UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

OR

For the fiscal year ended December 31, 20112013

OR

For the transition period from                    to                    

OR

Date of event requiring this shell company report                    

Commission file number 001-15122

CANON KABUSHIKI KAISHA

(Exact name of Registrant in Japanese as specified in its charter)

CANON INC.

(Exact name of Registrant in English as specified in its charter)

JAPAN

(Jurisdiction of incorporation or organization)

30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan

(Address of principal executive offices)

Toshihide Aoki,Shinichi Aoyama, +81-3-3758-2111, +81-3-5482-9680, 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan

(Name, Telephone, Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2011, 1,201,532,1682013, 1,136,999,404 shares of common stock, including 37,765,09223,634,424 ADSs, were outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ            Accelerated filer  ¨            Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

TABLE OF CONTENTS

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CERTAIN DEFINED TERMS, CONVENTIONS AND PRESENTATION OF FINANCIAL INFORMATION

All information contained in this Annual Report is as of December 31, 20112013 unless otherwise specified.

References in this discussion to the “Company” are to Canon Inc. and, unless otherwise indicated, references to the financial condition or operating results of “Canon” refer to Canon Inc. and its consolidated subsidiaries.

On March 16, 2012,14, 2014, the noon buying rate for yen in New York City as reported by the Federal Reserve Bank of New York was ¥83.34 =¥101.46= U.S.$1.

The Company’s fiscal year end is December 31. In this Annual Report “fiscal 2011”“2013” refers to the Company’s fiscal year ended December 31, 2011,2013, and other fiscal years of the Company are referred to in a corresponding manner.

FORWARD-LOOKING INFORMATION

This Annual Report contains forward-looking statements and information relating to Canon that are based on beliefs of its management as well as assumptions made by and information currently available to Canon Inc. When used in this Annual Report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” and “should” and similar expressions, as they relate to Canon or its management, are intended to identify forward-looking statements. Such statements, which include, but are not limited to, statements contained in “Item 3. Key Information-Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk”, reflect the current views and assumptions of the Company with respect to future events and are subject to risks and uncertainties. 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 Annual Report. 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 as anticipated, believed, estimated, expected, intended, planned or projected. Canon Inc. does not intend or assume any obligation to update these forward-looking statements.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item  3. Key Information

A. Selected financial data

The following information should be read in conjunction with and qualified in its entirety by reference to the Consolidated Financial Statements of Canon Inc. and subsidiaries, including the notes thereto, included in this Annual Report.

Notes:

The following table provides the noon buying rates for Japanese yen in New York City as reported by the Federal Reserve Bank of New York expressed in Japanese yen per U.S.$1 during the periods indicated and the high and low noon buying rates for Japanese yen per U.S.$1 during the months indicated. On March 16, 2012,14, 2014, the noon buying rate for yen in New York City as reported by the Federal Reserve Bank of New York was ¥83.34¥101.46 = U.S.$1.

B. Capitalization and indebtedness

Not applicable.

C. Reasons for the offer and use of proceeds

Not applicable.

D. Risk factors

Canon is one of the world’s leading manufacturers of office multifunction devices (“MFDs”), plain paper copying machines, network digital multifunction devices, laser printers, cameras, inkjet printers, semiconductor lithography equipmentcameras and LCD lithography equipment.

Primarily because of the nature of the business and geographic areas in which Canon operates and the highly competitive nature of the industries to which it belongs, Canon is subject to a variety of risks and uncertainties, including, but not limited to, the following:

Risks Related to Economic Environment

Economic trends in Canon’s major markets may adversely affect its operating results.

As a result of the economic downturn in Canon’s major markets, including Japan, the United States, Europe and Asia, declines in consumption and restrained investment may affect Canon’s operating results. The operating results for products such as office and industrial equipment are affected by the financial results of its corporate customers, and deterioration of their financial results has caused and may continue to cause customers to limit capital investments. Demand for Canon’s consumer products, such as cameras and inkjet printers, is discretionary. Fluctuating inventory levels, rapid price declines owing to intensifying competition and declines in levels of consumer spending and corporate investment could adversely affect Canon’s operating results and financial position.

Canon’s operating and financing activities expose it to foreign currency exchange and interest rate risks that may adversely affect its revenues and profitability.

Canon derives a significant portion of its revenue from its international operations. As a result, Canon’s operating results and financial position have been and may continue to be significantly affected by changes in the value of the yen versus foreign currencies. Sales of Canon’s products denominated in foreign currencies have been and may continue to be adversely affected by the strength of the yen against foreign currencies. Conversely, a strengthening of foreign currencies against the yen will generally be favorable to Canon’s foreign currency sales. Canon’s consolidated financial statements are presented in yen. As such, the yen value of Canon’s assets and liabilities arising from foreign currency transactions have fluctuated and may continue to fluctuate. Unpredictable fluctuations may have certain effects on Canon’s consolidated financial statements. Although Canon strives to mitigate the effects of foreign currency fluctuations arising from its international business activities, Canon’s consolidated financial statements have been and may continue to be affected by currency translations from the financial statements of Canon’s foreign subsidiaries and affiliates, which are denominated in various foreign currencies. Canon is also exposed to the risk of interest rate fluctuations, which may affect the value of Canon’s financial assets and liabilities.

Canon may be adversely affected by fluctuations in the stock and bond markets.

Canon’s assets include investments in publicly traded securities. As a result, Canon’s operating results and general financial position may be affected by price fluctuations in the stock and bond markets. Volatility in financial markets and overall economic uncertainty create the risk that the actual amounts realized in the future on Canon’s investments could differ significantly from the fair values currently assigned to them. In addition, if valuations of investment assets decrease because of conditions in stock or bond markets, for example, additional funding and accruals with respect to Canon’s pension and other obligations may be required, and such funding and accruals may adversely affect Canon’s operating results and consolidated financial condition.

High prices of raw materials could negatively impact Canon’s profitability.

Increases in prices for raw materials that Canon uses in manufacturing such as steel, non-ferrous metals and petrochemical products may lead to higher production costs and Canon may not be able to pass these increased production costs onto the sales prices of its products. Such increases in prices for raw materials could adversely affect Canon’s operating results.

Risks Related to Canon’s Industries and Business Operations

A substantial portion of Canon’s business activity is conducted outside Japan, exposing Canon to the risks of international operations.

A substantial portion of Canon’s business activity is conducted outside Japan. There are a number of risks inherent in doing business in international markets, including the following:

Any inability to manage the risks inherent in Canon’s international activities could adversely affect its business and operating results.

Canon has invested and will continue to invest actively in next-generation technologies. If the marketmarkets for these technologies doesdo not develop as Canon expects, or if its competitors produce these or competing technologies in a more timely or effective manner, there could be a material adverse effect on Canon’s operating results.results may be materially adversely affected.

Canon has made and will continue to make investments in next-generation technology research and development initiatives. Canon’s competitors may achieve research and development breakthroughs in these technologies more quickly than Canon, or may achieve advances in competing technologies that render products

under development by Canon uncompetitive. For several years, Canon has continued its investments in development and manufacturing in order to keep pace with technological evolution. If Canon’s business strategies diverge from market demands, Canon may not recover some or all of its investments, or may lose business opportunities, or both, which may have a material adverse effect on Canon’s operating results.

In addition, Canon has sought to develop production technology and equipment to accelerate the automation of its manufacturing processes and in-house production of key devices. If Canon cannot effectively implement these techniques, it may fail to realize cost advantages or product differentiation, and consequently lose business opportunities, which may adversely affect Canon’s operating results. While differentiation in technology and product development is an important part of Canon’s strategy, Canon must also accurately assess the demand for and commercial acceptance of new technologies and products that it develops. If Canon pursues technologies or develops products that are not well received by the market, its operating results could be adversely affected.

Entering new business areas through the development of next-generation technologies is a focal point of Canon’s corporate strategy. To the extent that Canon enters into such new business areas, Canon may not be able to establish a successful business modelsmodel or may face severe competition with new competitors. If such events occur, Canon’s operating results may be adversely affected.

If Canon does not effectively manage transitions in its products and services, its operating results may decline.

Many of the businessesbusiness areas in which Canon competes are characterized by rapid technological advances in hardware performance, software functionality and product features; frequent introduction of new products; short product life cycles; and continued qualitative improvements to current products at stable price levels. If Canon does not make effective transitions from existing productshas sought to invest substantial resources into introducing appealing, innovative and services tocost-competitive new offerings, its revenue and profits may decline. Among theproducts. There are several risks associated with theinherent in introduction of new products and services, aresuch as delays in development or manufacturing, low marketability due to an improperunsuitable product quality during the introductory period, variations in manufacturing costs, delaysnegative impact on sales of customer purchasing decisions in anticipation of further introductions,current products, uncertainty in predicting customer demand for new offerings and difficulty in effectively managing inventory levels in line with anticipated demand.levels. Moreover, if Canon is unable to respond quickly to unexpected technological innovations with respectsrespect to information systems and networks, Canon’s revenue may be significantly affected as a result of delays associated with the incorporation into its products of such new information technologies into existing products and services as well as new offerings.technologies.

Canon’s revenuerevenues and gross marginmargins also may suffer adverse effects because of the timing of product or service introductions by its competitors. This risk is exacerbated when a product has a short life cycle or when a competitor introduces a new product immediately prior to Canon’s introduction of a similar product. Furthermore, sales of Canon’s new products and services may replace sales of, or result in discounting of, some of its current products and services, potentially offsetting the benefits derived from the introduction of a successful new product or service. Canon must also ensure that its new products are not wholly or partially duplicative of existing products and operations. Given the competitive nature of Canon’s businesses, ifIf any of these risks materialize, future demand for itsCanon’s products and services could be reduced, and its operating results could decline.

Changes in the print environment may affect Canon’s business

In the business machines market for such products as MFDs, copying machines and printers, customers are increasingly looking for ways to cut costs while protecting the environment. From this perspective, Managed Print Services (“MPS”), which aim to optimize printing efficiencies in the office, have become popular in recent years. This trend could lead to a decrease in business machine print volumes.

In addition, the popularity of tablet PCs could also lead to a decrease in customer print opportunities. If Canon is unable to supply products and services that respond to these types of market trends, its operating results may be adversely affected.

Canon’s digital camera business operates in a highly competitive environment.

In the“Mirrorless” cameras are interchangeable lens digital camera field, major new manufacturers released “mirrorless” camera in this year. Eliminating one of the key components enables these mirrorless cameras to bewhich, because they do not incorporate a mirror mechanism, are more compact and lightweight than digital single-lens-reflex (“SLR”) cameras. The growth of the mirrorless camera market has athe potential to have a negative impact onadversely affect the market for digital SLR cameras, in which Canon boasts the top market share. If the mirrorless camera market continues to grow it may adversely affect ourand Canon fails to gain a leading position inshare of that market or the digital SLR camera market.market shrinks relative to that market, our revenues and our overall presence in the camera market may be adversely affected.

Meanwhile, the smartphone market has been growing dramatically on a global scale. Smartphones allow users not only to take photos, but also to retouch them and to upload them to SNSs (“Social networking services”). If Canon’s compact digital cameras become less appealing compared to smartphones, Canon could suffer from an erosion of the compact digital camera market, with a resulting adverse effect on operating results.

The markets for digital media and video recording technologies are subject to rapid technological change.

The markets in which Canon operates are subject to rapid technological change. The video camcorder industry has substantially transitioned to digital formats, and the increase in High Definition (“HD”) television broadcasts has accelerated the shift away from the Standard Definition (“SD”) format. Similarly, recording media are experiencing a rapid transition to flash memory and away from Mini DV tapes, DVDs, and hard disk drives. The pace of technological change has made predicting future market trends more difficult than was previously the case. If Canon is unable to forecast accurately the demand for particular new recording or media formats, this could reduce demand for its products, which would have a material adverse effect on Canon’s business, financial condition and operating results.

Video camcorders are no longer the only products on the market that are capable of recording movies. Digital SLRs and mirrorless digital cameras, compact digital cameras, smartphones and tablets are now also capable of recording HD movies. An increase in market share of these new products and resultant contraction of the video camcorder market could have a material adverse effect on Canon’s business, financial condition and operating results.

Because the semiconductor lithography equipment and liquid crystal display(“LCD”flat-panel-display (“FPD”) industry is highly cyclical, Canon may be adversely affected by any downturn in the industry.demand for semiconductor devices and FPD panels.

The semiconductor lithography equipment and LCDFPD lithography equipment industry is characterized by fluctuating business cycles, the timing, length and volatility of which are difficult to predict. Recurring periods of oversupply of semiconductor devices and LCDFPD panels have at times led to significantly reduced demand for capital equipment, including the semiconductor lithography equipment and LCDFPD lithography equipment that Canon produces. Despite this cyclicality, Canon must maintain significant levels of research and development expenditures to remain competitive. A future cyclical downturn in the lithography equipment industry and related fluctuations in the demand for capital equipment could cause cash flow from sales to fall below the level necessary to offset Canon’s expenditures, including those arising from research and development, and could consequently have a material adverse effect on Canon’s operating results and financial condition. In addition, LCD panel manufacturers are facing demands for severe price reductions

Canon’s business is subject to changes in the sales environment.

A substantial portion of LCD panels asCanon’s market share is concentrated in a resultrelatively small number of intense competition among makerslarge distributors, particularly in Europe and the United States. Canon’s product sales to these distributors constitute a significant percentage of televisions and personal computer monitors.its overall sales. As a result, panel manufacturersany disruptions in its relationships with these large distributors in specific sales territories could adversely affect Canon’s ability to meet its sales targets. Any increase in the concentration of sales to these large distributors could result in a reduction of Canon’s pricing power and adversely affect its profits. In addition, the rapid proliferation of Internet-based businesses may reduce their investment or demand price reductions for such equipment, which mayrender conventional distribution channels obsolete. These, and other changes in Canon’s sales environment, could adversely affect Canon’s operating results.

Downturns in the semiconductor and LCD markets have caused Canon’s customers to change their operating strategies, which in turn may affect Canon’s business.

The downturn in the semiconductor market has caused many device manufacturers to change their business models to focus on the design of semiconductors, while consigning the production of semiconductors to lower-cost foundries. At the same time, the downturn in the LCD market is leading to consolidation in the large-sized LCD panel production industry. If Canon is insufficiently responsive to market trends, including market changes led by device and large-sized LCD panel manufacturers, Canon may not be able to maintain its customer base among device and large-sized LCD panel manufacturers, which may result in a material adverse effect on Canon’s business operations. In addition, it is difficult for Canon to predict the future effects of these trends on its business. Moreover, as research and development, manufacturing and sales activities become increasingly globalized, shifting particularly to emerging markets, unexpected global developments, such as adverse regulatory or legal changes, and unanticipated events, such as natural disasters, may adversely affect Canon’s business.

The semiconductor and LCD equipment industry is characterized by rapid technological change. If Canon does not consistently develop new products to keep pace with technological change and meet its customers’ requirements, Canon may lose customers, and its business may suffer.

Canon’s semiconductor and LCD lithography equipment is subject to rapid technological change and can quickly become obsolete. Future success in the semiconductor and LCD lithography equipment business depends on Canon’s ability to enhance its existing products and develop new products using new and more advanced technologies. In particular, as semiconductor pattern sizes continue to shrink, the demand for more technologically advanced semiconductor lithography equipment is likely to increase. Canon’s existing semiconductor and LCD lithography equipment could become obsolete sooner than expected because of faster than anticipated changes in one or more of the technologies related to Canon’s products or in demand for products based on a particular technology. Any failure by Canon to develop the advanced technologies required by its customers at progressively lower costs or to supply sufficient quantities to its worldwide customer base could adversely affect Canon’s net sales and profitability.

Risks Related to Canon’s Business

Economic trends in Canon’s major markets may adversely affect its operating results.

In Europe, the sovereign debt crisis adversely affected European economies and slowed economic recovery, whereas in the United States, a lack of improvement in employment rates and continuing problems in the housing market led to a lower rate of growth. Although progress has been made in recovering from the Great East Japan Earthquake, a persistently strong yen to the U.S. dollar and sluggish economic growth in Europe and in the United States are placing severe adverse pressure on the Japanese economy. Although emerging Asian countries, such as China and India, continue to achieve solid economic growth, prospects for global economic recovery remain uncertain. As a result of the economic downturn in recent periods, declines in consumption and restrained investment in Canon’s major markets, including Japan, the United States, Europe and Asia, have affected both individual consumer and corporate sales, and if economic conditions do not improve, these trends may continue. Canon’s operating results for products such as office and industrial equipment are affected by the financial results of its corporate customers, and deterioration of their financial results has caused and may continue to cause customers to limit capital investments. Demand for Canon’s consumer products, such as cameras and inkjet printers, is discretionary. Fluctuating inventory levels, rapid price declines owing to intensifying competition and the recent decline in the level of consumer spending and corporate investment driven by the economic downturn could adversely affect Canon’s operating results and financial position.

Canon derives a significant percentage of its revenues from Hewlett-Packard.

Canon depends on Hewlett-Packard for a significant part of its business. During fiscal 2011, 19.3% of Canon’s net sales were to Hewlett-Packard. As a result, Canon’s business and operating results may be affected by the policies, business and operating results of Hewlett-Packard. Any decision by Hewlett-Packard management to limit or reduce the scope of its relationship with Canon would adversely affect Canon’s business and operating results.

Canon depends on specific outside suppliers for certain key components.

Canon relies on specific outside suppliers that meet Canon’s strict criteria for quality, efficiency and environmental friendliness for critical components and special materials used in its products. In some cases, Canon may be forced to discontinue production of some or all of its products if the specific outside suppliers that

supply key components and special materials across Canon’s product lines experience unforeseen difficulties, or if such parts and special materials suffer from quality problems or are in short supply. Further, the prices of components and special materials purchased from specific outside suppliers may surge,rise, triggered by the imbalance of supply and demand along with other factors. If such risksevents occur as an outcome of the dependency on such specific outside vendors, Canon’s operating results may be adversely affected.

Although competition is increasing in the market for supplies and services following initial product placement, Canon maintains a high market share in such sales. As a result, Canon may be subject to antitrust-related lawsuits, investigations or proceedings, which may adversely affect its operating results or reputation.

A portion of Canon’s net sales consists of sales of supplies and the provision of services after the initial equipment placement. As these supplies and services have become more commoditized, the number of competitors in these markets has increased. Canon’s success in maintaining these post-placement sales will depend on its ability to compete successfully with these competitors, some of which may offer lower-priced products or services. Despite the increase in competitors, Canon currently maintains a high market share in the market for supplies. Accordingly, Canon may be subject to lawsuits, investigations or proceedings under relevant antitrust laws and regulations. Any such lawsuits, investigations or proceedings may lead to substantial costs and have an adverse effect on Canon’s operating results or reputation.

Increases in counterfeit Canon products may adversely affect Canon’s brand image and its operating results.

In recent years, counterfeiting of Canon products has increased worldwide. Counterfeit products may diminish Canon’s brand image, particularly if purchasers of such products mistakenly attribute the counterfeit products’ poor quality to Canon. Canon has been taking measures to halt the spread of counterfeit products. However, there can be no assurance that such measures will be successful, and the continued manufacture and sale of such products could adversely affect Canon’s brand image as well as its operating results.

Per unit production costs are highest when a new product is introduced, and if such new products are not successful or if Canon fails to achieve cost reductions over time, Canon’s gross profits may be adversely affected.

The unit costs of Canon’s products have historically been highest when products are newly introduced into production. The introduction of new products has at times had a negative impact on gross profit, operating results and cash flow. Cost reductions and enhancements are typically achieved over time through:

Initial shipments of new products adversely affect Canon’s profit and cash flow, and if new products do not achieve sufficient sales volumes, Canon’s gross profit, operating results and cash flow may be adversely affected.

Cyclical patterns in sales of Canon’s products make planning and inventory management difficult and future financial results less predictable.

Canon generally experiences seasonal trends in the sales of its consumer-oriented products. Canon has little control over the various factors that produce these seasonal trends. Accordingly, it is difficult to predict short-term demand, placing pressure on Canon’s inventory management and logistics systems. If product supply from Canon exceeds actual demand, excess inventory will put downward pressure on selling prices and raise inefficiency in cash management, potentially reducing Canon’s revenue. Alternatively, if actual demand exceeds the supply of products, Canon’s ability to fulfill orders may be limited, which could adversely affect market share and net sales and increase the risk of unanticipated variations in its operating results.

Canon’s business is subject to changes in the sales environment.

A substantial portion of Canon’s market share is concentrated in a relatively small number of large distributors, particularly in Europe and the United States. Canon’s product sales to these distributors constitute a

significant percentage of its overall sales. As a result, any disruptions in its relationships with these large distributors in specific sales territories could adversely affect Canon’s ability to meet its sales targets. Any increase in the concentration of sales to these large distributors could result in a reduction of Canon’s pricing power and adversely affect its profits. In addition, the rapid proliferation of Internet-based businesses may render conventional distribution channels obsolete. These and other changes in Canon’s sales environment could adversely affect Canon’s operating results.

Canon is subject to financial and reputational risks owing to product quality and liability issues.

Although Canon works to minimize risks that may arise from product quality and liability issues, such as those triggered by the individual functionality and also from the combination of hardware and software that make up Canon’s products, there can be no assurance that Canon will be able to eliminate or limit these issues and the resulting damages. If such factors adversely affect Canon’s operating activities, generate additional expenses such as those related to product recalls, service and compensation, or otherwise hurt its brand image, Canon’s operating results or reputation for quality may be adversely affected.

Canon’s success depends in part on the value of its brand name, and if the value of the brand is diminished, Canon’s operating results and prospects will be adversely affected.

Canon’s success depends in part on the value of its brand name. Any negative publicity regarding the quality of Canon’s products could have an adverse impact on operations, especially negative publicity involving consumer products. There can be no assurance that such adverse publicity will not occur or that such claims will not be made in the future. Furthermore, Canon cannot predict the impact of such adverse publicity on its business and operating results. If Canon fails to maintain its overall compliance regime, especially legal or regulatory compliance, this also could result in damage to Canon’s credibility and brand value.

A substantial portion of Canon’s business activity is conducted outside Japan, exposing Canon to the risks of international operations.

A substantial portion of Canon’s business activity is conducted outside Japan, including in developing and emerging markets in Asia. There are a number of risks inherent in doing business in such markets, including the following:

Any inability to manage the risks inherent in Canon’s international activities could adversely affect its business and operating results. In order to reduce costs and produce Canon’s products competitively, Canon maintains several production facilities and more than ten sales bases in Asia, including China, Thailand and Vietnam, and is vigorously conducting significant production and sales activities in Asia. Under such circumstances, unexpected events may occur, including political or legal change, labor shortages or strikes, increased personnel costs or changes in economic conditions. In particular, a large revaluation of local currencies, or a sudden significant change in the tax system or other regulatory regimes could adversely affect Canon’s overall performance. Given the importance of Canon’s research and development, production and sales activities in Asia, Canon’s business may be more acutely exposed to such risks than to the global economy in general.

The outbreak, prevalence or spread of an epidemic disease, such as a new strain of influenza, in any region around the globe could also have a negative effect on Canon’s business operations, including its research and development, production and sales activities, along with the disruption of markets for Canon’s products.

In addition, unexpected changes in import taxes imposed by foreign governments could adversely affect Canon’s business and operating results.

Canon may unintentionally infringe international trade laws and regulations, and any such infringement may lead to an adverse effect on its business. The extent of the effect on Canon’s business will depend upon the nature of the infringement and the severity of fines or other sanctions potentially imposed upon Canon. A major infringement could result in a temporary or permanent suspension of Canon’s trading rights in one or more jurisdictions. In addition to any sanctions prescribed by law, adverse publicity regarding an alleged infringement of trade laws and regulations by Canon may also have a negative effect on the Canon brand and image.

Any of the above factors regarding international operations could have an adverse effect on Canon’s operating results.

Canon’s cooperation and alliances with, strategic investments in, and acquisitions of, third parties may not produce successful results. The unexpected emergence of strong competitors through mergers and acquisitions may affect Canon’s business environment.

Canon is engaged in alliances, joint ventures, and strategic investments with other companies. Canon also acquiresmakes strategic acquisitions of other companies. These activities can help to promote Canon’s technological development process and expand its customer base. However, weak business trends or disappointing performance by partners or targetsacquired companies may adversely affect the success of such activities. In addition, the success of such activities may be adversely affected by the inability of Canon and its partners or targetsacquired companies to successfully define and reach common objectives. Even if Canon and its partners or targetsacquired companies succeed in designing a structure that allows for the definition and achievement of common objectives, synergies may not be created between the businesses of Canon and its partners or targets.acquired companies. Integration of operations may take more time than expected. An unexpected cancellation of a major business alliance may disrupt Canon’s overall business plans and may also result in a delayed return on, or reduced recoverability of, the investment, adversely affecting Canon’s operating results and financial position.

In addition, the unexpected emergence of strong competitors through mergers and acquisitions or the formation of competitive business alliances may change the competitive environment of the businessesbusiness areas in which Canon participates, thereby affecting Canon’s future operating results.

Canon’s operating and financing activities expose it to foreign currency exchange and interest rate risks that may adversely affect its revenues and profitability.

Canon derives a significant portion of its revenue from its international operations. As a result, Canon’s operating results and financial position have been and may continue to be significantly affected by changes in the value of the yen versus foreign currencies. Sales of Canon’s products denominated in foreign currencies, as well as its margins have been and may continue to be adversely affected by the strength of the yen against foreign currencies. Conversely, a strengthening of foreign currencies against the yen will generally be favorable to Canon’s foreign currency sales. Canon’s consolidated financial statements are presented in yen. As such, the yen value of Canon’s assets and liabilities arising from foreign currency business transactions and the yen value of Canon’s foreign currency-denominated equity investments have fluctuated and may continue to fluctuate. These fluctuations may have unpredictable effects on Canon’s consolidated financial statements. Moreover, Canon’s consolidated financial statements have been and may continue to be affected by currency translations from the financial statements of Canon’s foreign affiliates, which are denominated in various foreign currencies. Furthermore, the values of a number of foreign currencies, such as the U.S. dollar and the euro, have weakened

significantly more than expected against the yen, which has negatively affected and may continue to affect Canon’s operating results and financial position. Although Canon strives to mitigate the effects of foreign currency fluctuations arising from its international business activities, Canon’s operating results and financial position could continue to be adversely affected if the current strong yen environment persists. Canon is also exposed to the risk of interest rate fluctuations, which may affect the value of Canon’s financial assets and liabilities.

Canon depends on efficient logistics services to distribute its products worldwide.

Canon depends on efficient logistics services to distribute its products worldwide. Problems with Canon’s computerized logistics systems, an outbreak of war or strife within Canon’s operating regions or regional labor

disputes, such as a dockworkers’ strike, could lead to a disruption of Canon’s operations and result not only in increased logistical costs, but also in the loss of sales opportunities owing to delays in delivery. Moreover, because demand for Canon’s consumer products may fluctuate throughout the year, transportation means, such as cargo vessels or air freight, and warehouse space must be appropriately managed to take such fluctuations into account. Failure to do so could result in either a loss of sales opportunities or the incurrence of unnecessary costs.

In addition, the increasing levels of precision required of semiconductor lithography equipment and LCDFPD lithography equipment and the resulting increase in the value and the size of such equipment in recent years have resulted in a concurrent increase in the need for sensitive handling and transportation of these products. Because of their precise nature, even a minor shock during the handling and transportation process can potentially cause irreparable damage to such products. If unforeseen accidents during the handling and transportation process render a significant portion of Canon’s high-end precision products unmarketable, costs will increase, and Canon may lose sales opportunities and the customer confidence.

Substantially higher crude oil prices and the supply-and-demand balance of transportation means could lead to increases in the cost of freight, which could adversely affect Canon’s operating results.

Furthermore, earthquakes or volcanic eruptions may cause a breakdown of transportation facilities, such as ports or airports, or otherwise interrupt critical logistics services, which may have an adverse effect on production or sales activities.

Other Risks

Canon’s business is subject to environmental laws and regulations.

Canon is subject to certain Japanese and foreign environmental laws and regulations in areas such as energy resource conservation, reduction of hazardous substances, product recycling, clean air, clean water and waste disposal.

In particular outlays required to address climate change could vary widely depending on circumstances of the Kyoto Protocol extension and corresponding measures.

In other cases, such as the “Directive Establishing a Framework for the Setting of EcoDesign Requirements for Energy-related Products across the European Union”, detailed implementation standards responsive to environmental requirements remain under review. Canon strives to comply with such standards to the extent possible in advance of official adoption. If, however, Canon’s current measures are deemed insufficient to satisfy such standards when adopted, Canon may be required to take further action and incur additional compliance costs.

Furthermore, Canon may incur rework or repair expenses if non-qualifying products are shipped in violation of the “European Union Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment” (“RoHS Directive”) or if other legal regulations are not fully followed by parts suppliers. Such extra costs may exceed compensation from parts suppliers or coverage from insurance contracts and could have an adverse effect on Canon’s overall business and operating results.

Environmental cleanup and remediation costs relating to Canon’s properties and associated litigation could decrease Canon’s net cash flow, adversely affect its operating results and impair its financial condition.

Canon is subject to potential liability for the investigation and cleanup of environmental contamination at each of the properties that it owns or operates and at certain properties Canon formerly owned or operated. If Canon is held responsible for such costs in any future litigation or proceedings, such costs may not be covered by insurance and may be material.

In addition, Canon may face liability for alleged personal injury or property damage because of exposure to chemicals or other hazardous substances from its facilities. Canon may also face liability for personal injury, property damage or natural resource damage, and decontamination costs for alleged pollution from its facilities. A significant increase in the number, success and cost of these claims could adversely affect Canon’s business and operating results.

Canon may be subject to intellectual property litigation and infringement claims, which could cause it to incur significant expenses or prevent it from selling its products.

Because of the emphasis on product innovation in the markets for Canon’s products, many of which are subject to frequent technological innovations, patents and other intellectual property are an important competitive factor. Canon relies primarily on internally developed technology, and seeks to protect such technology through a combination of patents, trademarks and other intellectual property rights.

Canon faces risks that:

To the extent that Canon is unaware of actual or potential infringements of, or adverse claims to, its rights in such technologies, any interference with Canon’s rights to use such technologies could adversely affect its operating results.

In addition, Canon may need to litigate in order to enforce its patents, copyrights or other intellectual property rights, to protect its trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement, which can be expensive and time-consuming. If any government agency or third party is adjudicated to have a valid claim against Canon, Canon could be required to:

Canon also licenses its patents to third parties in exchange for payment or cross-licensing. The terms and conditions of such licensing or changes in the renewal conditions of such licenses could affect Canon’s business.

Canon’s businesses, corporate image and operating results could be adversely affected by any of these developments.

Disputes involving payment of remuneration for employee inventions may adversely affect Canon’s brand image as well as its business.

Canon may face disputes involving payment of remuneration for employee inventions, the rights to which have been assigned to Canon. This risk is particularly relevant in countries such as Japan and Germany, where patent laws require companies to remunerate employees for the assignment of employee invention rights to the company. Canon maintains company rules and an evaluation system for employee inventions. Canon believes it has been making adequate payments to employees for the assignment of invention rights based on these rules. However, there can be no assurance that disputes will not arise with respect to the amount of these payments to employees. Such disputes may adversely affect Canon’s brand image as well as its business.

Canon’s facilities, information systems and information security systems are subject to damage as a result of disasters, outages or similar events.

Canon’s headquarters functions, information systems and research and development centers are located in or near Tokyo, Japan, where the possibility of damage from earthquakes is generally higher than in other parts of the world. In addition, Canon’s facilities or offices, including those for research and development, materials procurement, manufacturing, logistics, sales and services are located throughout the world and subject to the possibility of outage or similar disruption as a result of a variety of events, including natural disasters such as earthquake, flood computer viruses, cyber attacks and terrorist attacks. Although Canon is workingcontinues to establish appropriate backup structures for its facilities and information systems, there can be no assurance that Canon will be able to prevent or mitigate the effect of suchdisruptive events or developments such as the leakage of harmful substances and shutdowns of information systems, and leakage, falsification, and loss of internal databases.systems. Although Canon has implemented backup plans to permit the manufacture of its products at multiple production facilities, such plans do not cover all product models. In addition, such backup arrangements may not be adequate to maintain production quantity at sufficient levels. Such factors may adversely affect Canon’s operating activities, generate expenses relating to physical or personal damage, or hurt Canon’s brand image, and its operating results may consequently be adversely affected.

Canon’s success depends in part on the value of its brand name, and if the value of the brand is diminished, Canon’s operating results and prospects will be adversely affected.

Canon’s success depends in part on the value of its brand name. The main factors which could damage its brand value are defective product quality, circulation of counterfeit and failures of its compliance regime. Although Canon works to minimize risks that may arise from product quality and liability issues, such as those triggered by the individual functionality and also from the combination of hardware and software that make up Canon’s products, there can be no assurance that Canon will be able to eliminate or limit these issues and the resulting damages. If such factors adversely affect Canon’s operating activities, generate additional expenses such as those related to product recalls, service and compensation, or otherwise hurt its brand image, Canon’s operating results or reputation for quality may be adversely affected. Canon has been implementing measures to halt the spread of counterfeit products. However, there can be no assurance that such measures will be successful, and the continued manufacture and sale of such products could adversely affect Canon’s brand image as well as its operating results.

If Canon fails to maintain its overall compliance regime, especially legal and regulatory compliance, this also could result in damage to Canon’s credibility and brand value.

Canon’s business is subject to environmental laws and regulations.

Canon is subject to certain Japanese and foreign environmental laws and regulations in areas such as energy resource conservation, reduction of hazardous substances, product recycling, clean air, clean water and waste disposal. Due to the laws and regulations, Canon may face liability for additional costs and alleged damages. Such costs and damages could adversely affect Canon’s business and operating results.

Canon is subject to potential liability for the investigation and cleanup of environmental contamination at each of the properties that it owns or operates and at certain properties Canon formerly owned or operated. If Canon is held responsible for such costs in any future litigation or proceedings, such costs may not be covered by insurance and may be material.

Canon is subject to risks relating to legal proceedings.

Canon is involved in various claims and legal actions arising in the ordinary course of its business. Results of actual and potential litigation are inherently uncertain. An unfavorable result in a legal proceeding could adversely affect Canon’s reputation, financial condition and operating results.

Canon may be subject to intellectual property litigation and infringement claims, which could cause it to incur significant expenses or prevent it from selling its products.

Because of the emphasis on product innovation in the markets for Canon’s products, many of which are subject to frequent technological innovations, patents and other intellectual property are an important competitive factor. Canon relies primarily on internally developed technology, and seeks to protect such technology through a combination of patents, trademarks and other intellectual property rights.

In relation to protection of its technologies, Canon faces risks that:

In relation to third party intellectual property rights, if any governmental agency or third party is adjudicated to have a valid infringement claim against Canon, Canon could be required to:

Canon may need to litigate in order to enforce its intellectual property rights or in order to defend against claims of infringement, which can be expensive and time-consuming.

Canon also licenses its patents to third parties in exchange for payment or cross-licensing. The terms and conditions of such licensing or changes in the renewal conditions of such licenses could affect Canon’s business.

With respect to employee inventions, Canon maintains company rules and an evaluation system and has been making adequate payments to employees for the assignment of invention rights based on these rules. However, there can be no assurance that disputes will not arise with respect to the amount of these payments to employees.

Canon’s businesses, corporate image and operating results could be adversely affected by any of these developments.

Canon must attract and retain highly qualified professionals.

Canon’s future operating results depend in significant part upon the continued contributions of its employees. In addition, Canon’s future operating results depend in part on its ability to attract, train and retain qualified personnel in development, production, sales and management. The competition for human resources in the high-tech industries in which Canon operates has intensified in recent years. Moreover, owing to the accelerating pace of technological change, the importance of training new personnel in a timely manner to meet product research and development requirements will increase. Failure by Canon to recruit and train qualified personnel or the loss of key employees could delay development or slow production and could increase the risks of outflow of technologies and know-how. These factors may adversely affect Canon’s business and operating results.

Maintaining a high level of expertise in Canon’s manufacturing technology is critical to Canon’s business. However, it is difficult to secure the requisite expertise for specialized skill areas, such as lens processing, in a short time period. While Canon engages in advance planning to obtain the expertise needed for each skill area, Canon cannot guarantee that such expertise will be acquired in a timely manner and retained, and failure to do so may adversely affect Canon’s business and operating results.

Canon may be adversely affected by fluctuations in the stock and bond markets.is subject to risks arising from dependency on electronic data.

Canon’s assets include investments in publicly traded securities. As a result, Canon’s operating resultsCanon possesses confidential electronic data relating to manufacturing, research and general financial position may be affected by price fluctuations in the stockdevelopment, and bond markets. The current volatility in financial markets and overall economic uncertainty increase the risk that the actual amounts realized

in the future on Canon’s investments could differ significantly from the fair values currently assigned to them. In addition, if valuations of investment assets decrease because of conditions in stock or bond markets, for example, additional funding and accruals with respect to Canon’s pension and other obligations may be required, and such funding and accruals may adversely affect Canon’s operating results and consolidated financial condition.

Confidential information may be inadvertently disclosed, which could lead to damage claims or harm Canon’s reputation, and may have an adverse effect on Canon’s business.

In connection with certain projects, Canon may receive confidential orproduction, as well as sensitive information (such as personal information)obtained from its customers relating to thesethe customers orand to other affected individuals orand parties. In addition,This electronic data is used by Canon uses computerand third party managed systems and networks. Electronic data is also used for the information service functions in various products.

There are some risks inherent in the use of the electronic data, in managing information relatingincluding vulnerability to its employees.hacking and computer viruses, service failures due to unexpected events, and infrastructure issues, such as insufficient power supply and issues arising from damage caused by natural disasters. Although Canon makescontinues to make administrative and managerial improvements in order to alleviate these risks, such events may occur despite Canon’s best efforts to maintain the confidentialityefforts.

The materialization of such information through procedures designedrisks could result in interruptions to prevent accidental releaseessential work, leaks of confidential or sensitivedata and damage to the information such information may be inadvertently disclosed without Canon’s knowledge. If this occurs,service functions in products. The occurence of any of these events has the potential to cause Canon mayto be subject to claims for damages from the affected individuals orand parties suffer harmand to negatively influence Canon’s brand image, the social trust it has developed, and its reputation or be subject to liabilities or penalties under applicable statutes.

Inadvertent disclosure of confidential information regarding new technology could also have a material adverse effect on Canon’s business.operations and financial conditions.

Item  4. Information on the Company

A. History and development of the Company

Canon Inc. is a joint stock corporation (kabushiki kaisha) formed under the Corporation Law of Japan. Its principal place of business is at 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan. The telephone number is +81-3-3758-2111.

The Company was incorporated under the laws of Japan on August 10, 1937 to produce and sell Japan’s first focal plane shutter 35mm still camera, which was developed by its predecessor company, Precision Optical Research Laboratories, which was organized in 1933.

In the late 1950s, Canon entered the business machines field utilizing technology obtained through the development of photographic and optical products. With the successful introduction of electronic calculators in 1964, Canon continued to expand its operations to include plain paper copying machines, faxes, laser printers, bubble jet printers, computers, video camcorders and digital cameras.

The following are important recent events in the development of Canon’s business.

In fiscal 2011, 2010, and 2009, Canon’s increases in property, plant and equipment were ¥226,869¥188,826 million, ¥158,976¥270,457 million and ¥216,128¥226,869 million, respectively. In fiscal 2011,2013, the increases in property, plant and equipment were mainly used to expand production capabilities in both domestic and overseas regions, and to bolster Canon’s production-technology-related infrastructure. In addition, Canon has been continually investing in tools and dies for business machines, in which the amount invested is generally the same each year.

For fiscal 2012,2014, Canon projects an increase in property, plant and equipment of approximately ¥300,000 million, mainly in Japan.¥210,000 million. This amount is expected to be spent for investments in new production plants and new facilities of Canon. Canon anticipates that the funds needed for this increase will be generated internally through operations.

B. Business overview

Canon is one of the world’s leading manufacturers of network digitaloffice multifunction devices (“MFDs”), plain paper copying machines, laser printers, inkjet printers, cameras and lithography equipment.

Canon sells its products principally under the Canon brand name and through sales subsidiaries. Each of these subsidiaries is responsible for marketing and distribution to retail dealers in an assigned territory. 80.5%In 2013, 80.8% of consolidated net sales in fiscal 2011 were generated outside Japan, with approximately 27.0%28.4%, 31.3%30.1% and 22.2%22.3% generated in the Americas, Europe and Asia and Oceania, respectively.

Canon’s strategy is to develop innovative, high value-added products incorporating advanced technologies.

Canon’s research and development activities range from basic research to product-oriented research directed at maintaining and increasing Canon’s technological leadership in the marketplace.

Canon manufactures the majority of its products in Japan, but in an effort to reduce currency exchange risk and production costs, Canon has increased its overseas production and the use of local components. Canon has manufacturing subsidiaries in a variety of countries, including the United States, Germany, France, the Netherlands, Taiwan, China, Malaysia, Thailand, Vietnam and Vietnam.the Philippines.

As a concerned member of the world community, Canon emphasizes recycling and has increased its use of clean energy sources and cleaner manufacturing processes. Canon has also launched programs to collect and recycle used Canon cartridges and to refurbish used Canon copying machines. In addition, Canon has removed virtually all environmentally unfriendly chemicals from its manufacturing processes.

Products

Canon operates its business in three segments: the “Office Business Unit,” the “Consumer“Imaging System Business Unit” and the “Industry and Others Business Unit”.

- Office Business Unit -

Canon manufactures, markets and services a widefull range of monochrome network digital MFDs, color network digital MFDs, officeprinters, copying machines for personal and personal-use copying machines.office use and production print products for print professionals. Canon also delivers added value added to

customers through software, services and solutions. Our offerings cover a wide variety of markets from Small Office Home Office (“SOHO”), and Small and Midsize Business (“SMB”) to large enterprises and professional graphic arts.

In the office market, together with Océ, which we

consolidated in 2010, Canon is now in a much improved position compared to our position in fiscal 2010 to serve customers in terms of sales coverage, product portfolio and service capabilities to address needs in the imaging and document space.

In fiscal 2011, despite disruptions in our supply chain due to the Great East Japan Earthquake and collateral events, and notwithstanding a persistently strong yen and a global economic downturn triggered by the Eurozone crisis, Canon was able to maintain total sales at levels comparable to those of fiscal 2010.

The office market is subject to rapid change, andindustry, customer preferences havepreference has been shifting from monochrome to color products and from deviceshardware to services. In fiscal 2011, Canon strengthened its product lineup of digital color MFDs withservices and solutions. Especially in the introduction of the imageRUNNER 1730/1740/1750 series, Canon’s first mid-to-high speed letter-sized devices that cater to the needs of our Managed Document Services customers. Canon also launched low-end ledger-sized models tailored to the emerging markets. For example, the imageRUNNER 2420/2422 series targets growing markets in Asia, Latin America and parts of Europe.

Canon offers color network digital MFDs for a wide range of environments from offices to professional graphic arts. The print industry ismarket, customers are increasingly turning to short-run, print-on-demand and variable data printingprinting. The importance of connectivity, mobility, security, integration, workflow and web services is growing, and such added value is increasingly delivered together with hardware. Canon seeks to maintain itsposition as a market leader* in recent years. these core markets.

In fiscal 2011,2013, Canon enhanced its portfolio starting with the launch of the imageRUNNER ADVANCE 4200 series and the A4-size imageRUNNER ADVANCE 400iF and 500iF. To deliver higher value added and expand our presence in the existing market while acquiring new markets in the production print industry, Canon introduced the varioPRINT DP line with new Canon branding and the imagePRESS C7010 VPS, aC1+II. Aiming to accelerate the transition from offset to high volume digital color, press jointly developed withCanon previewed our future solution Niagara, an ultra high-volume color inkjet cutsheet printing platform. In the high speed continuous feed printer area, Océ. We believe this system combines our respective best-of-class strengths, teaming announced new Océ ColorStream 3000 Z series.

As for software, services and solutions, Canon’s digital color technology with Océ’s workflow innovation. The model has been well accepted in the marketplace.

Canon is also marketing diverse expansion modules, software and business solutions to increase customer value. Canon’s function expandableapplication development platform, the Multifunctional Embedded Application Platform (“MEAP”), enables quickallows the creation of customized applications for Canon MFDs enabling tight integration of fast, high quality image processing into the customer’s IT infrastructure. SuchThe integration not only boosts productivity but alsoand allows users to fully take advantage of the power of MFD cloud services. MFDs. Canon has introduced Enterprise Imaging Platform (“EIP”), a middleware application that enables customers to integrate enterprise applications and automate the business processes.

To maintain and enhance its competitive edge and to meet increasingly sophisticated customer demands, Canon is committed to the continued reinforcement of Canon’s hardware and software offerings and solutions capability.

In fiscal 2011, Canon began delivering form creation and print servicesthe monochrome laser printer market, the transition to salesforce.com users in Japan through an integration with salesforce.com’s cloud services. Canon also announced a strategic alliance with Oraclelow price segment is expected to bring together Canon’s imagingexpand sales in the micro office/home office market and Oracle’s software expertisein emerging markets. Canon expects an expansion in the color laser printer market to jointly developbe driven by increasing demand for color printing. Moreover, Canon plans to aggressively launch new products in the MFDs market and technologies to create new servicesdrive Canon’s business growth.

However, Canon is experiencing fierce competition with aggressive competitors in the laser printer market and offeringsan eventual decline in sales prices is becoming a major threat. Growth of the tablet PC and smartphone market, which affects users’ printing behavior and may also lead to a decrease in demand for our customers.

Canon Managed Document Services (“Canon MDS”)printing, is a unified global initiative for outsourced printing and document management services, settingbecoming a new standard for delivering managed print servicesthreat. Canon implements numerous efforts to customers. The Canon MDS offering leverages innovative technologiesenhance mobile printing solutions to tackle with the new threat and tools that combine the device functions, software solutions and professional service capabilities offered through Canon. With Canon MDS,create further business opportunities.

In response, Canon aims to help customers improvepromote technological developments in order to introduce competitive products in a timely manner across the office business unit, and to pursue business efficiency through continuous cost reduction and reduce total cost of ownership. This initiative is taking hold in the market and we are seeing steady growth in our MDS customer base.

Canon’s expanded alliance with Hewlett-Packard contributed to our being awarded several large enterprise deals. For example, in fiscal 2011, Canon and Hewlett-Packard were together awarded major MDS deals from large enterprises. We believe Canon and Hewlett-Packard continue to offer unmatched office workflow solutions that are highly responsive to customer needs in this market.

Canon made Océ a consolidated subsidiary in 2010 to strengthen our printing business. The integration is well underway. In fiscal 2011, we introduced the imagePRESS C7010VPS, the first jointly-developed product with Océ. The portfolio available for cross selling has expanded over time and we believe we offer to our respective customer bases a broader and richer set of combined offerings. This undertaking has been effective in terms of channel coverage, complementary assets and capabilities, and incremental sales growth.

Developed and fostered by Canon, laser printers are standard output peripherals for offices. Canon’s laser printers are relatively small and have high-quality capabilities attributable to Canon’s expertise with the relevant technologies. Canon’s adoption of a user-replaceable toner cartridge system containing optical components makes its printers easy to maintain. Most of Canon’s laser printer sales are on an Original Equipment Manufacturer (“OEM”) basis.

On a global basis, the production and sales of monochrome and color laser printers, mainly low-end products, expanded rapidly and achieved unit growth in excess of 10% in the past years. Unit growth of both monochrome and color laser printers was negative in fiscal 2008 and 2009 due to the recent economic downturn but returned to positive growth in fiscal 2010 and 2011 due to improved global economic conditions.

The large format inkjet printer market size is approaching the record set in 2008, and has accordingly been on a continuous recovery trend spurred by the accelerating shift to color, from black and white, and the contributions of emerging market expansion. Despite the earthquake in Japan, the floods in Thailand and the economic downturn in developed nations triggered by the Eurozone crisis, Canon large format inkjet printer main unit sales in 2011 exceeded those of 2010, setting a new post-2008 record. Canon believes it was able to achieve this result because it was able to solidify its position in the industry, not only by maintaining its high reputation in the large format inkjet printer market for high productivity and excellent usability, but also as a result of the successful launch of two new models featuring improved image features, the iPF8300S/6300S for graphic market.

An important growth strategy for Canon in the near term is to solidify its global position in the large format inkjet printer market by strengthening the business relationships with Océ and achieving the expansionoptimization of its large format inkjet printer lineup.

The Office Business Unit also includes the related sales of paper and chemicals, service and replacement parts.supply chain.

- ConsumerImaging System Business Unit -

Canon manufactures and markets digital cameras and digital video camcorders, as well as lenses and various related accessories.

The worldwide compact digital camera market declined by 5% year-on-year in fiscal 2011, primarily due to depressed consumer spending in developed markets and supply shortages caused by the natural disasters in Japan and Thailand. Canon maintained its formidable position in the industry by bringing seventeen new models to market in 2011. Three new models in particular have contributed to our sales: the PowerShot ELPH 100 HS, the PowerShot ELPH 300 HS, and the PowerShot SX230 HS.

In September 2011, the cumulative production of EOS-series SLR cameras topped 50 million units. Moreover, we produced the last 10 million units in only 16 months. In March 2011,2013, Canon launched twothree new entry class products the and particularly strengthened its product line up.

EOS Rebel T3i and EOS Rebel T3, to the SLR market which continued to experience robust growth. The EOS Rebel T3iT5i, succeeding T4i performance, is equipped with features, such as a fully automaticthe smooth and silent Auto Focus the movie function with Stepping Motor (lead-screw type) lenses. The Vari-angle Touch Screen LCD monitor enables

flexible shooting function called “Scene Intelligent Auto,” a function to facilitate video shootingpositions with clear views. EOS Rebel SL1 is the new offering in the Entry category and the first variable-angle LCD monitor in an entry-class product, making it in our opinion the ideal high-performanceworld’s smallest and lightest digital SLR camera for beginner-level users wishing to “shoot,” “express,” and “watch/present” their creations. In addition to a full range ofwhich uses APS-C size equivalent sensors. With excellent basic features, the EOS Rebel T3 offers color variation features, making it an attractive digital SLR camera capable of drawing in new users.

The launch of both models was challenging due to the earthquake and collateral events in Japan, but in the second halfperformance of the year, sales grew satisfactorily for both models, as well as forDigital SLR, it offers the oldersmallest body through a redesigned inside structure. Despite its compact design, it offers outstanding grip and operability. EOS Rebel T2i model. Meanwhile, sales of existing advanced-amateur class models including70D is equipped with the new innovative AF system, Dual Pixel CMOS AF offers smooth and silent AF, and Built-in Wireless LAN, enabling to expand image capturing area and increase the communication performance. EOS 5D Mark II,III, EOS 7D and EOS 60D remained satisfactory, contributing to increased overall market6D show steady sales and Canon keeps No.1 share in terms of value,the advanced amateur category. In addition to the need for higher resolution and in the United States in particular, ranking first among mid-range class models in terms of units sold.

The marketmore compact and lightweight sizes, such function as video recording with a full high definition (“HD”) format, is becoming a new standard feature for interchangeable lenseslens digital cameras. Canon believes there remains considerable room for digital cameras grew robustly as well.future growth in this category through development of new products based on state-of-the-art technology.

Canon launched four new lens products, and cumulative production of the EF lens series surpassed 90 million in May 2013. The interchangeable lens line up currently exceeds 70 products. By enhancing our core capability, Canon has been introducing high-quality and high-performance lenses built on superior optical technology (e.g., special “Sub-Wavelength” Coating, multi-layer diffractive optical elements and image stabilizers),new elemental technology, which we believeCanon believes allowed usit to maintain ourits advantage over the competitioncompetition.

Canon introduced eighteen new models to the compact digital camera market in this field, as well as2013 in order to add value to its products. While there has been a strong tendency toward reliance on electronic manufacturing services (“EMS”) in the compact digital SLR camera field. In October 2011,industry, there is a possibility that the

cumulative production of EF lens series interchangeable lens topped 70 million. Including threeThe market for conventional camcorders has been shrinking, as many other popular devices start equipping a movie function. On the other hand, new products launched in March 2011, the interchangeable lens lineup currently tops 60 products. With high expectations for further growthcategories like web cameras and action cameras are emerging and expanding. Canon aims to expand sales in this market with a product lineup including higher value added based on Canon’s distinctive high-definition, high-resolution technologies. Concurrently, Canon expects to continue boosting both revenue and market share.

Canon maintains a leading position in the digital video camcorder market, havinghas introduced a series of flash memory models in fiscal 2008 followed by high-end models in fiscal 2009,new product with unique styled camcorder especially for self-shooting, aiming to successfully promote Canon’s brand reputation for high image quality. In fiscal 2010, Canon added general-purpose models, allowing Canon to cover the full range with flash memory models.exploit a new market category. In the field of professional camcorders, Canon introduced flash memory models, ournew “XA” series; small sized camcorders equipped with a wide-angle and high magnification lens in addition to current “XF” series in 2010 and 2011 for use in broadcast news, documentary and independent filmmaking. Furthermore,“CINEMA EOS SYSTEM” has strengthened its line up by launching new digital cinema cameras capable of recording 4K-resolution video and improved user convenience through a wider selection of related software. Canon aims to solidify its top position in November 2011, Canon announced its full-fledged entry into digital high-resolutionthe motion picture production market by launching “Cinema EOS System” which consistsintroducing new products that suit to a wide variety of new interchangeable lens digital cinema cameras featuring a newly developed Super 35mm-equivalent, approximately 8.29 megapixel Complementary Metal–Oxide–Semiconductor (“CMOS”) sensor, and new EF Cinema Lens lineup. Despite a continuing slowdownmarket.

In 2013, Canon experienced robust growth in the overall digital video camcorderfield of projectors for business applications, and in particular brighter, installation type projectors. In this installation market, thereCanon enjoyed sales volume expansion in 2013, owing to the increased line-up of introducing three new install-type models in 2012. Canon launched two new install-type models in 2013, which differentiated from the competitor by advanced optical technology, imaging technology and compact design. Those will be strategic and leading models for expanding the projector business and advancing Canon’s position in the market. Moving forward, Canon expects to extend its competitive product lineup based around the optical technology on which the company prides itself.

In the broadcast TV lens market, worldwide market demand is stable although demand arising from the switchover to high definition broadcast formats in developed countries slowed down. Canon retains a steady, positive trendlarge share of the TV lens market with high value-added products.

Canon launched the “MREAL” mixed reality (“MR”) system based on graphic information processing technology that can combine the real world with computer graphics for the purpose of, for example, realizing more efficient product design in HD and flash memory sales and volume. CanonJuly 2012.

Inkjet printer technology has been expanding its flash memory model lineups in orderevolving, driving expansion of application to expand salesnot only for home use, but for office and to take advantage of this growth of the HDcommercial use such as poster printing and flash memory markets.photo printing that require high-quality.

Canon began aggressively expandingoffers a wide variety of products to meet such needs based on its lineupcore technology “Full-photolithography Inkjet Nozzle Engineering” (“FINE”), which enables realization of network cameras used forhigh-speed printing and high image quality at the same time.

For the home and business surveillance video and monitoring applications in the second half of 2008 and has achieved a reputation for high-quality images due to the strength of its optical performance and video processing technology. This market is expected to expand further through improvements in high-quality imaging and image analysis, both of which are trends that will enable Canon to apply its traditional strengths. In fact Canon launched four new HD products in the second half of 2011 to contribute to societal safety and security.

As the inventor of bubble jet printing technology, Canon believes that it continues to provide customers with the best performing inkjet printer models.use printers, Canon offers high-performance and high value-added multifunction and single function inkjet printers. In response to intense competition in this segment, Canon launched a new lineup of Multifunction Printers (“MFP”) and single function printers in fiscal 2011. All of these models feature print heads based on Canon’s Full-photolithography Inkjet Nozzle Engineering (“FINE”) technology, which boosts print speed and image quality up to 9600 x 2400 dpi, and the ChromaLife100+ system, which provides high quality and long-lasting photographic images using a combination of genuine ink and paper. Canon PIXMA photo printers offer many advanced features, including the Intelligent Touch System, Full HD Movie Print,such printer solutions as New PIXMA Cloud Link and wireless printing, each ofPIXMA Printing to tighten the connection with Cloud environment, smartphone and tablet PC which makes printer operation more user friendly for diversified users. With an advanced printer lineup,have been proliferating. Canon has expanded its sales volume and expects that its consumables business will expand accordingly, excluding adverse affects from currency fluctuations.

Beginning in February 2011 in Japan, followed by some other parts ofalso offers My Image Garden, the world,easy-to-use Intelligent Touch System, XL ink tank & ink cartridge. In 2012, Canon announced the company’s entry into the commercial photo printing market with the launch ofstarted to ship the DreamLabo 5000, which incorporatesthe first inkjet technologies.production photo printer featuring new “FINE” high-density print head technology. In the autumn of 2011,professional printing market, Canon also introducedoffers three professional photo inkjet printers: the PIXMA PRO-1 with a professional photo inkjet printer, which produces professional quality prints up12 LUCIA ink system of pigment-based inks, PIXMA PRO-10 with a 10 LUCIA ink system, and the PIXMA PRO-100 with eight dye inks to A3+ with 12-ink system. With the addition of these products,produce colorful and vivid prints. Canon aims to further expand its business leveraging its strength in the photo printing market.

Canon markets a wide variety of scanners geared toward a broad spectrum of user needs, includinglarge-format inkjet printers are based on “FINE” head technology and employ its unique image scanners in the CanoScan LiDE series using Contact Image Sensor (“CIS”)processor, “L-COA,” developed for high-speed, high-resolution printing, and scanners with Charge-Coupled Devices (“CCD”) for high resolution. CIS is a close-contact method that allows for a significant reduction in scanner weight and size.“LUCIA” pigment inks. Consequently, Canon has applied its expertise to developing space-saving and energy-efficient scanners, as well as easy personal computer connections via Universal Serial Bus interfaces (“USB”) for data and power. Although the scanner market has continued to shrink and has shifted toward MFPs, Canon has maintainedreceives a high market share.

Canon is the leader inevaluation and steadily boosts the market for television lenses used by television stations for live sports, news broadcasts, concerts, dramatic productions, and other applications. In 2011, Canon released the XJ95x8.6B high

definition zoom lens for outdoor broadcasts. This lens achieves not only the world’s widest angle, but also 95x optical zoom magnification, which has bolstered Canon’s position as the broadcast television lens market leader.

We believe Canon’s television lenses are easily the most popular for broadcasting all manner of sporting and other events around the world, and continue to deliver thrilling true depictions of events to television viewers, while inspiring viewers and conveying to them a realistic picture of news stories around the world.

Canon’s calculator operations—from development to production to marketing—are centered in Hong Kong. Canon’s tradition of technological innovation began with its focus on personal information products, including calculators with built-in printers and electronic dictionaries. Canon continues to develop appealing personal information products that reflect demand trends.share.

- Industry and Others Business Unit -

In theThe market for semiconductor lithography equipment thehas shown a recovery trend from 2010 continued andin the second half of 2013 due to the correction of supply-demand imbalances in the memory device market, grew roughly 20% in 2011 to about 360 units. Byalthough the type of lighting source, cutting-edge equipment using Argon-Fluoride (“ArF”) immersion now account for roughly one-third of the market asinvestments by memory makers had remained low in recent years because supply continued to outweigh demand. However, image sensor, logic device and foundries have been aggressively investing in miniaturization.automotive device makers steadily increased their equipment investments, drawn by the growing market for smartphones, tablet PCs and hybrid cars. At the same time, some manufacturers are startingstarted to invest in equipment using i-line steppers for small diameter wafers used in image sensors, power devices and LEDs, as well as for new markets such as 3D integration for Through SiliconThrough-Silicon Via (“TSV”).

In order to respond more flexibly to these market changes, Canon has been rationalizing production systems to better matchmore flexibly respond to these market changes, creating new systems with overall responsibility for each stepper model, and integrating manufacturing and sales functions so that customer needs can be more quickly addressedreflected in development. Through these activities, a “design-in” business style havehas been taking hold and are making steady progress is being made in developing and marketing products with high added value. For example, Canon made its first foray intoreleased a new i-line stepper FPA-3030i5+, optimized for the semiconductor back-endproduction of green devices such as LEDs and power devices, and FPA-5510iV which enables high productivity in the advanced packaging equipment market in 2011 with the introductionprocess such as TSV and Bump. As a result of these activities, Canon has occupied a high share of the i-line stepper market. Canon also released a new FPA-5510iV, which we believe offers the best solution for TSVDUV scanner FPA-6300ES6a with greatly improved productivity, overlay accuracy and bump lithography.

In 2011, the market for LCD lithography equipment remained relatively flatuptime rate compared to the previous year at around 110 units. conventional equipments.

The market for LCDFPD lithography equipment under 5.5th generation grew roughly 170%has been on a downward trend in 2011 frominvestment due to deterioration in the previous yearearnings of panel makers. The lithography market for small-to-mid sized panel production maintained steady trend drawn by growing demand for smartphones and tablet PCs. The lithography market for large-sized panel production, which has remained low in recent years, showed moderate recovery due to the rapid growth indemand from emerging countries and commercialization of 4K TVs.

Under the markets for smartphones and media tablets. However,circumstances, the market for LCD lithography equipment over 6th generation fell to one-half in 2011 from the previous year due to weak investment in 2011 resulting from aggressive investment in 2010, and price reductions for large LCD panels. In China, although theMPAsp-H760 supporting 8th generation production lines of LCDlarge-sized panels launched in 2011 ledcontinues to a significant expansion in the Chinese market, the growth could not fully absorb the effects of decreased demand in the overall LCD lithography equipment market.

The MPAsp-H700 series supporting 7th and 8th generation large LCD panels has offered customers an ability to maintainoffer high productivity and has contributed to customer production plans by allowing for quick equipment installation at existing production sites. This has helped Canon capture and maintain a leadingcommanding share of the South Korean market.FPD lithography equipment market for large-sized panel production. Furthermore, Canon’s sales and service support systems have earned high accolades in China.China where the market for FPD lithography equipment is growing. On the other hand, Canon has released new FPD lithography equipment, MPAsp-H800 for large-sized panel and the

Medical imaging

MPAsp-E810 for small-to-mid sized panels, with improved on resolution. Canon aims to gain an increasing share of the market for small-to-mid sized panel production in addition to large-sized panel production.

In the medical equipment sold by Canon includes X-ray image sensors, retinal cameras, autorefractometers and image-processing equipment for computerized systems. Canon’s pioneeringbusiness, the digital radiography system takes X-ray photography and medical imaging into(“DR”) market kept expanding, mainly in emerging markets such as Asia. Moreover, the digital age.systems market in industrialized nations continued to transition from the digitalization format of computed radiography (“CR”) to the newest format of DR. While the competition offered a rising number of new players, the target market of Canon DR products showed steady growth.

Other Canon launched new products with the “X-ray auto detection function”: CXDI-701C/G Wireless,CXDI-801C/G Wireless, CXDI-401C/G Wireless. Canon believes this function, which eliminates the need for communication with X-ray generators, is accelerating replacement of CR by DR.

For the ophthalmic equipment market, the optical coherence tomography (“OCT”) segment showed continuous growth, and further increase in volume and competition is expected. In this OCT segment, Canon sold the first Canon-brand OCT, OCT HS-100 in collaboration with consolidated subsidiary Optopol Technology, Sp. z o.o. (Poland). By adding the OCT to our product portfolio, we strive to increase sales in the ophthalmic equipment market.

The market of network cameras for business surveillance and management applications is expected to show double-digit growth, reflecting the progress of IT and digital technologies. Canon established a dedicated product group in 2013 to expand its network camera business, with its proprietary technologies of optics, sensor, imaging and network devices. With the introduction of four new compact Full HD network cameras at the end of 2013, Canon has extended its market coverage to meet demand for surveillance products for such areas as retail stores and offices.

NET SALES BY SEGMENT

The following table presents our net sales by segment for each of the periods shown.

NET SALES BY GEOGRAPHIC AREA

The following table presents our net sales by geographic area for each of the periods shown.

Seasonality

Canon’s sales for the fourth quarter are typically higher than for the other three quarters, mainly due to strong demand for consumer products, such as electronic components, including magnetic headscameras and micro-motors, are sold primarilyinkjet printers, during the year-end holiday season.

In Japan, corporate demand for office products peaks in the first quarter, as many Japanese companies end their fiscal years in March. Sales also tend to equipment manufacturers. In addition, increase at the start of the new school year in each region.

Sources of supply

Canon provides industrial machinespurchases materials such as die bonderglass, aluminum, plastic, steel and magnetic disk film deposition equipment.chemicals for use in various product components and in the manufacturing process. Canon also offers business information products, which primarily consistprocures raw materials from all over the world and selects suppliers based on a number of personal computers, serverscriteria, including environmental friendliness, quality, cost, supply stability and document scanners.

With the trend toward digitization, the demand for scanning documents into text or image dataPrices of some raw materials fluctuate according to market trends. Although Canon is expanding. Canon’s document scanners rapidlycurrently focusing on globalizing supplies and efficiently digitize large volumesimproving raw material resource management strategies, and believes that it will be able to continue procuring sufficient quantities of printed information. Canon offers a wide range of scanner models, including color-capable compact sheet-fed types and a flatbed model suitable for scanning book format documents. Canon also offers a hybrid model that can create microfilm records. Canon’s diverse lineup seeksraw materials to meet increased demand by business customers for digitizing office documents, which enablesits needs, there can be no assurance that supply shortages will not occur or that raw materials, such customers to share documents across Internetas crude oil, will be available at competitive prices, or intranet platforms or to capture forms with optical character recognition.

Personal computers and servers sold by Canon are manufactured by third parties underat all, in the manufacturers’ own brand names.future.

Marketing and distribution

Canon sells its products primarily through subsidiaries organized under regional marketing subsidiaries. These regional marketing subsidiaries are :subsidiaries: Canon Marketing Japan Inc. in Japan; Canon U.S.A., Inc. in North and South America; Canon Europe Ltd. and Canon Europa N.V. in Europe, Russia, Africa and the Middle East; Canon (China) Co., Ltd. in Asia outside Japan; and Canon Australia Pty. Ltd. in Oceania. Each subsidiary is responsible for its own market research and for determining its sales channels, advertising and promotional activities. Each subsidiary provides tailor-made solutions to a diverse range of unique customers and aims to advance Canon’s reputation as a highly trusted brand.

In Japan, Canon sells its products primarily through Canon Marketing Japan Inc., mainly to dealers and retail outlets.

In the Americas, Canon sells its products primarily through Canon U.S.A., Inc., Canon Canada Inc. and Canon Latin America, Inc., mainly to dealers and retail outlets.

In Europe, Canon sells its products primarily through Canon Europa N.V., which sells mainly through subsidiaries or independent distributors to dealers and retail outlets in each locality. In addition, copying machines are sold directly to end-users by several subsidiaries such as Canon (UK) Ltd. in the United Kingdom and Canon France S.A.S. in France.

In Southeast Asia and Oceania, Canon sells its products through subsidiaries located in those areas. In addition, copying machines are sold directly to end-users in Australia by Canon Australia Pty. Ltd.

Canon also sells laser printers on an OEM basis to Hewlett-Packard Company. Hewlett-Packard resells these printers under the “HP LaserJet Printers” name. During fiscal 2011, such2013 and 2012, OEM sales to Hewlett-Packard constituted 19.3%17.6% and 17.0%, respectively, of Canon’s consolidated net sales, and 20.1% in the previous fiscal year.sales.

Canon continues to enhance its distribution system by promoting the continuing education of its sales personnel and by improvingoptimizing inventory managementlevels and business planning through weekly analysis of sales data.

Service

In Japan and overseas, product service is provided in part by independent retail outlets and designated service centers that receive technical training assistance from Canon. Canon also services its products directly.

Most of Canon’s business machines carry warranties of varying terms, depending upon the model and country of sale. Cameras and camera accessories carry warranties that vary depending upon the model and country of sale.

Canon services its copying machines and supplies replacement drums, parts, toner and paper. Most customers enter into a contract under which Canon provides maintenance services, replacement drums and parts in return for a stated amount of the contract plus a per copy charge. Copying machines not covered by a service contract may be serviced from time to time by Canon or local dealers for a fee.

Seasonality

Canon’s sales for the fourth quarter are typically higher than for the other three quarters, mainly due to strong demand for consumer products, such as camerasPatents and inkjet printers, during the year-end holiday season.

In Japan, corporate demand for office products peaks in the first quarter, as many Japanese companies end their fiscal years in March. Sales also tend to increase at the start of the new school year in each region.

Sources of supplylicenses

Canon purchases materials such as glass, aluminum, plastic, steel and chemicals for use in various product components and in the manufacturing process. Canon procures raw materials from all over the world and selects suppliers based onholds a large number of criteria, including environmental friendliness, quality, cost, supply stabilitypatents, design rights and financial condition.

Prices of some raw materials fluctuate according to market trends. In fiscal 2011, the earthquaketrademarks in Japan and collateral events,abroad to protect proprietary technologies stemming from its research and development activities. Canon utilizes these intellectual property rights as wellimportant strategic management tools. For example, Canon leverages its intellectual property rights to expand its product lines and business operations and to form alliances and exchange technologies with other companies.

Canon has granted licenses with respect to its patents to various Japanese and foreign companies, most often with respect to electrophotography, laser printers, multifunction printers, facsimile machines and cameras.

Companies to which Canon has granted licenses include:

Canon has also entered into cross-licensing agreements with other major industry participants.

Companies with which Canon has entered into cross-licensing agreements include:

Canon has placed a high priority on the management of its intellectual property. Some products that are material to Canon’s operating results incorporate patented technology. Patented technology is critical to the continued success of Canon’s products, which typically incorporate technology from dozens of different patents. However, Canon does not believe that its business, as the floods in Thailand, caused acute shortages of raw materials and damaged production and other facilities. Although Canona whole, is currently focusingdependent on, globalizing supplies and improving raw material resource management strategies, and believes that it will be able to continue procuring sufficient quantities of raw materials to meet its needs, there can be no assurance that supply shortages will not reoccur or that raw materials, such as crude oil, willits profitability would be available at competitive prices,materially affected by the revocation, termination, expiration or at all in the future.infringement upon, any particular patent, copyright, license or intellectual property rights or group thereof.

NET SALES BY SEGMENT

The following table presents our net sales by segment for each of the periods shown.

NET SALES BY GEOGRAPHIC AREA

The following table presents our net sales by geographic area for each of the periods shown.

Competition

Canon encounters intense global competition in all areas of its business. Canon’s competitors range from some of the world’s major multinational corporations to smaller, highly specialized companies. Canon competes

in a number of different business areas, whereas many of its competitors focus on one or more individual areas. Consequently, Canon may face significant competition from entities that apply greater financial, technological, sales and marketing or other resources than Canon to their activities in a particular market segment.

The principal elements of competition that Canon faces in each of its markets are technology, quality, reliability, performance, price and customer service and support. Canon believes that its ability to compete effectively depends in large part on conducting successful research and development activities that enable it to create new or improved products and release them on a timely basis and at commercially attractive prices.

The competitive environments in which each product group operates are described below:

- Office Business Unit -

The markets for this segment are highly competitive. Canon’s primary competitors are Xerox Corporation/Fuji Xerox Co., Ltd.; Ricoh Company, Ltd.; Konica Minolta Holdings, Inc.; Hewlett-Packard Company; Samsung Electronics Co., Ltd.; and Lexmark International, Inc. Canon believes that it is one of the leading global manufacturersmanufacturers* of digital network MFPs,office MFDs, copying machines and laser printers. In addition to the general elements of competition described above, Canon’s ability to compete successfully in these markets also depends significantly on whether it can provide effective, broad-based “business solutions” to its customers and respond to interrelated customer needs. In particular, the ability to provide equipment and software that connect effectively to networks (ranging in scope from local area networks to the Internet)Internet and the cloud) is often a key to Canon’s competitive strength. In the United States, Europe and Japan, Canon is one of the market leadersleaders* in all areas of the business machine market. In emerging markets, for example in China, the current market leaders for business machines are Toshiba TEC Corporation, Sharp Corporation and Konica Minolta Holdings, Inc. Canon hopes to join this group by introducing products tailored to the Chinese market and by strengthening sales and service channels. In the color printing market, Ricoh, Xerox and Konica Minolta have been very aggressive, especially in Europe and the United States, and competition in this market has become fierce.

- ConsumerImaging System Business Unit -

In addition to the traditional camera manufacturers, other electrical manufacturers have also started aggressively launching interchangeable lens digital cameras and related products in fiscal 2011. Nevertheless, Canon has continued to invest aggressively in competitive new products and intends to maintain its leadership position in this market.

Canon’s primary competitors in the interchangeable lens digital camera market are Nikon Corporation and Sony Corporation and Panasonic Corporation. Another major competitor is Sigma Corporation, which produces lenses for use with Canon’s digital SLR products.

The compact digital camera market is extremely competitive, and a large number of Canon’s competitors are relying on electronic manufacturing service (“EMS”) manufacturers to do their development and production work.

Except for Japan, where competition is so fierce that expansion of market size is generally possible only by greatly reducing sales prices, averageAverage prices in the industry did not decline muchdeclined in fiscal 20112013 from levels seen in the previous year. Nevertheless, pricesPrices have been rapidly declining as measured by the standard of specification price value, and the commoditization of products has been progressing. Market contraction and exchange rate fluctuation risks caused by the financial crisis which started in 2008 are having a major impact, resulting in a severe profit profileconditions in the digital camera market. Despite these difficulties, Canon will seek to take advantage of its status as the number onemajor brand in the industry, along with its economies of scale, in order to maintain profitability.

Canon’s primary competitors in the compact digital camera market are Sony Corporation; Nikon Corporation; Panasonic Corporation; Fujifilm Co., Ltd.; Samsung Electronics Co., Ltd.; Olympus Corporation; Hoya Corporation; Eastman Kodak Company; and Casio Computer Co., Ltd. Canon’s primary competitors in the digital video camcorder market are Sony Corporation; Panasonic Corporation; and JVC KENWOODKenwood Corporation. Canon’s primary competitors in the inkjet printer market are Hewlett-Packard Company and Seiko Epson Corporation.

- Industry and Others Business Unit -

There continues to be veryVery stiff competition continues in the markets for lithography equipment used in the production of semiconductor devices and LCD panels.FPDs. In order to produce lithography equipment that can provide ultra-fine processing, there needs to be an integration of advanced optical, control and system technologies is required, along with continuous investment in technology development. The main competitors in these markets are Nikon Corporation, in the markets for semiconductor and LCDFPD lithography equipment, and ASML Holding N.V., in the market for semiconductor lithography equipment only.

Canon believes that it has helped its customers to improve their productivity by continuously improving the cost performance of semiconductor lithography equipment using the i-line and KrF laser light sources. In particular, the equipment using i-line havehas captured a large share of the global market. Canon believes that it has also been meeting the needs of image sensor manufacturers by quickly adapting to various unique specifications.

Canon’s LCDCanon belives its FPD lithography equipment for LCD panels with a common platform offeringoffers excellent productivity and reliability have captured large sharesthat has helped it capture market share of the industry-leading South Korean marketKorea and the promising Chinese market.

Patents and licenses

growing China. Panel makers are accelerating development of higher definition panels in recent years. Canon holds a large number of patents, design rights and trademarks in Japan and abroad to protect proprietary technologies stemming from its research and development activities. Canon utilizes these intellectual property rights as important strategic management tools. For example, Canon leverages its intellectual property rights to expand its product lines and business operations and to form alliances and exchange technologies with other companies.

Canon has granted licenses with respect to its patents to various Japanese and foreign companies, most often with respect to electrophotography, laser printers, multifunction printers, facsimile machines and cameras.

Companies to which Canon has granted licenses include:

Canonbelieves it has also been granted licensesmeeting the needs of panel makers by continuously offering new products with respect to patents held by other companies.

Companies that have granted licenses to Canon include:

Canon has also entered into cross-licensing agreements with other major industry participants.

Companies with which Canon has entered into cross-licensing agreements include:

Canon has placed a high priority on the management of its intellectual property. Some products that are material to Canon’s operating results incorporate patented technology. Patented technology is critical to the continued success of Canon’s products, which typically incorporate technology from dozens of different patents. However, Canon does not believe that its business, as a whole, is dependent on, or that its profitability would be materially affected by the revocation, termination, expiration or infringement upon any particular patent, copyright, license or intellectual property rights or group thereof.high-resolution.

Environmental regulations

Canon is subject to a wide variety of laws, regulations and industry standards relating to energy and resource conservation, recycling, global warming, pollution prevention, pollution remediation and environmental health and safety. Some of the environmental laws that affect Canon’s businesses are summarized below.

Fiscal 2011 was the fourth year of the first commitment period (2008-2012) under the Kyoto Protocol. The Japanese government has called upon the manufacturing, transport, services and household sectors to take further action for energy conservation.

The revised Energy Saving Law in Japan (Law Concerning the Rational Use of Energy) and the revised Act on Promotion of Global Warming Countermeasures came into full effect in April 2010. These laws require business operators to report their energy consumption and mid and long-term energy conservation plans in an effort to encourage energy efficiency. The Japanese government is also implementing multifaceted measures to reduce emissions, including the granting of a “domestic credit” to any large company that helps small and medium enterprises to conserve energy. This credit is expected to provide substantial incentives, as it will be deemed an emission reduction for participating companies. Trial implementation of an emissions trading scheme was launched in October 2008.

Despite the economic downturn, Canon has been working to achieve its voluntary action plan target (which is consistent with the plan of the Japan Electrics and Electronics Industrial Associations) and has been strengthening its group structure to comply with revised environmental laws. Canon has been participating in the

trial emissions trading scheme and managed through dedicated efforts to achieve the year 2010 target. However, due to electricity shortages and related rolling blackouts in Tokyo and other regions from damage to the nuclear power facilities in Fukushima caused by the earthquake and tsunami, Canon has been asked to achieve further electricity saving and energy conservation. These activities including a response to this request could increase Canon’s management costs and have adverse effects on its operating results and financial condition.

In September 2009, the Japanese government announced its conditional commitment to a 25% reduction of CO₂ emissions from the calendar year 1990 level by 2020. The announcement was made in the interest of concluding an agreement to establish binding CO₂ emission reduction targets at the Fifteenth Conference of the Parties to the United Nations Framework Convention on Climate Change (“COP15”), which was held in December 2009. The United States, the European Union and China also indicated their respective targets; however, results of the COP15 negotiations were not clarified, and the agenda was postponed to the COP16 held in 2010 and the COP 17 in 2011. The agenda of COP17 was again postponed until the COP18 conference to be held in December 2012. Prospects for a legally binding scheme, and any eventual implementation thereof by participant countries, including Japan, still remain unclear.

Canon continues to pursue CO₂ emission reductions through energy-efficient product design, logistics and factory operations on the basis of its understanding of the COP discussions. However, its efforts could increase Canon’s management costs and have adverse effects on its operating results and financial condition.

The Tokyo Metropolitan Government has mandated that the owners of certain large CO₂ emitters, including office buildings, reduce CO₂ emissions from April 2010. The target for the first compliance period (April 2010 to March 2015) has been set at 8% or 6% (according to the type of the building) below base emissions, which can be determined based on the amount of emissions from the building in recent years. In order for the owners of the large buildings to fulfill the requirement, they must reduce CO₂ emissions from their respective buildings and, if such reduction is insufficient, obtain certain Tokyo Metropolitan government-sanctioned credits. We expect to fulfill the requirement during the first compliance period.

Canon continues to pursue CO₂ emission reductions through energy-efficient office operations. However, such efforts could increase Canon’s management costs and have adverse effects on its operating results and financial condition.

A 2010 amendment to the Soil Pollution Prevention Law of Japan tightens certain requirements to survey soil to measure certain pollution levels. If soil pollution exceeds specified limits, a prefecture governor may designate the land as “Measure required area” when effects to human health due to soil pollution (and with exposure to pollutant) are foreseen, and the prefecture governor orders removal of pollutants. When exposures to pollutants are blocked and effects to human health are not foreseen, the area is declared “designated area for notification of changes of the land character.” The prefecture governor may publicly announce such designation and make the investigation report available upon request. The substances designated as pollutants consist of twenty-five chemical groups, including lead, arsenic and trichloroethylene. If an investigation shows that there is a likelihood that soil contamination may affect human health, the prefecture governor may issue an order to the landowner to take designated remedial actions and may restrict the changes of the land character. Canon has commenced a detailed survey and measurement of soil and groundwater to check for pollution at all of Canon’s operational sites in Japan. Additional costs may arise if these investigations reveal that remedial measures are necessary. These factors could adversely affect Canon’s operating results and financial condition of the sites.

See “Risk Factors—Other Risks—Environmental cleanup and remediation costs relating to Canon’s properties and associated litigation could decrease Canon’s net cash flow, adversely affect its operating results and impair its financial condition.”

The Law for Promotion of Effective Utilization of Resources, administered by the Japanese Ministry of Economy, Trade and Industry, was enacted in 2001. This law requires manufacturers of “specified reuse-promoted products,” including copying machines, to promote the use of recyclable resources and recovered products (designing and manufacturing products that may be easily reused or recycled). Failure to comply with the law could adversely affect Canon’s operating results.

These two directives were published in the Official Journal of the European Union in 2003, and member states were required to enact laws necessary to comply with these directives by 2004.

According to theUnder RoHS Directive, from July 1, 2006, companies have been required to ensure that electrical and electronic equipment (“EEE”) sold in the European Union does not contain lead, cadmium, hexavalent chromium, mercury, polybrominated biphenyls or polybrominated diphenyl ethers if placed on the market after that date. Pursuant to the RoHS Directive, Canon adapted its products so that they do not contain the prohibited hazardous substances.ethers. The RoHS recast Directive was published on July 1, 2011. As a result, manufacturers, like Canon, will be required to prepare new declarations of conformity and compliance documentation from January 2013, in addition to meeting current restrictions on substances. Furthermore, the scope of products covered will be expanded to medical and measurement equipment from July 2014. An additional four or five substances will be proposed as restricted substances in 2014. In parallel with these developments, all the RoHS exempted applications for which the restricted substances can be used are now under review. If the exempted applications concerned would be decided to expire, additional design-changes may be required for Canon products, and cost of changing designs may increase total compliance costs.

The WEEE Directive requires that companies selling electrical and electronic equipmentEEE bearing their trade names in the European Union must arrange and pay for collection, treatment, recycling, recovery and disposal of their equipment. Canon has become a member company of collective compliance schemes in each member state of the European Union and has achieved the required recycling levels for electrical and electronic equipmentEEE waste. Revisions to the WEEE Directive are now under consideration, and expected to be published in 2012. For theThe WEEE recast Directive it has been proposedwas published on July 24, 2012 and was applied from February 2014. Due to set collection rates based ona change in official interpretation, the sales volume in previous years andscope of products covered is to raise rates for recycling and recovery.be expanded to include consumables.

If tighter restrictions are enforced in 20132014 and beyond, Canon’s compliance costs could increase, including with costs related to the actions for newly-covered products and the development and adoption of substitute materials or processes. Such increased costs may have an adverse effect on Canon’s operating results.

The REACH Regulation was published in the Official Journal of the European Union, and was implemented in 2007. This regulation covers almost all chemicals (products in gaseous, liquid, paste or powder form) and articles (products in solid state) manufactured in or imported into the European Union.

All chemicals manufactured in or imported into the European Union that exceed specific content thresholds must be registered. Registration requires disclosure of information about usage and chemical characteristics. The registration of new chemicals commenced in June 2008. For chemical substances in use before “existing chemicals,” “pre-registration” was accepted from June 1 to December 1, 2008. Substances that were not pre-registered cannot be used until formally registered. Pre-registered substances are subject to compliance with formal registration procedures according to their quantity and hazardous properties. Canon uses some chemicals which are subject to pre-registration requirements and has completed the necessary pre-registrations.

If certain substances are contained in an article, the substances must be communicated to the recipient or consumer of the article. This requirement has been in place since October 2008. Moreover, starting in 2011, certain cases required notifying the European Chemical Agency of more specific information.

Furthermore, the additionadditional of restrictions on the use of certain substances hascan be proposed at any time by the ECHA or member states propose so, and, as some additional restrictions have been proposed, and ifalready adopted, manufacturers such as Canon will needneeds to take measures to address such new restrictions.

Canon has been implementing these requirements under the REACH Regulation, which could increase Canon’s management costs and have adverse effects on its operating results and financial condition.

The ErP Directive applies in Europe to all energy-using products although implementing measures for specific product categories have yet to be adopted. Until these implementing measures are adopted, it is difficult to predict the potential effects of the ErP Directive. However,and implementing measures with respect to off-mode and standby mode and external power supplies were adopted in and have been applied since 2010. Currently, a horizontal implementingThis measure covering home and office electric and electronic equipment which canwas expanded in 2013 to include requirements for energy modes with “networked standby”. The requirements for “networked standby” will be connected to a network is also under consideration, and is expected to be published in 2012.applied from 2015. For imaging equipment,equipments, the industry has made a public commitment to attain certain targets on environmentally conscious designs from 2012 by an industrial voluntary agreement (VA) and began implementation in 2011. Furthermore, implementing measures for AV equipment including projectorsThe revision of the VA is under final review and the commitments will be finalized after finalizing regulations for networked products described above (2012).become tighter than ever because the European authorities and NGOs are expected to require a stricter VA. Canon is continuing its preparations to comply with the ErP Directive. However, the requirements are expected to be challenging, and achieving compliance will likely increase Canon’s costs, especially by required design changes.

Electrical and electronic equipment recycling laws have been enacted or proposed in more than twenty American states. Although most of such laws cover only displays or television sets, printers and other products are covered by some states, such as Illinois, Michigan and Hawaii, among others. These laws require manufacturers to bear the costs of collecting and recycling electrical and electronic equipment based on sales volume or market share by brand of covered products. Canon expects that compliance with such state requirements might increase its costs, such as recycling fees and product guarantees.

The Chinese Ministry of Information Industry published Administrative Measures on the Control of Pollution Caused by Electronic Information Products in February 2006. These measures are modeled on2006, and regulates the European Unionsame six substances covered by the EU RoHS Directive described above and regulate six substances: lead, mercury, hexavalent chromium, cadmium, polybrominated biphenyls and polybrominated diphenyl ethers in electronic information products. The measures establish two stages of implementation. Stage 1 is in effect and covers nearly all Canon products.

To comply with Stage 1 requirements, a China-specific label must be placed on any covered product if any of the six regulated substances are contained therein, and use of the six regulated substances must be disclosed in each product manual. In addition, each product’s environmental protection use period (“EPUP”) must be stated within its recycling mark and include the production date. Packaging material markings must be displayed on the boxes of the covered products.

Stage 2 requires that the contents of six regulated substances in specific electronic information products (as specified by the Chinese Government in the “list for emphasized management”) to be restricted by limitations similar to the European UnionEU RoHS Directive. A China-specific compulsory product certification system will be introduced for such products. Standards to implement these measures and the “emphasized management list” are under discussion, including with regard to printers.

If these requirements are applied to Canon’s products, this could increase Canon’s costs and have an adverse effect on its operating results and financial condition.

The Regulation for the Management of the Recycling and Disposal of Waste Electrical and Electronic Products was issued by the Chinese government in 2009 and implemented on February 25, 2009. This regulation concerns the management of recycling and disposal activities with regard to waste electrical and electronic products in the interest of promoting comprehensive utilization of resources and the development of a circular economy.January 1, 2011. Producers and importers will beare required to pay a fee to a government fund. This regulation was implemented on January 1, 2011. The first list of products falling under the waste electrical and electronic products catalogue has been issued and includes four types of household applianceappliances as well as personal computers, but the funding scheme remains under review.computers. The Regulation of those payment fees described above was enforced on July 1, 2012.

If these requirements are applied to Canon’s products, this could increase Canon’s costs and have an adverse effect on its operating results and financial condition.

A 2010 amendment to the Soil Pollution Prevention Law of Japan tightens certain requirements to survey soil to measure certain pollution levels. If soil pollution exceeds specified limits, a prefecture governor may designate the land as a “Measure required area” if effects to human health due to soil pollution are foreseen, and the prefecture governor may order removal of pollutants. The substances designated as pollutants consist of twenty-five chemical groups, including lead, arsenic and trichloroethylene. If an investigation shows that soil contamination may affect human health, the prefecture governor may issue an order to the landowner to take designated remedial actions and may restrict the changes of the land character. Canon has commenced a detailed survey and measurement of soil and groundwater to check for pollution at all of Canon’s operational sites in Japan. Additional costs may arise if these investigations reveal that remedial measures are necessary. These factors could adversely affect Canon’s operating results and financial condition.

In addition to the laws described above, various environmental laws and regulations may have been promulgated or enacted by European Union member states, states of the United States, emerging countriesmarkets such as China, India, Russia, Vietnam, and others.other countries. Compliance with any such additional regulations may increase Canon’s costs and may adversely affect Canon’s operating results and financial condition.

Other regulations

Disclosure under Section 13(r) of the Securities Exchange Act of 1934

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”) added Section 13 (r) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.

During the year ended December 31, 2013, the following Canon affiliates had the transactions with Iran-related organizations. These transactions were conducted in compliance with applicable law in the respective countries.

As of the date of this report, Canon is not aware of any other activity, transaction or dealing by us or any of our affiliates during the year ended December 31, 2013 that requires disclosure in this report under Section 13(r) of the Exchange Act. Canon does not intend to conduct any further business activities with Iranian counterparties required to be disclosed under the ITRA, except for sales of consumables, repair, and maintenance services for products Canon previously sold to such entities.

C. Organizational structure

Canon Inc. and its subsidiaries and affiliates form a group of which Canon Inc. is the parent company. As of December 31, 2011,2013, Canon Inc. had 277257 consolidated subsidiaries and 11 affiliated companies accounted for by the equity method.

The following table lists the significant subsidiaries owned by Canon Inc., all of which are consolidated as of December 31, 2011.2013.

Name of company		Head office location		Proportion of ownership interest owned				Proportion of voting power held
Canon Marketing Japan Inc.		Tokyo, Japan			50.1%				58.5%
Canon U.S.A., Inc.		New York, U.S.A.			100.0%				100.0%
Canon Europa N.V.		Amstelveen, The Netherlands			100.0%				100.0%

D. Property, plants and equipment

Canon’s manufacturing is conducted primarily at 2728 plants in Japan and 1718 plants in other countries. Canon owns all of the buildings and the land on which its plants are located, with the exception of certain immaterial leases of land and floor space of certain of its subsidiaries. The names and locations of Canon’s plants and other facilities, their approximate floor space and the principal activities and products manufactured therein as of December 31, 20112013 are as follows:

Name and location		Floor space (including leased space)				Principal activities and products manufactured
Domestic		(Thousands of square feet)
Hiratsuka Plant, Kanagawa			1,118			R&D of display products
Tamagawa Office, Kanagawa			149			Quality engineering
Oita Plant, Oita			279			Manufacturing of semiconductor devices
Yako Office, Kanagawa			903			Development of inkjet printers, inkjet chemical products
Utsunomiya Plant, Tochigi			2,761			Manufacturing of lenses for cameras and other applications, R&D in optical technologies, development and sales of broadcasting equipment, R&D, manufacturing, sales and servicing of semiconductor production equipment
Toride Plant, Ibaraki			3,203			R&D in electrophotographic technologies, mass-production trials and supports; manufacturing of office imaging products, chemical products; training of manufacturing
Ami Plant, Ibaraki			1,131			Manufacturing of FPD production equipment
Canon Electronics Inc., Tokyo, Saitama and Gunma			1,309			Components, magnetic heads, document scanners and laser printers
Canon Finetech Inc., Saitama, Ibaraki and Fukui			990915			Large format inkjet printers, business-useBusiness-use printers, business machines peripherals and chemical products
Canon Precision Inc., Aomori			1,5071,506			Toner cartridges, sensors and micromotors
Canon Optron Inc., Ibaraki			143			Optical crystals (for lithography equipment,equipments, cameras, telescopes) and vapor deposition materials
Canon Chemicals Inc., Ibaraki			2,098			Toner cartridges and rubber functional components
Canon Components, Inc., Saitama			539610			Contact image sensors, inkjet cartridges and medical equipment
Oita Canon Inc., Oita			1,2271,225			Digital cameras, lenses and digital video camcorders
Nagahama Canon Inc., Shiga			1,0921,093			Laser printers, tonerToner cartridges and A-Si drums
Oita Canon Materials Inc., Oita			3,0492,995			Chemical products for copying machines and printers, and inkjet cartridges
Ueno Canon Materials Inc., Mie			654			Chemical products for copying machines and printers
Fukushima Canon Inc., Fukushima			971			Inkjet printers and inkjet cartridges

Name and location		Floor space (including leased space)				Principal activities and products manufactured
Domestic		(Thousands of square feet)
Canon Semiconductor Equipment Inc., Ibaraki			462423			Development and production of semiconductor production-related equipment
Canon Ecology Industry Inc., Ibaraki			496646			Recycling of toner cartridges, repair and recycling of business machines
Nisca Corporation, Yamanashi			388391			Copying machine peripherals, scanner units and optical equipment
Miyazaki Daishin Canon Inc., Miyazaki			167168			Digital cameras
Canon Mold Co., Ltd., Ibaraki			201219			Molds
Canon ANELVA Corporation, Kanagawa and Yamanashi			735746			Production equipment for electron devices, flat panel display and semiconductors
Canon Machinery Inc., Shiga			626623			Automated production equipment and semiconductor production-related equipment
Canon Tokki Corporation, Niigata, Kanagawa and Tokyo			219232			Vacuum technology-related equipment
Nagasaki Canon Inc., Nagasaki			413477			Digital cameras
Hita Canon Materials Inc., Oita			370			Rubber functional components

Name and location		Floor space (including leased space)				Principal activities and products manufactured
Overseas		(Thousands of square feet)
Europe
Canon Giessen GmbH, Giessen, Germany			336			Remanufacturing of copying machines and semiconductor production equipment
Canon Bretagne S.A.S., Liffre, France			506487			Manufacturing and recycling of toner cartridges
Océ-Technologies B.V., Venlo, the Netherlands			2,6752,493			R&D, manufacturing copying machines, corporate administration,Document management, high speed digital production printing systems and other functionswide format printers
Océ-Printing Systems GmbH, Poing, Germany			1,2871,233			R&D, manufacturing copying machines, corporate administration, and other functionsHigh speed digital production printing systems
Americas
Canon Virginia, Inc., Virginia, U.S.			1,9521,679			Toner cartridges, molds and remanufacturing of copying machines
Industrial Resource Technologies, Inc., Virginia, U.S.			185			Recycling of toner cartridges

Name and location		Floor space (including leased space)				Principal activities and products manufactured
Overseas		(Thousands of square feet)
Asia
Canon Inc., Taiwan, Taiwan			7611,774			Lenses and digital cameras
Canon Opto (Malaysia) Sdn. Bhd., Selangor, Malaysia			584			Digital cameras, lensesLenses and optical lens parts
Canon Dalian Business Machines, Inc., Dalian, China			1,7421,740			Production and recycling of toner cartridges, production of laser printers
Canon Zhuhai, Inc., Zhuhai, China			7521,909			Laser printers, MFPs, digitalDigital cameras, digital video camcorders and contact image sensors
Tianjin Canon Inc.Prachinburi (Thailand) Ltd., Tianjin, ChinaPrachinburi, Thailand			148808			Copying machines
Canon Hi-Tech Thailand Ltd., Ayutthaya and Nakohon Ratchasima, Thailand			2,5443,269			Inkjet printers, MFPs,MFDs, scanners, molds and plastic injection molded parts
Canon Zhongshan Business Machines Co., Ltd., Zhogshan, China			4961,331			Laser printers
Canon Vietnam Co., Ltd., Hanoi, and Bac Ninh, Vietnam			3,2453,233			Inkjet printers, laser printers, MFPs,MFDs, scanners and contact image sensors
Canon (Suzhou) Inc., Suzhou, China			1,5161,517			Copying machines
Canon Finetech Nisca (Shenzhen) Inc., Shenzhen, China			669706			Copying machines and laser printer peripherals
Canon Electronics Vietnam Co., Ltd., Hung Yen Province, Vietnam			182308			Components
Canon Business Machines (Philippines), Inc., Batangas, Philippines			910			Laser printers

Canon considers its manufacturing and other facilities to be well maintained and believes that its plant capacity is adequate for its current requirements. None of the buildings or land are subject to any major encumbrances.

Main facilities under construction for establishment/expansion