FORM 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

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

the Securities Exchange Act of 1934

 

For the month of ….  

July

  ……………………………………………… ,   

2017

 

 

   CANON INC.   
   (Translation of registrant’s name into English)   
   30-2, Shimomaruko 3-Chome, Ohta-ku, Tokyo 146-8501, Japan   
   (Address of principal executive offices)   

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F

  X   Form 40-F     

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes

      

No

  X

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


SIGNATURES

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

 

CANON INC.

 
   (Registrant)  

 

Date….

  July 27, 2017        By……/s/……… Eiji Shimizu………
                                         (Signature)*
        
        
        
        
        

                  Eiji Shimizu

                  General Manager

                   Consolidated Accounting Div.

                  Canon Inc.

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

The following materials are included.

1. RESULTS FOR THE SECOND QUARTER AND THE FIRST HALF ENDED JUNE 30, 2017


LOGO

CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND

THE FIRST HALF ENDED JUNE 30, 2017

July 27, 2017

CONSOLIDATED RESULTS FOR THE SECOND QUARTER

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

 

     Actual         
             Three months        
ended
June 30, 2017
            Three months        
ended
June 30, 2016
        Change(%)    

 

            Three months        
ended
June 30, 2017
               

Net sales

   ¥ 992,473       ¥ 860,246         +       15.4       $ 8,861,366            

Operating profit

     96,319         68,596         +       40.4         859,991            

Income before income taxes

     99,556         80,992         +       22.9         888,893            

Net income attributable

to Canon Inc.

   ¥ 69,180       ¥ 53,448         +       29.4       $ 617,679            
  

 

 

   

 

 

   

 

 

   

 

 

       

 

Net income attributable to Canon Inc. shareholders per share:

 

         

- Basic

   ¥ 63.53       ¥ 48.94         +       29.8       $ 0.57            

- Diluted

     63.53         48.94         +       29.8         0.57            
  

 

 

   

 

 

   

 

 

   

 

 

       

 

CONSOLIDATED RESULTS FOR THE FIRST HALF

 

 

       

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

 

 

     Actual      Projected  
     Six months
ended
  June 30, 2017  
    Six months
ended
June 30, 2016
    Change(%)

 

    Six months
ended
June 30, 2017
     Year ending
December 31,
2017
     Change(%)

 

 

Net sales

   ¥ 1,965,234       ¥ 1,657,476         +       18.6       $   17,546,732        ¥   4,050,000          +       19.1    

Operating profit

     171,984         108,683         +       58.2         1,535,571          330,000          +       44.2    

Income before income taxes

     177,566         126,753         +       40.1         1,585,411          340,000          +       39.0    

Net income attributable

to Canon Inc.

   ¥ 124,269       ¥ 81,439         +       52.6       $ 1,109,545        ¥ 220,000          +       46.0    
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

Net income attributable to Canon Inc. shareholders per share:

 

         

- Basic

   ¥ 113.98       ¥ 74.57         +       52.8       $ 1.02        ¥ 202.68          +       46.9    

- Diluted

     113.98         74.57         +       52.8         1.02          -            -      
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 
     Actual                      
     As of
June 30, 2017
    As of
December 31, 2016
    Change(%)

 

    As of
June 30, 2017
                     

Total assets

   ¥   5,209,750       ¥ 5,138,529         +       1.4       $ 46,515,625            
  

 

 

   

 

 

   

 

 

   

 

 

         

Canon Inc. shareholders’ equity

   ¥ 2,775,142       ¥ 2,783,129         -       0.3       $ 24,778,054            
  

 

 

   

 

 

   

 

 

   

 

 

         

 

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 JPY112=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of June 30, 2017, solely for the convenience of the reader.

 

 

Canon Inc.

   30-2, Shimomaruko 3-chome, Ohta-ku,

Headquarter office

   Tokyo 146-8501, Japan
   Phone: +81-3-3758-2111

 

-1-


I. Operating Results and Financial Conditions

2017 Second Quarter in Review

Looking back at the global economy in the second quarter of 2017, the U.S. economy continued to grow steadily as employment conditions and corporate earnings continued to improve. In Europe, the economy continued to recover moderately, centered on Germany and the U.K. The Chinese economy rallied due to public investments, and the economies of emerging countries realized moderate growth. In Japan, corporate earnings improved and consumer spending showed signs of recovery. As a result, the global economy overall continued to realize moderate growth.

As for the markets in which Canon operates amid these conditions, demand for office multifunction devices (MFDs) remained at around the same level as the previous year, while demand for laser printers continued to recover in emerging countries, centered on China. Demand for cameras shrank moderately while demand for inkjet printers remained at the same level as the previous year. Additionally, there was solid demand for medical equipment, mainly in developed countries. Within the Industry and Others sector, demand for semiconductor lithography equipment and manufacturing equipment for organic LED (OLED) displays enjoyed strong growth.

The average values of the yen during the second quarter and the first half of the year were ¥111.12 and ¥112.27 against the U.S. dollar, respectively, year-on-year depreciations of approximately ¥3 and ¥1, and ¥122.36 and ¥121.72 against the euro, respectively, year-on-year at the same level for the second quarter and a year-on-year appreciation of approximately ¥3 for the first half of the year.

During the second quarter, office MFDs enjoyed solid demand, mainly for color models. The total sales volume of laser printers increased compared with the same period of the previous year amid recovering demand in emerging countries, supported by the increased sales of new models. Although total unit sales of interchangeable-lens digital cameras and compact cameras decreased compared with the same period of the previous year amid the shrinking market, sales of compact-system cameras increased. Looking at inkjet printers, sales volume remained at approximately the same level as the previous year, thanks to such factors as increased sales of refillable ink tank models for emerging countries and new models launched in the previous year. Additionally, sales of semiconductor lithography equipment and manufacturing equipment for OLED displays exceeded those of the previous year, thanks to favorable market conditions. Under these conditions, along with the impact of acquiring Toshiba Medical Systems Corporation (TMSC), second-quarter net sales increased by 15.4% year on year to ¥992.5 billion. Net sales for the first half of the year increased by 18.6% year on year to ¥1,965.2 billion. Although the gross profit ratio dropped by 0.4 points to 49.9% due to the effect of the product mix, gross profit increased by 14.6% year on year to ¥495.6 billion, thanks to such factors as the increase in sales and continuous cost down efforts. Operating expenses increased by 9.7% year on year to ¥399.2 billion mainly due to the impact of acquiring TMSC. As a result, second-quarter operating profit increased by 40.4% to ¥96.3 billion and other income (deductions) decreased by ¥9.2 billion due to foreign currency exchange losses, while income before income taxes increased by 22.9% year on year to ¥99.6 billion and net income attributable to Canon Inc. increased by 29.4% to ¥69.2 billion. Operating profit for the first half of the year increased by 58.2% to ¥172.0 billion while income before income taxes increased by 40.1% to ¥177.6 billion and first-half net income attributable to Canon Inc. increased by 52.6% to ¥124.3 billion.

Basic net income attributable to Canon Inc. shareholders per share was ¥63.53 for the second quarter, a year-on-year increase of ¥14.59, and ¥113.98 for the first half, a year-on-year increase of ¥39.41.

 

-2-


Results by Segment

Looking at Canon’s second-quarter performance by business unit, beginning with the Office Business Unit, unit sales of office MFDs increased from the same period of the previous year, supported by steady sales of newly launched small-office/home-office color A3 (12”x18”) imageRUNNER ADVANCE C3500-series models and A3 (12”x18”) imageRUNNER ADVANCE C5500-series models, launched in the previous year. Among high-speed continuous-feed printers, sales of the Océ-produced VarioPrint i300, a high-speed sheet-fed color inkjet press, increased year on year. As for laser printers, sales of both hardware and consumables increased from the same period of the previous year, supported by steady sales of new models which expand the product lineup. These factors resulted in total sales for the business unit of ¥470.7 billion, a year-on-year increase of 3.1%, while operating profit totaled ¥55.9 billion, a year-on-year increase of 17.4%. Sales for the combined first six months of the year totaled ¥928.4 billion, a year-on-year increase of 1.9%, while operating profit totaled ¥111.3 billion, a year-on-year increase of 20.6%.

Within the Imaging System Business Unit, although sales volume of interchangeable-lens digital cameras declined compared with the previous year, owing to the shrinking market, unit sales of compact-system cameras, including the newly launched EOS M6, increased from the same period of previous year, allowing Canon to maintain the top share in major countries in Europe, the U.S. and Japan. As for digital compact cameras, while sales volume declined amid the shrinking market, sales of high-value-added models enjoyed solid demand, supported by healthy demand for the newly launched G9 X Mark II, part of the high-image-quality PowerShot G-series lineup. As for inkjet printers, newly designed home-use models launched in the previous year and refillable ink tank models that target emerging countries enjoyed strong demand, resulting in unit sales remaining at approximately the same level as the corresponding period of the previous year. As a result, sales for the business unit decreased by 1.7% to ¥282.7 billion year on year, while operating profit totaled ¥48.5 billion, a year-on-year increase of 12.2%. Sales for the combined first six months of the year totaled ¥524.7 billion, a year-on-year increase of 0.5%, while operating profit totaled ¥77.7 billion, a year-on-year increase of 23.7%.

Within the Medical System Business Unit, a newly disclosed business unit as of this quarter, TMSC’s computed tomography products maintained the top share in Japanese market and sales of such diagnostic imaging unit products as diagnostic ultrasound systems and magnetic resonance imaging remained firm. As a result, sales for the business unit totaled ¥88.6 billion year on year, while operating profit totaled ¥0.2 billion. Sales for the combined first six months of the year totaled ¥220.4 billion while operating profit totaled ¥10.1 billion.

In the Industry and Others Business Unit, unit sales of semiconductor lithography equipment increased from the same period of the previous year as a result of increasing demand for memory devices used in data centers. Additionally, sales of FPD lithography equipment and manufacturing equipment for OLED panel devices increased in response to growing demand for high-definition OLED displays used in mobile devices. As for network cameras, sales of network cameras increased considerably compared with the previous year thanks to efforts to strengthen the product lineup. Consequently, sales for the business unit increased by 25.0% year on year to ¥172.5 billion, while operating profit grew by ¥12.7 billion from the previous year to ¥13.2 billion. Sales for the combined first six months of the year totaled ¥334.9 billion, a year-on-year increase of 24.9%, while operating profit grew by ¥22.0 billion from the previous year to ¥21.9 billion.

Cash Flow

During the first half of 2017, cash flow from operating activities totaled ¥309.1 billion, an increase of ¥67.9 billion compared with the previous year, mainly owing to improvements in profitability. Cash flow from investing activities decreased by ¥668.3 billion year on year to ¥107.8 billion due to the payment made in the previous year for the right to acquire all of the shares of TMSC. Accordingly, free cash flow totaled ¥201.3 billion, an increase of ¥736.2 billion compared with the corresponding year-ago period.

Cash flow from financing activities recorded an outlay of ¥135.1 billion, mainly owing to the dividend payout and the repurchasing of treasury stock.

Owing to these factors, as well as the impact of foreign currency translation adjustments, cash and cash equivalents increased by ¥63.6 billion to ¥693.8 billion from the end of the previous year.

 

-3-


Outlook

As for the outlook in the third quarter onward, the U.S. economy is expected to continue recovering as employment conditions and consumer spending steadily improve. The European economy is expected to recover slowly due to increasing uncertainty surrounding the U.K.’s decision to leave the EU. Looking at China, the economy is expected to stabilize through changes in fiscal policy, while emerging economies, such as those of Southeast Asia, Russia and Brazil, are expected to recover. With regard to the Japanese economy, the outlook indicates a trend of gradual recovery supported by improved employment conditions and corporate earnings. Overall, the global economy is expected to recover more firmly than the previous year, despite such concerns as increasing geopolitical risks.

In the businesses in which Canon is involved, for office MFDs, demand for color models is expected to grow moderately, despite the contraction of the market for monochrome models. Looking at the laser printer market, demand for printers is expected to improve as the economy recovers. For interchangeable-lens digital cameras, although demand continues to decrease primarily in developed countries, the pace of decline is gradually decelerating. Projections for digital compact cameras, despite solid demand for high-value-added models, indicate continued market contraction, centered mainly on low-priced models. With regard to inkjet printers, the trend of decreasing demand is expected to gradually bottom out. As for the medical equipment market, demand is expected to remain firm in response to replacement demand for medical equipment in developed countries and increasing medical needs associated with population growth in emerging countries.

Looking at industrial equipment, within the semiconductor lithography equipment segment, the market is expected to remain at the same level as the previous year, while the outlook for FPD lithography equipment and OLED display manufacturing equipment points to active capital investment by panel manufacturers, which is expected to increase demand. The network camera market is also expected to grow in response to the increasing use of network cameras for diverse applications in such area as marketing support in addition to crime prevention and disaster monitoring.

With regard to currency exchange rates for the third quarter onward, on which Canon’s performance outlook is based, Canon anticipates exchange rates of ¥112 to the U.S. dollar and ¥125 to the euro, representing depreciations of approximately ¥4 against the U.S. dollar and approximately ¥3 against the euro as the annual average rates of the previous year.

Upon taking into consideration the impact of acquiring TMSC and the current economic forecast, Canon projects full-year consolidated net sales in 2017 of ¥4,050.0 billion, a year-on-year increase of 19.1%; operating profit of ¥330.0 billion, a year-on-year increase of 44.2%; income before income taxes of ¥340.0 billion, a year-on-year increase of 39.0%; and net income attributable to Canon Inc. of ¥220.0 billion, a year-on-year increase of 46.0%.

Consolidated Outlook

 

Fiscal year   Millions of yen        
    Year ending
December 31, 2017
    Change     Year ended
December 31, 2016
    Change (%)  
    Previous Outlook (A)     Revised Outlook (B)         (B - A)         Results (C)         (B - C) / C      

Net sales

    4,020,000         4,050,000         30,000         3,401,487         +19.1%   

Operating profit

    270,000         330,000         60,000         228,866         +44.2%   

Income before income taxes

    280,000         340,000         60,000         244,651         +39.0%   

Net income attributable to Canon Inc.

    180,000         220,000         40,000         150,650         +46.0%   
 

 

 

   

 

 

 

 

 

-4-


Basic Policy Regarding Profit Distribution

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

Canon Inc. plans to distribute an interim dividend of ¥75.00 per share for the fiscal year 2017, half the amount of the annual dividend paid out in fiscal 2016, to provide a stable return to shareholders. The year-end dividend, however, has yet to be decided.

 

This document contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect management’s views and assumptions formed by available information. All statements other than statements of historical fact are statements that could be considered forward-looking statements. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” or “should” and similar expressions, as they relate to Canon, are intended to identify forward-looking statements. Many factors could cause the actual results, performance or achievements of Canon to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by Canon’s targeted customers, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this document. A detailed description of these and other risk factors is included in Canon’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Canon does not intend or assume any obligation to update these forward-looking statements.

 

-5-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED

II. Financial Statements

1. CONSOLIDATED BALANCE SHEETS

 

     Millions of yen  
     As of
        June 30, 2017        
    As of
    December 31, 2016    
                Change              

ASSETS

      

 Current assets:

      

Cash and cash equivalents

     693,826          630,193          63,633     

Short-term investments

     17,529          3,206          14,323     

Trade receivables, net

     584,148          641,458          (57,310)    

Inventories

     596,837          560,736          36,101     

Prepaid expenses and other current assets

     268,894          264,155          4,739     
  

 

 

   

 

 

   

 

 

 

Total current assets

     2,161,234          2,099,748          61,486     

 Noncurrent receivables

     34,105          29,297          4,808     

 Investments

     70,612          73,680          (3,068)    

 Property, plant and equipment, net

     1,160,042          1,194,976          (34,934)    

 Intangible assets, net

     434,547          446,268          (11,721)    

 Goodwill

     954,715          936,424          18,291     

 Other assets

     394,495          358,136          36,359     
  

 

 

   

 

 

   

 

 

 

Total assets

     5,209,750          5,138,529          71,221     
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

      

 Current liabilities:

      

Short-term loans and current portion of long-term debt

     36,906          1,850          35,056     

Trade payables

     393,075          372,269          20,806     

Accrued income taxes

     51,909          30,514          21,395     

Accrued expenses

     282,592          304,901          (22,309)    

Other current liabilities

     283,635          273,835          9,800     
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     1,048,117          983,369          64,748     

 Long-term debt, excluding current installments

     615,984          611,289          4,695     

 Accrued pension and severance cost

     415,549          407,200          8,349     

 Other noncurrent liabilities

     140,313          142,049          (1,736)    
  

 

 

   

 

 

   

 

 

 

Total liabilities

     2,219,963          2,143,907          76,056     
  

 

 

   

 

 

   

 

 

 

 Equity:

      

 Canon Inc. shareholders’ equity:

      

Common stock

     174,762          174,762          -       

Additional paid-in capital

     401,381          401,385          (4)    

Legal reserve

     66,776          66,558          218     

Retained earnings

     3,392,745          3,350,728          42,017     

Accumulated other comprehensive income (loss)

     (202,064)         (199,881)         (2,183)    

Treasury stock, at cost

     (1,058,458)         (1,010,423)         (48,035)    
  

 

 

   

 

 

   

 

 

 

Total Canon Inc. shareholders’ equity

     2,775,142          2,783,129          (7,987)    

 Noncontrolling interests

     214,645          211,493          3,152     
  

 

 

   

 

 

   

 

 

 

Total equity

     2,989,787          2,994,622          (4,835)    
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

     5,209,750          5,138,529          71,221     
  

 

 

   

 

 

   

 

 

 
     Millions of yen        
     As of
June 30, 2017
    As of
December 31, 2016
       

 Notes:

      

 1. Allowance for doubtful receivables

     11,584          11,075       

 2. Accumulated depreciation

     2,618,029          2,578,342       

 3. Accumulated other comprehensive income (loss):

      

Foreign currency translation adjustments

     (17,467)         (13,960)      

Net unrealized gains and losses on securities

     14,631          15,251       

Net gains and losses on derivative instruments

     (1,053)         (2,742)      

Pension liability adjustments

     (198,175)         (198,430)      

 

-6-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED      

2. CONSOLIDATED STATEMENTS OF INCOME AND

      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

Consolidated statements of income

 

         

Results for the second quarter

 

   Millions of yen          
     Three months
ended
         June 30, 2017          
     Three months
ended
         June 30, 2016          
   

 Change(%) 

 

Net sales

     992,473           860,246        +   15.4 

Cost of sales

     496,921           427,878         
  

 

 

    

 

 

     

Gross profit

     495,552           432,368        +   14.6 

Operating expenses:

         

Selling, general and administrative expenses

     318,741           287,208         

Research and development expenses

     80,492           76,564         
  

 

 

    

 

 

     
     399,233           363,772         
  

 

 

    

 

 

     

Operating profit

     96,319           68,596        +   40.4 

Other income (deductions):

         

Interest and dividend income

     1,686           1,425         

Interest expense

     (105)          (341)        

Other, net

     1,656           11,312         
  

 

 

    

 

 

     
     3,237           12,396         
  

 

 

    

 

 

     

Income before income taxes

     99,556           80,992        +   22.9 

Income taxes

     27,739           24,912         
  

 

 

    

 

 

     

Consolidated net income

     71,817           56,080         

Less: Net income attributable to noncontrolling interests

     2,637           2,632         
  

 

 

    

 

 

     

Net income attributable to Canon Inc.

     69,180           53,448        +   29.4 
  

 

 

    

 

 

     

Results for the first half

 

   Millions of yen          
     Six months
ended
June 30, 2017
     Six months
ended
June 30, 2016
   

Change(%)

 

Net sales

     1,965,234           1,657,476        +   18.6 

Cost of sales

     1,001,338           820,362         
  

 

 

    

 

 

     

Gross profit

     963,896           837,114        +   15.1 

Operating expenses:

         

Selling, general and administrative expenses

     630,159           572,997         

Research and development expenses

     161,753           155,434         
  

 

 

    

 

 

     
     791,912           728,431         
  

 

 

    

 

 

     

Operating profit

     171,984           108,683        +   58.2 

Other income (deductions):

         

Interest and dividend income

     2,965           2,532         

Interest expense

     (353)          (521)        

Other, net

     2,970           16,059         
  

 

 

    

 

 

     
     5,582           18,070         
  

 

 

    

 

 

     

Income before income taxes

     177,566           126,753        +   40.1 

Income taxes

     48,048           41,457         
  

 

 

    

 

 

     

Consolidated net income

     129,518           85,296         

Less: Net income attributable to noncontrolling interests

     5,249           3,857         
  

 

 

    

 

 

     

Net income attributable to Canon Inc.

     124,269           81,439        +   52.6 
  

 

 

    

 

 

     

 

-7-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED      

Consolidated statements of comprehensive income

 

Results for the second quarter

 

  Millions of yen         
        Three months    
ended
June 30, 2017
        Three months    
ended
June 30, 2016
     Change(%)

 

 

Consolidated net income

    71,817         56,080          +        28.1    

Other comprehensive income (loss), net of tax

         

Foreign currency translation adjustments

    41,490         (178,795)         

Net unrealized gains and losses on securities

    (931)        (1,492)         

Net gains and losses on derivative instruments

    (1,166)        860          

Pension liability adjustments

    (511)        41          
 

 

 

   

 

 

       
    38,882         (179,386)         
 

 

 

   

 

 

       

Comprehensive income (loss)

    110,699         (123,306)            -      

Less: Comprehensive income (loss) attributable to noncontrolling interests

    4,779         (3,923)         
 

 

 

   

 

 

       

Comprehensive income (loss) attributable to Canon Inc.

    105,920         (119,383)            -      
 

 

 

   

 

 

       

Results for the first half

 

  Millions of yen         
        Six months    
ended
June 30, 2017
        Six months    
ended
June 30, 2016
       Change(%)  

 

 

Consolidated net income

    129,518         85,296          +        51.8    

Other comprehensive income (loss), net of tax

         

Foreign currency translation adjustments

    (2,604)        (270,258)         

Net unrealized gains and losses on securities

    (591)        (6,334)         

Net gains and losses on derivative instruments

    1,707         2,372          

Pension liability adjustments

    20         2,853          
 

 

 

   

 

 

       
    (1,468)        (271,367)         
 

 

 

   

 

 

       

Comprehensive income (loss)

    128,050         (186,071)            -      

Less: Comprehensive income (loss) attributable to noncontrolling interests

    5,964         (4,735)         
 

 

 

   

 

 

       

Comprehensive income (loss) attributable to Canon Inc.

    122,086         (181,336)            -      
 

 

 

   

 

 

       

 

-8-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED  
3. DETAILS OF SALES  

      Results for the second quarter

  Millions of yen              
           Sales by business unit       Three months ended    
June 30, 2017
        Three months ended    
June 30, 2016
        Change(%)    

 

 

           Office

    470,657         456,396         +       3.1    

           Imaging System

    282,688         287,543         -       1.7    

           Medical System

    88,617         -               -      

           Industry and Others

    172,483         137,971         +       25.0    

           Eliminations

    (21,972)        (21,664)          -      
 

 

 

   

 

 

   

 

 

 

             Total

    992,473         860,246         +       15.4    
 

 

 

   

 

 

   

 

 

 
    Millions of yen              
           Sales by region       Three months ended    
June 30, 2017
        Three months ended    
June 30, 2016
        Change(%)    

 

 

           Japan

    210,897         168,535         +       25.1    

           Overseas:

       

           Americas

    274,273         247,072         +       11.0    

           Europe

    253,983         236,774         +       7.3    

           Asia and Oceania

    253,320         207,865         +       21.9    
 

 

 

   

 

 

   

 

 

 
    781,576         691,711         +       13.0    
 

 

 

   

 

 

   

 

 

 

            Total

    992,473         860,246         +       15.4    
 

 

 

   

 

 

   

 

 

 

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Net sales for the three months ended June 30, 2016 were not restated since they were not material.

      Results for the first half

  Millions of yen              
           Sales by business unit         Six months ended      
June 30, 2017
          Six months ended      
June 30, 2016
        Change(%)    

 

 

           Office

    928,402         910,748         +       1.9    

           Imaging System

    524,747         522,359         +       0.5    

           Medical System

    220,372         -               -      

           Industry and Others

    334,943         268,142         +       24.9    

           Eliminations

    (43,230)        (43,773)          -      
 

 

 

   

 

 

   

 

 

 

             Total

    1,965,234         1,657,476         +       18.6    
 

 

 

   

 

 

   

 

 

 
    Millions of yen              
           Sales by region       Six months ended    
June 30, 2017
        Six months ended    
June 30, 2016
        Change(%)    

 

 

           Japan

    441,464         337,076         +       31.0    

           Overseas:

       

           Americas

    530,146         471,320         +       12.5    

           Europe

    495,555         456,659         +       8.5    

           Asia and Oceania

    498,069         392,421         +       26.9    
 

 

 

   

 

 

   

 

 

 
    1,523,770         1,320,400         +       15.4    
 

 

 

   

 

 

   

 

 

 

            Total

    1,965,234         1,657,476         +       18.6    
 

 

 

   

 

 

   

 

 

 

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Net sales for the six months ended June 30, 2016 were not restated since they were not material.

 

Notes: 1. The primary products included in each of the segments are as follows:

Office Business Unit :

Office multifunction devices (MFDs) / Laser multifunction printers (MFPs) / Laser printers / Digital production printing systems /

High speed continuous feed printers / Wide-format printers / Document solutions

Imaging System Business Unit :

Interchangeable lens digital cameras / Digital compact cameras / Digital camcorders / Digital cinema cameras /

Interchangeable lenses / Compact photo printers / Inkjet printers / Large format inkjet printers / Commercial photo printers /

Image scanners / Multimedia projectors / Broadcast equipment / Calculators

Medical System Business Unit :

Digital radiography systems / Diagnostic x-ray systems / Computed tomography / Magnetic resonance imaging /

Diagnostic ultrasound systems / Clinical chemistry analyzers / Ophthalmic equipment

Industry and Others Business Unit :

Semiconductor lithography equipment / FPD (Flat panel display) lithography equipment / Vacuum thin-film deposition equipment /

Organic LED (OLED) panel manufacturing equipment / Die bonders / Micromotors / Network cameras / Handy terminals /

Document scanners

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

Americas: United States of America, Canada, Latin America

Europe: United Kingdom, Germany, France, Netherlands, European countries, Middle East and Africa

Asia and Oceania: China, Asian countries, Australia

 

-9-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED 

4.    CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Millions of yen  
         Six months ended    
June 30, 2017
         Six months ended    
June 30, 2016
 

Cash flows from operating activities:

     

Consolidated net income

     129,518          85,296    

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

     

Depreciation and amortization

     126,615          122,372    

Loss on disposal of fixed assets

     1,670          3,163    

Deferred income taxes

     (8,150)         (2,982)   

Decrease in trade receivables

     58,105          67,738    

Increase in inventories

     (36,543)         (31,050)   

Increase in trade payables

     20,974          26,305    

Increase (decrease) in accrued income taxes

     21,164          (12,178)   

Decrease in accrued expenses

     (22,227)         (24,148)   

Increase in accrued (prepaid) pension and severance cost

     1,189          3,824    

Other, net

     16,791          2,867    
  

 

 

    

 

 

 

 

Net cash provided by operating activities

  

 

 

 

309,106  

 

 

  

 

 

 

241,207  

 

 

Cash flows from investing activities:

     

Purchases of fixed assets

     (94,835)         (100,700)   

Proceeds from sale of fixed assets

     3,105          2,095    

Purchases of available-for-sale securities

     -            (8)   

Proceeds from sale and maturity of available-for-sale securities

     558          407    

Increase in time deposits, net

     (13,959)         (4,057)   

Acquisitions of businesses, net of cash acquired

     (5,598)         (9,226)   

Purchases of other investments

     (250)         (665,676)   

Other, net

     3,141          1,073    
  

 

 

    

 

 

 

 

Net cash used in investing activities

  

 

 

 

(107,838) 

 

 

  

 

 

 

(776,092) 

 

 

Cash flows from financing activities:

     

Proceeds from issuance of long-term debt

     1,158          238    

Repayments of long-term debt

     (2,819)         (473)   

Increase in short-term loans, net

     2,278          610,000    

Purchases of noncontrolling interests

     -            (4,993)   

Dividends paid

     (81,905)         (81,905)   

Repurchases and reissuance of treasury stock, net

     (50,012)         (6)   

Other, net

     (3,815)         (2,978)   
  

 

 

    

 

 

 

 

Net cash provided by (used in) financing activities

  

 

 

 

(135,115) 

 

 

  

 

 

 

519,883  

 

 

Effect of exchange rate changes on cash and cash equivalents

     (2,520)         (49,431)   
  

 

 

    

 

 

 

Net change in cash and cash equivalents

     63,633          (64,433)   

Cash and cash equivalents at beginning of period

     630,193          633,613    
  

 

 

    

 

 

 

 

Cash and cash equivalents at end of period

  

 

 

 

693,826  

 

 

  

 

 

 

569,180  

 

 

  

 

 

    

 

 

 

 

 

-10-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. NOTE FOR GOING CONCERN ASSUMPTION

      Not applicable.

6. SEGMENT INFORMATION

  SEGMENT INFORMATION BY BUSINESS UNIT

 

Results for the second quarter

  

Millions of yen

      

 

  

    Three months ended    

June 30, 2017

  

    Three months ended    
June 30, 2016

         Change(%)        

Office

        

Net sales:

        

 

External customers

   470,178       455,858         +          3.1     
 

Intersegment

   479       538         - 11.0     
 

 

  

 

  

 

  

 

 

 
 

Total

   470,657       456,396         + 3.1     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   414,784       408,791         + 1.5     

 

  

 

  

 

  

 

 

 

Operating profit

   55,873       47,605         + 17.4     

 

  

 

  

 

  

 

 

 

Imaging System

        

Net sales:

        
 

External customers

   282,568       287,303         - 1.6     
 

Intersegment

   120       240         - 50.0     
 

 

  

 

  

 

  

 

 

 
 

Total

   282,688       287,543         - 1.7     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   234,198       244,320         - 4.1     

 

  

 

  

 

  

 

 

 

Operating profit

   48,490       43,223         + 12.2     

 

  

 

  

 

  

 

 

 

Medical System

        

Net sales:

        
 

External customers

   88,526       -           -     
 

Intersegment

   91       -           -     
 

 

  

 

  

 

  

 

 

 
 

Total

   88,617       -           -     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   88,445       -           -     

 

  

 

  

 

  

 

 

 

Operating profit

   172       -           -     

 

  

 

  

 

  

 

 

 

Industry and Others

        

Net sales:

        
 

External customers

   151,201       117,085         + 29.1     
 

Intersegment

   21,282       20,886         + 1.9     
 

 

  

 

  

 

  

 

 

 
 

Total

   172,483       137,971         + 25.0     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   159,332       137,472         + 15.9     

 

  

 

  

 

  

 

 

 

Operating profit

   13,151       499         -     

 

  

 

  

 

  

 

 

 

Corporate and Eliminations

        

Net sales:

        
 

External customers

   -       -           -     
 

Intersegment

   (21,972)      (21,664)          -     
 

 

  

 

  

 

  

 

 

 
 

Total

   (21,972)      (21,664)          -     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   (605)      1,067           -     

 

  

 

  

 

  

 

 

 

Operating profit

   (21,367)      (22,731)          -     

 

  

 

  

 

  

 

 

 

Consolidated

        

Net sales:

        
 

External customers

   992,473       860,246         + 15.4     
 

Intersegment

   -       -           -     
 

 

  

 

  

 

  

 

 

 
 

Total

   992,473       860,246         + 15.4     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   896,154       791,650         + 13.2     

 

  

 

  

 

  

 

 

 

Operating profit

   96,319       68,596         + 40.4     

 

  

 

  

 

  

 

 

 

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for the three months ended June 30, 2016 were not restated since they were not material.

*Operating results pertaining to TMSC, a company acquired in December 2016, are included in “Medical System” for the second quarter of 2017. Amortization costs of identified intangible assets resulting from the purchase price allocation of TMSC are included in “Corporate and Eliminations”.

 

-11-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED

 

Results for the first half

  

Millions of yen

      

 

  

      Six months ended      

June 30, 2017

  

      Six months ended      
June 30, 2016

         Change(%)        

Office

        

Net sales:

        

 

External customers

   927,315       909,498         +          2.0     
 

Intersegment

   1,087       1,250         - 13.0     
 

 

  

 

  

 

  

 

 

 
 

Total

   928,402       910,748         + 1.9     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   817,101       818,439         - 0.2     

 

  

 

  

 

  

 

 

 

Operating profit

   111,301       92,309         + 20.6     

 

  

 

  

 

  

 

 

 

Imaging System

        

Net sales:

        
 

External customers

   524,468       521,870         + 0.5     
 

Intersegment

   279       489         - 42.9     
 

 

  

 

  

 

  

 

 

 
 

Total

   524,747       522,359         + 0.5     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   447,021       459,518         - 2.7     

 

  

 

  

 

  

 

 

 

Operating profit

   77,726       62,841         + 23.7     

 

  

 

  

 

  

 

 

 

Medical System

        

Net sales:

        
 

External customers

   220,150       -           -     
 

Intersegment

   222       -           -     
 

 

  

 

  

 

  

 

 

 
 

Total

   220,372       -           -     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   210,304       -           -     

 

  

 

  

 

  

 

 

 

Operating profit

   10,068       -           -     

 

  

 

  

 

  

 

 

 

Industry and Others

        

Net sales:

        
 

External customers

   293,301       226,108         + 29.7     
 

Intersegment

   41,642       42,034         - 0.9     
 

 

  

 

  

 

  

 

 

 
 

Total

   334,943       268,142         + 24.9     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   313,085       268,265         + 16.7     

 

  

 

  

 

  

 

 

 

Operating profit

   21,858       (123)          -     

 

  

 

  

 

  

 

 

 

Corporate and Eliminations

        

Net sales:

        
 

External customers

   -       -           -     
 

Intersegment

   (43,230)      (43,773)          -     
 

 

  

 

  

 

  

 

 

 
 

Total

   (43,230)      (43,773)          -     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   5,739       2,571           -     

 

  

 

  

 

  

 

 

 

Operating profit

   (48,969)      (46,344)          -     

 

  

 

  

 

  

 

 

 

Consolidated

        

Net sales:

        
 

External customers

   1,965,234       1,657,476         + 18.6     
 

Intersegment

   -       -           -     
 

 

  

 

  

 

  

 

 

 
 

Total

   1,965,234       1,657,476         + 18.6     

 

  

 

  

 

  

 

 

 

Operating cost and expenses

   1,793,250       1,548,793         + 15.8     

 

  

 

  

 

  

 

 

 

Operating profit

   171,984       108,683         + 58.2     

 

  

 

  

 

  

 

 

 

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for the six months ended June 30, 2016 were not restated since they were not material.

*Operating results pertaining to TMSC, a company acquired in December 2016, are included in “Medical System” for the first half of 2017. Amortization costs of identified intangible assets resulting from the purchase price allocation of TMSC are included in “Corporate and Eliminations”.

 

-12-


CANON INC. AND SUBSIDIARIES

CONSOLIDATED

7. SIGNIFICANT CHANGES IN CANON INC. SHAREHOLDERS’ EQUITY

    None.

8. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) GROUP POSITION

 

  1.

Number of Group Companies

 

     June 30, 2017   December 31, 2016       Change      

Subsidiaries

  373     367       6  

Affiliates

  7     9       (2

Total

  380     376       4  

 

  2.

Change in Group Entities

 

Subsidiaries

  

        Addition:

  

8 companies

        Removal:

  

2 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.

9. NOTE FOR NON-GAAP FINANCIAL MEASURES

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

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

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

 

        

Billions of yen

    
        

    Six months ended    

June 30, 2017

    
 

Net cash provided by operating activities

   309.1     
 

Net cash used in investing activities

   (107.8)    
    

 

  
 

Free cash flow

   201.3     
    

 

  

 

-13-


Canon Inc.        

July 27, 2017        

 

CONSOLIDATED RESULTS FOR THE SECOND QUARTER

AND THE FIRST HALF ENDED JUNE 30, 2017

SUPPLEMENTARY REPORT

TABLE OF CONTENTS

 

          PAGE  

1.

   SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT      S    1  

2.

   SEGMENT INFORMATION BY BUSINESS UNIT      S    2  

3.

   OTHER INCOME / DEDUCTIONS      S    2  

4.

   BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT      S    3  

5.

   SALES GROWTH IN LOCAL CURRENCY (Year over year)      S    3  

6.

   PROFITABILITY      S    4  

7.

   IMPACT OF FOREIGN EXCHANGE RATES      S    4  

8.

   STATEMENTS OF CASH FLOWS      S    4  

9.

   R&D EXPENDITURE      S    5  

10.

   INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION      S    5  

11.

   INVENTORIES      S    5  

12.

   DEBT RATIO      S    5  

13.

   OVERSEAS PRODUCTION RATIO      S    5  

14.

   NUMBER OF EMPLOYEES      S    5  

 

This document contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect management’s views and assumptions formed by available information. All statements other than statements of historical fact are statements that could be considered forward-looking statements. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” or “should” and similar expressions, as they relate to Canon, are intended to identify forward-looking statements. Many factors could cause the actual results, performance or achievements of Canon to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by Canon’s targeted customers, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this document. A detailed description of these and other risk factors is included in Canon’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Canon does not intend or assume any obligation to update these forward-looking statements.


Canon Inc.    

 

1. SALES BY GEOGRAPHIC AREA AND BUSINESS UNIT      (Millions of yen
          2017     2016              Change year over year  
         

 

 2nd quarter

 

   

 

1st half

 

   

 

Year (P)

 

   

 

 2nd quarter

 

   

 

1st half

 

   

 

Year

 

         

 

2nd quarter 

 

   

 

1st half 

 

   

 

 Year

 

 

Japan

                                   
   

Office

    95,362       189,416       -       96,434       190,538       378,834           -1.1%         -0.6%         -    
   

Imaging System

    41,287       73,898       -       42,252       77,197       179,304           -2.3%         -4.3%         -    
   

Medical System

    40,249       110,390       -       -       -       -           -         -         -    
   

Industry and Others

    33,999       67,760       -       29,849       69,341       148,841           +13.9%         -2.3%         -    
   

Total

    210,897       441,464       879,300       168,535       337,076       706,979           +25.1%         +31.0%         +24.4%    
Overseas                                    
   

Office

    374,816       737,899       -       359,424       718,960       1,426,028           +4.3%         +2.6%         -    
   

Imaging System

    241,281       450,570       -       245,051       444,673       914,987           -1.5%         +1.3%         -    
   

Medical System

    48,277       109,760       -       -       -       -           -         -         -    
   

Industry and Others

    117,202       225,541       -       87,236       156,767       353,493           +34.4%         +43.9%         -    
   

Total

    781,576       1,523,770       3,170,700       691,711       1,320,400       2,694,508           +13.0%         +15.4%         +17.7%    
    Americas                                    
   

Office

    151,391       297,730       -       145,589       292,512       582,297           +4.0%         +1.8%         -    
   

Imaging System

    81,150       147,261       -       80,936       139,332       297,403           +0.3%         +5.7%         -    
   

Medical System

    20,342       44,486       -       -       -       -           -         -         -    
   

Industry and Others

    21,390       40,669       -       20,547       39,476       83,844           +4.1%         +3.0%         -    
   

Total

    274,273       530,146       1,093,800       247,072       471,320       963,544           +11.0%         +12.5%         +13.5%    
    Europe                                    
   

Office

    149,083       290,087       -       141,234       280,398       556,353           +5.6%         +3.5%         -    
   

Imaging System

    74,812       141,368       -       79,444       145,805       293,894           -5.8%         -3.0%         -    
   

Medical System

    15,830       34,119       -       -       -       -           -         -         -    
   

Industry and Others

    14,258       29,981       -       16,096       30,456       63,276           -11.4%         -1.6%         -    
   

Total

    253,983       495,555       1,009,500       236,774       456,659       913,523           +7.3%         +8.5%         +10.5%    
    Asia and Oceania                                    
   

Office

    74,342       150,082       -       72,601       146,050       287,378           +2.4%         +2.8%         -    
   

Imaging System

    85,319       161,941       -       84,671       159,536       323,690           +0.8%         +1.5%         -    
   

Medical System

    12,105       31,155       -       -       -       -           -         -         -    
   

Industry and Others

    81,554       154,891       -       50,593       86,835       206,373           +61.2%         +78.4%         -    
   

Total

    253,320       498,069       1,067,400       207,865       392,421       817,441           +21.9%         +26.9%         +30.6%    
Intersegment                                    
   

Office

    479       1,087       -       538       1,250       2,957           -11.0%         -13.0%         -    
   

Imaging System

    120       279       -       240       489       998           -50.0%         -42.9%         -    
   

Medical System

    91       222       -       -       -       -           -         -         -    
   

Industry and Others

    21,282       41,642       -       20,886       42,034       82,326           +1.9%         -0.9%         -    
   

Eliminations

    (21,972     (43,230     -       (21,664     (43,773     (86,281         -         -         -    
   

Total

    0       0       0       0       0       0           -         -         -    
Total                                    
    Office     470,657       928,402       1,869,200       456,396       910,748       1,807,819           +3.1%         +1.9%         +3.4%    
   

Imaging System

    282,688       524,747       1,119,000       287,543       522,359       1,095,289           -1.7%         +0.5%         +2.2%    
   

Medical System

    88,617       220,372       440,000       -       -       -           -         -         -    
   

Industry and Others

    172,483       334,943       709,600       137,971       268,142       584,660           +25.0%         +24.9%         +21.4%    
   

Eliminations

    (21,972     (43,230     (87,800     (21,664     (43,773     (86,281         -         -         -    
   

Total

    992,473       1,965,234       4,050,000       860,246       1,657,476       3,401,487           +15.4%         +18.6%         +19.1%    

(P)=Projection

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Net sales for the six months ended June 30, 2016 were not restated since they were not material.

 

- S1 -


Canon Inc.

 

2. SEGMENT INFORMATION BY BUSINESS UNIT                        (Millions of yen
                2017      2016             Change year over year
            

 

 

 

 

2nd quarter

 

 

 

 

  

 

 

 

 

1st half

 

 

 

 

  

 

 

 

 

Year (P)

 

 

 

 

  

 

 

 

 

2nd quarter

 

 

 

 

  

 

 

 

 

1st half

 

 

 

 

  

 

 

 

 

Year

 

 

 

 

     

 

 

 

 

2nd quarter

 

 

 

 

  

 

 

 

 

    1st half    

 

 

 

 

 

 

Year

 

Office

                                  
    External customers        470,178        927,315        1,867,500        455,858        909,498        1,804,862           +3.1%        +2.0%     +3.5%
    Intersegment          479        1,087        1,700        538        1,250        2,957           -11.0%        -13.0%     -42.5%
   

Total sales

         470,657        928,402        1,869,200        456,396        910,748        1,807,819           +3.1%        +1.9%     +3.4%
   

Operating profit

       55,873        111,301        208,000        47,605        92,309        169,486           +17.4%        +20.6%     +22.7%
   

% of sales

         11.9%        12.0%        11.1%        10.4%        10.1%        9.4%           -        -     -

Imaging System

                                  
    External customers        282,568        524,468        1,118,200        287,303        521,870        1,094,291           -1.6%        +0.5%     +2.2%
    Intersegment          120        279        800        240        489        998           -50.0%        -42.9%     -19.8%
   

Total sales

         282,688        524,747        1,119,000        287,543        522,359        1,095,289           -1.7%        +0.5%     +2.2%
   

Operating profit

       48,490        77,726        160,000        43,223        62,841        144,413           +12.2%        +23.7%     +10.8%
   

% of sales

         17.2%        14.8%        14.3%        15.0%        12.0%        13.2%           -        -     -

Medical System

                                  
    External customers        88,526        220,150        439,600        -        -        -           -        -     -
    Intersegment          91        222        400        -        -        -           -        -     -
   

Total sales

         88,617        220,372        440,000        -        -        -           -        -     -
   

Operating profit

       172        10,068        20,500        -        -        -           -        -     -
   

% of sales

         0.2%        4.6%        4.7%        -        -        -           -        -     -

Industry and Others

                                  
    External customers        151,201        293,301        624,700        117,085        226,108        502,334           +29.1%        +29.7%     +24.4%
    Intersegment          21,282        41,642        84,900        20,886        42,034        82,326           +1.9%        -0.9%     +3.1%
   

Total sales

         172,483        334,943        709,600        137,971        268,142        584,660           +25.0%        +24.9%     +21.4%
   

Operating profit

       13,151        21,858        45,900        499        (123      7,448           -        -     +516.3%
   

% of sales

         7.6%        6.5%        6.5%        0.4%        -0.0%        1.3%           -        -     -

Corporate and Eliminations

                                  
    External customers        -        -        -        -        -        -           -        -     -
    Intersegment          (21,972      (43,230      (87,800      (21,664      (43,773      (86,281         -        -     -
   

Total sales

         (21,972      (43,230      (87,800      (21,664      (43,773      (86,281         -        -     -
   

Operating profit

 

        

 

(21,367

 

 

    

 

(48,969

 

 

    

 

(104,400

 

 

    

 

(22,731

 

 

    

 

(46,344

 

 

    

 

(92,481

 

 

       

 

-

 

 

 

    

 

-

 

 

 

 

-

 

Consolidated

                                  
    External customers        992,473        1,965,234        4,050,000        860,246        1,657,476        3,401,487           +15.4%        +18.6%     +19.1%
    Intersegment          -        -        -        -        -        -           -        -     -
   

Total sales

         992,473        1,965,234        4,050,000        860,246        1,657,476        3,401,487           +15.4%        +18.6%     +19.1%
   

Operating profit

       96,319        171,984        330,000        68,596        108,683        228,866           +40.4%        +58.2%     +44.2%
   

% of sales

         9.7%        8.8%        8.1%        8.0%        6.6%        6.7%           -        -     -
                                 (P)=Projection
3. OTHER INCOME / DEDUCTIONS                             

(Millions of yen)

 

                2017      2016             Change year over year
            

 

 

 

 

2nd quarter

 

 

 

 

  

 

 

 

 

1st half

 

 

 

 

  

 

 

 

 

Year (P)

 

 

 

 

  

 

 

 

 

2nd quarter

 

 

 

 

  

 

 

 

 

1st half

 

 

 

 

  

 

 

 

 

Year

 

 

 

 

     

 

 

 

 

2nd quarter

 

 

 

 

  

 

 

 

 

1st half

 

 

 

 

 

 

Year

 

    Interest and dividend, net        1,581        2,612        3,000        1,084        2,011        3,701           +497        +601     (701)
    Forex gain (loss)        (2,254      (3,465      (3,900      7,622        10,680        (2         (9,876      (14,145   (3,898)
   

Equity earnings
of affiliated companies

       197        709        1,500        242        511        890           (45      +198     +610
    Other, net          3,713        5,726        9,400        3,448        4,868        11,196           +265        +858     (1,796)
    Total          3,237        5,582        10,000        12,396        18,070        15,785           (9,159      (12,488   (5,785)
                                 (P)=Projection

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for the six months ended June 30, 2016 were not restated since they were not material.

*The actual and projected operating results pertaining to TMSC, a company acquired in December 2016, are included in “Medical System” for the second quarter, first half and fiscal year 2017.

Amortization costs of identified intangible assets resulting from the purchase price allocation of TMSC are included in “Corporate and Eliminations.”

 

- S2 -


Canon Inc.

 

4. BREAKDOWN OF PRODUCT SALES WITHIN BUSINESS UNIT  
              

 

2017

 

 

 

2016

              

 

2nd quarter  

 

  1st half     Year (P)     2nd quarter     1st half     Year  

 Office

                     
    Monochrome copiers   16%     15%     16%     17%     16%     16%  
    Color copiers   22%     22%     22%     22%     21%     21%  
    Printers   38%     39%     37%     36%     37%     37%  
    Others   24%     24%     25%     25%     26%     26%  

 Imaging System

                     
    Cameras   64%     62%     61%     63%     61%     61%  
    Inkjet printers   28%     29%     30%     28%     30%     30%  
    Others   8%     9%     9%     9%     9%     9%  

 Industry and Others

                     
    Lithography equipment   25%     25%     28%     20%     23%     21%  
    Others   75%     75%     72%     80%     77%     79%  
               

 

(P)=Projection

5. SALES GROWTH IN LOCAL CURRENCY (Year over year)            
               2017            
           

2nd quarter  

 

 

1st half  

 

 

Year (P)  

 

     

 Office

               
   

Japan

  -1.1%     -0.6%     -        
   

Overseas

  +2.4%     +2.4%     -        
   

Total

  +1.6%     +1.8%     +1.3%        

 Imaging System

               
   

Japan

  -2.3%     -4.3%     -        
   

Overseas

  -2.5%     +2.2%     -        
   

Total

  -2.5%     +1.2%     0.0%        

 Industry and Others

               
   

Japan

  +13.9%     -2.3%     -        
   

Overseas

  +33.1%     +43.8%     -        
   

Total

  +24.2%     +24.9%     +20.4%        

 Total

               
   

Japan

  +25.1%     +31.0%     +24.4%        
   

Overseas

  +11.5%     +15.6%     +15.2%        
     

  Americas

 

+8.3%  

 

+11.5%  

 

+11.0%  

     
     

  Europe

 

+6.6%  

 

+9.9%  

 

+7.7%  

     
       

  Asia and Oceania

 

+20.9%  

 

+27.1%  

 

+28.4%  

     
   

Total

  +14.2%     +18.7%     +17.1%        
         

 

(P)=Projection

     

 

- S3 -


Canon Inc.

6. PROFITABILITY                
              

 

2017

 

 

 

2016

 

               
              

 

1st half

 

 

 

Year (P)

 

 

 

1st half

 

 

 

Year

 

               

ROE *1

  8.9%    7.9%    5.7%    5.2%         

ROA *2

  4.8%    4.3%    3.6%    3.1%         
*1 Return on Equity ; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Shareholders’ Equity   (P)=Projection        
*2 Return on Assets ; Based on Net Income attributable to Canon Inc.          
7. IMPACT OF FOREIGN EXCHANGE RATES  

(1) Exchange rates

              (Yen)  
              

 

2017

 

 

 

2016

 

   
              

 

2nd quarter

 

 

 

1st half

 

 

 

2nd half (P)

 

 

 

Year (P)

 

 

 

2nd quarter

 

 

 

1st half

 

 

 

Year

 

   

Yen/US$

  111.12    112.27    112.00    112.14    108.08    111.28    108.58   

Yen/Euro

  122.36    121.72    125.00    123.39    121.94    124.33    120.25   
                 

 

(P)=Projection

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

 

2017

 

                   
             

 

2nd quarter

 

 

 

1st half

 

 

 

Year (P)

 

                   

    US$

  +9.4    +7.7     +40.2           

    Euro

  +0.9    (8.2)    +21.8           

    Other currencies

  +0.0    (1.7)    +5.8           

  Total

  +10.3    (2.2)    +67.8           
         

 

(P)=Projection

         

    (3) Impact of foreign exchange rates per yen

  (Billions of yen)                            
            

 

2017

 

                           
              

 

2nd half (P)

 

                           

On sales

                 

US$

  7.2               

Euro

  3.5               

On operating profit

                 

US$

  2.3               

Euro

  1.6               
      (P)=Projection              
8. STATEMENTS OF CASH FLOWS           (Millions of yen)    
    

 

2017

 

 

 

2016

 

       
    

 

2nd quarter

 

 

 

1st half

 

 

 

Year (P)

 

 

 

2nd quarter

 

 

 

1st half

 

 

 

Year

 

       

Net cash provided by operating activities

  141,685     309,106     550,000     126,585     241,207     500,283      

Net cash used in investing activities

  (57,742)    (107,838)    (255,000)    (55,863)    (776,092)    (837,125)     

Free cash flow

  83,943     201,268     295,000     70,722     (534,885)    (336,842)     

Net cash provided by (used in) financing activities

  (51,669)    (135,115)    (318,200)    (50,835)    519,883     355,692      

Effect of exchange rate changes on cash and cash equivalents

  6,898     (2,520)    (7,000)    (31,661)    (49,431)    (22,270)     

Net change in cash and cash equivalents

  39,172     63,633     (30,200)    (11,774)    (64,433)    (3,420)     

Cash and cash equivalents at end of period

  693,826     693,826     600,000     569,180     569,180     630,193      
               

 

(P)=Projection

   

 

- S4 -


Canon Inc.    

 

9. R&D EXPENDITURE              

(Millions of yen)

 

          2017   2016
          2nd quarter    1st half    Year (P)    2nd quarter    1st half    Year 
   

Office

  22,808      45,056      -      23,987      49,956      94,440   
   

Imaging System

  23,054      44,892      -      23,092      46,706      91,752   
   

Medical System

  7,436      18,612      -      -      -      -   
   

Industry and Others

  15,835      32,012      -      18,065      33,798      67,887   
   

Corporate and Eliminations

  11,359      21,181      -      11,420      24,974      48,297   
   

Total

  80,492      161,753      335,000      76,564      155,434      302,376   

% of sales

  8.1%      8.2%      8.3%      8.9%      9.4%      8.9%   
             

 

(P)=Projection

10. INCREASE IN PP&E & DEPRECIATION AND AMORTIZATION  

(Millions of yen)

 

 

         2017   2016
          2nd quarter    1st half    Year (P)    2nd quarter    1st half    Year 

Increase in PP&E

  37,191      68,829      190,000      40,526      90,990      171,597   

Depreciation and amortization

  64,476      126,615      260,000      62,162      122,372      250,096   
             

 

(P)=Projection

11. INVENTORIES                

   (1) Inventories

           

(Millions of yen)

 

           
          2017   2016   Difference            
          Jun.30   Dec.31              
    Office   211,469      205,656      +5,813         
    Imaging System   148,793      127,386      +21,407         
    Medical System   80,477      -      +80,477         
    Industry and Others   156,098      227,694      (71,596)        
   

Total

  596,837      560,736      +36,101         

 

   (2) Inventories/Sales*

           

(Days)

 

           
          2017   2016   Difference            
          Jun.30   Dec.31              
    Office   42      42      0         
    Imaging System   52      41      +11         
    Medical System   67      -      -         
    Industry and Others   98      152      (54)        
   

Total

  55      59      (4)        
 

 

*Index based on the previous six months sales.

     
12. DEBT RATIO            
          2017   2016   Difference            
          Jun.30   Dec.31              
    Total debt / Total assets   12.5%      11.9%      +0.6%         
13. OVERSEAS PRODUCTION RATIO    
        2017   2016        
        1st half   Year        
    Overseas production ratio   37%      44%           
14. NUMBER OF EMPLOYEES      
        2017   2016   Difference      
        Jun.30   Dec.31        
    Japan   74,464      72,913      +1,551         
    Overseas   126,709      124,760      +1,949         
   

Total

  201,173      197,673      +3,500         

*Canon newly established “Medical System” Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for the six months ended June 30, 2016 were not restated since they were not material.

 

- S5 -