Canon Marketing Japan Group

Three-Year Management Plan (2009- 2011)

January 28 , 2009

Haruo Murase
President and CEO

Fiscal 2008 in Review

1. Five years of history（billions of yen）

Net Sales（Net Sales）
815.5

867.2

821.9

（income）
905.1
827.5

Operating income

Ordinary income

Net income22. The topics in 2008 & 2009
2008
Apr.

Canon System Solutions Inc. and Argo 21 Co. merged into Canon IT Solutions Inc.

Jul.

Canon System & Support Inc. and Canon BM Tokyo, Osaka, Kanagawa merged

Sep.

Canon IT Solutions Inc acquired all shares of Bic Niuse Co., Inc.
and changed buseinss name to Qualisite Tecqunoslgy Inc.

2009
Canon IT Solutions Inc. and Canon Network Communications merged.
Jan.

AIS and Solution Servise merged.
FMS Inc. got the part of medical businesses in Canon IT Solutions.

Apr.

Canon Marketing Japan acquires an interest of NRI Learning Network inc.
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Three-Year management Plan
From 2009 to 2011

1. Basic point of viewFind the chances and expand business domain
in global economic slump.
 Implement positive strategy for growth withimproving productivity and remove waste.

52. Keep sound balance sheet
Inventories

billions of yen40.0

14日171516141210864
20

30.0
20.0

37.7

43.0

34.1

10.0
0.0
2007

2008
amountbillions of yen
200.0
72

100.0

67

65

189.6

149.5

158.0

2007

2008

2011

50.0
0.0
amountdays

Complete weekly SCM control ＆Enhance parts inventory control

80
70
60
50
4030
20
100

days

Accuracy improvement in credit control

Free cash flow
Net cash provided by operating activities

日150.02011

Net cash used in investing activities
Free cash flow

Receivables

2006-2008
cumulative
106.4

billions of yen
2009-2011
cumulative
83.5

70.0
36.4

63.7
19.8

6

3. Business PlanConsolidated

billions of yen
2008

2009%

2010%

2011%

%

Net sales

827.5

814.0

840.0

920.0

(Y on Y)

(91%)

(98%)

(103%)(110%)

Operating income(Y on Y)
Ordinary income(Y on Y)Net income(Y on Y)

E.P.S.

25.4 3.1%(69%)

21.0 2.6%(83%)

25.9 3.1%(70%)(131%)

23.0 2.8%(89%)

11.2 1.4%(107%)

10.0 1.2%(116%)
34.0 3.7%(117%)

14.0 1.7%(140%)\73

32.0 3.5%

29.0 3.5%(126%)(89%)\79

27.5 3.3%

17.0 1.8%(121%)\102\124* E.P.S. after 2009 is calculated with the number of average-during term stocks in 2008.
74.Comparison with previous plan (2008-2010)
2008

2009%

New2010%

Net sales

827.5

Operating income

25.4

3.1%

21.0

2.6%

27.5

3.3%

32.0

3.5%

Ordinary income

25.9

3.1%

23.0

2.8%

29.0

3.5%

34.0

3.7%

Net income

11.2

1.4%

10.0

1.2%

14.0

1.7%

17.0

1.8%

Net sales

925.0

Operating income

34.0

3.7%

38.0

4.0%

43.0

4.2%

Ordinary income

34.0

3.7%

38.0

4.0%

43.0

4.2%

Net income

19.0

2.1%

21.0

2.2%

23.5

2.3%

Changes

Net sales(97.5)(A)-(B)

Operating income

(8.6)

-0.6%

(17.0)-1.4%(15.5) -0.9%

Ordinary income

(8.1)

-0.5%

(15.0)-1.1%(14.0) -0.8%

Net income

(7.8)

0.0%

(11.0)-1.0%(9.5) -0.6%(2009～11)

Before（2008～10)

814.0

%
840.0

billions of yen
2011
%

960.0

920.0

1,020.0(146.0)(180.0)8

5. Business plan by business Segment
billions of yen
2008

2009

2010

2011

Document buseness

329.5

322.5

325.0

329.0

Y on Y

(95%)

(98%)

(101%)(101%)

IT solution

166.5172.5

187.0

203.0

Y on Y(97%)(104%)(108%)(109%)

Buseiness Solutions

496.0

495.0

512.0

532.0

Y on Y(96%)(100%)(103%)(104%)

Consumer Equipment

265.8

271.0

273.0

284.0

Y on Y(93%)(102%)(101%)(104%)

Industrial Equipment

65.7

48.0

55.0

104.0

Y on Y

(63%)

(73%)

(115%)(189%)

Total

827.5

814.0

840.0

920.0

Y on Y

(91%)

(98%)

(103%)(110%)

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6. Key strategies
1.

Achieve No.1 in Customer Satisfaction & Status forKey Canon Products

2.

ITS 3000 Plan

3.

Income-Linked Growth and the Establishment ofNew Revenue Sources

4.

Improving Group Management Quality106-1.Achieve No.1 in Customer Satisfaction &Status for Key Canon Products
No.1 inJapanese Market

No.1 in Customer Satisfaction

No.1 in Services &Support quality
Foster a Digitalphoto culture

Solution

Marketing powerwith IT System

Strengthening of collaboration
with manufacturers

Sales strength

Product quality

Qualified forConsulting

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Marketing power with IT System～Raise productivity through the introduction of New IT System～

SystemAdvantage

Times

Salesforce▪CRM(customer relations management)

2008
Expansionin series

New service &support system▪Efficiency-creating▪Unify management of Service &support business

May, 2009▪Expansion of receiving order andNew physicaldistribution & order- delivering commodities in nightand holiday.
receiving system

September,
2009

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No.1 in Services & Support quality～Customer focused in each segment～

Segment
Business Solutions
Consumer
Equipment

Measures▪Promotion of streamlining with new IT System→ Progression in quality▪Centralization of call center → Improved function▪More convenience service center▪Redefine the position “ EOS-School”, “Canon Photocircle”→ Foster a Digital-photo culture

Industrial Equipment▪Establish the structure of Solution services

136-2. ITS 3000 Plan
Brand-building in IT Solution business market～ What can we do in IT Solution Business? ～SIEmbedded Software
Canon Products
Automobile

Development ofsoftware foreach industry

Migration
ERP

IT Outsourcing

InfrastructureServerSupply networks

Solution

IT Products
Business PC
Handy Terminal
Package software

Internet Data Center

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Business area

MeasuresSI

Be Prime-constractor
Get in operation of Consulting business

Embeddedsoftware

Expanding in Canon products
Shift to growth field like in-vehicle software

Infrastructure
Solution
IT Outsourcing

IT Products

Canon IT solution Inc. hold the central place in business
ERP, Production control system, Security system, Document
Solution
The expansion of the operative service business / IDC
business (datacenter), the setup of the SaaS businessfoundation
Profit making
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Establishment of Consolidated management～ Maximize group power ～Business Name
Canon MJ ITS company
Canon Software

Personal
numberRole

170 Segment unification
1,200 From consulting to development ofbusiness software, development ofembedded software

Canon Software America

20 Business application software
Development

Canon software Giken *130 Development of embedded software

Canon software information system

230 Development and sales ofcommunication system / the controlsystem＊In April, 2009 Canon Software Giken will merge with Canon Software

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Business Name
Canon IT Solutions

PersonalnumberRole

3,200 System integration (Consulting,Construction, Operation management,Maintenance service and others)

CANON CONTROL SYSTEM (SHANGHAI) INC.
(SHANGHAI) INC.

130 Offshore

SSJ K.K.

90 ERP

Garden Network, Ltd.

20 ASP System for gas station

Canon ITS Medical Inc..

140 Development of electronic medical chart

Canon BizAttenda Inc.

180 BPO, temporally help service

AES Inc.

130 Human resource development

Qualysite Technologies Inc.

230 JAVA, IT Outsourcing

NRI Learning Network
will join our group in April, 2009

50 IT training
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Key Strategies
The creation of the unification synergy effect inCanon IT Solutions Inc.
Provide whole IT Solution
Expand datacenter business & IT outsourcing businessImprovement sales Strength by the cooperation
Strengthening of competitiveness with the aid of theoffshore development
M&A & Alliance18

6-3. Income-Linked Growth and theEstablishment of New Revenue Sources
Document Business

Smooth introduction to market of new generation MFPExpansion of the digital commercial printing businessImprovement of the cost competitiveness by the changeof the Service & Support business

Consumer equipment
Expand the home printing businessIndustrial equipment
Canon Products + Import products
196-4. Improving Group Management Quality
The clarification of the role of groups
Reinforcement of the management system
More substantiality of the internal control
Construction of BCP( business continuation plan)Upbringing of professional talented person
Promotion of the shred service system
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Canon Marketing Japan Group
Forward-looking statements, including results forecasts on this web site, are based on
management’s assumption in light of current information available and therefore containinherent risks and uncertainties.As a consequence, a range of variable factors may cause
actual results to differ materially from forecasts.

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