Shaping the Future of
Sustainable Society
Annual Report 2015
for the year ended December 31, 2015

ProﬁleThe globally respected Canon Group engages in diverse activities in more than 180 countries. The role of theCanon Marketing Japan (Canon MJ) Group is to market and propose solutions, primarily in Japan. The Canon MJ
Group comprises 25* companies and 18,214* employees and will strive to evolve into a group that adds value
and supplies solutions that resolve social issues.
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 and services for Canon’s proﬁtability growth areas, Canon’s growth areas, and our independent growthareas through strategies that we tailor speciﬁcally for each domain.
In January 2016, we embarked on Long-Term Management Objectives Phase III and our Three-YearManagement Plan. We will continue to leverage our robust customer base that encompasses many of Japan’slargest corporations as well as numerous small and medium-sized enterprises, our strengths as a marketing
entity of Japan within the Canon Group, and our technological capabilities as a systems integrator to materialize
our mission and vision and continue to grow.
* As of April 1, 2016

Disclaimer Regarding Forward-Looking Statements
This annual report contains forward-looking statements about the performance and management plansof 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 inJapan as well as other major global markets, private capital expenditures, currency ﬂuctuations, notably
against the U.S. dollar, materials prices, and political turmoil in certain countries and regions.

Canon Marketing Japan Inc. Annual Report 2015

Our Mission and Vision

Group Mission
Help resolve social issues
with advanced imaging andIT solutions.

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g

rm

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Lo

The Canon Marketing Japan
Group understands andgrows with its customers.

Phase III
2016–2020

Phase II
2011–2015

This ﬁve-year initiative encompasses a
mission and vision. This is because we wish
to collaborate with customers in resolvingsocial issues by combining Canon’s strengths
in imaging technologies with our years ofexpertise in IT technologies. Our Groupﬁnancial targets for 2020 are ¥800 billion in
net sales and ¥40 billion in operating income.

1 Our Mission and Vision

39 Financial Section

2 Canon MJ Group’s Value Creation Flow

68 Canon MJ Group Companies

4 SPECIAL FEATURE: A Truly Reliable IT Partner

69 Corporate Data

Phase I
2006–2010

Contents

Group Vision

8 Highlights of FY2015
11 To Our Stockholders and Stakeholders
12 An Interview with the President
18 Canon EXPO 2015 Tokyo
20 At a Glance
22 Segment Review and Strategies
30 Sustainable Management
33 Corporate Governance12

Canon Marketing Japan Inc. Annual Report 2015

Canon MJ Group’s Value Creation FlowBusiness Partners
in Japan and Overseas
Develop andmanufacture
excellent
products

Independent Growth Areas

Canon Inc.
Canon’s Growth Areas

Research andDevelopment
Manufacturing
Analyze andprovide feedback
on customer
needs and issues

Alliance Partners
in Japan and Overseas

Canon’s Proﬁtability Growth Areas

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

Relationships with Canon and Other Entities
The Canon MJ Group creates value through various relationships.
As part of the Canon Group, we oversee sales, services, and marketing for Canon
products in Japan and supply IT solutions. We do more than simply stock and sell
products to customers. With the Canon Group deploying a customer-driven approach on
the market frontlines, we endeavor to identify customer needs and issues as the closest
Group entity to customers. We analyze and feed back to Canon the information we amassin such efforts, thereby contributing to product and service planning and development.
The Canon MJ Group forms alliances with domestic and foreign enterprises thathave outstanding technological capabilities to supply optimal solutions to customers.
Partnerships in key ﬁelds include 3D printers with 3D Systems Corporation; security
software with ESET, spol. s r.o.; and metrology systems with Zygo Corporation.
On the sales front, we maintain our own sales network in Japan, and have built
alliances with consumer electronics retailers, regional sales companies, and ﬁnancial institutions.

Canon Marketing Japan Inc. Annual Report 2015

MarketingServices

Solutions
Provideadvancedimaging and IT
solutions

Business
Solutions

IT
Solutions

Imaging
Systems

Customers

Industrial/
MedicalBusinesses
Consumers
Overseas
Identify
customer needs
and issues

Relationships with Customers
The Canon MJ Group operates in keeping with the Group‘s vision of Long-Term
Management Objectives Phase III, which is that “the Canon Marketing Japan Group
understands and grows with its customers.”
The Canon MJ Group caters to both businesses and consumers. Our corporate
customer base includes Japan’s largest corporations through to small and mediumsized enterprises, served by an extensive domestic sales network. We draw on that
network and advanced IT to deploy attentive and efﬁcient sales activities.
Because the needs of larger and smaller corporate customers differ, the Canon
MJ Group maintains a structure to optimize solutions according to scale. As well as
salespeople, we employ numerous customer and systems engineers, enabling us tobecome more responsive to customer needs and issues.
Many consumers use Canon’s cameras and printers. Promotions are essential to maintaining customer
appeal. The Canon MJ Group uses diverse channels as a marketing expert to reach and attract individuals.

Society3

4Canon Marketing Japan Inc. Annual Report 2015

SPECIALFEATUREA Truly Reliable IT Partner

Imaging and IT—Canon MJ Group’s IT Solutions Strengths
The Group’s mission under Long-Term Management Objectives Phase

range of industries. We precisely analyze the operations of each

III (2016–2020) is “to help resolve social issues with advanced imaging

customer, which enables us to provide the optimal information system.

and IT solutions.” Imaging products—including cameras, multifunctional

The experience gained through working on difﬁcult projects for major

products (MFPs), laser beam and inkjet printers, and medical imaging

banks and Japan’s leading manufacturers has been accumulated bysystems—lie at the heart of Canon’s business. Based on such a productour workforce of more than 4,000 system engineers (SEs). This gives

lineup, to meet the diversifying needs of each individual customer, it is

us the capabilities needed to handle large-scale projects, and is at theessential to leverage the power of information technology (IT). The

core of our strengths.

foundations on which we meet these needs are the Canon MJ Group’s
excellent IT solutions strengths, which we have cultivated over a long

Why Customers Choose to Work with Canon MJ

period. The source of these strengths is the sound technical capabilities

We understand the operations of our customers even more than our

accumulated to date through working closely with a large number ofcustomers do. If that were not the case, customers would not choose

customers to provide solutions to their problems.

to work with Canon MJ. Under the supervision of project managers
who possess a rich amount of experience, development engineers

Strength as a Systems Integrator—Extensive Track

closely communicate with customers on a daily basis, enabling them

Record of Experience and Results

to identify and analyze issues faced by customers to a very detailed

Our strength as a systems integrator is founded on technical andlevel. Hence, Canon MJ development engineers provide proposals forsolution provision capabilities delivered to customers across a diverse

operational improvements from the same standpoint as the customers.

Canon Marketing Japan Inc. Annual Report 2015

CASE STUDY 1

Letter of Appreciation from a Major Bank

The 2nd Financial Systems Development Department at Canon IT

Subsequently, Canon IT Solutions received an inquiry from

Solutions Inc. received a letter of appreciation from a major bankthe bank about participating in an overseas project, and wascustomer. In the past, the department has received letters expressing

commissioned to work on the project, which involved renewal of thegratitude on several occasions, but the reason on this occasion wasbank’s overseas cash and foreign exchange settlement system. The

that Canon IT Solutions contributed to the successful completion ofoverseas project required engineers to communicate and coordinate

the bank’s project to migrate overseas operations to a next-generation

with local staff of the bank—system users—in English. The more

system.

detailed the speciﬁcations become, the more difﬁcult it becomes to

In the past, Canon IT Solutions participated in the integrationachieve mutual understanding. However, since the Canon IT Solutionsof the bank’s domestic enterprise system as the project management

manager assigned to the project had a strong understanding of theofﬁce (PMO). For that earlier project, Canon IT Solutions provided

bank’s domestic operational ﬂow, the project team was able tosupport from a central role covering the project as a whole. The

overcome numerous problems to make a successful release of

project was particularly important since it involved the bank’s core

the system. As a result, Canon IT Solutions received this letter ofmanagement systems. Hence, in a situation where failure could not

appreciation from the bank. Overseas ﬁnancial services systems

be tolerated, Canon IT Solutions was tasked with providing projectchange at a hectic pace, meaning there are signiﬁcant businesssupport. Although the system development work was difﬁcult, theopportunities. We are working to make sure that the success of thissystem migration was successfully completed and Canon IT Solutions

overseas project leads to Canon MJ winning more system development

won a high level of trust.

projects overseas.

Imaging Products

Canon MJ Group’s IT Solutions Strengths

Technical Capabilities

Communication from the Customer’s
Perspective

5

6

Canon Marketing Japan Inc. Annual Report 2015

SPECIALFEATUREA Truly Reliable IT Partner

CASE STUDY 2

Dedicated IT Manager for SME Customers

There are strong needs among small and medium-sized enterpriseand the ability to communicate from the customer’s perspective.

(SME) customers in such areas as improvement of operational

However, it also leverages the latest IT-related knowledge and

efﬁciency and network security. To respond to such needs, the Canon

contributes to business expansion by having a close understanding

MJ Group has a large number of engineers who possess advancedof the customer’s organization and business.

technical skills and extensive product knowledge. These engineers

As a case example of Network Support contributing to businesswork in what is called “Network Support,” which is responsible for

expansion, let us introduce a case from Canon System & Support Inc.

providing SMEs with cloud computing services, implementing security

A Network Support engineer who was assigned to a project to replacesystems, and installing and maintaining IT infrastructure. Generally,a new customer’s network cameras noticed that the server room in

SME customers do not have their own dedicated IT manager. Hence,

which the video-recording server was installed was very small, making

as IT specialists, our Network Support engineers listen to the problems

the situation for managing the server less than ideal. By making acustomers have, address these issues, and provide improvement

proposal to improve the server usage situation by changing the existing

proposals. Hence, Canon MJ takes on the role of dedicated IT manager

server to a space-saving rack-type setup, the customer was very happy.

for SME customers. However, being tasked with the responsibility ofThis became an opportunity for the customer to discuss a wide range

solving customer problems is not something that happens overnight.

of IT issues with the Network Support engineer, and subsequently led toIf we did not have sound product and technical capabilities, customers

a proposal and orders for an IT maintenance contract, anti-virus

would not choose Canon MJ. Furthermore, without building asoftware replacement, the installation of a ﬁrewall, and changeover

relationship based on strong trust, we would not gain a stronger

to a Canon MFP from a competitor’s product.

understanding of our customers’ businesses than the customers
themselves. Network Support, of course, has high-level technical skills

Canon Marketing Japan Inc. Annual Report 2015

Protecting Customers’ Businesses—Meeting Increasingly
Sophisticated Security Needs through Advanced Security
Products and Proprietary Technology
Important IT assets owned by customers are exposed to veryin malware analysis. As part of thissigniﬁcant threats of server attack and criminal penetration. Such

strategy, we have established thethreats are becoming more cunning and sophisticated each year.

Malware Lab Project Ofﬁce, and are

In addition, in the case of a data leak or other security breach, theproviding information based on in-housecompany concerned is likely to come in for severe criticism from amalware analysis through the ESET website. From

range of stakeholders, and if the company’s response is slow it can

the third quarter of 2016, we plan to launch a fee-based

have a major impact on the company’s business.

malware analysis service. This will involve responding to individual

In response to such security needs, the Canon MJ Groupinquiries regarding malware received and what the malware is doing

exclusively imports and markets ESET, an end-point anti-virus software

within a system. The service will provide analysis reports on eachproduct for which Canon MJ has an exclusive distributorship in Japan.

speciﬁc malware incursion, and we will work to increase customer

The Canon MJ Group also markets “FortiGate” and “CLAVISTER,” which

satisfaction in this area.

are next-generation ﬁrewall and uniﬁed threat management (UTM)
products. These security products and services help to protect customers
from malware and other threats. Furthermore, Canon MJ provides
solutions to prevent information leaks, and these solutions extend to
cloud services. Solutions are mainly provided through the “GUARDIAN”
series of products, which utilizes software development technology
cultivated to date in-house.

Working toward Further Technical Advances
To enhance the level of customer satisfaction and raise Canon MJ’spresence in the industry, we are working to strengthen our capabilities

78

Canon Marketing Japan Inc. Annual Report 2015

Highlights of FY2015
Financial Highlights of FY2015
For the year:

Net sales¥646,003

Cost of sales
millionGross profit¥412,898

million¥233,105

2.0% decrease
2014: ¥659,432 million

3.1% decrease
2014: ¥425,896 million

0.2% decrease
2014: ¥233,536 million

SG&A expenses

Operating income

Net income¥26,647¥15,670¥206,458

million1.0% decrease
2014: ¥208,448 million

million

6.2% increase
2014: ¥25,088 million

million2.2% decrease
2014: ¥16,030 million

At year-end:

Total assets¥486,502

Total stockholders’ equity¥277,008

million1.4% increase
2014: ¥479,747 million

million2.6% increase
2014: ¥270,061 million

Key ratios:

Total stockholders’ equity ratio

ROE

56.9%

5.7%

0.6pp increase
2014: 56.3%

0.4pp decrease
2014: 6.1%

millionPer share data:

Stockholders’ equity

Net income

Cash dividends¥2,136.22¥120.84¥45.002.6% increase
2014: ¥2,082.60

2.2% decrease
2014: ¥123.62

12.5% increase
2014: ¥40.00

Canon Marketing Japan Inc. Annual Report 2015

Business Highlights of FY2015
Reinforced operations

Improved profitability

Operating margin(%)

Operating margin
was a record 4.1%

4.1
3.8

2.5

2.6

’12

’13

1.3

Accelerated operating margin gains
FY

Canon’s growth areas

’11

’14

’15

Independent growth areas

Network cameras

Data center business performed
favorablyGreatly increased
sales

Orders surged
Backlog orders of data center business rose, reflecting
large orders

Leveraged our sales channels amid market expansion
to boost sales

Non-Financial Highlights of FY2015

CO2 emissions

CO2 emissions(Tons)

48,723

48,723
43,569tons
35,93036,21437,459

’11

’12

’13

4.1

12% increase
2014: 43,569 tons

FY

’14

’15

9

10

Canon Marketing Japan Inc. Annual Report 2015

Pursuing Even
Greater Growth

Haruo Murase
Chairman
Masahiro Sakata
President

Canon Marketing Japan Inc. Annual Report 2015

To Our Stockholders and Stakeholders

It is a pleasure to report that Canon MJ progressed solidly with its growth initiatives forthe year ended December 31, 2015. Operating income rose for the sixth consecutive
term as a result of those efforts.
Management therefore lifted the dividend for the year by ¥5, to ¥45 per share.
Canon MJ resolved to pursue even greater growth as it prepared to enter 2016.
Accordingly, we launched Long-Term Management Objectives Phase III, covering 2016
through 2020. Under this initiative, we aim to progress with our Group mission of helping
to resolve social issues with advanced imaging and IT solutions while deploying ourGroup vision, which is to understand and grow with our customers. The Canon MJ
Group has the resources to materialize these objectives, and management will endeavor
to optimally employ them.
In our view, the Japanese market still offers ample growth potential. This isbecause we are able to cultivate the market as a customer-driven entity.
The Canon MJ Group will continue endeavoring to grow as a true partner for its
customers in its marketing efforts.
We look forward to the ongoing support and encouragement of our stockholders
and stakeholders in our endeavors.

Haruo Murase
Chairman

Masahiro Sakata
President

1112

Canon Marketing Japan Inc. Annual Report 2015

An Interview with the President

Masahiro Sakata
President

Shaping the Future of
Sustainable SocietyCanon Marketing Japan Inc. Annual Report 2015

Q1
A

How do you assess your performance in fiscal 2015?
“We again boosted earnings in a lackluster operating climate.”
The Japanese economy was generally sluggish in ﬁscal 2015,
reﬂecting slow growth in personal consumption and capital
expenditure.
It was against this backdrop that the Canon MJ Group
strove to expand sales of new products and propose various

and inkjet printers.
In Canon’s growth areas, a new focus for us, we successfully
cultivated markets for network cameras and projectors, generating
solid sales.
In such independent growth areas as IT solutions, industrial

solutions in keeping with its Three-Year Management Plan

equipment, and medical solutions, we boosted sales of suchthrough 2017 while focusing more on high-margin offerings

offerings as systems integration for ﬁnancial and medical

and services to boost earnings.

institutions and data center services, as well as semiconductor

In Canon’s proﬁtability growth areas, we maintained our No.

manufacturing equipment and measurement equipment.

1 share of the domestic market for key offerings. These included

Notwithstanding such progress, net sales for the year

laser printers, interchangeable lens digital cameras, compact

decreased 2.0%, to ¥646,003 million. This reﬂected signiﬁcantly

digital cameras, and inkjet printers. In interchangeable lens digital

lower revenues in the ﬁrst quarter as demand plunged after

cameras, we expanded sales of semi-pro models, interchangeablespiking ahead of a consumption tax rate hike.

lenses, and other highly competitive products while increasing
sales on the strength of new mirrorless cameras.
At the same time, unit shipments and sales in Japan oflaser printers declined amid a shift toward MFPs. Domestic unit

Operating income rose 6.2%, to ¥26,647 million. This was
our sixth straight gain, and it stemmed from favorable showingsof highly proﬁtable products and services and solutions, as wellas efforts to streamline operations and bolster productivity.

shipments and sales were also down for compact digital cameras

Q2
A

Why did you formulate Long-Term Management Objectives Phase III (2016 to 2020)?
Could you overview this initiative for us?
“We formulated ﬁxed goals that we are determined to reach.”
The Canon MJ Group has diverse resources. We have

optimally harness our Group resources and cultivate growth intremendous expertise in human resources, products, andnew business areas.

markets, and are unique for a marketing infrastructure that
services both other businesses and consumers.
Under Long-Term Management Objectives Phase II, which
ended in 2015, we steadily increased operating income by2020 Group Mission
Help resolve social issues with advanced imaging andIT solutions.

shifting toward highly proﬁtable businesses.
But sales were basically ﬂat. And while this reﬂected

Imaging encompasses input and output technologies forvarious external factors, there were growth issues for various

cameras, printers, and other consumer products and MFPs,

reasons. We did not fully leverage our strong Groupwide

laser printers, and other business offerings. Our mission isresources. We were still in the process of restructuring existing

about combining imaging hardware with applications andbusinesses and did not progress as fast as we would haveservices for IT solutions to deliver more attractive offerings

liked in shifting toward new services businesses and growth

to customers and resolve social issues.

areas. Our business process reforms went little further than
improvements. And there remained plenty of scope for decisive

2020 Group Visionaction under radical reforms to deploy new IT systems and

The Canon Marketing Japan Group understands anddrive efﬁciencies.

grows with its customers.

In light of such issues, we decided to formulate Long-Term
Management Objectives Phase III, through which we aim toOur vision might be better understood in the context of the

13

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Canon Marketing Japan Inc. Annual Report 2015

customer-centricity of the Canon MJ Group Code of Conduct.

The key goals of Long-Term Management Objectives

In my many years in marketing I found that there can be

Phase III are ﬁnancial. We are targeting ¥800 billion in net

signiﬁcant gaps between products and customer needs.
Sellers cannot satisfy customers by making selﬁsh andsales and ¥40 billion in operating income by 2020.
Group Management Goals

arbitrary assumptions about the products and services that

(Billions of yen)they provide. So, sellers must identify customer issues andNet sales

Operating income
800.0

requirements in commercializing or proposing offerings. They

725.0
659.4

also need to understand that society changes. As a seller, you

646.0

660.0

686.0
40.0
35.0

cannot delight customers these days just by highlighting the
29.1

performance of your hardware. What is far more important is

25.1

26.6

27.0

’15
Results’16
Targets

whether what you propose will resolve customers’ issues.
So, we must ﬁrst and foremost ask customers what they
think and build truly trusting partnerships with them, drawing
on internal and external resources in the process of working
out customers’ issues and wants. That is customer-centricity.

FY’14
Results’17
Targets’18
Targets’20
Targets

And as part of that process, we will shift away from astructure that focuses on speciﬁc existing products andWe will annually update the medium-term management

channels toward one that focuses on market and customer

plan that I will outline a little later. But the goals of Long-Termcategories and solutions.

Management Objectives Phase III are ﬁxed, and we are

Our six basic policies and priority strategies are as follows:
Basic Policies
1

Become a true partnerof customers

Priority Strategies• Expand large company solutions by industry and solutions for small and mediumsized enterprises• Strengthen customer relations through digital marketing

Maintain the high earnings • Attain and maintain No. 1 market shares for key products• Reform sales approach by improving customer relationship management (CRM)
2 base of Canon’s
proﬁtability growth areasand pushing ahead with e-commerce
Transform Canon growth• Broaden network camera business by collaborating with Axis Communications AB
areas into core businesses
and Milestone Systems A/S
3 by improving solution• Expand into the upstream and downstream commercial printing processes and enterskills and encouraging
the package and industrial printing markets
cooperation• Make IT-based high-value-added solution services central to all businesses• Switch from entrusted development business to solution proposing Sier
Draw on the Group’s• Migrate in-house packaged products to the cloud to create a stock-based businesscapabilities in independent• Expand cross-industry solutions through Group synergies in such areas as security
4
growth areas to grow theand outsourcing
IT solutions business• Transform the industrial business unit into a commercial ﬁrm• Strengthen the medical solutions business
Reform the businessstructure and processes
5 by deploying andreinforcing operational
underpinnings• Overhaul business process reforms in existing operations, leveraging progress tobuild next-generation IT systems• Transform the cost structure to transition to a new business framework

Create a more dynamic
corporate culture• Cultivate professionals who fully understand customers’ businesses and spearhead
growth area improvements and new business creation• Swiftly create new value through interpersonal collaboration and promote diversity

6

Canon Marketing Japan Inc. Annual Report 2015

determined to reach them. In fact, our commitment to

Key Management Indicatorssuch goals is even stronger than under predecessor

FY2015Results

FY2018Targets

FY2020Targets

Net sales (Billions of yen)

646.0

725.0

800.0

Under Long-Term Management Objectives Phase III, theGross margin

36.1%

35.0%

35%

Canon MJ Group will endeavor to expand its business

SG&A expenses to net sales

32.0%

30.2%

30%

areas by leveraging a solid customer base, Canon’s

Operating margin

4.1%

4.8%

5.0%

initiatives.

highly competitive product lineup, IT, and other strengths.

Q3
A

How are you positioning your medium-term management plan for 2016 through 2018?
“We will manage progress under this growth strategy.”
Our medium-term management plan for materializing Long-Term(1) Bolster solutions through cloud services, reinforce our sales

Management Objectives Phase III comprises growth strategies

structure, and collaborate with Axis Communications, Milestone

for Canon’s proﬁtability growth areas, Canon’s growth areas, andSystems, and other companies to increase network camera

our independent growth areas. (See Growth Scenario by Category

sales.

on page 21.)(2) Reinforce capabilities in book, newspaper, and othercommercial printing areas and enter package and industrial

Canon’s Proﬁtability Growth Areas

printing ﬁelds to boost production printing sales.
(3) Bolster our 4K and 8K product lineup and equipment and

MFPs, laser printers, cameras, inkjet printers, and CXDI digitalradiography systems

solutions in peripheral areas to grow sales in commercial
imaging equipment.

We aim to maintain or secure No. 1 market shares in Canon’s
existing business areas while boosting productivity and earnings.
(1) Strengthen sales capabilities and MFP market share, expand
sales of related solutions products, and cultivate key industry
customers for laser printers, thereby boosting documentbusiness earnings.
(2) Expand number of novice photographers and cultivate amateur

Independent Growth Areas
IT solutions, industrial equipment (semiconductors and nonsemiconductors), medical solutions, infection control, anddispensing equipment
We look to boost sales in the Group’s independent growth areas.

enthusiasts, reinforce product appeal, and maintain the(1) Become a solutions and services delivery business andproﬁtability of consumer inkjet printers to enhance imaging

reinforce cloud business to increase IT solutions sales.

systems earnings.
(3) Leverage IT to increase operational efﬁciencies throughdigital marketing, expand CRM and e-commerce, and draw
on IT to raise maintenance service productivity and thereby
drive sales and service reforms.

Canon’s Growth Areas
Network cameras, projectors, production printing, businessinkjet printers, commercial imaging equipment, DreamLabo,and machine vision
We seek to increase sales in these new priority business areas
for Canon.

(2) Broaden service offerings through security-related products
and IT services to boost security business sales.
(3) Leverage specialty capabilities of Group companies to expand
outsourcing businesses.
(4) Harness IT to increase medical solutions sales.
In addition to these growth strategies, we will establish speciﬁcnumerical targets and manage progress.
Under our medium-term management plan, we are targeting net
sales of ¥725 billion, operating income of ¥35 billion, and a returnon equity of 7.5% in ﬁscal 2018.

15

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Canon Marketing Japan Inc. Annual Report 2015

Consolidated Performance Targets
Results(Billions of yen)

Net sales
YoY growth rate
Operating income
Operating margin
Ordinary income
Ordinary income margin
Net income
Net income margin
EPS (Yen)ROE

FY2014 Results
659.4
—
25.1
3.8%
26.6
4.0%
16.0
2.4%
124
6.1%

Free cash ﬂow(Three years cumulative amount)

Medium-Term Management Plan Targets
FY2015 Results
646.0
-2.0%
26.6
4.1%
28.0
4.3%
15.7
2.4%
121
5.7%

FY2016 Targets
660.0
2.2%
27.0
4.1%
28.2
4.3%
17.7
2.7%
137
6.3%

112 (2013 to 2015)

We have set aside ¥40 billion in funds for M&As and otherstrategic investments.
Such extensive investments should help us to build eventhrough to 2018. This will include allocations of ¥8.5 billion to
upgrade the Nishi-Tokyo Data Center, ¥25 billion for our MFP

FY2018 Targets
725.0
5.7%
35.0
4.8%
36.0
5.0%
23.0
3.2%
177
7.5%

287 (2016 to 2018)

Investment Plan
We will make ¥54 billion in general investments from 2016

FY2017 Targets
686.0
3.9%
29.1
4.2%
30.2
4.4%
19.1
2.8%
147
6.5%

more value.

and other rental businesses, and ¥8.5 billion for IT investments.

Q4
A

What is your stance on IT solutions?
“IT solutions are a key strength for us.”
IT solutions are key to the Group’s growth in the years ahead,sales in our IT Solutions segment as well as another ¥58.3

and not simply in terms of the IT Solutions segment. We willbillion in IT solutions sales in other business segments.

leverage IT solutions in collaboration with other segments tobolster the value of our overall products and services.
For example, in ﬁscal 2015 we generated ¥141.2 billion in

Q5A

We were able to do this because we have our own IT
engineers, and we will leverage this strength to generate evenfurther IT solutions growth Groupwide.

How do you position the Canon brand?
“The Canon brand is an unchanging strength.”
While our independent business domains, IT solutions, and othercompanies if Canon’s products alone are not sufﬁcient to resolve

operations are important for the Canon MJ Group, Canon brandcustomer issues. So, we will continue to position Canon as our

products will remain our greatest strength.

core brand while also handling offerings from other JapaneseThat said, we would never hesitate to collaborate with otherand overseas companies.

Q6

Tell us about your corporate governance approach.

A“We will endeavor to enhance corporate governance through dialogues with investors andother stakeholders.”
Japan formulated and launched its Corporate Governance Code

Executives naturally have a duty to enhance corporate

in 2015, making it a particularly important year in terms of social

management transparency and to endeavor to generateinterest in that area.

sustainable growth and enhance corporate value.

Canon Marketing Japan Inc. Annual Report 2015

We have worked tirelessly at Canon MJ to improve
corporate governance as a platform for pursuing transparent,
fair, and swift decision-making.
We endeavor to enhance corporate governance throughdialogues with investors and other stakeholders.

Q7
A

What steps are you taking in terms of CSR?
“We are driving forward with CSR management.”
Our Group mission under Long-Term Management Objectives

issues, so we seek to resolve social issues to deliver value-

Phase III is to help resolve social issues with advanced imaging

added solutions from new perspectives. In other words, we

and IT solutions. We see social changes underpinning customer

aim to resolve social issues in the course of business.

Q8

What are you doing in terms of shareholder returns?

A“We aim to pay dividends based on comprehensively considering factors based on aconsolidated payout ratio of at least 30%.”
The basic policy of our new medium-term management plan

For ﬁscal 2015, we paid cash dividends of ¥45.00 per

is to target a consolidated payout ratio of at least 30%, paying

share, up ¥5.00 from a year earlier. This lifted the payout ratio

dividends after comprehensively considering our medium-termfrom 32.4% to 37.2%.

earnings forecasts, investment plans, and cash ﬂows.

Q9

How do you see the year ahead?

A“We are solidly positioned to drive growth to reach our objectives regardless of economic
trends.”
I believe that my prime task as an executive is to clarify where

I look forward to the ongoing support and encouragement

the Company will head. Long-Term Management Objectivesof all our stockholders and other stakeholders for our efforts in

Phase III and the medium-term management plan that wethe year ahead.

formulated in ﬁscal 2015 determine that direction.
The outlook for the Japanese economy remains uncertain

March 2016at this stage, as although there have been some positive
developments, overseas economic downturns could adversely
affect the Japanese economy.
We are solidly positioned to drive growth to reach our
objectives regardless of economic trends, and are already doing

Masahiro Sakata

our best in that regard.

President17

18

Canon Marketing Japan Inc. Annual Report 2015

Canon EXPO 2015 Tokyo
Overview
The Canon Group has held Canon EXPO every five years since 2000 topresent key Canon technologies and products and solutions. Canon EXPO
2015 Tokyo, held in November 2015, showcased achievements underPhase IV of the Group’s Excellent Global Corporation Plan (2011–2015)
and presented objectives for the years ahead. The approximately 20,000
guests enjoyed glimpses of the work and social value that the Groupseeks to deliver to Tokyo by 2020. Following are several highlights.

Network Camera Solutions
Canon proposes a range of compelling solutions centered on network
camera technologies. They include surveillance systems that enhancecommunity security by monitoring stadiums, theaters, and otherfacilities that accommodate large crowds and by swiftly detecting
dangers from crime and accidents. Canon’s high-sensitivity network
cameras ensure outstanding surveillance anywhere, even in thedarkest places. Its solutions could swiftly process massive volumesof information to automatically detect problems and issue alerts and
VB-H 652 LVE

speedily identify individuals through facial recognition results anddatabase matching.
The Canon Group collaborates with two Group companies
in this ﬁeld. They are security camera leader Axis Communications
AB and Milestone Systems A/S, the world’s top provider of video
management software. Canon aims to leverage synergies from its
imaging technologies and the network image processing and video
management technologies of these two Group companies to deliver
new information value.

Exhibition by Canon, Axis Communications AB, and Milestone Systems A/S garneredcustomer attention.

Canon Marketing Japan Inc. Annual Report 2015

Healthcare
Enhancing the value of medical care is vital to healthy living. Canondraws on its advanced imaging technologies to contribute to healthcare
progress by driving the visualization of medical images while promoting
information sharing over the cloud to ensure more timely and accurate
treatment.
Canon’s integrated medical image management system isa cloud-based solution for comprehensively managing and sharing
medical images associated with patient information. Healthcare
professionals can use this system to administer and browse data from
X-rays, computed tomography (CT), and other modalities, images from

Integrated medical image management system screenshot

digital cameras, and patient documentation. In harnessing image
processing technologies, Canon contributes to more accurate image
diagnostics by, for example, making it possible to compare previous
and new CT images to identify metastatic cancer or verify changes inmagnitude. Using the cloud-based Medical Image Place service would
enable remote checking of CT and other information, making it easier
to collaborate with diagnostic imaging experts. Analyzing medical
images and matching them against cloud-based case data should
accelerate diagnoses.

Overview of Medical Image Place

Data centers
Image interpretation
providers

Uploading CT or
MRI images

Remoteinterpretation
infrastructureservices

Medical examination
institutions

Medical Image Place

Uploading
diagnostic results
Institutions
requesting
interpretations

Clinics
Hospitals

19

20

Canon Marketing Japan Inc. Annual Report 2015

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.
Composition of Net Sales
Business Solutions

IT Solutions

Imaging Systems

48%

21%

27%

Industrial/Medical

4%

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.

Sales target

Operating income target(Billions of yen)(Billions of yen)
368.1

326.9

334.1

Sales target

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

13.5

348.0

168.7
11.0
9.0

141.2

145.8

6.7

154.2

9.2
4.4

4.1

FY

’15
result

’16

’17
’18
objective

FY’15
result

’16

’17
’18
objective

FY’15
result

’16

’17
’18
objective

FY’15
result

’16

4.6

’17
’18
objective

Imaging Systems

Industrial/ Medical

We provide a broad range of input through output products andWe use the world’s most advanced equipment and technology

attentive after-services for consumers and professionals thatto provide specialty solutions that underpin the businesses ofenable everyone to enjoy photography and videography.

semiconductor manufacturers and healthcare professionals.

Sales target

Operating income target

Sales target

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

178.7

180.3

180.5

183.1

13.8

13.3

13.0

13.5

33.6
30.7
27.2

0.9

26.7
0.1

-0.3
-0.7

FY

’15
result

’16

’17
’18
objective

FY’15
result

’16

’17
’18
objective

FY’15
result

’16

’17
’18
objective

FY’15
result

’16

’17
’18
objective

Canon Marketing Japan Inc. Annual Report 2015

Growth Scenario by Category
Below, we overview our growth scenario categories and strategies to materialize our Long-Term Management Objectives
Phase III. We will push ahead with our shift to Canon’s and independent growth areas. These areas should account for a
combined 50% of net sales by 2020, from 37% in the year under review.

Growth Scenario Categories and Strategy Overview
Strategy Overview

Key Products and Services• Achieve and maintain No.1 market shares of key products• Increase productivity by reforming sales and services

MFPs and LBPs
Cameras, Inkjet Printers
CXDI digital radiography systems

Canon’s
Growth Areas• Expand the network camera business
Collaborate with Axis Communications and Milestone Systems
Enhance solutions• Expand the production printing business area
Upstream and downstream processes of commercial printing
Package printing, industrial printing area

Network Cameras, Projectors, Production
Printing, Business Inkjet Printers,
Commercial Imaging Equipment,
DreamLabo, Machine Vision

Independent
Growth Areas• Strengthen and expand IT solutions in all businesses• Switch from entrusted development business to solution proposing Sier
• Expand cross-industry solutions (security, outsourcing, etc.)• Turn Industrial Business Unit into a commercial ﬁrm• Strengthen the medical solutions business

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

Canon’s
Proﬁtability
Growth Areas

Annual average growth rate:+4.4%

Shifting Weight to Growth Areas(Billions of yen)

800.0

800

725.0
700

646.0

Beyond Canon
40%

+8.2%

50%

600

37%
500
Beyond Japan
8%

400+14.2%

300

63%

200

-0.3%

100

0

FY2015FY2016

Canon’s Proﬁtability Growth Areas

FY2017
Canon’s Growth Areas

FY2018
Independent Growth Areas

FY202021

22Canon Marketing Japan Inc. Annual Report 2015

Segment Review and Strategies

Business Solutions
Senior Vice President’s Business Management Policies
The Group provides hardware and solutions that it optimizes for each customer..
We will continue to reinforce sales to the promising medium-sized enterprisemarket while expanding our share in MFPs. We will also accelerate ourbusiness expansion in the production printing, network camera, projector, andother markets offering outstanding growth potential.

Masachika Adachi
Senior Vice President

Major Products

Major Companies / Organizations

Business-use multifunctional products (MFPs)

Canon Marketing Japan Inc.

Commercial printing systems

Business Solutions Company

Laser printers

Canon System & Support Inc.

Large-format inkjet printers

Canon Production Printing Systems Inc.

Maintenance services

PerformanceandKey Trends

Office Multifunctional Products (MFPs)
Domestic unit shipments of MFPs were basically unchanged from a year earlier. The Group focused on
cultivating new customers for its imageRUNNER ADVANCE series of color ofﬁce MFPs by boosting salesof such offerings as the mass-market C5200 series and the C3300 series, launched in May 2015. The
latter range delivers improved image quality, operability, andproductivity. In production MFPs for commercial printing,
we focused on increasing sales of such models as theimagePRESS C800/C700/C60 for the light production market
and the imagePRESS C10000VP, launched in October 2015,
for the middle production market. While overall MFP unit
shipments thereby rose, sales were down slightly from ayear earlier. This reﬂected a higher percentage of MFPs soldat mass-market prices.

Canon Marketing Japan Inc. Annual Report 2015

Laser Printers
Domestic unit shipments of laser printers were down amid a shift toward relying on MFPs for ofﬁce output.
The Group maintained its No. 1 market share by endeavoring to increase sales of the Satera LBP8730i
monochrome printer and the Satera LBP9950Ci color printer, launched in May 2015, for high-volumecommercial users. Sales were down, however, as there were fewer large orders. Sales of toner cartridges
also declined.

Large-Format Inkjet Printers
We strove to boost sales of such products as the iPF605L plus/iPF680, and thereby maintained our top market
share. Sales declined, however, reﬂecting a downturn in the mainstay computer-aided design (CAD) market.

Network Cameras and Projectors
In network cameras, we augmented surveillance applications by endeavoring to cultivate marketing
applications for the retail sector. In projectors, we cultivated new markets, including for digital signage.
Network camera and projector sales both rose.

Maintenance Services
Sales of maintenance services for MFPs and other offerings were down slightly. This was despite steady print
volume gains in line with growth in the number of machines in ﬁeld (MIF), and stemmed from lower unit prices
for service charges.

Group Companies
Although Group company Canon System & Support Inc. boosted revenues from the third quarter, sales forthe term were down in the absence of a Windows XP-related demand spike and a demand hike before theconsumption tax rate increase in the ﬁrst quarter of the previous year. Canon Production Printing Systems Inc.
increased its sales on higher unit shipments of continuous feed digital printers.
Business Solutions segment sales decreased 1.0%, to ¥326.9 billion. Operating income climbed 9.6%,
to ¥9.0 billion.

OutlookandKey Measures

Anticipating Higher Sales of Office MFPs to Small and Medium-Sized Enterprises
We expect that unit shipments in the ofﬁce MFP market will remain basically unchanged in the year ahead.
We anticipate higher sales on the strength of solutions for large companies in various industries and efforts
to cultivate new customers among small and medium-sized enterprises.

Focusing on Expanding Share in Laser Printers and Cultivating Specialty Applications
DemandUnit shipments will probably slip amid an ongoing shift in the market from laser printers to MFPs. We will
deploy new models to capture a greater share of the market for high-end machines while cultivating specialty
applications demand, particularly in the retailing and medical equipment ﬁelds, to boost sales.

Leveraging Our Customer Base and External Alliances to Dramatically Increase Network
Camera Sales
Demand should increase for advanced systems, including for those offering remote monitoring and analysis
of high-resolution images. We will draw on our nationwide customer base and sales channels to supply
Canon’s unique high-resolution cameras and advanced image analysis systems. We will reinforce allianceswith Axis Communications AB and Milestone Systems A/S to greatly increase sales.

Maintenance Service Unit Prices to Continue Trending Downward
We expect that print volume will rise, with maintenance service unit prices continuing to slide. Our maintenanceservices sales should therefore decline.
In light of these factors, we forecast that segment sales for ﬁscal 2016 will rise 2.2%, to ¥334.1 billion,
and operating income will gain 2.2%, to ¥9.2 billion, reﬂecting gains in MFPs and other key hardware andnetwork cameras.

23

24

Canon Marketing Japan Inc. Annual Report 2015

Segment Review and Strategies

IT Solutions
Senior Vice President’s Business Management Policies
We look for domestic IT investment to continue rising in the year ahead. We
will expand our systems integration (SI) services by developing systems forﬁnancial institutions, an area in which we are exceptionally strong. We will
work beyond segment frameworks to build our IT solutions business.

Akihisa Kamimori
Senior Vice President

Major Business

Major Companies / Organizations

Systems integration (SI) services business

Canon IT Solutions Inc.

IT infrastructure and services business

Canon Software Inc.

Embedded systems business

Edifist Learning Inc.

Products business

14 other companies

Nishi-Tokyo Data Center

Canon MJ’s Operations in Asia
Canon Information Systems (Shanghai) Inc.

Canon Marketing Japan Inc.

Software development and sales

Material Automation (Thailand) Co., Ltd.

Canon IT Solutions (Philippines), Inc.

IT solutions operations in Southeast Asia

IT solutions operations in the Philippines

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

Canon Marketing Japan Inc. Annual Report 2015

PerformanceandKey Trends

SI Services BusinessWe develop systems from scratch or use solution packages to accommodate speciﬁc customers. We
performed solidly in our mainstay systems development business, especially among ﬁnancial institutions,while enjoying growth in solutions projects for medical institutions. Sales were down, however, because
system management services sales partly transferred to the IT infrastructure and services business in theyear under review.

IT Infrastructure and Services BusinessWe offer infrastructural products and system platform construction and outsourcing services in such areas
as cloud storage, system operations, data centers, and business process outsourcing. Sales were up froma year earlier, owing partly to the solid performance of data center services.

Embedded Systems BusinessWe develop software for embedding in products. Sales were up from a year earlier, reﬂecting steady orders
from major manufacturing customers.

Products BusinessWe sell IT hardware, packaged software, and licenses. Despite a healthy performance in such areas as
security products, sales declined amid the absence of a demand spike for business PCs and other Windows
XP-related offerings in the previous ﬁscal year.
Segment sales therefore decreased 5.1%, to ¥141.2 billion. In contrast, operating income jumped
30.7%, to ¥4.1 billion.

OutlookandKey Measures

SI Services and Data Center Operations Should Remain Solid
We look for the domestic IT solutions market to continue performing solidly in the year ahead. The SI services
business should generate higher sales in the year ahead, reﬂecting increases in projects for the ﬁnancial
services, manufacturing, and educational sectors. The IT infrastructure and services business should boost
its sales on expansion in infrastructure solutions, data center, and other outsourcing services. Sales of theembedded systems business should rise on growth in projects for customers outside the Group. The products
business should remain basically unchanged, as gains in PC peripherals and security products should offset
the impact of segment changes for some offerings.
In ﬁscal 2016, expansions in SI services, data center, and other IT infrastructure services is expected toboost segment sales 3.3%, to ¥145.8 billion. We forecast a 7.3% rise in operating income, to ¥4.4 billion.

25

26

Canon Marketing Japan Inc. Annual Report 2015

Segment Review and Strategies

Imaging Systems
Senior Vice President’s Business Management Policies
We anticipate a recovery in the market for interchangeable lens digital
cameras. We will endeavor to expand sales of this equipment, focusing
on mirrorless models, which have strong growth potential. We will draw
on our strengths in 4K technology to expand in commercial equipment.

Koichi Yagi
Senior Vice President

Major ProductsInterchangeable lens digital cameras
Compact digital cameras
Inkjet printers
Commercial imaging equipment

Major Companies / Organizations
Canon Marketing Japan Inc.
Imaging Systems Company
Canon Customer Support Inc.

Canon Marketing Japan Inc. Annual Report 2015

PerformanceandKey Trends

Digital Cameras
Domestic unit shipments of interchangeable lens digital cameras were down. One factor was a prolonged
slump in consumer spending owing to a consumption tax rate hike. We nonetheless generated solid resultsfor high-end amateur models and interchangeable lenses. We strengthened our lineup and market share forentry-level offerings with a new mirrorless camera in October 2015. We thereby maintained our top market
share and boosted sales for interchangeable lens digital cameras.
Domestic unit shipments of compact digital cameras declined, partly because a proliferation ofsmartphones dampened demand for low-end models. We nonetheless worked to increase sales of premiumand long-zoom models. While we maintained our top market share, sales were down from a year earlier.

Inkjet Printers
Inkjet printer shipments in Japan were down from a year earlier. We rolled out user campaigns and otherpromotional initiatives and strove to increase sales, especially of new models. These efforts enabled us
to maintain our top market share. Sales declined, however, amid dwindling market demand and sales
competition, which drove down prices. Sales of inkjet cartridges also decreased.

Commercial Imaging Equipment
Notwithstanding solid reception for a new CINEMA EOS SYSTEM model, sales of this equipment was down
owing to sluggish demand amongst broadcasters upgrading to high-deﬁnition data camera models.
Segment sales thus dropped 3.6%, to ¥178.7 billion, with operating income slipping 2.9%,
to ¥13.8 billion.

OutlookandKey Measures

Boost Unit Shipments by Expanding Sales of Mirrorless Cameras
While the interchangeable lens digital camera market is projected to remain sluggish in the ﬁrst half of theyear, demand should pick up in the second half, thereby exceeding that of the previous ﬁscal year. We aim
to capture the top share of the mirrorless camera market, which offers strong demand potential, and should
boost unit shipments on solid sales expansion efforts.

Increase Compact Digital Camera Profitability
We expect unit shipments in the compact digital camera market to decrease as demand for low-priced models
shrinks. We will keep pushing ahead with our full lineup strategy while focusing on sales of premium andlong-zoom models to enhance proﬁtability and maintain our top market share.

Maintain Inkjet Printer Earnings
Unit shipments in the inkjet printer market will probably continue to fall. We will strive to maintain earnings bytargeting marketing initiatives at the home and SOHO markets. We nonetheless expect that unit shipments
and cartridge sales will decline.

Endeavoring to Greatly Expand 4K Demand in Commercial Imaging Equipment
We will strive to capture new demand for 4K offerings for broadcasters while driving sales growth for the
CINEMA EOS SYSTEM to greatly increase sales in the year ahead.
With the interchangeable lens digital camera market set to recover in ﬁscal 2016, we look for segment
sales to rise 0.9%, to ¥180.3 billion. Operating income should decrease 3.6%, however, to ¥13.3 billion,
amid spending on intensive promotions to stimulate camera market demand and because of lower ink
cartridge sales.

27

28

Canon Marketing Japan Inc. Annual Report 2015

Segment Review and Strategies

Industrial/Medical
President’s Business Management Policies
Industrial Equipment
We seek to expand our lineup beyond semiconductor fabrication equipment
and other existing offerings by developing areas offering fast growth rates.
These include machine vision and industrial cameras.
Medical Equipment
We will push forward with selection and concentration in existing businesses
while striving to swiftly become proﬁtable. We will leverage our strengths
in IT solutions to expand in medical imaging with such applications as 3D
and remote diagnostics, thereby cultivating medical equipment as a corebusiness domain.

Major Products
Industrial equipment
Medical equipment

Major Companies / Organizations
Canon Marketing Japan Inc.
Industrial Equipment Sales Headquarters
Canon Marketing Japan Inc.
Medical Equipment Sales Headquarters
Canon Lifecare Solutions Inc.
ELQUEST CORPORATION
Canon Advanced Technologies Taiwan Inc.

Canon Marketing Japan Inc. Annual Report 2015

PerformanceandKey Trends

Industrial Equipment
We performed well in lamp annealing, plasma ashing equipment, and other semiconductor manufacturingsystems and in testing and measuring systems thanks to rising capital investment and plant operating
rates in the semiconductor market. Sales of maintenance services and repair parts also gained, resulting
in higher sales.

Medical Equipment
Sales were down in the absence of the demand spike that preceded a consumption tax rate hike in the previous
term. Another factor was fewer large orders for medical imaging equipment.
Segment sales therefore decreased 3.1%, to ¥27.2 billion. Operating loss was ¥743 million, which was¥235 million lower than a year earlier.

OutlookandKey Measures

Industrial Equipment Business Should Continue to Perform Well
We anticipate higher sales and earnings in the year ahead on expanded sales of semiconductor fabricationequipment and testing and measuring systems.

Bolstering Medical Equipment Profitability
In the year ahead, we anticipate steady demand growth for sterilization and other infections control andmedical solutions. Sales will probably slide, however, owing to earnings structure revisions that shrink some
operations, although operating proﬁt should improve.
In ﬁscal 2016, we forecast a 1.8% decline in segment sales, to ¥26.7 billion, reﬂecting revisions in theearnings structure of our medical equipment business. We also expect an operating loss of ¥300 million,
which would be ¥400 million lower than in the previous period.

29

30

Canon Marketing Japan Inc. Annual Report 2015

Sustainable Management

Philosophy

The Canon MJ Group undertakes CSR activities to help resolve
social issues while harnessing the power of marketing to create

Mission/Visioneconomic value. In keeping with Canon’s corporate philosophy of
Kyosei (which means living and working together for the commongood), we will continue to pursue synergistic progress for the— CSR is Marketing —Group and for society and enhance the corporate value and brand
CSR Awarenessby benefiting society through business. We will also contribute tosustainable social development by making CSR central to

Shared Philosophy:
The “Three Selfs” Spirit

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.

United Nations Global Compact
In December 2009, Canon MJ signed the UN Global Compact. Under
this initiative, companies commit themselves to universal principles
relating to human rights, labor standards, the environment, and theprevention of corruption. The underlying principle is that companies
should work to resolve global problems through responsible corporate• 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.
• We will conduct our business activities fairly and in good faith,with particular emphasis on dialogues with stakeholders.
• We will strive to develop safe, healthy working environments.
• We will contribute to the conservation of the environment andbiodiversity.
• We will respect human rights.

activities. By reﬂecting this principle in our business activities, we willcontribute to the realization of a better and more sustainable society.

FTSE4Good Index Series
Canon MJ has been included in the FTSE4Good Index Series for nine consecutive years. This index measures theperformance of companies demonstrating strong environmental, social, and governance (ESG) practices.

Canon Marketing Japan Inc. Annual Report 2015

Environmental Management

Social Contributions

The Canon MJ Group is contributing to social and environmental

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

progress by reinforcing an environmental management approach thatthrough business and activities that help to create a society in which all

reduces the ecological impact of operations while collaborating withpeople can enjoy fulﬁlling lives.

communities and customers in initiatives to balance the wealth of life

Running the Smile for the Future Projectand safeguarding this planet.

The Canon MJ Group launched the Smile for the Future Project in

Deploying Green Ratios

January 2012 to support efforts to recover from the Great East JapanThe Canon MJ Group formulated the following three Green Ratios as

Earthquake by encouraging people to enjoy nature through photography.

medium-term environmental benchmarks for monitoring annual

The project fosters interpersonal communication and children’s emotional

progress.

well-being through its photography and nature experience programs.

• Annual improvement in CO2 emissions intensity

In the photography experience program, professional photographers
1.2% (year on year)

show participants how to take pictures with Canon cameras and print
the results. Under the nature experience program, parents and children• Contributions to reductions in customer CO2 emissions
More than 150,000 metric tons
• Ratio of customer CO2 emissions reductions divided by the Canonfrom disaster-affected regions interact with residents in areasabundant with natural features,
participating in photography

MJ Group’s own reductions
More than tripleclasses and playing in natural
surroundings.

Positive effect on global environment
2020 target

Contributions to
reductions incustomer CO2
emissions

150,000
metric tons
or higher

±0

Green
Ratio
More thantriple1CO2 emissions of
the Canon MJ Group

Annual improvement in
CO2 emissions intensity
1.2% (year on year)

Negative impact on global environment

Creating the GREEN NAVI ver. 2 Website

Participants in an event in Ofunato, Iwate Prefecture, on November 28, 2015

We created the GREEN NAVI ver. 2 website to offer ofﬁce product andsolutions applications that enhance efﬁciency and reduce costs while
lowering environmental impact.
The website presents applications in three main content
categories. These are life cycle assessments and carbon offsets,
energy and resource conservation simulators, and the product andsolutions showcase.
http://cweb.canon.jp/ecology/green-navi/index.html?id=sol

Supporting the United Nations World Food Programme
Canon MJ supports this food aid initiative in developing nations withthe objective of eradicating hunger and poverty. We became a councilorin the Japan Association for the World Food Programme (WFP) in
December 2008 as part of that commitment. Since 2009, we have

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Canon Marketing Japan Inc. Annual Report 2015

been a proud sponsor of WFP’s Walk the World; 55 employees andCombatting Harassment

family members took part in this charity initiative in 2015. As well,

Canon MJ engages in various awareness-building initiatives to prevent

some of our business sites donate percentages of vending machinesexual and power harassment.

sales to the WFP’s School Meals program, raising ¥613,393* inHarassment issues are part of the agenda for training new employees

donations in 2015.

and managers. Compliance meetings also position harassment as an* This amount included matching donations from FV East Japan and Kirin Beverage.

issue for discussion within work units.
We make it easier for employees to seek advice about harassment

School Recycling Seminars

by offering consultations and by enabling the sharing of concerns by

Canon MJ personnel visit elementary schools to conduct seminars on

email or telephone.

the importance of recycling and present efﬁcient sorting techniques,using cartridges and other consumables from laser printers. Participants

Initiatives to Employ People with Disabilities

engage in scientiﬁc experiments for sorting in recycling processes.

The Canon MJ Group is committed to employing people withdisabilities, and accordingly endeavors to create a barrier-free work
environment.
Employees with Disabilities (Non-Consolidated Basis)
Number of employees with disabilities

2.05%

2.08%

164

164

165

’09

’10

’11

1.97%
1.85%
1.62%

Percentage of employees with disabilities

2.05%

2.13%

2.20%

161

165

167

’12

’13

’14

2.18%

161

154

133

Respecting Human Rights and Diversity
The Canon MJ Group endeavors to prevent employee discriminationand harassment and fosters a corporate culture that values diversity.

Preventing Discrimination and Promoting Diversity
The Canon Group aims to ensure that all executives and employees
alike understand and adhere to the Canon Group Code of Conduct,

FY

’07

’08

’15

which encourages respect for individuals and individuality and prohibits
discrimination, including in terms of race, religion, nationality, gender,

As of June 2015, 2.18%* of Canon MJ’s employees were people withand age.

disabilities, exceeding the mandatory rate of 2.0%. The Group will

Within the Canon MJ Group, we utilize email magazines sent

continue pushing ahead with new graduate and midcareer hiring ofto all employees and compliance meetings for all work units to raise

individuals with disabilities.

awareness among executives and employees about discrimination* Calculated according to prescribed working hours, disability degrees, and other factors in keeping withissues.

the Ministry of Health, Labour and Welfare standards.

Canon MJ and Canon IT Solutions Inc. pledged commitments to
the Keidanren (Japan Business Federation)’s action plan on women’s
active participation in the workforce, submitting plans for appointing
females to managerial and Board positions.
Canon System & Support Inc., Canon Production Printing Systems
Inc., Canon Software Inc., Canon BizAttenda Inc., and Canon Customer
Support Inc. have also deployed action plans based on their speciﬁc
circumstances for appointing and recruiting female executives.

Canon Marketing Japan Inc. Annual Report 2015

Corporate Governance
Overview of Corporate Governance at the Canon MJ Group• Organizational format: Company with Audit & Supervisory
Board members• Number of directors: 10• Number of outside directors: 2• Number of outside directors designated as independent: 2• Term of directors: 1 year
• Number of Audit & Supervisory Board members: 5• Number of outside Audit & Supervisory Board members: 3• Number of outside Audit & Supervisory Board members designatedas independent: 2• Term of Audit & Supervisory Board members: 4 years• Independent auditor: Ernst & Young ShinNihon LLC• Use of executive ofﬁcer system: Yes(As of March 29, 2016)

Corporate Governance Organization
General Stockholders’ Meeting
Appointment / Dismissal

10 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 GovernanceWe recognize that sustainable growth in corporate value requires
ongoing improvement in such areas as management transparency andthe monitoring of progress toward management targets. This is reﬂectedin our wide-ranging initiatives to strengthen corporate governance.

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

Independence from the Parent Company
The Company’s parent company is Canon Inc., which held 58.5% of theCompany’s voting rights as of December 31, 2015. Within Canon Inc.’s
corporate group, the Company oversees sales, service, and marketingfor Canon products in the Japanese market. The Company also supplies
IT solutions and other services, clearly compartmentalizing its operations.
With regard to transactions with the parent company, the Company
has the exclusive right to sell all Canon-branded products in Japan, theexceptions being semiconductor manufacturing equipment and liquid
crystal (LC) substrate exposure devices. Transaction terms are determinedby presenting the Company’s asking prices and engaging in conventional
negotiations. None of the Company’s directors concurrently serves theparent company.
It is because of this situation that the Company faces no restrictions
from the parent company in terms of operational activities and maintains
a certain level of independence from the parent company by making its

Corporate Governance Structure
In addition to the Board of Directors and the Audit & Supervisory Board,
our corporate governance structure also includes an internal auditing
system. We have also established a range of committees, including the
CSR Committee, the Disclosure Committee, and the Internal Controls
Evaluation Committee, to implement policies across the entire organization.

Board of Directors
There are now 10 directors, including two outside directors. By limiting
the term of ofﬁce for directors to one year, we have created amanagement structure capable of adapting quickly to changes in thebusiness environment. Important decisions are made by the Board of
Directors, which normally meets once a month, and at Management
Committee meetings attended by the directors of Canon MJ and thepresidents of major subsidiaries.

33

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Canon Marketing Japan Inc. Annual Report 2015

On March 29, 2011, we introduced an executive ofﬁcer system.
The purpose of the system is to speed up management decision-making
in the Canon MJ Group by separating management decision-making
from executive functions and reducing the number of directors. It also
clariﬁes responsibility for the performance of business operations andstrengthens executive systems.

Audit & Supervisory Board
There are ﬁve Audit & Supervisory Board members, of whom three areappointed from outside of the Company. The Audit & Supervisory
Board’s duties include monitoring and reviewing management as well
as reporting the results of these activities to the stockholders or Boardof Directors of the Company. The Audit & Supervisory Board also works
in close alliance with the Internal Auditors Ofﬁce and the accounting
auditors to improve the efﬁcacy of monitoring.

Internal Auditors Ofﬁce
Internal audits are conducted by the Internal Auditors Ofﬁce, an
independent specialist unit that also assesses and advises Canon MJ
and its subsidiaries on legal compliance, the effectiveness of processes,
internal control systems, and information security. The Internal Auditors

Ofﬁce works in coordination with similar units established in major
subsidiaries. The Canon MJ Group has 50 audit staff members asof the end of 2015.

Audit of Financial Statements
Canon MJ’s ﬁnancial statements are audited by the Company’s
independent auditor, Ernst & Young ShinNihon LLC. The independent
auditor rotates responsible partners who have been involved in auditsof any company for more than seven years.

Outside Directors and Outside Audit & Supervisory Board
Members (as deﬁned under the Corporation Law)
Canon MJ has two outside directors and three outside Audit &Supervisory Board members. We have not adopted a policy or criteria
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.

Reasons for Appointing Outside Directors
Independent director

Reason for appointment

Norihisa Doi

Mr. Doi has served as a university professor and as a board member of academic societies, and also met
requirements for appointment as an independent director.

Akio Dobashi*

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

* Mr. Dobashi previously worked at Sojitz Corporation. Although the Company has a contract with Sojitz to maintain business and other equipment, management concluded that in view of the scale and nature oftransactions there are no prospective conﬂicts of interest with the Company’s stockholders.

Reasons for Appointing Outside Audit & Supervisory Board Members
Independent audit &supervisory board
memberReason for appointment

Shigeo Hasegawa

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

Kunihiko Tedo

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

Nobuyasu Kusumi*

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

* Mr. Kusumi has served as a senior executive at Sompo Japan Nipponkoa Insurance Inc. and Sompo Japan Nipponkoa Himawari Life Insurance, Inc. The Company has an insurance policy with Sompo Japan Nipponkoa
Insurance and a contract with that company to sell and maintain business and other equipment. The Company also has a contract with Sompo Japan Nipponkoa Himawari Life Insurance to sell and maintain businessand other equipment. Management concluded. However, that in view of the scale and nature of transactions there are no prospective conﬂicts of interest with the Company’s stockholders.

The Company does not maintain a specialist organization or provide
full-time staff to assist outside directors or outside Audit & Supervisory
Board members. Directors in charge of operations and other ofﬁcials
provide outside directors with prior explanations of Board of Directors’
meeting agendas as needed. Internal auditors, directors in charge of
operations, and other ofﬁcials provide outside Audit & Supervisory

Board members with prior explanations of Board of Directors’ meeting
agendas as needed. Outside Audit & Supervisory Board members
attend Audit & Supervisory Board meetings, which are held at least
once monthly, as well as liaison meetings and other gatherings
conducted as required to exchange information on important items
and make decision as the Board.

Canon Marketing Japan Inc. Annual Report 2015

Remuneration to Directors and Audit & Supervisory Board Members
Category
Directors (excluding outside directors)
Audit & Supervisory Board members (excluding
outside Audit & Supervisory Board members)
Outside directors and outside Audit &Supervisory Board members

502

Total remuneration by category (Millions of yen)
Basic remuneration
Bonuses
437

64

9

42

42

—

2

45

45

—

5

Total remuneration(Millions of yen)

Number of directors
remunerated

Note: Remuneration and other payments to directors does not include salaries for directors who are concurrently employees.

Remuneration for directors consists of basic remuneration ascompensation for executing roles and duties and executive bonuses
linked to corporate performance in the ﬁscal years in question.
The Company does not provide stock options or other incentives
to directors. Audit & Supervisory Board members receive basic
remuneration that is not linked to corporate performance. This isin keeping with the Company’s policy of ensuring objective audits.

Method of Determination• Basic Remuneration
Resolutions at general meetings of stockholders place ceilings on total
remuneration for all directors and Audit & Supervisory Board members.
The Board of Directors determines remuneration to each director, while
Audit & Supervisory Board members determine remuneration for eachother by consulting among themselves.
• Executive Bonuses
General meetings of stockholders resolve on proposals for total bonus
payments based on corporate performance in the ﬁscal years inquestion. The Board of Directors determines payments to directors

according to their roles and performances, based on the totals approvedat general meetings of stockholders.

IR Activities
We formulated the Canon MJ IR Policy in 2008 to clarify our stance on
disclosure, which is through the investor relations (IR) website below.
For retail investors, the president or the managing executive ofﬁcer who
oversees IR, conduct company brieﬁngs. In 2015, we exhibited at three
events for retail investors—in April, June, and August—and held two
company brieﬁngs at brokerage branches. For analysts and institutional
investors, the managing executive ofﬁcers in charge of IR and accounting
overview our results at quarterly brieﬁngs for analysts. The president
presents medium-term management plans upon results announcementsof the previous ﬁscal year. In addition, we welcome meeting requests
from analysts and institutional investors, and hold individual meetings
and teleconferences with foreign institutional investors.
Canon MJ IR website

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

Message from Outside Director

Message from Outside Director

I believe that the basic roles of outside directors
are to help propel corporate activities while also
checking business execution.
I perform these dual roles by participating
in meetings of the Board of Directors, theManagement Committee, and other executive
bodies, asking questions, making proposals,
and providing advice on almost every occasion.
Norihisa Doi
I frequently voice dissent, and gatherings
Outside Director
have become freer and more open forums forthe exchanging of opinions as a result. I think this is very good for theCompany’s management.
Before such meetings, I obtain detailed brieﬁngs from corporate planningpersonnel on management issues, implementation, and other topics. I also
engage in discussions about individual projects as needed as part of efforts
to thoroughly understand progress in corporate activities.
As well, I am frequently asked my views from others throughout the Company.
I am a computer science and information security expert, with particularstrengths in software, so I have experience in practical matters. I strive to draw
on this experience to help bring together IT with priority corporate activities
under Long-Term Management Objectives Phase III.

In my view, the role of an outside director is toreinforce the supervisory function of the Boardof Directors, monitoring governance andcompliance to contribute to ongoing growth incorporate value while preventing misconduct.
I accordingly scrutinize management very closelyfrom third-party perspectives.
I believe that it is vital to offer new ideas
Akio Dobashi
outside those of a speciﬁc company’s culture
Outside Director
and practices.
While I believe that the Company has a proper governance structure
in place, I only recently became a director, so I will set about verifying its
effectiveness.
The Company has embarked on a drive to diversify and globalize underthe banner of Beyond Canon, Beyond Japan. I will draw on my experience
as president at a general trading ﬁrm to contribute to the progress of Canon
Marketing Japan.

35

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Canon Marketing Japan Inc. Annual Report 2015

Corporate Governance

Board of Directors and Audit & Supervisory Board Members(As of March 29, 2016)

Board of Directors

Representative Director,
Chairman

Representative Director,
President

Haruo Murase

Masahiro Sakata

Director

Director

Director

Director

Director

Yutaka Usui

Koichi Yagi

Yoshiyuki Matsusaka

Masachika Adachi

Shiro Hamada

Director

OutsideOutsideAkihisa Kamimori

Norihisa Doi

Akio Dobashi

Audit & Supervisory Board Members

Standing

Standing

Standing, outside

Standing, outside

Standing, outside

Masahiro Shimizu

Fumio Ogaki

Shigeo Hasegawa

Kunihiko Tedo

Nobuyasu Kusumi

Canon Marketing Japan Inc. Annual Report 2015

Management Systems
Raising the value of the Canon MJ Group’s corporate brand is anComplianceongoing priority. We do this by maintaining high standards of corporate

For the Canon MJ Group, compliance is not simply a matter of obeying

ethics Groupwide, and by developing structures capable of respondinglaws and regulations. We deﬁne compliance as obedience to regulatory

to a variety of management risks.

requirements and social rules, a commitment to social justice, andcontinuing efforts to meet the expectations of society. Our compliance

Risk Management

activities are designed to encourage high ethical values and respect for

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

the law in individual employees through awareness activities, employee

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

education, and organizational activities.

outbreak, or other contingencies that could impact on its activities.
These initiatives are coordinated by the BCM1 Committee.
In July 2007, we established the BCP2 Expert Committee as a
subsidiary organization of the Management Committee tasked with

In keeping with the rules that it sets, the Board of Directors
carefully deliberates and decides on important management mattersand receives reports from representative and executive directors andexecutive ofﬁcers on business implementation progress.

developing, maintaining, and managing BCP systems. Renamed the

To raise awareness of the Canon Group Code of Conduct, all

BCM Committee in 2010, its activities include deliberations on BCM

employees and ofﬁcers of Canon MJ carry Compliance Cards. Printed

policies for the entire Canon MJ Group.

on these cards are the “Three Selfs” spirit and compliance tests that

1 BCM: Business continuity management
2 BCP: Business continuity planInternal Controls
Chaired by the president, the Internal Controls Evaluation Committee
consists of ofﬁcials representing corporate departments andsubsidiaries. Its task is to develop internal control systems for theentire 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.
In Japan, in keeping with the application of the internal control
reporting regime to listed companies under the Financial Instruments
and Exchange Law, since the year ended December 31, 2009, theCompany has submitted internal control reports that assess theeffectiveness of internal controls relating to ﬁnancial reporting.

can be used by individuals to check their own conduct.

Information Security
The Canon MJ Group regards the reinforcement of information security
as part of its responsibilities toward the creation of a more securesociety, and as essential to meeting customers’ expectations in linewith our Customer Focus philosophy.
Our efforts follow two central themes: Reinforcing the Group-level
information security infrastructure by improving uniformity and efﬁciency,
and improving the security, reliability, and efﬁciency of the processes
through which we provide value to customers.
Through continuous monitoring and evaluation, we strive to identify
factors that hinder or contribute to better information security, a processthat we also use to upgrade our services to customers and our IT
solutions.

37

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Canon Marketing Japan Inc. Annual Report 2015

Corporate GovernanceBusiness Risks
Impacts of Market Competition and Fluctuations

or other events. Results could be affected if such situations hamper sales

In the Business Solutions segment, price competition continues in ofﬁce

activities.

MFPs and maintenance services. Although the Group is endeavoring to
avoid such competition by differentiating itself through initiatives to add

Credit Risks

value to its offerings, proﬁtability could deteriorate if price competition

The Canon MJ Group could experience unforeseen credit losses, as

intensiﬁes. An increase in unit sales of third-party laser printer tonerit engages in many transactions in which it collects payments after

cartridges could constrain revenues from genuine Canon counterparts.

providing goods and services. The Company therefore draws on credit

In IT Solutions, the Company carefully manages work hours in

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

thorough credit management efforts while hedging risks through trade

additional customer speciﬁcations, altered requirements, or mismatches

credit risk insurance and other means. The Company provides

in the Company’s and customers’ interpretations of speciﬁcations or

allowances for doubtful receivables to cover the risks of losses on

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 stocksuperiority, through such measures as the swift launch of competitive

as of December 31, 2015. Canon MJ has the near-exclusive right to sell

products and the holding of training workshops for sales staff of mass

products (excluding semiconductor manufacturing equipment and LC

electronics retailers, proﬁtability could further deteriorate if pricesubstrate exposure devices) manufactured by Canon Inc. under thecompetition further intensiﬁes.

Canon brand in Japan. In ﬁscal 2015, Canon MJ’s purchases from

The market for compact digital cameras could shrink further amid

Canon Inc. amounted to ¥226.6 billion, or 65.2% of its total purchases.

competition with smartphones, and the inkjet printer market is maturing.

Because of this relationship, a major shift in the management

While the Company is endeavoring to cultivate new demand, such aspolicies or business activities of Canon Inc. could have a signiﬁcantthrough offering new applications or cloud service-linked products that

impact on the business activities, performance, and ﬁnancial position of

simplify printing from smartphones, sales of hardware and inkjet

the Canon MJ Group. If it becomes impossible to maintain the superiority

cartridges could decline if the markets mature further.

of Canon products in relevant industries for whatever reason, the Group’s

In the Industrial/Medical segment, capital spending among

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

The Canon MJ Group holds important information about various Group

Pharmaceutical and Medical Device Act (formerly, the Pharmaceuticaloperations as well as a considerable amount of sensitive information

Affairs Act) makes it mandatory to appoint sales administrators, set up

about companies and individuals. As such, we formulate information

post-marketing traceability information systems, and reinforce safety

management policies and rules, educate and train employees to increase

management structures. While the Canon MJ Group does its utmost toawareness of the importance of information management, implement

maintain systems to comply with such requirements, transactions withand check the status of system security measures, and create andmedical institutions and medical equipment dealers could decline if its

deploy an information security management system. Notwithstanding

safety management structure or information systems do not performthese measures, information that leaks externally as a result of cyber

as envisaged.

attacks could greatly inconvenience business partners and other

Each business segment offers goods purchased from parent
company Canon Inc. and many other manufacturers, creating the risk of
insufﬁcient supplies of goods following natural disasters, major accidents,

stakeholders or lower the credit standing of the Canon MJ Group, thus
possibly hampering its operations, results, and ﬁnancial position.

Canon Marketing Japan Inc. Annual Report 2014

Financial Section
40

Ten-Year Consolidated Financial Summary

42

Financial Review

44

Consolidated Balance Sheets46

Consolidated Statements of Income

47

Consolidated Statements of Comprehensive Income

48

Consolidated Statements of Changes in Net Assets

49

Consolidated Statements of Cash Flows

50

Notes to Consolidated Financial Statements

67

Independent Auditor’s Report

39

40

Canon Marketing Japan Inc. Annual Report 2015

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

2015

2014

2013

2012

Net sales (Note 5)¥ 646,003¥ 659,432¥ 657,216¥ 659,218

Operating income

26,64725,08817,013

16,802For the year:

Income (loss) before income taxes and minority interests

27,49825,85817,055

17,529Net income (loss)

15,67016,03010,168

10,579At year-end:
Total assets

486,502479,747

467,076

462,574

Total stockholders' equity (Note 4)

277,008

270,061

256,795

253,862

Cash flows:
Cash flows from operating activities

29,73038,191

28,781

33,767

Cash flows from investing activities(44,536)(15,221)(25,757)(16,067)

Cash flows from financing activities(6,225)(4,545)(9,105)(11,813)

Cash and cash equivalents

99,574

120,607

102,183108,260¥ 120.84¥ 123.62

Per share of common stock:
Net income (loss) (Note 2)
Cash dividends (Note 3)
Stockholders' equity (Note 4)

¥

76.67

¥

77.45

45.00

40.00

24.00

24.00

2,136.22

2,082.60

1,980.22

1,907.50

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, 2015.
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.

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
IncomeOperatingMarginTotal
Current
Assets374 369
867

Total
Current
Liabilities

Current
Ratio

36.9

905
2.4

827

2.4

33.9

2.2 2.2
687 674

4.1

328

4.1

302 302 302

3.8
632 659 657 659 646
1.6

1.4
1.1

1.5

2.2
26.6

25.4

2.1

25.1

3.1
2.5

2.6

16.8

1.9
220 214
184

0.9
6.3

1.1

2.0

2.0

2.0

17.0

FY ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15

340 348

3.9

0.6

-0.6

317 325

1.3
1.7 1.7

1.8

1.9
154 157 151 163

165 165 160

7.7 8.4

FY ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15

FY ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15

Canon Marketing Japan Inc. Annual Report 2015

Millions of yen

Thousands of U.S. dollars(Note 1)

2011

2010

2009

2008

2007

2006

2015

¥ 632,419¥ 674,159¥ 686,615¥ 827,487¥ 905,137¥ 867,172$ 5,338,868

8,442

7,736

6,297

25,41636,88633,919220,223

10,972

8,584

(595)

22,22935,45232,967227,256

6,764

3,724

(4,343)

11,186

20,03318,807

129,504

447,765448,592

449,607484,937

526,125

526,578

4,020,678

250,671

246,680

246,829

255,220

266,086

260,367

2,289,322

¥

8,716

35,18618,144

41,122

47,21418,094

245,702(12,108)(13,012)(25,834)(28,967)(21,912)(19,217)(368,066)(3,811)(8,171)(4,324)(21,738)(16,345)(6,126)(51,446)

102,373

109,575

95,575

107,589

117,206

108,248

822,926

Yen

U.S. dollars

49.30

¥

26.70

¥

(31.62)¥78.63¥ 134.84¥ 125.64

$

1.00

20.00

20.00

20.00

40.00

40.00

36.00

0.37

1,827.25

1,798.16

1,797.31

1,858.39

1,817.59

1,739.50

17.65

4. Total stockholders’ equity in the above table represents the total of stockholders’ equity and accumulated other comprehensive income in the consolidated balance sheets.
5. Effective fiscal 2013, we have changed to an accounting method that deducts a portion of sales incentives (which had previously been accounted for under selling, general 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 / %)Total Stockholders’Equity260 266 255
254 257
247 247 251
7.6
7.4

ROE

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

Total Assets

Total Stockholders’Equity Ratio

270 277527 526

20.0
485

6.1

5.7
49.4 50.6

4.2

4.3

Total Assets and Total Stockholders’ Equity Ratio

52.6

480
463 467487

18.8

450 449 448
56.9
54.9 55.0 56.3
54.9 55.0
56.0

16.0 15.7

11.2

10.6 10.2

4.0
2.7
6.8
1.5

3.7

-1.7
-4.3

FY ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15

FY ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15

FY ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15

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Canon Marketing Japan Inc. Annual Report 2015

Financial Review
Business Performance

were up, in line with the steady orders for data center services. Steadyorders from key manufacturing customers helped the embedded

Net Sales

systems business to boost its sales. In the products business, sales

For the year ended December 31, 2015, consolidated net sales

were down from a year earlier, as the absence of the previous year’s

decreased 2.0%, to ¥646,003 million. The decline reflected a

spike in demand for office PCs and other equipment outweighed asignificant sales downturn in the first quarter after a surge in thesteady gain in security product revenues.

previous term ahead of a hike in the consumption tax rate in Japan,

Segment sales therefore declined 5.1%, to ¥141,201 million.

and it offset gains from new product sales promotions and extensive
efforts to market solutions, which resulted in aggregate sales gains

Imaging Systems

from the second quarter.

Sales of interchangeable-lens digital cameras were solid, reflecting
favorable demand for advanced amateur models and lenses. We also

Segment Information

released new entry-level models in April 2015 and launched mirrorlessBusiness Solutions

cameras in October 2015. We thereby retained our No. 1 market share

Sales were down slightly for office and production multifunctional

in interchangeable-lens digital cameras and increased their sales. We

products (MFPs). This was because for a middle range priced models

also maintained our top market share in compact digital cameras,present a greater proportion of those sales. This offset higher overall

expanding sales of premium and high-magnification zoom lens models,unit shipments of MFPs as a result of a relentless focus on marketing,although sales were down because the market shrank.

particularly of new models, and intensively cultivating new customers.
We maintained our No. 1 share in the laser printer category by

We kept the position of the market share leader in inkjet printerson the strength of solid promotional activities and increased sales of

expanding sales of A3 monochrome models and high-volume color

new products. Sales of these products were down overall, however, as

machines. Category sales were down, however, owing to fewer large

the market was lackluster and prices fell amid intensified competition.

orders. Toner cartridge sales decreased.

Ink cartridge sales were also down.

Sales of maintenance services for office MFPs were down slightly,

Sales of commercial imaging equipment decreased. This was

as a decrease in unit charges overshadowed a steady rise in print

because solid demand for the EOS C100 Mark II, a new CINEMA EOS

volume as the number of machines in field improved.

SYSTEM, was insufficient to offset slow upgrades to high-definition

Although sales increased from the third quarter, sales of Group
company Canon System & Support Inc. decreased for the term,

broadcast monitoring cameras.
Sales of this segment therefore decreased 3.6%, to ¥178,701 million.

reflecting the impact of the consumption tax rate hike in the firstquarter of the previous term, when there was a spike in demand for

Industrial/Medical

PCs and other products. Canon Production Printing Systems Inc.

Industrial equipment sales were favorable. This reflected higher capital

boosted sales by increasing shipments of continuous form printers.

expenditure in semiconductor-related markets and greater plant

As a result of these factors, Business Solutions sales were down

utilization rates, which drove demand for lamp annealing, plasma

1.0%, to ¥326,871 million.

ashing, and other semiconductor fabrication equipment and metrology
systems. Sales also rose steadily for maintenance services and repair

IT Solutions

parts. In the medical imaging category, sales were down in the absence

The systems integration (SI) services business benefited from higherof the previous year’s demand spike ahead of the consumption tax rateorders for developing key systems, particularly from financial institutions,

hike, while there were no large modality orders.

and more solutions projects for medical institutions. Sales from thisbusiness were down, however, as we allocated some systems
maintenance service sales to the IT infrastructure and services
business from this year under review. Sales of the latter business

Segment sales therefore decreased 3.1%, to ¥27,153 million.

Canon Marketing Japan Inc. Annual Report 2015

Income Analysis

Cash Flows

Consolidated net sales were down 2.0%, to ¥646,003 million.

Cash and cash equivalents (“net cash”) amounted to ¥99,574 million

This reflected declines of net sales in the Business Solutions,as of December 31, 2015, a decrease of ¥21,033 million from the end

IT Solutions, Imaging Systems and Industrial/Medical segments.

of the previous year.

Cost of sales decreased ¥12,998 million. Gross profit dropped
0.2%, to ¥233,105 million.
Selling, general and administrative expenses slipped 1.0%,

Net cash provided by operating activities amounted to ¥29,730
million, compared with ¥38,191 million in the previous year. This wasdue mainly to ¥27,498 million in income before income taxes andto ¥206,458 million, reflecting falls in retirement benefit costs

minority interests, ¥15,524 million in depreciation and amortization,and depreciation and amortization.

and a decrease of ¥2,599 million in notes and accounts receivable-

Operating income therefore rose 6.2%, to ¥26,647 million.

trade, partially offset by increases of ¥2,162 million in inventories

Net other income was ¥851 million, from ¥770 million a year earlier.

and ¥10,515 million in income taxes paid.

Net income was therefore down 2.2%, to ¥15,670 million. Net
income per share was ¥120.84, down ¥2.78 from a year earlier.

Net cash used in investing activities was ¥44,536 million, comparedwith ¥15,221 million in the previous year. The main factors were a¥30,000 million increase in short-term loans receivable, ¥12,384

Financial Position

million in payments for purchases of property, plant and equipment,

Total current assets increased ¥7,947 million from the end of theand ¥3,002 million in payments for purchases of intangible assets.

previous year, to ¥347,543 million. This reflected a ¥29,999 million

Net cash used in financing activities amounted to ¥6,225 million,

increase in short-term loans receivable, which outweighed a ¥21,700

compared with ¥4,545 million in the previous year, owing mainly tomillion decrease in securities.

dividends paid of ¥5,844 million.

Fixed assets decreased ¥1,192 million, to ¥138,959 million. Key
factors in that change were decreases of ¥1,226 million in buildings
and structures, net, ¥1,093 million in software, and ¥362 million inland, outweighing a ¥1,496 million increase in investments in securities.
Total current liabilities decreased ¥5,092 million, to ¥159,679
million. This was because of decreases of ¥2,487 million in consumption
taxes payable and ¥1,996 million in accrued expenses.
Total long-term liabilities increased ¥4,762 million, to ¥49,385
million. This was because of a ¥4,960 million increase in net defined
benefit liabilities, slightly offset by a ¥124 million decline in leaseobligations.
Total net assets increased ¥7,085 million, to ¥277,438 million.
Key factors in that rise were ¥15,670 million in net income offset by¥5,835 million in dividend payments and a ¥2,662 million reduction inretained earnings stemming from the application of the Japanese
accounting standard for retirement benefits. Total stockholders’ equity
ratio was 56.9%, up 0.6 percentage points from a year earlier.
Stockholders’ equity per share increased ¥53.62, to ¥2,136.22.

43

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Canon Marketing Japan Inc. Annual Report 2015

Consolidated Balance Sheets
Canon Marketing Japan Inc. and Consolidated Subsidiaries
December 31, 2015 and 2014

Millions of yen

ASSETS

2015

2014

CURRENT ASSETS:
Cash and cash equivalents (Notes 8 and 9)¥ 99,574¥ 120,607

Notes and accounts receivable (Note 8)

125,907

128,473

Inventories (Note 5)

30,006

27,815

Deferred tax assets (Note 11)

5,281

4,860

Short-term loans receivable (Note 8)

80,05450,055

Other current assets

6,923

7,899

Allowance for doubtful receivables

(202)

(113)

347,543

339,596

Land (Note 3)

35,94036,302

Buildings and structures (Note 3)

Total current assets

PROPERTY, PLANT AND EQUIPMENT:

88,20187,005

Machinery and vehicles

328

161

Furniture and fixtures

19,474

19,902

Rental assets

34,98731,731

Lease assets

1,323

1,907

Total

180,253

177,008(80,943)(76,949)

99,310100,059

Accumulated depreciation
Net property, plant and equipment

INTANGIBLE ASSETS:
Goodwill (Note 2)

820

1,091

8,269

9,362

Lease assets

77

116

Utilization rights

318

318

Other intangible assets

15

20

9,499

10,907

SoftwareTotal intangible assets

INVESTMENTS AND OTHER ASSETS:
7,789

6,293

Long-term loans receivable

Investments in securities (Notes 3, 8 and 9)

11

12

Lease deposits (Note 15)

5,275

5,338

Deferred tax assets (Note 11)

14,76815,040

Other investments

2,605

2,859

Allowance for doubtful receivables

(298)

(357)

Total investments and other assets

30,15029,185

Total non-current assets

138,959

140,151¥ 486,502¥ 479,747

Total assets

Canon Marketing Japan Inc. Annual Report 2015

Millions of yen

LIABILITIES AND NET ASSET

2015

2014

¥ 101,834¥ 101,338

222

344

Accrued income taxes (Note 11)

6,201

5,919

Consumption taxes payable

5,132

7,619

Accrued expenses

22,11924,115Reserves

4,172

4,166

Other current liabilities

19,99921,270159,679

164,771

Lease obligations (Note 15)

321

445

Deferred tax liabilities (Note 11)

582

540

Deferred tax liabilities for land revaluation (Note 11)26

29

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

943

998

42,82337,863CURRENT LIABILITIES:
Notes and accounts payable (Notes 3 and 8)
Lease obligations (Note 15)

Total current liabilities

LONG-TERM LIABILITIES:Net defined benefit liabilities (Notes 2 and 10)
Other long-term liabilities (Note 15)

4,690

4,748

49,38544,62373,30373,303

Capital surplus

82,82082,820Retained earnings

151,037

143,864

Treasury stock(31,912)(31,905)

275,248

268,082

2,775

1,705

1

—

Foreign currency translation adjustments

225

272

Remeasurements of defined benefit plans(1,241)

2

1,760

1,979

MINORITY INTERESTS

430

292

Total net assets

277,438

270,353¥ 486,502¥ 479,747

Total long-term liabilities

CONTINGENT LIABILITIES (Note 4)

NET ASSETS (Note 2):
STOCKHOLDERS’ EQUITY (Note 16):
Common stock:
Authorized 299,500,000 shares; Issued 151,079,972 shares in 2015 and 2014

Total stockholders’ equity
ACCUMULATED OTHER COMPREHENSIVE INCOME
Net unrealized gain on available-for-sale securities
Deferred gains or losses on hedges

Total accumulated other comprehensive income

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

45

46

Canon Marketing Japan Inc. Annual Report 2015

Consolidated Statements of Income
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2015 and 2014

Millions of yen

NET SALES

2015

2014

¥ 646,003¥ 659,432

COST OF SALES

412,898

425,896

Gross profit

233,105

233,536

206,458

208,448

26,64725,088Interest and dividend income

407

362

Interest expense

(27)

(32)

Equity in loss of affiliates—(3)

Insurance income

599

596

Foreign exchange losses

(123)

—

Gain on sales of fixed assets

349

71

Gain on negative goodwill—

12

Insurance income due to disaster

35

332

Settlement received—

255

Loss on impairment of fixed assets

(3)

(6)

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

Gain on sales of investments in securities

82

4

Gain on sales of shares of subsidiaries and affiliates

57—

Loss on sales and disposal of fixed assets

(369)

(216)

Loss on disaster

(15)

(390)

Loss on litigation

—

(600)

Special extra retirement payments

(524)

(13)

Corporate reorganization-related expense

(103)

—

Other, net

486

398

Income before income taxes and minority interests

851

770

27,49825,85810,302

8,686

INCOME TAXES (Note 11):
Current
Deferred

1,468

1,109

11,7709,795

15,72816,06358

33¥ 15,670¥ 16,030

Income before minority interests
MINORITY INTERESTS
Net income

Yen

PER SHARE OF COMMON STOCK (Note 2):
Net income¥

120.84¥123.62

Cash dividends applicable to the year

¥

45.00

¥

40.00

• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. Annual Report 2015

Consolidated Statements of Comprehensive Income
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2015 and 2014

Millions of yen

INCOME BEFORE MINORITY INTERESTS

2015

2014

¥ 15,728¥ 16,063

1,071

567

OTHER COMPREHENSIVE INCOME (LOSS) (Note 6)
Net unrealized gain on available-for-sale securities
Deferred gains or losses on hedges

1—

Foreign currency translation adjustments

(20)

165

Remeasurements of defined benefit plans, net of tax
Total other comprehensive income (loss)
Comprehensive income(1,243)

—

(191)

732

¥ 15,537¥ 16,795¥ 15,451¥ 16,771

86

24

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

47

48

Canon Marketing Japan Inc. Annual Report 2015

Consolidated Statements of Changes in Net Assets
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2015 and 2014

Millions of yen

Stockholders’ equity
Number of sharesof common stock
BALANCE AT JANUARY 1, 2014

151,079,972

Commonstock

Capitalsurplus¥ 73,303

Retainedearnings¥ 82,820

Treasurystock¥ 131,332¥ (31,897)

Net income

16,030Cash dividends(3,501)

Purchase of treasury stock(9)

Disposition of treasury stock

1

Minority interests in income
Cash dividends paid to minority shareholders
Other, net
BALANCE AT JANUARY 1, 2015
Cumulative effect of changes in accounting
policies (Note 2)
Restated balance at beginning of year3151,079,972¥ 73,303¥ 82,820¥ 143,864¥ (31,905)(2,662)
151,079,972

73,30382,820141,202(31,905)

Net income

15,670Cash dividends(5,835)Purchase of treasury stock(7)

Disposition of treasury stock

0

0

Sales of shares of consolidated subsidiaries
Minority interests in income
Cash dividends paid to minority shareholders
Other, net
BALANCE AT DECEMBER 31, 2015

151,079,972¥ 73,303¥ 82,820¥ 151,037¥ (31,912)

Millions of yen

Accumulated other comprehensive income
Net unrealized gain Deferred gains
on available-foror losses onsale securities
hedgesBALANCE AT JANUARY 1, 2014

¥ 1,139—

Foreign currency Remeasurements
translationof defined benefit
adjustments
plans
¥ 98

—

Minority
interests

Total net
assets¥ 281¥ 257,076

Net income

16,030Cash dividends(3,501)

Purchase of treasury stock(9)

Disposition of treasury stock

1

Minority interests in income

33

Cash dividends paid to minority shareholders
Other, net
BALANCE AT JANUARY 1, 2015
Cumulative effect of changes in accounting
policies (Note 2)
Restated balance at beginning of year566
¥ 1,705

174
—

¥ 272

¥

33

(12)

(12)

2

(10)

735

2

¥ 292

¥ 270,353(2,662)

1,705

—

272

2

292

267,691

Net income

15,670Cash dividends(5,835)Purchase of treasury stock(7)

Disposition of treasury stock

0

Sales of shares of consolidated subsidiaries

63

63

Minority interests in income

58

58

Cash dividends paid to minority shareholders

(11)

(11)

Other, net
BALANCE AT DECEMBER 31, 2015

1,070

1

(47)

(1,243)28(191)¥ 2,775

¥ 1

¥ 225

¥ (1,241)¥ 430¥ 277,438• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. Annual Report 2015

Consolidated Statements of Cash Flows
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Years ended December 31, 2015 and 2014

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
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in net defined benefit liabilities
Interest and dividend income
Interest expense
Loss (gain) on sales and retirement of property, plant and equipment, net
Loss (gain) on sales of investments in securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) 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: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
Decrease (increase) in short-term loans receivable, net
Decrease (increase) in time deposits, net
OtherNet cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (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.

2015

2014

¥ 27,498¥ 25,858

15,524
3
242
—
30
(918)
(407)
27
(26)
(70)
2,599
(2,162)497(2,972)39,865407(27)(10,515)
29,73017,090
6
139
(12)
(115)
(474)
(362)
32
95
(3)
4,848
303
(7,244)
3,618
43,779363(33)(5,918)38,191(12,384)801(3,002)
(132)
169
—
125
—
(30,000)—(113)(44,536)(10,332)440(3,354)
(180)
33
(939)
239
(1,279)(40)
109
82(15,221)

—
(375)
(7)
(5,844)
1(6,225)(2)(21,033)
120,607¥ 99,574

(141)
(527)
(9)
(3,514)(354)(4,545)(1)
18,424102,183¥ 120,607

49

50

Canon Marketing Japan Inc. Annual Report 2015

Notes to Consolidated Financial Statements

1

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.

2

Summary of Significant Accounting Policies(a) Principles of Consolidation
The accompanying consolidated financial statements for the year ended
December 31, 2015 include the accounts of the Company and all of its 26(27 in 2014) subsidiaries.
All intercompany accounts and transactions are eliminated inconsolidation.
Goodwill 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 represents the amount after 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 represents the amountafter 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 using the benefit formula 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.
(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 forfinancial 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.

Canon Marketing Japan Inc. Annual Report 2015(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.
(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
From the fiscal year ended December 31, 2015, the Company applied themain clause of Article 35 of the “”Accounting Standard for Retirement
Benefits”” and the main clause of Article 67 of the “”Guidance on AccountingStandard for Retirement Benefits”” (Accounting Standards Board of Japan(ASBJ) Statement No. 26, May 17, 2012) and (ASBJ Guidance No. 25,
March 26, 2015). The Company accordingly reviewed its methods forcalculating retirement benefit obligations and service costs and changed
its period attribution method for projected retirement benefits from thestraight-line method to the benefit formula basis. It also changed themethod for determining the discount rate from one that approximates theaverage remaining service period of employees with respect to the bonddurations that are the basis for such determination, to a single weighted
average discount rate that reflects the projected timing for paying
retirement benefits and the amounts for each such period.
Accounting Standard for Retirement Benefits and its guidance areapplied with transitional treatments stipulated in Article 37 of the AccountingStandard for Retirement Benefits. As of January 1, 2015, the impact of thechanges in methods for calculating retirement benefit obligations andservice costs was reflected in retained earnings. This resulted in a ¥4,062
million increase in net defined benefit liabilities and a ¥2,662 million
decrease in retained earnings as of January 1, 2015. The impacts on
operating income and income before income taxes and minority interests
for the year ended December 31, 2015 were immaterial.
(r) Accounting Standards Not Yet Applied• Revised Accounting Standard for Business Combinations(ASBJ Statement No. 21, September 13, 2013)• Revised Accounting Standard for Consolidated Financial Statements(ASBJ Statement No. 22, September 13, 2013)• Revised Accounting Standard for Business Divestitures(ASBJ Statement No. 7, September 13, 2013)• Revised Accounting Standard for Earnings Per Share(ASBJ Statement No. 2, September 13, 2013)• Revised Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures(ASBJ Guidance No. 10, September 13, 2013)• Revised Guidance on Accounting Standard for Earnings Per Share(ASBJ Guidance No.4, September 13, 2013)(1) Overview
The principal accounting standard revisions were 1) accounting forchanges in a parent’s holdings in a subsidiary when control is retained in
the acquisition of additional shares in that subsidiary, 2) the corresponding
accounting for acquisition costs, 3) net income disclosure and revisingterminology from minority interests to non-controlling interests, and 4)
provisional accounting.
(2) Application Date
The changes will be applied from the beginning of the fiscal year ending
December 31, 2016. Provisional accounting will apply to businesscombinations occurring on or after the start of the fiscal year ending
December 31, 2016.
(3) Effect of Applying Accounting Standards
The effects of the adoption of the revised accounting standards andguidance are currently being evaluated.

51

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Canon Marketing Japan Inc. Annual Report 2015

• Guidance on Recoverability of Deferred Tax Assets(ASBJ Guidance No. 26, December 28, 2015)(1) Overview
Entities are classified into one of five categories under the framework
applied in Auditing Guidance No. 66, “Auditing Treatment for Judgment ofRecoverability of Deferred Assets”, with regard to assessing the recoverabilityof deferred tax assets. The Company basically follows the framework for
estimating total deferred tax assets in keeping with the relevant categories,
making the necessary adjustments for the following treatments:(i) Treatment for entities that do not satisfy any criteria for categories 1
through 5(ii) Criteria for categories 2 and 3(iii) Treatment for unscheduled deductible temporary differences at
category 2 entities(iv) Treatment for determining reasonable estimable periods of futuretaxable income prior to adjustments for deductible temporary
differences at category 3 entities(v) Treatment for situations in which entities that satisfy the criteria forcategory 4 are classified in category 2 or 3

3(2) Application Date
The changes will be applied from the beginning of the fiscal year ending
December 31, 2017.
(3) Effect of Applying Accounting Guidance
The effects of the adoption of the accounting guidance are currently being
evaluated.
(s) Change in Presentation Method
Consolidated Statements of Changes in Net Assets
The Company previously presented changes of items other thanstockholders’ equity as an aggregate net amount. To enhance theconvenience of the users of the consolidated financial statements, fromthe year ended December 31, 2015, the Company began presenting
major individual components of those changes separately and theircorresponding amounts.
The Company accordingly restated the Consolidated Statements of
Changes in Net Assets for the previous fiscal year.

Assets Pledged as Collateral
Assets pledged as collateral as of December 31, 2015 and 2014 were as follows:(1) Pledged assets
Millions of yen

2015
Land

¥

647

2014
¥

701

Buildings

437

480

Time deposits

62—¥ 1,146¥ 1,181Total(2) Liabilities secured by the above assets

Millions of yen

Accounts payable
Total

4

2015

2014

¥ 301

¥ 264

¥ 301

¥ 264

Contingent Liabilities
Contingent liabilities as of December 31, 2015 and 2014 were as follows:
Millions of yen

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

2015

2014

¥ 37

¥ 45

—

8

¥ 37

¥ 53

Canon Marketing Japan Inc. Annual Report 2015

5

Inventories
Inventories as of December 31, 2015 and 2014 were composed of the following:
Millions of yen

2015

2014

Merchandise¥ 25,801¥ 24,043

Service parts

2,526

2,428

Work in progress

792

489

Supplies

735

720

Other

152

135

¥ 30,006¥ 27,815

Total

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

6

Other Comprehensive Income (Loss)
The following table shows reclassification adjustments for each component of other comprehensive income (loss) for the years ended December 31,
2015 and 2014.
Millions of yen

2015

2014

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

¥ 1,551

Reclassification adjustments

¥ 870

(82)

1,469

(1)

869

1

1

—

—

(20)

(20)

165

165

Deferred gains or losses on hedges
Amount arising during the year
Foreign currency translation adjustments
Amount arising during the year
Remeasurements of defined benefit plans
Amount arising during the year

(661)

Reclassification adjustments(1,155)—(1,816)

Total other comprehensive income (loss) before tax effect

—
1,034

175

(302)

¥ (191)¥ 732

Tax effectTotal other comprehensive income (loss)

—

(366)

The following table shows tax effects for each component of other comprehensive income (loss) for the years ended December 31, 2015 and 2014
Millions of yen

2015
Pre-tax
amountNet unrealized gain on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments¥ 1,469

Tax effectNet-of-tax
amount¥ (398)¥ 1,0712014
Pre-tax
amount¥869

Tax effect¥ (302)Net-of-tax
amount
¥ 567

1

(0)

1

—

—

—

(20)

—

(20)

165

—

165

Remeasurements of defined benefit plans(1,816)573(1,243)———

Total other comprehensive income (loss)¥ (366)¥ 175¥ (191)¥ 1,034¥ (302)

¥ 732

53

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Canon Marketing Japan Inc. Annual Report 20157

Consolidated Statement of Changes in Net Assets
Current Fiscal Year (from January 1, 2015 to December 31, 2015)
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

21,405
21,4053
3

0
021,40821,408Issued stock
Common stock
Total
Treasury stock
Common stock
Total

Notes: 1. The increase of 3 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¥3,242

Common stock¥2,593

Type of stock

March 26, 2015
General stockholders’ meeting
July 22, 2015
Board of Directors’ meeting

Base date

Date effective¥25

December 31, 2014

March 27, 2015¥20

June 30, 2015

August 26 2015

(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 29, 2016
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, 2015

March 30, 2016

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

Total dividends

Dividend per share(Millions of yen)

(Yen)

Common stock¥1,556

Common stock¥1,945

Type of stock

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

Canon Marketing Japan Inc. Annual Report 2015

8

Financial Instruments
Current Fiscal Year (from January 1, 2015 to December 31, 2015) and Previous Fiscal Year (from January 1, 2014 to December 31, 2014)
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, 2015 and 2014, 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

2015Book value(1) Cash and deposits

Fair value

Difference¥ 36,774¥ 36,774—(2) Notes and accounts receivable

125,907

125,907—(3) Short-term investments in securities and investments in securities

69,782

69,782—(4) Short-term loans receivable

80,05480,054—¥ 312,517¥ 312,517—¥ 101,834¥ 101,834—¥ 101,834¥ 101,834—

Total assets(5) Notes and accounts payable
Total liabilities

Millions of yen

2014Book value(1) Cash and deposits(2) Notes and accounts receivable

Fair value

Difference¥ 36,107¥ 36,107—

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

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

55

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Canon Marketing Japan Inc. Annual Report 2015

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 9 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 were as follows:
Millions of yen

2015

2014

Book value
Equity securities

¥ 312

¥ 308

Investments in investment partnerships

¥ 495

¥ 475

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, 2015 and 2014 was summarized as follows:
Millions of yen

2015
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¥ 36,774———

125,907

—

—

—

—

—

—

—

62,800———80,054———¥ 305,535———

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

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

Canon Marketing Japan Inc. Annual Report 2015

9

Securities
Securities as of December 31, 2015 and 2014 were classified and included in the following accounts:
Millions of yen

2015

2014

¥ 7,789¥ 6,293

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

62,80084,500¥ 70,589¥ 90,793

The carrying amounts and aggregate fair values of investments in securities at December 31, 2015 and 2014 were as follows:
Millions of yen

2015
Cost

Unrealized gains

Unrealized losses

Fair value

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

¥ 3,061¥ 3,942¥ (33)¥ 6,970

11

1

—

12

¥ 3,072¥ 3,943¥ (33)¥ 6,982

Millions of yen

2014
Cost

Unrealized gains

Unrealized losses

Fair value

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

¥ 3,052¥ 2,471¥ (25)¥ 5,498

11

1

—

12

¥ 3,063¥ 2,472¥ (25)¥ 5,510

Available-for-sale and held-to-maturity securities whose fair value is not readily determinable as of December 31, 2015 and 2014 were as follows:
Millions of yen

2015

2014

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

¥

312
495

¥

308
475

Held-to-maturity:
Certificates of deposit
Total

62,80084,500¥ 63,607¥ 85,283

57

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Canon Marketing Japan Inc. Annual Report 201510

Employees’ Retirement and Severance Benefits
Current Fiscal Year (from January 1, 2015 to December 31, 2015)
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

Retirement benefit obligations at beginning of year
Cumulative effect of changes in accounting policies
Restated balance at beginning of year

2015

2014

¥ 202,476¥ 186,469

4,062

—

206,538

186,469

Service costs

7,402

6,760

Interest costs

2,110

2,845

Actuarial gains and losses(1,827)

12,097

Benefit paid
Retirement benefit obligations at end of year

(6,738)(5,695)¥ 207,485¥ 202,476(2) Reconciliation of plan assets at beginning and end of year
Millions of yen

Plan assets at beginning of year

2015

2014

¥ 165,178¥ 154,598

Expected return on plan assets

4,562

4,283

Actuarial gains and losses(2,488)

6,967

Contributions from the employer

4,174

4,599

Benefit paid

(6,172)(5,269)¥ 165,254¥ 165,178

Plan assets at end of year

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

Net defined benefit liabilities at beginning of year
Net periodic benefit costs

2015

2014

¥ 565

¥ 444

91

91

Benefit paid

(33)

(19)

Contributions to plans

(31)

(29)

Other
Net defined benefit liabilities at end of year

—

78

¥ 592

¥ 565

Canon Marketing Japan Inc. Annual Report 2015(4) Reconciliation of retirement benefit obligations and plan assets at year-end and net defined benefit liabilities and assets in consolidated balance sheets
Millions of yen

Funded retirement benefit obligations
Plan assets

Unfunded retirement benefit obligations

2015

2014

¥ 190,471¥ 186,455

165,505

165,431

24,96621,024

17,857

16,839Net liabilities and assets in consolidated balance sheets¥ 42,823¥ 37,863

Net defined benefit liabilities¥ 42,823¥ 37,863

Net liabilities and assets in consolidated balance sheets¥ 42,823¥ 37,863

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

(5) Retirement benefit costs
Millions of yen

Service costs

2015

2014

¥ 7,402¥ 6,760

Interest costs

2,110

2,845

Expected return on plan assets(4,562)(4,283)

Amortization of actuarial gains and losses

1,525

3,641

Amortization of prior service costs(2,680)(4,462)

91

91¥ 3,886¥ 4,592

Net periodic benefit costs using the simplified method
Retirement benefit costs of defined benefit plans

Note: In addition to the above retirement benefit costs, the Group recorded ¥893 million (including ¥524 million of special extra retirement payments) and ¥352 million (including¥13 million of special extra retirement payments) for extra retirement payments for the years ended December 31, 2015 and 2014, respectively.

(6) Remeasurements of defined benefit plans before income tax effect adjustment
Change in unrecognized prior service costs and unrecognized actuarial gains and losses for the year ended December 31, 2015 were as follows:
Millions of yen
Unrecognized priorservice costs

At beginning of year

Unrecognized actuarial gains
and losses

Total¥ (12,380)¥ 12,430

Net change

2,680

(864)

¥

1,816

50

At end of year

¥ (9,700)¥ 11,566¥ 1,866

2015

2014

Bonds

24%

24%

Stocks34(7) Plan assets
1. Main components of plan assets
Ratios for main components of plan assets were as follows:

Pooled funds

48

48

Life insurance company general accounts

21

20

Other
Total

4

4

100%

100%

Note: The composition of pooled funds was 49% in bonds and 51% in stocks for the year ended December 31, 2015, and 48% in bonds and 52% in stocks for the year ended
December 31, 2014.

59

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Canon Marketing Japan Inc. Annual Report 2015

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 as of December 31, 2015 and 2014 were as follows:

2015

2014

Discount rates

0.1 - 1.2%

1.1 - 2.0%

Long-term expected rates of return on plan assets

1.0 - 3.0%

1.0 - 3.0%

Estimated rates of salary increases

1.7 - 3.0%

1.7 - 3.0%

3. Defined contribution plan
The required contributions of the Company and consolidated subsidiaries to defined contribution plans totaled ¥1,939 million and ¥1,589 million for theyears ended December 31, 2015 and 2014, respectively.

11

Income Taxes
For the year ended December 31, 2015, the difference between the statutory income tax rate of 35.0% and the effective income tax rate following the
adoption of tax-effect accounting of 42.8% was 7.8 percentage points. The effective income tax rate for the year ended December 31, 2015, differed fromthe statutory income tax rate following the adoption of tax-effect accounting for the reasons outlined in the table below.
The difference between the statutory income tax rate and the effective income tax rate for the year ended December 31, 2014 was not material,
therefore the tax reconciliation for 2014 was not disclosed.

2015
Statutory income tax rate
Entertainment and other expenses permanently not deductible for tax purposes

35.0 %
1.2

Per-capita levy of inhabitants’ taxes

1.2

Valuation allowance(1.2)

Dividend income not taxable(0.0)

Decrease in deferred tax assets due to tax rate changes

5.9

Other

0.7

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

42.8 %

Canon Marketing Japan Inc. Annual Report 2015

The effects of significant temporary differences, which resulted in deferred tax assets and liabilities as of December 31, 2015 and 2014, were as follows:
Millions of yen

2015

2014

¥ 1,333¥ 1,291

Accrued business tax and business office tax

668

654

Loss on disposal and devaluation of inventories

400

434

Net defined benefit liabilities

13,85913,255

Excess amortization of software

987

1,695

Loss carried forward

790

1,124

Loss on devaluation of investments in securities

734

812

Excess depreciation of fixed assets

657

520

Loss on impairment of fixed assets

79

100

DEFERRED TAX ASSETS:
Accrued bonuses to employees

Allowance for doubtful receivables

166

117

5,119

4,890

Gross deferred tax assets

24,792

24,892

Less: valuation allowance(2,460)(3,199)¥ 22,332¥ 21,693¥ 1,197¥

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

1,450

1,534

244

117

¥ 2,891¥ 2,362

Deferred tax liabilities for land revaluation¥¥

Net deferred tax assets¥ 19,46726

29¥ 19,360(Additional Information)
On March 31, 2015, the “Act to Partially Revise the Income Tax Act and Others” (Act No. 9 of 2015) was promulgated. Under the act, effective from thefiscal year beginning on or after April 1, 2015, a reduction in the corporate tax rate and other measures were implemented. Accompanying these changes,
the effective statutory tax rate used to calculate the Company’s deferred tax assets and liabilities was reduced from the previously used 35% to 33% for
temporary differences expected to be reversed in the fiscal year beginning on January 1, 2016, and to 32% for temporary differences expected to bereversed in the fiscal year beginning on January 1, 2017 and thereafter.
Due to these changes in taxation rates, deferred tax assets (after deduction of deferred tax liabilities) decreased by ¥1,579 million, income taxesdeferred increased by ¥1,633 million, net unrealized gain on available-for-sale securities increased by ¥116 million, and remeasurements of defined
benefit plans decreased by ¥62 million as of and for the year ended December 31, 2015.

61

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Canon Marketing Japan Inc. Annual Report 2015

12

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.
Major companies and organizations in each segment
Reportable Segment

Business Solutions

IT Solutions

Imaging Systems

Industrial/Medical

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 Business
Canon Lifecare Solutions Inc.
ELQUEST CORPORATIONAZE, Ltd.
Canon Advanced Technologies Taiwan Inc.

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 2015(3) Information by reportable segment for the years ended December 31, 2015 and 2014 was as follows:
Millions of yen

2015Year ended or as of December 31,
Reportable Segment
Imaging
Systems

Industrial/
MedicalOther¥ 326,871 ¥ 112,622 ¥ 178,701¥ 27,153¥

Business
Solutions

IT Solutions

Total

Adjustments

Consolidated

Net sales:
External customers
Intersegment
Total

—

—

¥ 326,871 ¥ 141,201 ¥ 178,701

Segment income (loss)
Segment assets

28,579¥ 8,991 ¥

4,136 ¥ 13,842—

656 ¥ 646,003—— ¥ 646,003

28,579 ¥ (28,579)—¥ 27,153¥

656 ¥ 674,582 ¥ (28,579) ¥ 646,003¥¥

421 ¥ 26,647(743)— ¥ 26,647¥ 140,511 ¥ 65,305 ¥ 74,981¥ 19,212¥ 9,395 ¥ 309,404 ¥ 177,098 ¥ 486,502¥ 10,680 ¥¥¥Other items:
Depreciation and amortization
Amortization of goodwill—

Changes in the amount of property, plant¥ 10,621 ¥and equipment and intangible assets

2,151 ¥

1,996

97

—

2,399 ¥

1,080

527
145

¥

446

170 ¥ 15,524— ¥ 15,524

—

—

¥

242

7 ¥ 14,553

242— ¥ 14,553

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 ¥177,098 million.
3. Segment income (loss) corresponds to operating income stated on the consolidated statement of income.

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——¥ 28,024¥

51 ¥ 692,465 ¥ (33,033) ¥ 659,432

Segment income (loss)

¥

¥

¥

438 ¥ 25,088

Segment assets¥ 138,579 ¥ 65,040 ¥ 77,940

8,206 ¥

33,033

3,164 ¥ 14,258

(978)

—

— ¥ 659,432¥ 330,233 ¥ 148,750 ¥ 185,407

Total

—

51 ¥ 659,432

33,033 ¥ (33,033)—— ¥ 25,088¥ 19,725¥ 9,395 ¥ 310,679 ¥ 169,068 ¥ 479,747¥

Other items:
Depreciation and amortization
Amortization of goodwill¥ 10,877 ¥— ¥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.

63

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Canon Marketing Japan Inc. Annual Report 2015

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

2015Year ended or as of December 31,
Reportable Segment

Impairment loss

Business
Solutions

IT Solutions

Imaging
Systems

Industrial/
Medical

¥ 3

—

—

—

Other

Total

—

¥ 3

Adjustments

Consolidated—¥ 3

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

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

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

2015Year ended or as of December 31,
Reportable Segment
Other

Business
Solutions

IT Solutions

Imaging
Systems

Industrial/
MedicalAmortization of goodwill

—

¥ 97

—

¥ 145

—

Goodwill at December 31, 2015

—

¥ 275

—

¥ 545

—

Total

Adjustments

Consolidated

¥ 242

—

¥ 242

¥ 820

—

¥ 820

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

5. Information on gain on negative goodwill
There were no applicable items in the year ended December 31, 2015.
For 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.

Canon Marketing Japan Inc. Annual Report 201513

Related Party Transactions
Current Fiscal Year (from January 1, 2015 to December 31, 2015)
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)¥ 226,661

Accounts
payable¥ 69,764¥ 7,051

Accounts
receivableand others¥ 2,766¥ 30,000

Short-term
loans¥ 80,000

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 ofcapitalNote: Transaction amounts do not include consumption tax, etc., however, the account balances include consumption 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, 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¥ 5,560

Accounts
receivableand others¥ 2,809¥ 50,000

Short-term
loans¥ 50,000

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

65

66

Canon Marketing Japan Inc. Annual Report 201514

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, 2015 and 2014 were ¥1,832 million and ¥1,951 million,
respectively.

15

Lease Obligations, Long-Term Loans Payable and Deposits
Lease obligations, long-term loans payable and deposits as of December 31, 2015 were 2014 consisted of the following:
Millions of yen

Average interest rate (2015)

2015

2014

Lease obligations
Current portion of lease obligations¥

Lease obligations (excluding current portion)

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

16

—
0.0%

222

¥

344

321

445

543

789

—

—

4,044

3,710

¥ 4,587¥ 4,499

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 2015

Independent Auditor’s Report

67

68

Canon Marketing Japan Inc. Annual Report 2015

Canon MJ Group Companies
As of April 1, 2016

Segment

Company nameLines of businessBusiness Solutions

Canon System & Support Inc.

Solutions consulting, sales, support, and maintenance services, mainly for
Canon’s products

Canon Production Printing Systems Inc.

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

Canon IT Solutions Inc.

Systems integration and consulting, IT services, and software development and sales

Canon Software Inc.

Development of IT solutions and software embedded in products

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

Edifist Learning Inc.

Corporate IT and management training for corporations

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

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 25 consolidated subsidiaries (including domain name management companies).

Canon Marketing Japan Inc. Annual Report 2015

Corporate Data
Headquarters

Number of Stockholders

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

11,060Tokyo 108-8011, Japan

Number of Employees

Date of Establishment

Consolidated: 18,101

February 1, 1968

Non-consolidated: 5,243

Common Stock(As of December 31, 2015)¥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, 2016)

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
6,084
1,876
1,778
1,673
1,430
1,383
1,161
1,158
1,134

50.11%
4.03
1.24
1.18
1.11
0.95
0.91
0.77
0.77
0.75

Canon Inc.
Canon Marketing Japan Group Employee Stock Ownership Association
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd.
STATE STREET BANK AND TRUST COMPANY
CBNY—GOVERNMENT OF NORWAY
THE BANK OF NEW YORK MELLON SA/NV 10
Japan Trustee Services Bank, Ltd. (Trust Account 9)
Canon Marketing Japan Group Business Partner Stock Ownership Association
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT
Note: The percentage of ownership is calculated excluding the number of treasury stock (21,407,603 shares)

Shareholder Composition

Canon MJ Investor Relations Website

Financial Institutions
8.3%

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

Securities Companies
0.6%

facilitate communication with stockholders. The website contains:

Treasury Stock
14.2%• News for investors
Other Domestic Companies
51.3%

Individuals and Others
13.0%• IR calendar• Financial results and other financial information• Information on Long–Term Management Objectives Phase III (FY2016–2020)and Three-Year Management Plan (FY2016–2018)

Foreign Companies, etc.
12.6%

• Stock information• Annual reports

http://cweb.canon.jp/eng/ir/
Stock Price Range and Trading Volume
3,000

Stock Price (Yen)

Trading Volume (Shares)
10,000,000

2,500

8,000,000

2,000
6,000,000
1,500
4,000,000
1,000
2,000,000

500
0

2013
1

3

5

7

9

11

2014
1

3

5

7

9

11

2015
1

3

5

7

9

11

2016
1

0
3

69

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/

Printed in Japan