Canon Inc.

Third Quarter 2013 Results

October 24, 2013

Toshizo Tanaka Executive Vice President & CFO

This presentation contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect managements 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 Canons 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 presentation. A detailed description of these and other risk factors is included in Canons 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.

October 24, 2013 Canon Inc.

Agenda
3Q 2013 Results FY 2013 Projections Details by Business Financial Situation Supplementary Information

P3 5 P6 9 P10 15 P16 18 P19 24

October 24, 2013 Canon Inc.

3Q 2013 in Summary
External Environment
Increasing signs of slowdown amid prolonged global economic weakness Yens depreciation

Results
Posted second consecutive quarter of growth in both net sales and profits
Maintaining or improving market share enhancing competitiveness through the launch of new products that take advantage of technological strengths Continuing efforts to reduced costs and expenses

October 24, 2013 Canon Inc.

Summary of Results
3Q 2013 Actual
3Q 2013 Actual 3Q 2012 Actual (Billions of yen) Pct. Change

Net Sales Gross Profit

(% Sales)

913.1 447.1
49.0%

799.9 386.8
48.3%

+14.2% +15.6%

Op. Profit
(% Sales)

90.6
9.9%

70.9
8.9%

+27.8%

Net Income
Attributable to Canon Inc.

58.8
6.4%
98.91 131.09

50.1
6.3%
78.58 98.48

+17.3%

(% Sales)
Foreign Exchange Rate

Yen 1USD Yen 1EURO

October 24, 2013 Canon Inc.

Transition in Sales and Op. Profit

3Q 2013 Actual v. 3Q 2012 Actual
(Billions of yen)

Sales
3Q 2012 Actual Foreign Exchange Impact
(Net Sales, Cost of Sales, Expenses)

Op. Profit 70.9 +53.1

Change in Exchange Rate 1USD: 1EURO: 78.58 to 98.91 yen 98.48 to 131.09 yen

799.9 +141.3 +21.8 -12.1 -1.7 +8.0 -36.1 +113.2 913.1

Sales Volume Impact Office Imaging System Industry and Others Total Others Total Change 3Q 2013 Actual

-8.8 -24.6 +19.7 90.6

October 24, 2013 Canon Inc.

Assumptions
2013 Current Projection

Average Exchange Rate

4Q13 97.00 yen

FY13 96.95 yen

FY12 79.96 yen

Yen-1USD
Yen-1EURO

130.00 yen 128.24 yen 102.80 yen

Impact of Exchange Rate Movement (4Q Impact Given a One Yen Change)

Net Sales USD EURO 4.7 billion yen 2.1 billion yen

Operating Profit 1.8 billion yen 1.2 billion yen

October 24, 2013 Canon Inc.

Key Points FY2013

External Environment
Uncertainty towards year-end selling season amid expectations that economic situations in Europe and emerging markets such as China will remain challenging

Outlook
Revised projections, primarily for interchangeable-lens cameras Aim to firmly secure sales and profit growth in the fourth quarter and for the full year
Execute product and regionally tailored sales strategies Continue efforts to reduce costs and expense Promote measures that emphasize profitability to maintain sound financial condition
October 24, 2013 Canon Inc.

Summary of Projected Results

FY 2013 Current Projection
(Billions of yen) FY 2013 Current Projection FY 2012 Actual Pct. Change

Net Sales Gross Profit

(% Sales)

3,750.0 1,811.2
48.3%

3,479.8 1,650.0
47.4%

+7.8% +9.8% +11.2%

Op. Profit
(% Sales)

360.0
9.6%

323.9
9.3%

Net Income
Attributable to Canon Inc. (% Sales)
Foreign Exchange Rate

240.0
6.4% 96.95 128.24

224.6
6.5% 79.96 102.80

+6.9%

Yen 1USD Yen 1EURO

October 24, 2013 Canon Inc.

Transition in Sales and Op. Profit

FY 2013 Current Projection v. FY 2013 Previous Projection
(Billions of yen)

Sales
Previous Projection (Jul. 24, 2013) Foreign Exchange Impact
(Net Sales, Cost of Sales, Expenses)

Op. Profit 380.0 +24.0

Change in Exchange Rate 1USD: 1EURO: 95.46 to 96.95 yen 125.42 to 128.24 yen

3,850.0 +47.7 -41.8 -112.6 -3.3 -157.7 +10.0 -100.0 3,750.0

Sales Volume Impact Office Imaging System Industry and Others Total Others Total Change Current Projection (Oct. 24, 2013)

-92.7 +48.7 -20.0 360.0

October 24, 2013 Canon Inc.

Office
3Q 2013 Actual
(Billions of yen) Growth rate y/y ( ) Local currency base
800

3Q13 Growth Rate y/y (Unit Base)

3Q13 Color Ratio Copiers Value Base* Unit Base 54% 36% Printers 46% 15%

Copiers
Color Monochrome Total +9% -7% -2%

Printers
+31% +22% +24%

*Includes Consumables

Sales

Monochrome copiers
Printers

Color copiers
Others

Office total +20.6%(-0.8%) 520 494

[Link]
Op. Profit (Billions of yen) Op. Profit Ratio

600

456 409
400

464

Growth rate y/y

+63.1%

Printers +20.8%(-2.6%)
11.2% 12.9%

14.7% 13.6%

200

10.1%

76
51 60 67

+15.8%(-3.0%) +16.8%(-2.1%)
0 3Q12 4Q12 1Q13 2Q13 3Q13

41

Copier total

3Q12

4Q12

1Q13

2Q13

3Q13

+16.3%(-2.6%)
October 24, 2013 Canon Inc.

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Office
FY 2013 Projection
(Billions of yen) Growth rate y/y ( ) Local currency base
3,000 Monochrome copiers Printers 2,500 Color copiers Others

FY13 Growth Rate y/y (Unit Base)

FY13 Color Ratio Copiers Value Base* Unit Base 55% 36% Printers 47% 14%

Copiers
Color Monochrome Total +10% -2% +2%

Printers
+15% +12% +12%

*Includes Consumables

Sales

Office total +13.5%(-3.2%) 1,995

[Link]
Op. Profit (Billions of yen) Op. Profit Ratio

2,000

2,020 1,758

Growth rate y/y

+33.8%
1,500

1,000

Printers +8.9%(-8.8%)

13.0% 11.6% 264

13.6%

272

500

+15.7%(+0.3%) +13.5%(-1.8%)

204

FY12

FY13 Previous Projection

FY13 Current Projection

Copier total

FY12

+14.7%(-0.7%)

FY13 Previous Projection

FY13 Current Projection

October 24, 2013 Canon Inc.

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Imaging System
3Q 2013 Actual
(Billions of yen) Growth rate y/y ( ) Local currency base
600 Cameras IJP Others

Growth Rate y/y (Unit Base) 3Q13 Interchangeable Lens Digital Cameras Compact Digital Cameras Total Digital Cameras IJP -3%

Interchangeable Lens Digital Camera Ratio * Value Base Unit Base 3Q13 83% 41%

-31%
-22% -2%

Sales

* Proportion of Total Digital Cameras * Value Base Includes Interchangeable Lenses

Imaging System +8.2%(-12.0%) 386 349

[Link]
Op. Profit (Billions of yen) Op. Profit Ratio

411
400

322

298

Growth rate y/y

IJP +19.2%(-0.5%)
16.3% 13.4% 9.6% 14.6%

+8.2%
16.3%

200

Cameras +3.7%(-16.6%)

53

55 28

56

57

3Q12

4Q12

1Q13

2Q13

3Q13

3Q12

4Q12

1Q13

2Q13

3Q13

October 24, 2013 Canon Inc.

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Imaging System
FY 2013 Projection
(Billions of yen) Growth rate y/y ( ) Local currency base 2,500
Cameras IJP Others

Growth Rate y/y (Unit Base) FY13 Interchangeable Lens Digital Cameras Compact Digital Cameras Total Digital Cameras IJP -3%

Interchangeable Lens Digital Camera Ratio * Value Base Unit Base FY13 81% 36%

-24%
-17% +1%

Sales

* Proportion of Total Digital Cameras * Value Base Includes Interchangeable Lenses

2,000

Imaging System +4.2%(-11.9%)

[Link]
Op. Profit (Billions of yen) Op. Profit Ratio

1,500

1,406

1,537

1,465
IJP +16.0%(+0.6%)

Growth rate y/y

+0.7%

1,000

500

Cameras +0.0%(-16.3%)

16.5% 15.0% 254 210 212 14.5%

FY12

FY13 Previous Projection

FY13 Current Projection

FY12

FY13 Previous Projection

FY13 Current Projection

October 24, 2013 Canon Inc.

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Industry and Others

3Q 2013 Actual
(Billions of yen)
180
Lithography Equipment (Unit Sales) 3Q12 3Q13 IC 8 10 FPD 3 0

IC Lithography Unit Breakdown by Light Source 3Q12 3Q13 ArF 0 0 KrF 0 0 i-line 8 10

Growth Rate y/y ( ) Local Currency Base

Sales Eliminations Lithography Equipment Others

Sales

150
Net Sales

120

Industry and Others Net Sales

20

[Link]
30.0%

86 71 64 57 72

Op. Profit (Billions of yen) Op. Profit Ratio

25.0%

+1.7%(-3.9%)
15

90

Gross Sales
10

*Calculation of operating profit ratio includes intersegment sales

20.0%

15.0%

+2.3%(-1.9%)
Gross Sales (Includes sales among Group businesses)

60 80
Gross 93

98 75 69

86

5.4%
Gross 95
5

10.0%

5.0%

5
0
0.0%

30

Sales Eliminations (Sales among Group businesses)

(Litho. Equip.)
13 0 -22 -30 9 -20 6 -18 11 9 -23
-10

-32.4%(-36.9%)
-5

-9 -8.9% 3Q12 4Q12

-8

-6 -6.8%

-5.0%

-8
-10.0%

-22

-10.0% 1Q13 2Q13

-8.6%
-15.0%

3Q12

4Q12

1Q13

2Q13

3Q13

3Q13

October 24, 2013 Canon Inc.

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Industry and Others

FY 2013 Projection
(Billions of yen)
600

Growth Rate y/y ( ) Local Currency Base Sales Eliminations Lithography Equipment Others

Sales

Lithography Equipment (Unit Sales) FY13 FY13 FY12 Previous Current Projection Projection IC 46 44 46 FPD 16 17 17

IC Lithography Unit Breakdown by Light Source FY13 FY13 FY12 Previous Current Projection Projection ArF 0 0 0 KrF 3 5 7 i-line 43 39 39

500
Net Sales

Industry and Others Net Sales

-8.1%(-12.6%)

323
400

305

45

[Link]
15.0%

297
Gross Sales

Op. Profit (Billions of yen)

Op. Profit Ratio

30
10.0%

300 345
Gross Sales (Includes sales among Group businesses) Gross 408

-6.1%(-9.6%)
332
Gross 383

*Calculation of operating profit ratio includes intersegment sales

15
5.0%

315

200 1.4%
0

0.0%

100

(Litho. Equip.)
Sales Eliminations (Sales among Group businesses)

63 0 -84 -100

66

68

+8.2%(+4.5%)
-15

-22 -5.6%

-19
-5.0%

-5.0%

-93 FY13 Previous Projection

-86
-30

-10.0%

FY12

FY13 Current Projection

FY12

FY13 Previous Projection

FY13 Current Projection

October 24, 2013 Canon Inc.

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Inventories
(Billions of yen)
800
Amount (Billions of yen) Turnover (Days)
90

700
54 46 600

56

57

63

57

61

60

59 608

70

50

591 554 518 542 552

589

582
30

500

477

10

-10

400
-30

300
3QE11 4QE11 1QE12 2QE12 3QE12 4QE12 1QE13 2QE13 3QE13

-50

October 24, 2013 Canon Inc.

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Capital Expenditure
(Billions of yen)
1,000
Increase in PP&E Net Income Attributable to Canon Inc. Depreciation

Free Cash Flow

(Billions of yen)
1,000
Operating C/F Free C/F Investing C/F

750

750

500
247 249 260 240 225

500
744

402

150

213

171

470

250
276 261 270 258 260 240 227 230 255

250
342

384

485

335

515
FY13 Current Projection

257

0
FY10 FY11 FY12 FY13 Previous Projection FY13 Current Projection

159

0
FY10 FY11 FY12 FY13 Previous Projection

213

300

215

October 24, 2013 Canon Inc.

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Cash on Hand
Cash on Hand (Year-end)
1500 4

Cash-on-hand (Bilions of yen) Cash-on-hand (In months of 2nd-half net sales)

3.5

2.8
1000

2.5

2.5 2.3 2.0 2.2

2.5

795

841
2

773 667 690 710

1.5

500

0.5

FYE09

FYE10

FYE11

FYE12

Note : 450, 100, 50, 100, 150, and 50 billion yen was used to acquire own shares in 2007, 2008, 2010, 2011, 2012, and 2013, respectively.

FYE13 Previous Projection

FYE13 Current Projection

October 24, 2013 Canon Inc.

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Supplementary Information

October 24, 2013 Canon Inc.

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Transition in Sales and Operating Profit

FY 2013 Current Projection v. FY 2012 Actual
(Billions of yen)
Sales Op. Profit

FY 2012 Actual
Foreign Exchange Impact

3,479.8
+488.7

323.9
+217.8
Change in Exchange Rate 1USD: 1EURO: 79.96 to 96.95 yen 102.80 to 128.24 yen

(Net Sales, Cost of Sales, Expenses)

Sales Volume Impact

Office Imaging System

+27.1 -66.1

Industry and Others

Total

-39.5
-78.5 -92.6

Others
Total Change FY 2013 Current Projection

-140.0
+270.2 3,750.0

-89.1
+36.1 360.0

Supplementary Information

October 24, 2013 Canon Inc.

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Gross Profit Variance Analysis

3Q 2013 Actual v. 3Q 2012 Actual
(Billions of yen) 3Q13 3Q12 386.8 48.3% Change +60.3 +0.7pt.

(Billions of yen)
150
141.3

Gross Profit % Sales

447.1 49.0%

100
60.3

50
11.6

0
-8.8
-36.1 -47.7

-50

-100
Forex Impact on Sales Sales Volume Impact Price Change Forex Impact on Costs Cost Reduction Total Change in Gross Profit

Supplementary Information

October 24, 2013 Canon Inc.

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Operating Profit Variance Analysis

3Q 2013 Actual v. 3Q 2012 Actual
3Q13 (Billions of yen) 3Q12 70.9 8.9% Change +19.7 +1.0pt.

(Billions of yen)
150

Op. Profit % Sales

90.6 9.9%

100
60.3

50
19.7

-0.1

-50
-40.5

-100
Total Change in Gross Profit Change in SG & A (Excluding Forex Impact) Change in SG & A (Forex Impact) Total Change in Operating Profit

Supplementary Information

October 24, 2013 Canon Inc.

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Interest Bearing Debt

(Billions of yen)
50
Debt Debt/Total Assets

5.0%

40

4.0%

30

3.0%

20
11 0.3% 12

2.0%

10

10 0.3%

1.0% 0.3% 4 0.1% FYE12 3 0.1% 0.0% 3QE13

0 FYE09 FYE10 FYE11

Supplementary Information

October 24, 2013 Canon Inc.

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Financial Ratios
(Yen) 900 15%

600

9.2%

9.6% 8.7% 8.9%

10%

6.3% 4.9% 300 3.4% 106.64 0 FY09 FY10 199.71

6.3%

5.7%

5.9% 5%

204.49

191.34

209.07

0% FY11
ROE

FY12
ROA

FY13 Current Projection

EPS(Basic) (Attributable to Canon Inc.)

Supplementary Information

October 24, 2013 Canon Inc.

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