TRANSFORMINGTO EXPANDOUR BUSINESS FIELDS

Annual Report 2017
for the year ended December 31, 2017

PROFILE
Group Mission

Help resolve social issues with advanced imaging and IT solutions.
Group Vision

The Canon Marketing Japan Group understands and grows with its
customers.
Code of Conduct

Date of establishment

Customer-centricity

February 1, 1968

Canon
EuropeCanon
Asia
Marketing

Canon
Australia

Canon
Inc.

Canon
U.S.A.

Canon Marketing Japan

Role within the Canon Group

Market and propose solutions, primarily in Japan.
Business units

Consumers, Enterprise, Area, and Professional
Number of consolidated subsidiaries

Number of employees

22 (As of April 1, 2018)

17,647 (As of December 31, 2017)

FINANCIAL AND NON-FINANCIAL HIGHLIGHTS OF FY2017
Net sales

Operating income¥632.2 billion (0.5% increase)¥30.4 billion (9.9% increase)Proﬁt attributable to owners of parent

Proﬁt attributable to owners of parent per share¥20.7 billion (13.9% increase)¥159.48 (13.9% increase)

ROE

Cash dividends per share

7.2% (0.7pp increase)¥60 (20.0% increase)

CO2 emissions

Industrial waste recycling ratio

48,945 tons (1.0% increase)99.98% (0.2pp increase)

Number of female managers

Rate of paid holidays taken by employees

79 (1.3% decrease)

62.9% (8.7pp decrease)

CONTENTS

1FINANCIAL AND NON-FINANCIAL HIGHLIGHTS OF FY201716

NEW SEGMENT STRATEGIES2AN INTERVIEW WITH THE PRESIDENT26

SUSTAINABLE MANAGEMENT

11

SHIFTING FOCUS TOWARD GROWTH AREAS

29

CORPORATE GOVERNANCE

12

SPECIAL FEATURE:
HELPING RESOLVE SOCIAL ISSUES WITHADVANCED IMAGING AND IT SOLUTIONS

37

FINANCIAL SECTION68

CANON MJ GROUP COMPANIES69CORPORATE DATA

14REVIEW BY SEGMENT

Editorial Policy
Annual Report 2017 mainly aims to inform readers about the Canon MJ Group’s outstanding medium- and long-term growth potential. The intro pages feature an interview with
Masahiro Sakata, president of Canon MJ, in which he discusses the Company’s policies and initiatives to shift to a growth path and enhance proﬁtability, primarily throughframework reforms under the medium-term management plan for 2018–2020. The special feature presents the Company’s latest efforts in its Advanced Imaging and IT Solutions
business, which continues to generate growth. The annual report also presents business strategies in new business segments and provides a fuller picture of Group environmental,social, and governance (ESG) practices and other non-ﬁnancial information.
Disclaimer Regarding Forward-Looking Statements
This annual report contains forward-looking statements about the future performance and management plans of the Canon MJ Group. All forward-looking statements are based on
management’s assumptions in light of information available to the Company at the time of publication. The following factors may therefore inﬂuence actual results. These factors
include consumer trends in Japan as well as other major global markets, private capital expenditures, currency ﬂuctuations, notably against the U.S. dollar, materials prices, andpolitical turmoil in certain countries and regions.

Canon Marketing Japan Inc. I Annual Report 20171

AN INTERVIEW WITH THE PRESIDENT

Masahiro Sakata
President

2

Canon Marketing Japan Inc. I Annual Report 2017

The Canon Marketing Japan (Canon MJ) Group celebrated its 50th anniversary on February 1, 2018. We would like to take this opportunity tothank our stakeholders for their tremendous support and encouragement over the years.

Q How would you assess fiscal 2017?
It was a year of exceptional change.
Net sales for the year rose 0.5%, to ¥632,190 million, with operating

on an uptick in personal consumption and capital expenditure. I found theincome climbing 9.9%, to ¥30,407 million. The operating margin was a

economic turnaround quite perceptible, and its workings differed clearlyrecord 4.8%, while return on equity (ROE) increased 0.7 percentage point,

from the recovery a short while back. Instead of experiencing a turnaroundto 7.2%.

from sluggish demand, we have seen certain markets disappear and

The Japanese economy recovered steadily in the year under review

growth start from new areas.

have shifted focus away from Canon’s profitability growth areas toward Canon’s growth
Q You
areas and independent growth areas. Your sales gains have been particularly strong in
IT solutions, industrial equipment, and network cameras. Is that all according to plan?
IT solutions and industrial equipment sales have exceeded expectations.
Organizations can’t expect fast results when shifting a majority of theirproducts and services because you ﬁrst have to amass solid skillsets andmanagement resources into growth areas. And growth engines vary among

knowledge. That said, we’ve done better than expected in IT solutions andbusinesses. It takes a bit more time to go places with professional

industrial equipment.

Actual results for FY2016

Independent Growth Areas
IT solutions, industrial equipment,
medical imaging solutions, etc.

Actual results for FY2017% change

31%

33%

4%

(¥197.9 billion)(¥206.7 billion)(¥8.8 billion)

Canon’s Growth Areas

7%

7%

1%

Production printing, network cameras, etc.

(¥46.5 billion)(¥46.9 billion)(¥0.4 billion)

Canon’s Proﬁtability Growth Areas
Multifunction printers (MFPs), laser beam printers(LBPs), digital cameras, inkjet printers, etc.

62%

60%

-2%

(¥384.9 billion)(¥378.6 billion)(¥-6.3 billion)

fiscal 2017, you generated a 4.8% operating margin—a new high—on the back of radical
Q Instructuralreforms. What initiatives did you undertake?
We overhauled our operations.
We went well beyond cost-cutting to revamp our business approach. We

away with procedures that we deemed ineffective. Just some of ouralso reevaluated the need and cost beneﬁts of business processes, such as

initiatives bore fruit in ﬁscal 2017. So, there’s still plenty to do on the

preparing and approving individual documents. And then we decided to do

structural reform front.

Canon Marketing Japan Inc. I Annual Report 20173

have entered the third year of Long-Term Management Objectives Phase III,Q You
your plan for fiscal 2016 through fiscal 2020. How are you progressing in that respect?
Our structural reforms are going well, although growth has been a mixed bag.
Our structural reforms have progressed solidly, and our earnings areto generate the overall growth sought. We’ve also expanded faster thanbasically on target. On the sales front, we’ve invested in various ways andhoped in some areas, and slower in others. All in all, it’s been a mixed bag.

shifted operating resources to the right areas. But in my view, we have yet

have stated that the Group’s three prime competencies are our customer base,
Q YouIT technicalskills, and the Canon brand. Do you look to solidify your position in those regards?
We have improved upon our superior position but need to work harder at it.
I believe we have improved upon our superior position. You can’t get acustomer base or sales clout overnight. We have taken the time necessary

Canon IT Solutions Inc. is central to our technological capabilities inthat area, and I think its efforts are paying off.

to build ours, and it won’t deteriorate any time soon. Still, solutions will

I always appreciate that we can beneﬁt from the strength of the

become an increasingly important element of our sales clout, and I think

Canon brand. Still, I recognize that we have some way to go before people

we’ll need to enhance the relevant skillsets and knowledge.

see Canon MJ as an IT solutions provider.

us about your near-term and near-future market climate outlook assumptions
Q Tellfor the current three-year management plan.
We have identified changes in market needs and are allocating resources to growth fields.
We have put in a solid effort to maintain and build momentum in Canon’sfor existing products, and will probably continue to rise. But on the upside,

proﬁtability growth areas. So, in drawing up our growth scenario in view of

we have received more business inquiries than envisaged in IT solutions

current market conditions and prospects we noted that we have increasedin our independent growth areas, underscoring changing market needs. If

our market presence while rivals have been scaling back. Still, the truth is

we fail to devote more of our resources to areas in which markets arethat downsizing pressures are mounting in the marketplace, particularly

expanding, I’m sure that we’d incur considerable opportunity losses.

have stated before that you seek to leverage IT solutions capabilities to reinforce
Q You
your stock businesses as new sources of earnings. What do you mean by that?
We’ll leverage IT solutions stock businesses to stabilize our earnings base.

4

We have maintained a product-based stock business to date. We’ll

as well as cloud and data center services. You also have new security

continue that approach, although we’re worried that the market willneeds. As IT solutions become more important in operations, such stock

contract. When you deploy IT, you naturally require maintenance services,businesses should increase.

Canon Marketing Japan Inc. I Annual Report 2017

We need to ensure that we always offer stock businesses whenproviding IT solutions. Our Group has already pushed forward with suchbusiness models, and we aim to stabilize earnings by increasing theweighting of IT solutions in our stock businesses.

Conventional Revenue Models

Revenue Models to Grow in the Future

MFPs + maintenance services

IT maintenance services
Cloud services

LBPs + toner cartridges

Data center services
Security

Inkjet printers + ink cartridges
Work to create and strengthen stock businesses
based on IT solution technologies

Product-based stock businesses

have said that you look to enhance productivity in Canon’s profitability growth areas.
Q You
Does that mean that there’s still scope for structural reforms to boost profit margins?
We’ll enhance per capita productivity by deploying IT.
As well as pushing ahead with structural reforms, we will roll out IT in

can then undertake regularly planned inspections. So, by rolling out IT

various ﬁelds. In MFP maintenance, for example, we offer the NETEYE

setups like this I believe that we still have lots of room to boost the per

remote monitoring service. This enhances our productivity because wecapita productivity of our people.

what respects do you think that switching to a new framework can deliver what
Q Incustomers
want?
We can now offer optimal customer solutions.
The prime objective of the new framework was to deliver products andUnder our previous organization, we had lots of functional overlap

services matching customer needs. That’s the biggest customer beneﬁt.

from product-centric departments. The trouble was that when theSo, we have to identify customer issues. When we had a vertical, product-

individual functions of such departments were small we were sometimes

based organizational structure, we tended to think ﬁrst of how best to

unable to fully satisfy our customers. But with a customer-centric

supply offerings. Everything started with products. Under our new setup,organization we can enhance our ability to propose solutions to customers

we begin by thoroughly researching our customers so we can deliverby consolidating functions by customer category, and resolve their needs.

solutions to them. On top of that, we seek enduring relationships with our

We consolidated IT platform, business process outsourcing (BPO),

customers rather than one-off deals. Once we’re in that position, we cancall center, marketing, and service and support from cross-functionalbuild even closer ties with our customers because they feel they canperspectives. They are common to all customer-speciﬁc organizations. We

come to us ﬁrst when they need something. We’ll increase revenues per

will combine consolidated and reinforced functions for customer-speciﬁcsalesperson to become a company with high per capita productivity andorganizations to provide optimal customer solutions.

higher earnings margins.

(Please see pages 6 and 7 regarding the new framework.)

Canon Marketing Japan Inc. I Annual Report 20175

AN INTERVIEW WITH THE PRESIDENT:A CUSTOMER-CENTRIC FRAMEWORKWe are switching from a product-based framework to a customer-centric

The Area segment delivers one-stop solutions to small-to-one. This will further deepen our ties with customers and supply

medium-sized customers by transforming its sales and service

outstanding value to drive growth and enhance proﬁtability.

structure that had some regional overlap into an efficient one.

Our new framework comprises segments that deliver solutions

The Professional segment consists of four sub-segments,

attuned to the needs of speciﬁc customers and markets. The ﬁrst is the

production printing, industrial equipment, healthcare, and visual

Consumers segment for retail customers. The other three segments,

solutions. This distinctive setup enables us to deepen customer ties

under the Business / Office banner, are Enterprise, Area, and Professional.

and enhance our expertise, thereby enabling us to better contribute

The Enterprise segment incorporates the former Businessto customer businesses.

Solutions and IT Solutions segments to share information and provide
optimal solutions to large customers.

Changing to a Framework that Matches Customer and Market Requirements

Product-based framework

Toward a customer-centric framework

Business Solutions
Consumers

Enterprise(Large customers)

IT Solutions

Imaging Systems

Industrial / Medical

Area

Professional(Small-to-mediumsized customers)• Maintain a customer- and market-centric business unit
structure• Deepen understanding of customers and establish processes• Corporate structure centered on products and channels• Call center, services, support, and other functions
scattered throughout the organization• Difficult to have the IT Solutions segment coordinate withother segments as a standalone unit

to develop and produce results in step with them
• Cultivate business based on IT solutions in all businessareas by deploying IT platform function units• Provide high-value-added solutions and strengthen ourcustomer responsiveness by rolling out marketing andservice & support supervision across the Group

6

Canon Marketing Japan Inc. I Annual Report 2017

Conceptual Diagram of New Framework

A Customer-and Market-Centric Business Unit Structure
Individuals

Business Unit

Consumers

Business / OfficeSpecialist Fields

Enterprise

Area

Professional(Large customers)(Small-to-mediumsized customers)

Production Printing
Industrial Equipment
Healthcare
Visual Solutions

IT Platform
Functional Unit

BPO

BPO

Call Centers / Services

Supervisory DivisionMarketing Supervision

Service & Support Supervision

Canon Marketing Japan Inc. I Annual Report 20177

Q What are the business unit goals under your new framework?
We look to generate value according to specific roles.
In the Consumers business unit, substantial growth cannot be expected

The Area business unit does business through partners around Japan

going forward in a business that has focused to date on products likeand through Group company Canon System & Support Inc., which provides

cameras and inkjet printers. While selling to large retailers will accountsales and support. Traditionally, we did not have enough functions tofor much of its business, the business unit needs to go back to its

oversee speciﬁc areas, and we also found it hard to resolve support

basics. It needs to focus on end users and work out the value we canstructure issues in some areas. With the Area business unit in place, wedeliver. We look to maintain the high proﬁtability of existing businesses

now have a fortiﬁed structure to oversee each area and potentially enhance

while building new engines of growth. The mission of the Consumers

productivity by strategically deploying operations, allocating humanbusiness unit is to be customer-centric and create new growth engines.

resources, and reinforcing services in each region.

The business equipment and IT solutions that the Enterprise

The Professional business unit focuses on specialist hardware andbusiness unit handles were previously in completely different businesssolutions. Sellers of such hardware need higher skillsets and knowledge

units. Of course, organizational setups are irrelevant to customers. They

than those handling general-purpose models to satisfy customers. We

only care about how we can resolve their speciﬁc issues. Since becoming

created this business unit to provide expert advice that customers can rely

president, I have pursued a policy of packaging business equipment and IT

on. The individual efforts of employees are central to acquiring advanced

solutions for our customers because IT solutions will clearly be vital in all

expertise and skills, and as such we are exploring a human resources

areas down the track. One person oversees both equipment and solutions

evaluation setup that rewards such endeavors.

in the Enterprise business unit, and we can deliver even more solid sales
and support to our customers.

Q What cross-functional capabilities are important in your new framework?
It’s vital to provide enhanced services for our customers and proactive sales support forour salespeople.

8

As I said earlier, cross-functional support is essential for all customer

services in markets that we did not previously expect to serve. Cross-groups. We will draw on a common support platform to enhance customer

functional perspectives are also proactive, extending beyond support toservice. Cross-functionality also means that we can adopt productencompass fully harnessing Group resources so we can deliver products

marketing techniques from other ﬁelds, enabling us to sell products andand services to more customers.

Canon Marketing Japan Inc. I Annual Report 2017

aim to increase Group IT solutions sales an average of 9% over the next three years. How do
Q You
you plan to achieve that?
We’ll deliver total IT solutions to take advantage of robust demand.
Demand for IT solutions is very solid. As I mentioned when discussing

security. We can expand our business by providing total IT solutions. The

stock businesses, IT is no longer just about developing and operatingGroup has steadily broadened these solutions that empower it to grow tosystems. It now covers everything from data centers to cloud services anda certain extent.

Enterprise(Large customers)

Area(Small-to-medium-sized customers)

Cloud shift
Solution shift
Digital business shift

IT concierge

Professional

Development of data centers and cloud infrastructure, IT maintenance and operation
IT products (PCs, servers, network equipment)
IT security
Document solutions
SI solutions by business category

Mission-critical and businesspackaged software

Visual solutions

Embedded (On-board software for vehicles)

IT support cloud service forsmall-to-medium-sized enterprises

Medical IT solutions

Strengthening the IT business infrastructure (Optimum arrangement of technical resources and quality control)

Q What approaches will you take with network camera and production printing?
We will provide packages that cater to network camera demand while focusing on continuous feedmodels in the production printing business.
We expect demand for network cameras to surge in the runup to the Tokyo

The production printing ﬁeld encompasses cut-sheet and continuous

2020 Olympic and Paralympic Games. Our focus in accommodating demand

feed models. We have quite a good record in cut-sheet printers. And wewill be to put together comprehensive packages rather than pursue

have no particular concerns about our growth prospects in the continuous

standalone sales of models. The packages will comprise applications thatfeed arena, as it will take a little time to adjust for the Japanese market

analyze captured images and also include things like safe data storage sopartly because these models are imports.

our customers can use network cameras effectively and reliably. Enhancing
our comprehensive strengths can drive further growth.

Canon Marketing Japan Inc. I Annual Report 20179

Q Please tell us about mergers and acquisitions (M&As) as a way of growing businesses?
We seek to drive further expansion through acquisitions in promising business areas.
We look for growth in such areas as security and other IT services,

Solutions acquired a 6.0% stake in Toyo Business Engineering Corporation.

industrial equipment, and network cameras. We intend to drive further

The latter company has grown on the strength of its outstanding mission-

expansion as needed through acquisitions. We will also partner with othercritical software mcframe business package, and we will pursue businesscompanies and invest extensively. In March this year, for example, Canon IT

growth through product and sales collaboration.

FTSE4Good, FTSE Blossom Japan, SNAM Sustainability Index, and other benchmarks track
Q The
your stock. Why do you think they do this? And what is your environmental, social, andgovernance (ESG) stance?
Ever since our establishment, we have fostered a corporate culture that addresses
environmental issues.
I think that our corporate culture is conducive to tackling ESG issues. On

cartridges. We have long embraced such challenges. Undertaking ESG

the environmental front, for example, we have a strong record in cutting

efforts is thus nothing new for us, and I assume external organizations

the energy consumption and CO2 emissions of MFPs and of recycling inkjet

have included us in their indices in recognition of our efforts.

Q What are your shareholder return plans for this fiscal year?
We have raised dividends for four consecutive years.
We base amounts on a dividend payout ratio of 30% and also take into

¥10, to ¥60. That represented the fourth straight annual dividend increase.

account such elements as medium-term earnings outlooks, investment

We will endeavor to deliver shareholder returns in ﬁscal 2018 in line withplans, and cash ﬂow. In ﬁscal 2017, we lifted cash dividends per share by

the same approach.

is your economic outlook for fiscal 2018? What key changes in the business climate are
Q Whatyou focusing on?
We consider it vital to properly identify overall and individual changes.

10

While I don’t expect signiﬁcant changes in the economy overall, we willsurvival if we fail to identify and address changes. Accordingly, we need tolikely see some markets shrink or deteriorate and others expand more thantake a balanced approach to overall and individual changes, and will do

anticipated. We will weaken our business fundamentals and threaten ourour very best to serve the interests of our stakeholders in such endeavors.

Canon Marketing Japan Inc. I Annual Report 2017

SHIFTING FOCUS TOWARD GROWTH AREAS
The growth scenario categories and strategic overview for reaching the objectives of Long-Term Management Objectives Phase III are as follows. We will shiftoperational resources to Canon’s growth areas and independent growth areas and expand our growth ﬁelds.

Growth Scenario Categories and Strategy Overview
Strategy Overview

Key Products and Services

Canon’s
Proﬁtability
Growth Areas• Achieve and maintain No.1 market shares of key products• Increase productivity by reforming sales and services

MFPs and LBPs
Cameras, Inkjet Printers
Cxdi Digital Radiography Systems

Canon’s
Growth Areas• Expand the network camera business by collaborating with Axis
Communications and Milestone Systems and by strengthening thesolution business• Expand the production printing business in the areas of upstream anddownstream processes of commercial printing and in the areas of package
printing and industrial printing

Network Cameras, Projectors, Production
Printing, Business Inkjet Printers, Commercial
Imaging Equipment, DreamLabo, Machine
VisionIndependent
Growth Areas• Strengthen and expand IT solutions in all businesses• Switch from entrusted development business to solution proposing Sier
• Expand cross-industry solutions (security, outsourcing, etc.)• Turn Industrial Equipment Organization into a commercial ﬁrm• Strengthen the medical solutions business

IT Solutions
Industrial Equipment (Semiconductors and
Non-Semiconductors), Medical Solutions,
Infection Control, Dispensing Equipment

Sales Targets by Growth Scenario(Billions of yen)
800

600

263.6

37%

10%

78.8

11%

56%

377.7

52%

233.7

34%

8%

69.1

58%

377.3

Independent
Growth Areas

206.7

33%

215.5

34%

400

Canon’s Growth Areas

46.9

7%

53.0

200

Canon’s Proﬁtability
Growth Areas

378.6

60%

376.5

0

FY2017
Results

FY2018FY2019FY2020Three-Year Management Plan

Canon Marketing Japan Inc. I Annual Report 201711

SPECIAL FEATUREHELPING RESOLVE SOCIAL ISSUES WITH ADVANCED IMAGING
AND IT SOLUTIONS
Integrating the latest technology
to fine-tune monitoringin diverse locations

Network Cameras

We integrated Canon imaging technologies and the network
image processing technologies of Axis Communications AB,
a Canon group member, to supply high-resolution
interchangeable lens network cameras and related
solutions. We collaborate with video management software
top-runner Milestone Systems A/S, another Group member,to manage and analyze data. We will market and cultivate
new services by applying advanced video analytics toaccumulated data.

Providing total support for corporate
information security with ourearthquake-resistant and seismic
control and isolation facilities
Our state-of-the-art Nishi-Tokyo Data Center complies with
Tier 4, the top facility standard of the Japan Data CenterCouncil, and has also received the Management andOperations Stamp of Approval, a global standard that theUptime Institute of the United States developed to validate
data center facility management practices. The center’ssophisticated security systems and earthquake-resistantand seismic control and isolation facilities safeguardcustomers’ vital information. The Okinawa Data Centeris an optimal location for a disaster recovery site. We meetcustomer needs by providing total support for everythingfrom design through construction and operations forcollocation, housing, and cloud services.

12

Canon Marketing Japan Inc. I Annual Report 2017

Data Center Services

The Canon MJ Group draws on its imaging and IT capabilities to supply optimal solutions
to various customer sites.

Cybersecurity

Supplying comprehensive security
solutions that address customer issues
The Group offers the most advanced cybersecurity by
packaging its original GUARDIANWALL series with the
ESET security software series and other proven products
from Japan and overseas for which it is an agent. We
draw on the nation’s leading information gathering andanalytical capabilities in providing our malware analysis
service and other comprehensive network throughendpoint security solutions.

Vehicular Embedded Systems

Assisting automakers by developing
vehicular embedded systems
Automobiles are packed with sensors, electronic control
units, and other electronics technologies. We draw on the
know-how we have accumulated over many years in ourembedded business to serve automakers by developing
communications, diagnostics, powertrain control, carnavigation, and other information-related embedded
systems. We aim to supply total solutions for AUTOSAR,
a global development partnership of automotive parties,
encompassing everything from support for deploying
through integrating onboard control system software
platforms to developing applications.

Canon Marketing Japan Inc. I Annual Report 201713

REVIEW BY SEGMENT
BUSINESS SOLUTIONS
MFPs

Sales

Operating Income

The Japanese MFP market experienced a decline in unit shipments amid
lackluster demand. It was against this backdrop that the Group launched
the imageRUNNER ADVANCE C3500 series of office MFPs and cultivated its
small-to-medium-sized enterprise customer base. At the same time, it
secured major orders from large customers, boosting unit shipments andsales. As a result, the Group’s unit shipments reached record highs forthree consecutive years.

(Billions of yen)(Billions of yen)

327.3

330.2

326.9

334.6

338.1

12.1

12.2

’16

’17

9.0
8.2
5.5

Production Printing
We enjoyed solid sales of the imagePRESS C850/C650 and other cut-sheet
models among offices and commercial printers. Production printing sales
were down, however, owing to delayed shipments of new continuous feed
printers.

Laser Printers
Although unit shipments of laser printers again declined amid an ongoingshift among offices to MFPs, sales of these products rose as a result of
several large orders and higher sales to certain priority sectors. We haveretained our top market spot in this segment for 26 consecutive years.
Toner cartridge sales were up, reﬂecting greater demand among retailers,
medical institutions, and other high-print-volume sectors and increased
shipments to ﬁnancial institutions and government agencies.

Network Cameras
Sales were up on large orders from commercial facilities and new orders
in various ﬁelds that incorporated offerings from Axis Communications AB
and Milestone Systems A/S, Canon group members.

FY

’13

’14

’15

’16

’17

FY

’13

’14

’15

Maintenance Services
Sales of maintenance services for office MFPs were down slightly froma year earlier because unit maintenance charges continued to fall,
overshadowing a rise in print volumes amid gains in the number ofmachines in ﬁeld (MIF).

Group Companies
Canon System & Support Inc. boosted sales slightly on the strength ofincreased demand for such IT Solutions business offerings as security
solutions and IT equipment maintenance services.
Sales were down at Canon Production Printing Systems Inc., owing
largely to delays in shipments of new continuous feed printers.
As a result of these factors, Business Solutions sales rose 1.1%, to¥338,146 million. Operating income increased 1.5%, to ¥12,239 million.

IT SOLUTIONSIn the ﬁscal year under review, IT investments expanded among ﬁnancial
institutions and manufacturers in Japan, with demand generally favorable
among small-to-medium-sized enterprises and large customers.

Sales

Operating Income(Billions of yen)(Billions of yen)

142.3

148.8

141.2
128.8

SI Services Businesses

4.6

134.9
4.1

We develop customized systems and systems that employ solution
packages. Sales increased on solid demand from the ﬁnancial services
and education sectors.

4.0

3.2

IT Infrastructure and Services BusinessWe offer data center, cloud, system infrastructure construction, andsystem operations services. Sales were up in the ﬁscal year under review
on solid demand for data center services.

Embedded Systems BusinessWe develop software for embedding in products. Sales were lower owing
to a decline in demand among key manufacturing customers, offsetting
steady automotive industry demand.

14

Canon Marketing Japan Inc. I Annual Report 2017

0.4
FY

’13

’14

’15

’16

’17

FY

’13

’14

’15

’16

’17

Products BusinessWe sell IT hardware, packaged software, and licenses. Sales increased onfavorable sales of ESET security software and other security products andsolid demand for IT product offerings.
Segment sales therefore advanced 4.7%, to ¥134,897 million.
Operating income rose 14.5%, to ¥4,560 million.

IMAGING SYSTEMS
Digital Cameras

Sales

Operating Income

Unit shipments in the domestic digital interchangeable lens camera
market declined in the ﬁscal year under review owing to slow demand forsingle-lens reﬂex (SLR) models, which overshadowed favorable demand
for mirrorless cameras. During the term, we launched and heavily
promoted the EOS M100 entry-level mirrorless camera, greatly increasing
sales of mirrorless offerings. While we boosted sales of mid-range
offerings, centered on the new EOS 6D Mark II SLR model, overall sales ofdigital interchangeable lens cameras were down amid an entry-level shift
from SLR models to mirrorless ones.
Compact digital camera sales were up in the Japanese market,
with supplies rebounding after shortages experienced in the previous
ﬁscal year owing to earthquake damage in Kumamoto Prefecture. Our
sales of these cameras increased, reﬂecting favorable demand forhigh-end models.

(Billions of yen)(Billions of yen)

Inkjet Printers
Sales were down, as unit shipments declined amid sluggish market
conditions.

191.7

185.4

14.3

178.7
159.2

FY

’13

’14

’15

’16

152.3

’17

13.8

12.5
10.9

FY

’13

’14

’15

’16

11.7

’17

Commercial Imaging Equipment
Sales declined as broadcast lens shipments dropped amid low demand
from broadcast stations.
Segment sales accordingly decreased 4.3%, to ¥152,339 million,
with operating income rising 7.4%, to ¥11,689 million.

INDUSTRIAL / MEDICAL
Industrial Equipment

Sales

Operating Income

Sales increased amid buoyant conditions in semiconductor-related
markets, which boosted sales of semiconductor fabrication equipment,
inspection / measuring equipment, and maintenance services. Sales werealso up in businesses unrelated to the semiconductor market, reﬂecting
favorable demand.

(Billions of yen)(Billions of yen)

32.2
26.1

28.0

1.5

34.3

27.2
0.2

Medical Business
Medical business sales declined, as sluggish sales of X-ray ﬁlms anddispensary offerings offset progress from reinforcing medical solutions
and pushing ahead with business structure reforms.
Segment sales thus rose 6.5%, to ¥34,309 million. Operating income
surged 730.1%, to ¥1,544 million.

-0.7
-1.0

-1.8
FY

’13

’14

’15

’16

’17

FY

’13

’14

’15

’16

’17

Canon Marketing Japan Inc. I Annual Report 201715

NEW SEGMENT STRATEGIESCONSUMERS BUSINESS UNIT
Business Management Policies
There are few prospects for signiﬁcantmarket growth in key consumer
businesses, digital SLR cameras andinkjet printers being two examples. We
will endeavor to make existing
businesses more robust while expanding
such new growth areas as mirrorlesscameras and business printers.

Strengths and Strategies• Per capita productivity: This is very
high in this business unit. We will keep
striving to enhance its efficiency while
prioritizing growth and new
businesses.
• Focus beyond Canon: We will leverage
the strengths of our channels and our
e-commerce capabilities whilebolstering merchandise from otherbrands and new services to broaden
lifestyle offerings.
• Engage with customers online andthrough high-street stores: We will
increase customer satisfaction throughshops, showrooms, and other retailfacilities and through direct online
sales sites and Web services.

16

Canon Marketing Japan Inc. I Annual Report 2017

Business Overview
The Consumer Business Unit aims to broaden
engagement with customers in business-to-consumer(BtoC) markets and maintain ongoing ties with them.
The unit supplies cameras, printers, and diverse otherproducts and services that enable customers to enjoy
all things photo and video. The Canon MJ Group
beneﬁts from the support of numerous customers inJapan, and held the No. 1 share of the domestic market
in 2017 with regard to digital SLR and compact digital
cameras and also inkjet printers.
That said, the markets for cameras and printers
have matured. We seek to increase customer
Director, Senior Vice President
Director of Consumer Business Unitsatisfaction by boosting the proportion of high-valueYoshiyuki Matsusaka
added products in our sales mix and by focusing onsuch growth areas as mirrorless cameras and businessprinters.
We look to bolster sales of products carrying the Canon and other brands and cultivate new services toincrease everyday enjoyment for our customers. We connect with customers through mass retailers, camera
shops, online sales, and wholesale channels. At the same time, we are strengthening our direct online sales
capabilities for individuals to enhance our reach.
This business unit is extremely productive, accounting for roughly a quarter of Canon MJ Group sales
and about a third of its operating income. The unit looks to streamline existing businesses while investing todrive further growth.

Market Outlook and Strategies for Fiscal 2018
Interchangeable Lens Digital Cameras
Demand for interchangeable lens digital cameras has trended downward since peaking in 2013, declining
particularly for digital SLR cameras. Demand for mirrorless cameras, however, is expected to expand for asecond straight year in ﬁscal 2018 and to exceed that of digital SLR cameras for the ﬁrst time. We aim tosecure the top share of the mirrorless camera market by cultivating demand among women and young men,particularly for the EOS Kiss M and EOS M100. We seek growth in the entry-level market through our combinedclout in mirrorless and digital SLR models.

Compact Digital Cameras
The compact digital camera market is trending down overall, with demand expected to continue to decline inﬁscal 2018. As such, Canon will focus on high-value-added models that are market drivers, including highmagniﬁcation zoom lens cameras and high-resolution, high-deﬁnition cameras.
Printers
Aggregate printer market demand, including for inkjet and laser models, was down around 5% in 2017.
Demand for consumer inkjet models is dropping, while that for business models is rising. For consumer
machines, we will focus on expanding sales of high-value-added offerings and boosting unit prices. We will
also expand our presence in business models by increasing store exposure and undertaking digital marketing.
We will pursue overall growth by compensating for lower consumer machines and lower consumables due tolower print volumes with expansion in business models.
New Businesses
Markets in core businesses are maturing, so we must urgently build new businesses. We will invest in productsales and new services businesses by drawing on various channels and our e-commerce.

Risk Management Approach
Markets for our core businesses could shrink more than expected. We will invest in mirrorless camera,
business printer, and other growth businesses, as well as new businesses and e-commerce channels that canbecome new engines of expansion.

Canon Marketing Japan Inc. I Annual Report 201717

NEW SEGMENT STRATEGIESENTERPRISE BUSINESS UNIT
Business Management Policies
Our mission is to become true partners
for customers by creating value withthem and delivering it to them.
Our vision is to increase our market
and industry presences and contributeto society.
• Become a solutions-centric businessand expand our IT solutions
operations.
• Solidify our customer base and makeit a shared resource within the Group.
• Understand what markets want andbuild a value-added solutions businessto increase proﬁtability.
• Thoroughly deploy solutions acrossindustries to expand our revenue scale
while increasing productivity.

Strengths and Strategies
Under the new framework resulting fromoperational integration, we aim to build
a large IT solutions business byaccelerating our transformation to abusiness- and service-centric entity.
We will combine two key qualities tocreate a high-value-added, productive
business model. One is the strong
marketing clout and business solutions
capabilities stemming from ourcustomer base and industry-speciﬁc
setup for large organizations. The otheris our advanced systems development
and technological capabilities, robust
project track record, and industry
knowledge.

18

Canon Marketing Japan Inc. I Annual Report 2017

Business Overview
The Enterprise Business Unit offers industry-speciﬁc
and management solutions to large customers in theﬁnance, manufacturing, logistics, public, andeducation sectors.
The key focus of this business unit is on
synergizing the operations of the former Business
Solutions segment with the former IT Solutions
segment, including Canon IT Solutions Inc., asubsidiary of Canon MJ. The former Business
Solutions segment delivered MFPs, laser printers,
and other equipment and solutions to corporate
customers. Over the years, the IT Solutions segment
Director, Senior Vice President
Director of Enterprise Business Unit
reﬁned its development and technological
Masachika Adachi
capabilities and enhanced quality to earn solid
customer trust.
It is important to incorporate the excellent aspects of how both the former Business Solutions
segment and the former IT Solutions segment approached their tasks. We will fully employ the customer
base that the former Business Solutions segment amassed and use the former IT Solutions segment’s
expertise to build industry-speciﬁc solutions and complete a business model across sectors, thereby
propelling dramatic growth.

Market Outlook and Strategies for Fiscal 2018
We have formulated scenarios for the four key industries that we serve.
The financial services sector is entering the eldercare, healthcare, and other industries whileembracing fintech, blockchain, and other technologies, creating more business opportunities for us.
Demand among government financial institutions, credit card issuers, insurers, brokerages, andother financial services players to upgrade enterprise systems should underpin growth. We willdevelop business-specific solutions centered on fiduciary operations and cloud-based damage
insurance assessments.
In manufacturing, demand is robust for streamlining design and development. Expenditures on IT
services for assembly line production remain high, particularly among automakers. We expect to continue
growing more than the market average through such drivers as global enterprise systems integration,
cloud computing, and the Internet of Things (IoT). We will cultivate enterprise systems that package suchofferings as document and production management, demand forecasts, and accounting and salaries.
On the logistics front, there is strong demand for business process reforms in retailing andtransportation amid a shrinkage in the working population, higher labor costs, and other factors. We thus

have opportunities to offer work process visualization, automation, and other solutions. Drivers should
include activities relating to omni-channel experience and other digital transformations, as well asenterprise system upgrades and the adoption of cloud computing among leading trading ﬁrms. We will
create solutions centered on point-of-sale and other sales promotion tasks and build enterprise systems
based on demand forecasting and other capabilities.
In educational markets, institutions are drawing on government support in exploring various ways
to deliver better outcomes. The numerous business opportunities that we anticipate include operational
support systems, educational content, and school facilities infrastructure. We will deploy a range of highdemand school operations and administration solutions for campuses.

Risk Management Approach
There is an industrywide shortage of systems engineers, and this situation is expected to worsen. The
Canon MJ Group will bolster hiring quantitatively and quantitatively, boost human resources training, andpursue selection and concentration with vendors to enhance productivity.

Canon Marketing Japan Inc. I Annual Report 201719

NEW SEGMENT STRATEGIESAREA BUSINESS UNIT
Business Management Policies• Grow with partners by understanding
our customers’ needs more deeply tohelp resolve their management andoperational issues.
• Deliver outstanding customer
satisfaction in service and support
areas.
• Employ information and data toestablish uniform management
processes and management styles toenhance efficiency and productivity forour partners and our organization.
• Better incentivize and reward partners
and employees and improve theirsatisfaction levels.

Strengths and Strategies• We can leverage partners’ nationwide
customer bases and partner brands,
through which we provide new value tocultivate growth for us and ourpartners alike.
• We maintain an IT support structure
covering approximately 200 sitesaround Japan that positions us toexpand businesses in growth areasand synergize with partners.
• We can offer systems proposals
speciﬁc for the speciﬁc business andoperational solutions of systems
integrators. We can also enhance sales
efficiency by offering systems-linked
products.

20

Canon Marketing Japan Inc. I Annual Report 2017

Business Overview
We operate nationwide, focusing on offering
management and business solutions for small-tomedium-sized customers with fewer than 1,000
employees. We classify customers according to thenumber of employees they have so we can provide
solutions that address their speciﬁc issues. For
example, we draw on expertise from proposals wehave made to date and our own to provide optimal
solutions for information security measures andproductivity improvements, which are areas ofparticular customer interest.
Our customer channels are Canon System &Vice President
Director of Area Business Unit
Support Inc., a subsidiary of Canon MJ, business
Kunihiko Kubo
partners in Japan, and dealers and systems partners,
which are primarily systems integrators. We will
optimize the combined strengths of these channels and the Canon MJ Group by undertaking area marketingand establishing an optimal customer response structure that is both market- and customer-centric.
This business unit is the Canon MJ Group’s largest in terms of revenues and personnel, and offers
signiﬁcant growth potential in view of small-to-medium-sized enterprises investing solidly in IT. We aim to
expand further in markets for these enterprises by supplying Canon products and providing the solutions
mentioned earlier to deepen customer trust.

Market Outlook and Strategies for Fiscal 2018
In Japan, companies are reforming work practices to streamline operations, shorten working hours, andenhance productivity. They should accordingly invest extensively in artiﬁcial intelligence (AI), cloud, robotic
process automation, and other IT ﬁelds. We anticipate more opportunities in PCs in the runup to 2020, when
Microsoft Corporation ends support for Windows 7. Small-to-medium-sized customers lack specialist units
and personnel in such IT areas, giving us more opportunities to offer one-stop products and services. We lookto generate growth in IT solutions by accommodating customer demand.
At the same time, we do not anticipate signiﬁcant growth in demand for MFPs, laser printers, andother document output equipment because of the consolidation of such systems and the increasing
digitization of documents.
To expand product sales under such circumstances, we will have to supply offerings that come with
IT solutions and products that are essentially capital goods for our customers. We will accordingly needto deploy resources strategically in such ﬁelds, and will reinforce our structure and cultivate our humanresources.

In view of robust corporate investments in IT solutions, the market environment is positive for systems
integrators that are a customer channel for us. We expect to continue expanding by providing products for the
speciﬁc business and operational solutions of systems integrators.

Risk Management Approach
The counter-based maintenance business constitutes a high proportion of sales, and such sales could
decrease. Another risk is that our capabilities in IT proposals and support could experience relative declines.
We will accordingly build a very robust business model in which we become a solutions provider for small-tomedium-sized customers.
We also face business continuity risks, notably that our partners will age or leave no successors. We willthus construct a system in which we match partners with each other, provide personnel support to them, andcan share and follow up with partner customers.

Canon Marketing Japan Inc. I Annual Report 201721

NEW SEGMENT STRATEGIESPROFESSIONAL BUSINESS UNIT: PRODUCTION PRINTING
Business Management Policies
We require all employees in thisorganization to explore ways to growwith our highly specialized customer
base, swiftly delivering top-quality
products and services and attentive
support.
We are cultivating a cadre of
professionals that can help customers
tackle changes in the printing market.

Strengths and Strategies
We will leverage color inkjet printers tomaintain and expand the customer basethat we have amassed over the years,
mainly among those engaged in data
printing services.
We will take advantage of thetechnological and development
capabilities that we have cultivated as
partners of those customers to enter
new markets.

Business Overview
We offer business reform support for customers, primarily in the printing industry. We sell high-speed digitalprinters, wide-format printers, and point-of-purchase systems and consumables. We provide print prepress
and post-processing equipment and printing-related software and maintenance services. We also develop andsupply workﬂow systems and print services.

Market Outlook and Strategies for Fiscal 2018
The printing market is gradually trending down. The digital printing market is expanding in Japan, however,albeit more slowly than in Europe or the United States. This is because of a shift away from offset printing
toward on-demand printing, which makes possible multi-type, small-quantity production in applications suchas direct mails, insurance notices, teaching materials, and other mass documentation.
We will accordingly undertake the following business strategies:• Provide printing solutions for forms and variable data for data print services machines in ﬁeld (MIF),
replacing them with color inkjet printers to maintain and expand the customer base.
• Secure color MIF by offering color digital printers and solutions lineups in keeping with deliverables, thereby
expanding stock businesses.
• Use new industrial printing offerings to enter markets for signs, displays, labels, and other media.
• Secure new MIF by replacing the offerings of other companies with new wide-format printers and drawing
management solutions.
• Expand sales by differentiating printers with inspection devices and workﬂow systems and by supplying
total solutions.
• Recruit personnel to reinforce our professional sales standing in the printing market.

Risk Management Approach
It is possible that digitization may not progress as expected because of lower-priced offset printing in thecommercial printing sector. We will accordingly go beyond printing to offer an array of IT technology and other
Canon MJ Group solutions to address various customer issues in the printing market.

22

Canon Marketing Japan Inc. I Annual Report 2017

PROFESSIONAL BUSINESS UNIT: INDUSTRIAL EQUIPMENT
Business Management Policies
Our growth strategies underpin
everything we do.
We accordingly pursue a mission ofcultivating technological progress ofindustrial infrastructure and providing
valuable solutions to realize a safe,
secure, and affluent lifestyle, workplace,and society.
Our vision is to become a proﬁtableorganization by fostering non-Canon andoverseas businesses, what we call
Beyond Canon and Beyond Japan, from
customer-centric and global
perspectives while cultivating ourservices businesses.

Strengths and Strategies• Identify world-class equipment andpackage it with technology.
• Be a ﬁeld service team that can installand support various equipment.
• Provide total solutions, including forprocess reforms, for customers in theindustrial arena.

Business Overview
This organization sells, installs, and supports semiconductor manufacturing and inspection equipment, IoTrelated vision products, and laser processing equipment, and currently handles the offerings of 18 companies
from 7 countries. We will accelerate product group expansion and broaden our activities to continue meetingcustomer needs.

Market Outlook and Strategies for Fiscal 2018
The markets for 3D-NAND ﬂash memory, CMOS image sensors, power supply integrated circuits (ICs), andsensors are vibrant, owing to further expansion in Big Data adoption and advances in self-driving, AI, and IoTtechnologies. As such, the semiconductor market is projected to remain robust.
We seek to reinforce sales by adding more products to our lineup for materials manufacturers in view offurther expansion in the semiconductor business. We will pursue diversity in customer and product markets
while increasing maintenance services sales.
IoT-related demand is surging. We will accordingly expand our product range to encompass everythingfrom Canon CMOS image sensors, cameras, and other products, and machine vision to application softwareand strengthen our solutions capabilities.
The laser processing market is doing well on progress in laser-related technologies. We will differentiate
and expand sales by leveraging Canon’s fast, high-precision digital Galvano scanning systems and other key
components. We will also strengthen sales to 3D-printer mass production customers and bolster our
measuring equipment lineup.

Risk Management Approach
Our risks in the year ahead are that markets will experience dramatic changes and that ties with overseas
business partners will dissipate. We will secure new product lines that enable us to tackle and overcome
such challenges.

Canon Marketing Japan Inc. I Annual Report 201723

NEW SEGMENT STRATEGIESPROFESSIONAL BUSINESS UNIT: HEALTHCARE
Business Management Policies
We will focus on bolstering andexpanding sales of our cloud-based
Medical Image Place service inproviding solutions that leverage ourstrengths, thereby helping to enhance
efficiency at medical sites and enhancepatient care. We will also accelerate
reforms undertaken in the past few
years while strengthening collaboration
within the Group to broaden thebusiness base and maximize synergies.

Strengths and Strategies• Awareness of the Medical Image
Place cloud service has increased
in line with changes in Japan’s
healthcare system. The government’s
revision to fee reimbursements tomedical institutions in April 2018
should drive demand higher forthis service.
• In its review of fee reimbursements,
the government approved of opticalcoherence tomography angiography,
a non-invasive procedure that has
greatly improved the safety of
examinations. We have excellent
prospects in this area with Canon’shighly regarded OCT-HS100. We willcontinue endeavoring to expand
sales with orders for such offerings.
• We aim to expand our medical
imaging solutions business by setting
up a framework for collaborating with
Canon Medical Systems Corporation,
Japan’s top manufacturer of medical
equipment.

Business Overview
We combine medical equipment from the Canon and other brands and medical IT systems to supply
optimal solutions that contribute to better treatment, health, and prevention.
• Medical Imaging Solutions BusinessWe sell Canon’s digital radiography systems, fundus cameras, and other medical diagnostics equipment fromcompanies in Japan and abroad. We leverage our strengths in imaging and IT solutions technologies to offer
such medical imaging solutions as cloud services for remote diagnostics of images.
• Infection Control Business
The equipment recycling and treatment that is part of the medical supply structure is fundamental toinfection control. ES Series hydrogen peroxide gas sterilizers from Canon Lifecare Solutions Inc. arepivotal to the product line and expertise we offer to customers for cleaning, packaging, sterilizing, andstoring solutions.
• Pharmacy Business
The fully automatic AX930 and AX45f dispensing and packing machines of Canon Lifecare Solutions arecentral to our range of equipment, ﬁxtures, and consumables for dispensaries. We provide total support for
new pharmacy models that combine dispensing systems and healthcare equipment.
• Medical IT BusinessWe draw on our advanced operational expertise to cater to diverse customer needs with an array ofsolutions and services. Our capabilities extend from constructing large medical information systems
to receipt computers, electronic medical records, and health testing systems.
• Healthcare BusinessWe provide products that prevent lifestyle diseases and reduce the need for long-term eldercare. These offerings
include UDEX-i, a fully automated sphygmomanometer that can take readings of left and right arms.

Market Outlook and Strategies for Fiscal 2018
Partly because of the review of fee reimbursements this year, medical institutions are increasingly
constraining investments while they assess the extent to which the review will affect their operations.
It will likely take around six months or so to determine the impact, so we expect institutions to resume
full-scale investments in the fourth quarter of ﬁscal 2018.
Construction costs are increasing amid rising demand related to the Tokyo 2020 Olympic andParalympic Games and recoveries from natural disasters. This factor is making it more costly for hospitals
to rebuild and renovate, putting pressure on their budgets for medical equipment purchases.
We anticipate a recovery in demand for medical information systems after plunging last year.
We will accordingly step up collaboration with partners and review our area strategies, as well as
our organizational structure for securing direct orders. We are also devoting considerable effort toexpanding our stock businesses, and aim to boost profitability. We will focus on Medical Image
Place, optical coherence tomography angiography, and other offerings that are now eligible for
medical fee reimbursement.

Risk Management Approach
The revision of remunerations could hamper the operations of medical institutions, while higher
construction and renovation costs could constrain medical equipment purchases. We will tackle thesechallenges by focusing on areas newly subject to fee reimbursement and on solutions that drive
operational efficiencies.

24

Canon Marketing Japan Inc. I Annual Report 2017

PROFESSIONAL BUSINESS UNIT: VISUAL SOLUTIONSBusiness Management Policies
This organization formulated thefollowing policies in the ﬁrst halfof 2018.
• Go beyond precedents in pursuing theessence of problem solving.
• Avoid looking at the business based
solely on your own responsibilities.
• Managers should ensure that younger
employees are trained properly.
• Reform work practices so that
employees can balance theirprofessional and private lives.
• Swiftly establish business foundations.

Strengths and Strategies• The key technological strengths arethose of Group companies Canon, Axis
Communications, and Milestone
Systems.
• We can create new value bycollaborating with alliance partners.
• We can draw on the customer base of
the Canon MJ Group and our systems
integrator solutions for network
cameras.
• We can leverage Canon’s advanced
optical technologies and specialized
sales teams in professional imaging
equipment.

Business Overview
We enhance safety and security for society and deliver new value with imaging solutions through network
cameras. These solutions center around our image management infrastructure, harnessing vision from thecameras and aggregating sensing information from IoT devices. The solutions assess the accumulated images
and information, linking them with AI and Big Data analysis to identify and provide customer solutions. We
also provide broadcast lenses, robotic cameras, and other commercial imaging equipment and services forbroadcasting stations and other video professionals.

Market Outlook and Strategies for Fiscal 2018
In the market for surveillance camera systems, centered on network cameras, demand for security
enhancements has been brisk amid preparations for the Rugby World Cup 2019 and the Tokyo 2020 Olympic
and Paralympic Games, with the number of new and renovated structures rising and the number of inboundtourists increasing. At the same time, we are analyzing information from images and IoT devices to streamline
marketing and assist with hospitality improvements, and thereby aim to bolster operations by cultivating new
businesses. We seek to cultivate businesses that enhance safety and security while resolving various social
issues through imaging solutions.
On the professional imaging equipment front, we anticipate steady capital investments among all
relevant broadcasters in light of the full-ﬂedged launch of 4K ultrahigh-deﬁnition Broadcast Satellite (BS)programming in December 2018 and preparations for the Rugby World Cup 2019 and the Tokyo 2020 Olympic
and Paralympic Games. We look to increase professional imaging equipment revenues through expanded
sales, particularly of broadcast lenses.

Risk Management Approach
One risk in the network camera business is that Chinese and Korean vendors will penetrate the Japanesemarket. We will therefore reinforce our imaging infrastructure business so that price is not the soledeterminant of our success. Another challenge is that competition will intensify among domestic network
camera manufacturers. We will harness our customer base and the comprehensive capabilities of the Canon
MJ Group to boost value-added propositions through our solutions suggestions. We also need to address
market entries from players in other industries, examples being Google, Microsoft, and telecommunications
carriers. We accordingly aim to collaborate with other companies instead of competing, creating businesses
with them and cooperating in terms of systems.
A key risk for our professional imaging equipment business is that young people are decreasingly
watching regular television, which could result in lower advertising revenues for broadcasters and cause theirperformances to deteriorate. We could also experience a sales
downturn from broadcasters reducing capital investments after
the Olympic and Paralympic Games. We will therefore cultivate
new opportunities, notably in video production for broadcasters
and by employing specialty capabilities from our security andsurveillance operations for non-broadcasters.

Canon Marketing Japan Inc. I Annual Report 201725

SUSTAINABLE MANAGEMENTThe Canon MJ Group undertakes CSR activities to help resolve social issues while

Philosophy
Mission /Visionharnessing the power of marketing to create economic value. In keeping with
Canon’s corporate philosophy of Kyosei (which means living and working— CSR is Marketing —together for the common good), we will continue to pursue synergistic progress
for the Group and for society and enhance the corporate value and brand by

CSR Awarenessbeneﬁting society through business. We will also contribute to sustainable social
Shared Philosophy: The “Three Selfs” Spirit

development by making CSR central to corporate management.

CSR Awarenesshigh-resolution video technology and drone-based solutions that

Our participatory approach to CSR is based on the sharing of the Canonenhance productivity in agriculture and others.

MJ Group’s CSR philosophy and values by all employees, and on acommitment to accurate knowledge. Our efforts to foster CSR
awareness in our employees are coordinated by the CSR Promotion
Division.

The “Three Selfs” Spirit
Our “Three Selfs” spirit is a central guiding principle that dates back to
the founding of Canon and is part of our corporate DNA. The principle

External Assessments

states that employees should proactively take the initiative (self-

Selected as a Health and Productivity Stock in 2018

motivation), conduct oneself responsibly and with accountability (self-

The Ministry of Economy, Trade and Industry and the Tokyo Stockmanagement), and know one’s position, roles, and circumstances (self-

Exchange (TSE) chose the Group for the ﬁrst time in 2018 for the Healthawareness). The Three Selfs spirit is the foundation of our CSR activities.

and Productivity Stock Selection program that theyjointly run. From among companies listed on the

Sustainable Development Goals (SDGs) Initiatives

exchange, the program chooses one company per

The Canon MJ Group endeavors to attain the internationally acceptedindustry based on management’s employee

SDGs of the United Nations through its business activities, resolving

healthcare strategies.

social issues and delivering new value to contribute to social
sustainability. For example, we are endeavoring to cut CO2 emissions

Indicesthrough the use of carbon offset programs and to prevent ecological

Canon MJ has been included in the FTSE4Good Index Series for 11

damage in order to help realize a low-carbon economy. We offer

consecutive years. In ﬁscal 2017, FTSE Blossom Japan and the SNAM

products that help resolve a range of issues. Our network camera

Sustainability Index began tracking the Company’s stock.

systems, for example, can prevent damage from natural disasters andalleviate some of the challenges that eldercare givers face in looking
after their patients. Our cybersecurity measures make it possible to use
information and communications technology (ICT) safely. We also offer

26

Canon Marketing Japan Inc. I Annual Report 2017

CSR Policies

Positive effect on the global environment
2020 target

We produced the Canon MJ Group CSR Activity Policy to enable allGroup employees to practice CSR in their work. We will contribute toContributions to
reductions in customer
CO2 emissions

sustainable social development by sharing and applying the policy
throughout the entire Group.

150,000
metric tons
or higher

±0

Green
Ratio
More thantriple1

CSR Activity Policy

CO2 emissions of
the Canon MJ Group

Annual improvement in
CO2 emissions intensity
1.2% (year on year)• We will contribute to the creation of an enriched social environment
in which people can live in safety and with peace of mind.

Negative impact on the global environment• We will provide dependable quality through all of our business activities.

Supplying Eco-Friendly Products• We will contribute to the development of human resources capable ofAs part of efforts to engage incontributing to the improvement of society.

distinctive environmental activities• We will conduct our business activities fairly and in good faith, withas a marketing enterprise, we supply

particular emphasis on dialogues with stakeholders.

customers with MFPs, laser printers,• We will strive to develop safe, healthy working environments.

and other Canon offerings that

• We will contribute to the conservation of the environment and biodiversity.

consume less electricity. We also

• We will respect human rights.

provide information on ways to cut
CO2 emissions in using products and

The GREEN NAVI Ver. 2 website helps
customers to engage in activities that will
help reduce their environmental footprint.

Environmental Management

thereby help lower society-wide emissions.

The Canon MJ Group seeks to contribute to social progress by

http://cweb.canon.jp/ecology/green-navi/ (in Japanese only)

enhancing lifestyles and safeguarding the environment by deploying
in-house measures to prevent global warming and reduce waste while

Product Collection and Recycling Activities

pursuing distinctive initiatives as a marketing enterprise.

We set up a program to efficiently collect used Canon MFPs, laser
printers and those cartridges from customers and dealers and to

Deploying Green Ratios (FY2016–2020)

recycle valuable resources within the Group, thereby contributing to

The Canon MJ Group formulated the following three Green Ratios as

the creation of a recycling-driven economy.

medium-term environmental benchmarks for monitoring annual progress.

Group member Canon Ecology Industry Inc. recycles used

Annual improvement in CO2 emissions intensity

cartridges, disassembling and cleaning reusable parts and crushing

1.2% (year on year)

and pelletizing other parts for use in new cartridges.

Contributions to reductions in customer CO2 emissions
More than 150,000 metric tons

Group Company Contributions to CO2 Emissions Reductions
Canon System & Support develops and sells a telematic device that

Ratio of customer CO2 emissions reductions divided by the Canon MJ
Group’s own reductions
More than triple

helps lower CO2 emissions. This IT solution device emails driver
supervisors as soon as it detects the sudden acceleration anddeceleration of company-owned vehicles. As of January 2018, 2,000
customer vehicles were ﬁtted with the device, which is designed toCanon Marketing Japan Inc. I Annual Report 201727

help reduce traffic accidents and infringements and cut gasoline

Combatting Harassment

consumption.

Canon MJ engages in various awareness-building initiatives to prevent
sexual and power harassment.
Harassment issues are part of the agenda for training newSocial Contributions
As a good corporate citizen, the Canon MJ Group contributes to society

employees and managers. Compliance meetings also position

through business and activities that help to create a society in whichharassment as an issue for discussion within work units.

all people can enjoy fulﬁlling lives.

We make it easier for employees to seek advice about harassment
by offering consultations and by enabling the sharing of concerns by

Launching the Books for Kids Drive

email or telephone.

In April 2017, we launched the Books for Kids Drive, through which weheighten employee awareness of children’s poverty and donate used

Initiatives to Employ People with Disabilities

books. All proceeds from sales of these items go to the Children’s

The Canon MJ Group is committed to employing people with disabilities,

Future Support Fund, which accepts donations from individuals andand accordingly endeavors to create a barrier-free work environment.

corporations and assists grassroots organizations around Japan thattackle the issue of children’s poverty. As of December 31, 2017, Group

Employees with Disabilities (Non-Consolidated Basis)
Number of Employees with Disabilities

employees and their families had donated 10,327 books for this cause.

2.12%
165

2.19%
168

Percentage of Employees with Disabilities
2.17%

2.16%

161

157

2.10%

150

Respecting Human Rights and Diversity
The Canon MJ Group endeavors to prevent employee discrimination and

FY

’13

’14

’15

’16

’17

harassment and fosters a corporate culture that values diversity.
As of June 2017, 2.10%* of Canon MJ’s employees were people with
Preventing Discrimination and Promoting Diversity

disabilities, exceeding the Japanese government’s mandatory rate of

The Canon Group aims to ensure that all executives and employees

2.0%. The Group will continue pushing ahead with new graduate andalike understand and adhere to the Canon Group Code of Conduct, which

midcareer hiring of individuals with disabilities.

encourages respect for individuals and individuality and prohibits*Calculated according to prescribed working hours, disability degrees, and other factors in keepingwith the Ministry of Health, Labour and Welfare standards.

discrimination, including in terms of race, religion, nationality, gender,
and age.
Within the Canon MJ Group, we utilize email magazines sent to all
employees and compliance meetings for all work units to raise awarenessamong executives and employees about discrimination issues.

28

Canon Marketing Japan Inc. I Annual Report 2017

CORPORATE GOVERNANCE
Overview of Corporate Governance at the Canon MJ Group• Organizational format: Company with Audit & Supervisory
Board members• Number of directors: 7• Number of outside directors: 2• Number of outside directors designated as independent: 2• Term of directors: 1 year
• Number of Audit & Supervisory Board members: 5• Number of outside Audit & Supervisory Board members: 3• Number of outside Audit & Supervisory Board members designated as
independent: 2• Term of Audit & Supervisory Board members: 4 years• Independent auditor: Ernst & Young ShinNihon LLC• Use of executive officer system: Yes(As of March 30, 2018)

Corporate Governance Organization
General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

7 Directors
Board of Directors

Monitoring

5 Audit & Supervisory Board Members
Audit & Supervisory Board

Appointment / Dismissal

Cooperation

Audit of ﬁnancial
statements

Independent
AuditorCooperation

Management Committee
CSR Committee

Internal Auditors Office

Cooperation

Disclosure Committee
Internal audits

Internal Controls Evaluation Committee
AdviceBusiness Units / Group Companies

Lawyers /Licensed Tax Accountants

Staff Managers

Basic Stance on Corporate GovernanceIndependence from the Parent Company

We recognize that sustainable growth in corporate value requires ongoing

The Company’s parent company is Canon Inc., which held 58.5% of the

improvement in such areas as management transparency and the monitoring

Company’s voting rights as of December 31, 2017. Within Canon Inc.’s corporateof progress toward management targets. This is reﬂected in our wide-ranging

group, the Company oversees sales, service, and marketing for Canon products

initiatives to strengthen corporate governance. We have implemented allin the Japanese market. The Company also supplies IT solutions and otherprinciples of Japan’s Corporate Governance Code.

services, clearly compartmentalizing its operations.

Protection of Minority Shareholders in Transactions with theControlling Shareholder and in General

the exclusive right to sell all Canon brand products in Japan, the exceptions

The Company’s controlling shareholder is Canon Inc. The Company concludes

determined by presenting the Company’s asking prices and engaging inimportant basic agreements with Canon Inc. based on resolutions of the Board

conventional negotiations. None of the Company’s directors concurrentlyof Directors. Such agreements are appropriately and fairly implemented

serves the parent company.

With regard to transactions with the parent company, the Company has

without compromising the Company’s interests. The Company acts

being semiconductor and LCD lithography systems. Transaction terms are

It is because of this situation that the Company faces no restrictions fromappropriately and fairly in all transactions, not just those with its controlling

the parent company in terms of operational activities and maintains a certain

shareholder, to avoid compromising its independence and interests and tolevel of independence from the parent company by making its own

safeguard the interests of all shareholders.

management decisions on business activities and operations.
The Company ensures the effectiveness of its corporate governanceas a listed enterprise by bolstering its internal auditing department while
independently building diverse internal controls systems through collaboration
with its Audit & Supervisory Board members and the independent auditor andsetting up committees.

Canon Marketing Japan Inc. I Annual Report 201729

CORPORATE GOVERNANCE

Policy on Constructive Dialogue with Shareholders

expertise. At least one outside Audit & Supervisory Board member is an outside

The Company helps to drive sustainable growth and improve corporate value

auditor who fulﬁlls the independence criteria that the Board of Directors

over the medium and long terms by engaging in constructive dialogue withseparately determines.

shareholders, including through general meetings of shareholders, brieﬁngs on

The Audit & Supervisory Board cooperates with the independent auditor

management plans for the medium and long terms, results brieﬁngs, andand the Internal Auditors Office to assess performance and corporate assets

meetings with major institutional investors.

and ensure sound management.
There are ﬁve Audit & Supervisory Board members, of whom three are

Board of Directors, Directors, and Executive Officers

outside auditors. Their duties include attending Board of Directors’ meetings,

We maintain a structure in which the representative director oversees

speaking with directors and other parties, and perusing important accounts’Companywide business strategies and execution, while supervision of businessdocuments in line with the auditing policies and work allocations that the Audit

domains and headquarters functions is primarily through executive directors,& Supervisory Board stipulates, and conducting rigorous audits by examining

and add at least two independent external directors to ensure soundoperations and property.

management. In accordance with laws and ordinances, the Board of Directors
monitors important decisions and implementation.
Other decisions are handled by the representative director or under theInternal Auditors OfficeInternal audits are conducted by the Internal Auditors Office, an independent

representative director’s direction and supervision through executive officers

specialist unit that also assesses and advises Canon MJ and its subsidiaries onwhom the Board of Directors appoints through its resolutions to assume

legal compliance, the effectiveness of processes, internal control systems, andresponsibility for making and implementing decisions for business domains

information security. The Internal Auditors Office works in coordination withand headquarters functions.

similar units established in major subsidiaries. The Canon MJ Group has 52

The Board of Directors comprises seven members, including two outside

audit staff members.

directors. By limiting the term of office for directors to one year, we havecreated a management structure capable of adapting quickly to changes in the

Audit of Financial Statements

business environment. Important decisions are made by the Board of Directors,

The Canon MJ Group’s ﬁnancial statements are audited by the Company’s

which normally meets once a month, and at Management Committee meetings

independent auditor, Ernst & Young ShinNihon LLC. The independent auditor

attended by the directors of Canon MJ and the presidents of major subsidiaries.

rotates responsible partners who have been involved in audits of any company

On March 29, 2011, we introduced an executive officer system. The

for more than seven years. (They rotate a chief partner every ﬁve years.)

purpose of the system is to speed up management decision-making in thefunctions and reducing the number of directors. It also clariﬁes responsibility

Outside Directors and Outside Audit & Supervisory Board Members(as Deﬁned under the Corporation Law)for the performance of business operations and strengthens executive

Canon MJ has two outside directors and three outside Audit & Supervisorysystems. There were 23 executive officers as of April 1, 2018.

Board members. Pursuant to the consent of all Audit & Supervisory Board

Canon MJ Group by separating management decision-making from executive

members and the Board of Directors, we implemented our independence

Audit & Supervisory Board and Auditors

criteria for outside directors and outside Audit & Supervisory Board members

The Audit & Supervisory Board functions independently of the Board of

to clarify the standards for ensuring outside directors and outside Audit &Directors, and comprises individuals who are familiar with the Company’s

Supervisory Board members in keeping with the Corporate Governance Codebusiness or corporate management and who have accounting or otherand standards of independence. Our outside directors and Audit & Supervisory

Reasons for Appointing Outside Directors
Independent director

Reason for appointment

Akio Dobashi*1*4

Mr. Dobashi has amassed ample expertise in corporate management as a senior executive of a general trading company, and also met
requirements for appointment as an independent director.

Yoshio Osawa*2*4

Mr. Osawa has amassed ample expertise in corporate management as a senior executive of a general trading company and an IT services ﬁrm,
and also met requirements for appointment as an independent director.

*1 Mr. Dobashi previously worked at Sojitz Corporation. Although the Company has a contract with Sojitz to maintain business and other equipment, transactions with that company account for less than 2% of the Company’s consolidated net sales.
*2 Mr. Osawa previously worked at Sumitomo Corporation and SCSK Corporation, with which the Company does business. Transactions with Sumitomo are based on sales and maintenance contracts for business equipment, but such transactions account forless than 2% of the Company’s consolidated net sales. Transactions with SCSK are based on sales and maintenance contracts for business equipment and on the supply of IT equipment, but such transactions account for less than 2% of the Company’s
consolidated net sales.

30

Canon Marketing Japan Inc. I Annual Report 2017

Reasons for Appointing Outside Audit & Supervisory Board Members
Independent Audit &Supervisory Board member

Reason for appointment
Mr. Tedo worked for many years in accounting in the Canon Group, and served as a Senior Vice President at Canon U.S.A., Inc., with his
expertise positioning him well to independently monitor the Company’s management.

Kunihiko Tedo
Nobuyasu Kusumi*3*4

Mr. Kusumi served as an insurance company executive for many years, and also met requirements for appointment as an independent
audit & supervisory board member.

Shigeo Hasegawa*4

Mr. Hasegawa has many years of accounting and auditing experience as a certiﬁed public accountant, and also met requirements forappointment as an independent audit & supervisory board member.

*3 Mr. Kusumi has served as a senior executive at Sompo Japan Nipponkoa Insurance Inc. and Sompo Japan Nipponkoa Himawari Life Insurance, Inc. The Company has an insurance policy with Sompo Japan Nipponkoa Insurance and a contract with thatcompany to sell and maintain business and other equipment. The Company also has a contract with Sompo Japan Nipponkoa Himawari Life Insurance to sell and maintain business and other equipment. Management concluded, however, that in view of thescale and nature of transactions there are no prospective conﬂicts of interest with the Company’s shareholders.
*4 Have notiﬁed the Tokyo Stock Exchange as an independent director or an audit & supervisory board member as prescribed by the Exchange.

Directors’ and Audit & Supervisory Board Members’ Attendance at Board Meetings
Name
Outside directors

Outside Audit & Supervisory Board members

Attendance at meetings of the Board of Directors and Audit & Supervisory Board during ﬁscal 2017

Norihisa Doi

17/17 times (100%) of Board of Directors’ meetings

Akio Dobashi

17/17 times (100%) of Board of Directors’ meetings

Shigeo Hasegawa

17/17 times (100%) of Board of Directors’ meetings
18/18 times (100%) of Audit & Supervisory Board meetings

Kunihiko Tedo

17/17 times (100%) of Board of Directors’ meetings
18/18 times (100%) of Audit & Supervisory Board meetings

Nobuyasu Kusumi

17/17 times (100%) of Board of Directors’ meetings
18/18 times (100%) of Audit & Supervisory Board meetings

Board members satisfy the independence criteria and help maintain andimprove the transparency and accountability of the Board of Directors.

Policies and Procedures for Determining Remuneration for Senior
Executives and Directors

The Company does not maintain a specialist organization or provide

Remuneration for the representative director and directors consists of basic

full-time staff to assist outside directors or outside Audit & Supervisory Board

remuneration, which is a ﬁxed basic monthly fee for executing their roles andmembers. Directors in charge of operations and other officials provide outside

duties, and a bonus linked to performance during the ﬁscal year. Outside

directors with prior explanations of Board of Directors’ meeting agendas asdirectors only receive basic remuneration.

needed. Internal auditors, directors in charge of operations, and other officials

Individual basic remuneration amounts are in accordance with the basic

provide outside Audit & Supervisory Board members with prior explanations ofapproach to calculations determined through resolutions of the Board of

Board of Directors’ meeting agendas as needed. Outside Audit & Supervisory

Directors within the maximum total remuneration for all directors approved at

Board members attend Audit & Supervisory Board meetings, which are held at

general meetings of shareholders. Individual bonuses are in keeping with theleast once monthly, as well as liaison meetings and other gatherings conductedbasic approach to calculations determined through resolutions of the Board ofas required to exchange information on important items and audit details.

Directors based on totals approved at general meetings of shareholders foreach ﬁscal year.

Analysis and Evaluation of Effectiveness of Board of Directors
Directors and Audit & Supervisory Board members evaluated the effectivenessof the Board of Directors, reporting to it on their ﬁndings. While broadly
conﬁrming that the Board of Directors functions effectively, some memberssuggested ways to enhance effective oversight of the progress andperformance of management strategies and management planning. The Boardof Directors will leverage such approaches in its operations.

Canon Marketing Japan Inc. I Annual Report 201731

CORPORATE GOVERNANCE

IR Activities

presents medium-term management plan at the ﬁscal results announcements.

We formulated the Canon MJ IR Policy in 2008 to clarify our stance, which is

In addition, we welcome meeting requests from analysts and institutional

disclosed on the official investor relations (IR) website below. For retailinvestors, and hold individual meetings and teleconferences with foreign

investors, the president, the managing executive officer overseeing IR, or otherinstitutional investors.

executives conduct company brieﬁngs. In addition, the Company exhibited at
events for retail investors in March, April, August, and September 2017. For

Canon MJ IR website

analysts and institutional investors, the managing executive officer overseeing

canon.jp/8060e-ir

IR provides an overview of our results at quarterly brieﬁngs. The president

Messages from Outside Directors
My role as an outside director is to conﬁrm

The plan and check elements of PDCA

management transparency, looking

cycles are key focuses for outside directors

particularly at whether there are conﬂicts

in that we advise management on planningof interest between the Company and its

and monitor conﬂicts of interest anddirectors. Canon is a major shareholder ofmanagement transparency.

the Company, so it is vital to ensure that it

Earlier in my career, I was an

Akio Dobashi

does not hamper the interests of minority

Yoshio Osawa

executive at a trading ﬁrm and at one of its

Outside Director

shareholders. I have identiﬁed no conﬂicts

Outside Director

listed subsidiaries. As the president of thatof interest in the two years since I became

subsidiary, I ensured that we engaged fairly

an outside director. Also, the Company has outstanding management

and appropriately with diverse shareholders, from the parent company thattransparency, and directors engage in free and vigorous debate in Board

had a majority stake to individual and foreign institutional investors. I planmeetings.

to bring my experience from that time to Canon MJ.

I come from a trading company background, so I am able to draw on

The Company is shifting operational resources into growth areas in

my experience in business investments to appropriately advise on

keeping with the objectives of Long-Term Management Objectives Phase III,

investment standards, taking into consideration shareholders’ beneﬁts.

which ends in ﬁscal 2020. I believe I can contribute to the Company’s

The Company is pushing ahead with medium-term management plans

growth by drawing on my experiences both in launching and expanding

to materialize Long-Term Management Objectives Phase III. In my view,

businesses in the Japanese market and in accelerating growth throughsocial credibility is a key prerequisite for the Company to generateacquisitions.

sustainable growth. The Group has a solid brand reputation as a result of

The atmosphere in discussions at meetings of the Board of Directors,

the trust it has amassed over the years. A scandal could destroy that trust

the Management Committee, business reporting, and other meetings isand brand reputation in an instant. So, another part of my role is toalways genial and open. The only real issues I can maybe see is that thesafeguard those assets, remaining sufficiently knowledgeable to ensure

Company needs to implement management strategies more swiftly andthat no such incident occurs.

pursue more work practice reforms to bolster productivity. I will
accordingly do my best to share my forthright views as an outside director
while carefully analyzing the Company’s businesses.

32

Canon Marketing Japan Inc. I Annual Report 2017

Management Systems
Raising the value of the Canon MJ Group’s corporate brand is an ongoing

the expectations of society. Our compliance activities are designed topriority. We do this by maintaining high standards of corporate ethics

encourage high ethical values and respect for the law in individual employees

Groupwide, and by developing structures capable of responding to a variety

through awareness activities, employee education, and organizational activities.

of management risks.

In keeping with the rules that it sets, the Board of Directors carefully
deliberates and decides on important management matters and receives

Risk Management

reports from representative and executive directors and executive officers on

The Canon MJ Group has taken steps to ensure the continuity of its businessbusiness implementation progress.

activities in the event of a major earthquake, an inﬂuenza outbreak, or otherWe distribute the Canon Group Code of Conduct and other handbooks andcontingencies that could impact its activities. These initiatives for the Group

Compliance Cards to all Group employees and enhance awareness throughoverall are coordinated by the BCM* Committee, a subsidiary organization of

education and training. We convene the semiannual Compliance Meeting to

the Management Committee.

conﬁrm compliance risks and countermeasures at each work site. We also

*BCM: Business continuity management

maintain an ongoing internal reporting system.

Internal Controls

Information Security

Based on the Companies Act, the Board of Directors resolved the basic policy

The Canon MJ Group regards the reinforcement of information security as partfor an internal controls system to ensure appropriate business practices, andof its responsibilities toward the creation of a more secure society, and as

is deploying that system in line with that policy.

essential to meeting customers’ expectations in line with its Customer Focus

Chaired by the president, the Internal Controls Evaluation Committee
consists of officials representing corporate departments and subsidiaries. Itstask is to develop internal controls systems for the entire Canon MJ Group.
Canon Inc., which is listed on the New York Stock Exchange, has adopted

philosophy.
We have taken various steps to bolster information security governance,
moving forward with objective assessments and ongoing improvements. We
formulated the Basic Policy on Information Security for the Canon MJ Group andsystems that comply with the Sarbanes-Oxley Act, a U.S. law designed torolled out the Information Security Management System (ISMS) and Personal

improve corporate governance. As a member of the global Canon Group, Canon

Information Protection Management System (PMS) for the Group to standardize

MJ has also applied global perspectives by establishing systems based on theand streamline management. We are optimizing our information security

same standards.

countermeasures, training information security personnel, and have secured
and maintained certiﬁcation under the ISMS Conformity Assessment Scheme

Corporate Ethics and Complianceand Privacy Mark. We deployed the Canon MJ Computer Security Incident

For the Canon MJ Group, compliance is not simply a matter of obeying laws andResponse Team to reinforce cybersecurity. We also issue the Information

regulations. We deﬁne compliance as obedience to regulatory requirements

Security Report.

and social rules, a commitment to social justice, and continuing efforts to meet

Business Risks
Impacts of Market Competition and Fluctuations

speciﬁcations, altered requirements, or mismatches in the Company’s andIn office MFPs and maintenance services, price competition continues.

customers’ interpretations of speciﬁcations or progress could hamper results.

Although print volumes using MFPs are on a rising trend, the unit price forIn the digital interchangeable lens camera market, if a rapid shift were to

maintenance services continues to fall, and proﬁtability could deteriorate if

occur from SLR cameras toward mirrorless cameras, unit shipments of SLR

price competition intensiﬁes. A decline in print volumes driven by the trend

cameras—in which the Company holds a high market share—could be affected.

toward paperless offices could affect the Canon MJ Group’s results. An increase

In inkjet printers, accompanying the decline in volumes of New Year’s greetingin unit sales of third-party laser printer toner cartridges could constrain

cards produced, sales of inkjet printers and inkjet cartridges could be affected.

revenues from genuine Canon counterparts.
In IT Solutions, the Company carefully manages work hours in various SI
projects to prevent losses. Nonetheless, such factors as additional customer

In the industrial equipment business, capital spending among
semiconductor and device manufacturers greatly affects orders forsemiconductor fabrication and measuring equipment. Results could stagnate

Canon Marketing Japan Inc. I Annual Report 201733

CORPORATE GOVERNANCE

if these manufacturers reduced such expenditure.

Relationship with Parent Company

In the medical equipment business, the Pharmaceutical and Medical

Canon MJ is a subsidiary of Canon Inc., which owned 58.5% of its stock as ofDevice Act (formerly, the Pharmaceutical Aff airs Act) makes it mandatory to

December 31, 2017. The Company has the exclusive right to sell products

appoint sales administrators, set up post-marketing traceability information(excluding semiconductor and LCD lithography systems) manufactured bysystems, and reinforce safety management structures. While the Group does

Canon Inc. under the Canon brand in Japan. In ﬁscal 2017, Canon MJ’s

its utmost to maintain systems to comply with such requirements,

purchases from Canon Inc. amounted to ¥215.6 billion, or 61.5% of its totaltransactions with medical institutions and medical equipment dealers could

purchases.

decline if its safety management structure or information systems do not
perform as envisaged.

Because of this relationship, a major shift in the management policies orbusiness activities of Canon Inc. could have a signiﬁcant impact on the

The Canon MJ Group offers goods purchased from parent company Canonbusiness activities, performance, and ﬁnancial position of the Canon MJ Group.

Inc. and many other manufacturers, creating the risk of insufficient supplies of

If it becomes impossible to maintain the superiority of Canon products ingoods following natural disasters, major accidents, or other events. Results

relevant industries for whatever reason, the Group’s results could be adversely

could be affected if such situations hamper sales activities.

affected.

Credit Risks

Information Management

The Canon MJ Group could experience unforeseen credit losses, as it engages

The Canon MJ Group holds important information about various Group

in many transactions in which it collects payments after providing goods andoperations as well as a considerable amount of sensitive information about

services. The Company therefore draws on credit information from external

companies and individuals. As such, we formulate information management

credit bureaus and other sources as part of thorough credit management

policies and rules, educate and train employees to increase awareness of theefforts while hedging risks through trade credit risk insurance and otherimportance of information management, implement and check the status ofmeans. The Company provides allowances for doubtful receivables to cover thesystem security measures, and create and deploy an ISMS. Notwithstanding

risks of losses on collection. Large unforeseen uncollectible amounts could

these measures, information that leaks externally as a result of cyberattacks

detract from the Group’s results and ﬁnancial position.

could greatly inconvenience business partners and other stakeholders or lower
the credit standing of the Canon MJ Group, thus possibly hampering its
operations, results, and ﬁnancial position.

IT Governance
IT Investments to Boost Corporate Value

Reason for Adopting IT Governance

The Canon MJ Group has strategically shifted its IT investment approach away

The Canon MJ Group adopted IT governance in view of the importance of IT-from a focus on increasing productivity by better visualizing its operations andbased corporate management, complementing existing efforts to bolster

reinforcing management toward one of pursuing business growth by enhancing

corporate governance and sustainably increase corporate value.

customer experience and bolstering competitiveness. We also aim to leverage
the experience and performance amassed from IT investments to cultivate IT
solutions and improve corporate value.

Group IT GovernanceManagement Committee
Approve
Approve

Long-term management objectives

IT investment management
Plan

Three-year management plan

Approve

ReportAct

Do

ReportCheck
IT strategy formulation

34

Canon Marketing Japan Inc. I Annual Report 2017

IT investment implementation

IT use

Review

Group IT Governance

IT Strategy Formulation

The Canon MJ Group set up a process to formulate IT strategies, implement
Management Planning Department

IT investments, and use IT to enhance corporate value. The Group createdGroup management strategies

an IT investment management system to oversee IT activities, results, andpeople concerned, and optimize the benefits of IT investments while

IT Strategy Assessment Committee

lowering their risks.

IT Department

IT Governance FocusesGroup IT strategies• IT Strategy Formulation
IT Strategy Assessment Committee

The Canon MJ Group’s business units draw up three-year management plans
linked to the long-term management objectives, as part of which the IT
Department formulates Group IT strategies. The IT Department serves as a hub

Business units

Business units

Business units

for the Management Planning Department and business units, putting together

Business strategies

Business strategies

Business strategies

and prioritizing the required IT measures and driving the formulation of GroupIT strategies.

• IT Investment Management

IT UseThe Management Committee oversees two IT investment assessment
committees that approve and evaluate investments. These are the Business

Proactive

Business Investment Assessment Committee(focuses on operational growth)

Defensive

Internal Operations IT Investment Assessment Committee(focuses on increasing productivity)

Investment Assessment Committee, which focuses on operational growth, andShifting IT investment allocations

the Internal Operations IT Investment Assessment Committee, which seeks toincrease productivity. This setup enables us to start small with strategic
investments and then grow them.

IT investment management• IT Investment Implementation

Plan
Approve

ReportAs well as conducting reviews at each stage, such as creating systems

Act

Do

ReportReview

Checkconcepts and planning and building systems, we have drawn on expertiseamassed through the business of Group ﬁrm Canon IT Solutions Inc. to set upa system to comply with quality, cost, and delivery requirements.

• IT Use
After deploying systems, IT investment assessment committees report theassessment of return on investment and collaborate with business divisions sothat customers can beneﬁt. The committee suggest improvements forinvestments that have not delivered intended returns, and implement plan–do–
check–act (PDCA) cycles to generate reliable returns.

Systems
concepts andplanning

Systems
construction

Systems
deployment

Investment
returnmeasurement

Project management (progress
management, results sharing, andcommunications)
Check

Approve

IT expert review

Project review

IT investment implementation

IT use• Future Initiatives
We will enhance the functionality and links between the formulation of IT

understanding of customers, enhance services that we can develop with them,strategies, IT investment management and implementation, and IT use andand help resolve social issues while increasing corporate value.

accelerate proactive IT investing. We will draw on such efforts to deepen our

Canon Marketing Japan Inc. I Annual Report 201735

CORPORATE GOVERNANCE

Board of Directors and Audit & Supervisory Board Members(As of March 28, 2018)

Board of Directors

President & Representative Director
Masahiro Sakata

Senior Managing Director &Representative Director
Yutaka Usui

Director
Yoshiyuki Matsusaka

OutsideAkio Dobashi

Outside
Yoshio Osawa

Director
Masachika Adachi

Director
Shiro Hamada

Standing, outside
Kunihiko Tedo

Standing, outside
Nobuyasu Kusumi

Audit & Supervisory Board Members

Standing
Masahiro Shimizu

36

Canon Marketing Japan Inc. I Annual Report 2017

Standing
Shinichi Inoue

OutsideShigeo Hasegawa

FINANCIAL SECTION
38

Ten-Year Consolidated Financial Summary

40

Financial Review

42

Consolidated Balance Sheets

44

Consolidated Statements of Income

45

Consolidated Statements of Comprehensive Income

46

Consolidated Statements of Changes in Net Assets

47

Consolidated Statements of Cash Flows48

Notes to Consolidated Financial Statements

66

Independent Auditor’s Report

Canon Marketing Japan Inc. I Annual Report 2017

37

TEN-YEAR CONSOLIDATED FINANCIAL SUMMARYCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31

2017

2016

2015

2014

Net sales (Note 5)¥ 632,190¥ 629,314¥ 646,003¥ 659,432

Operating income

30,407

27,676

26,64725,088Proﬁt (loss) before income taxes

30,91928,90327,49825,858Proﬁt (loss) attributable to owners of parent

20,68018,162

15,67016,030Total assets

510,833

497,728

486,502479,747

Total stockholders’ equity (Note 4)

297,032

280,473

277,008

270,061

Cash ﬂows from operating activities

28,88533,30629,73038,191

Cash ﬂows from investing activities

7,964(19,461)(44,536)(15,221)

Cash ﬂows from ﬁnancing activities(7,145)(6,086)(6,225)(4,545)

Cash and cash equivalents at end of year

136,980

107,286

99,574

120,607¥ 159.48¥ 140.06¥ 120.84¥ 123.62

60.00

50.00

45.00

40.00

2,290.70

2,162.96

2,136.22

2,082.60

For the year:

At year-end:

Cash flows:

Per share of common stock:
Proﬁt (loss) attributable to owners of parent (Note 2)
Cash dividends (Note 3)
Stockholders’ equity (Note 4)

Notes 1. The ﬁgures have been presented in U.S. dollars by translating all Japanese yen amounts at ¥113 to U.S.$1, the prevailing exchange rate as of December 31, 2017.
2. Proﬁt (loss) attributable to owners of parent per share is based on the weighted average number of shares of common stock outstanding during the respective ﬁscal years.
3. Cash dividends per share are the amounts applicable to the respective ﬁscal years, including dividends to be paid after the end of the year.

Net Sales and Return on Sales (ROS)(Billions of yen / %)Net Sales

Operating Income and Operating Margin(Billions of yen / %)ROS

Operating Income

Working Capital
Operating Margin(Billions of yen / Times)

Total
Current
Assets

4.8
4.4

827

4.1

3.3
687 674

2.9

632
632 659 657 659 646
2.4 2.4 629

3.8

25.4

26.6

328
302 302 302

27.7

2.3

2.5 2.6
16.8 17.0

2.0
1.8

0.6

184
0.9

FY ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

38

Canon Marketing Japan Inc. I Annual Report 2017

2.5
2.2

1.1

-0.6

317 325

Current
Ratio

398
340 348 362 362

25.1

3.1

1.6 1.5

1.4

30.4

Total
Current
Liabilities

6.3

1.1
7.7

1.3

2.0
1.9

2.0

2.1

1.9

154 157 151 163 165 165 160 157 157

8.4

FY ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

FY ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

Millions of yen

Thousands of U.S. dollars(Note 1)

2013

2012

2011

2010

2009

2008

2017

¥ 657,216¥ 659,218¥ 632,419¥ 674,159¥ 686,615¥ 827,487$ 5,594,602

17,013

16,802

8,442

7,736

6,297

25,416

269,088

17,055

17,52910,972

8,584

(595)

22,229273,619

10,168

10,579

6,764

3,724

(4,343)

11,186

183,009467,076

462,574

447,765448,592

449,607484,937

4,520,646

256,795

253,862

250,671

246,680

246,829

255,220

2,628,602

28,781

33,767

8,716

35,18618,144

41,122

255,619(25,757)(16,067)(12,108)(13,012)(25,834)(28,967)

70,478(9,105)(11,813)(3,811)(8,171)(4,324)(21,738)(63,230)

102,183108,260

102,373

109,575

95,575

107,589

1,212,212

Yen

U.S. dollars(Note 1)

¥

76.67

¥

77.45

¥

49.30

¥

26.70

¥ (31.62)

¥

78.63

$

1.41

24.00

24.00

20.00

20.00

20.00

40.00

0.53

1,980.22

1,907.50

1,827.25

1,798.16

1,797.31

1,858.39

20.27

4. Total stockholders’ equity in the above table represents the total of stockholders’ equity and accumulated other comprehensive income (loss) in the consolidated balance sheets.
5. Effective ﬁscal 2013, we have changed to an accounting method that deducts a portion of sales incentives (which had previously been accounted for under selling, general and administrative expenses) from net sales;
therefore, the amount of net sales for ﬁscal 2012 and relevant key management indicators have been adjusted retroactively.

Total Stockholders’ Equity and ROE(Billions of yen / %)Total Stockholders’EquityROE

297
270 277 280
255 247 247 251 254 257
6.1 5.7 6.5 7.2
4.3

4.2

Total Assets and Total Stockholders’ Equity Ratio

Profit (Loss) Attributable to Owners of Parent(Billions of yen / %)(Billions of yen)

485

Total Assets

Total Stockholders’Equity Ratio

487 498
467 480

20.7

511

18.2

463
450 449 448
56.9 56.4 58.1
54.9 55.0 56.3
55.0
54.9
52.6
56.0

16.0 15.7
11.2

10.6 10.2

4.0
2.7
6.8
1.5
3.7

-1.7
-4.3
FY ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

FY ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

FY ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

Canon Marketing Japan Inc. I Annual Report 2017

39

FINANCIAL REVIEWBusiness Performance
Net Sales• IT Solutions

Consolidated net sales for the year ended December 31, 2017, increased 0.5%,

Sales of the Systems Integration (SI) services business increased on solid

to ¥632,190 million, from the previous year. This was despite lower sales ofdemand from the ﬁnancial services and education sectors.

digital interchangeable lens cameras and inkjet printers amid sluggish markets
in those areas, and reﬂected favorable IT Solutions and Industrial / Medical
demand.

Sales of the IT infrastructure and services business were up, reﬂecting
favorable demand for data center services.
The embedded systems business posted lower sales because of a decline
in demand among key manufacturing customers, which offset steady sales to

Segment Information• Business Solutions

the automotive industry.

We launched several color office multifunction printers (MFPs) for small-to-

software and other security products and solid demand for IT product offerings.

medium-sized customers during the year and endeavored to attract newSales in the products business were up amid favorable sales of ESET security

Segment sales therefore advanced 4.7%, to ¥134,897 million.

customers. We also secured major MFPs orders from large companies, boostingsales of offerings in this category.

• Imaging Systems

Production printing sales were down, as delays in shipments of newSales of digital interchangeable lens cameras were down. This was due mainly

continuous feed printers overshadowed solid demand for cut-sheet printers

to a surge in sales of mirrorless cameras, which further cannibalized demand

among offices and commercial printers.

for entry-level SLR models.

Although unit shipments of laser printers again declined, sales of theseCompact digital camera sales were up, with supplies rebounding after

products rose as a result of several large orders and higher sales to certain

shortages experienced in the previous year owing to earthquake damage inpriority sectors. Toner cartridge sales were up, reﬂecting greater demand

Kumamoto Prefecture. Another factor was favorable demand for high-end models.

among certain high-print-volume sectors and increased shipments to ﬁnancial
institutions and government agencies.
Network camera sales also increased. This was due to large orders fromcommercial facilities and new orders in various ﬁelds that incorporated
offerings from Axis Communications AB and Milestone Systems A/S.

Inkjet printer sales were down, as unit shipments declined amid sluggish
market conditions. Ink cartridge sales also dwindled, reﬂecting lower print volumes.
Sales of commercial imaging equipment were down, as broadcast lens
shipments dropped amid low demand from broadcast stations.
Sales of this segment accordingly decreased 4.3%, to ¥152,339 million.

Sales of maintenance services for office MFPs were down from a year
earlier because unit maintenance charges continued to fall, overshadowing• Industrial / Medicala rise in print volumes amid gains in the number of machines in ﬁeld (MIF).

Industrial equipment increased amid buoyant conditions in semiconductor-related

Canon System & Support Inc., consolidated subsidiary boosted sales

markets, which boosted sales of semiconductor fabrication equipment, inspectionslightly on the strength of increased demand for such IT Solutions business/ measuring equipment, and maintenance services. Sales were also up in

offerings as security solutions and IT equipment maintenance services.

businesses unrelated to the semiconductor market, reﬂecting favorable demand.

Sales were down at Canon Production Printing Systems Inc., consolidated

Medical business sales declined, as sluggish sales of X-ray ﬁlms andsubsidiary owing largely to delays in shipments of new continuous feed printers.

dispensary offerings offset progress from reinforcing medical solutions andAs a result of these factors, Business Solutions sales rose 1.1%, to¥338,146 million.

40

Canon Marketing Japan Inc. I Annual Report 2017

pushing ahead with business structure reforms.
Segment sales thus rose 6.5%, to ¥34,309 million.

Income Analysis

Cash Flows

Consolidated net sales increased 0.5%, to ¥632,190 million.

Net cash provided by operating activities amounted to ¥28,885 million, from

Cost of sales increased 1.3%, to ¥408,418 million. Gross proﬁt was down
1.0%, to ¥223,772 million.
Selling, general and administrative expenses declined 2.5%, to ¥193,365
million. Operating income thus rose 9.9%, to ¥30,407 million. Total otherincome dropped 58.3%, to ¥512 million.
Proﬁt attributable to owners of parent therefore advanced 13.9%, to¥20,680 million, increasing ¥19.42 on a per-share basis, to ¥159.48.

¥33,306 million a year earlier. This change was due to ¥30,919 million in proﬁt
before income taxes, as well as ¥14,269 million in depreciation andamortization, an increase of ¥3,917 million in inventories, and ¥9,163 million inincome taxes paid.
Net cash provided by investing activities was ¥7,964 million, comparedwith ¥19,461 million used in these activities in the previous year. The principal
factors were ¥21,355 million in proceeds from sales of property, plant andequipment and ¥12,071 million in payments for purchases of property, plant

Financial Position
Total current assets increased ¥35,365 million from the end of the previous
year, to ¥397,507 million. This stemmed from increases of ¥29,694 million in
cash and cash equivalents and ¥3,891 million in inventories.
Total non-current assets decreased ¥22,260 million, to ¥113,326 million.

and equipment.
Net cash used in ﬁnancing activities amounted to ¥7,145 million, from ¥6,086
million in the previous year, largely because of dividends paid of ¥7,140 million.
As a result of these factors, cash and cash equivalents at the end of theyear stood at ¥136,980 million, up ¥29,694 million from a year earlier.

The key factors were falls of ¥16,600 million in buildings and structures, (net ofaccumulated depreciation), and ¥5,347 million in land.
Total current liabilities increased ¥432 million, to ¥157,398 million. Key
factors were increases of ¥1,600 million in accrued income taxes and ¥289
million in consumption taxes payable, which outweighed a ¥1,722 million
decline in notes and accounts payable.
Total long-term liabilities decreased ¥3,930 million, to ¥55,912 million,
reﬂecting a ¥3,964 million decline in net deﬁned beneﬁt liabilities.
Total net assets increased ¥16,603 million, to ¥297,523 million. This rise
reﬂected ¥20,680 million in proﬁt attributable to owners of parent, ¥7,132 million
in dividend payments, and an increase of ¥2,214 million in remeasurements ofdeﬁned beneﬁt plans.
The total stockholders’ equity ratio was 58.1%, up 1.7 percentage points from ayear earlier. Stockholders’ equity per share increased ¥127.74, to ¥2,290.70.

Canon Marketing Japan Inc. I Annual Report 201741

CONSOLIDATED BALANCE SHEETSCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESDECEMBER 31, 2017 AND 2016
Millions of yen

ASSETS

2017

2016

Cash and cash equivalents (Notes 3, 11 and 12)¥ 136,980¥ 107,286

Notes and accounts receivable (Note 11)

125,627

124,475

Inventories (Note 5)

33,871

29,980

Deferred tax assets (Note 14)

4,063

4,215

Short-term loans receivable (Note 11)

90,01490,044

Other current assets

7,050

6,263

(98)

(121)

397,507362,142Land

29,01734,364

Buildings and structures

51,862

89,797CURRENT ASSETS:

Allowance for doubtful receivables
Total current assets
PROPERTY, PLANT AND EQUIPMENT:

Machinery and vehicles

308

205

Furniture and ﬁxtures

17,72018,253

Rental assets

38,84336,836

Lease assets

562

958

Construction in progress

90—

138,402180,413(63,311)(83,711)75,091

96,702

5,153

6,443

Total
Accumulated depreciation
Net property, plant and equipment
INTANGIBLE ASSETS:
SoftwareLease assets

13

54

Utilization rights

316

317

3

5

5,485

6,819

9,028

7,422

30

10

Other intangible assets
Total intangible assets
INVESTMENTS AND OTHER ASSETS:
Investments in securities (Notes 11 and 12)Long-term loans receivable

42

Net deﬁned beneﬁt assets

404—

Lease deposits (Notes 17 and 18)

4,880

4,825

Deferred tax assets (Note 14)

16,203

17,669Other investments

2,533

2,484

Allowance for doubtful receivables

(328)

(345)

Total investments and other assets

32,75032,065

Total non-current assets

113,326

135,586

Total assets¥ 510,833¥ 497,728

Canon Marketing Japan Inc. I Annual Report 2017

Millions of yen

LIABILITIES AND NET ASSETS

2017

2016

¥ 100,940¥ 102,662

147—

CURRENT LIABILITIES:
Notes and accounts payable (Note 11)
Short-term loans payable (Note 18)
Lease obligations (Note 18)

125

176

Accrued income taxes (Note 14)

6,290

4,689

Consumption taxes payable

4,586

4,297

Accrued expenses

18,16918,969Reserves

4,192

4,088

Other current liabilities (Note 13)

22,94922,086

Total current liabilities

157,398

156,967

Lease obligations (Note 18)

164

206

Deferred tax liabilities (Note 14)

439

422

LONG-TERM LIABILITIES:Deferred tax liabilities for land revaluation (Note 14)—

7

Allowance for long-term continuous service rewards (Note 2)

961

962

Net deﬁned beneﬁt liabilities (Notes 2 and 13)

49,60453,569Other long-term liabilities (Notes 13 and 18)

4,744

4,676

55,912

59,842

Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 4 and 10)
NET ASSETS (Note 2):
STOCKHOLDERS’ EQUITY (Notes 9 and 19):
Common stock

73,30373,303

Capital surplus

Authorized 299,500,000 shares; Issued 151,079,972 shares in 2017 and 201682,82082,820Retained earnings

176,912

163,364

Treasury stock
Total stockholders’ equity(31,921)(31,915)

301,114287,572

3,159

2,329

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Net unrealized gains on available-for-sale securities
Deferred gains or losses on hedges

6

(15)

Foreign currency translation adjustments

99

147

Remeasurements of deﬁned beneﬁt plans(7,346)(9,560)(4,082)(7,099)Total accumulated other comprehensive income (loss)
NON-CONTROLLING INTERESTS

491

446

Total net assets

297,523

280,919¥ 510,833¥ 497,728

Total liabilities and net assets• See accompanying notes to consolidated ﬁnancial statements.

Canon Marketing Japan Inc. I Annual Report 201743

CONSOLIDATED STATEMENTS OF INCOMECANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2017 AND 2016
Millions of yen

NET SALES

2017

2016

¥ 632,190¥ 629,314

408,418

403,307

223,772

226,007

193,365

198,331

30,407

27,676COST OF SALES (Note 5):
Gross proﬁt
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 6):
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income

286

353

Interest expense

(12)

(15)

Insurance income

549

609

Foreign exchange losses

(12)

(78)

Gain on sales of ﬁxed assets (Note 7)

879

775

Loss on impairment of ﬁxed assets (Note 7)(1,033)(131)

Gain on sales of investments in securities

540

661

Loss on sales and disposal of ﬁxed assets (Note 7)

(898)

(986)

Special extra retirement payments

(100)

(6)

Loss on disaster

—

(28)

Other, net

313

73

Total other income

512

1,227

Proﬁt before income taxes

30,91928,903Current

9,951

8,789

Deferred

272

1,918

10,223

10,707¥ 20,696¥ 18,196¥¥

INCOME TAXES (Note 14):

Total income taxes
Proﬁt
PROFIT ATTRIBUTABLE TO:
Non-controlling interests
Owners of parent
Proﬁt

16

34

20,68018,162¥ 20,696¥ 18,196
Yen

PER SHARE OF COMMON STOCK (Note 2):
Proﬁt attributable to owners of parent¥ 159.48¥ 140.06

Cash dividends applicable to the year¥¥

• See accompanying notes to consolidated ﬁnancial statements.

44

Canon Marketing Japan Inc. I Annual Report 2017

60.00

50.00

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2017 AND 2016
Millions of yen

2017

2016

¥ 20,696¥ 18,196

Net unrealized gains or losses on available-for-sale securities

831

(447)

Deferred gains or losses on hedges

21

(15)

PROFIT
OTHER COMPREHENSIVE INCOME (LOSS) (Note 8)

Foreign currency translation adjustments
Remeasurements of deﬁned beneﬁt plans, net of tax
Total other comprehensive income (loss)
Comprehensive income

(58)

(81)

2,214

(8,320)3,008(8,863)¥ 23,704¥ 9,333¥ 23,697¥ 9,302

COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of parent
Non-controlling interests
Comprehensive income

731¥ 23,704¥ 9,333• See accompanying notes to consolidated ﬁnancial statements.

Canon Marketing Japan Inc. I Annual Report 201745

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2017 AND 2016
Millions of yen

Number of sharesof common stock
BALANCE AT JANUARY 1, 2016
Proﬁt attributable to owners of parent
Cash dividends
Purchase of treasury stock
Proﬁt attributable to non-controlling interests
Cash dividends paid to non-controlling interests
Other, net
BALANCE AT JANUARY 1, 2017
Proﬁt attributable to owners of parent
Cash dividends
Purchase of treasury stock
Disposition of treasury stock
Proﬁt attributable to non-controlling interests
Cash dividends paid to non-controlling interests
Other, net
BALANCE AT DECEMBER 31, 2017

151,079,972

Commonstock¥ 73,303

Stockholders’ equity
CapitalRetained
surplusearnings¥ 82,820¥ 151,037
18,162(5,835)

Treasurystock¥ (31,912)(3)

151,079,972¥ 73,303¥ 82,820¥ 163,364
20,680(7,132)¥ (31,915)

(6)
0

0

151,079,972¥ 73,303¥ 82,820¥ 176,912¥ (31,921)

Millions of yen

Accumulated other comprehensive income (loss)
Net unrealized
Deferred gains
gains on available- or losses on
for-sale securities
hedgesBALANCE AT JANUARY 1, 2016
Proﬁt attributable to owners of parent
Cash dividends
Purchase of treasury stock
Proﬁt attributable to non-controlling interests
Cash dividends paid to non-controlling interests
Other, net
BALANCE AT JANUARY 1, 2017
Proﬁt attributable to owners of parent
Cash dividends
Purchase of treasury stock
Disposition of treasury stock
Proﬁt attributable to non-controlling interests
Cash dividends paid to non-controlling interests
Other, net
BALANCE AT DECEMBER 31, 2017
• See accompanying notes to consolidated ﬁnancial statements.

46

Canon Marketing Japan Inc. I Annual Report 2017

¥ 2,775(446)¥ 2,329830¥ 3,159¥ 1(16)¥ (15)

21¥ 6

Foreign currency Remeasurements
translationof deﬁned beneﬁt
adjustments
plans
¥ 225

(78)
¥ 147

(48)
¥ 99

Non-controllinginterests¥ (1,241)¥ 430(8,319)¥ (9,560)

34
(10)
(8)
¥ 446

2,214
¥ (7,346)

16
(12)
41
¥ 491

Total net
assets¥ 277,438
18,162(5,835)(3)34(10)(8,867)¥ 280,919
20,680(7,132)
(6)
0
16
(12)
3,058
¥ 297,523

CONSOLIDATED STATEMENTS OF CASH FLOWSCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2017 AND 2016
Millions of yen

2017

2016

¥ 30,919¥ 28,903

Depreciation and amortization

14,26914,870Loss on impairment of ﬁxed assets

1,033

131
799

CASH FLOWS FROM OPERATING ACTIVITIES:
Proﬁt before income taxes
Adjustments for:

Amortization of goodwill—

Increase (decrease) in allowance for doubtful receivables

(41)

(34)

Increase (decrease) in net deﬁned beneﬁt liabilities(960)(1,271)

Decrease (increase) in net deﬁned beneﬁt assets

(206)

—

Interest and dividend income

(286)

(353)

Interest expense

1215

Loss (gain) on sales and disposal of property, plant and equipment, net

778

Loss (gain) on sales of investments in securities

(540)

(661)

Decrease (increase) in notes and accounts receivable-trade(1,099)1,248

Decrease (increase) in inventories(3,917)

88

Increase (decrease) in notes and accounts payable-trade(1,813)

843

397

(716)

Other, net
Sub-total

37,77543,940Interest and dividends received

285

367

Interest paid

(12)

(18)

Income taxes paid
Net cash provided by operating activities(9,163)(10,983)

28,88533,306(10,991)

CASH FLOWS FROM INVESTING ACTIVITIES:Payments for purchases of property, plant and equipment(12,071)

Proceeds from sales of property, plant and equipment

21,355

2,308

Payments for purchases of intangible assets(1,231)(1,442)

Payments for purchases of investments in securities

(733)

(455)

Proceeds from sales of investments in securities

881

797

Decrease (increase) in short-term loans receivable, net

10(9,990)

Other

(247)

312

7,964

(19,461)

Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term loans payable, net

147—

Repayments of ﬁnance lease obligations

(192)

(239)

Proceeds from share issuance to non-controlling shareholders

49—

Payments for purchases of treasury stock

(7)

(3)

(7,140)(5,844)

Dividends paid
Other
Net cash used in ﬁnancing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(2)—(7,145)(6,086)

(10)

(47)

29,694

7,712

Cash and cash equivalents at beginning of year

107,286

99,574

Cash and cash equivalents at end of year

¥ 136,980¥ 107,286• See accompanying notes to consolidated ﬁnancial statements.

Canon Marketing Japan Inc. I Annual Report 201747

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1

Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated ﬁnancial statements of Canon Marketing Japan Inc.

prepared by the Company as required by the Financial Instruments and Exchange(the “Company”) and its consolidated subsidiaries (the “Group”) are prepared on the

Law of Japan.

basis of accounting principles generally accepted in Japan, which are different in

2

Certain accounts and items presented in the original consolidated ﬁnancial

certain respects as to application and disclosure requirements of International Financial

statements in Japanese have been reclassiﬁed for the convenience of readers

Reporting Standards, and are compiled from the consolidated ﬁnancial statements

outside Japan.

Summary of Significant Accounting Policies(a) Principles of Consolidation
The accompanying consolidated ﬁnancial statements for the year ended December 31,

Normal repairs and maintenance, including minor renewals and improvements,
are charged to income as incurred.

2017 include the accounts of the Company and all of its 23 (24 in 2016) subsidiaries.
All intercompany accounts and transactions are eliminated in consolidation.

(f) Intangible assets
Amortization is computed by the straight-line method for intangible assets. Software(b) Cash Equivalents

for sale is amortized within 3 years and software used in-house use is amortized

For purposes of the consolidated statements of cash ﬂows, the Company and its

over 5 years.

consolidated subsidiaries consider all highly liquid investments, including securities,
time deposits and certiﬁcates of deposit, all of which mature or become due within(g) Leases

three months of the date of acquisition, to be cash equivalents.

Leased assets under ﬁnance lease contracts are depreciated by the straight-line
method over their respective lease contract term with zero residual value.

(c) Securities
The held-to-maturity debt securities are stated at amortized cost.

(h) Allowance for Doubtful Receivables

Available-for-sale marketable securities are stated at fair market value, withAn allowance for doubtful receivables is provided in the amount required to coverunrealized gain or loss, net of the applicable taxes, reported as a separate component

possible losses on collection. It is determined by adding individually estimatedof net assets. Available-for-sale securities whose fair value is not readily determinable

uncollectible amounts for speciﬁc items to an amount based on the actual rate ofare stated at cost determined by the moving-average method.

uncollected receivables of the Group in prior years.

(d) Inventories(i) Allowance for bonuses

Merchandise and service parts are valued at cost determined by the monthly moving-

Allowance for bonuses is provided at the estimated amount of bonuses to be paid toaverage method. The carrying amount in the balance sheet represents the amount after

employees subsequent to the balance sheet date for services rendered in the current

write-downs due to decreased proﬁtability.

ﬁscal year.

Work in process is valued at cost determined by the speciﬁc identiﬁcation
method.

(j) Bonuses to Directors

Supplies are valued at cost determined by the last-purchase price method. The

The estimated amount payable for the next round of directors’ bonuses, which arecarrying amount in the balance sheet represents the amount after write-downs due toclassed as expenses for the current year, has been included in the accounts for thedecreased proﬁtability.

current ﬁscal year.

(e) Property, Plant and Equipment(k) Allowance for Long-Term Continuous Service Rewards

Property, plant and equipment are stated at cost. Depreciation is computed by the

In order to set aside money for payment of rewards to employees who have given

declining-balance method for property and equipment, with the exception of items that

long-term continuous service determined in accordance with the Company’s internal

are depreciated by the straight-line method at rates based on the estimated useful lives

regulations, an allowance for long-term continuous service rewards is recorded basedof the respective assets.

on the amount the Company and certain consolidated subsidiaries expect to pay in the

These items are buildings purchased on or after April 1, 1998 (exclusive of

future.

furniture and ﬁxtures) and structures are purchased on or after April 1, 2016, all48

buildings and structures of the Company’s Makuhari office, property and equipment of(I) Accounting Method for Retirement Benefits

certain consolidated subsidiaries, and rental assets in the Business Solutions segment.

(1) Method of attributing estimated amounts of retirement beneﬁts to periods

The useful lives are as follows:In calculating retirement beneﬁt obligations, the estimated amount of retirement

Buildings, from 5 to 75 years; furniture and ﬁxtures, from 2 to 20 years; and rental

beneﬁts attributed to a period up to the current ﬁscal year is primarily determinedassets, 3 years.

using the beneﬁt formula basis.

Canon Marketing Japan Inc. I Annual Report 2017

(2) Amortization of unrecognized actuarial gains and losses and prior service cost
Unrecognized prior service cost is amortized by the straight-line method over the
average remaining service period of the eligible employees at the time when it arose.

their historical exchange rates.
Revenue and expense accounts are translated at the average exchange rates
prevailing during the year.

Unrecognized actuarial gains and losses are amortized from the ﬁscal year following
the year in which they arose by the straight-line method over the average remaining(p) Per Share Amounts of Common Stockservice period of the eligible employees.

Proﬁt attributable to owners of parent per share is calculated using proﬁt available toholders of common stock, and the weighted average number of shares of common(3) Application of simpliﬁed method at smaller-sized companies, etc.

stock outstanding for the period.

Certain consolidated subsidiaries apply the simpliﬁed method for calculating net

Cash dividends per share presented in the accompanying consolidated statements

deﬁned beneﬁt liabilities and net periodic beneﬁt costs. Under this method, theof income are dividends applicable to the respective ﬁscal years, including dividends topayments for voluntary early retirement of all eligible employees at the end of thebe paid after the end of the respective ﬁscal years.

ﬁscal year are recognized as retirement beneﬁt obligations.
(q) Recognition of Revenues and Expenses and Recognition of Revenue from(m) Income Taxes

Customized Software Development

Deferred tax assets and liabilities are recorded to reﬂect the impact of temporary

For software development contracts in progress as of December 31, the percentage-of-differences between assets and liabilities recognized for ﬁnancial reporting purposes

completion method is applied in cases where the outcomes of such softwareand such amounts recognized for tax purposes. These deferred taxes are measured bydevelopment contracts can be estimated reliably. When the percentage-of-completion

applying the statutory income tax rate to the temporary differences.

method is applied, the percentage of completion at the end of the ﬁscal year isdetermined based on actual costs incurred and estimated total contract costs. For all(n) Translation of Foreign Currency Accounts

other contracts, the completed-contract method is applied.

All short-term and long-term monetary receivables and payables denominated inforeign currencies are translated into Japanese yen at the current exchange rates in(r) Application of Consolidated Taxation Systemeffect at the balance sheet date. The foreign exchange gains and losses on translation

The Company and certain consolidated subsidiaries have adopted the consolidated

are recognized in the accompanying consolidated statements of income.

taxation system.

(o) Foreign Currency Financial Statements(s) Additional Information

The balance sheet accounts of the foreign subsidiaries are translated into Japanese yen

From the year ended December 31, 2017, the Company has applied Implementation

at the current exchange rates in effect at the balance sheet date, except for the

Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, March 28, 2016).

components of net assets excluding non-controlling interests which are translated at

3

Assets Pledged as Collateral
Assets pledged as collateral as of December 31, 2017 and 2016 were as follows:
Millions of yen

4

2017

2016

Time deposits

¥ 59

¥ 55

Total

¥ 59

¥ 55

Contingent Liabilities
Contingent liabilities as of December 31, 2017 and 2016 were as follows:
Millions of yen

Guarantees for employees’ housing loans
Total

2017

2016

¥ 15

¥ 25

¥ 15

¥ 25

Canon Marketing Japan Inc. I Annual Report 201749

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5

Inventories
Inventories as of December 31, 2017 and 2016 were composed of the following:
Millions of yen

2017

2016

Merchandise¥ 29,795¥ 25,888

Service parts

2,281

2,383

Work in process

958

834

Supplies

782

742

Other

55

133

¥ 33,871¥ 29,980

Total

Note: For the software development contracts from which contract losses are expected, the inventory relating to such contracts and relevant reserves for contract losses do not offset each other and havebeen recorded in gross amounts in current assets and current liabilities, respectively.

Write-downs of inventories for the years ended December 31, 2017 and 2016, net of the amount of the reversal, were included in the following account:
Millions of yen

Cost of sales

6

2017

2016

¥ 2,004¥ 1,568

Selling, General and Administrative Expenses
The primary components of “Selling, General and Administrative Expenses” for the years ended December, 2017 and 2016 were as follows:
Millions of yen

2017

2016

Salaries and allowances¥ 95,053¥ 94,089

Provision for bonuses

2,918

2,950

Provision for directors' bonuses

128

129

Provision of allowance for long-term continuous service rewards

394

379

Retirement benefit costs

4,395

4,408

Provision for product warranties

465

453

Provision of allowance for doubtful receivables

19

63

Research and development costs included in “Selling, general and administrative expenses” and “Cost of sales” for the years ended December 31, 2017 and 2016 amounted to ¥429 million and ¥666 million,
respectively.

50

Canon Marketing Japan Inc. I Annual Report 2017

7

Other Income (Expenses)
1. The components of “Gain on sales of ﬁxed assets” for the years ended December, 2017 and 2016 were as follows:
Millions of yen

2017

2016

Buildings and structures

¥ 741

¥ 84

Machinary and vehicles—

5

Furniture and fixtures

13

4

Rental assets

0

—

Land

124

682

Software

—

0

Other

1

—

¥ 879

¥ 775

Total
2. The components of “Loss on sales and disposal of ﬁxed assets” for the years ended December, 2017 and 2016 were as follows:

Millions of yen

2017

2016

Buildings and structures

¥ 603

¥ 525

Machinary and vehicles

00Furniture and fixtures

44

172

Rental assets

88

53

Land

140

102

Software

14

132

Other
Total

9

2

¥ 898

¥ 986

3. The Group recorded impairment losses for the following asset groups for the current ﬁscal year.
Location
Itabashi-ku, Tokyo
Tomisato-shi, Chiba Prefecture

Usage
Training center
Business asset

Category
Buildings, Land
Buildings, Land, OtherIn principle, business assets are grouped based on the entities in the Group.
In line with a decision to sell the above training center, the Group reduced book value to the recoverable amount and recorded impairment loss of ¥793 million.
As a result of business restructuring, the Group reduced the book value of business assets to the recoverable value and recorded impairment loss of ¥240 million.
Recoverable amount is based on the selling price less cost to disposal for business assets and is based on planned sale amounts for land.

Canon Marketing Japan Inc. I Annual Report 201751

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8

Other Comprehensive Income (Loss)
The following table shows amount arising during the year, reclassiﬁcation adjustments, pre-tax amount, tax effect and net-of-tax amount for each component of othercomprehensive income (loss) for the years ended December 31, 2017 and 2016.
2017

2016

Net unrealized gains or losses on available-for-sale securities
Amount arising during the year
Reclassiﬁcation adjustments¥ 1,749

¥

(29)

(540)

(661)

Pre-tax amount

1,209

(690)

Tax effect

(378)

243

Net-of-tax amount

831

(447)

Deferred gains or losses on hedges
Amount arising during the year
Pre-tax amount

30

(22)

30

(22)

Tax effect(9)

7

Net-of-tax amount

21

(15)

(58)

(81)

Pre-tax amount

(58)

(81)

Tax effect——Net-of-tax amount

(58)

(81)

3,431

(10,506)

Foreign currency translation adjustments
Amount arising during the year

Remeasurements of deﬁned beneﬁt plans
Amount arising during the year
Reclassiﬁcation adjustments
Pre-tax amount(1,511)(12,017)

Tax effect

(988)

3,697

Net-of-tax amount2,214(8,320)¥ 3,008¥ (8,863)

Total other comprehensive income (loss)

52

(229)
3,202

Canon Marketing Japan Inc. I Annual Report 2017

9

Common Stock and Dividends
1. The following table shows the movement of number of common stock for the year ended 2017 and 2016.

As of January 1,
2016

Increase or purchase

Decrease or sale

(Thousands of shares)(Thousands of shares)

As of December 31, Increase or purchase Decrease or sale
(Thousands of shares) (Thousands of shares)
2016

As of December 31,
2017

Issued stock

151,080——

151,080——

151,080

Treasury stock

21,4081—

21,4093

021,412

2. Matters regarding dividends
The Company distributes a semiannual interim dividend by resolution of Board of Directors and annual dividend by resolution of General stockholders’ meeting.
Semiannual interim dividends is paid to the common stock holders of the Company as of semiannual period end and annual dividend is paid to the common stock holders of
the Company as of year end.
Resolution date, total dividends, dividend per share for the year ended 2017 and 2016 were as follows:
2017

2016

Total dividends

Dividend per share(Millions of yen)

(Yen)

Total dividends

Dividend per share(Millions of yen)

(Yen)

Dividends

Resolution date

Annual dividend

March 29, 2017

¥ 3,890¥ 30

March 29, 2016

¥ 3,242¥ 25

Interim dividend

July 26, 2017

¥ 3,242¥ 25

July 25, 2016

¥ 2,593¥ 20

Resolution date

Annual dividend of ¥4,538 million (¥35 dividend per share) was resoluted by General stockholders’ meeting held on March 28, 2018.
Total dividend per share was ¥60 for ﬁscal 2017 and increased ¥10 from ¥50 for ﬁscal 2016.

10

Lease Commitment
Future minimum lease payments subsequent to December 31, 2017 for noncancelable operating leases are summarized as follows:
Millions of yen

2017
Due within one year
Due after one year
Total

¥ 2,483
12,015¥ 14,498

Canon Marketing Japan Inc. I Annual Report 201753

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11

Financial Instruments
1. Information on ﬁnancial instruments(1) Policies for ﬁnancial instruments
The Group limits its asset management to ﬁnancial instruments characterized as verysafe and believes that ﬁnancing should mainly be conducted through the use of Groupﬁnances whenever necessary. The Company enters into derivative transactions to hedge
against foreign exchange ﬂuctuation risks and not for speculative purposes.
(2) Types and risks of ﬁnancial instruments and systems to control those risks
Operating receivables, consisting of notes and accounts receivable, are exposed tocredit risks of customers. The Group strives to mitigate these risks by strict credit
control utilizing credit information provided by external credit agencies, as well as bycredit insurance and other risk-hedging means.
Short-term loans receivable are mainly the loans to the parent company by theCompany, rendered in compliance with the internal regulations for investment andmanagement of funds.
Short-term investments in securities and investments in securities consist
primarily of held-to-maturity debt securities and equity securities issued by businesscounterparties of the Group, and are exposed to market price ﬂuctuation risk. Regarding
this risk, the Group periodically monitors the fair values of the securities and theﬁnancial condition of their issuers i.e., business counterparties. In addition, forsecurities other than held-to-maturity debt securities, the Group continuously reviews
the status of security holdings, taking market conditions and relationships withbusiness counterparties into consideration.
Trade payables, consisting of notes and accounts payable, are mainly those due
within six months.
Derivative transactions consist of forward exchange contracts to hedge against therisks of ﬂuctuations in foreign currency denominated trade payables.
(3) Supplementary explanation on fair values of ﬁnancial instruments
The fair values of ﬁnancial instruments include not only values based on market
quotations, but also values calculated on a theoretical basis in cases where market
quotations are not available. Such values may vary depending on different assumptions,as variables are factored into the calculation of such values.
2. Fair values of ﬁnancial instruments
The book values of ﬁnancial instruments in the consolidated balance sheets as ofDecember 31, 2017 and 2016, their fair values, and the differences between the two are
as follows. The table below, however, excludes the ﬁnancial instruments whose fairvalues are not readily determinable (see Note 2).

Millions of yen

2017Book value(1) Cash and deposits

Fair value

Difference¥ 66,479¥ 66,479—(2) Notes and accounts receivable

125,627

125,627—(3) Short-term investments in securities and investments in securities

77,99877,998—(4) Short-term loans receivable

90,01490,014—¥ 360,118¥ 360,118—¥ 100,940¥ 100,940

—

147

147

—

¥ 101,087¥ 101,087—

Total assets(5) Notes and accounts payable(6) Short-term loans payable
Total liabilities

Millions of yen

2016Book value(1) Cash and deposits

Difference¥ 76,786(2) Notes and accounts receivable

124,475

124,475—(3) Short-term investments in securities and investments in securities

36,81436,814—90,04490,044—¥ 328,119¥ 328,119—(4) Short-term loans receivable
Total assets(5) Notes and accounts payable
Total liabilities

54

Fair value¥ 76,786

Canon Marketing Japan Inc. I Annual Report 2017—

¥ 102,662¥ 102,662—¥ 102,662¥ 102,662—

Notes: 1. Calculation methods of fair values of ﬁnancial instruments and other matters relating to securities are as below:
Assets(1) Cash and deposits, (2) Notes and accounts receivable, and (4) Short-term loans receivable(3) Short-term investments in securities and investments in securities
The book values of these assets are used as their fair values, since they are to be settled in
The fair values of equity securities are based on the prices at the security exchanges, and thosethe short term and accordingly their fair values approximate their book values.
of debt securities are based on the prices at the security exchanges or quotations obtained fromcounterparty ﬁnancial institutions. Details of securities by holding objectives are described in
Note 9 Securities.
Liabilities(5) Notes and accounts payable, (6) Short-term loans payable
The book values of these liabilities are used as their fair values, since they are to be settled in the short term and accordingly their fair values approximate their book values.
2. The book values of ﬁnancial instruments whose fair values are not readily determinable as of December 31, 2017 and 2016 were as follows:
Millions of yen

2017

2016

Equity securities

¥ 893

¥ 439

Investments in investment partnerships

¥ 637

¥ 669

These ﬁnancial instruments are not included in (3) Short-term investments in securities and investments in securities in the preceding table of fair values, since they do not have market prices andtherefore their fair values are not readily determinable.

3. The redemption schedule of monetary claims and securities with maturities as of December 31, 2017 and 2016 were summarized as follows:
Millions of yen

2017
Due within
1 yearCash and deposits
Notes and accounts receivable

Due after
1 year2016
Due within
1 yearDue after
1 year¥ 66,480—¥ 76,786—

125,627—

124,475

—

—

—

—

—

70,500—30,500—90,014—90,044—¥ 352,621—¥ 321,805—

Short-term investments in securities and investments in securities
Held-to-maturity debt securities(1) Corporate bonds(2) Other
Short-term loans receivable
Total

Canon Marketing Japan Inc. I Annual Report 201755

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12

Securities
Securities as of December 31, 2017 and 2016 were classiﬁed and included in the following accounts:
Millions of yen

2017

2016

¥ 9,028¥ 7,42270,50030,500¥ 79,528¥ 37,922

Securities classiﬁed as:
Available-for-sale:
Investments in securities
Held-to-maturity:
Cash and cash equivalents
Total

The carrying amounts and aggregate fair values of investments in securities at December 31, 2017 and 2016 were as follows:
Millions of yen

2017
Cost

Unrealized gains

Unrealized losses

Fair value

Securities classiﬁed as:
Available-for-sale:
Equity securities
Other
Total

¥ 3,005¥ 4,512¥ (32)¥ 7,485

11

2

—

13

¥ 3,016¥ 4,514¥ (32)¥ 7,498

Millions of yen

2016
Cost

Unrealized gains

Unrealized losses

Fair value

Securities classiﬁed as:
Available-for-sale:
Equity securities
Other
Total

¥ 3,030¥ 3,296¥ (24)¥ 6,302

10

2

—

12

¥ 3,040¥ 3,298¥ (24)¥ 6,314

Available-for-sale securities whose fair value is not readily determinable as of December 31, 2017 and 2016 were as follows:
Millions of yen

2017

2016

¥ 893

¥ 439

637

669

¥ 1,530¥ 1,108

Available-for-sale:
Equity securities
Investments in investment partnerships
Total

56

Canon Marketing Japan Inc. I Annual Report 2017

13

Employees’ Retirement and Severance Benefits
1. Overview
The Company has a deﬁned contribution pension plan, a pension plan with a marketbased variable accumulation rate (quasi-cash balance plan), and a lump-sum
severance payment plan, and its domestic consolidated subsidiaries have deﬁned
beneﬁt corporate pension plans, and lump-sum severance payment plans. The

Company sometimes provides retiring employees with extra retirement payments notincluded in the retirement beneﬁt obligations actuarially calculated in line with its
retirement beneﬁt accounting.

2. Defined benefit plans(1) Reconciliation of retirement beneﬁt obligations at beginning and end of year
Millions of yen

2017

2016

¥ 216,803¥ 207,485

Service costs

6,615

7,040

Interest costs

1,325

2,156

Retirement beneﬁt obligations at beginning of year

Actuarial gains and losses(1,024)

10,255

Beneﬁt paid

(6,481)(6,800)Prior service costs

1,150(3,333)

Transfer to a deﬁned contribution plan

(412)

—

Other
Retirement beneﬁt obligations at end of year

(24)

—

¥ 217,952¥ 216,803(2) Reconciliation of plan assets at beginning and end of year
Millions of yen

Plan assets at beginning of year

2017

2016

¥ 163,874¥ 165,254

Expected return on plan assets

4,686

4,543

Actuarial gains and losses

3,601(3,333)Contributions from the employer

3,182

3,508

Beneﬁt paid

(5,868)(6,098)(23)—¥ 169,452¥ 163,874

Other
Plan assets at end of year
(3) Reconciliation of retirement beneﬁt obligations at beginning and end of year for which the simpliﬁed method was applied

Millions of yen

Net deﬁned beneﬁt liabilities at beginning of year

2017

2016

¥ 640

¥ 592

Net periodic beneﬁt costs

112

112

Beneﬁt paid

(18)

(32)

Contributions to plans

(34)

(32)

¥ 700

¥ 640

Net deﬁned beneﬁt liabilities at end of year

Canon Marketing Japan Inc. I Annual Report 201757

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(4) Reconciliation of retirement beneﬁt obligations and plan assets at year-end and net deﬁned beneﬁt liabilities and assets in consolidated balance sheets
Millions of yen

Funded retirement beneﬁt obligations

2017

2016

¥ 197,724¥ 197,295

Plan assets

169,765

164,163

27,95933,132

Unfunded retirement beneﬁt obligations

21,241

20,437¥ 49,200¥ 53,569(404)—¥ 49,200¥ 53,569

Net liabilities and assets in consolidated balance sheets
Net deﬁned beneﬁt assets
Net liabilities and assets in consolidated balance sheets
Note: Plan assets include plan assets for which the simpliﬁed method was applied.

(5) Retirement beneﬁt costs
Millions of yen

Service costs

2017

2016

¥ 6,615¥ 7,040

Interest costs

1,325

2,156

Expected return on plan assets(4,686)(4,543)

Amortization of actuarial gains and losses

3,199

1,925

Amortization of prior service costs(3,446)(3,687)

112

112

3,119

¥ 3,003(63)—

Net periodic beneﬁt costs using the simpliﬁed method
Retirement beneﬁt costs of deﬁned beneﬁt plans
The gain on transfer to a deﬁned contribution plan recorded as “Other income”¥

Note: In addition to the above retirement beneﬁt costs, the Group recorded ¥282 million (including ¥100 million of special extra retirement payments) and ¥433 million (including ¥6 million of special extra
retirement payments) for extra retirement payments for the years ended December 31, 2017 and 2016, respectively.

(6) Remeasurements of deﬁned beneﬁt plans before income tax effect adjustment
Changes in unrecognized prior service costs and unrecognized actuarial gains and losses for the years ended December 31, 2017 and 2016 were as follows:
Millions of yen

2017
Unrecognized priorservice costs

Unrecognized actuarial gains
and losses

Total

At beginning of year

¥ (9,347)¥ 23,229¥ 13,882

Net change

4,596(7,798)(3,202)At end of year

¥ (4,751)¥ 15,431¥ 10,680

Note: Net change for the year ended December 31, 2017 includes the amount of ¥26 million in line with a transition from a lump sum severance payment plan to a deﬁned contribution pension plan.
Millions of yen

2016
Unrecognized priorservice costs

58

Unrecognized actuarial gains
and losses

Total

At beginning of year

¥ (9,700)¥ 11,566¥ 1,866

Net change

353

11,66312,016

At end of year

¥ (9,347)¥ 23,229¥ 13,882

Canon Marketing Japan Inc. I Annual Report 2017

(7) Plan assets
1. Main components of plan assets
Ratios for main components of plan assets were as follows:

2017

2016

Bonds

22%

16%

Stocks3

3

Pooled funds

51

48

Life insurance company general accounts

19

20

Other
Total

5

13

100%

100%

Note: The composition of pooled funds was 46% in bonds and 54% in stocks for the year ended December 31, 2017, and 50% in bonds and 50% in stocks for the year ended December 31, 2016.

2. Methodology for setting long-term expected rates of return
The long-term expected rate of return on plan assets are determined by considering current and projected plan asset allocations and current and anticipated long-term rates ofreturn from diverse plan assets.
(8) Actuarial assumptions
The principal actuarial assumptions as of December 31, 2017 and 2016 were as follows:

2017

2016

0.03 - 0.63%

0.03 - 0.69%

Long-term expected rates of return on plan assets

2.0 - 3.0%

1.0 - 3.0%

Estimated rates of salary increases

1.7 - 2.7%

1.7 - 2.6%

Discount rates

3. Defined contribution plan
The required contributions of the Company and consolidated subsidiaries to deﬁned contribution plans totaled ¥1,990 million and ¥2,045 million for the years ended December 31,
2017 and 2016, respectively.
4. Other retirement benefits matters
Assets to be transferred to a deﬁned contribution pension plan in line with a transition from a lump sum severance payment plan totaled ¥375 million. The transfers are planned for
four years. The ¥274 million not transferred as of the year ended December 31, 2017, is included in “other current liabilities” and “other long-term liabilities”.

Canon Marketing Japan Inc. I Annual Report 201759

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14

Income Taxes
The effects of signiﬁcant temporary differences, which resulted in deferred tax assets and liabilities as of December 31, 2017 and 2016, were as follows:
Millions of yen

2017

2016

DEFERRED TAX ASSETS:
Sales promotion expenses

928¥ 1,249

Accrued bonuses to employees

1,169

1,188

Accrued business tax and business office tax

773

654

Loss on disposal and devaluation of inventories

554

469

Provision for loss on orders received
Net deﬁned beneﬁt liabilities

¥

151

143

15,401

16,670Loss on devaluation of investments in securities

405

780

Excess amortization of software

653

735

Excess depreciation of ﬁxed assets

893

727

Loss carryforward

482

429

Asset retirement obligations

445

419

Allowance for long-term continuous service rewards

298

298

Loss on valuation of golf club membership

118

118

Lump-sum depreciable assets

85

101

Loss on impairment of ﬁxed assets

137

68

Other

1,232

1,209

Gross deferred tax assets

23,72425,257

Less: valuation allowance(1,020)(1,350)¥ 22,704¥ 23,907¥ (1,398)¥

Total deferred tax assets
DEFERRED TAX LIABILITIES:Net unrealized gains on available-for-sale securities
Deferred capital gain

(995)

(1,404)(1,407)

Uncollected enterprise tax refunds(6)—

Deferred gains or losses on hedges

(3)

—

Other

(66)

50

¥ (2,877)¥ (2,452)

Total deferred tax liabilities
Deferred tax liabilities for land revaluation
Net deferred tax assets—¥ 19,827¥7¥ 21,462

Note: Net deferred tax assets as of March 31, 2017 and 2016 are reﬂected in the following accounts in the consolidated balance sheet:

Current assets—deferred tax assets
Investments and other assets—deferred tax assets
Long-term liabilities—deferred tax liabilities
Net deferred tax assets

2017

2016

¥ 4,063¥ 4,215

16,203

17,669

(439)

(422)

¥ 19,827¥ 21,462

A reconciliation between the statutory income tax rate and the effective income tax rate for the years ended December 31, 2017 and 2016 were as follows:

Statutory income tax rate

2016
33.0 %

Entertainment and other expenses permanently not deductible for tax purposes

0.9

1.0

Per-capita levy of inhabitants’ taxes

1.1

1.2

Valuation allowance

0.5

(1.0)

Dividend income not taxable

0.0

(0.0)

Decrease in deferred tax assets due to tax rate changes

0.0

1.9

Other

(0.4)

0.9

33.1 %

37.0 %

Effective income tax rate

60

2017
31.0 %

Canon Marketing Japan Inc. I Annual Report 2017

15

Segment Information
1. Segment Information(1) Description of Reportable Segments
Reportable segments are constituent units of the Group for which separate ﬁnancial
information is available and they are subject to periodic reviews by the Board of
Directors to determine the allocation of management resources and assess theirrespective operating results.

The Company has four reportable segments, Business Solutions, IT Solutions,
Imaging Systems and Industrial/Medical, all of which are determined based on theorganizational structure of the Group and include companies of the Group.

Major companies and organizations in each segment
Reportable Segment

Major companies / organizations
Canon Marketing Japan Inc.
Business Solutions Company

Business Solutions

Canon System & Support Inc.
Canon Production Printing Systems Inc.
3 other companies
Canon Marketing Japan Inc.
ITS Company

IT Solutions

Imaging Systems

Canon IT Solutions Inc.
10 other companies
Canon Marketing Japan Inc.
Imaging System Company
Canon Customer Support Inc.
Canon Marketing Japan Inc.
Industrial Equipment-Medical Equipment BusinessIndustrial/Medical

Canon Lifecare Solutions Inc.
3 other companies

Major products and services in each segment
Reportable Segment

Major products / services

Business Solutions

Multifunction Printers (MFPs), print-on-demand (POD) digital presses, Continuous Feed Press, laser printers, large format
ink-jet printers, office-use facsimiles, liquid crystal projectors, document scanners, industrial printers, teleconference
system, network cameras, document solutions, service and support

IT Solutions

Systems Integration services business, IT infrastructure and services business, embedded systems business, products
business

Imaging Systems

Digital cameras, interchangeable lenses, digital video cameras, ink-jet printers, compact photo printers, personal-use
scanners, calculators, commercial imaging equipment

Industrial/Medical

Semiconductor manufacturing equipment, optical measurement equipment, 3D printers, medical equipment (digital X-ray
cameras, ophthalmic equipment), medical system, sterilization and cleaning systems, fully automated pharmaceuticaldispensing systems

From the year ended December 31, 2017, the Group changed its reportable segments in keeping with a Group reorganization based on Long-Term Management Objectives Phase III.
Canon BizAttenda Inc., and A&A Co., Ltd., which were included in IT Solutions segment, are now part of Business Solutions. Similarly, Canon ITS Medical Inc., previously part of IT
Solutions, is now in Industrial/Medical segment.
Segment information for the previous ﬁscal year has been restated to reﬂect the recategorizations.

Canon Marketing Japan Inc. I Annual Report 201761

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(2) Methods of measurement for sales, segment income (loss), assets, and other items for reportable segments
Accounting methods for reportable segments are the same as the accounting methods described in Note 2 Summary of signiﬁcant accounting policies.
Segment income (loss) is measured based on the amount of operating income. Intersegment sales and transfers are based on market prices.
(3) Information by reportable segment for the years ended December 31, 2017 and 2016 were as follows:
Millions of yen

2017Year ended or as of December 31,
Reportable Segment
Other

Business
Solutions

IT Solutions

Total

Adjustments

Consolidated

Imaging Systems Industrial/Medical

Net sales:
External customers¥ 338,146¥ 107,368¥ 152,339¥ 34,309—

27,529——¥ 338,146¥ 134,897¥ 152,339¥ 34,309

Intersegment
Total

¥

¥

28

¥ 632,190—¥ 632,190—

27,529¥ (27,529)—

28¥ 659,719¥ (27,529)¥ 632,190

Segment income (loss)¥ 12,239¥

4,560¥ 11,689¥ 1,544¥ 375¥ 30,407—¥ 30,407

Segment assets¥ 130,214¥ 62,606¥ 63,671¥ 22,505¥ 8,238¥ 287,234¥ 223,599¥ 510,833¥ 10,277

¥

¥

¥

441

¥ 142

¥ 14,269—¥ 14,269

—

—

—

—

—

3

¥ 13,666—¥ 13,666

Other items:
Depreciation and amortization
Amortization of goodwill
Changes in the amount of property, plant andequipment and intangible assets—¥ 10,223

2,326

1,083

—
¥

2,510

—
¥

706

¥

224

¥

Notes: 1. “Other” represents operating segments which are not included in the reportable segments, and includes operations such as the shared-services business.
2. Major items of adjustments of segment assets are surplus operating funds (cash, cash equivalents and short-term investments in securities) of the Company and assets of administrative
departments.
3. Segment income (loss) corresponds to operating income stated on the consolidated statement of income.

Millions of yen

2016Year ended or as of December 31,
Reportable Segment
Other

Business
Solutions

IT Solutions

Total

Adjustments

Consolidated

Imaging Systems Industrial/Medical

Net sales:
External customers¥ 334,603¥ 103,270¥ 159,207¥ 32,209—

25,529——Intersegment¥25¥ 629,314—¥ 629,314—

25,529¥ (25,529)

—

Total

¥ 334,603¥ 128,799¥ 159,207¥ 32,209¥

25¥ 654,843¥ (25,529)¥ 629,314

Segment income (loss)¥ 12,053¥

3,981¥ 10,887

¥

186

¥ 569

¥ 27,676—¥ 27,676

Segment assets¥ 145,218¥ 59,999¥ 71,021¥ 20,627¥ 9,195¥ 306,060¥ 191,668¥ 497,728¥ 10,620¥¥¥

Other items:
Depreciation and amortization
Amortization of goodwill
Changes in the amount of property, plant andequipment and intangible assets

—
¥

8,168

2,071
254

¥

4,114

1,562
—

¥

530

¥

496

¥ 121

¥ 14,870—¥ 14,870

545

—

799

—

799

357

—

¥ 13,169—¥ 13,169

Notes: 1. “Other” represents operating segments which are not included in the reportable segments, and includes operations such as the shared-services business.
2. Major items of adjustments of segment assets are surplus operating funds (cash, cash equivalents and short-term investments in securities) of the Company and assets of administrative
departments.
3. Segment income (loss) corresponds to operating income stated on the consolidated statement of income.

62

Canon Marketing Japan Inc. I Annual Report 2017

2. Related Information(1) Information by product and service
Disclosure of information by product and service is omitted since the segment information contains the same information.
(2) Information by geographical area
1. SalesDisclosure of information on sales by geographical area is omitted since sales to domestic external customers accounts for more than 90% of consolidated net sales.
2. Property, plant and equipment
Disclosure of information on property, plant and equipment by geographical area is omitted since the amount of domestic property, plant and equipment accounts for more than
90% of total property, plant and equipment recorded on the consolidated balance sheet.
(3) Information by major customers
Disclosure of information by major customers is omitted since no customer accounts for 10% or more of consolidated net sales.
3. Information on impairment loss on property, plant and equipment by reportable segment
Impairment loss on property, plant and equipment by reportable segment for the year ended 2017 and 2016 were as follows:
Millions of yen

2017Year ended or as of December 31,
Reportable Segment

Impairment loss

Other

Business
Solutions

IT Solutions

¥ 793

—

Total

Adjustments

Recordedamount—¥ 1,033

Imaging Systems Industrial/Medical

—

¥ 240

—

¥ 1,033

Note: “Other” represents operating segments which are not included in the reportable segments and includes operations such as the shared-services business.

Millions of yen

2016Year ended or as of December 31,
Reportable Segment

Impairment loss

Other

Business
Solutions

IT Solutions

¥ 80

—

Total

Adjustments

Recordedamount—¥ 131

Imaging Systems Industrial/Medical

—

¥ 51

—

¥ 131

4. Information on amortization and balance of goodwill by reportable segment
The amortization of goodwill by reportable segment for the year ended December 31, 2016 were as follows.
No goodwill was recorded as of December 31, 2017 and 2016.
Millions of yen

2016Year ended or as of December 31,
Reportable Segment
Other

Adjustments

Recordedamount

¥ 799

—

¥ 799

—

—

—

Total

Business
Solutions

IT Solutions

Amortization of goodwill

—

¥ 254

—

¥ 545

—

Goodwill at December 31, 2016

—

—

—

—

—

Imaging Systems Industrial/Medical

Canon Marketing Japan Inc. I Annual Report 201763

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16

Related Party Transactions
Transaction conditions and policies for deciding transaction conditions, etc. with related party(1) Purchases of products are decided based on price negotiations each ﬁscal year, after considering market prices and the affiliated company’s proposals regarding desired prices.
(2) Sales of office equipment and consumables, etc. are subject to similar conditions as general transactions.
(3) With regard to loans of capital, interest rates on loans are decided rationally after considering market interest rates. Furthermore, collateral is not accepted.
Transaction with parent company and major corporate stockholders, etc. for the year ended 2017 and related balance as of December 31, 2017 were as follows:
Related contents

Category

Name ofcompany, etc.

Address

Capital orinvestment
capital (Millionsof yen)Business
contents or
occupation

Percentage
possession of Board members
holding
Businessvoting rights
relationships(Ownership) (%) concurrent
positionsContents of transactions

Transaction
amount (Millionsof yen)Accounts

Balance at endof ﬁscal year
(Millions of yen)¥ 215,630

Accounts
payable¥ 67,880¥ 7,276

Accounts
receivableand others¥ 2,250— Short-term loans¥ 90,000

Purchases of
products

Parent company

Canon Inc.

Ohta-ku,Tokyo¥174,762

Development andmanufacturing(Ownership)in the office,Direct 58.5
imaging system,
Indirect 0.0
and industrial
equipment areas

0 holdconcurrent
positions

Manufacture of
products sold byCanon MJ

Operatingtransactions

Sales of officeequipment andconsumables,
etc.

Nonoperating Loans of capitaltransactions

Note: Transaction amounts do not include consumption tax, etc., however, the account balances include consumption tax, etc.

Transaction with parent company and major corporate stockholders, etc. for the year ended 2016 and related balance as of December 31, 2016 were as follows:
Related contents

Category

Name ofcompany, etc.

Address

Capital orinvestment
capital (Millionsof yen)Business
contents or
occupation

Percentage
possession of Board members
holding
Businessvoting rights
relationships(Ownership) (%) concurrent
positionsContents of transactions

Transaction
amount (Millionsof yen)Accounts

Balance at endof ﬁscal year
(Millions of yen)¥ 212,620

Accounts
payable¥ 70,744¥ 6,371

Accounts
receivableand others¥ 2,235

Purchases of
products

Parent company

Canon Inc.

Ohta-ku,Tokyo¥174,762

Development andmanufacturing(Ownership)in the office,Direct 58.5
imaging system,
Indirect 0.0
and industrial
equipment areas

0 holdconcurrent
positions

Manufacture of
products sold byCanon MJ

Operatingtransactions

Sales of officeequipment andconsumables,
etc.

Nonoperating Loans of capitaltransactions

Note: Transaction amounts do not include consumption tax, etc., however, the account balances include consumption tax, etc.

64

Canon Marketing Japan Inc. I Annual Report 2017

¥ 10,000 Short-term loans¥ 90,000

17

Asset Retirement Obligations
The Group recognizes restoration obligations under real estate rental agreements ofbuildings and other real estates as asset retirement obligations.
Instead of recognizing liabilities, the Group reasonably estimates the uncollectible
amount of lease deposits relating to the real estate rental agreements, and accounts forthe portion of such estimated amount attributable to the current ﬁscal year as an expense.

18

The outstanding balances of lease deposits considered uncollectible as ofDecember 31, 2017 and 2016 were ¥2,920 million and ¥1,860 million, respectively.

Lease Obligations, Loans Payable and Deposits
Lease obligations, loans payable and deposits as of December 31, 2017 and 2016 were as follows:
Millions of yen

Average interest rate (2017)

2017

2016

¥ 147

—

Current portion of lease obligations

125

¥ 176

Lease obligations (excluding current portion)

164

206

Short-term loans payable
Lease obligations

Long-term loans payable (excluding current portion)
Deposits
Total

19

289

382

—

—

—

0.01%

4,123

4,065

¥ 4,559¥ 4,447

Stockholders’ Equity
The Corporate Law of Japan went into effect on May 1, 2006, replacing the Commercial
Code. It is applicable to events or transactions of companies in Japan occurring on orafter May 1, 2006 and for ﬁscal years ending on or after May 1, 2006.
The Corporate Law stipulates that the amounts actually paid in or provided inconsideration for newly issued stock shall be recorded as common stock. However, italso allows 50% or less of such amounts to be recorded as additional paid-in capital.
Under the Corporate Law, a company that meets certain criteria can establish its
Articles of Incorporation so that dividends can be paid to its existing stockholders by
resolution of the Board of Directors, without requiring the approval of a resolution at a
general stockholders’ meeting. The Company has met said criteria and amended its
Articles of Incorporation at the annual general stockholders’ meeting for ﬁscal 2006.
The Corporate Law provides that an amount equal to 10% of the amount to be disbursed

as distributions of capital surplus (other than the capital reserve) and retained earnings(other than the legal reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve equals 25% of
the common stock account. However, such appropriation cannot be made if theaggregate amount of the legal reserve exceeds 25% of common stock (i.e. theaggregate amount of the Company’s legal reserve has already reached 25% of its
common stock).

Canon Marketing Japan Inc. I Annual Report 2017

65

INDEPENDENT AUDITOR’S REPORT

66

Canon Marketing Japan Inc. I Annual Report 2017

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Canon Marketing Japan Inc. I Annual Report 201767

CANON MJ GROUP COMPANIESAS OF APRIL 1, 2018

Segment

Company nameLines of business

Canon IT Solutions Inc.

Systems integration (SI) and consulting, IT services, and software development
and sales

SuperStream Inc.

Planning, development, and sales of SuperStream NX management infrastructure
solution for accounting and salaries

Qualysite Technologies Inc.

Java systems development, and data center operations, maintenance, andauxiliary services

Canon Software America, Inc.

Development of business applications software for Group companies

Canon Information Systems (Shanghai) Inc.

SI and consulting for Japanese and Group companies and development andsales of software relating to Canon products

Canon IT Solutions (Thailand) Co., Ltd.

Business liaison for Group companies in Thailand and Vietnam

Material Automation (Thailand) Co., Ltd.

Proposals, sales, and service related to IT hardware through software

ASAHI-M.A.T. Co., Ltd.

Sales and support for CAD, CAM, and CAE in Thailand

MAT Vietnam Company Limited

Proposals, sales, and service related to IT hardware through software in Vietnam

Canon BizAttenda Inc.

Consulting, support for business process optimization, back office businessprocess optimization, office support, contact center, temp staffing, and services

Ediﬁst Learning Inc.

Human resources development consulting, training, and auxiliary services

Canon System & Support Inc.

IT solutions consulting, sales, support, and maintenance services for Canon’s
and third parties’ products

A&A Co., Ltd.

Exclusive domestic sales of 3D CAD software Vectorworks Japanese version andplanning, development, and sales of related software

Canon Production Printing Systems Inc.

Sales and maintenance services for production printers and consumables,development and delivery of workﬂow systems, and provision of printing
services

Commercial Printing Lab Inc.

Creation of digital printing business, content production, and printing business(by use of inkjet continuous feed printers, production printers, and offset printing
machinery)

Canon Lifecare Solutions Inc.

Sales of medical and healthcare devices equipment and related consumables
and medical imaging systems

ELQUEST CORPORATION

Design, production, and sales of dispensing, infection prevention, medical, andhealthcare equipment

Canon ITS Medical Inc.

Providing IT solutions for the medical and healthcare ﬁeld, systems development,
network construction, and hardware sales

Service & Support

Canon Customer Support Inc.

Contact center operations focusing on Canon’s products, technical support,
reception counter for repair and maintenance of consumer products, and photobusiness support

Group Shared Services

Canon Business Support Inc.

Facilities management for Group companies and BPO-related services

Enterprise BU

Area BU

Production
Printing

Professional BU

Healthcare

The Group comprises 22 consolidated subsidiaries (including domain name management companies).

68

Canon Marketing Japan Inc. I Annual Report 2017

CORPORATE DATA
Headquarters

Number of Shareholders

Canon S Tower, 16-6, Konan 2-chome, Minato-ku,

11,188

Tokyo 108-8011, Japan

Number of Employees

Date of Establishment

Consolidated: 17,647

February 1, 1968

Non-consolidated: 5,284

Common Stock(As of December 31, 2017)¥73,303,082,757

Main Locations of Operations

Number of Shares Issued

Headquarters, Makuhari office and branches

151,079,972 shares(Sapporo, Sendai, Nagoya, Osaka, Hiroshima, and Fukuoka)

Stock Listing(As of April 1, 2018)

Canon Marketing Japan Inc.’s common stock is traded on the First
Section of the Tokyo Stock Exchange. (Ticker Symbol: 8060)

Major Shareholders
Name of shareholder

Number of shares held(Thousands)

Percentage of ownership(%)

75,708
5,764
2,823
1,999
1,456
1,417
1,176
1,073
1,001
879

58.4%
4.4
2.2
1.5
1.1
1.1
0.9
0.8
0.8
0.7

Canon Inc.
Canon Marketing Japan Group Employee Stock Ownership Association
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
STATE STREET BANK AND TRUST COMPANY 505001
GOVERNMENT OF NORWAY
Canon Marketing Japan Group Business Partner Stock Ownership Association
Japan Trustee Services Bank, Ltd. (Trust Account 5)
Mizuho Bank, Ltd.
The Dai-ichi Life Insurance Company, Limited
Note: The percentage of ownership is calculated excluding the number of treasury stock (21,411,513 shares).

Shareholder Composition

Canon MJ Investor Relations Website

Financial Institutions
9.3%

Canon MJ maintains a comprehensive investor relations (IR) website to further

Securities Companies
0.6%

facilitate communication with shareholders. The website contains:

Treasury Stock
14.2%• News for investors
Other Domestic Companies
51.2%

Individuals and Others
11.4%• IR calendar• Financial results and other ﬁnancial information• Information on Long-Term Management Objectives Phase III (FY2016–2020) andThree-Year Management Plan

Foreign Companies, etc.
13.3%

• Stock information• Annual reports

canon.jp/8060e-ir
Stock Price Range and Trading Volume
Stock Price (Yen)

Trading Volume (Shares)

3,000

10,000,000

2,500

8,000,000

2,000

6,000,000

1,500
4,000,000
1,000
2,000,000

500
0

2015
1

3

5

7

9

11

2016
1

3

5

7

9

11

2017
1

3

5

7

9

11

2018
1

0
3

Canon Marketing Japan Inc. I Annual Report 201769

Headquarters
Canon S Tower, 16-6, Konan 2-chome,
Minato-ku, Tokyo 108-8011, Japan

Canon Marketing Japan Website(Investor Relations)canon.jp/8060e-ir