Based on a new policy on returning profits to shareholders, at a Board of Directors meeting held on December 14, 2005, a decision was made to revise upward the projected year-end dividend for the fiscal year ending December 31, 2005 (the 105^th Business Term) as follows.

Since 1996, under two five-year initiatives — Phases I and II of the Excellent Global Corporation Plan — the Canon Group has been working towards increasing its corporate value. During this period, management has focused on profitability and cash flow, which has led to greater competitiveness of its products and a stronger financial position.

Going forward, Canon will positively invest in strategic areas to accelerate growth, and will also place priority on actively returning profits to shareholders as an important management measure, taking full advantage of its strengthened financial base, which is attributable to the two five-year plans.

As for returning profits to shareholders, Canon has worked to raise its dividend per share in accordance with the company's policy of providing a stable dividend. Under the new policy, Canon will actively work to return profits to shareholders, mainly in the form of a dividend, taking into consideration planned future investments, free cash flow, and the company's consolidated business performance. Specifically, the medium- to long-term objective will be to continuously strive to raise the consolidated payout ratio to around 30 percent.

    (the 105^th Business Term)

Canon will finish this year, the final year of Phase II of the Excellent Global Corporation Plan, by achieving increases in both sales and profits, and also significantly exceeding the targets that were set out for Phase II. Accordingly, in response to the continued support of shareholders and based on the new policy on returning profits to shareholders, the following upward revision was made to the year-end per-share dividend projection.