profit			629,869				642,996
		Selling, general and administrative expenses			460,631				438,059
		Operating profit			169,238				204,937
		Other income (deductions):
		Interest and dividend income			103,788				36,837
		Interest expense			(2,124)				(1,687)
		Other, net			(1,084)				9,261
					100,580				44,411
		Ordinary profit			269,818				249,348
		Non-ordinary gain (loss), net			(2,447)				(7,326)
		Income before income taxes			267,371				242,022
		Income taxes			55,408				66,551
		Net income		¥	211,963			¥	175,471

 

- 21 -

---

CANON INC.

NON-CONSOLIDATED

12. NON-CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

( Parent company only )

 

Year ended December 31, 2015

(Millions of yen)

			Shareholders’ equity																																				Valuation and translation adjustments								Subscription rights to shares				Total net assets
			Common stock				Capital surplus				Retained earnings																				Treasury stock				Total shareholders’ equity				Net unrealized gains (losses) on securities				Net deferred profits (losses) on hedges
							Additional paid-in capital				Legal reserve				Other retained earnings
															Reserve for special depreciation				Reserve for deferral of capital gain on property				Special reserves				Retained earnings brought forward
Balance at the beginning of current period		¥	174,762			¥	306,288			¥	22,114			¥	341			¥	3,693			¥	1,249,928			¥	692,960			¥	(1,011,418	)		¥	1,438,668			¥	7,780			¥	(679	)		¥	1,553			¥	1,447,322
Cumulative effects of changes in accounting policies																											(2,951	)							(2,951	)															(2,951	)
Restated balance		¥	174,762			¥	306,288			¥	22,114			¥	341			¥	3,693			¥	1,249,928			¥	690,009			¥	(1,011,418	)		¥	1,435,717			¥	7,780			¥	(679	)		¥	1,553			¥	1,444,371
Changes of items during the period
Transfer to reserve for special depreciation																																			-																-
Reversal of reserve for special depreciation															(174	)											174								-																-
Transfer to reserve for deferral of capital gain on property																			157								(157	)							-																-
Reversal of reserve for deferral of capital gain on property																			(123	)							123								-																-
Dividends paid																											(174,711	)							(174,711	)															(174,711	)
Net income																											211,963								211,963																211,963
Purchase of treasury stock																															(39	)			(39	)															(39	)
Disposal of treasury stock																											(42	)			1,047				1,005																1,005
Net changes of items other than shareholders’ equity																																			-				1,071				919				(422	)			1,568
Total changes of items during the period			-				-				-				(174	)			34				-				37,350				1,008				38,218				1,071				919				(422	)			39,786
Balance at the end of current period		¥	174,762			¥	306,288			¥	22,114			¥	167			¥	3,727			¥	1,249,928			¥	727,359			¥	(1,010,410	)		¥	1,473,935			¥	8,851			¥	240			¥	1,131			¥	1,484,157

 

- 22 -

---

CANON INC.

NON-CONSOLIDATED

 

Year ended December 31, 2014

(Millions of yen)

			Shareholders’ equity																																				Valuation and translation   adjustments								Subscription   rights to   shares				Total   net   assets
			Common   stock				Capital   surplus				Retained earnings																				Treasury stock				Total shareholders’ equity				Net unrealized gains (losses) on securities				Net deferred profits (losses) on hedges
							Additional   paid-in   capital				Legal   reserve				Other retained earnings
															Reserve   for   special   depreciation				Reserve for   deferral of   capital gain   on property				Special reserves				Retained   earnings   brought   forward
Balance at the beginning of current period		¥	174,762			¥	306,288			¥	22,114			¥	294			¥	3,369			¥	1,249,928			¥	663,665			¥	(861,666)			¥	1,558,754			¥	7,239			¥	(1,351	)		¥	2,388			¥	1,567,030
Changes of items during the period
Transfer to reserve for special depreciation															148												(148	)							-																-
Reversal of reserve for special depreciation															(101	)											101								-																-
Transfer to reserve for deferral of capital gain on property																			443								(443	)							-																-
Reversal of reserve for deferral of capital gain on property																			(119	)							119								-																-
Dividends paid																											(145,790	)							(145,790	)															(145,790	)
Net income																											175,471								175,471																175,471
Purchase of treasury stock																															(150,039	)			(150,039	)															(150,039	)
Disposal of treasury stock																											(15	)			287				272																272
Net changes of items other than shareholders’ equity																																			-				541				672				(835	)			378
Total changes of items during the period			-				-				-				47				324				-				29,295				(149,752	)			(120,086	)			541				672				(835	)			(119,708	)
Balance at the end of current period		¥	174,762			¥	306,288			¥	22,114			¥	341			¥	3,693			¥	1,249,928			¥	692,960			¥	(1,011,418	)		¥	1,438,668			¥	7,780			¥	(679	)		¥	1,553			¥	1,447,322

 

- 23 -

---

CANON INC.

NON-CONSOLIDATED

13. NOTE FOR GOING CONCERN ASSUMPTION

         ( Parent company only )

     Not applicable.

 

- 24 -

---

Executives of Canon Inc.

NON-CONSOLIDATED

 

Directors				As of March 30, 2016
Position		Name		Current Position
Representative director Chairman & CEO		Fujio Mitarai		Representative director Chairman (President) & CEO
Representative director President & COO		Masaya Maeda		Senior Managing Director Chief Executive, Image Communication Products Operations
Representative director Executive Vice President & CFO		Toshizo Tanaka		Representative director Executive Vice President & CFO Group Executive, Finance & Accounting Headquarters Group Executive, Facilities Management Headquarters Group Executive, Human Resources Management & Organization Headquarters
Representative director Senior Managing Director & CTO		Shigeyuki Matsumoto		Senior Managing Director Group Executive, R&D Headquarters
Director (Outside)		Kunitaro Saida		Same as on the left
Director (Outside)		Haruhiko Kato		Same as on the left
Audit & Supervisory Board Members
Position		Name		Current Position
Audit & Supervisory Board Member		Makoto Araki		Same as on the left
Audit & Supervisory Board Member		Kazuto Ono		Same as on the left
Audit & Supervisory Board Member (Outside)		Tadashi Ohe		Same as on the left
Audit & Supervisory Board Member (Outside)		Osami Yoshida		Same as on the left
Audit & Supervisory Board Member (Outside)		Kuniyoshi Kitamura		Same as on the left
Executive Officers
Position		Name		Current Position
Executive Vice President		Yoroku Adachi		Senior Managing Director Chairman & CEO, Canon U.S.A., Inc.
Executive Vice President		Toshio Homma		Senior Managing Director Group Executive, Procurement Headquarters
Senior Managing Executive Officer		Hideki Ozawa		Senior Managing Director President & CEO, Canon (China) Co., Ltd.
Senior Managing Executive Officer		Seymour Liebman		Managing Executive Officer Executive Vice President, Canon U.S.A., Inc.
Senior Managing Executive Officer		Rokus van Iperen		Managing Executive Officer President & CEO, Canon Europa N.V. / President & CEO, Canon Europe Ltd.
Managing Executive Officer		Yasuhiro Tani		Managing Director Group Executive, Digital System Technology Development Headquarters
Managing Executive Officer		Kenichi Nagasawa		Director Group Executive, Corporate Intellectual Property & Legal Headquarters
Managing Executive Officer		Naoji Otsuka		Director Chief Executive, Inkjet Products Operations
Managing Executive Officer		Hiroyuki Suematsu		Managing Executive Officer Group Executive, Quality Management Headquarters
Managing Executive Officer		Shigeyuki Uzawa		Managing Executive Officer Chief Executive, Optical Products Operations
Managing Executive Officer		Masanori Yamada		Director Group Executive, Network Visual Solution Business Promotion Headquarters
Managing Executive Officer		Aitake Wakiya		Director Deputy Group Executive, Finance & Accounting Headquarters
Managing Executive Officer		Akiyoshi Kimura		Director Chief Executive, Office Imaging Products Operations
Managing Executive Officer		Eiji Osanai		Director Group Executive, Production Engineering Headquarters
Managing Executive Officer		Masaaki Nakamura		Director Deputy Group Executive, Human Resources Management & Organization Headquarters
Managing Executive Officer		Akio Noguchi		Managing Executive Officer Group Executive, Mixed Reality Solution Business Promotion Headquarters
Managing Executive Officer		Ryuichi Ebinuma		Executive Officer Deputy Group Executive, R&D Headquarters
Managing Executive Officer		Yuichi Ishizuka		Managing Executive Officer President & COO, Canon U.S.A., Inc.
Managing Executive Officer		Kazuto Ogawa		Executive Officer Executive Vice President, Canon (China) Co., Ltd.
Executive Officer		Shunsuke Inoue		Executive Officer Group Executive, Device Technology Development Headquarters
Executive Officer		Takayuki Miyamoto		Executive Officer Chief Executive, Peripheral Products Operations
Executive Officer		Katsumi Iijima		Executive Officer Group Executive, Information & Communication Systems Headquarters
Executive Officer		Soichi Hiramatsu		Executive Officer Deputy Group Executive, Procurement Headquarters
Executive Officer		Kazuhiko Noguchi		Executive Officer Group Executive, Public Affairs Headquarters
Executive Officer		Masato Okada		Executive Officer Deputy Chief Executive, Image Communication Products Operations
Executive Officer		Nobutoshi Mizusawa		Executive Officer Deputy Group Executive, R&D Headquarters
Executive Officer		Yoichi Iwabuchi		Executive Officer Deputy Group Executive, Digital System Technology Development Headquarters
Executive Officer		Hiroaki Takeishi		Executive Officer Group Executive, Semiconductor Production Equipment Group
Executive Officer		Takashi Takeya		Executive Officer Senior General Manager, Global Logistics Management Center
Executive Officer		Nobuyuki Tainaka		Executive Officer Senior General Manager, Global Legal Administration Center
Executive Officer		Takanobu Nakamasu		Executive Officer Group Executive, Corporate Planning Development Headquarters
Executive Officer		Toshihiko Kusumoto		Executive Officer Deputy Chief Executive, Office Imaging Products Operations
Executive Officer		Akiko Tanaka		Executive Officer President & CEO, Canon BioMedical, Inc..
Executive Officer (New appointment)		Go Tokura		Group Executive, ICP Group 2 Image Communication Products Operations
Executive Officer (New appointment)		Ritsuo Mashiko		President, Oita Canon Inc.
Executive Officer (New appointment)		Hisahiro Minokawa		President & CEO, Canon Hongkong Co., Ltd.
Executive Officer (New appointment)		Noriko Gunji		Executive Vice President, Canon Hongkong Co., Ltd.

 

- 25 -

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Canon Inc.

January 27, 2016

CONSOLIDATED RESULTS FOR THE FOURTH QUARTER

AND THE FISCAL YEAR ENDED DECEMBER 31, 2015

SUPPLEMENTARY REPORT

TABLE OF CONTENTS

 

				PAGE
1.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2015)			S    1
2.		SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2016/Projection)			S    2
3.		SEGMENT INFORMATION BY BUSINESS UNIT (2015)			S    3
4.		OTHER INCOME / DEDUCTIONS (2015)			S    3
5.		SEGMENT INFORMATION BY BUSINESS UNIT (2016/Projection)			S    4
6.		OTHER INCOME / DEDUCTIONS (2016/Projection)			S    4
7.		BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT			S    5
8.		SALES GROWTH IN LOCAL CURRENCY			S    5
9.		PROFITABILITY			S    6
10.		IMPACT OF FOREIGN EXCHANGE RATES			S    6
11.		STATEMENTS OF CASH FLOWS			S    6
12.		R&D EXPENDITURE			S    7
13.		INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION			S    7
14.		INVENTORIES			S    7
15.		DEBT RATIO			S    7
16.		OVERSEAS PRODUCTION RATIO			S    7
17.		NUMBER OF EMPLOYEES			S    7

 

---

Canon Inc.

 

1. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2015)

(Millions of yen)

				2015								2014										Change year over year
				4th quarter				Year				4th quarter				Year						4th quarter		Year
Japan
		Office			98,804				379,277				97,336				380,594					+1.5%		-0.3%
		Imaging System			66,958				198,739				70,815				207,281					-5.4%		-4.1%
		Industry and Others			37,975				136,264				39,603				136,442					-4.1%		-0.1%
		Total			203,737				714,280				207,754				724,317					-1.9%		-1.4%
Overseas
		Office			434,562				1,728,969				467,013				1,695,194					-6.9%		+2.0%
		Imaging System			298,986				1,063,928				331,143				1,135,220					-9.7%		-6.3%
		Industry and Others			105,353				293,094				54,026				172,521					+95.0%		+69.9%
		Total			838,901				3,085,991				852,182				3,002,935					-1.6%		+2.8%
		Americas
		Office			175,923				713,197				183,816				656,783					-4.3%		+8.6%
		Imaging System			110,869				352,946				113,156				345,707					-2.0%		+2.1%
		Industry and Others			24,804				78,279				12,883				34,010					+92.5%		+130.2%
		Total			311,596				1,144,422				309,855				1,036,500					+0.6%		+10.4%
		Europe
		Office			185,623				680,619				191,573				689,275					-3.1%		-1.3%
		Imaging System			95,593				335,312				109,440				367,050					-12.7%		-8.6%
		Industry and Others			19,511				58,435				11,362				34,159					+71.7%		+71.1%
		Total			300,727				1,074,366				312,375				1,090,484					-3.7%		-1.5%
		Asia and Oceania
		Office			73,016				335,153				91,624				349,136					-20.3%		-4.0%
		Imaging System			92,524				375,670				108,547				422,463					-14.8%		-11.1%
		Industry and Others			61,038				156,380				29,781				104,352					+105.0%		+49.9%
		Total			226,578				867,203				229,952				875,951					-1.5%		-1.0%
Intersegment
		Office			641				2,570				464				2,944					+38.1%		-12.7%
		Imaging System			239				1,168				207				693					+15.5%		+68.5%
		Industry and Others			22,883				95,293				23,066				89,802					-0.8%		+6.1%
		Eliminations			(23,763	)			(99,031	)			(23,737	)			(93,439	)				-		-
		Total			0				0				0				0					-		-
Total
		Office			534,007				2,110,816				564,813				2,078,732					-5.5%		+1.5%
		Imaging System			366,183				1,263,835				402,165				1,343,194					-8.9%		-5.9%
		Industry and Others			166,211				524,651				116,695				398,765					+42.4%		+31.6%
		Eliminations			(23,763	)			(99,031	)			(23,737	)			(93,439	)				-		-
		Total			1,042,638				3,800,271				1,059,936				3,727,252					-1.6%		+2.0%

 

- S1 -

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Canon Inc.

2. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT (2016/Projection)

 

(1) Sales by business unit						(Millions of yen)

				2016 (P)				2015						Change year over year
				Year				Year						Year
		Office				2,114,800				2,110,816						+0.2%
		Imaging System				1,200,000				1,263,835						-5.1%
		Industry and Others				623,600				524,651						+18.9%
		Eliminations				(88,400)				(99,031)						-
		Total				3,850,000				3,800,271						+1.3%
																(P)=Projection
(2) Sales by region																(Millions of yen)
				2016 (P)				2015						Change year over year
				Year				Year						Year
		Japan				751,700				714,280						+5.2%
		Overseas				3,098,300				3,085,991						+0.4%
		Americas				1,153,300				1,144,422						+0.8%
		Europe				1,075,000				1,074,366						+0.1%
		Asia and Oceania				870,000				867,203						+0.3%
		Total				3,850,000				3,800,271						+1.3%
																(P)=Projection

 

- S2 -

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Canon Inc.

 

3. SEGMENT INFORMATION BY BUSINESS UNIT (2015)

(Millions of yen)

					2015								2014										Change year over year
					4th quarter				Year				4th quarter				Year						4th quarter			Year
Office
		External customers			533,366				2,108,246				564,349				2,075,788						-5.5%			+1.6%
		Intersegment			641				2,570				464				2,944						+38.1%			-12.7%
		Total sales			534,007				2,110,816				564,813				2,078,732						-5.5%			+1.5%
		Operating profit			72,243				290,586				73,589				292,057						-1.8%			-0.5%
		% of sales			13.5%				13.8%				13.0%				14.0%						-			-
Imaging System
		External customers			365,944				1,262,667				401,958				1,342,501						-9.0%			-5.9%
		Intersegment			239				1,168				207				693						+15.5%			+68.5%
		Total sales			366,183				1,263,835				402,165				1,343,194						-8.9%			-5.9%
		Operating profit			62,126				183,439				58,267				194,601						+6.6%			-5.7%
		% of sales			17.0%				14.5%				14.5%				14.5%						-			-
Industry and Others
		External customers			143,328				429,358				93,629				308,963						+53.1%			+39.0%
		Intersegment			22,883				95,293				23,066				89,802						-0.8%			+6.1%
		Total sales			166,211				524,651				116,695				398,765						+42.4%			+31.6%
		Operating profit			(2,784	)			(13,079	)			(6,741	)			(21,801	)					-			-
		% of sales			-1.7%				-2.5%				-5.8%				-5.5%						-			-
Corporate and Eliminations
		External customers			-				-				-				-						-			-
		Intersegment			(23,763	)			(99,031	)			(23,737	)			(93,439	)					-			-
		Total sales			(23,763	)			(99,031	)			(23,737	)			(93,439	)					-			-
		Operating profit			(24,543	)			(105,736	)			(26,646	)			(101,368	)					-			-
Consolidated
		External customers			1,042,638				3,800,271				1,059,936				3,727,252						-1.6%			+2.0%
		Intersegment			-				-				-				-						-			-
		Total sales			1,042,638				3,800,271				1,059,936				3,727,252						-1.6%			+2.0%
		Operating profit			107,042				355,210				98,469				363,489						+8.7%			-2.3%
		% of sales			10.3%				9.3%				9.3%				9.8%						-			-
4. OTHER INCOME / DEDUCTIONS (2015)																							(Millions of yen)
					2015								2014										Change year over year
					4th quarter				Year				4th quarter				Year						4th quarter			Year
		Interest and dividend, net			1,123				4,917				2,017				7,406						(894	)		(2,489)
		Forex gain (loss)			(1,009	)			(22,149	)			4,599				2,628						(5,608	)		(24,777)
		Equity earnings of affiliated companies			110				447				168				478						(58	)		(31)
		Other, net			1,695				9,013				1,656				9,238						+39			(225)
		Total			1,919				(7,772	)			8,440				19,750						(6,521	)		(27,522)

 

- S3 -

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Canon Inc.

5. SEGMENT INFORMATION BY BUSINESS UNIT (2016/Projection)										(Millions of yen)
				2016 (P)		2015				Change year over year
				Year		Year				Year
Office
		External customers		2,112,700		2,108,246				+0.2%
		Intersegment		2,100		2,570				-18.3%
		Total sales		2,114,800		2,110,816				+0.2%
		Operating profit		278,800		290,586				-4.1%
		% of sales		13.2%		13.8%				-
Imaging System
		External customers		1,198,100		1,262,667				-5.1%
		Intersegment		1,900		1,168				+62.7%
		Total sales		1,200,000		1,263,835				-5.1%
		Operating profit		172,000		183,439				-6.2%
		% of sales		14.3%		14.5%				-
Industry and Others
		External customers		539,200		429,358				+25.6%
		Intersegment		84,400		95,293				-11.4%
		Total sales		623,600		524,651				+18.9%
		Operating profit		1,300		(13,079)				-
		% of sales		0.2%		-2.5%				-
Corporate and Eliminations
		External customers		-		-				-
		Intersegment		(88,400)		(99,031)				-
		Total sales		(88,400)		(99,031)				-
		Operating profit		(92,100)		(105,736)				-
Consolidated
		External customers		3,850,000		3,800,271				+1.3%
		Intersegment		-		-				-
		Total sales		3,850,000		3,800,271				+1.3%
		Operating profit		360,000		355,210				+1.3%
		% of sales		9.4%		9.3%				-
										(P)=Projection
6. OTHER INCOME / DEDUCTIONS (2016/Projection)										(Millions of yen)
				2016 (P)		2015				Change year over year
				Year		Year				Year
		Interest and dividend, net		(500)		4,917				(5,417)
		Forex gain (loss)		(3,300)		(22,149)				+18,849
		Equity earnings of affiliated companies		900		447				+453
		Other, net		2,900		9,013				(6,113)
		Total		0		(7,772)				+7,772
										(P)=Projection

 

- S4 -

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Canon Inc.

 

7. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT
				2016 (P)				2015								2014
				Year				4th quarter				Year				4th quarter				Year
Office
		Monochrome copiers			15%				16	%			16	%			15	%		16%
		Color copiers			21%				21	%			20	%			21	%		19%
		Printers			39%				38	%			41	%			40	%		42%
		Others			25%				25	%			23	%			24	%		23%
Imaging System
		Cameras			60%				60	%			62	%			63	%		64%
		Inkjet printers			31%				31	%			29	%			29	%		27%
		Others			9%				9	%			9	%			8	%		9%
Industry and Others
		Lithography equipment			23%				26	%			24	%			21	%		23%
		Others			77%				74	%			76	%			79	%		77%
																				(P)=Projection
8. SALES GROWTH IN LOCAL CURRENCY (Year over year)
				2016 (P)				2015
				Year				4th quarter				Year
Office
		Japan			-				+1.5	%			-0.3	%
		Overseas			-				-7.2	%			-4.9	%
		Total			+1.7%				-5.7	%			-4.1	%
Imaging System
		Japan			-				-5.4	%			-4.1	%
		Overseas			-				-9.9	%			-11.7	%
		Total			-3.2%				-9.1	%			-10.5	%
Industry and Others
		Japan			-				-4.1	%			-0.1	%
		Overseas			-				+95.1	%			+67.2	%
		Total			+19.2%				+42.5	%			+30.4	%
Total
		Japan			+5.2%				-1.9	%			-1.4	%
		Overseas			+2.3%				-1.8	%			-3.3	%
		Americas			+1.7%				-4.7	%			-2.8	%
		Europe			+3.0%				+1.8	%			+0.6	%
		Asia and Oceania			+2.2%				-2.6	%			-9.0	%
		Total			+2.9%				-1.8	%			-3.0	%
									(P)=Projection

 

- S5 -

---

Canon Inc.

 

9. PROFITABILITY
				2016 (P)		2015		2014
				Year		Year		Year
		ROE *1		7.7%		7.4%		8.7%
		ROA *2		5.1%		5.0%		5.9%
								(P)=Projection
*1 Return on Equity; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Shareholders’ Equity
*2 Return on Assets; Based on Net Income attributable to Canon Inc.
10. IMPACT OF FOREIGN EXCHANGE RATES
(1) Exchange rates												(Yen)
				2016 (P)		2015				2014
				Year		4th quarter		Year		4th quarter		Year
		Yen/US$		120.00		121.60		121.13		114.78		106.18
		Yen/Euro		130.00		132.81		134.20		143.41		140.62
												(P)=Projection
(2) Impact of foreign exchange rates on sales (Year over year)						(Billions of yen)
				2016 (P)		2015
				Year		4th quarter		Year
		US$		(18.3)		+14.9		+170.5
		Euro		(29.2)		(19.7)		(44.8)
		Other currencies		(13.1)		(1.8)		+21.1
		Total		(60.6)		(6.6)		+146.8
								(P)=Projection
(3) Impact of foreign exchange rates per yen				(Billions of yen)
				2016 (P)
				Year
		On sales
		US$		14.0
		Euro		6.9
		On operating profit
		US$		4.6
		Euro		2.9
				(P)=Projection
11. STATEMENTS OF CASH FLOWS										(Millions of yen)
				2016 (P)		2015				2014
				Year		4th quarter		Year		4th quarter		Year
		Net cash provided by operating activities		550,000		143,892		474,724		185,377		583,927
		Net cash used in investing activities		(300,000)		(89,154)		(453,619)		(37,908)		(269,298)
		Free cash flow		250,000		54,738		21,105		147,469		314,629
		Net cash used in financing activities		(165,500)		(244)		(210,202)		(50,185)		(300,886)
		Effect of exchange rate changes on cash and cash equivalents		1,900		(2,128)		(21,870)		39,970		41,928
		Net change in cash and cash equivalents		86,400		52,366		(210,967)		137,254		55,671
		Cash and cash equivalents at end of period		720,000		633,613		633,613		844,580		844,580
												(P)=Projection

 

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Canon Inc.

12. R&D EXPENDITURE				(Millions of yen)
				2016 (P)		2015		2014
				Year		Year		Year
		Office		-		105,298		104,391
		Imaging System		-		90,236		87,510
		Industry and Others		-		66,585		26,516
		Corporate and Eliminations		-		66,381		90,562
		Total		320,000		328,500		308,979
		% of sales		8.3%		8.6%		8.3%
						(P)=Projection
13. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION
				(Millions of yen)
				2016 (P)		2015		2014
				Year		Year		Year
		Increase in PP&E
		Office		-		70,887		65,662
		Imaging System		-		35,634		29,200
		Industry and Others		-		20,683		13,856
		Corporate and Eliminations		-		67,916		73,625
		Total		230,000		195,120		182,343
		Depreciation and amortization
		Office		-		86,206		87,058
		Imaging System		-		52,070		53,912
		Industry and Others		-		45,064		37,544
		Corporate and Eliminations		-		89,987		84,966
		Total		285,000		273,327		263,480
						(P)=Projection
14. INVENTORIES
		(1) Inventories		(Millions of yen)
				2015		2014		Difference
				Dec.31		Dec.31
		Office		225,327		238,344		(13,017)
		Imaging System		155,767		168,802		(13,035)
		Industry and Others		120,801		121,021		(220)
		Total		501,895		528,167		(26,272)
		(2) Inventories/Sales*						(Days)
				2015		2014		Difference
				Dec.31		Dec.31
		Office		39		42		(3)
		Imaging System		43		43		0
		Industry and Others		86		132		(46)
		Total		47		50		(3)
		*Index based on the previous six months sales.
15. DEBT RATIO
				2015		2014		Difference
				Dec.31		Dec.31
		Total debt / Total assets		0.0%		0.0%		0.0%
16. OVERSEAS PRODUCTION RATIO
				2015		2014
				Year		Year
		Overseas production ratio		48%		45%
		*From the 2nd quarter of 2015, the method used to calculate the overseas production ratio has changed. The distinctions between domestic and overseas of parts supplied overseas from Japan as well as other adjustments have been made to more accurately reflect the underlying reality. Past figures have been adjusted to conform to the new method of calculation.
17. NUMBER OF EMPLOYEES
				2015		2014		Difference
				Dec.31		Dec.31
		Japan		68,325		69,201		(876)
		Overseas		121,246		122,688		(1,442)
		Total		189,571		191,889		(2,318)

 

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