Leveraging Strengths
Annual Report 2014
for the year ended December 31, 2014

ProﬁleThe globally respected Canon Group engages in diverse activities in more than 180 countries. The roles of the Canon
Marketing Japan (Canon MJ) Group in Canon Group are to market and propose solutions, primarily in Japan.
The Canon MJ Group harnesses its Business Solutions, IT Solutions, Imaging Systems, and Industrial/Medical
business segments to create new customer value in all areas of life, work, and society. We provide products andservices for Canon’s existing and new priority domains and our independent business domains through strategies that
we tailor speciﬁcally for each domain. In keeping with the basic concept of Beyond Canon, Beyond Japan for our
independent business domains, we reinforced our presence in Japan and overseas—particularly in Associationof Southeast Asian Nation (ASEAN) member states—for products and services outside the Canon brand.
Under our new medium-term management plan, the Canon MJ Group’s 27* companies and 18,482* employees
will strive to evolve into a trading company that adds value and supplies solutions that resolve social issues.
* As of April 1, 2015

Canon Marketing Japan Group’s Value Creation FlowBusiness Partners
in Japan and Overseas

Independent Business Domains

Canon Inc.
Resarch and Development

Canon’s New Priority Domains

Manufacturing
Canon’s Existing Domains

Alliance Partners
in Japan and Overseas

Three-Year Management Plan
Long-Term Management Objectives Phase II

Canon Marketing Japan Inc. Annual Report 2014

Contents
1 Canon Marketing Japan Group’s Value Creation Flow
2 Financial and Business Highlights
4 To Our Stockholders and Stakeholders
6 A Message from the President

Disclaimer Regarding Forward-Looking Statements
This annual report contains forward-looking statements
about the performance and management plans of Canon
Marketing Japan Inc., based on management’s
assumptions in light of current information. The following
factors may therefore inﬂuence actual results. These
factors include consumer trends in Japan as well asother major global markets, private capital expenditures,
currency ﬂuctuations, notably against the U.S. dollar,materials prices, and political turmoil in certain countries
and regions.

12 SPECIAL FEATURE 1: Providing Healthcare Solutions to Address Social Issues
16 SPECIAL FEATURE 2: Demand for Network Cameras Set to Expand
18 At a Glance
20 Segment Review and Strategies
28 Sustainable Management
35 Financial Section
66 Canon MJ Group Companies
67 Corporate Data

MarketingServices

SolutionsCustomers
Business
Solutions

IT
Solutions

Imaging
Systems

Industrial/
MedicalBusinesses
Consumers
Overseas
Society12Canon Marketing Japan Inc. Annual Report 2014

Financial and Business Highlights
Financial Highlights of FY2014
For the year:

Net sales¥659,432

Cost of sales
million

0.3% increase
2013: ¥657,216 million

Gross proﬁt¥425,896

million

1.7% decrease
2013: ¥433,279 million¥233,536

million

4.3% increase
2013: ¥223,937 million

At year-end:

Total assets¥479,747

Total stockholders’ equity
million2.7% increase
2013: ¥467,076 million¥270,061

million5.2% increase
2013: ¥256,795 million

Key ratios:

Total stockholders’ equity ratio

ROE

56.3%

6.1%

1.3pp increase
2013: 55.0%

2.1pp increase
2013: 4.0%

Business Highlights of FY2014
Canon’s existing domains

Canon’s new priority domains

Captured top shares of the cameraand printer markets

Progressed steadily in network
camerasNo. 1 market share

62.2% growth

Maintained leading shares in markets for interchangeablelens digital cameras, compact digital cameras, andlaser printers and secured the top spot in inkjet printers
for the ﬁrst time in four years

Secured large orders and expanded business byhighlighting marketing as well as monitoring applications

Canon Marketing Japan Inc. Annual Report 2014

SG&A expenses¥208,448

million

0.7% increase
2013: ¥206,924 million

Operating income

Net income¥25,088¥16,030

millionmillion47.5% increase
2013: ¥17,013 million

57.7% increase
2013: ¥10,168 million

Stockholders’ equity

Net income

Cash dividends¥2,082.60¥123.62¥40.005.2% increase
2013: ¥1,980.22

61.2% increase
2013: ¥76.67

66.7% increase
2013: ¥24.00

Per share data:

Stock information:

Number of shares outstanding at year-end

151,080thousand2013: 151,080 thousand

Canon MJ’s independent business domains

Expanded IT Solutions segment sales

Grew 3D businesses

4.5% growthBusiness acquisitions

Expanded IT Solutions segment sales overall while
increasing sales of IT Solutions businesses in theBusiness Solutions segment by 6.3%

Purchased 3D computer-aided design (CAD) software
ﬁrm A&A Co., Ltd., and 3D medical imaging company
AZE, Ltd., and expanded sales of 3D printers and Mixed
Reality (MR) systems through various channels

34Canon Marketing Japan Inc. Annual Report 2014

To Our Stockholders and Stakeholders

Moving Forwardwith a Growth Scenario
The first item to report in this message is that Masahiro Sakata became president ofCanon Marketing Japan Inc. as of March 26, 2015.
It is a pleasure to report to our stockholders and stakeholders that Canon MJ
boosted operating income for the fifth straight term in the year ended December
31, 2014.
Management accordingly increased the dividend for the year by ¥16, to ¥40
per share.
However, we are only at the beginning of our task. Our objective for 2017, the ﬁnal
year of the medium-term management plan that we recently announced, is to evolve
into a corporate group that continues to provide original and new added value. This alsomeans that it is crucial for us to generate average annual net sales growth of 4% throughﬁscal 2017, which is double the pace of Japan’s nominal projected GDP expansion. It isthus vital that we embark on a basic policy of refocusing to expand our business horizons
under a concept that we have termed “Beyond Canon,” and “Beyond Japan.” We must
now move forward with a solid expansionary strategy.
Your new top management team’s focus is on accelerating growth, and welook forward to your ongoing support and encouragement in our endeavors.

Haruo Murase
Chairman

Masahiro Sakata
President

Canon Marketing Japan Inc. Annual Report 2014

Masahiro Sakata
President

Haruo Murase
Chairman

5

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Canon Marketing Japan Inc. Annual Report 2014

A Message
from the President

Masahiro Sakata
President

Canon Marketing Japan Inc. Annual Report 2014

Fiscal 2014 Performance
Increased operating income 47.5%, to ¥25.1 billion—our fifthshares of the Japanese markets for interchangeable lens digitalconsecutive gain—on the strength of a shift to higher value-added

cameras, inkjet printers, laser printers, and other offerings in Canon’sbusinesses and enhanced productivity

existing domains. In addition, we took advantage of market growth inUnder Long-Term Management Objectives Phase II, a five-year

Canon’s new priority domains of commercial printing and network

plan launched in 2011, we reached our final year objective ofcameras to boost revenues and increased sales in such independent

Beyond Canon revenues representing 33% of net sales

business domains as IT solutions for the industrial and medical ﬁelds.
As such, and despite the sales of some products being negatively

The Japanese economy experienced instability in ﬁscal 2014, ended

affected by the consumption tax hike, consolidated net sales increased

December 31, 2014. Although a spike in demand ahead of the

0.3%, to ¥659.4 billion.

consumption tax hike underpinned an ongoing recovery through March,

We also enhanced proﬁtability on the favorable performances

the tax increase caused a prolonged slowdown in personalof high-margin products, services, and solutions, and enhanced

consumption after April.

productivity from operational streamlining. Operating income climbed

It was against this backdrop that the Canon MJ Group set about
deploying key strategies under a three-year medium-term management

47.5%, to ¥25.1 billion, our ﬁfth consecutive rise. Net income
advanced 57.7%, to ¥16.0 billion.

plan ending in ﬁscal 2016. These efforts enabled us to capture top

Leveraging Strengths
We will leverage our strengths to generate and build synergies beyond in-house and Group company boundaries
to become a robust corporate group that can deliver sustainable growth under all economic conditions.

Goals of New Medium-Term Management Plan
Under our new three-year initiative, which ends in ﬁscal 2017, ourDominate the markets for each of Canon’s businesses

mission is to evolve into a trading company that adds value andEnhance productivity and add further value in Canon’s existing

supplies solutions that resolve social issues. We will continue todomains

improve and train our in-house talent and relentlessly overhaul our

Maximize Group synergies

earnings structure to bolster our earnings potential.

Strengthen and expand Canon’s new priority domains

We have formulated the following six policies to drive progress.

Focus the Canon MJ Group’s energies on expanding independent
business domains while swiftly creating new businesses andprocuring new products
Promote a Beyond Japan concept in all business creation

7

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Canon Marketing Japan Inc. Annual Report 2014

A Message from the President

Leveraging Strengths
Numerical Targets of New Medium-Term Management Plan
The table below shows that we aim to increase both revenues andexpansion target is double Japan’s roughly 2% growth rate projection

earnings over the three years ending in ﬁscal 2017.

for nominal GDP.

In keeping with our Beyond Canon, Beyond Japan concept, weOn the earnings front, we will add value to existing businesses

will invest heavily in domains offering growth potential, maximizing

while increasing the proportional sales contributions of high-margin

Group synergies to expand our businesses. We aim to increase net

services and leveraging IT and business process innovations to boost

sales an average 4.0% annually, reaching ¥741.0 billion by ﬁscal

productivity and reduce variable expenses. We therefore seek to2017. This growth rate is lower than the ﬁgure we set in ﬁscal 2013

increase operating income an average 13.8% annually, to ¥37.0 billion

as net sales rose only marginally in ﬁscal 2014 and because we also

in ﬁscal 2017.

factored in Japanese economic prospects. That said, our net sales
Consolidated Performance Targets(Billions of yen)

Net sales
Sales growth rate

FY2014 Results

FY2015 Targets

FY2016 Targets

FY2017 Targets

659.4

681.0

709.0

741.0

0.3%

3.3%

4.1%

4.5%

Average growth rate (FY2014–FY2017): 4.0%

Operating income

25.1

26.0

33.0

37.0

Income margin

3.8%

3.8%

4.7%

5.0%

Net income

16.0

16.9

21.6

24.2

ROE

6.1%

6.2%

7.5%

8.0%

EPS* (yen)

124

130

167

186

* EPS for 2015 and thereafter were calculated based on the number of shares at the end of 2014.

Growth Scenario(for Canon’s Existing Domains, Canon’s New Priority Domains, and Independent Business Domains)
In Japan, most of Canon’s existing businesses are in mature markets.

Sales Growth Scenario

While these areas are projected to offer stable growth, we aim to(Billions of yen)increase their proﬁtability by streamlining operations and services and741.0

enhancing productivity. At the same time, we will strive to accelerate
growth in Canon’s new priority domains and our independent businessdomains. The areas that Canon is prioritizing because of their signiﬁcant

659.4

681.0

709.0

239.4

6.8%

58.5

66.7

16.6%

424.6

427.9

434.9

1.1%

FY2015(Target)

FY2016(Target)

FY2017(Target)

207.5

222.6

42.1

48.9

420.6

FY2014

196.7

growth prospects are network cameras and commercial printing, thelatter presenting increasing opportunities because of progress in

Average
growth rate

digitization. In our independent business domains, we will expand our
IT Solutions business to take advantage of a projected ongoing risein IT investments in Japan. We also anticipate growth in the 3D printerand medical imaging ﬁelds.

Canon’s existing domains

Canon’s new priority domains

Independent business domains

Canon Marketing Japan Inc. Annual Report 2014

Segment Growth Strategies
Business Solutions

for the ﬁnance and brokerage ﬁelds, where customers rate our

We expect to maintain basically the same levels for multifunction

offerings very highly. We will reinforce systems integration (SI) services

products (MFPs) and laser printers in Canon’s existing domains.

in those areas and in manufacturing and education, particularly at

As such, we will endeavor to generate growth in MFPs by deploying

universities, where we are attracting solid orders for migrations andstrategies focused on corporate scales and priority sectors so that weother large projects.

can increase the number of machines in ﬁeld (MIF) and document

Overseas, Material Automation (Thailand) Co., Ltd. will spearheadvolume (DV). In services, we will deploy remote equipment monitoring

our transformation from an IT infrastructure services provider to aand other tools to enhance customer satisfaction and efﬁciency,

solutions business, deploying the solutions that we provide in Japan

thereby boosting proﬁtability. With laser printers, we will deepen ourin ASEAN member states.

market reach in speciﬁc sectors to increase cartridge sales. GoodIn Canon’s new priority domains, we will swiftly expand 3D

examples are drug envelopes and information sheets fortechnology-based businesses that draw on such Group offerings aspharmaceutical dispensaries and point-of-purchase materials

3D computer-aided design (CAD), 3D printers, and business solutions

in retailing.

for MR*.

In Canon’s new priority domains, we will draw on Canon Production

For ﬁscal 2017, therefore, we project ¥173.6 billion in sales andPrinting Systems Inc., established in 2013, to expand our production¥8.4 billion in operating income for the IT Solutions segment.

printing business by increasing our proﬁle in central reprographics* Mixed Reality (MR) is a graphics system that is able to merge smoothly the real world with computer

departments and commercial printing. Network cameras have highgrowth prospects because applications are broadening beyond

graphics (CG), giving the user the impression that the CG image really exists. In designing products, using
3D CG that has been created by the MR system makes prototypes unnecessary and so development leadtime and costs can be greatly reduced.

monitoring to include marketing. We also look to expand the projectorbusiness, as applications are broadening beyond ofﬁce usage to

Imaging Systems

encompass such promotional tools as digital signage.

In the digital camera category, we aim to reinforce our product lineup

In solutions, representing independent business domains for thefrom user perspectives and offer an array of interchangeable lenses

Canon MJ Group, we look to expand cloud-based solutions for large

to encourage those relying on their compact digital cameras andcorporations and will have Canon System & Support Inc. spearhead oursmartphones for photography to move up to the entry-level EOS KISS

IT Solutions business services for small and medium-sized enterprises.

and the EOS M3 mirrorless camera and thereafter to such mid-range

We will also cultivate 3D solutions.

models as the EOS 70D and EOS 7D Mark II.

Through these growth strategies, for ﬁscal 2017 we target

In Japan, the household penetration of interchangeable lensBusiness Solutions segment sales of ¥362.0 billion and operating

digital cameras was around 20% in 2014, so we anticipate further

income of ¥13.5 billion.

growth in this area in the years ahead. We will capitalize on the
astounding success of the EOS 7D Mark II in 2014 to deploy marketing

IT Solutions

strategies that match customer needs so we can maintain our No. 1

Apart from Mixed Reality (MR)*—a new priority ﬁeld for Canon—shares in the entry-level, mid-range, and professional photography

independent business domains account for most of this segment.

categories.

Here, we seek to improve our efﬁciency and shift to service

We believe that demand for inkjet printers, in which we had thebusinesses by restructuring operations. Accordingly, we plan to partially

top market share in 2014, will remain around the same over the next

integrate Canon IT Solutions Inc. and Canon Software Inc. to generate

few years. The keys to expanding this business will be deploying

new value and Group synergies.

attractive new products that drive replacement purchases and

The Nishi-Tokyo Data Center has steadily increased its operating

proposals that encourage people to do more printing. Speciﬁc efforts

rates, and we look to swiftly launch full-scale operations there andwill include highlighting the fun of printing smartphone photos,

expand system operation services.

reinforcing our professional model lineup, and expanding sales for

Our greatest strength in this segment is developing core systems

business applications, particularly for small and home ofﬁces.

910

Canon Marketing Japan Inc. Annual Report 2014

A Message from the President

Leveraging Strengths
Japan initiated 4K broadcasting in March 2015 throughin such areas as precision sensors and other non-semiconductor

Communications Satellite and cable TV channels. 8K broadcasts areapplications.

now set to begin in 2018, ahead of the originally scheduled 2020. We

In Canon’s new priority domains, we will fully deploy machine

therefore anticipate a surge in demand for high-resolution professional

vision and industrial camera offerings.

video equipment, and already have a range of offerings with 4K and 8K

In medical systems, we will endeavor to increase sales of Canon’scapabilities. We will endeavor to take advantage of demand growth and

CXDI digital radiography system, boost unit sales from modalities, andbuild on our leading position in the high-resolution broadcasting andenhance market share.

video ﬁelds.

In our independent business domains, we will reinforce ourOur Imaging Systems segment projections for ﬁscal 2017 are for¥200.0 billion in sales and ¥13.0 billion in operating income.

capabilities in medical imaging IT solutions to make them the core of our
medical business. We will also take advantage of our strong offerings ininfection management and pharmaceutical dispensing to expand ouroperations in those areas in Japan and abroad.

Industrial/Medical
Of our four segments, we target our greatest growth in this businessarea.

We will endeavor to make this business segment proﬁtable byincreasing sales and swiftly deploying business process reforms.

In the industrial equipment category, we look to increase ourrange of such traditional independent business domain offerings as

For the Industrial/Medical segment, we forecast ¥42.4 billion insales and ¥1.7 billion in operating income for ﬁscal 2017.

semiconductor testing and measuring systems and build our position
Segment Performance Targets(Billions of yen)

FY2014 Results

FY2015 Targets

FY2016 Targets

FY2017 Targets

Average
growthrate
Operatingincome (FY'14–'17)

Sales

OperatingincomeSales

OperatingincomeSales

Operatingincome

Sales

330.2
0.9%
148.8
4.5%
185.4
(3.3%)
28.0
7.3%

8.2
2.5%
3.2
2.1%
14.3
7.7%
(1.0)
—

340.0
3.0%
151.7
2.0%
188.8
1.8%
31.5
12.4%

8.7
2.6%
4.2
2.8%
13.2
7.0%
(0.5)
—

351.4
3.4%
159.5
5.1%
195.0
3.3%
37.8
20.1%

12.5
3.6%
6.4
4.0%
12.7
6.5%
1.0
2.6%

362.0
3.0%
173.6
8.8%
200.0
2.6%
42.4
12.1%

13.5
3.7%
8.4
4.8%
13.0
6.5%
1.7
4.0%

Other/Sales eliminations(33.0)

0.4(31.0)

0.4(34.7)

0.4(37.0)

0.4

Group consolidated

659.4
0.3%

25.1
3.8%

681.0
3.3%

26.0
3.8%

709.0
4.1%

33.0
4.7%

741.0
4.5%

37.0
5.0%

Business Solutions
IT Solutions
Imaging Systems
Industrial/Medical* The percentage in the lower part of each segment shows the YOY growth rate for sales and operating income margin.

3.1%
5.3%
2.6%
14.8%

4.0%

Canon Marketing Japan Inc. Annual Report 2014

Investment Plan
I would now like to explain our investment plan for materializing theIT equipment and systems to help enhance business process

objectives of our new medium-term management plan. One of our

productivity.

general investments will be to allocate ¥21.0 billion over three years in

For strategic M&As, we have prepared approximately ¥40 billion

securing assets to expand our highly promising MFP rental business.

in funds, which is within the bounds of free cash ﬂow for the relevant

In keeping with our growth strategies for the IT Solutions segment,
we plan to invest an additional ¥5 billion over three years in the NishiTokyo Data Center.
We will also invest ¥9 billion over three years to develop in-houseﬁscal years. Acquisition targets would include the IT solutions, medical,
and documentation ﬁelds.
We believe that such proactive investments will help us to build
further value.

Contributing to Social Sustainability
I mentioned when presenting our new medium-term management plan

generating economic value, and we will make CSR central to ourthat our mission is to evolve into a trading company that adds value

corporate management. Through pursuit of our mission, we hope toand supplies solutions that resolve social issues. This will entail us

contribute to social sustainability.

leveraging our marketing capabilities to resolve such issues while

Looking Ahead
In ﬁscal 2015, the Japanese economy should continue a mild recovery
despite the impacts of downturns in overseas economies and a

I will do my very best in the year ahead to maximize value for allof Canon MJ Group’s stockholders and stakeholders.

declining yen. The Canon MJ Group will accordingly step up businessefforts to reach the targets of the medium-term management plan thatMay 2015

it announced in January this year.
Our product and services lineup is far more diverse than those ofrivals, and are a source of our strength. We will leverage such strength
to generate and build synergies beyond in-house and Group company
boundaries to become a robust corporate group that can deliver

Masahiro Sakata

sustainable growth under all economic conditions.

President

1112

Canon Marketing Japan Inc. Annual Report 2014

SPECIALFEATURE

1

Providing Healthcare Solutions
to Address Social Issues
Japan is the world’s fastest graying country. In 2013, 25% of the nation’s population was over the age of 65. This ﬁgure
is expected to reach 30% by 2025. Providing the most appropriate healthcare services in such a situation while also
constraining the seemingly ever increasing cost of treatment has become a huge challenge that society must resolve.
As such, the Japanese government is pushing ahead with initiatives that entail functionally differentiating treatments,
fostering collaboration between medical institutions, and creating preventive medicine frameworks.
As a private entity, the Canon MJ Group is doing much to tackle these issues.

Number of hospital beds in 2010 and an ideal state in 2025
Advanced
medicalcare needed2010
Bed shortfall

70,000 beds
(15:1)

330,000 beds
(7:1)

Advanced acutephase 180,000 beds

250,000 beds
(10:1)

General acutephase 350,000
bedsThis zone represents
a number of
additional beds
needed for treating
the elderly

Sub-acute phase
260,000 beds

210,000 beds
(Recuperation wards)* Proportions in chart indicate nurse to bed ratios

Long-term care

240,000 beds for local communities

30,000 beds
(13:1)

An ideal state in 2025
Patient and bed numbers balanced

Treatment 280,000 beds
necessary forchronic and other ailments

Source: Adapted from page 24 of Overview of Social Security System by Ministry of Health, Labour and WelfareCanon Marketing Japan Inc. Annual Report 2014

Strategies for Cultivating Our Healthcare Capabilities
The Canon Group has a long track record in healthcare. In 1940, not

One thrust is to employ proprietary solutions to assist with treatment

long after its establishment, Canon Inc. developed Japan’s ﬁrst indirect

through cloud-based medical imaging services. Another is to draw on

X-ray camera. It has since continued to create digital X-ray imaging

Canon’s strengths in proposing new applications for cameras, printers,

equipment and retinal cameras.

scanners, projectors, network cameras, and other general-purpose

The Canon MJ Group is leveraging its strengths in imaging andother ﬁelds to deliver unmatched value so it can increase its share inequipment as part of a focus on increasing productivity in thehealthcare ﬁeld.

the medical arena.

Medical Image Place: A Cloud-Based Medical Imaging Services Infrastructure
In October 2014, we unveiled Medical Image Place, a proprietary

small and mid-sized hospitals without resident physicians withcloud-based medical imaging services infrastructure that incorporates

diagnostics capabilities.

Canon’s imaging strengths and cloud technologies.

Medical Image Place is the fruit of joint research and development

It will become increasingly important to properly manage healthwith remote interpretation service provider Medical Image Lab, Inc.

diagnoses, medical history, and other data to deliver ﬁnely tuned

Medical Image Place inaugurated services in October 2014, and has

medical services. Cloud services are attracting attention as a vehicle

since seen a steady increase in the number of hospitals using its

for centrally managing such data.

services.

The initial offering from Medical Image Place was a remote

The Canon MJ Group aims to bolster its applications and medical

interpretation infrastructure service. This setup uploads computed

cloud services, and has already launched its second offering, a service

tomography (CT), magnetic resonance imaging (MRI), and other images

that can externally store huge volumes of medical image data. Withinfrom medical institutions so that they can secure diagnostic support

2015, the Group looks to launch a cloud-based picture archiving andfrom external radiologists. This can beneﬁt the considerable number ofcommunication system.

Overview of Medical Image Place

Data centers
Imageinterpretation
providers
Uploading CT or
MRI images

Uploading
diagnostic results

Remoteinterpretation
infrastructureservices

Medicalexamination
institutions

Medical Image Place

Institutions
requesting
interpretations

Clinics
Hospitals

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Canon Marketing Japan Inc. Annual Report 2014

Feedback: Medical Image Lab, Inc.
Medical Image Lab was established as a venture at Hokkaido
University in 2002 to engage in medical diagnostic systems researchand development and to provide medical support in Hokkaido. We
asked the ﬁrm about its R&D collaboration with Canon MJ and its
hopes for Canon.
Kazuo Miyazaka, chairman of Medical Image Lab, and Yukinori Hirasawa, CEO

Outside Sapporo, Asahikawa, Hakodate, and other major cities,

Institutions are proceeding apace in using Medical Image

medical institutions are few and far between in Hokkaido, which

Place, and it will likely play a vital role as the foundation for

is Japan’s biggest prefecture. Medical institutions outside large

collaboration in the healthcare community. We look for it topopulation areas suffer from a lack of diagnostic radiologists inmaterialize even more advanced services, which would include

CT, MRI, and other modalities.

automated image diagnostics that leverage Canon’s image

In 1988, Hokkaido University Hospital set about addressing

processing technologies. We will endeavor to engage even morethis medical coverage gap by becoming the ﬁrst in Japan toclosely with hospitals requesting services and continue todeploy and experiment with remote interpretation systems.

enhance the quality of medicine.

It thereafter launched Medical Image Lab, which provides
interpretation services to approximately 60 medical institutions.
The key recent challenges for the company have been its aging
systems and surging data volumes.
In seeking a partner to collaborate in next-generation
systems development, we found that only Canon satisﬁed ourstandards. We were convinced that we could create bettersystems by drawing on Canon’s image processing and cloudtechnologies and on our experience. Canon personnel spent abouta year observing procedures at hospitals, creating systems thatreﬂected radiologist needs and completing Medical Image Place.

Interpretation using Medical Image Place

Services Stemming from Medical Solutions Collaboration within the Group
It is crucial for all Group business units to pool their resources to drive

treatment more efﬁciently, thereby enhancing medical care. We will

progress in the medical ﬁeld. They are therefore collaborating to share

therefore draw on our Group expertise to resolve medical issues.

their customer information, products, sales support structures, andUsing models created with 3D printers offers tremendous

other tools to create medical solutions that draw on Canon’s strengths.
Medical Photo Solution was the ﬁrst fruit of such teamwork,

potential. We believe that physicians would ﬁnd it very useful before
surgery to be able to evaluate models created on Canon MJ 3D

linking digital pictures of treated sites and other subjects withprinters based on data from AZE, Ltd., which provides 3D medical

electronic medical records through Wi-Fi. This solution has greatly

imaging solutions from CT and MRI modalities. AZE became part of

improved medical treatment workﬂows.

the Canon MJ Group in September 2014.

Physicians are naturally most interested in practicing medicine.

In addition to packaging our products to create new solutions, it isThis is why there tend to be delays in setting up systems for ofﬁce

also important to share information from customers and expertise to create

equipment and documentation that do not relate directly to providing

a common process. Such an approach makes it possible to identify issues

treatment. Yet, having systems in place can contribute to providing

arising in medical treatment and develop solutions and services.

Canon Marketing Japan Inc. Annual Report 2014

al
AZE VirtualPlace, medical
image analysis softwaree• Infection control equipment• Electronic medical records systems• Digital camera image management solutions• Bed management systems• Medical image systems• Medical ofﬁce systems• Medical image cloud services• Medical image viewers• Medical image analysis software

Hospital businessElectronic medical records
systems• CXDI• Retinal cameras

High-speed, low-temperaturesterilization systems

Overview of Canon MJ Group’s
medical offerings• Medical examination systems

Preventive care, healthexamination, andlife-saving products

Dispensary services• Medical examination data acquisition systems• Packaging machines• Blood pressure gauges• Tablet supply units• Health measurement equipment• Electronic drug history systems• Bone density measuring devices• Pharmacy ofﬁce systems• AED• Mental health management

Packaging machine

Providing Healthcare Solutions
The healthcare market is worth approximately ¥40 trillion annually,

imaging, which is a core competence of Canon. By bolsteringand it continues to grow. The Canon MJ Group has only just begun toactivities in this ﬁeld, we can contribute to the health of numerous

tap into this area, and anticipates tremendous business opportunities.

people by suppressing the occurrence of diseases and also constrain

Preventive medicine is a particularly promising area for leveraging

national medical expenditure.

the Canon Group’s solid track record, examples being X-ray andretinal examinations. Preventive medicine also needs a lot of

15

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Canon Marketing Japan Inc. Annual Report 2014

SPECIALFEATURE

2

Demand for Network Cameras
Set to Expand
Japan’s network camera market expanded approximately

analog surveillance cameras are set for replacement with

20% in 2014, to around ¥25.4 billion (Source: Fuji

high-deﬁnition digital models. Canon’s network cameras

Keizai Group).

showcase its technologies and strengths as a camera

The Canon MJ Group is expanding its business in
new applications for network cameras as one of its growthstrategies in the Business Solutions segment.
Network cameras are surveillance systems that
distribute videos through IP networks, and Japan’s many

manufacturer, delivering vivid images even in dark places,smooth subject movements, and instant focusing.
In recent years, applications for these cameras have
expanded beyond surveillance for crime prevention toencompass marketing and business process improvements.

Canon Marketing Japan Inc. Annual Report 2014

Examples of fields in which network cameras are increasingly deployed• Monitoring food and beverage manufacturing and packaging lines• Preventing crime in shopping streets and malls• Store management• Preventing crime and managing safety in nursing homes (monitoring patients)• Enhancing operational processes in hospitals
Example of Retail Store Management
Cashier

The new VB-R11VE is the ﬁrst

Store C

Canon model capable

Store Bof panning 360°

Headquarters
Close-up images ofcurrency notes, faces,
and hands
Store A

Real-time
monitoring ofeach store
Entrance

Clear images against thesun with a counterlightcompensatory function

Shop space

Cover wide area in anarrow space

Parking area

Box types are applicablefor outdoor use

17

18

Canon Marketing Japan Inc. Annual Report 2014

At a Glance
The Canon MJ Group leverages close collaboration between its companies to add new value in all areas of life, work,and society for customers around the globe.

Business Solutions

IT Solutions

We help customers improve productivity and resolve business

We leverage our comprehensive capabilities in such areas

challenges by providing innovative solutions that combine an arrayas system development, data center services, and packagedof business equipment, particularly Canon offerings, with software

software to create advanced IT environments to help customers

and operating services.

improve their competitiveness as well as corporate value.

Growth Scenario

Growth Scenario
Annual average
growth rate
(FY2014–FY2017)

Category

Independent
business domains

6%

Canon’s new priority
domains

Canon’s existingdomains

Included businesses

Annual average
growth rate
(FY2014–FY2017)

Category

IT solutions, Document solutions,Support business

15%

Production printing business,
Network cameras, Projectors

0.2%

MFP (including maintenancebusiness), LBP (including
cartridges and maintenancebusiness)

Independent
business domains

6%

Systems integration business12%

IT infrastructure and service
business

8%

Embedded systems business-0.4%
Canon’s new priority
domains

Included businesses

45%

Products businessMR** Mixed Reality

Sales target

Operating income target

Sales target

Operating income target(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

330.2

340.0

351.4

362.0

13.5

173.6

12.5
148.8

151.7

8.4

159.5
6.4

8.2

8.7
4.2
3.2

FY

’14
result

’15

’16
’17
objective

FY’14
result

’15

’16
’17
objective

FY’14
result

’15

’16
’17
objective

FY’14
result

’15

’16
’17
objective

Canon Marketing Japan Inc. Annual Report 2014

Composition of Net Sales
Business Solutions

IT Solutions

Imaging Systems

Industrial/Medical

47.7%

21.5%

26.8%

4.0%

¥659.4 billion
Imaging Systems

Industrial/ Medical

We provide a broad range of input through output products

We use the world’s most advanced equipment and technologythat enable everyone from novices to professionals to enjoy

to provide specialty solutions for semiconductor manufacturing,

photography and videography.

healthcare, and other ﬁelds.

Growth Scenario

Growth Scenario

Category

Annual average
growth rate
(FY2014–FY2017)

Included businesses

21%

Framed photo rental (Shuttle
Photo), Photo-related online
services (withPhoto), IT products

19%

Commercial imaging equipment,
Commercial photo printers(DreamLabo)

2%

Interchangeable lens digital
cameras, Compact digital
cameras, Digital video cameras,
Inkjet printers, Other consumer
equipment

Canon’s new priority
domains

Independent
businessdomains
Canon’s newpriority domains
Canon’s existingdomains

Originalbusinesses
MedicalCanon’s existingdomains

Industrial

Independent
business domains

Annual average
growth rate
(FY2014–FY2017)

Category

Canon’s newpriority domains
Canon’s existingdomains

22%
148%

Included businesses

Testing and measurement,
Process equipment, Field
engineers, ecoFab, New products
Inspection cameras, Machine
vision, AGV

7%

Component business

11%

Procurement modality/Ophthalmic
products, PACS/Medical imaging
solutions, Ophthalmic equipment,
Infection management,
Pharmaceutical dispensing,
Healthcare products—
11%

Medical IT business
CXDI, Digital non-mydriatic retinal
cameras/OCT

Sales target

Operating income target

Sales target

Operating income target(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

14.3
185.4

188.8

195.0

13.2

200.0

12.7

42.4

13.0

1.7

37.8
1.0

31.5
28.0

-0.5
-1.0

FY

’14
result

’15

’16
’17
objective

FY’14
result

’15

’16
’17
objective

FY’14
result

’15

’16
’17
objective

FY’14
result

’15

’16
’17
objective

19

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Canon Marketing Japan Inc. Annual Report 2014

Segment Review and Strategies

Business-use multifunction products (MFPs)

Senior Vice President’s Business
Management Policies

Commercial printing systems

Japan’s business-to-business (B2B) operating

Laser printers

climate continues to improve. The Canon MJ Group

Major Products

Large-format inkjet printers
Maintenance services

Major companies / organizations

provides hardware and IT solutions that it optimizes
for customers, and is endeavoring to increase theproductivity of maintenance services as well as

Canon Marketing Japan Inc.

add value to them to overcome an ongoing decline

Business Solutions Company

in unit prices. At the same time, we will also

Canon System & Support Inc.

accelerate expansions in such areas as production

Canon Production Printing Systems Inc.

printing, network cameras, and projectors.

Performance and Key Trends

Business
Solutions

Office Multifunction Products (MFPs)
Unit ofﬁce MFP shipments in the domestic market were up slightly froma year earlier. We expanded sales of such imageRUNNER ADVANCE
series models as the C2220F/C5235F color models to cultivate newcustomers and secured several large orders.
In production MFPs for the commercial printing market, we
focused on generating sales of the imagePRESS C800/C700 for thelight production market and Océ series commercial printers.
We thereby increased overall MFP sales from a year earlier.

Laser Printers
Unit shipments of these printers rose in Japan. We secured
large orders for such offerings as the Satera LBP8730i/8630 A3
Masachika Adachi

monochrome series while cultivating demand for printers for sector-

Senior Vice President

speciﬁc applications. We thus boosted unit shipments and maintained
our No. 1 market share. Sales were down, however, owing largely to
lower unit prices.
Toner cartridge sales declined amid a shift among general ofﬁces
toward MFPs for print applications.

Large-Format Inkjet Printers
Sales were solid, particularly for the iPF605L plus/iPF680 series,
enabling us to remain the market leader in unit shipment terms,
although sales were basically unchanged from a year earlier.

Canon Marketing Japan Inc. Annual Report 2014

imageRUNNER ADVANCE C5255F
image

Maintenance Services

Network Cameras

Sales were around the same as the previous term, as an increase in

We generated steady sales on the strength of efforts to cultivate

the number of machines in ﬁeld (MIF) and solid demand stemming

marketing as well as monitoring applications, generating several large

from brisk corporate activities offset an ongoing decline in unit prices

orders in the process.

for maintenance services.

Sales for the Business Solutions segment therefore increased 0.9%,
to ¥330.2 billion. Operating income climbed 48.3%, to ¥8.2 billion.

1. Increase MFP market share and profitability through business innovations
2. Expand share for laser printers in specific business areas and maintain top market share

GrowthStrategies

3. Secure a competitive edge in the central reprographic department, data print services,and commercial printing markets and expand the managed document services business
4. Reinforce the solutions business
5. Expand the network camera business to encompass new applications
6. Expand the projector business to cover new applications

Outlook and Key Measures
Expanding Office MFP Market Share and Number of MIF
We aim to increase market share and the number of MIF for ofﬁce

Anticipating Steady Demand for Large-Format Inkjet
Printers

MFPs by cultivating new customers, providing industry-speciﬁc

We expect that laser printer shipments will be basically unchanged

solutions, introducing new products, and undertaking sales promotions.

in ﬁscal 2015, as notwithstanding efforts to expand deals for sector-

In production MFPs for the commercial printing market, we will

speciﬁc applications, there were many large deals in the previous year.

endeavor to generate orders for the imagePRESS C800/C700 light

At the same time, we expect a slight decline in toner cartridge sales.

production devices and continuous feed digital printers. Such efforts

We also anticipate increased shipments of large-format inkjet printers,

should enable us to increase overall MFP shipments.

reﬂecting favorable demand in the poster and computer-aided design(CAD) markets.
We accordingly forecast that segment sales will rise 3.0%, to¥340.0 million, in ﬁscal 2015, and operating income will increase
6.1%, to ¥8.7 billion, with the MFP and the production printing
businesses driving this growth.

21

22

Canon Marketing Japan Inc. Annual Report 2014

Segment Review and Strategies

Systems integration (SI) business

Senior Vice President’s Business
Management Policies

IT infrastructure and services businessWe expect IT investment in Japan to expand, andEmbedded systems businessare seeking further growth in systems integration

Major Products

Products business

Major companies / organizations
Canon MJ IT Group Holdings Inc.

(SI) services for ﬁnancial institutions, an area inwhich we excel. Our stock business focus is ondata center services. Overseas, we will reinforce

Canon IT Solutions Inc.

our solutions businesses throughout Southeast

Canon Software Inc.

Asia, particularly in Thailand.

Edifist Learning Inc.
14 other companies

Performance and Key Trends

IT
Solutions

SI Services BusinessWe did well with customized systems development projects for
brokerages and banks, and increased the number of solutions projects
for medical institutions. In Southeast Asia, IT solutions business
Material Automation (Thailand) Co., Ltd., began contributing toperformance. These factors resulted in higher sales.

IT Infrastructure and Services BusinessAlthough data center service orders were solid, revenues declined
for services, software, and other infrastructural solutions offerings,
resulting in slightly lower sales.

Embedded Systems BusinessAkihisa Kamimori

Sales rose on an upturn in projects for key customers in the

Senior Vice President

manufacturing sector, while project demand remained solid in theautomotive sector.

Products Business
Sales were higher than a year earlier. One factor was that Canon IT
Solutions Inc. generated solid sales of ESET security software, for which
we are the general distributor in Japan. Another contributor was CAD
software ﬁrm A&A Co., Ltd., which became a consolidated subsidiary inJune 2014.
Segment sales thus increased 4.5%, to ¥148.8 billion. Operating
income surged more than eightfold, to ¥3.2 billion.

Canon Marketing Japan Inc. Annual Report 2014

Canon MJ’s Operations in Asia

Canon Marketing Japan Inc.

Canon Information Systems (Shanghai) Inc.
Software development and sales

Material Automation (Thailand) Co., Ltd.
IT solutions operations in Southeast Asia

Canon IT Solutions (Philippines), Inc.
IT solutions operations in the Philippines

Canon IT Solutions (Thailand) Co., Ltd.
IT solutions operations in Thailand

Nishi-Tokyo Data Center

1. Improve efficiency and shift to services business by restructuring operations
2. Expand SI services business based on sector strengths and solutions in niche areas
3. Swiftly launch full-scale operations of the Nishi-Tokyo Data Center and expand systems operation
services

GrowthStrategies

4. Expand products business by strengthening in-house package product lineup and cultivatingcompetitive offerings for which we have exclusive distribution rights
5. Expand the embedded systems business in the automotive and other sectors
6. Reinforce the business structure in ASEAN member states, centered on Material Automation(Thailand)
7. Accelerate new business launches

Outlook and Key Measures
Products business sales could drop in ﬁscal 2015, as PC

Solid Prospects for Customized System Development andData Center Services

revenues in the year under review were higher than average.

In the year ahead, SI services business sales should increase on steadyWe therefore anticipate growth in ﬁscal 2015 in ﬁnancial

customized system development demand from ﬁnancial institutions andinstitution, manufacturing, retail, and educational solutions. Segment

an increase in the number of manufacturing and retail projects.

sales are expected to rise 2.0%, to ¥151.7 billion, while operating

The IT infrastructure and services business should boost its sales
by expanding systems operation and data center services.
The embedded systems business looks to increase sales byreinforcing operations for external customers, particularly in theautomotive sector.

income is projected to increase 31.3%, to ¥4.2 billion.

23

24

Canon Marketing Japan Inc. Annual Report 2014

Segment Review and Strategies

Interchangeable lens digital cameras

Senior Vice President’s Business
Management Policies

Compact digital cameras

There is considerable room for demand for

Inkjet printers

interchangeable lens digital cameras to grow.

Major Products

Commercial imaging equipment

Major companies / organizations
Canon Marketing Japan Inc.

We will market strategically to increase sales of
new offerings and maintain our top market share.
In addition, we expect demand for 4K and 8K

Imaging Systems Company

broadcasting systems to become more common,

Canon Customer Support Inc.

and will therefore reinforce our commercial imaging

withPhoto Inc.

equipment lineup and expand our business.

Performance and Key Trends

Imaging
Systems

Digital Cameras
During the year under review, we retained our top share of the Japanesemarket for interchangeable lens digital cameras on the strength ofdemand for such mid-range models as the EOS 5D Mark III and theEOS 7D Mark II, which was launched in October 2014, and dynamic
marketing activities. These factors helped us to increase unit prices
and maintain a healthy business structure. Interchangeable lenses
were popular, particularly for new products. Interchangeable lens digital
camera sales were down, however, as the April 2014 consumption tax
hike caused a prolonged decline in demand.
We did well in compact digital cameras with the PowerShot G1
X Mark II and other premium models, as well as with the PowerShot
SX long zoom series, which helped to maintain our No. 1 market share

Koichi Yagi
Senior Vice President

based on the strength of a lineup extending from premium models
through such entry-level offerings as the IXY series. Sales of compact
models were down from a year earlier, however, as the market shrank.

Inkjet Printers
We extensively promoted the PIXUS MG7530, which makes it easy toprint smartphone photos. October 2014 saw the introduction of the
MAXIFY series for the business printer market. These factors enabled
us to increase unit shipments and capture top share in the inkjet printermarket. Sales declined, however, owing to sluggish market conditions.
Ink cartridge sales remained basically unchanged.

Canon Marketing Japan Inc. Annual Report 2014

EOS 7D M
Mark II

Commercial Imaging Equipment

lenses between equipment upgrade cycles and the absence of the

Demand was steady for portable broadcast zoom lenses and forlarge orders experienced in the previous year for outdoor monitoring

Cinema EOS System lenses, while commercial 4K displays launchedcameras.

during the year also contributed to sales. Nonetheless, sales wereAs a result of these factors, segment sales decreased 3.3%, todown from a year earlier owing to a demand decline for studio zoom

¥185.4 billion, although operating income rose 14.1%, to ¥14.3 billion.

1. Secure top market shares in all interchangeable lens digital camera categories

GrowthStrategies

2. Dominate the market for compact digital cameras by strategically offering a full lineup centeredon premium models
3. Increase inkjet printer print volumes
4. Expand commercial imaging equipment by strengthening capabilities in 4K and over resolution
and SI capabilities
5. Bolster customer relationship management (CRM) and engage in digital marketing

Outlook and Key Measures
Maintain No. 1 Share in Digital Camera Market

share of the business market through the MAXIFY series. We thereby

We aim to boost our share of the markets for interchangeable lensanticipate higher shipment numbers.

digital cameras and lenses by deploying new products while pushingahead with a strategy of encouraging users to step up to premium

Capturing the 4K Market

models. We look to increase shipment numbers in the year ahead.

We will strive to increase sales of broadcast television lenses. We will

In compact digital cameras, we will continue to focus on sellingalso expand sales of the Cinema EOS System, commercial 4K displays,

high-value-added premium models and high-magniﬁcation zoom

and other offerings for the 4K market to boost sales of commercial

models. We will endeavor to increase proﬁtability and maintain our top

imaging equipment.

market share by maintaining our full lineup strategy.

We will accordingly introduce and aggressively market new
products in ﬁscal 2015 with a view to increasing segment sales

Proposing New Printing Techniques to Cultivate Demand

1.8%, to ¥188.8 billion. Reﬂecting advertising and other expenditures,

We will cultivate demand for photo printing by highlighting theoperating income is projected to decline 7.7%, to ¥13.2 billion.

smartphone compatibility of our inkjet printers. We look to expand our

25

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Canon Marketing Japan Inc. Annual Report 2014

Segment Review and Strategies

Industrial equipment

President’s Business Management
Policies

Medical equipment

Industrial Equipment

Major Products

We seek to expand our lineup beyond
Major companies / organizations
Canon Marketing Japan Inc.
Industrial Equipment Sales Headquarters
Canon Marketing Japan Inc.

semiconductor fabrication equipment and otherexisting offerings by developing areas offering fast
growth rates. These include machine vision andMedical Equipment Sales Headquarters

industrial cameras.

Canon Lifecare Solutions Inc.

Medical Equipment

ELQUEST CORPORATION

We will expand sales in our modalities, centered

Canon Advanced Technologies Taiwan Inc.

on the expanding markets for hospitals and clinics,
and will swiftly cultivate our capabilities centeredon pharmaceutical dispensing systems andsterilization equipment as new core businesses.
We aim to develop medical image cloud services

Industrial/
Medicalin keeping with the importance of employing IT
solutions in the healthcare ﬁeld.
Masahiro Sakata
President

Performance and Key Trends
Industrial Equipment
During the year under review, capital spending recovered in
the semiconductor fabrication market, driving solid sales forsemiconductor fabrication equipment maintenance services and forthe metrology systems of Zygo Corporation of the United States. 3D
printers from 3D Systems, Inc., also of the United States, and othernew products also contributed to performance, enabling us to boost
sales from ﬁscal 2013.

Canon Marketing Japan Inc. Annual Report 2014

Phenix Systems PXL,
Powder bed additive manufacturing equipment

Medical Equipment

and the contributions of AZE, Ltd., a 3D medical imaging technology

In the medical imaging business, demand was favorable for digitalcompany that became a consolidated subsidiary in August 2014.

radiography (X-ray imaging) systems as well as for the computed

Segment sales thus increased 7.3%, to ¥28.0 billion. We

tomography (CT), magnetic resonance imaging (MRI), and otherposted an operating loss of ¥1.0 billion, which was significantly

modalities. In the healthcare ﬁeld, sales rose for sterilization equipment

lower than the previous year.

and ophthalmic equipment. Sales increased owing to these factors

Industrial Equipment
1. Bolster our lineup of new products and make them growth engines while strengthening ourcapabilities as a technology trading company
2. Swiftly launch Canon’s priority businesses, including for machine vision and industrial cameras
3. Cultivate the Taiwanese market through Canon Advanced Technologies Taiwan Inc.

GrowthStrategies

Medical Equipment
1. Expand modality sales by reinforcing our marketing capabilities
2. Strengthen consulting and one-stop trading company capabilities for hospitals
3. Strengthen and expand medical imaging IT solutions
4. Expand independent infection management and pharmaceutical dispensing businesses
5. Expand overseas businesses

Outlook and Key Measures
Market 3D Printers and New Products

pharmaceutical dispensing systems and sterilization equipment. We

In the industrial equipment category, we aim to increase sales ofwill develop such areas of the medical imaging solutions businesssemiconductor fabrication equipment and optical metrology systems

as 3D medical image analysis systems and remote interpretation

while expanding sales of 3D printers. We also plan to boost orders

infrastructure services*, thus increasing sales year on year.

for machine vision, industrial cameras, and other new offerings while
increasing maintenance services to increase sales for the year.

For ﬁscal 2015, we look to increase segment sales 12.4%,
to ¥31.5 billion, on the strength of existing products and extensive
marketing efforts for new offerings. Operating loss is expected to be

Anticipating Favorable Demand for Modality Projects,
Pharmaceutical Dispensing Systems, and Sterilization
Equipment
In medical equipment, we expect favorable demand in digitalradiography, CT, MRI, and other modalities, and in such areas as

lower, at ¥500 million.
* These services can be offered any time and anywhere for diagnosing images from CT,
MRI, and other modalities.

27

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Canon Marketing Japan Inc. Annual Report 2014

Sustainable Management

Philosophy

The Canon MJ Group undertakes CSR activities to help
resolve social issues while harnessing the power ofCustomer Focus

marketing to create economic value. In keeping with

Philosophy Brings Full CSR Participation

Canon’s corporate philosophy of Kyosei (which means— CSR is Marketing —living and working together for the common good), we willcontinue to pursue synergistic progress for the Group andCSR Awarenessfor society and enhance the corporate value and brandby beneﬁting society through business. We will also

Shared Philosophy:

contribute to sustainable social development by making

The “Three Selfs” Spirit

CSR central to corporate management.

CSR Awareness

CSR Policies

Our participatory approach to CSR is based on the sharing of the

We produced the Canon MJ Group CSR Activity Policy to enable all

Canon MJ Group’s CSR philosophy and values by all employees, andGroup employees to practice CSR in their work. We will contribute toon a commitment to accurate knowledge. Our efforts to foster CSR

sustainable social development by sharing and applying the policy

awareness in our employees are coordinated by the CSR Promotion

throughout the entire Group.

Division.
CSR Activity Policy

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
states that employees should proactively take the initiative (selfmotivation), conduct oneself responsibly and with accountability (selfmanagement), and know one’s position, roles, and circumstances (selfawareness). The Three Selfs spirit is the foundation of our CSR activities.

• We will contribute to the creation of an enriched social
environment in which people can live in safety and with peaceof mind.
• We will provide dependable quality through all of our businessactivities.
• We will contribute to the development of human resources
capable of contributing to the improvement of society.

United Nations Global Compact• We will conduct our business activities fairly and in good faith,

In December 2009, Canon MJ signed the UN Global Compact. Under

with particular emphasis on dialogue with stakeholders.

this initiative, companies commit themselves to universal principles• We will strive to develop safe, healthy working environments.

relating to human rights, labor standards, the environment, and theprevention of corruption. The underlying principle is that companies• We will contribute to the conservation of the environment andbiodiversity.

should work to solve global problems through responsible corporate
activities. By reﬂecting this principle in our business activities, we willcontribute to the realization of a better and more sustainable society.

• We will respect human rights.

Canon Marketing Japan Inc. Annual Report 2014

Environmental Management

Social Contributions

We strengthened our environmental management infrastructure by

As a good corporate citizen, the Canon MJ Group contributes to society

formulating an environmental vision and management system. Also, wethrough business and activities that help to create a society in which allendeavor to reduce the environmental impacts of our operations and ofpeople can enjoy fulﬁlling lives.

customers and society.

Case Study: School Building Memorials Project
Establishing a Green Ratio

Numerous schools were built in Japan in the 1970s and the early

We lowered CO2 emissions from our business sites and logistics

1980s as the country’s number of students surged. To reinforce

activities and aim to help customers reduce their emissions by aseismic performance and increase levels of safety, the Japaneseminimum of 100,000 metric tons annually and at least double ourgovernment is extensively rebuilding many of these older facilities. The

own levels. This is what we term the Green Ratio. We are doing thisresult being that it will be impossible for many children to celebrateby providing environmentally friendly products and managing

their graduations in familiar surroundings. As such, the Canon MJ

progress accordingly. The 2014 start of full operations at the Nishi-

Group and Pentel Co., Ltd.—which makes painting, writing, and otherTokyo Data Center increased our CO2 emissions by 19% from a year

supplies for schools and ofﬁces—are jointly running a project thatearlier. At the same time, we also helped customers lower their

allows students to memorialize school buildings before demolition.

emissions through our products and IT solutions. Accordingly, ourGreen Ratio improved to 1:3.0.

Children at schools participating in the project paint giant murals
in their classrooms. As well as decorating their new facilities with large
posters from the murals, assigned student photographers use digital

Positive effect on global environment
2007 actual

SLRs to take pictures of classmates creating the murals, for inclusion

2015 target

in photo albums for school libraries. Pentel donates art materials andContribution tocustomers’ CO2
reductions

Green
Ratio
83,895 tons

±049,305 tons
CO2 emissions ofCanon MJ Group

Negative impact on global environment

100,000 tons
or higher

Double or
higher1

frames for the project and we lend cameras and produce and donate
large posters and photo albums.

29

30

Canon Marketing Japan Inc. Annual Report 2014

Sustainable Management

Corporate Governance(As of March 26, 2015)

Corporate Governance Organization
General Stockholders’ Meeting
Appointment / Dismissal

9 Directors
Board of Directors

Appointment / Dismissal

Monitoring

5 Audit & Supervisory Board Members
Audit & Supervisory Board

Appointment / Dismissal

Cooperation

Audit of ﬁnancial
statements
Cooperation

Management Committee
CSR Committee

Internal Auditors Ofﬁce

Independent
AuditorCooperation

Disclosure Committee
Internal audits

Internal Controls Evaluation Committee
AdviceGroup Companies

Lawyers /Licensed Tax
Accountants

Staff Managers

Basic Stance on Corporate Governance

The purpose of the system is to speed up management decision-making

We recognize that sustainable growth in corporate value requiresin the Canon MJ Group by separating management decision-making

ongoing improvement in such areas as management transparency andfrom executive functions and reducing the number of directors. It also

the monitoring of progress toward management targets. This is reﬂectedclariﬁes responsibility for the performance of business operations andin our wide-ranging initiatives to strengthen corporate governance.

strengthens executive systems.

Corporate Governance Structure

Audit & Supervisory Board

In addition to the Board of Directors and the Audit & Supervisory Board,

There are ﬁve Audit & Supervisory Board members, of whom three are

our corporate governance structure also includes an internal auditing

appointed from outside of the Company. The Audit & Supervisorysystem. We have also established a range of committees, including theBoard’s duties include monitoring and reviewing management as well as

CSR Committee, the Disclosure Committee, and the Internal Controls

reporting the results of these activities to the stockholders or Board of

Evaluation Committee, to implement policies across the entire

Directors of the Company. The Audit & Supervisory Board also works

organization.

in close alliance with the Internal Auditors Ofﬁce and the independent
auditor to improve the efﬁcacy of monitoring.

Board of Directors
There are now nine directors, including one outside director. By limiting

Internal Auditors Ofﬁce

the term of ofﬁce for directors to one year, we have created aInternal audits are conducted by the Internal Auditors Ofﬁce, anmanagement structure capable of adapting quickly to changes in the

independent specialist unit that also assesses and advises Canon MJ

business environment. Important decisions are made by the Board ofand its subsidiaries on legal compliance, the effectiveness of processes,

Directors, which normally meets once a month, and at Management

internal control systems, and information security. The Internal Auditors

Committee meetings attended by the directors of Canon MJ and theOfﬁce works in coordination with similar units established in major

presidents of major subsidiaries.

subsidiaries. The Canon MJ Group has 50 audit staff members.

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

Canon Marketing Japan Inc. Annual Report 2014

Message from Outside Director
I believe that the fundamental role of an outside director is to help drive corporate activities andto oversee management.
I therefore participate in the Management Committee and other executive meetings as well
as gatherings of the Board of Directors to provide appropriate suggestions and advice andoccasionally offer dissenting views. Before such meetings, I endeavor to assess corporate
activities by receiving detailed brieﬁngs from management planning ofﬁcers on operational issues
and implementation progress and, where necessary, by conducting hearings about individual
projects.
My experience after more than a year as an outside director of Canon Marketing Japanis that the Company has a solid corporate governance structure. The Board of Directors,
Norihisa Doi
Outside Director

Management Committee, president-chaired CSR Committee, Audit & Supervisory Board, andother governance components all function well.
I will continue exploring ways to draw on my expertise in the software aspects of computerscience and information security to contribute to the growth strategy of Canon Marketing Japan.

Audit of Financial Statements

such gatherings at brokerage branches). For analysts, the director

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

in charge of accounting or the general manager of the Accounting

independent auditor, Ernst & Young ShinNihon LLC. The independent

Headquarters overview our results at quarterly brieﬁngs for analysts.

auditor rotates responsible partners who have been involved in audits

The president presents medium-term management plans upon resultsof any company for more than ﬁve years or seven years.

announcements. In addition, we welcome meeting requests frominstitutional investors and analysts, and hold individual meetings andOutside Directors and Outside Audit & Supervisory Board
Members (as deﬁned under the Corporation Law)

teleconferences with foreign institutional investors.

Canon MJ has one outside director and three outside Audit &Canon MJ IR website

Supervisory Board members. We have not adopted a policy or criteria

http://cweb.canon.jp/eng/ir/

concerning the selection of outside directors and outside Audit &Supervisory Board members, who are independent from Canon MJ.
However, the people that we appoint to these positions have extensive
knowledge and are able to provide effective monitoring and supervisionof management. Our outside director, who has experience as auniversity professor and ofﬁcial of an academic organization, is unlikely
to have any conﬂicts of interests with Canon MJ’s general stockholders.

IR Activities
We formulated the Canon MJ IR Policy in 2008 to clarify our stance on
disclosure. For retail investors, we exhibit at investor relation (IR) events(in 2014, February and August) and have the head of the Communications
Headquarters, which oversees IR, hold company brieﬁngs (in 2014, four

31

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Canon Marketing Japan Inc. Annual Report 2014

Sustainable Management

Board of Directors and Audit & Supervisory Board Members
Board of Directors

Representative Director,
Chairman

Representative Director,
President

Haruo Murase

Masahiro Sakata

Director

Director

Director

Director

Director

Yo Shibasaki

Yutaka Usui

Koichi Yagi

Yoshiyuki Matsusaka

Masachika Adachi

Director

OutsideAkihisa Kamimori

Norihisa Doi

Audit & Supervisory Board Members

Standing

Standing

Standing, outside

OutsideOutsideMasahiro Shimizu

Fumio Ogaki

Shigeo Hasegawa

Kuniyoshi Kitamura

Kazuto Ono

Canon Marketing Japan Inc. Annual Report 2014

Management Systems
Raising the value of the Canon MJ Group’s corporate brand is anon these cards are the Three Selfs spirit and compliance tests that canongoing priority. We do this by maintaining high standards of corporate

be used by individuals to check their own conduct.

ethics Groupwide, and by developing structures capable of responding

Information Security

to a variety of management risks.

The Canon MJ Group regards the reinforcement of information security

Risk Management

as part of its responsibilities toward the creation of a more secure

The Canon MJ Group has taken steps to ensure the continuity of its

society, and as essential to meeting customers’ expectations in line

business activities in the event of a major earthquake, an inﬂuenza

with our Customer Focus philosophy.

outbreak, or other contingencies that could impact on its activities.
1

These initiatives are coordinated by the BCM* Expert Committee.
In July 2007, we established the BCP*2 Expert Committee as a
subsidiary organization of the Management Committee tasked with

Our efforts follow two central themes: Reinforcing the Group-level
information security infrastructure by improving uniformity andefﬁciency, and improving the security, reliability, and efﬁciency of theprocesses through which we provide value to customers.

developing, maintaining, and managing BCM systems. Renamed theThrough continuous monitoring and evaluation, we strive to identify

BCM Expert Committee in 2010, its activities include deliberations on

factors that hinder or contribute to better information security, a process

BCP policies for the entire Canon MJ Group.

that we also use to upgrade our services to customers and our*1 BCM: Business continuity management

IT solutions.

*2 BCP: Business continuity planInternal Controls
Chaired by the president, the Internal Controls Evaluation Committee
consists of ofﬁcials representing corporate departments and subsidiaries.
Its task is to develop internal control systems for the entire Canon
MJ Group.
Canon Inc., which is listed on the New York Stock Exchange, has
adopted systems that comply with the Sarbanes-Oxley Act, a U.S. law
designed to improve corporate governance. As a member of the global
Canon Group, Canon MJ has also applied global perspectives by
establishing systems based on the same standards.

Compliance
For the Canon MJ Group, compliance is not simply a matter of obeying
laws and regulations. We deﬁne compliance as obedience to regulatory
requirements and social rules, a commitment to social justice, andcontinuing efforts to meet the expectations of society. Our complianceactivities are designed to encourage high ethical values and respect for
the law in individual employees through awareness activities, employee
education, and organizational activities.
To raise awareness of the Canon Group Code of Conduct, allemployees and ofﬁcers of Canon MJ carry Compliance Cards. Printed

33

34

Canon Marketing Japan Inc. Annual Report 2014

Sustainable Management

Business Risks
Impacts of Market Competition and Fluctuationsof insufﬁcient supplies of goods following natural disasters, major

In the Business Solutions segment, price competition continues

accidents, or other events. Results could be affected if such situations

in ofﬁce MFPs and maintenance services. Although the Group ishamper sales activities.

endeavoring to avoid such competition by differentiating itself throughinitiatives to add value to its offerings, proﬁtability could deteriorate if

Credit Risks

price competition intensiﬁes. An increase in unit sales of third-party

The Canon MJ Group could experience unforeseen credit losses, as

laser printer toner cartridges could constrain revenues from genuine

it engages in many transactions in which it collects payments after

Canon counterparts.

providing goods and services. The Company therefore draws on credit

In IT Solutions, the Company carefully manages work hours

information from external credit bureaus and other sources as part ofin various SI projects to prevent losses. Nonetheless, such factors

thorough credit management efforts while hedging risks through trade

as additional customer speciﬁcations, altered requirements, or

credit risk insurance and other means. The Company provides

mismatches in the Company’s and customers’ interpretations ofallowances for doubtful receivables to cover the risks of losses on

speciﬁcations or progress could hamper results.

collection. Large unforeseen uncollectible amounts could detract fromIn the Imaging Systems segment, intense price competition in the

the Group’s results and ﬁnancial position.

market for digital cameras could continue due to the rapid speed ofinnovation in technology and the presence of numerous competitors.

Relationship with Parent Company

While the Company continuously strives to ensure its competitive

Canon MJ is a subsidiary of Canon Inc., which owned 58.5% of its

superiority, through such measures as the swift launch of competitive

stock as of December 31, 2014. Canon MJ has the near-exclusive

products and the holding of training workshops for sales staff of massright to sell products (excluding semiconductor and LCD lithographyelectronics retailers, proﬁtability could further deteriorate if pricesystems) manufactured by Canon Inc. under the Canon brand in Japan.

competition further intensiﬁes.

In ﬁscal 2014, Canon MJ’s purchases from Canon Inc. amounted to

The market for compact digital cameras could shrink further amid
competition with smartphones. Demand for inkjet printers is heaviest¥233.0 billion, or 65.0% of its total purchases.
Because of this relationship, a major shift in the management

at year-end, so results could suffer if competition is greater thanpolicies or business activities of Canon Inc. could have a signiﬁcant

anticipated during that time. Revenues could deteriorate if a downturn

impact on the business activities, performance, and ﬁnancial position

in print demand for photos and other output leads to sluggish sales ofof the Canon MJ Group. If it becomes impossible to maintain the

ink cartridges.

superiority of Canon products in relevant industries for whateverIn the Industrial/Medical segment, capital spending amongreason, the Group’s results could be adversely affected.

semiconductor and device manufacturers greatly affects orders forsemiconductor fabrication and optical measuring equipment. Results

Information Management

could stagnate if these manufacturers reduced such expenditure.

The Canon MJ Group holds important information about various GroupThe revised Pharmaceutical Affairs Law makes it mandatory to appoint

operations as well as a lot of sensitive information about companies

sales administrators, set up post-marketing traceability informationand individuals. As such, we formulate information management

systems, and reinforce safety management structures. While the Canon

policies and rules, educate and train employees to increase awareness

MJ Group does its utmost to maintain systems to comply with suchof the importance of information management, implement system

requirements, transactions with medical institutions and medical

security measures, and create and deploy an information security

equipment dealers could decline if its safety management structure

management system. Information that leaks externally notwithstanding

or information systems do not perform as envisaged.

these measures could greatly inconvenience business partners andEach business segment offers goods purchased from parent

other stakeholders or lower the credit standing of the Canon MJ Group,company Canon Inc. and many other manufacturers, creating the risk

thus possibly hampering its operations, results, and ﬁnancial position.

Canon Marketing Japan Inc. Annual Report 2014

Financial Section
36

Ten-Year Consolidated Financial Summary

38

Financial Review

40

Consolidated Balance Sheets

42

Consolidated Statements of Income

43

Consolidated Statements of Comprehensive Income

44

Consolidated Statements of Changes in Net Assets

45

Consolidated Statements of Cash Flows46

Notes to Consolidated Financial Statements

65

Independent Auditor’s Report

35

36

Canon Marketing Japan Inc. Annual Report 2014

Ten-Year Consolidated Financial Summary
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31

2014

2013

2012

2011

Net sales (Note 6)¥ 659,432¥ 657,216¥ 659,218¥ 632,419

Operating income

25,08817,013

16,802

8,442

For the year:

Income (loss) before income taxes and minority interests

25,85817,055

17,52910,972

Net income (loss)

16,03010,168

10,5796,764

At year-end:
Total assets

479,747

467,076

462,574

447,765

Total stockholders' equity (Note 5)

270,061

256,795

253,862

250,671

Cash flows:
Cash flows from operating activities

38,191

28,781

33,767

8,716

Cash flows from investing activities(15,221)(25,757)(16,067)(12,108)

Cash flows from financing activities(4,545)(9,105)(11,813)(3,811)

120,607

102,183108,260

102,373

Cash and cash equivalents

Per share of common stock:
Net income (loss) (Note 2)¥ 123.62

¥

76.67

¥

77.45

¥

49.30

Cash dividends (Notes 3 and 4)

40.00

24.00

24.00

20.00

Stockholders' equity (Note 5)

2,082.60

1,980.22

1,907.50

1,827.25

Notes 1. The figures have been presented in U.S. dollars by translating all Japanese yen amounts at ¥121 to U.S.$1, the prevailing exchange rate as of December 31, 2014.
2. Net income (loss) 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.
4. Year-end cash dividends applicable to the year ended December 31, 2005 include a ¥2.00 bonus dividend reflecting record-high consolidated net sales, operating income
and net income.

Net Sales and Return on Sales (ROS)

Operating Income and Operating Margin

Working Capital(Billions of yen / %)(Billions of yen / %)(Billions of yen / Times)

Net Sales

ROS

Operating
IncomeOperatingMargin

362
822
1.9

867

Total
Current
Assets374 369

Total
Current
Liabilities

Current
Ratio

36.9

905
2.4

827

33.9

2.2 2.2
687 674632

659 657 659

1.1

1.5

302 302 302

3.8
25.4

25.1

2.1

2.6

16.8

0.6

1.9
212 220 214
184

0.9
6.3

1.1

2.0

2.0

2.0

17.0

FY ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

340

3.1
2.5

-0.6

317 325

3.9

3.6

1.6
1.4

29.7

328
4.1

1.3

1.7 1.7 1.7

1.8

1.9
154 157 151 163

165 165

7.7 8.4

FY ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

FY ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

Canon Marketing Japan Inc. Annual Report 2014

Millions of yen

Thousands of U.S. dollars(Note 1)

2010

2009

2008

2007

2006

2005

2014

¥ 674,159¥ 686,615¥ 827,487¥ 905,137¥ 867,172¥ 821,948$ 5,449,851

7,736

6,297

25,41636,88633,91929,723

207,339

¥

8,584

(595)

22,22935,45232,96727,086

213,702

3,724(4,343)

11,186

20,03318,807

15,358132,479

448,592

449,607484,937

526,125

526,578

513,335

3,964,851

246,680

246,829

255,220

266,086

260,367

247,244

2,231,909

35,18618,144

41,122

47,21418,09436,985

315,628(13,012)(25,834)(28,967)(21,912)(19,217)(17,887)(125,793)(8,171)(4,324)(21,738)(16,345)(6,126)(4,311)(37,562)

109,575

95,575

107,589

117,206

108,248

115,504

996,752

Yen

U.S. dollars

26.70

¥

(31.62)¥78.63¥ 134.84¥ 125.64¥ 101.78

$

1.02

20.00

20.00

40.00

40.00

36.00

28.00

0.33

1,798.16

1,797.31

1,858.39

1,817.59

1,739.50

1,650.52

17.21

5. Total stockholders’ equity in the above table represents the total of stockholders’ equity and valuation and translation adjustments in the consolidated balance sheets. This is due to theadoption of an accounting standard for the presentation of net assets in the balance sheet effective the year ended December 31, 2006, which requires former stockholders’ equity andminority interests to be presented as net assets, and net assets to be classified as stockholders’ equity, valuation and translation adjustments and minority interests.
6. 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 andadministrative 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 / %)247

Total Stockholders’EquityROE

260 266 255
254 257
247 247 251
7.6
7.4

Total Assets and Total Stockholders’ Equity Ratio

Net Income (Loss)(Billions of yen / %)(Billions of yen)

Total Assets

270
513

527 526

20.0
485

6.1

6.4

48.2

4.2

4.3

Total Stockholders’Equity Ratio

49.4 50.6

52.6

18.8

480
463 467

450 449 448
54.9 55.0 56.3
54.9 55.0
56.0

16.0

15.4

11.2

10.6 10.2

4.0
2.7
6.8
1.5

3.7

-1.7
-4.3

FY ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

FY ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

FY ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

37

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Canon Marketing Japan Inc. Annual Report 2014

Financial Review
Business Performance

offsetting steady orders for data center services. In the IT products
category, sales were higher than a year earlier on the strength of solid

Net Sales

security software revenues and the consolidation in June 2014 of A&A

In the year ended December 31, 2014, consolidated net sales

Co., Ltd., which markets 3D computer-aided design software.

increased 0.3%, to ¥659,432 million. This improvement reflected new

Segment sales thus rose 4.5%, to ¥148,750 million.

product sales promotions and extensive efforts to market solutions,which offset lower sales of some offerings owing to the impact of the

Imaging Systems

Japanese consumption tax hike in April 2014.

We maintained our top market share in interchangeable-lens digital
cameras owing to strong demand for mid-range models and extensive

Segment Information

promotional efforts. Sales of interchangeable lenses were favorable,

Business Solutions

particularly of new offerings. Nonetheless, sales of these cameras were

Overall sales of multifunctional products (MFPs) were higher than alower than a year earlier because of a prolonged downturn following

year earlier. This reflected intensive efforts to cultivate new customers

the consumption tax hike. We also maintained our market-leadingfor office MFPs, generating solid results in major accounts. In

share in compact digital cameras on the strength of a balanced lineup

production MFPs, we also focused on generating orders for Canon andcovering premium to entry-level products. Sales of these offerings wereOcé commercial printers. In the laser printer category, we secured

down, however, as the market shrank. We captured top share in thelarge orders for A3 monochrome models and cultivated demand for

inkjet printer market, with shipments increasing from a year earlier on

printers for specialist applications. We thereby increased shipments,

the strength of solid promotional efforts and new offerings for businessmaintaining our number-one shipment share, although sales of laser

markets, but sales decreased amid sluggish market conditions. Ink

printers declined amid lower unit prices. Toner cartridge sales were

cartridge sales remained basically unchanged. Sales from thedown amid a shift toward MFPs at regular offices.

commercial imaging equipment category decreased year on year.

Sales of maintenance services for office MFPs were basicallyFavorable demand for portable zoom lenses for broadcasting

unchanged from a year earlier, as the growing number of machines inapplications, exchangeable CINEMA EOS SYSTEM lenses, andthe field and brisk corporate activity overcame an ongoing decrease incommercial 4K displays was insufficient to offset lower demand forunit prices. Group company Canon System & Support Inc. increased

studio zoom lenses and the absence of another large order forsales by boosting unit shipments of office MFPs and laser printers andmonitoring cameras.

doing well in its IT Solutions business. Canon Production Printing
Systems Inc., formed on April 1, 2014, by integrating production

Sales of this segment therefore decreased 3.3%, to ¥185,407
million.

printing units within the Group, posted lower sales owing to lackluster
production printer sales that overshadowed solid demand for POP

Industrial/Medical

advertising production printers.

Industrial equipment sales were up. This reflected steady sales of

As a result of these factors, Business Solutions sales increased
0.9% year on year, to ¥330,233 million.

maintenance services for semiconductor fabrication equipment andmetrology systems from Zygo Corporation amid a recovery in capital
expenditure in the semiconductor production equipment market.

IT Solutions

Performance also benefited from such new offerings as 3D printers

Sales of the systems integration (SI) service business were up,

from 3D Systems, Inc., of the United States. In the medical imaging

reflecting higher orders for developing individual systems, particularly

category, demand was strong for digital radiography systems, as wellfrom financial institutions, and more solutions projects for medical

as for computed tomography (CT), magnetic resonance imaging (MRI),

institutions. Sales from the IT infrastructure service business wereand other modalities. The healthcare category benefited from higher

down slightly from a year earlier. This was because sales of servers

sales of sterilizers and ophthalmic equipment. The August 2014

and software declined in the infrastructure solutions business,consolidation of AZE, Ltd., which has outstanding 3D medical image

Canon Marketing Japan Inc. Annual Report 2014

analysis technologies, also contributed to an increase in medical

million in dividend payments. Total stockholders’ equity ratio was

equipment sales.

56.3%, up 1.3 percentage points from a year earlier. Stockholders’As a result of these factors, segment sales increased 7.3%, toequity per share increased ¥102.38, to ¥2,082.60.

¥28,024 million.

Cash Flows
Income Analysis

Cash and cash equivalents (“net cash”) amounted to ¥120,607 million

Consolidated net sales increased 0.3%, to ¥659,432 million. This

as of December 31, 2014, an increase of ¥18,424 million from the end

reflected gains in the Business Solutions, IT Solutions, andof the previous year.

Industrial/Medical segments, which outweighed a decline in
Imaging Systems sales.
Cost of sales decreased ¥7,383 million. Gross profit rose 4.3%, to¥233,536 million.
Selling, general and administrative expenses increased 0.7%, toNet cash provided by operating activities amounted to ¥38,191
million, compared with ¥28,781 million in the previous year. Thischange was due mainly to ¥25,858 million in income before income
taxes and minority interests, ¥17,090 million in depreciation andamortization, and a decrease of ¥4,848 million in notes and accounts¥208,448 million, owing to such factors as advertising and salesreceivable, partially offset by a decrease of ¥7,244 million in notes andpromotion expenses.

accounts payable and income taxes paid of ¥5,918 million.

Operating income therefore climbed 47.5%, to ¥25,088 million.

Net cash used in investing activities was ¥15,221 million,

Net other income was ¥770 million, an increase from ¥42 million

compared with ¥25,757 million in the previous year. The main factors

a year earlier. The key factors here were ¥332 million in insurance

were ¥10,332 million in payments for purchases of property, plant andincome due to disaster and ¥255 million in settlement received.

equipment, ¥3,354 million in payments for purchases of intangible

Net income thus rose 57.7%, to ¥16,030 million. Net income pershare was ¥123.62, up ¥46.95 from a year earlier.

assets, ¥939 million in payments for purchases of shares ofsubsidiaries, and ¥1,279 million in payments for purchases ofinvestments in subsidiaries resulting in change in scope of

Financial Position
Total current assets increased ¥14,657 million from the end of theconsolidation.
Net cash used in financing activities amounted to ¥4,545 million,

previous year, to ¥339,596 million. This stemmed from an increase ofcompared with ¥9,105 million in the previous year. Cash flows from

¥18,424 million in cash and cash equivalents, which offset a ¥4,224

financing activities mainly represent dividends paid of ¥3,514 million.

million decrease in notes and accounts receivable.
Fixed assets decreased ¥1,986 million, to ¥140,151 million. Prime
factors in this change were decreases of ¥2,645 million in softwareand ¥1,045 million in deferred tax assets, outweighing a ¥4,130
million increase in rental assets.
Total current liabilities decreased ¥143 million, to ¥164,771
million. This was because a decrease of ¥7,161 million in notes andaccounts payable offset rises of ¥2,922 million in accrued income
taxes and ¥4,654 million in consumption taxes payable.
Total long-term liabilities decreased ¥463 million, to ¥44,623
million, owing to a ¥38,234 million decrease in the allowance for
employees’ retirement benefits, which offset an increase of ¥37,863
million in net defined benefit liabilities.
Total net assets increased ¥13,277 million, to ¥270,353 million,
owing to such factors as ¥16,030 million in net income and ¥3,501

39

40

Canon Marketing Japan Inc. Annual Report 2014

Consolidated Balance Sheets
Canon Marketing Japan Inc. and Consolidated Subsidiaries
December 31, 2014 and 2013

Millions of yen

ASSETS

2014

2013

CURRENT ASSETS:¥ 120,607¥ 102,183

Notes and accounts receivable (Note 9)

Cash and cash equivalents (Notes 9 and 10)

128,473

132,697

Inventories (Note 5)

27,81528,234

Deferred tax assets (Note 12)

4,860

5,089

Short-term loans receivable (Note 9)

50,05550,000

Other current assets

7,899

6,924

Allowance for doubtful receivables

(113)

(188)

339,596324,939

Land (Note 3)

36,30236,013

Buildings and structures (Note 3)

87,00585,973

161

160

Furniture and fixtures (Note 8)

19,902

19,917

Rental assets

31,731

27,601

Lease assets

1,907

1,852

Total

177,008

171,516(76,949)(71,832)

100,059

99,684

Total current assets

PROPERTY, PLANT AND EQUIPMENT:

Machinery and vehicles

Accumulated depreciation
Net property, plant and equipment

INTANGIBLE ASSETS:
Goodwill (Note 2)

1,091

448

Software

9,362

12,007

Lease assets

116

93

Utilization rights

318

316

Other intangible assets

20

30

10,907

12,894

Total intangible assets

INVESTMENTS AND OTHER ASSETS:
6,293

5,304

Long-term loans receivable

Investments in securities (Notes 3, 9 and 10)1212Lease deposits (Note 16)

5,338

5,571

Deferred tax assets (Note 12)

15,04016,085

Other investments

2,859

2,981

Allowance for doubtful receivables

(357)

(394)

Total investments and other assets
Total assets

29,18529,559¥ 479,747¥ 467,076

Canon Marketing Japan Inc. Annual Report 2014

Millions of yen

LIABILITIES AND NET ASSETS

2014

2013

¥ 101,338¥ 108,499

344

447

Accrued income taxes (Note 12)

5,919

2,997

Consumption taxes payable

7,619

2,965

Accrued expenses

24,11524,976

Reserves

4,166

4,311

CURRENT LIABILITIES:
Notes and accounts payable (Notes 3 and 9)
Lease obligations (Note 16)

Other current liabilities
Total current liabilities

21,27020,719164,771

164,914

LONG-TERM LIABILITIES:Long-term loans payable (Notes 3 and 16)—

74

Lease obligations (Note 16)

445

455

Deferred tax liabilities (Note 12)

540

579

Deferred tax liabilities for land revaluation (Note 12)29

31

Allowance for employees’ retirement benefits (Notes 2 and 11)—

38,234998

933

37,863—

Allowance for long-term continuous service rewards (Note 2)
Net defined benefit liabilities (Notes 2 and 11)
Other long-term liabilities
Total long-term liabilities

4,748

4,780

44,62345,086

CONTINGENT LIABILITIES (Note 4)

NET ASSETS (Note 2):
STOCKHOLDERS’ EQUITY (Note 17):
Common stock:
Authorized—299,500,000 shares;
73,30373,303

Capital surplus

Issued—151,079,972 shares in 2014 and 201382,82082,820Retained earnings

143,864

131,332

Treasury stock(31,905)(31,897)

1,705

1,139

ACCUMULATED OTHER COMPREHENSIVE INCOME
Net unrealized gain on available-for-sale securities
Foreign currency translation adjustments

272

98

Remeasurements of defined benefit plans

2

—

1,979

1,237

292

281

270,353

257,076¥ 479,747¥ 467,076

Total accumulated other comprehensive income
MINORITY INTERESTS
Total net assets
Total liabilities and net assets• See accompanying notes to consolidated financial statements.

41

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Canon Marketing Japan Inc. Annual Report 2014

Consolidated Statements of Income
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2014 and 2013

Millions of yen

NET SALES

2014

2013

¥ 659,432¥ 657,216

COST OF SALES

425,896433,279

Gross profit

233,536

223,937

208,448

206,924

25,08817,013

Interest and dividend income

362

347

Interest expense

(32)

(31)

Equity in loss of affiliates(3)—

Insurance income

596

648

Gain on sales of fixed assets

71

26

Gain on negative goodwill

12—

Insurance income due to disaster

332—

Settlement received

255—

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income
OTHER INCOME (EXPENSES):

Loss on impairment of fixed assets

(6)

(5)

Gain on sales of investments in securities

4603

Loss on sales and disposal of fixed assets

(216)

(639)

Loss on disaster

(390)

—

Loss on litigation

(600)

—

Expenses related to change of business name—(3)

Office transfer expenses

—

(204)

Special extra retirement payments

(13)

(597)

Other, net

398

(103)

770

42

25,85817,055

Income before income taxes and minority interests

INCOME TAXES (Note 12):Current

8,686

6,331

Deferred

1,109

518

9,795

6,849

Income before minority interests

16,063

10,206MINORITY INTERESTS
Net income

33

38¥ 16,030¥ 10,168Yen

PER SHARE OF COMMON STOCK (Note 2):
Net income
Cash dividends applicable to the year
• The fiscal 2013 cost of sales, selling, general and administrative expenses, and gross profit have been restated.
• See accompanying notes to consolidated financial statements.

¥

123.62¥40.00¥76.67¥24.00Canon Marketing Japan Inc. Annual Report 2014

Consolidated Statements of Comprehensive Income
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2014 and 2013

Millions of yen

2014

2013

¥ 16,063¥ 10,206

Net unrealized gain on available-for-sale securities

567

1,078

Foreign currency translation adjustments

165

168

Total other comprehensive income

732

1,246

¥ 16,795¥ 11,452¥ 16,771¥ 11,398

24

54

INCOME BEFORE MINORITY INTERESTSOTHER COMPREHENSIVE INCOME (Note 6)

Comprehensive income
Comprehensive income attributable to
Shareholders of Canon Marketing Japan Inc.
Minority interests• See accompanying notes to consolidated financial statements.

43

44

Canon Marketing Japan Inc. Annual Report 2014

Consolidated Statements of Changes in Net Assets
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2014 and 2013

Millions of yen

Stockholders’ equity
Number of sharesof common stock

BALANCE AT JANUARY 1, 2013

151,079,972

Commonstock

Capitalsurplus¥ 73,303

Retainedearnings¥ 82,820

Treasurystock¥ 124,624

Net income

10,168Cash dividends(3,460)Purchase of treasury stock¥ (26,892)(5,006)

Disposition of treasury stock(0)

1¥ 131,332¥ (31,897)

Other, net
BALANCE AT JANUARY 1, 2014

151,079,972¥ 73,303¥ 82,820

Net income

16,030Cash dividends(3,501)

Purchase of treasury stock(9)

Disposition of treasury stock0

1

Other, net
BALANCE AT DECEMBER 31, 20143
151,079,972¥ 73,303¥ 82,820¥ 143,864¥ (31,905)

Millions of yen

Accumulated other comprehensive income
Net unrealized gain
on available-for-salesecurities
BALANCE AT JANUARY 1, 2013¥

61

Foreign currencytranslation
adjustments¥ (54)

Remeasurementsof defined benefit
plans—

Minority
interests

Total net
assets¥ 226¥ 254,088

Net income

10,168Cash dividends(3,460)Purchase of treasury stock(5,006)

Disposition of treasury stock

1

Other, net
BALANCE AT JANUARY 1, 2014

1,078

152

¥ 1,139

¥ 98

—

55

1,285

¥ 281

¥ 257,076

Net income

16,030Cash dividends(3,501)

Purchase of treasury stock(9)

Disposition of treasury stock

1

Other, net
BALANCE AT DECEMBER 31, 2014

566

174

2

11

756

¥ 1,705

¥ 272

¥ 2

¥ 292

¥ 270,353• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. Annual Report 2014

Consolidated Statements of Cash Flows
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2014 and 2013

Millions of yen

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Gain on negative goodwill
Decrease in allowance for doubtful receivables
Increase in allowance for employees’ retirement benefits
Decrease in allowance for directors’ retirement benefits, net
Decrease in net defined benefit liabilities
Interest and dividend income
Interest expense
Loss on sales and retirement of property, plant and equipment, net
Gain on sales of investments in securities
Decrease (increase) in notes and accounts receivable-trade
Decrease in inventories
Decrease (increase) in notes and accounts payable-trade
Other, net
Sub-totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Payments for purchases of investments in securities
Proceeds from sales of investments in securities
Payments for purchases of shares of subsidiaries
Proceeds from sales of shares of affiliates
Payments for purchases of shares of subsidiaries resulting in change in scope of consolidation
Proceeds from purchases of shares of subsidiaries resulting in change in scope of consolidation
Increase in short-term loans receivable, net
Decrease in time deposits, net
OtherNet cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term loans payable, net
Repayments of finance lease obligations
Payments for purchases of treasury stock
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
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
• See accompanying notes to consolidated financial statements.

2014

2013

¥ 25,858¥ 17,055

17,090
6
139
(12)
(115)
—
—
(474)
(362)
32
95
(3)
4,848
303
(7,244)
3,618
43,779363(33)(5,918)38,191

17,448
5
53
—
(150)
483
(1,046)
—
(347)
31
510
(599)
(4,730)
433
4,192
3,541
36,879350(31)(8,417)28,781—(10,332)440(3,354)
(180)
33
(939)
239
(1,279)
—
(40)
109
82
(15,221)30(13,691)327(3,513)
(194)
1,307
—
—
—
45
(9,998)47(117)(25,757)

(141)
(527)
(9)
(3,514)(354)(4,545)(1)
18,424102,183¥ 120,607—(631)(5,006)(3,468)0(9,105)
4(6,077)108,260¥ 102,183

45

46

Canon Marketing Japan Inc. Annual Report 2014

Notes to Consolidated Financial Statements

01

Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Canon Marketing Japan Inc. (the “Company”) and its consolidated subsidiaries (the “Group”) areprepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Law of Japan.
Certain accounts and items presented in the original consolidated financial statements in Japanese have been reclassified for the convenience ofreaders outside Japan.

02

Summary of Significant Accounting Policies(a) Principles of Consolidation
The accompanying consolidated financial statements for the year ended
December 31, 2014 include the accounts of the Company and all of its 27(30 in 2013) subsidiaries.
All intercompany accounts and transactions are eliminated inconsolidation.
The excess of acquisition costs over net assets acquired is amortized
generally over five years.
(b) Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company
and its consolidated subsidiaries consider all highly liquid investments,
including securities, time deposits and certificates of deposit, all of whichmature or become due within three months of the date of acquisition, tobe cash equivalents.
(c) Securities
The held-to-maturity debt securities are stated at amortized cost.
Available-for-sale marketable securities are stated at fair market
value, with unrealized gain or loss, net of the applicable taxes, reported asa separate component of net assets. Available-for-sale securities whose
fair value is not readily determinable are stated at cost determined by themoving-average method.
(d) Inventories
Merchandise and service parts are valued at cost determined by themonthly moving-average method. The carrying amount in the balance
sheet is calculated with consideration of write-downs due to decreased
profitability.
Work in process is valued at cost determined by the specificidentification method.
Supplies are valued at cost determined by the last-purchase pricemethod. The carrying amount in the balance sheet is calculated withconsideration of write-downs due to decreased profitability.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computedby the declining-balance method for property and equipment, with the
exception of items that are depreciated by the straight-line method at rates
based on the estimated useful lives of the respective assets. These items
are buildings purchased on or after April 1, 1998 (exclusive of furnitureand fixtures), all buildings and structures of the Company’s Makuhari
office, property and equipment of certain consolidated subsidiaries, andrental assets in the Business Solutions segment. The useful lives are as
follows: buildings, mainly fifty years; furniture and fixtures, mainly five

years; and rental assets, mainly three years. Normal repairs andmaintenance, including minor renewals and improvements, are charged toincome as incurred.
(f) Accounting Method for Retirement Benefits(1) Method of attributing estimated amounts of retirement benefits toperiods
In calculating retirement benefit obligations, the estimated amount of
retirement benefits attributed to a period up to the current fiscal year is
primarily determined based on the straight-line basis.
(2) Amortization of unrecognized actuarial gains and losses and priorservice cost
Unrecognized prior service cost is amortized by the straight-line method
over the average remaining service period of the eligible employees at thetime when it arose. Unrecognized actuarial gains and losses are amortizedfrom the fiscal year following the year in which they arose by the straightline method over the average remaining service period of the eligible
employees.
(3) Application of simplified method at smaller-sized companies, etc.
Certain consolidated subsidiaries apply the simplified method for
calculating net defined benefit liabilities and net periodic benefit costs.
Under this method, the payments for voluntary early retirement of alleligible employees at the end of the fiscal year are recognized as
retirement benefit obligations.
(g) Leases
Leased assets under finance lease contracts are depreciated by thestraight-line method over their respective lease contract term with zero
residual value.
Leased assets under finance lease contracts that do not deem totransfer ownership to the lessee and were entered into before January 1,
2009 when the latest accounting standards for lease transactions wereadopted are accounted for as operating leases.
(h) Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided in the amount required
to cover possible losses on collection. It is determined by adding
individually estimated uncollectible amounts for specific items to an
amount based on the actual rate of uncollected receivables of the Group inprior years.
(i) Income Taxes
Deferred tax assets and liabilities are recorded to reflect the impact of
temporary differences between assets and liabilities recognized forCanon Marketing Japan Inc. Annual Report 2014

financial reporting purposes and such amounts recognized for tax
purposes. These deferred taxes are measured by applying the statutory
income tax rate to the temporary differences.
(j) Translation of Foreign Currency Accounts
All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at thecurrent exchange rates in effect at the balance sheet date. The foreignexchange gains and losses on translation are recognized in theaccompanying consolidated statements of income.
(k) Foreign Currency Financial Statements
The balance sheet accounts of the foreign subsidiaries are translated into
Japanese yen at the current exchange rates in effect at the balance sheet
date, except for the components of net assets excluding minority interests
which are translated at their historical exchange rates.
Revenue and expense accounts are translated at the averageexchange rates prevailing during the year.
(l) Per Share Amounts of Common Stock
Net income per share is calculated using net income available to holdersof common stock, and the weighted average number of shares of common
stock outstanding for the period.
Cash dividends per share presented in the accompanying
consolidated statements of income are dividends applicable to therespective fiscal years, including dividends to be paid after the end of therespective fiscal years.
(m) Bonuses to Directors
The estimated amount payable for the next round of directors’ bonuses,
which are classed as expenses for the current year, has been included in
the accounts for the current fiscal year.
(n) Allowance for Long-Term Continuous Service Rewards
In order to set aside money for payment of rewards to employees who
have given long-term continuous service determined in accordance with
the Company’s internal regulations, an allowance for long-term continuous
service rewards is recorded based on the amount the Company andcertain consolidated subsidiaries expect to pay in the future.
The Company and some of its subsidiaries have established internal
regulations related to the Refresh and Vacation System for employees who
have been very diligent and have given long-term and continuous service.
The system grants vacations and pays rewards at fixed intervals in orderto refresh the minds and bodies of these employees and enable them towork with new vigor in the future.
(o) Recognition of Revenues and Expenses and Recognition of
Revenue from Customized Software Development
For software development contracts in progress as of December 31, thepercentage-of-completion method is applied in cases where the outcomesof such software development contracts can be estimated reliably. Whenthe percentage-of-completion method is applied, the percentage ofcompletion at the end of the fiscal year is determined based on actual
costs incurred and estimated total contract costs. For all other contracts,
the completed-contract method is applied.
(p) Application of Consolidated Taxation System
The Company and certain consolidated subsidiaries have adopted theconsolidated taxation system.

(q) Changes in Accounting Policies
Effective from December 31, 2014, the Company applied “AccountingStandard for Retirement Benefits” (Accounting Standards Board of Japan(ASBJ) Statement No. 26, May 17, 2012) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012),
except for the main clause of Article 35 of the Accounting Standard for
Retirement Benefits and the main clause of Article 67 of the Guidance on
Retirement Benefits. In accordance with this application, this accounting
treatments for retirement benefits have been changed to record net
defined benefit liabilities in the amount of retirement benefit obligations
less the fair value of plan assets. Unrecognized actuarial gains and losses
and unrecognized prior service cost are also included in net defined
benefit liabilities.
The Accounting Standard for Retirement Benefits and its guidance areapplied with transitional treatments stipulated in Article 37 of the
Accounting Standard for Retirement Benefits. As of December 31, 2014,
the impact of this change was reflected in remeasurements of defined
benefit plans under accumulated other comprehensive income.
As a result, as of December 31, 2014, ¥37,863 million was allocatedto net defined benefit liabilities and accumulated other comprehensive
income increased by ¥2 million.
(r) Accounting Standards Not Yet Applied“Accounting Standard for Retirement Benefits” (Accounting Standards
Board of Japan (ASBJ) Statement No. 26, May 17, 2012)“Guidance on Accounting Standard for Retirement Benefits” (ASBJ
Guidance No. 25, May 17, 2012)(1) Overview
In light of financial reporting improvement perspectives and international
trends, these standards were amended to enhance disclosure forunrecognized actuarial gains and losses and unrecognized prior service
cost accounting and calculations of retirement benefit obligations andservice costs.
(2) Application Date
The Company adopted revised accounting methods for retirement benefit
obligations and service costs from the beginning of the fiscal year ending
December 31, 2015.
This change in accounting policy will not apply retroactively to prioryear consolidated financial statements because transitional treatments
have been specified in the relevant accounting standards.
(3) Effect of Applying Accounting Standards
Management was reviewing the effect on the consolidated financial
statements at the time of their preparation of revisions to calculations ofretirement benefit obligations and service costs.
(s) Change in Presentation Method
Consolidated Statements of Income
The Company traditionally included the expenses of intragroup businesssystem development and operations entrusted to certain consolidated
subsidiaries in cost of sales. From the current fiscal year, however, it
included this expenditure in selling, general and administrative expenses
to reflect the increasing quantitative impact of such operations amid
increasing process internalization.
The Company has restated its consolidated financial statements forthe previous fiscal year to reflect this change in presentation method.
As a result of this decision, management reclassified ¥3,727 millionof cost of sales in the previous fiscal year’s consolidated statement ofincome as part of selling, general and administrative expenses.

47

48

Canon Marketing Japan Inc. Annual Report 201403

Assets Pledged as Collateral
Assets pledged as collateral as of December 31, 2014 and 2013 were as follows:(1) Pledged assets
Millions of yen

2014
Land
Buildings

¥

701

2013
¥

647

480

435

¥ 1,181¥ 1,082(2) Liabilities secured by the above assets
Millions of yen

Accounts payable

04

2014

2013

¥ 264

¥ 315

¥ 264

¥ 315

Contingent Liabilities
Contingent liabilities at December 31, 2014 and 2013 were as follows:
Millions of yen

Joint and several guarantee on lease payment of two customers
Guarantees for employees’ housing loans

05

2014

2013

¥ 8

¥ 38

45

54

¥ 53

¥ 92

Inventories
Inventories at December 31, 2014 and 2013 were composed of the following:
Millions of yen

2014

2013

Merchandise¥ 24,043¥ 24,414

Service parts

2,428

2,427

Work in progress

489

578

Supplies

720

669

Other

135

146

¥ 27,815¥ 28,234

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 have been recorded in gross amounts in current assets and current liabilities, respectively. Out of inventories, ¥21 million at December 31, 2014 forwork in progress relates to software development contracts from which losses are expected and corresponds to the reserve for contract losses.

Canon Marketing Japan Inc. Annual Report 201406

Other Comprehensive Income
The following table shows reclassification adjustments for each component of other comprehensive income for the years ended December 31, 2014 and2013
Millions of yen

2014

2013

Net unrealized gain on available-for-sale securities
Amount arising during the year

¥ 870

Reclassification adjustments¥ 2,217

(1)

869

(564)

1,653

165

165

168

168

Foreign currency translation adjustments
Amount arising during the year
Total other comprehensive income before tax effectTax effectTotal other comprehensive income

1,034

1,821

(302)

(575)

¥ 732

¥ 1,246

The following table shows tax effects for each component of other comprehensive income for the years ended December 31, 2014 and 2013
Millions of yen

2014
Net unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total other comprehensive income¥869¥ (302)

¥ 567

2013
¥ 1,653¥ (575)¥ 1,078

165

—

165

168

—

168

¥ 1,034¥ (302)¥ 732¥ 1,821¥ (575)¥ 1,24649

50

Canon Marketing Japan Inc. Annual Report 201407

Consolidated Statement of Changes in Net Assets
Current Fiscal Year (from January 1, 2014 to December 31, 2014)
1. Matters pertaining to the types and total number of shares issued and the types and number of shares of treasury stock
End of the previous fiscal year

Increase

Decrease

End of the current fiscal year

(Thousands of shares)(Thousands of shares)(Thousands of shares)(Thousands of shares)

151,080
151,080————

151,080
151,080

21,40021,40055

0
021,405
21,405

Issued stock
Common stock
Total
Treasury stock
Common stock
Total

Notes: 1. The increase of 5 thousand shares of treasury stock was due to the purchase of fractional stock.
2. The decrease of 0 thousand shares of treasury stock was due to the sale of fractional stock.

2. Matters regarding dividends(1) Payment of dividends
Resolution

Total dividends

Dividend per share(Millions of yen)

(Yen)

Common stock¥1,556

Common stock¥1,945

Type of stock

March 27, 2014
General stockholders’ meeting
July 23, 2014
Board of Directors’ meeting

Base date

Date effective¥12

December 31, 2013

March 28, 2014¥15

June 30, 2014

August 26, 2014

(2) Dividends for which the base date falls within the current fiscal year and the date effective is in the following fiscal year
Resolution

Type of stock

March 26, 2015
General stockholders’ meeting Common stock

Funds used to pay
the dividend

Total dividends

Dividend per share(Millions of yen)

(Yen)

Retained earnings¥3,242¥25

Base date

Date effective

December 31, 2014

March 27, 2015

Previous Fiscal Year (from January 1, 2013 to December 31, 2013)
1. Matters pertaining to the types and total number of shares issued and the types and number of shares of treasury stock
End of the previous fiscal year

Increase

Decrease

End of the current fiscal year

(Thousands of shares)(Thousands of shares)(Thousands of shares)(Thousands of shares)

151,080
151,080————

151,080
151,080

17,993
17,993

3,407
3,407

0
0

21,40021,400Issued stock
Common stock
Total
Treasury stock
Common stock
Total

Notes: 1. The increase of 3,407 thousand shares of treasury stock consists of an increase of 3,403 thousand shares due to the purchase through the market, and 4 thousand
shares due to the purchase of fractional stock.
2. The decrease of 0 thousand shares of treasury stock was due to the sale of fractional stock.

2. Matters regarding dividends(1) Payment of dividends
Resolution
March 27, 2013
General stockholders’ meeting
July 23, 2013
Board of Directors’ meeting

Total dividends

Dividend per share(Millions of yen)

(Yen)

Common stock¥1,863

Common stock¥1,597

Type of stock

Base date

Date effective¥14

December 31, 2012

March 28, 2013¥12

June 30, 2013

August 27, 2013

(2) Dividends for which the base date falls within the current fiscal year and the date effective is in the following fiscal year
Resolution

Type of stock

March 27, 2014
General stockholders’ meeting Common stock

Funds used to pay
the dividend

Total dividends

Dividend per share(Millions of yen)

(Yen)

Retained earnings¥1,556¥12

Base date

Date effective

December 31, 2013 March 28, 2014

Canon Marketing Japan Inc. Annual Report 201408

LeasesFinance Leases
Lease payments for finance leases excluding subleases, except for the lease agreements which stipulate the transfer of ownership of the leased property
to the Company and its consolidated subsidiaries, were ¥15 million and ¥82 million for the years ended December 31, 2014 and 2013, respectively.
(As Lessee)
Future minimum lease payments subsequent to December 31, 2014 and 2013 are summarized as follows:
Millions of yen

2014

2013

Within one year

—

¥ 15

Thereafter

—

—

—

¥ 15

Future minimum lease payments:

Future minimum lease payments included the following subleases:
Millions of yen

2014

2013

Within one year——

Thereafter

—

—

—

—

Future minimum lease payments:

The following pro forma amounts represent acquisition cost, accumulated depreciation and amortization, and net book value of leased property as ofDecember 31, 2014 and 2013, excluding subleases:
Millions of yen

2014

2013

—

¥ 210

Acquisition cost:
Furniture and fixtures¥ 210
Accumulated depreciation and amortization:
Furniture and fixtures

—

¥ 195
¥ 195

Net book value:
Furniture and fixtures

—

¥ 15

—

¥ 15

51

52

Canon Marketing Japan Inc. Annual Report 201409

Financial Instruments
Current Fiscal Year (from January 1, 2014 to December 31, 2014) and Previous Fiscal Year (from January 1, 2013 to December 31, 2013)
1. Information on financial instruments(1) Policies for financial instruments
The Group limits its asset management to financial instruments characterized as very safe and believes that financing should mainly be conducted throughthe use of Group finances whenever necessary. The Company enters into derivative transactions to hedge against foreign exchange fluctuation risks andnot 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 to credit risks of customers. The Group strives to mitigate these risks bystrict credit control utilizing credit information provided by external credit agencies, as well as by credit insurance and other risk-hedging means.
Short-term loans receivable are mainly the loans to the parent company by the Company, rendered in compliance with the internal regulations forinvestment and management of funds.
Short-term investments in securities and investments in securities consist primarily of held-to-maturity debt securities and equity securities issued bybusiness counterparties of the Group, and are exposed to market price fluctuation risk. Regarding this risk, the Group periodically monitors the fair valuesof the securities and the financial condition of their issuers i.e., business counterparties. In addition, for securities other than held-to-maturity debt
securities, the Group continuously reviews the status of security holdings, taking market conditions and relationships with business 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 the risks 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 ofsuch values.
2. Fair values of financial instruments
The book values of financial instruments in the consolidated balance sheets as of December 31, 2014 and 2013, their fair values, and the differences
between the two are as follows. The table below, however, excludes the financial instruments whose fair values are considered extremely difficult to assess(see Note 2).
Millions of yen

2014Book value(1) Cash and deposits

Fair value

Difference¥ 36,107¥ 36,107—(2) Notes and accounts receivable

128,473

128,473—(3) Short-term investments in securities and investments in securities

90,01090,010—(4) Short-term loans receivable

50,05550,055—¥ 304,645¥ 304,645—¥ 101,338¥ 101,338—¥ 101,338¥ 101,338—

Total assets(5) Notes and accounts payable
Total liabilities

Millions of yen

2013
Book value(1) Cash and deposits(2) Notes and accounts receivable

Fair value

Difference¥ 20,083¥ 20,083—

132,697

132,697—(3) Short-term investments in securities and investments in securities

86,83686,836—(4) Short-term loans receivable

50,00050,000—¥ 289,616¥ 289,616—¥ 108,499¥ 108,499—¥ 108,499¥ 108,499—

Total assets(5) Notes and accounts payable
Total liabilities

Notes: 1. Calculation methods of fair values of financial instruments and other matters relating to securities are as below;

Canon Marketing Japan Inc. Annual Report 2014

Assets(1) Cash and deposits, (2) Notes and accounts receivable, and (4) Short-term loans receivable
The book values of these assets 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.
(3) Short-term investments in securities and investments in securities
The fair values of equity securities are based on the prices at the security exchanges, and those of debt securities are based on the prices at the security exchanges or
quotations obtained from counterparty financial institutions. Details of securities by holding objectives are described in Note 10 Securities.
Liabilities(5) Notes and accounts 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 considered extremely difficult to assess are as follows:
Millions of yen

2014

2013

Book value
Equity securities

¥ 308

¥ 327

Investments in investment partnerships

¥ 475

¥ 341

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 and therefore assessment of their fair values is considered to be extremely difficult.
3. The redemption schedule of monetary claims and securities with maturities as of December 31, 2014 and 2013 is summarized as follows:
Millions of yen

2014
Due after 1 year Due after 5 years
Due within 1 year
Due after 10 years
but within 5 years but within 10 years
Cash and deposits
Notes and accounts receivable¥ 36,107———

128,473

—

—

—

—

—

—

—

84,500———50,055———¥ 299,135———

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

Millions of yen

2013
Due after 1 year Due after 5 years
Due within 1 year
Due after 10 years
but within 5 years but within 10 years
Cash and deposits
Notes and accounts receivable¥ 20,083———

132,697

—

—

—

—

—

—

—

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

82,200———50,000———¥ 284,980

—

—

—

53

54

Canon Marketing Japan Inc. Annual Report 2014

10

Securities
Securities as of December 31, 2014 and 2013 were classified and included in the following accounts:
Millions of yen

2014

2013

¥ 6,293¥ 5,304

Cash and cash equivalents

84,50082,200Investments in securities——

Securities classified as:
Available-for-sale:
Investments in securities
Held-to-maturity:

84,50082,200¥ 90,793¥ 87,504

The carrying amounts and aggregate fair values of investments in securities at December 31, 2014 and 2013 were as follows:
Millions of yen

2014Book value

Unrealized gains

Unrealized losses

Fair value

Securities classified as:
Held-to-maturity:
Corporate bonds

—

—

—

—

Other

—

—

—

—

—

—

—

—

Millions of yen

2014
Cost

Unrealized gains

Unrealized losses

Fair value

Securities classified as:
Available-for-sale:
Equity securities
Other¥ 3,052¥ 2,471¥ (25)¥ 5,498

11

1

—

12

¥ 3,063¥ 2,472¥ (25)¥ 5,510

Canon Marketing Japan Inc. Annual Report 2014

Millions of yen

2013
Book value

Unrealized gains

Unrealized losses

Fair value

Securities classified as:
Held-to-maturity:
Corporate bonds

—

—

—

—

Other

—

—

—

—

—

—

—

—

Millions of yen

2013
Cost

Unrealized gains

Unrealized losses

Fair value

Securities classified as:
Available-for-sale:
Equity securities
Other¥ 3,030¥ 1,712¥ (117)¥ 4,625

11

0

—

11

¥ 3,041¥ 1,712¥ (117)¥ 4,636

Available-for-sale and held-to-maturity securities whose fair value is not readily determinable as of December 31, 2014 and 2013 were as follows:
Millions of yen

2014

2013

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

¥

308
475

¥

327
341

Held-to-maturity:
Certificates of deposit

84,50082,200¥ 85,283¥ 82,86855

56

Canon Marketing Japan Inc. Annual Report 201411

Employees’ Retirement and Severance Benefits
Current Fiscal Year (from January 1, 2014 to December 31, 2014)
1. Overview
The Company has a defined contribution pension plan, a pension plan with a market-based 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 not included 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

2014
Retirement benefit obligations at beginning of year

¥ 186,469

Service costs

6,760Interest costs

2,845

Actuarial gains and losses

12,097

Benefit paid
Retirement benefit obligations at end of year

(5,695)¥ 202,476(2) Reconciliation of plan assets at beginning and end of year
Millions of yen

2014
Plan assets at beginning of year

¥ 154,598

Expected return on plan assets

4,283

Actuarial gains and losses

6,967

Contributions from the employer

4,599

Benefit paid

(5,269)Plan assets at end of year

¥ 165,178(3) Reconciliation of retirement benefit obligations at beginning and end of year for which the simplified method was applied
Millions of yen

2014
Net defined benefit liabilities at beginning of year

¥ 444

Net periodic benefit costs

91

Benefit paid

(19)

Contributions to plans

(29)

Other
Net defined benefit liabilities at end of year

78
¥ 565

(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

2014
Funded retirement benefit obligations
Plan assets¥ 186,455
165,431
21,024

Unfunded retirement benefit obligations

16,839Net liabilities and assets in consolidated balance sheets¥ 37,863

Net defined benefit liabilities¥ 37,863

Net liabilities and assets in consolidated balance sheets¥ 37,863

Note: Includes plans for which the simplified method was applied.

Canon Marketing Japan Inc. Annual Report 2014

(5) Retirement benefit costs
Millions of yen

2014
Service costs¥ 6,760

Interest costs

2,845

Expected return on plan assets(4,283)

Amortization of actuarial gains and losses

3,641

Amortization of prior service cost

(4,462)

Net periodic benefit costs using the simplified method

91

Retirement benefit costs of defined benefit plans¥ 4,592

Note: In addition to the above retirement benefit costs, the Company recorded ¥352 million (including ¥13 million of special extra retirement payments) for extra retirement
payments.

(6) Remeasurements of defined benefit plans
Millions of yen

2014
Unrecognized prior service cost

¥ (12,380)

Unrecognized actuarial gains and losses
Total

12,430¥50(7) Plan assets
1. Main components of plan assets
Ratios for main components of plan assets were as follows:
2014
Bonds

24%

Stocks4%

Pooled funds

48%

Life insurance company general accounts

20%

Other

4%

Total

100%

Note: The Company holds 48% of its pooled funds in bonds and 52% in stocks.

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 andanticipated long-term rates of return from diverse plan assets.
(8) Actuarial assumptions
The principal actuarial assumptions at the end of the year ended December 31, 2014 were as follows:
2014
Discount rate

1.1 - 2.0%

Long-term expected rate of return on plan assets

1.0 - 3.0%

3. Defined contribution plan
The required contributions of the Company and consolidated subsidiaries to defined contribution plans totaled ¥1,589 million.

57

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Canon Marketing Japan Inc. Annual Report 2014

Previous Fiscal Year (from January 1, 2013 to December 31, 2013)
The liability for employees’ retirement benefits as of December 31, 2013 consisted of the following:
Millions of yen

2013
Projected benefit obligation¥ 187,143

Fair value of plan assets(154,829)

Unrecognized actuarial loss

(10,941)

Unrecognized prior service cost

16,842

Prepaid pension cost
Allowance for employees’ retirement benefits

19¥ 38,234

The components of net periodic benefit costs for the year ended December 31, 2013 were as follows:
Millions of yen

2013
Service costs¥ 6,832

Interest costs

3,147

Expected return on plan assets(3,739)Amortization of prior service cost

(4,649)Amortization of actuarial loss

4,863

Other

1,389

Net periodic benefit costs¥ 7,843

Assumptions used in accounting for the above plans for the year ended December 31, 2013 were principally as follows:
2013
Discount rate

1.4 - 2.0%

Expected rates of return on plan assets

1.0 - 3.0%

Amortization period of prior service cost

5-13 years

Recognition period of actuarial loss

5-13 years

Canon Marketing Japan Inc. Annual Report 2014

12

Income Taxes
The difference between the statutory income tax rate and the effective income tax rate for the year ended December 31, 2014 is not material, therefore
the tax reconciliation for 2014 is not disclosed.
For the year ended December 31, 2013, the difference between the statutory income tax rate (38.0%) and the effective income tax rate following the
adoption of tax-effect accounting (40.2%) was 2.2 percentage points. The effective income tax rate for the year ended December 31, 2013, differed fromthe statutory income tax rate following the adoption of tax-effect accounting for the reasons outlined in the table below.
2013
Statutory income tax rate

38.0 %

Entertainment and other expenses permanently not deductible for tax purposes

2.0 %Per-capita levy of inhabitant's taxes

2.1 %Valuation allowance(2.0)%

Dividend income not taxable(0.5)%

Other

0.6 %

Effective income tax rate following the adoption of tax-effect accounting

40.2 %The effects of significant temporary differences, which resulted in deferred tax assets and liabilities as of December 31, 2014 and 2013, were as follows:
Millions of yen

2014

2013

¥ 1,291¥ 1,491

Accrued business tax and business office tax

654

504

Loss on disposal and devaluation of inventories

434

642

13,255—

DEFERRED TAX ASSETS:
Accrued bonuses to employees

Net defined benefit liabilities
Allowance for employees’ retirement benefits—

13,653

Excess amortization of software

1,695

2,563

Loss carried forward

1,124

2,129

Loss on devaluation of investments in securities

812

695

Excess depreciation of fixed assets

520

497

Loss on impairment of fixed assets

100

261

Allowance for doubtful receivables

117

46

4,890

4,390

Gross deferred tax assets

24,892

26,871

Less: valuation allowance(3,199)(3,872)¥ 21,693¥ 22,999

¥

¥

Other

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

711

539

1,534

1,684

117

212

¥ 2,362¥ 2,435

Net deferred tax assets¥ 19,360¥ 20,595

Deferred tax liabilities for land revaluation

¥

¥

29

31

(Additional Information)
Modifications to the amount of deferred tax assets and liabilities due to changes of corporate tax rates
Due to the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No.10, 2014) on March 31, 2014, the Special Reconstruction
Corporation Tax will not be imposed from fiscal years starting on or after April 1, 2014. As a result, the effective statutory income tax rate to be used in thecalculation of deferred tax assets and liabilities for temporary differences that are expected to reverse in fiscal years starting from January 1, 2015, will berevised to 35% from 38% of the prior fiscal year.
Due to these changes in corporate tax rates, the amount of deferred tax assets (less the amount of deferred tax liabilities) decreased by ¥657 million,
resulting in an increase of the same amount in deferred income taxes as of and for the year ended December 31, 2014.

59

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Canon Marketing Japan Inc. Annual Report 201413

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 their respective operating results.
The Company has four reportable segments, Business Solutions, IT Solutions, Imaging Systems and Industrial/Medical, all of which are determinedbased on the organizational structure of the Group and include companies of the Group.
The “Industrial Equipment” segment has been renamed the “Industrial/Medical” segment.
This change in segment description has no impact on any financial information of this segment.
Major companies and organizations in each segment
Reportable Segment

Business Solutions

IT Solutions

Imaging Systems

Major companies / organizations
Canon Marketing Japan Inc.
Business Solutions Company
Canon System & Support Inc.
Canon Production Printing Systems Inc.
Canon Marketing Japan Inc.
IT Product Promotion Headquarters
Canon MJ IT Group Holdings Inc.
Canon IT Solutions Inc.
Canon Software Inc.
Edifist Learning Inc.
12 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.
AZE, Ltd.
Canon Advanced Technologies Taiwan Inc.
1 other company

Major products and services in each segment
Reportable Segment

Major products / services

Business Solutions

Business-use multifunctional products, print-on-demand (POD) digital presses, personal-use plain-paper
copiers, laser printers, large format ink-jet printers, office-use facsimiles, liquid crystal projectors,
document scanners, color cardprinters, color label printers, teleconference system, network cameras,
document solutions, service and support

IT Solutions

System integration, embedded software, infrastructure & operation, solution & software products,
computer devices, network devices, smart devices

Imaging Systems

Digital cameras, interchangeable lenses, digital video cameras, ink-jet printers, compact photo printers,
personal-use scanners, electronic dictionaries, 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 cleaningsystems, fully automated pharmaceutical dispensing systems(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.

Canon Marketing Japan Inc. Annual Report 2014(3) Information by reportable segment for the years ended December 31, 2014 and 2013 was as follows:
Millions of yen

2014Year ended or as of December 31,
Reportable Segment
Imaging
Systems

Industrial/
Medical

Other¥ 330,233 ¥ 115,717 ¥ 185,407¥ 28,024¥

Business
Solutions

IT Solutions

Total

Adjustments

Consolidated

Net sales:
External customers
Intersegment

33,033——¥ 28,024¥

51 ¥ 692,465 ¥ (33,033) ¥ 659,432

Segment income (loss)

¥

¥

¥

438 ¥ 25,088

Segment assets¥ 138,579 ¥ 65,040 ¥ 77,940¥ 19,725¥ 9,395 ¥ 310,679 ¥ 169,068 ¥ 479,747¥ 10,877 ¥¥

8,206 ¥

3,164 ¥ 14,258—— ¥ 659,432¥ 330,233 ¥ 148,750 ¥ 185,407

Total

—

51 ¥ 659,432(978)

33,033 ¥ (33,033)—— ¥ 25,088

Other items:
Depreciation and amortization
Amortization of goodwill— ¥Changes in the amount of property, plant¥ 10,089 ¥and equipment and intangible assets

3,065 ¥

2,489

¥

484

103

—

¥

36

2,321 ¥

1,322

¥

755

175 ¥ 17,090— ¥ 17,090

— ¥

— ¥

¥

139

41 ¥ 14,528

139— ¥ 14,528

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 andassets of administrative departments, totaling ¥169,068 million.
3. Segment income (loss) corresponds to operating income stated on the consolidated statement of income.

Millions of yen

2013Year ended or as of December 31,
Reportable Segment
Imaging
Systems

Industrial/
Medical¥ 327,264 ¥ 112,049 ¥ 191,730¥ 26,106

Business
Solutions

IT Solutions

Other

Total

Adjustments

Consolidated

Net sales:
External customers
Intersegment—¥ 26,106

Segment income (loss)¥¥ (1,765) ¥Segment assets¥ 135,459 ¥ 66,660 ¥ 81,881¥ 19,075¥ 11,089 ¥ 314,164 ¥ 152,912 ¥ 467,076¥ 10,812 ¥¥¥387 ¥ 12,491—— ¥ 657,216—

5,535 ¥

30,25067 ¥ 657,216¥ 327,264 ¥ 142,299 ¥ 191,730

Total

—

¥

¥

30,250 ¥ (30,250)—

67 ¥ 687,466 ¥ (30,250) ¥ 657,216
365 ¥ 17,013— ¥ 17,013

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

3,186 ¥

2,811

— ¥

53

—

9,285 ¥

2,926 ¥

1,654

461
—

¥

540

¥

178 ¥ 17,448— ¥ 17,448

— ¥

— ¥

53

12 ¥ 14,417

53— ¥ 14,417

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 andassets of administrative departments, totaling ¥152,912 million.
3. Segment income (loss) corresponds to operating income stated on the consolidated statement of income.

61

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Canon Marketing Japan Inc. Annual Report 2014

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% ofconsolidated 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
Millions of yen

2014Year ended or as of December 31,
Reportable Segment

Impairment loss

Business
Solutions

IT Solutions

Imaging
Systems

Industrial/
Medical

—

—

—

¥ 6

Other

Total

—

¥ 6

Adjustments

Consolidated—¥ 6

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

2013Year ended or as of December 31,
Reportable Segment

Impairment loss

Business
Solutions

IT Solutions

Imaging
Systems

Industrial/
Medical

—

¥ 0

—

¥ 5

Other

Total

—

¥ 5

Adjustments

Consolidated—¥ 5

4. Information on amortization and balance of goodwill by reportable segment
Millions of yen

2014Year ended or as of December 31,
Reportable Segment
Other

Total

Adjustments

Consolidated

Business
Solutions

IT Solutions

Imaging
Systems

Industrial/
MedicalAmortization of goodwill

—

¥ 103

—

¥ 36

—

¥

139

—

¥

Goodwill at December 31, 2014

—

¥ 401

—

¥ 690

—

¥ 1,091—¥ 1,091

139

Millions of yen

2013Year ended or as of December 31,
Reportable Segment
Imaging
Systems

Industrial/
Medical

Other

Total

Adjustments

Consolidated

Business
Solutions

IT Solutions

Amortization of goodwill

—

¥ 53

—

—

—

¥ 53

—

¥ 53

Goodwill at December 31, 2013

—

¥ 448

—

—

—

¥ 448

—

¥ 448

5. Information on gain on negative goodwill
In the year ended December 31, 2014, the Company acquired shares in A&A Co., Ltd., making it a consolidated subsidiary. This resulted in a ¥12 million
gain on negative goodwill, which the Company included in other income but has not allocated to individual reporting segments.
There were no applicable items in the year ended December 31, 2013.

Canon Marketing Japan Inc. Annual Report 201414

Related Party Transactions
Current Fiscal Year (from January 1, 2014 to December 31, 2014)
Parent company and major corporate stockholders, etc.

Category

Name ofcompany, etc.

Address

Capital orinvestment
capital(Millions ofyen)

Related contents
Percentage
Board
Business possession ofcontents or voting rights members
Businessholding
occupation (Ownership)
relationships
concurrent(%)
positionsContents of transactions

Transaction
amount(Millions ofyen)Accounts

Balance at
end of fiscal
year(Millions ofyen)¥ 232,974

Accounts
payable¥ 71,051

Purchases of
products

Parentcompany

Development
andmanufacturing(Ownership)in the office,Canon Inc. Ohta-ku,Tokyo ¥174,762
Direct 58.5
imaging system,
Indirect 0.0
and industrial
equipment
areas

Operatingtransactions
Two hold
concurrent
positions

Sales of officeequipment
andconsumables,
etc.

Manufactureof products
sold by
Canon MJ
Nonoperatingtransactions

Loans ofcapital

Accounts¥ 5,560 receivable andothers¥ 2,809

Short-term
loans¥ 50,000¥ 50,000

Note: Transaction amounts do not include sales tax, etc., and the balance of credit and debt includes sales tax, etc.

Transaction conditions and policies for deciding transaction conditions, etc.
(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.
Previous Fiscal Year (from January 1, 2013 to December 31, 2013)
Parent company and major corporate stockholders, etc.

Category

Name ofcompany, etc.

Address

Capital orinvestment
capital(Millions ofyen)

Related contents
Percentage
Board
Business possession ofcontents or voting rights members
Businessholding
occupation (Ownership)
relationships
concurrent(%)
positionsContents of transactions

Transaction
amount(Millions ofyen)Accounts

Balance at
end of fiscal
year(Millions ofyen)¥ 242,165

Accounts
payable¥ 76,241

Purchases of
products

Parentcompany

Manufactureand saleof office(Ownership)
equipment,
Canon Inc. Ohta-ku,Tokyo ¥174,762
Direct 58.5
imaging system
Indirect 0.0
equipment,
and industrial
equipment

Operatingtransactions
Two hold
concurrent
positions

Sales of officeequipment
andconsumables,
etc.

Manufactureof products
sold by
Canon MJ
Nonoperatingtransactions

Loans ofcapital

Accounts¥ 4,284 receivable andothers¥ 2,785

Short-term
loans¥ 50,000¥ 50,000

Note: Transaction amounts do not include sales tax, etc., and the balance of credit and debt includes sales tax, etc.

Transaction conditions and policies for deciding transaction conditions, etc.
(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.

63

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Canon Marketing Japan Inc. Annual Report 201415

Asset Retirement Obligations
The Group recognizes restoration obligations under real estate rental agreements of buildings 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 for the portion of such estimated amount attributable to the current fiscal year as an expense.
The outstanding balances of lease deposits considered uncollectible as of December 31, 2014 and 2013 were ¥1,951 million and ¥1,900 million,
respectively.

16

Lease Obligations, Long-Term Loans Payable and Deposits
Lease obligations, long-term loans payable and deposits at December 31, 2014 and 2013 consisted of the following:
Millions of yen

Average interest rate

2014

2013

Lease obligations
Current portion of lease obligations¥

Lease obligations (excluding current portion)

Long-term loans payable (excluding current portion)
Deposits

17

—
0.0%

344

¥

447

445

455

789

902

—

74

3,710

3,603

¥ 4,499¥ 4,579

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 inJapan occurring on or after 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 in consideration for newly issued stock shall be recorded as common
stock. However, it also 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 thanthe 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 the aggregate amount of the legal reserve exceeds 25% of common
stock (i.e. the aggregate amount of the Company’s legal reserve has already reached 25% of its common stock).

Canon Marketing Japan Inc. Annual Report 2014

Independent Auditor’s Report

65

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Canon Marketing Japan Inc. Annual Report 2014

Canon MJ Group Companies
As of January 1, 2015

Segment

Company NameLines of BusinessBusiness Solutions

Canon System & Support Inc.

Business equipment sales and service
IT solutions for small and medium-sized enterprises

Canon Production Printing Systems Inc.

Sales and maintenance services for production printers and consumables

Canon MJ IT Group Holdings Inc.

Overseeing business activities of Group IT solutions companies

Canon IT Solutions Inc.

Systems integration and consulting and software development and sales

Canon ITS Medical inc.

Medical systems sales and development

Canon BizAttenda Inc.

Business process outsourcing and temp staffing

SuperStream Inc.

Integrated business package planning and sales

Qualysite Technologies Inc.

Software development and data center operations

A&A Co., Ltd.

Domestic sales of Vectorworks 3D CAD software

Canon Software America, Inc.

Business applications software development

Canon Information Systems (Shanghai) Inc.

Software development and sales

Canon IT Solutions (Thailand) Co., Ltd.

IT solutions operations in Thailand

Material Automation (Thailand) Co., Ltd.

IT solutions operations in Southeast Asia

Canon IT Solutions (Philippines), Inc.

IT solutions operations in the Philippines

Canon Software Inc.

Development of IT solutions and software embedded in products

Edifist Learning Inc.

Corporate IT and management training for corporations

Imaging Systems

Canon Customer Support Inc.

Call center and consumer product services

Industrial/Medical

Canon Lifecare Solutions Inc.

Medical equipment and systems and healthcare-related equipment sales and service

ELQUEST CORPORATION

Medical equipment production

AZE, Ltd.*

3D medical image analysis and other systems development, production, and sales

Canon Advanced Technologies Taiwan Inc.

Sales and service for semiconductor manufacturing and other equipment

Canon Business Support Inc.

Management of Group real estate and other assets

IT Solutions

Shared services

The Group comprises 26 consolidated subsidiaries (the other four including a domain name management company).
*AZE, Ltd., became a consolidated subsidiary as of August 26, 2014.

Canon Marketing Japan Inc. Annual Report 2014

Corporate Data
Headquarters

Number of Stockholders

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

13,347

Tokyo 108-8011, Japan

Number of Employees

Date of Establishment

Consolidated: 18,378

February 1, 1968

Non-consolidated: 5,327

Common Stock(As of December 31, 2014)¥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)(As of April 1, 2015)

Stock Listing
Canon Marketing Japan Inc.’s common stock is traded on theFirst Section of the Tokyo Stock Exchange.

Major Stockholders
Name of stockholder

Number of shares held
(thousands)

Percentage of ownership(%)

75,708
6,150
1,769
1,484
1,339
1,274
1,249
1,001
907
886

58.51%
4.75
1.37
1.15
1.04
0.99
0.97
0.77
0.70
0.68

Canon Inc.
Canon Marketing Japan Group Employee Stock Ownership Association
CBNY—Government of Norway
Japan Trustee Services Bank, Ltd. (Trust Account)
State Street Bank and Trust Company
The Master Trust Bank of Japan, Ltd.
Canon Marketing Japan Group Business Partner Stock Ownership Association
Mizuho Bank, Ltd.
The Bank of New York Mellon SA/NV 10
The Bank of New York 133524
Note: The percentage of ownership is calculated excluding the number of treasury stocks (21,404,708 shares)

Shareholder Composition

Canon MJ Investor Relations Website

Financial Institutions
7.0%

Canon MJ maintains a comprehensive Investor Relations website to further

Securities Companies
0.4%

facilitate communication with stockholders. The website contains:

Foreign Companies, etc.
13.8%

• News for investors
Other Domestic Companies
51.3%

Treasury Stock
14.2%• IR calendar• Financial results and other financial information• Information on the Three-Year Management Plan (FY2015–2017)• Stock information

Individuals and Others
13.3%• Annual reports

http://cweb.canon.jp/eng/ir/

Stock Price Range and Trading Volume
3,000

Stock Price (Yen)

Trading Volume (Shares)
12,000,000

2,500

10,000,000

2,000

8,000,000

1,500

6,000,000

1,000

4,000,000

500

2,000,000

0

0
2012
1

3

5

7

9

11

2013
1

3

5

7

9

11

2014
1

3

5

7

9

11

2015
1

3

67

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

Canon Marketing Japan Website(Investor Relations)
http://cweb.canon.jp/eng/ir/

This annual report was printed on the Canon imagePRESS C800
high-speed, high-resolution printer.

Printed in Japan