FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

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

the Securities Exchange Act of 1934

 

For the month of ….		October		……………………………………………… ,		2020

 

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

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

 

Form 20-F		X		Form 40-F

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

 

Yes				No		X

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

SIGNATURES

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

 

								CANON INC.
								(Registrant)
Date….		October 26, 2020						By...../s/………Sachiho Tanino………………
								(Signature)*
								Sachiho Tanino
								General Manager
								Consolidated Accounting Div.
								Canon Inc.

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

The following materials are included.

1. RESULTS FOR THE THIRD QUARTER AND THE NINE MONTHS ENDED SEPTEMBER 30, 2020

CONSOLIDATED RESULTS FOR THE THIRD QUARTER AND

THE NINE MONTHS ENDED SEPTEMBER 30, 2020

October 26, 2020

CONSOLIDATED RESULTS FOR THE THIRD QUARTER

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

 

		Actual
		Three months         ended September 30,  2020				Three months         ended September 30, 2019				Change(%)								Three months         ended September 30,  2020
Net sales		¥	758,881			¥	869,495				-				12.7			$	7,159,255
Operating profit			19,192				38,445				-				50.1				181,057
Income before income taxes			22,808				47,024				-				51.5				215,170
Net income attributable to Canon Inc.		¥	16,658			¥	26,522				-				37.2			$	157,151
Net income attributable to Canon Inc. shareholders per share:
- Basic		¥	15.93			¥	24.93				-				36.1			$	0.15
- Diluted			15.93				24.93				-				36.1				0.15
CONSOLIDATED RESULTS FOR THE NINE MONTHS
(Millions of yen, thousands of U.S. dollars, except per share amounts)
		Actual																				Projection
		Nine months ended   September 30, 2020				Nine months ended September 30, 2019				Change(%)								Nine months ended September 30, 2020				Year ending December 31, 2020				Change(%)
Net sales		¥	2,214,508			¥	2,639,830				-				16.1			$	20,891,585			¥	3,140,000				-				12.6
Operating profit			34,314				121,998				-				71.9				323,717				64,000				-				63.4
Income before income taxes			50,096				144,212				-				65.3				472,604				86,000				-				56.1
Net income attributable to Canon Inc.		¥	29,729			¥	92,349				-				67.8			$	280,462			¥	52,000				-				58.4
Net income attributable to Canon Inc. shareholders per share:
- Basic		¥	28.29			¥	86.16				-				67.2			$	0.27			¥	49.53				-				57.6
- Diluted			28.28				86.15				-				67.2				0.27				49.52				-				57.6
		Actual
		As of September 30, 2020				As of December 31, 2019				Change(%)								As of September 30, 2020
Total assets		¥	4,701,606			¥	4,768,351				-				1.4			$	44,354,774
Canon Inc. shareholders’ equity		¥	2,500,212			¥	2,692,595				-				7.1			$	23,586,906

 

Notes:		1.		Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.
		2.		U.S. dollar amounts are translated from yen at the rate of JPY106=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of September 30, 2020, solely for the convenience of the reader.

 

 

Canon Inc.		30-2, Shimomaruko 3-chome, Ohta-ku,
Headquarter office		Tokyo 146-8501, Japan
		Phone: +81-3-3758-2111

 

-1-

I. Operating Results and Financial Conditions

2020 Third Quarter in Review

Looking back at the global economy in the third quarter of 2020, the global economy improved after a sharp decline in the second quarter as a result of gradual resumption of economic activities in the global coronavirus (“COVID-19”) pandemic. In the U.S., despite continued restrictions on economic activities in some states, increased consumer spending and exports accelerated the economic recovery. The European economy trended positively due to a recovery in consumption resulting from the easing of lockdowns in each country. In China, the recovery trend continued mainly in domestic demand and exports after the resumption of economic activities. Even in other emerging markets, although the spread of COVID-19 continued, with the exception of some emerging countries, the economy headed toward a recovery phase. In Japan, the economy showed signs of recovery mainly due to the resumption of economic activities and the easing of voluntary activity restrictions.

Amid these conditions, in the markets in which Canon operates, as for office multifunction devices (MFDs) and laser printers, demand for both monochrome and color models declined due to insufficient recovery of corporate activities. For cameras, although the market continued to shrink, demand headed toward a recovery phase due to a recovery in consumption. For inkjet printers, the pace of recovery gradually increased in emerging countries, in addition to developed countries and China, where demand for remote working and education was solid. For medical equipment, although restrictions on sales activities to medical institutions were eased, sales activities were affected by the prolonged impact of COVID-19. For industrial equipment, although the market recovery for FPD (Flat Panel Display) lithography equipment was slower than expected due to delays in installation, demand for semiconductor lithography equipment remained solid.

The average values of the yen during the third quarter and the first nine months of the year were ¥ 106.17 and ¥ 107.59 against the U.S. dollar, respectively, a year-on-year appreciation of approximately ¥ 1 and year-on-year appreciation of approximately ¥ 2, and ¥ 124.13 and ¥ 121.02 against the euro, respectively, a year-on-year depreciation of approximately ¥ 5 and year-on-year appreciation of approximately ¥ 2.

During the third quarter, sales of MFDs for the office and production printing market both decreased, although they showed signs of recovery. Unit sales of laser printers, particularly of color models, were below those of the same period of the previous year. Sales of services and consumables also declined due to a moderate recovery in customers’ print volumes after the resumption of corporate activities. For interchangeable-lens digital cameras, although unit sales were below those of the same period of the previous year, Canon attracted home image capturing demand of families staying longer hours indoors. As for inkjet printers, unit sales were significantly above those of the same period of the previous year due to the recovery in demand in some emerging countries on top of demand for remote working and education in developed countries and China. In medical equipment, although equipment installation at medical institutions as well as business negotiations were trending toward recovery, sales were below those of the same period of the previous year due to the prolonged impact of COVID-19, and the demand ahead of the consumption tax hike in Japan which occurred during the same period of the previous year. For industrial equipment, despite solid demand for semiconductor lithography equipment for memory devices, sales for FPD lithography equipment and organic LED (OLED) panels manufacturing equipment decreased compared with those of the same period of the previous year as a result of postponement of installation due to the impact of COVID-19. As for network cameras, which are being used in a growing range of applications and where the market continued to grow, sales increased thanks to resumed sales and marketing activities. Under these conditions, third-quarter net sales decreased by 12.7% year-on-year to ¥758.9 billion. Net sales for the first nine months of the year decreased by 16.1% year on year to ¥2,214.5 billion. Gross profit as a percentage of net sales decreased by 1.6 points to 43.2%. Third-quarter gross profit decreased by 16.0% year-on-year to ¥327.6 billion. Operating expenses decreased by 12.2% year-on-year to ¥308.4 billion, due to the further promotion of efficiency for expenses throughout the entire Group, despite negative effects of foreign currency fluctuation. As a result, third-quarter operating profit decreased by 50.1% to ¥19.2 billion. Other income (deductions) decreased by ¥5.0 billion to ¥3.6 billion, mainly due to currency exchange losses compared with the previous year, while income before income taxes decreased by 51.5% year on year to ¥22.8 billion and net income attributable to Canon Inc. decreased by 37.2% year on year to ¥16.7 billion. Operating profit for the first nine months of the year decreased by 71.9% to ¥34.3 billion, while income before income taxes decreased by 65.3% to ¥50.1 billion and net income attributable to Canon Inc. for the first nine months decreased by 67.8% to ¥29.7 billion.

Basic net income attributable to Canon Inc. shareholders per share was ¥15.93 for the third quarter, a year-on-year decrease of ¥9.00, and ¥28.29 for the first nine months, a year-on-year decrease of ¥57.87.

 

-2-

Results by Segment

Looking at Canon’s third-quarter performance by business unit, in the Office Business Unit, although sales of the new imageRUNNER ADVANCE DX series were strong, unit sales of MFDs for the office and the production printing market were below those of the same period of the previous year due to such factors as the moderate recovery in business negotiations following the resumption of in-office work. As for laser printers, unit sales, particularly of color models, were below those of the same period of the previous year as a result of continued economic slowdown caused by COVID-19. Sales of services and consumables also declined due to a moderate recovery in customers’ print volumes after the resumption of corporate activities. These factors resulted in total sales for the business unit of ¥335.9 billion, a year-on-year decrease of 21.0%, while income before income taxes decreased by 90.1% year-on-year to ¥4.1 billion. Sales for the combined first nine months of the year totaled ¥1,041.0 billion, a year-on-year decrease of 20.2%, while income before income taxes totaled ¥52.1 billion, a year-on-year decrease of 59.7%.

As for the Imaging System Business Unit, although unit sales were below those of the same period of the previous year as the market continues to shrink, the shift to mirrorless model was accelerated particularly for full-frame mirrorless models due to the introduction of new product. As for inkjet printers, sales of printers and consumables increased significantly from the same period of the previous year as a result of recovering demand in some emerging countries as well as the demand for remote working and education in developed countries and China. These factors resulted in total sales for the business unit of ¥185.4 billion, a year-on-year decrease of 2.0%, while income before income taxes increased by 158.5% year-on-year to ¥26.9 billion thanks to improvements in profitability. Sales for the combined first nine months of the year totaled ¥478.8 billion, a year-on-year decrease of 16.0%, while income before income taxes totaled ¥28.6 billion, a year-on-year decrease of 0.5%.

Within the Medical System Business Unit, demand was captured for Computed tomography (CT) systems for the diagnosis of pneumonia and Diagnostic X-ray systems, supported by a gradual recovery of equipment installation at medical institutions as well as sales and marketing activities. While sales of the same period of the previous year increased due to the demand ahead of the consumption tax hike in Japan, these factors resulted in total sales for the business unit of ¥105.4 billion, a year-on-year decrease of 7.5%, while income before income taxes decreased by 47.6% year-on-year to ¥5.0 billion. Sales for the combined first nine months of the year totaled ¥313.3 billion, a year-on-year decrease of 4.6%, while income before income taxes totaled ¥15.1 billion, a year-on-year decrease of 22.4%.

As for the Industry & Others Business Unit, regarding semiconductor lithography equipment, demand for memory devices remained solid. As a result, unit sales were significantly above those of the same period of the previous year. In FPD lithography equipment, although the resumption of installation work after COVID-19 travel restrictions were gradually eased, unit sales were below those of the same period of the previous year. Sales for network cameras increased as a result of strengthened sales activities based on diversified applications made possible by video analysis for such purposes as remote monitoring and social distance monitoring, as well as conventional market needs including crime prevention and disaster monitoring tools. These factors resulted in total sales for the business unit of ¥153.3 billion, a year-on-year decrease of 6.9%, while income before income taxes totaled ¥4.3 billion, a year-on-year increase of 49.7% due to cost reduction. Sales for the combined first nine months of the year totaled ¥439.7 billion, a year-on-year decrease of 13.3%, while income before income taxes totaled ¥6.1 billion, a year-on-year decrease of 66.0%.

 

-3-

Cash Flow

During the first nine months of 2020, cash flow from operating activities decreased by ¥0.4 billion year-on-year to ¥194.1 billion due to working capital improvement, despite a sharp decrease in profit. Cash flow used in investing activities was restrained by ¥46.1 billion year-on-year to ¥111.7 billion mainly due to a decrease of investment in production equipment. Accordingly, free cash flow totaled positive ¥82.4 billion, an increase of ¥45.7 billion compared with the corresponding year-ago period.

Cash flow from financing activities recorded an outlay mainly arising from dividend payments and share repurchases. However, proceeds of ¥6.9 billion in total were recorded mainly due to an increase in short-term loans for securing sufficient working capital.

Owing to these factors, as well as the impact from foreign currency translation adjustments, cash and cash equivalents increased by ¥87.5 billion to ¥500.3 billion from the end of the previous year.

Outlook

Looking at the world economy for the fourth quarter onwards, although various economic measures and fiscal policies are being implemented in each country and region, prospects remain uncertain. While the spread of COVID-19 is expected to continue, the pace of the world economy is expected to recover moderately with the balanced measures to curb infection and expand economic activities. However, it is expected to take time to control the spread of infections and see a full-scale recovery in global economic activities.

In the markets in which Canon operates, for office MFDs and laser printers, although a moderate recovery is assumed, demand is expected to remain below that of the previous year due to the impact of economic slowdown. As for interchangeable-lens digital cameras, although the overall market is expected to continue to shrink, sales promotion efforts are expected to be intensified for Canon’s extensive lineup of full-frame mirrorless cameras and lenses, including the new EOS R5 and EOS R6. As for inkjet printers, demand is expected to remain solid due to remote working and education needs. As for the medical equipment market, only a gradual recovery in demand is expected due to the resumption of medical device purchases by medical institutions despite the prolonged impact of COVID-19. For semiconductor lithography equipment, while demand for memory devices is expected to remain firm, demand for image sensors and automotive devices is expected to remain moderate. For FPD lithography equipment, a gradual rise in capital investment in small- and medium-size panels is expected. As for network cameras, the market is expected to head toward expansion due to increasing demand for high-resolution cameras and the video analysis solutions that make use of them.

With regard to currency exchange rates for the fourth quarter onwards, on which Canon’s performance outlook is based, Canon anticipates exchange rates of ¥105 to the U.S. dollar and ¥125 to the euro, representing appreciation of approximately ¥2 against the U.S. dollar and the same level against the euro as the annual average rates of the previous year.

Taking into consideration exchange rate assumptions, Canon’s first nine months performance, as well as current market conditions and sales prospects of new product, Canon’s 2020 full-year projection on a consolidated basis are net sales of ¥3,140.0 billion, a year-on-year decrease of 12.6%; operating profit of ¥64.0 billion, a year-on-year decrease of 63.4%; income before income taxes of ¥86.0 billion, a year-on-year decrease of 56.1%; and net income attributable to Canon Inc. of ¥52.0 billion, a year-on-year decrease of 58.4%, which were revised from the previous outlook.

 

-4-

Consolidated Outlook

 

Fiscal year		Millions of yen
		Year ending December 31, 2020								Change				Year ended December 31, 2019				Change (%)
		Previous Outlook (A)				Revised Outlook (B)				(B - A)				Results (C)				(B - C) / C
Net sales			3,080,000				3,140,000				60,000				3,593,299				-12.6%
Operating profit			45,000				64,000				19,000				174,667				-63.4%
Income before income taxes			70,000				86,000				16,000				195,740				-56.1%
Net income attributable to Canon Inc.			43,000				52,000				9,000				125,105				-58.4%

 

 

-5-

CANON INC. AND SUBSIDIARIES

CONSOLIDATED

II. Financial Statements

1. CONSOLIDATED BALANCE SHEETS

 

		Millions of yen
		As of     September 30, 2020				As of     December 31, 2019				Change
ASSETS
Current assets:
Cash and cash equivalents			500,287				412,814				87,473
Short-term investments			89				1,767				(1,678)
Trade receivables, net			448,496				559,836				(111,340)
Inventories			617,610				584,756				32,854
Prepaid expenses and other current assets			294,016				286,792				7,224
Total current assets			1,860,498				1,845,965				14,533
Noncurrent receivables			17,026				17,135				(109)
Investments			48,791				48,361				430
Property, plant and equipment, net			1,053,211				1,089,671				(36,460)
Operating lease right-of-use assets			104,541				114,418				(9,877)
Intangible assets, net			324,458				347,921				(23,463)
Goodwill			897,670				898,661				(991)
Other assets			395,411				406,219				(10,808)
Total assets			4,701,606				4,768,351				(66,745)
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt			227,760				42,034				185,726
Trade payables			284,388				305,312				(20,924)
Accrued income taxes			11,048				18,801				(7,753)
Accrued expenses			315,056				324,891				(9,835)
Current operating lease liabilities			30,501				31,884				(1,383)
Other current liabilities			236,737				237,576				(839)
Total current liabilities			1,105,490				960,498				144,992
Long-term debt, excluding current installments			358,846				357,340				1,506
Accrued pension and severance cost			364,301				368,507				(4,206)
Noncurrent operating lease liabilities			75,624				83,688				(8,064)
Other noncurrent liabilities			92,440				106,400				(13,960)
Total liabilities			1,996,701				1,876,433				120,268
Equity:
Canon Inc. shareholders’ equity:
Common stock			174,762				174,762				-
Additional paid-in capital			404,633				405,017				(384)
Legal reserve			69,407				67,572				1,835
Retained earnings			3,362,909				3,462,182				(99,273)
Accumulated other comprehensive income (loss)			(353,147)				(308,442)				(44,705)
Treasury stock, at cost			(1,158,352)				(1,108,496)				(49,856)
Total Canon Inc. shareholders’ equity			2,500,212				2,692,595				(192,383)
Noncontrolling interests			204,693				199,323				5,370
Total equity			2,704,905				2,891,918				(187,013)
Total liabilities and equity			4,701,606				4,768,351				(66,745)
		Millions of yen
		As of September 30, 2020				As of December 31, 2019
Notes:
1. Allowance for doubtful receivables			11,803				10,359
2. Accumulated depreciation			2,767,530				2,727,189
3. Accumulated other comprehensive income (loss):
Foreign currency translation adjustments			(132,678)				(96,282)
Net gains and losses on derivative instruments			(307)				(887)
Pension liability adjustments			(220,162)				(211,273)

 

-6-

CANON INC. AND SUBSIDIARIES

CONSOLIDATED      

2. CONSOLIDATED STATEMENTS OF INCOME AND

      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

Consolidated statements of income
Results for the third quarter		Millions of yen
		Three months ended      September 30, 2020				Three months ended      September 30, 2019				Change(%)
Net sales			758,881				869,495			-			12.7
Cost of sales			431,305				479,619
Gross profit			327,576				389,876			-			16.0
Operating expenses:
Selling, general and administrative expenses			240,313				277,624
Research and development expenses			68,071				73,807
			308,384				351,431
Operating profit			19,192				38,445			-			50.1
Other income (deductions):
Interest and dividend income			657				1,349
Interest expense			(206)				(275)
Other, net			3,165				7,505
			3,616				8,579
Income before income taxes			22,808				47,024			-			51.5
Income taxes			3,648				16,202
Consolidated net income			19,160				30,822
Less: Net income attributable to noncontrolling interests			2,502				4,300
Net income attributable to Canon Inc.			16,658				26,522			-			37.2
Results for the nine months		Millions of yen
		Nine months ended September 30, 2020				Nine months ended September 30, 2019				Change(%)
Net sales			2,214,508				2,639,830			-			16.1
Cost of sales			1,252,954				1,453,192
Gross profit			961,554				1,186,638			-			19.0
Operating expenses:
Selling, general and administrative expenses			727,504				842,451
Research and development expenses			199,736				222,189
			927,240				1,064,640
Operating profit			34,314				121,998			-			71.9
Other income (deductions):
Interest and dividend income			2,282				4,266
Interest expense			(594)				(811)
Other, net			14,094				18,759
			15,782				22,214
Income before income taxes			50,096				144,212			-			65.3
Income taxes			11,952				41,332
Consolidated net income			38,144				102,880
Less: Net income attributable to noncontrolling interests			8,415				10,531
Net income attributable to Canon Inc.			29,729				92,349			-			67.8

 

-7-

CANON INC. AND SUBSIDIARIES    

CONSOLIDATED      

 

Consolidated statements of comprehensive income
Results for the third quarter		Millions of yen
		Three months ended      September 30, 2020				Three months ended      September 30, 2019				Change(%)
Consolidated net income			19,160				30,822				-				37.8
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments			(757)				(32,032)
Net gains and losses on derivative instruments			43				(405)
Pension liability adjustments			1,228				850
			514				(31,587)
Comprehensive income (loss)			19,674				(765)								-
Less: Comprehensive income attributable to noncontrolling interests			2,666				4,314
Comprehensive income (loss) attributable to Canon Inc.			17,008				(5,079)								-
Results for the nine months		Millions of yen
		Nine months ended September 30, 2020				Nine months ended September 30, 2019				Change(%)
Consolidated net income			38,144				102,880				-				62.9
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments			(36,333)				(86,203)
Net gains and losses on derivative instruments			558				(305)
Pension liability adjustments			(8,518)				3,527
			(44,293)				(82,981)
Comprehensive income (loss)			(6,149)				19,899								-
Less: Comprehensive income attributable to noncontrolling interests			8,818				10,456
Comprehensive income (loss) attributable to Canon Inc.			(14,967)				9,443								-

 

-8-

CANON INC. AND SUBSIDIARIES    

 

CONSOLIDATED
3. DETAILS OF SALES
Results for the third quarter		Millions of yen
Sales by business unit		Three months ended     September 30, 2020				Three months ended     September 30, 2019				Change(%)
Office			335,860				425,339				-				21.0
Imaging System			185,402				189,174				-				2.0
Medical System			105,376				113,937				-				7.5
Industry and Others			153,295				164,658				-				6.9
Eliminations			(21,052)				(23,613)								-
Total			758,881				869,495				-				12.7
		Millions of yen
Sales by region		Three months ended     September 30, 2020				Three months ended     September 30, 2019				Change(%)
Japan			192,817				227,816				-				15.4
Overseas:
Americas			202,463				249,399				-				18.8
Europe			195,737				199,874				-				2.1
Asia and Oceania			167,864				192,406				-				12.8
			566,064				641,679				-				11.8
Total			758,881				869,495				-				12.7
Results for the nine months		Millions of yen
Sales by business unit		Nine months ended     September 30, 2020				Nine months ended     September 30, 2019				Change(%)
Office			1,041,026				1,305,098				-				20.2
Imaging System			478,804				570,177				-				16.0
Medical System			313,322				328,500				-				4.6
Industry and Others			439,701				507,209				-				13.3
Eliminations			(58,345)				(71,154)								-
Total			2,214,508				2,639,830				-				16.1
		Millions of yen
Sales by region		Nine months ended     September 30, 2020				Nine months ended     September 30, 2019				Change(%)
Japan			584,788				657,922				-				11.1
Overseas:
Americas			600,699				745,835				-				19.5
Europe			554,162				638,622				-				13.2
Asia and Oceania			474,859				597,451				-				20.5
			1,629,720				1,981,908				-				17.8
Total			2,214,508				2,639,830				-				16.1

*Based on the realignment of Canon’s internal reporting and management structure, from the beginning of the first quarter of 2020, Canon has reclassified certain businesses from the Industry and Others Business Unit to the Office Business Unit. Operating results for the three and nine months ended September 30, 2019 also have been restated.    

 

Notes: 1. The primary products included in each of the segments are as follows:
Office Business Unit :
Office multifunction devices (MFDs) / Laser multifunction printers (MFPs) / Laser printers / Digital continuous feed presses / Digital sheet-fed presses / Wide-format printers / Document solutions
Imaging System Business Unit :
Interchangeable-lens digital cameras / Digital compact cameras / Interchangeable lenses / Compact photo printers / Inkjet printers / Large format inkjet printers / Commercial photo printers / Image scanners / Calculators
Medical System Business Unit :
Digital radiography systems / Diagnostic X-ray systems / Computed tomography (CT) systems / Magnetic resonance imaging (MRI) systems / Diagnostic ultrasound systems / Clinical chemistry analyzers / Ophthalmic equipment
Industry and Others Business Unit :
Semiconductor lithography equipment / FPD (Flat panel display) lithography equipment / Vacuum thin-film deposition equipment / Organic LED (OLED) panel manufacturing equipment / Die bonders / Network cameras / Digital camcorders / Digital cinema cameras / Multimedia projectors / Broadcast equipment / Micromotors / Handy terminals / Document scanners

2. The principal countries and regions included in each regional category are as follows:
Americas: United States of America, Canada, Latin America
Europe: United Kingdom, Germany, France, Netherlands, European countries, Middle East and Africa
Asia and Oceania: China, Asian countries, Australia

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED 

4. CONSOLIDATED STATEMENTS OF CASH FLOWS    

 

		Millions of yen
		Nine months ended     September 30, 2020				Nine months ended     September 30, 2019
Cash flows from operating activities:
Consolidated net income			38,144				102,880
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			166,221				178,514
(Gain) loss on disposal of fixed assets			888				4,271
Deferred income taxes			(6,224)				(8,504)
Decrease in trade receivables			99,975				76,967
Increase in inventories			(41,843)				(42,366)
Decrease in trade payables			(23,945)				(28,295)
Decrease in accrued income taxes			(7,519)				(16,501)
(Decrease) increase in accrued expenses			(7,918)				8,892
Decrease in accrued (prepaid) pension and severance cost			(9,548)				(8,515)
Other, net			(14,164)				(72,831)
Net cash provided by operating activities			194,067				194,512
Cash flows from investing activities:
Purchases of fixed assets			(120,632)				(151,941)
Proceeds from sale of fixed assets			7,617				120
Purchases of securities			(560)				(4,228)
Proceeds from sale and maturity of securities			435				761
(Increase) decrease in time deposits, net			1,635				(1,516)
Acquisitions of businesses, net of cash acquired			(127)				(1,716)
Other, net			(66)				675
Net cash used in investing activities			(111,698)				(157,845)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			2,100				-
Repayments of long-term debt			(873)				(2,410)
Increase in short-term loans, net			185,767				132,657
Transactions with noncontrolling interests			1,376				362
Dividends paid			(126,938)				(171,487)
Repurchases and reissuance of treasury stock, net			(50,005)				(50,003)
Other, net			(4,526)				(5,557)
Net cash provided by (used in) financing activities			6,901				(96,438)
Effect of exchange rate changes on cash and cash equivalents			(1,797)				(12,559)
Net change in cash and cash equivalents			87,473				(72,330)
Cash and cash equivalents at beginning of period			412,814				520,645
Cash and cash equivalents at end of period			500,287				448,315

 

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

5. NOTE FOR GOING CONCERN ASSUMPTION

    Not applicable.

6. SIGNIFICANT CHANGES IN CANON INC. SHAREHOLDERS’ EQUITY

    None.

7. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

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

Recently Issued Accounting Guidance

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments – Credit Losses – (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to use a current expected credit loss model to measure impairments of certain financial assets. Using this model results in earlier recognition of losses than under the incurred loss approach, which requires waiting to recognize a loss until it is probable of being incurred. Canon adopted the guidance from the quarter beginning January 1, 2020 with the modified retrospective basis through a cumulative effect adjustment directly to retained earnings as of the beginning of the period. The adoption of this guidance did not have a material impact on its consolidated results of operation and financial condition.

 

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