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 August      , 2007

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  þ		Form 40-F  o

     [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  o		No  þ

     [If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-          

 

 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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

The following materials are included.

To Our Shareholders

     We are pleased to present our report for the summary of the first half of our 107th business term (from January 1, 2007 to June 30, 2007).

     Reviewing conditions in both the domestic and overseas economies during the first half of the current business term, the U.S. economy continued to show modest growth, despite the impact of a slowdown in housing investment and capital investment. The European economies were strong overall, including a steady recovery of consumer spending and continued growth in internal demand. Asian economies maintained their high growth particularly in China. The Japanese economy remained strong with a firm bottom in capital investment under modest growth in corporate earnings and also due to a pickup in consumer spending. In the foreign exchange markets, the yen was weaker against both the U.S. dollar and the euro compared with the first half of the previous fiscal year.

     Regarding markets in which the Canon Group operates, demand expanded greatly for digital single-lens-reflex (SLR) cameras, color network multifunction devices and color laser beam printers. Fiercer price competition for inkjet printers was accompanied by an acceleration in the shift from single-function to multifunction machines. Although demand for semiconductor production equipment showed a trend of recovery, demand for mirror projection mask aligners for LCDs fell greatly due to a restraint in capital investment by LCD panel manufacturers.

     Under these business conditions, the Canon Group, entering the second year of Phase III (2006 to 2010) of our “Excellent Global Corporation Plan,” continued to launch new products differentiated by their unique technology in a market where price competition keeps intensifying, while concentrating on various initiatives to improve our cost competitiveness and strengthen our corporate structure, by further advancing our efforts on in-house production of key components, production automation and procurement reform activities, etc.

 

     Additionally, in February and March of this year, we acquired approximately 31 million of our own shares for about 200 billion yen in order to improve our capital efficiency and to ensure a flexible future capital strategy.

     As to the earnings for the first half of the current business term, on a consolidated basis, we recorded net sales of 2,166.7 billion yen (up 11.0% from the first half of 2006), income before income taxes and minority interests of 406.1 billion yen (up 19.1%), and net income of 255.2 billion yen (up 19.1%). Also on a non-consolidated basis, we recorded net sales of 1,371.0 billion yen (up 8.3%), ordinary profit of 302.3 billion yen (up 22.8%), and net income of 200.9 billion yen (up 29.2%). All of these figures were record highs.

     For the interim dividend, we have decided to pay 50.0 yen per share from August 24.

     Looking ahead to the second half of the current business term, we expect the global economy to continue growing steadily, but also believe that factors such as rise in crude oil and other resource costs, fluctuating interest rates and intensifying market competition will continue to provide uncertainty in our business environment. Under these conditions, the Canon Group is fully committed in management to achieve strong performance in the current business term, which marks the 70th anniversary of our founding.

     We look forward to your continued support and encouragement in the future.

August 2007

Fujio Mitarai
Chairman & CEO

Tsuneji Uchida
President & COO

  Change in Profits

Net Sales (Consolidated) 100 MILLIONS OF YEN		Net Sales (Non-Consolidated) 100 MILLIONS OF YEN

Income before Income Taxes and Minority Interests (Consolidated) 100 MILLIONS OF YEN		Ordinary Profit (Non-Consolidated) 100 MILLIONS OF YEN

Net Income (Consolidated) 100 MILLIONS OF YEN		Net Income (Non-Consolidated) 100 MILLIONS OF YEN

  Business Conditions by Operations

n Sales by Operations

Consolidated

Operations		Sales				Change from the First
		(100 millions of yen)				Half of Fiscal 2006 (%)
Business Machines			14,466				12.4
Office Imaging Products			6,324				8.0
Computer Peripherals			7,607				17.6
Business Information Products			535				(1.9	)
Cameras			5,196				12.9
Optical and Other Products			2,005				(2.3	)
Total			21,667				11.0

Non-Consolidated

Operations		Sales				Change from the First
		(100 millions of yen)				Half of Fiscal 2006 (%)
Business Machines			9,245				10.9
Office Imaging Products			2,771				8.5
Computer Peripherals			6,474				11.9
Cameras			3,688				11.6
Optical and Other Products			777				(23.6	)
Total			13,710				8.3

Consolidated		Non-Consolidated

Note:

Regarding the segment of “Business Information Products” within the “Business Machines” category in the consolidated information above, there were no sales on a non-consolidated basis.

n Business Machines Operations

Office Imaging Products

     Regarding color machines in our “imageRUNNER series” of office-use digital network multifunction devices, in a market shifting toward color machines, we launched the “iR C5185/C5185N,” which are the two top models in the series, capable of printing 51 color pages per minute. We also worked to increase sales of the predecessor model—the popular “iR C5180” —as well as the affordable “iR C3380/C2880 series.”

     As for black-and-white machines, we began and worked to expand sales of five models of three high-speed multifunctional products, including the “iR5075N/iR5065N,” which boasts excellent productivity and energy saving, as well as six models of three affordable products, including the “iR3045F/3035F,” which combines energy saving with space-saving. We also worked to expand our solution business, leveraging the Multifunctional Embedded Application Platform (“MEAP”) capable of expanding range of functions, which is installed on our “imageRUNNER series.”

     Additionally, regarding printers for digital commercial printing, under our new “imagePRESS” brand launched last year toward our full-scale entry into the Digital Commercial Printing market which is expected to grow, we launched sales of the “imagePRESS C7000VP” which is capable of printing 70 pages per minute in both color and black-and-white, and worked to expand sales together with our popular “imagePRESS C1.”

     In the multifunctional black-and-white machines for individuals and small-business owners, of which market is expanding in Japan and overseas, we launched three products, including the “Satera MF4150” which is capable of printing 20 pages per minute, as well as the “Satera MF4680” which can be used on a network, and worked to expand sales of these products.

     As a result of these activities, sales for this segment grew by 8.0% on a consolidated basis and by 8.5% on a non-consolidated basis, both in comparison to the first half of 2006.

 

Consolidated

 

Non-Consolidated

 

Computer Peripherals

     The conditions for inkjet printers remained severe, with intensifying price competition amid a market slowdown. Under these circumstances, we worked to differentiate our products through our proprietary “FINE” high-precision print head technology, and by pursuing beautiful design and high usability. We also worked to expand our product lineup, launching such products as the “PIXUS iP2500” which offers luxurious design and high definition printing for its affordable price, the compact “PIXUS iP90v” into which miniaturization technologies are concentrated, and the “PIXUS Pro9500” model for professionals and high-end amateurs which uses 10-color pigment ink and supports A3 wide-size paper and half-size. Additionally, amid accelerating shift from single-function to multifunction devices, our mid-level “PIXUS MP600” multifunction machine has gained great popularity in the market, maintaining a high share in the Japanese market since its launch last year.

     In laser beam printers, as for OEM-brand products, we enjoyed steadily growing unit sales of affordable black-and-white and color products which led to solid sales revenue. As for Canon-brand products, amid growing demand for color machines, we introduced the compact “Satera LBP5100” with an automated double-sided printing function and printing capability of 10 color pages per minute, and worked to promote sales together with our high-speed “Satera LBP5900/5600” capable of printing A3 paper.

     As for black-and-white machines, we launched the “Satera LBP3970/3920” high-speed, compact machines capable of printing A3 paper, and achieved favorable sales as well as the “Satera LBP3000/2900” with double-sided printing as a standard function.

     We also worked to advance our solution business by making proposals of printing environment to respond to our customer’s business types and needs utilizing the “MEAP-Lite” function expansion system.

     As a result of these activities, sales for this segment grew by 17.6% on a consolidated basis and by 11.9% on a non-consolidated basis, both in comparison to the first half of 2006.

 

Consolidated

 

Non-Consolidated

 

Business Information Products

     The market for office-use document scanners has continued to grow due to the demand for businesses to digitize their documents in order to comply with various laws related to company’s internal control, the management of personal information, and the management of medical related information. Under these circumstances, in the “DR Scanner series” handled by Canon Electronics Inc., we introduced the compact and affordable “DR-2580C” and “DR-2050CII” for which demand of such type has grown substantially, as well as the “DR-2050SP” which is capable of sending scanned data to a projector, and achieved strong growth in sales as a result of our efforts for sales expansion.

     Regarding the calculators handled by Canon Electronics Business Machines (H.K.) Co., Ltd., we launched for the Japanese market the “BP36-DTS” calculator with a high-speed, quiet printer capable of printing 5.6 lines per second and worked to expand sales. Also print-capable calculators continued to enjoy a favorable reception in the U.S. market and maintained their high share. Regarding the electronic dictionaries for the Japanese market also handled by that company, the flagship “wordtank V300” learner’s model featuring a large full touch-screen panel, and our “wordtank M300” which while compact offers a full range of learning features, were introduced and helped to increase sales.

     As for servers and personal computers handled by Canon Marketing Japan Inc., single product sales fell as that Company moved ahead with its shift to the solutions business.

     As a result of these activities, sales for this segment fell by 1.9% on a consolidated basis in comparison to the first half of 2006. For this segment, there were no sales on a non-consolidated basis.

 

Consolidated

 

n Camera Operations

     In digital cameras, amid the expanding demand for SLR products, the “EOS-1D Mark III” launched as our flagship model in May was selected in Europe as Best Professional Digital SLR Camera and enjoyed a favorable response in the market. Also “EOS 30D” for high-end amateurs, and the compact, lightweight “EOS Kiss Digital X” launched last year maintained their strong sales, and sales of SLR products increased as a result. Consequently, sales of our “EF lens series,” dedicated flashes and other products also marked sound sales increases.

     In the area of compact digital cameras, we have increased sales, launching three products in our stylish “IXY DIGITAL series,” including the “IXY DIGITAL 10” featuring 3x zoom in a simple, square design, and the “IXY DIGITAL 810 IS” employing optical image stabilization function, both of which are equipped with a face recognition function, as well as seven products in our “PowerShot series” featuring broad range of shooting styles with a variety of product lineup, including the “PowerShot S5 IS” with 12x optical zoom, and the “PowerShot A570 IS” which is the first affordable camera equipped with the DIGIC III imaging processor.

     Additionally, in the compact photo printers, we enhanced our product lineup in the dye sublimation “SELPHY series” printers with the launch of the “CP750/CP740” featuring a larger color LCD monitor.

     In digital video cameras, we introduced such new products as the “iVIS HV20” HDV model featuring a built-in full HD CMOS sensor for even greater sensitivity and the “iVIS DC50” 5-megapixel DVD model featuring dual layer disk, and worked to increase sales, and as a result, increased our share in the market for HD video cameras where demand is expected to grow.

     As a result of these activities, sales for this segment grew by 12.9% on a consolidated basis and by 11.6% on a non-consolidated basis, both in comparison to the first half of 2006.

 

Consolidated

 

Non-Consolidated

 

n Optical and Other Products Operations

     In semiconductor production equipment, unit shipments into the market have increased amid growing demand for semiconductors and aggressive capital investment by manufacturers. Under these conditions, we worked to increase sales of the “FPA-6000ES5a” KrF (krypton fluoride) stepper and the “FPA-5500iZa” i-line stepper.

     Regarding mirror projection mask aligners for LCDs, the market shrunk greatly as a consequence of manufacturers continuing to restrain capital investment due to a glut in LCD panel production. Amid these circumstances, although we introduced the new “MPAsp-H700” eighth-generation mirror projection mask aligner for LCDs, and worked actively to increase sales, unit sales and sales revenue both declined.

     In the area of large-format inkjet printers, the market showed a strong growth due to new demand created by a wide range of applications in large-format printing such as the production of posters. In this context, we introduced the new “imagePROGRAF iPF6100” capable of printing A1-plus paper, and worked to expand sales. As a result of these efforts, sales increased greatly.

     Regarding broadcast-use television lenses, we introduced several new products, including the “KH13×4.5” and “KJ13×6B,” which are compact, lightweight standard zoom lenses for affordable High Definition Television (HDTV) cameras. As a result of these enhancements to our lineup, sales grew strongly.

     In medical equipment, we worked to expand sales of our “CXDI-50G” X-ray digital camera equipped with our own Flat Panel X-Ray Image Sensor. As a result of these efforts, we recorded strong sales.

     The “BESTEM series” die bonder handled by Canon Machinery Inc. remained popular, and the semiconductor sputtering equipment and magnetic head film deposition equipment and other products handled by Canon ANELVA Corporation also recorded strong performance.

     As a result of these activities, sales for this segment fell by 2.3% on a consolidated basis and by 23.6% on a non-consolidated basis, both in comparison to the first half of 2006.

 

Consolidated

 

Non-Consolidated

 

Note:

The products mentioned above may have different names in other areas.

  Consolidated Financial Statements

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

Consolidated Balance Sheets

ASSETS		Millions of yen
		As of June 30, 2007 (Unaudited)				As of Dec. 31, 2006
Current assets:
Cash and cash equivalents			1,108,728				1,155,626
Time deposits			22,166				41,953
Marketable securities			294				10,445
Trade receivables, net			729,298				761,947
Inventories			575,036				539,057
Prepaid expenses and other current assets			282,254				273,321
Total current assets			2,717,776				2,782,349
Noncurrent receivables			14,560				14,335
Investments			116,471				110,418
Property, plant and equipment, net			1,336,716				1,266,425
Other assets			422,991				348,388
Total assets			4,608,514				4,521,915
LIABILITIES AND STOCKHOLDERS' EQUITY		Millions of yen
		As of June 30, 2007 (Unaudited)				As of Dec. 31, 2006
Current liabilities:
Short-term loans and current portion of long-term debt			5,301				15,362
Trade payables			506,177				493,058
Income taxes			135,090				133,745
Accrued expenses			318,330				303,353
Other current liabilities			215,850				217,789
Total current liabilities			1,180,748				1,163,307
Long-term debt, excluding current installments			16,290				15,789
Accrued pension and severance cost			49,210				83,876
Other noncurrent liabilities			63,198				55,536
Total liabilities			1,309,446				1,318,508
Minority interests			224,701				216,801
Commitment and contingent liabilities
Stockholders’ equity:
Common stock			174,674				174,603
[Authorized shares] (share)			[3,000,000,000	]			[3,000,000,000	]
[Issued shares] (share)			[1,333,588,114	]			[1,333,445,830	]
Additional paid-in capital			403,577				403,510
Legal reserve			45,730				43,600
Retained earnings			2,552,314				2,368,047
Accumulated other comprehensive income (loss)			104,169				2,718
Treasury stock			(206,097	)			(5,872	)
[Treasury shares] (share)			[32,993,191	]			[1,794,390	]
Total stockholders’ equity			3,074,367				2,986,606
Total liabilities and stockholders’ equity			4,608,514				4,521,915

 

Notes:

1.		Allowance for doubtful receivables	16,553 million yen
2.		Accumulated depreciation of property, plant and equipment	1,488,148 million yen
3.		Accumulated other comprehensive income (loss) include foreign currency translation adjustments, net unrealized gains and losses on securities, net gains and losses on derivative financial instruments and pension liability adjustments.
4.		Collateral assets	222 million yen
5.		Guarantees of bank borrowings by employees and consolidated subsidiaries and affiliated companies	28,507 million yen
6.		Number of consolidated subsidiaries and affiliated companies accounted for under equity method is 230 and 19 respectively.

 

Consolidated Statements of Income

Millions of yen
		Six months ended				Six months ended
		June 30, 2007				June 30, 2006
		(Unaudited)				(Unaudited)
Net sales			2,166,724				1,952,255
Cost of sales			1,059,170				973,542
Gross profit			1,107,554				978,713
Operating expenses:
Selling, general and administrative expenses			548,411				493,709
Research and development expenses			170,267				146,527
			718,678				640,236
Operating profit			388,876				338,477
Other income (deductions):
Interest and dividend income			17,367				11,143
Interest expense			(795	)			(625	)
Other, net			693				(7,950	)
			17,265				2,568
Income before income taxes and minority interests			406,141				341,045
Income taxes			142,836				118,814
Income before minority interests			263,305				222,231
Minority interests			8,122				8,057
Net income			255,183				214,174

Note:

	Net income per share
	Basic		194.38 yen
	Diluted		194.33 yen

Other significant matter:

Prior to the second quarter of fiscal 2007, the Company and its domestic subsidiaries had depreciated machinery and equipment under the fixed-percentage-on-declining base method with certain salvage values. As a result of evaluation of its depreciation method, effective second quarter of 2007, the Company and its domestic subsidiaries have changed their depreciation method to 250% declining balance method with salvage values of 1 yen. As a result of this change, income before income taxes and minority interests, and net income for the six months ended June 30, 2007 decreased by 19,330 million yen and 11,178 million yen, respectively.

 

Consolidated Statements of Stockholders’ Equity

Millions of yen
		Common stock				Additional paid-in capital				Legal reserve				Retained earnings				Accumulated other comprehensive income (loss)				Treasury stock				Total stockholders’ equity
Balance at December 31, 2006			174,603				403,510				43,600				2,368,047				2,718				(5,872	)			2,986,606
Cumulative effect of a change in accounting principle — adoption of EITF 06-2, net of tax															(2,204	)											(2,204	)
Conversion of convertible debt and other			71				63																				134
Cash dividends															(66,582	)											(66,582	)
Transfers to legal reserve											2,130				(2,130	)											-
Comprehensive income:
Net income															255,183												255,183
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments																			49,237								49,237
Net unrealized gains and losses on securities																			1,438								1,438
Net gains and losses on derivative instruments																			(977	)							(977	)
Pension liability adjustments																			51,753								51,753
Total comprehensive income																											356,634
Repurchase of treasury stock, net							4																(200,225	)			(200,221	)
Balance at June 30, 2007 (Unaudited)			174,674				403,577				45,730				2,552,314				104,169				(206,097	)			3,074,367

  Non-Consolidated Financial Statements

Non-Consolidated Balance Sheets

ASSETS		Millions of yen
		As of June 30,				As of Dec. 31,
		2007				2006
Current Assets			1,431,255				1,622,281
Cash and deposits			206,144				324,053
Notes receivable			267,168				295,862
Accounts receivable			566,660				621,656
Finished goods			115,155				93,685
Work in process			111,031				107,666
Raw materials and supplies			5,487				4,642
Deferred tax assets			37,201				34,124
Short-term loans receivable			20,281				19,320
Other current assets			102,147				121,295
Allowance for doubtful receivables			(19	)			(22	)
Fixed Assets			1,377,390				1,315,791
Property, Plant And Equipment			866,142				818,094
Buildings			434,729				418,087
Machinery			161,263				150,795
Vehicles			433				332
Tools and equipment			59,424				54,985
Land			136,472				133,522
Construction in progress			73,821				60,373
Intangibles			37,810				34,480
Software			34,317				31,999
Other intangible assets			3,493				2,481
Investments			473,438				463,217
Marketable securities-noncurrent			32,875				38,571
Investment in affiliated companies			357,051				347,051
Long-term loans receivable			8,101				4,897
Long-term pre-paid expenses			13,980				13,741
Deferred tax assets-noncurrent			55,307				53,810
Guarantees			2,019				2,141
Other noncurrent assets			4,169				3,102
Allowance for doubtful receivables-noncurrent			(64	)			(96	)
TOTAL ASSETS			2,808,645				2,938,072

 

LIABILITIES AND NET ASSETS		Millions of yen
		As of June 30,				As of Dec. 31,
		2007				2006
Current Liabilities			713,735				770,621
Notes payable			2,437				2,248
Accounts payable			374,423				406,771
Short-term loans			34,657				36,452
Other payable			86,668				115,245
Accrued expenses			64,333				70,238
Accrued income taxes			104,212				103,871
Deposits			12,085				10,161
Accrued warranty expenses			3,131				3,171
Accrued bonuses for employees			4,935				5,656
Accrued bonuses for directors			148				295
Other current liabilities			26,706				16,513
Noncurrent Liabilities			52,310				58,168
Convertible debentures			176				318
Accrued pension and severance cost			47,069				52,376
Accrued directors’ retirement benefit			1,261				1,209
Reserve for environmental provision			3,804				4,265
TOTAL LIABILITIES			766,045				828,789
Stockholders’ Equity			2,035,807				2,101,545
Common Stock			174,674				174,603
Capital Surplus			306,227				306,152
Additional paid-in capital			306,201				306,130
Other capital surplus			26				22
Retained Earnings			1,761,003				1,626,662
Legal reserve			22,114				22,114
Other retained earnings			1,738,889				1,604,548
Reserve for special depreciation			10,191				12,485
Reserve for deferral of capital gain on property			1,273				1,292
Special reserves			1,249,928				1,249,928
Retained earnings brought forward			477,497				340,843
Treasury Stock			(206,097	)			(5,872	)
Difference Of Appreciation And Conversion			6,793				7,738
Net Unrealized Gains (Losses) On Securities			7,907				8,899
Net Deferred Profits (Losses) On Hedges			(1,114	)			(1,161	)
TOTAL NET ASSETS			2,042,600				2,109,283
TOTAL LIABILITIES AND NET ASSETS			2,808,645				2,938,072

 

Non-Consolidated Statements of Income

Millions of yen
			Six months ended				Six months ended
			June 30, 2007				June 30, 2006
Net sales				1,370,988				1,266,000
Cost of sales				830,843				785,624
Gross profit				540,145				480,376
Selling, general and administrative expenses				259,782				239,954
Operating profit				280,363				240,422
Other Income				60,708				41,114
Interest income				1,684				769
Dividend income				13,970				2,572
Rental income				21,855				17,405
Patent royalties				17,726				14,864
Miscellaneous income				5,473				5,504
Other Expense				38,795				35,435
Interest expense				314				34
Depreciation of rental assets				19,009				15,661
Loss on disposal and write-off of inventories				1,910				4,334
Foreign exchange loss				12,499				11,402
Miscellaneous loss				5,063				4,004
Ordinary profit				302,276				246,101
Non-Ordinary Income				494				335
Gain on sales of fixed assets				404				335
Gain on sales of marketable securities-noncurrent				90				-
Non-Ordinary Loss				1,433				8,299
Loss on sales and disposal of fixed assets				1,433				2,975
Loss on impairment of fixed assets				-				5,218
Loss on sales of marketable securities-noncurrent				-				34
Loss on sales of investments in affiliated companies				-				72
Income before income taxes				301,337				238,137
Income taxes	-Current			104,356				77,942
	-Deferred			(3,944	)			4,647
Net income				200,925				155,548

 

Notes to Non-Consolidated Balance Sheets

Accumulated depreciation of property, plant and equipment		782,984 million yen
Accumulated impairment losses of property, plant and equipment		494 million yen
Cautionary obligation and other
Cautionary obligation contract		24,231 million yen

Notes to Non-Consolidated Statements of Income

Net income per share		153.05 yen

(Change of Depreciation Method)

		Due to the amendment of Japanese Corporate Tax Law in 2007, the Company changed its method of depreciation of buildings purchased on or after April 1, 2007 to the straight-line method at rates prescribed in the amended corporate tax law and its method of depreciation of other tangible fixed assets purchased on or after April 1, 2007 to the declining-balance method at rates prescribed in the amended corporate tax law.
		The changes in accounting for depreciation did not have a material impact on the statements of income.

 

Non-Consolidated Statements of changes in Stockholders’ Equity

		Stockholders’ equity
			Common stock				Capital surplus										Retained earnings
								Additional paid-in capital					Other capital surplus					Legal reserve
																							Reserve for
																							special
																							depreciation
Balance of December 31, 2006				174,603					306,130					22					22,114					12,485
Changes in the term
Issuance of new shares
Conversion of convertible debentures				71					71
Transfer to reserve for special depreciation																								536
Reversal of reserve for special depreciation																								(2,829	)
Transfer to reserve for deferral of capital gain on property
Reversal of reserve for deferral of capital gain on property
Transfer to special reserves
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock														4
Net change of items other than stockholders’ equity
Total changes in the term				71					71					4					—					(2,294	)
Balance of June 30, 2007				174,674					306,201					26					22,114					10,191

Notes:

1.		Number of outstanding shares as of June 30, 2007		1,333,588,114 shares
2.		Classes and number of treasury stock

Classes of stock

Balance as of December 31, 2006

Increase

Decrease

Balance as of June 30, 2007

Common stock

1,794,390 shares

31,201,445 shares

2,644 shares

32,993,191 shares

(Reason for change)
The increase of 31,201,445 shares reflects the acquisition of 31,165,500 shares as approved by the resolution of the board of directors’ meeting, and the purchase of 35,945 shares based on the shareholders’ request for purchase of shares less-than-one-unit. The decrease reflects the sale of 2,644 shares based on the shareholders’ request for the sale of shares less-than-one-unit.

 

Millions of yen
Stockholders’ equity																										Difference of appreciation and conversion										Total net assets
Retained earnings																Treasury stock					Total stockholders’ equity					Net unrealized gains (losses) on securities					Net Deferred profits (losses) on hedges
Other retained earnings
	Reserve for deferral of capital gain on property					Special reserves					Retained earnings brought forward
		1,292					1,249,928					340,843					(5,872	)				2,101,545					8,899					(1,161	)				2,109,283
																						-															-
																						142															142
												(536	)									-															-
												2,829										-															-
																						-															-
		(19	)									19										-															-
																						-															-
												(66,583	)									(66,583	)														(66,583	)
												200,925										200,925															200,925
																	(200,239	)				(200,239	)														(200,239	)
																	14					17															17
																						-					(992	)				47					(945	)
		(19	)				-					136,654					(200,225	)				(65,738	)				(992	)				47					(66,683	)
		1,273					1,249,928					477,497					(206,097	)				2,035,807					7,907					(1,114	)				2,042,600

3.

Dividend from surplus

Resolution

Total amount of dividends (Millions of yen)

Dividend per share (Yen)

Record date

Effective date

March 29, 2007

The ordinary general meeting of shareholders

66,583

50.00

December 31, 2006

March 30, 2007

July 26, 2007 Board of directors’ meeting

65,030

50.00

June 30, 2007

August 24, 2007

  COMPANY PROFILE

(The following statements are the status as of June 30, 2007, if not specified otherwise.)

n Canon Group Global Network

(1)  Major Overseas Bases

Name [Location]
R&D
Canon Development Americas, Inc.          [U.S.A.]
Canon Technology Europe Ltd.          [U.K.]
Canon Research Centre France S.A.S.          [France]
Canon Information Systems Research Australia Pty. Ltd.          [Australia]
Manufacturing
Canon Virginia, Inc.          [U.S.A.]
Canon Giessen GmbH          [Germany]
Canon Bretagne S.A.S.          [France]
Canon Dalian Business Machines, Inc.          [China]
Canon Zhuhai, Inc.          [China]
Canon Zhongshan Business Machines Co., Ltd.          [China]
Canon (Suzhou) Inc.          [China]
Canon Inc., Taiwan          [Taiwan]
Canon Hi-Tech (Thailand) Ltd.          [Thailand]
Canon Vietnam Co., Ltd.          [Vietnam]
Canon Opto (Malaysia) Sdn. Bhd.          [Malaysia]
Marketing
Canon U.S.A., Inc.          [U.S.A.]
Canon Canada, Inc.          [Canada]
Canon Latin America, Inc.          [U.S.A.]
Canon Europa N.V.          [Netherlands]
Canon (UK) Ltd.          [U.K.]
Canon France S.A.S.          [France]
Canon Deutschland GmbH          [Germany]
Canon North-East Oy          [Finland]
Canon (China) Co., Ltd.          [China]
Canon Hongkong Co., Ltd.          [Hong Kong]
Canon Singapore Pte. Ltd.          [Singapore]
Canon Australia Pty. Ltd.          [Australia]
Canon do Brasil Indústria e Comércio Limitada          [Brazil]
Canon Chile, S.A.          [Chile]
Canon South Africa Pty. Ltd.          [South Africa]
R&D, Manufacturing and Marketing
Canon Electronic Business Machines (H.K.) Co., Ltd.          [Hong Kong]

 

(2)  Major Domestic Bases

Name [Location]
Canon Inc.,
Headquarters          [Tokyo]
Ayase Office          [Kanagawa Pref.]
Hiratsuka Development Center          [Kanagawa Pref.]
Ami Plant          [Ibaraki Pref.]
Optics R&D Center          [Tochigi Pref.]
Toride Plant          [Ibaraki Pref.]
Kosugi Office          [Kanagawa Pref.]
Fuji-Susono Research Park          [Shizuoka Pref.]
Yako Office          [Kanagawa Pref.]
Tamagawa Plant          [Kanagawa Pref.]
Utsunomiya Plant          [Tochigi Pref.]
Utsunomiya Optical Products Plant          [Tochigi Pref.]
Manufacturing
Oita Canon Inc.          [Oita Pref.]
Canon Chemicals Inc.          [Ibaraki Pref.]
Nagahama Canon Inc.          [Shiga Pref.]
Fukushima Canon Inc.          [Fukushima Pref.]
Marketing
Canon Marketing Japan Inc.          [Tokyo]
Canon Software Inc.          [Tokyo]
R&D, Manufacturing and Marketing
Canon Electronics Inc.          [Saitama Pref.]
Canon Finetech Inc.          [Ibaraki Pref.]
Canon Machinery Inc.          [Shiga Pref.]
Nisca Corporation          [Yamanashi Pref.]
Canon ANELVA Corporation          [Tokyo]

n Main Activities of the Canon Group

     Canon Group is engaged in the manufacture and sales of the following products.

Operations				Main Products
Business Machines		Office Imaging Products		Network Multifunction Devices, Laser Multifunction Printers, Copying Machines
		Computer Peripherals		Laser Beam Printers, Inkjet Printers, Inkjet Multifunction Printers, Image Scanners
		Business Information Products		Computers, Document Scanners, Handy Terminals, Calculators, Electronic Dictionaries
Cameras				Digital Cameras, Digital Video Cameras, Interchangeable Lenses, LCD Projectors
Optical and Other Products				Semiconductor Production Equipment, Mirror Projection Mask Aligners for LCDs, Broadcast-use Television Lenses, Medical Image Recording Equipment, Large-Format Inkjet Printers, Vacuum Equipment for Electronic Components

 

n  Employees of the Canon Group

Consolidated

Number of employees		127,338 persons
(Increase of 8,839 persons from the end of the previous term)
Americas		10,350 persons
Europe		11,537 persons
Japan		54,487 persons
Others		50,964 persons

Note:
The number of employees represents the total number of employees excluding those who do not work full-time.

Non-Consolidated

Number of employees		20,937 persons
Increase from the end of the previous term		560 persons
Average age		39.3 years
Average years of service		15.7 years

Notes:

n  Shares and Convertible Debentures

(1) Shares

Number of Shares Issuable           3,000,000,000 shares

Outstanding Shares, Capital Stock and Number of Shareholders

		As of the end of				Increase (decrease)				As of the end of
		the Previous Term				during this Half-Term				this Half-Term
Outstanding Shares			1,333,445,830				142,284				1,333,588,114
(share)
Capital Stock (yen)			174,603,298,109				70,999,716				174,674,297,825
Number of Shareholders (person)			120,770				(8,192	)			112,578

Note:
The increase of the outstanding shares and capital stock during this half-term reflect the conversion of convertible debentures into shares.

(2) Shareholding by Category

		Number of Shareholders				Number of Shares
Banking Companies			350				521,507,767
Securities Underwriting Companies			70				45,358,890
Other Domestic Companies			1,161				42,870,443
Foreign Companies, etc.			1,189				609,870,823
Individual and Others			109,807				80,987,000
Treasury Stock			1				32,993,191
Total			112,578				1,333,588,114

Shareholding Ratio

(3) Convertible Debentures

The third series of Unsecured Convertible Debentures Due 2008     MILLIONS OF YEN

 

n  Directors and Corporate Auditors

Directors

Position		Name		Business in Charge or Representatives of other Organization, etc.
Chairman & CEO		Fujio Mitarai		Chairman of Nippon Keidanren
President & COO		Tsuneji Uchida
Vice President		Toshizo Tanaka		Group Executive of Policy & Economy Research
				Headquarters
Senior Managing Director		Nobuyoshi Tanaka		Group Executive of Corporate Intellectual
				Property & Legal Headquarters
Senior Managing Director		Junji Ichikawa		Chief Executive of Optical Products Operations
Senior Managing Director		Hajime Tsuruoka		President of Canon Europa N.V.
Managing Director		Akiyoshi Moroe		Group Executive of Human Resources
				Management & Organization Headquarters and
				Group Executive of External Relations
				Headquarters
Managing Director		Kunio Watanabe		Group Executive of Corporate Planning
				Development Headquarters and Deputy Group
				Executive of Policy & Economy Research
				Headquarters
Managing Director		Yoroku Adachi		President & CEO of Canon U.S.A., Inc.
Managing Director		Yasuo Mitsuhashi		Chief Executive of Peripheral Products
				Operations
Managing Director		Tomonori Iwashita		Group Executive of Global Environment
				Promotion Headquarters and Group Executive of
				Quality Management Headquarters
Managing Director		Masahiro Osawa		Group Executive of Finance & Accounting
				Headquarters
Managing Director		Shigeyuki Matsumoto		Group Executive of Device Technology
				Development Headquarters
Director		Katsuichi Shimizu		Chief Executive of Inkjet Products Operations
Director		Ryoichi Bamba		Executive Vice President of Canon U.S.A., Inc.
Director		Toshio Homma		Chief Executive of L Printer Products Operations
Director		Keijiro Yamazaki		Group Executive of General Affairs Headquarters
Director		Shunichi Uzawa		Group Executive of Core Technology
				Development Headquarters
Director		Masaki Nakaoka		Chief Executive of Office Imaging Products
				Operations
Director		Toshiyuki Komatsu		Group Executive of Leading-Edge Technology
				Development Headquarters
Director		Haruhisa Honda		Group Executive of Production Engineering
				Headquarters
Director		Tetsuro Tahara		Group Executive of Global Manufacturing &
				Logistics Headquarters
Director		Seijiro Sekine		Group Executive of Information &
				Communication Systems Headquarters
Director		Shunji Onda		Group Executive of Global Procurement
				Headquarters
Director		*Kazunori Fukuma		President of SED Inc.
Director		*Hideki Ozawa		President of Canon (China) Co. Ltd.
Director		*Masaya Maeda		Chief Executive of Image Communication
				Products Operations