

Consolidated Financial Statements
Year ended December 31, 2023 

with Independent Auditor’s Report



Data

Consolidated Balance Sheet
Canon Marketing Japan Inc. and Consolidated Subsidiaries
December 31, 2023
(Millions of yen)
2023

2022

Cash and cash equivalents (Notes 6 and 23)¥ 89,691¥ 84,632

Notes accounts receivable-trade and contract assets (Notes 7, 17, and 23)

111,650

110,432

Inventories (Note 8)

39,82638,521

Short-term loans receivable (Note 23)

170,005

180,013

7,482

6,154

(43)

(44)

418,611

419,708Land

28,36028,360

Buildings and structures

82,30780,189Machinery and vehicles

167

167

Furniture and fixtures

15,703

15,225

Rental assets

34,46335,913

Lease assets

2440

Construction in progress

271

897

161,295

160,791(76,270)(75,514)85,02585,277

Software

5,601

5,365

Goodwill (Note 27)

4,868

327

Customer-related intangible assets (Note 28)

3,409

—

Facility utilization rights

302

303

Other intangible assets

20

Total intangible assets

14,182

5,995

16,315

13,3121016

Prepaid pension and severance costs (Note 12)10,987393

Lease deposits

2,559

2,768

Deferred tax assets (Notes 5 and 16)

5,917

12,904

Other investments and other assets

3,962

3,555

Allowance for doubtful receivables

(202)

(188)

39,54832,760¥ 557,366¥ 543,740

ASSETS
CURRENT ASSETS:

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

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

INVESTMENTS AND OTHER ASSETS:
Investments in securities (Notes 9 and 23)
Long-term loans receivable

Total investments and other assets
Total assets (Note 27)

1

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

(Millions of yen)
2023

2022

¥ 45,552¥ 47,376

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Notes and accounts payable-trade

100

46

Accrued income taxes (Note 16)

8,233

7,453

Consumption taxes payable

6,713

5,426

Accrued expenses

16,586

16,628

Accrued bonuses

3,223

3,440

Accrued directors’ bonuses

107

119

Accrued product warranties

269

243

Accrued loss on contracts (Note 8)

52

115

Other current liabilities (Note 17)

29,75627,216

110,591

108,062

Long-term lease obligations (Notes 11 and 23)

207

74

Deferred tax liabilities (Notes 16)

178—

Allowance for long-term continuous service rewards

723

749

Accrued pension and severance cost (Note 12)

7,760

32,142Other long-term liabilities (Note 11)

2,398

2,341

11,26635,30673,30373,30382,727

82,82759

29

256,880

233,355(2,093)(2,093)

6,861

5,203

Deferred gain (loss) on derivatives under hedge accounting

87

(15)

Foreign currency translation adjustments

344

294

Defined retirement benefit plans

16,611

6,668

Total

434,779

399,571730

801

435,509400,372¥ 557,366¥ 543,740

Current portion of long-term lease obligations (Notes 11 and 23)

Total current liabilities
LONG-TERM LIABILITIES:

Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 13 and 22)
EQUITY:SHAREHOLDERS’ EQUITY (Notes 14 and 15):
Common stock:
Authorized, 299,500,000 shares; issued, 131,079,972 shares as of December 31,
2023 and 2022
Capital surplus
Stock acquisition rights (Note 19)
Retained earnings
Treasury stock, at cost; 1,401,615 shares in 2023 and 1,404,790 shares in 2022
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gain (loss) on available-for-sale securities

NON-CONTROLLING INTERESTS
Total equity
Total liabilities and equity• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

2

Data

Consolidated Statement of Income
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Year Ended December 31, 2023
(Millions of yen)
2023

2022

¥ 609,473¥ 588,132

404,980

388,843

204,493

199,289

151,998

149,342

52,49549,947

Interest income

383

300

Dividend income

238

210

NET SALES (Notes 17 and 27)
COST OF SALES (Notes 8 and 18):
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 18 ,19 and 20):
Operating income (Note 27)
OTHER INCOME (EXPENSES):Interest expense

(11)

(12)

Insurance income

457

459

Foreign exchange gains—

29

Foreign exchange losses(6)—

Loss on investments in partnership

(31)

(29)

3

3

Gain on sales of investments in securities (Note 9)

114

730

Loss on sales of investments in securities (Note 9)

(3)

(18)

Loss on sales of shares of subsidiaries and associates

(159)

—

Loss on sales and disposal of long-lived assets (Note 21)

(480)

(124)

Loss on impairment of investments in securities (Note 9)

—

(58)

Other, net

5786

Gain on sales of long-lived assets (Note 21)

Total other income (expenses)

562

1,576

Net income before income taxes

53,05751,523Current

15,493

14,244

Deferred

980

1,652

16,473

15,89636,58435,62791

75

36,49335,552¥ 36,584¥ 35,627

INCOME TAXES (Note 16):

Total income taxes
Net income
NET INCOME ATTRIBUTABLE TO:
Non-controlling interests
Owners of the parent
Net income(Yen)

PER SHARE DATA:
Net income attributable to owners of the parent (Note25)-Basic¥ 281.41¥ 274.16-Diluted

281.34274.10120.0090.00

Cash dividends applicable to the year (Note15)• See accompanying notes to consolidated financial statements.

3

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

Consolidated Statement of Comprehensive Income
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Year Ended December 31, 2023
(Millions of yen)

NET INCOME

2023

2022

¥ 36,584¥ 35,627

1,659(2,673)OTHER COMPREHENSIVE INCOME (LOSS) (Note 26):
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on derivatives under hedge accounting

102

(38)

Foreign currency translation adjustments

65

194

9,943

3,600

11,7691,083¥ 48,353¥ 36,710¥ 48,247¥ 36,612

106

98

Defined retirement benefit plans
Total other comprehensive income
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Non-controlling interests• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

4

Data

Consolidated Statement of Changes in Equity
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Year Ended December 31, 2023
(Thousands of shares / Millions of yen)

Shareholders’ equity
Common stock

BALANCE AS OF JANUARY 1, 2022

SharesAmountCapitalsurplusStockacquisitionrightsRetainedearnings

Treasury stock
SharesAmount131,080¥ 73,303¥ 82,824—¥ 208,825(1,405)¥ (2,092)

Net income attributable to owners of the parent

—

—

—

—

35,552——

Cash dividends

—

—

—

—

(11,022)——

Purchase of treasury stock

—

—

—

—

—

(1)

(4)

Disposition of treasury stock

—

—

3

—

—

2

3

Additional purchase of shares of consolidated subsidiaries

—

—

—

—

—

—

—

Net income attributable to non-controlling interests

—

—

—

—

—

—

—

Cash dividends paid to non-controlling interests

—

—

—

—

—

—

—

Net change in the year

—

—

—

¥ 29

—

—

—

BALANCE AS OF JANUARY 1, 2023

131,080

73,30382,82729

233,355(1,404)(2,093)

Net income attributable to owners of the parent

—

—

—

—

36,493——

Cash dividends

—

—

—

—

(12,968)——

Purchase of treasury stock

—

—

—

—

—

(1)

(5)

Disposition of treasury stock

—

—

5

—

—

3

5

Additional purchase of shares of consolidated subsidiaries

—

—

(105)

—

—

—

—

Net income attributable to non-controlling interests

—

—

—

—

—

—

—

Cash dividends paid to non-controlling interests

—

—

—

—

—

—

—

Net change in the year

—

—

—

30

—

—

—

131,080¥ 73,303¥ 82,727¥ 59¥ 256,880(1,402)¥ (2,093)

BALANCE AS OF DECEMBER 31, 2023

(Millions of yen)

Accumulated other comprehensive income (loss)
Deferred
Unrealized
Foreign
gain (loss) on
Definedgain (loss) on
currencyderivatives
retirement
available-fortranslation
under hedge
benefit planssale securities
adjustments
accounting

BALANCE AS OF JANUARY 1, 2022

Total equity¥ 373,950¥ 727¥ 374,677¥ 7,873

¥ 23

¥ 126

¥ 3,068

Net income attributable to owners of the parent

—

—

—

—

35,552—35,552

Cash dividends

—

—

—

—

(11,022)—(11,022)

Purchase of treasury stock

—

—

—

—

(4)

—

(4)

Disposition of treasury stock

—

—

—

—

6

—

6

Additional purchase of shares of consolidated subsidiaries

—

—

—

—

—

—

—

Net income attributable to non-controlling interests

—

—

—

—

—

75

75

Cash dividends paid to non-controlling interests
Net change in the year
BALANCE AS OF JANUARY 1, 2023

—

—

—

—

—

(24)

(24)

(2,670)

(38)

168

3,600

1,089

23

1,112

5,203

(15)

294

6,668

399,571801

400,372

Net income attributable to owners of the parent

—

—

—

—

36,493—36,493

Cash dividends

—

—

—

—

(12,968)—(12,968)

Purchase of treasury stock

—

—

—

—

(5)

—

(5)

Disposition of treasury stock

—

—

—

—

10

—

10

Additional purchase of shares of consolidated subsidiaries

—

—

—

—

(105)

—

(105)

Net income attributable to non-controlling interests

—

—

—

—

—

91

91

Cash dividends paid to non-controlling interests
Net change in the year
BALANCE AS OF DECEMBER 31, 2023
• See accompanying notes to consolidated financial statements.

5

Noncontrollinginterests

Total

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

—

—

—

—

—

(22)

(22)

1,658

102

50

9,943

11,783(140)

11,643¥ 6,861

¥ 87

¥ 344

¥ 16,611¥ 434,779¥ 730¥ 435,509

Consolidated Statement of Cash Flows
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Year Ended December 31, 2023
(Millions of yen)
2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES:¥ 53,057¥ 51,523

9,739

9,593

Amortization of goodwill

199

30

Amortization of customer-related intangible assets

303—

Net income before income taxes
Depreciation and amortization

(7)

111

Increase (decrease) in accrued pension and severance costs(13,348)(3,480)Decrease (increase) in prepaid pension and severance costs

10,387(46)

Contribution of cash to retirement benefit trust (Note12)

Increase (decrease) in allowance for doubtful receivables(18,000)—

Increase (decrease) in accrued bonuses

(299)

(716)

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

152

108

Loss (gain) on sales of investments in securities

(111)

(712)

Loss on impairment of investments in securities—

58

Loss (gain) on sales of shares of subsidiaries and associates

159—

Loss (gain) on investments in partnership31

29

Decrease (increase) in notes and accounts receivable(61)(2,895)(691)(3,280)

Increase (decrease) in notes and accounts payable-trade(2,503)

986

Income taxes paid

(14,810)(13,820)

Decrease (increase) in inventories

Other, net
Net cash provided by operating activities

3,986

236

28,18337,725(8,343)(8,890)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

20

24(1,961)

(894)

(744)

(676)

244

1,330

Payments for purchases of shares of subsidiaries(Note28 )(7,619)(210)

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

10,013

11

(750)

—

Proceeds from sales of investments in securities

Payments for acquisition of businesses

(872)

(802)

(10,012)(10,107)

Repayments of finance lease obligations

(13)

(56)

Payments for purchases of additional shares of a subsidiary

(260)

—

(5)

(4)

(12,961)(11,020)

Other, net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:Payments for purchases of treasury stock
Dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents

(22)

(24)

—

(156)

(13,261)(11,260)

149

245

Net increase (decrease) in cash and cash equivalents

5,059

16,603

Cash and cash equivalents as of beginning of year

84,632

68,029Cash and cash equivalents as of end of year (Note 6)¥ 89,691¥ 84,632• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

6

Data

Notes to Consolidated Financial Statements
Canon Marketing Japan Inc. and Consolidated Subsidiaries
Year Ended December 31, 2023

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”) are prepared 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 arecompiled from the consolidated financial statements prepared by the Company as required by the Japanese Financial Instruments and Exchange Act. Certain accounts and items presented in the original consolidated financial statements in Japanese
have been reclassified in order to present them in a form that is more familiar to readers outside of Japan.
Japanese yen figures less than a million yen are rounded to the nearest million yen.
In addition, certain changes have been made to the presentation of the consolidated financial statements of the previous
fiscal year to conform to those of the current fiscal year.

2

Summary of Significant Accounting Policies(a) Principles of Consolidation
The accompanying consolidated financial statements for the fiscal year ended December 31, 2023, include the accountsof the Company and all of its 14 (15 in 2022) subsidiaries. All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within theGroup has also been eliminated. The Company does not have any associated companies accounted for using either
equity method or cost method.
Canon Information Systems (Shanghai) Inc. became no longer a subsidiary as a result of sale of equity and therefore, it
was not included in the scope of consolidation from the current fiscal year.
In addition, SuperStream Inc. became no longer a subsidiary as a result of the merger with Canon IT Solutions, Inc. andtherefore, it was not included in the scope of consolidation from the current fiscal year.
TCS Inc. (former TOKYO NISSAN COMPUTER SYSTEM CO., LTD.) became a subsidiary as a result of a share acquisition
and therefore, it is included in the scope of consolidation from the current fiscal year.
All consolidated subsidiaries except for TCS Inc. have the same balance sheet date as the consolidated balance sheet
date. The fiscal year-end of TCS Inc. is March 31.
In preparing the consolidated financial statements, the Company uses the provisional financial statements of TCS Inc. asof December 31.

(b) Cash Equivalents
The Company and its consolidated subsidiaries consider all highly liquid investments, including time deposits and certificates of deposit, all of which mature or become due within three months of the date of acquisition, to be cash
equivalents.

(c)

Inventories
Merchandise and service parts are valued at cost determined by the monthly moving-average method. The carrying
amount in the consolidated balance sheet represents the amount after write-downs due to decreased profitability.
Work in process is valued at cost determined by the specific identification method.
Supplies are valued at cost determined by the last-purchase price method. The carrying amount in the consolidatedbalance sheet represents the amount after write-downs due to decreased profitability.

(d) Allowance for Doubtful Receivables
To cover possible losses on collection, allowance for specific receivables from customers experiencing financial difficulties
is estimated on an individual basis. For all other receivables, allowance is calculated based on past experiences of credit
losses.

7

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

(e) Property, Plant and Equipment, Excluding Lease Assets
Property, plant and equipment, excluding lease assets, are stated at cost. Depreciation is computed by 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. Items depreciated by the straight-line method arerental assets, certain assets of consolidated subsidiaries, buildings purchased on or after April 1, 1998 with the exceptionof building improvements, and building improvements and structures purchased on or after April 1, 2016.
The useful lives are as follows:
Buildings and structures, from 3 years to 75 years; furniture and fixtures, from 2 years to 20 years; and rental assets,
3 years.
(f)

Leases(1) Finance lease transactions — Lessees’ accounting
Leases that meet the criteria for finance lease including transfer of ownership are recorded as assets. Such leasetransactions mainly involve servers used in the Company’s IT system and software.
(2) Accounting method for depreciation of lease assets — Lessees’ accounting
Lease assets under finance lease contracts are depreciated by the straight-line method over their respective lease
contract term with zero residual value.

(g) Long-Lived Assets
The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

(h) Intangible Assets
Software for sales is amortized by the amount by comparing the larger of the amortization calculated based on theestimated sales quantity or the estimated revenue, or the amortization calculated based on the straight-line method
using the estimated effective duration of sales up to 3 years. Internal-use software is depreciated by the straight-line
method based on the length of in-house durability of 5 years.
Customer-related intangible assets are generally amortized by the straight-line method based on the period over which
the assets are expected to generate income from recorded date.

(i)

Method and period for amortization of goodwill
Goodwill is amortized over a maximum of 20 years using straight-line method.

(j)Investments in Securities
Investments in securities consist of debt and equity securities. Held-to-maturity debt securities are stated at amortizedcost. Available-for-sale marketable securities are stated at fair value, with unrealized gain or loss, net of the applicabletaxes, reported as a separate component of equity, and costs of securities sold are determined by the moving-averagemethod. Available-for-sale securities whose fair value is not readily determinable are stated at cost determined by themoving-average method.

(k) Accrued Bonuses
The estimated payment for current year’s portion of employees’ bonus is recorded based on the projected payments.

(l)

Accrued Directors’ Bonuses
The estimated payment for current year’s portion of directors’ bonus is recorded based on the projected payments.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

8

Data
Notes to Consolidated Financial Statements(m) Accrued Product Warranties
Costs arising from a one-year free warranty contract for consumer products are recorded based on the past experiencesof free repairs. Also, at certain subsidiaries, the future payment for free program maintenance and repairs are estimatedand accrued for based on the historical figures.

(n) Accrued Loss on Contracts
To cover possible future losses on contracts in progress at the end of the current year, if the occurrence of loss is probable and the loss amount can be reasonably estimated as of the end of the year, the amount of losses expected to be
incurred in the following year and thereafter is recorded.

(o) Allowance for Long-Term Continuous Service Rewards
The estimated payment is recorded in order to cover payment of rewards to employees in accordance with internal
regulations on long-term continuous service.

(p) Accounting Method for Retirement Benefits(1) Method of attributing estimated amounts of retirement benefits to periods
In calculating retirement benefit obligations, the estimated amount of retirement benefits attributed to periods up to
the current year is primarily determined using the benefit formula basis.
(2) Amortization of unrecognized actuarial gains and losses and prior service cost
Unrecognized prior service cost is amortized by the straight-line method over a certain number of years within the
average remaining service period of the eligible employees for past service when occurred. Unrecognized actuarial
gains and losses are amortized from the year following the year in which they arose by the straight-line method overa certain number of years within the average remaining service period of the eligible employees.
(3) Application of simplified method at smaller-sized companies
Certain consolidated subsidiaries apply the simplified method for calculating accrued pension and severance costs
and net periodic benefit costs. Under this method, the payments for voluntary early retirement of all eligible employees at the end of the year are recognized as retirement benefit obligations.

(q) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement ofincome. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.

(r)

Translation of Foreign Currency Accounts
All short-term and long-term receivables and payables denominated in foreign currencies are translated into Japanese
yen at the current exchange rates in effect at the consolidated balance sheet date except for foreign currency-denominated payables covered by exchange contracts for hedge purpose. The foreign exchange gains and losses on translation
are recognized in the accompanying consolidated statement of income.

(s)Translation of Subsidiaries’ Financial Statements Prepared in Foreign Currency
The consolidated balance sheet accounts of the foreign subsidiaries are translated into Japanese yen at the current
exchange rates in effect at the consolidated balance sheet date, except for the components of equity, excluding
non- controlling interests, which are translated at their historical exchange rates.
Revenue and expense accounts in foreign currency are translated at the average exchange rates prevailing during
the year.

9

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

(t)Per Share Amounts
Basic earnings (net income attributable to owners of the parent) per share are computed based on the weighted-average number of shares of common stock outstanding during each year. The computation of diluted earnings per sharereflects the maximum possible dilution from exercise of option.
Shareholders’ equity per share is computed based on the number of shares of common stock outstanding at year end.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to
the respective years, including dividends to be paid after the end of the respective years.

(u) Standards for Recognizing Significant Revenues and Expenses
The key performance obligations in the Group’s main businesses related to revenue from contracts with customers andthe usual point in time at which these obligations are satisfied (the usual point in time at which revenue is recognized)
are as follows.
The Group sells and provides services for products. It also sells products and provides services in the IT solutions andindustrial equipment and healthcare fields. For sales of products that do not require customer acceptance inspections,
the Group is generally entitled to receive consideration for the transaction from the customer when the product isdelivered, as legal ownership of the product, physical possession, significant risks associated with ownership of the
product, and economic value are transferred to the customer. Therefore, revenue is recognized when the product has
been delivered to the customer because the performance obligation is deemed to be satisfied when control over the
product is transferred to the customer at that point in time. For sales of products that require customer acceptanceinspections, the Group is entitled to receive consideration for the transaction from the customer when the product isinspected as legal ownership of the product, physical possession, significant risks associated with ownership of the
product, and economic value are transferred to the customer. Accordingly, revenue is recognized when the product has
been inspected and accepted to the customer because the performance obligation is deemed to be satisfied whencontrol over the product is transferred to the customer at that point in time. Services for products are mainly maintenance contracts for business equipment, which are either routine or recurring services. Therefore, revenue is recognizedon a straight-line basis over a specific period depending on the nature of the contract with the customer because theperformance obligation is deemed to be satisfied over time as the services are provided to the customer in accordancewith the contract. For contracts where the Group is entitled to receive consideration from the customer for the portionof the performance obligation satisfied according to the volume of product used, revenue is recognized based on theamount obtained by multiplying the unit price stipulated in the contract by the volume of product used, which is basedon the judgement that the customer shall receive benefits in proportion to the volume of product used. Consideration
for transactions is generally settled within a short period from the time the performance obligation is satisfied, and theamount of the promised consideration does not include a significant financial component. Furthermore, for certain salesof products and provision of services for certain products, consideration for transactions is received in advance.
Each reporting segment has unique revenue recognition methods, as outlined below. As the Enterprise and Area segments provide similar products and services, their revenues are stated in the aggregate.

Consumers segment
Transaction prices for the sale of products include rebates and other forms of variable consideration that are contingent
upon the achievement of predetermined targets and are mainly related to products generally sold to retailers. Rebates
and other variable consideration are deducted from the transaction price and rebates are estimated using the expectedvalue method based on past performance and other factors.

Enterprise and Area segments
Maintenance and operation services and outsourcing of IT solutions are services provided to customers consistently overthe period of the contract. Therefore, revenue is recognized on a straight-line basis over a certain period depending on
the nature of the contract with the customer, based on the judgment that the performance obligation is satisfied overtime. For contracts in which the Group is entitled to receive consideration from the customer for the portion of theperformance obligation satisfied according to the labor hours or the work performed, revenue is recognized basedon the volume obtained by multiplying the unit price stipulated in the contract by the labor hours or the work performed for the service because the customers receive benefits in proportion to the labor hours or the work performed
for the service.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

10

Data
Notes to Consolidated Financial Statements

For System Integration (SI) services that involve contract software development, revenue is recognized over the period ofdevelopment in proportion to the progress toward completion when it can be reasonably estimated, as the results aretransferred to the customer in accordance with the development progress. To estimate the progress toward completion,
the input method based on costs incurred (cost-to-cost method) is used to recognize revenue because the costs incurred
are proportional to the progress toward completion. In cases where the progress toward completion cannot be reasonably estimated, revenue is recognized based on the cost recovery method for those items for which the costs incurred inproportion to the progress completed can be recovered.

Professional segment
For SI services involving the contract development of systems for the healthcare and other sectors, please refer to therelevant information on performance obligation for the Enterprise and Area segments.

(v)

Research and Development Costs
Research and development costs are charged to income as incurred.

(w) Stock-Based Compensation
The Company measures stock-based compensation cost at the grant date, based on the fair value of the award, andrecognizes the cost on a straight-line basis over the requisite service period, which is the vesting period.

(x)

Key Hedge Accounting Methods(1) Hedge accounting method
Accounts payable denominated in foreign currencies for which foreign exchange forward contracts are used tohedge the foreign currency fluctuations is translated at the contracted rate if the forward contracts qualify forhedge accounting.
(2) Hedging instrument and hedged item
Hedging instrument—Forward exchange contracts
Hedged item—Foreign currency-denominated payables(3) Hedging policy
The Company hedges the risk of changes in foreign currency-denominated payables’ Japanese yen equivalent cash
flow attributable to changes in the related foreign currency exchange rates.
(4) Hedging effectiveness
The Company does not assess hedge effectiveness at year-end because hedging instrument and hedged item havethe same currency, amount, and due date in accordance with the Company’s hedging policy.

11

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

(y)New Accounting Pronouncements(Accounting Standard for Corporate Income Taxes, Local Inhabitant Taxes, and Enterprise Taxes, etc.)“Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27, October 28, 2022)“Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25, October 28, 2022)“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, October 28, 2022)(1) Overview
The guidance stipulates the treatment of the tax effect of the sale of shares of subsidiaries when the Group’s corporate tax system is applied and the classification of the income taxes to be recorded when other comprehensive
income is taxed.
(2) Scheduled date of application
The guidance is scheduled to be applied at the beginning of the fiscal year ending December 31, 2025.
(3) Effect of applying the accounting standard, etc.
The effect of applying the accounting standard was under review at the time of preparation of the consolidated
financial statements.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

12

Data
Notes to Consolidated Financial Statements

3

Changes in Accounting Policies(Application of revised Implementation Guidance on Accounting Standard for Fair Value Measurement)
The Group has applied the revised Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ
Guidance No. 31, June 17, 2021; hereinafter “Implementation Guidance on Fair Value Measurement Standard”) from thecurrent fiscal year, and will prospectively apply the new accounting policies stipulated by the Implementation Guidance on
Fair Value Measurement Standard in accordance with the transitional treatment provided in Paragraph 27-2 of the Implementation Guidance on Fair Value Measurement Standard. There is no impact on the consolidated financial statements.

4

Changes in Presentation(Income Taxes)
In Note 16 Income Taxes, “prepaid pension and severance costs,” which were included in “other” under “deferred tax
liabilities” in the previous fiscal year, has been disclosed separately as of December 31, 2023. To reflect this change, ¥125
million was reclassified form “other” to “prepaid pension and severance costs” as of December 31, 2022.

5

Significant Accounting Estimates
The Group records the deferred tax assets amounts for future temporary differences for which the timing of realization isreasonably estimated. This is because stable taxable income has been achieved for the years ended December 31, 2023 and2022, and the Group forecasts that the subsequent business environment is unlikely to significantly change in the near
future. Deferred tax assets as of December 31, 2023 and 2022, were ¥ 5,917 million and ¥ 12,904 million, respectively. The
Group considers the estimated future taxable income and business environment to be appropriate as they are determinedbased on the best estimate and judgement by management. However, they may be affected by changes in future businessand economic environment as well as revision and promulgation of related laws and regulations. If management estimate
and judgement about future taxable income and business environment needs to be revised, the amount to be recognized in
the consolidated financial statements for the following years may be affected.

6Cash and Cash Equivalents
Cash and cash equivalents as of December 31, 2023 and 2022, consisted of the following:(Millions of yen)
2023

Cash and deposits
Certificates of deposit due within three months
Cash and cash equivalents

13

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

2022¥ 88,191¥ 84,132

1,500

500

¥ 89,691¥ 84,632

7

Notes Maturing as of Year-End
Notes with maturities at year-end were treated as having been settled on the maturity date, although the consolidatedbalance sheet date fell on a holiday of financial institutions. The amounts of notes that matured as of year-end were as
follows:(Millions of yen)2023

Notes receivable-trade
Electronically recorded monetary claims-operating

8

2022

¥ 205

¥ 227

789

698

Inventories
The components of Inventories as of December 31, 2023 and 2022, were as follows:(Millions of yen)
2023

2022

Merchandise¥ 34,404¥ 33,410

Service parts

4,745

4,487

Work in process

197

100

Supplies

480

524¥ 39,826¥ 38,521

Total

Write-downs of inventories, net of the amount of the reversal, for the years ended December 31, 2023 and 2022, were ¥ 754
million and ¥ 1,140 million, respectively. Accrued loss on contracts of ¥ 52 million for the years ended December 31, 2023
and reversal of loss of contracts of ¥ (150) million for the year ended December 31, 2022, were included in cost of sales.

9

Investments in Securities
Investments in securities classified as available-for-sale as of December 31, 2023 and 2022, were as follows:(Millions of yen)
2023

2022

Marketable equity securities¥ 13,707

Unlisted equity securities

1,240

769

Investments in investment partnerships

1,368

1,656

¥ 16,315¥ 13,312

Total¥ 10,887

The carrying amounts and aggregate fair values of marketable equity securities as of December 31, 2023 and 2022, wereas follows:(Millions of yen)
2023
Cost

¥ 4,1822022

Unrealized gains

Unrealized losses¥ 9,667¥ (142)

Fair value

Cost¥ 13,707¥ 4,007

Unrealized gains

Unrealized losses¥ 7,087¥ (207)

Fair value¥ 10,887

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

14

Data
Notes to Consolidated Financial Statements

Available-for-sale securities which did not have a quoted price as of December 31, 2023 and 2022, were as follows:(Millions of yen)
2023

Unlisted equity securities2022¥ 1,240¥   769

1,368

1,656

¥ 2,608¥ 2,425

Investments in investment partnerships
Total

The proceeds, realized gains and realized losses of the available-for-sale securities which were sold during the years ended
December 31, 2023 and 2022, were as follows:(Millions of yen)
2023
Proceeds

Marketable equity securities
Others
Total

2022

Realized gains

Realized losses

¥ 114

¥ (3)

¥ 244

Proceeds¥ 1,302

Realized gains

Realized losses¥ 730¥ (18)

—

—

—

—

—

—

¥ 244

¥ 114

¥ (3)

¥ 1,302¥ 730¥ (18)

Impairment loss on listed equity securities for the year ended December 31, 2022 was ¥55 million. Impairment loss on
unlisted equity securities for the years ended December 31, 2022 was ¥ 3 million, respectively.

10

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 related to the realestate rental agreements, and accounts for the portion of such estimated amount attributable to the current year as an
expense.
The outstanding balances of lease deposits considered uncollectible as of December 31, 2023 and 2022, were ¥ 3,444
million and ¥ 3,538 million, respectively.

11

Lease Obligations and Deposits
Lease obligations and deposits included in other long-term liabilities as of December 31, 2023, were as follows:
Category

Current portion of lease obligations (See Note 23)
Lease obligations, excluding current portion (See Note 23)

Balance at
beginning of year
(Millions of yen)¥     46

Balance at
end of year
(Millions of yen)¥

Averageinterest rate(%)

Payment due

100

—

—

74

207

—

2025–2028

2,219

2,240

0.00%

—

¥ 2,339¥ 2,547——

Other interest-bearing liabilities
Guarantee deposits received
Total

15

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

12

Employees’ Retirement and Severance Benefits
1.

Overview of retirement benefit plans adopted
The Company has a defined contribution pension plan, a pension plan with a market-based variable accumulation rate(quasi-cash balance plan), and lump-sum severance payment plans. Retirement benefit trusts were set up for the pension plan with a market-based variable accumulation rate and the lump-sum severance payment plans. The lump-sum
severance payment plans are unfunded plans, but as a result of setting up the retirement benefit trusts, some of them
have become funded plans. In addition, certain consolidated subsidiaries have defined benefit pension plans and lumpsum severance payment plans.

2.

Defined benefit pension plans(1) Reconciliation of retirement benefit obligations at the beginning and end of year, excluding the simplified method in (3)(Millions of yen)
2023

2022

¥ 185,410¥ 210,250

Service costs

4,839

5,685

Interest costs

2,538

1,067

Actuarial (gains) losses(3,213)(20,684)

Retirement benefit obligations at beginning of year

(841)

—

(11,406)(10,908)¥ 177,327¥ 185,410

Prior service costs
Benefit paid
Retirement benefit obligations at end of year

(2) Reconciliation of plan assets at the beginning and end of year, excluding the simplified method in (3)(Millions of yen)

Plan assets at beginning of year

2023

2022

¥ 154,458¥ 170,501

Expected return on plan assets

4,400

4,256

Actuarial gains (losses)

11,468(14,240)

Contributions from the employer

2,863

2,892

Contribution of cash to retirement benefit trust

18,000—Benefit paid

(9,398)(8,951)(0)—¥ 181,791¥ 154,458

Other
Plan assets at end of year(3)	Reconciliation of retirement benefit obligations at the beginning and end of year for which the simplified method
was applied(Millions of yen)
2023

2022

¥ 798

¥ 743

Net periodic benefit costs

147

136

Benefit paid

(42)

(35)

Contributions to plans

(48)

(46)

Increase due to a newly consolidated subsidiary383—¥ 1,238¥ 798

Accrued pension and severance costs at beginning of year

Accrued pension and severance costs at end of year

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

16

Data
Notes to Consolidated Financial Statements(4)	Reconciliation of retirement benefit obligations and plan assets at year-end and accrued and prepaid pension and severance costs in consolidated balance sheets(Millions of yen)

Funded retirement benefit obligations

2023

2022

¥ 171,706¥ 167,366(182,190)(154,839)(10,484)

12,527

Plan assets

7,257

Unfunded retirement benefit obligations

19,222Net liabilities and assets in consolidated balance sheets¥(3,227)¥31,749Accrued pension and severance costs¥    7,760¥

32,142

Prepaid pension and severance costs(10,987)(393)¥   (3,227)

Net liabilities and assets in consolidated balance sheets¥

31,749Note 1: Plans for which the simplified method was applied were included.
Note 2: T he retirement benefit trusts were set up for the Company’s lump-sum severance payment plans. Therefore, funded retirement benefit obligations include obligations ofsuch plans, and similarly, plan assets include the retirement benefit trusts.

(5) Retirement benefit costs
Retirement benefit costs for the years ended December 31, 2023 and 2022, consisted of the following:(Millions of yen)
2023

2022

Service costs¥ 4,839¥ 5,685

Interest costs

2,538

1,067

Expected return on plan assets(4,400)(4,256)

Amortization of actuarial (gains) losses

(843)

(939)

Amortization of prior service costs

(275)

(282)

Net periodic benefit costs using the simplified method

147

136

¥ 2,006¥ 1,411Retirement benefit costs of defined benefit plans(6) Defined retirement benefit plans before effect adjustment
Changes in unrecognized prior service costs and unrecognized actuarial gains and losses for the years ended December
31, 2023 and 2022, were as follows:(Millions of yen)2023
Unrecognizedprior service
costs

At beginning of year
Net change
At end of year

17

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

2022

Unrecognizedactuarial
gains and losses

Total

Unrecognizedprior service
costs

Unrecognizedactuarial
gains and losses

Total

(925)

¥ (8,740)¥ (9,665)¥ (1,207)¥ (3,235)¥ (4,442)(566)(13,838)(14,404)282(5,505)(5,223)¥ (1,491)¥ (22,578)¥ (24,069)¥   (925)¥ (8,740)¥ (9,665)¥

(7) Plan assets(i)

Main components of plan assets
Ratios for main components of plan assets were as follows:
2023

2022

17%

14%

Stocks5

4

Pooled funds

6254Life insurance company general accounts

9

14

Other

7

14

100%

100%

Bonds

Total

Note 1 : 10% of the total plan assets as of December 31, 2023, was retirement benefit trusts that were set up for the pension plan with a market-based variable accumulation
rate and the lump-sum severance payment plan.
Note 2 : The composition of pooled funds was 49% in bonds and 51% in stocks as of December 31, 2023, and 45% in bonds and 55% in stocks as of December 31, 2022.

(ii)

Method for setting long-term expected rates of return
The long-term expected rate of return on plan assets is determined by considering current and projected plan asset
allocations and current and anticipated long-term rates of return from diverse plan assets.

(8) Actuarial assumptions
The principal actuarial assumptions for the years ended December 31, 2023 and 2022, were as follows:
2023

2022

0.87–1.70%

0.87–1.54%

Long-term expected rates of return on plan assets

2.5–2.8%

2.0–2.5%

Estimated rates of salary increases

1.6–2.4%

1.9–2.6%

Discount rates

3.

Defined contribution plan
The required contributions of the Company and consolidated subsidiaries to defined contribution plans, including
employees’ pension fund plan in the multiemployer plan which is accounted for in the same manner as the defined
contribution plan, totaled ¥ 1,845 million and ¥ 1,889 million for the years ended December 31, 2023 and 2022,
respectively.

13

Contingent Liabilities (Guarantee Obligations)
The Company provides the following guarantee obligations.
(Millions of yen)
2023

Guarantees for employees’ housing loans

2022

¥3

¥4

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

18

Data
Notes to Consolidated Financial Statements

14

Shareholders’ Equity
The Companies Act of Japan went into effect on May 1, 2006, replacing the Commercial Code. This applies to events ortransactions of companies in Japan occurring on or after May 1, 2006, and for the years ending on or after May 1, 2006.
The Companies Act stipulates that the amounts actually paid in or contributed in-kind for newly issued stock shall berecorded as common stock. However, it also allows 50% or less of such amounts to be recorded as additional paid-in capital.
Under the Companies Act, a company that meets certain criteria can establish in its Articles of Incorporation so that dividends can be paid to its existing shareholders by resolution of the Board of Directors, without requiring the approval of aresolution at a General Meeting of Shareholders. The Company has met said criteria and amended its Articles of Incorporation at the annual General Meeting of Shareholders for the fiscal year ended December 31, 2006. The Companies Act
provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus other than thecapital reserve and retained earnings other than the legal reserve be transferred to the capital reserve and the legal reserve,
respectively, up to 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., theaggregate amount of the Company’s legal reserve has already reached 25% of its common stock).

15

Common Stock and Dividends
1.	The following table shows the movement of number of common stock for the years ended December 31,
2023 and 2022:(Thousands of shares)
As of January
1, 2022

Increase orpurchase

Decreaseor saleAs of December
31, 2022

Increase orpurchase

Decreaseor saleAs of December
31, 2023

Issued stock

131,080——

131,080——

131,080

Treasury stock

1,405

1

2

1,404

1

3

1,402

Note a: The increase in treasury stock of 1 thousand shares and 1 thousand shares for the years ended December 31, 2023 and 2022, respectively, was due to the purchase of
fractional stock.
Note b: T he decrease in treasury stock of 3 thousand shares and 2 thousand shares for the fiscal year ended December 31, 2023, and 2022, respectively, was due to disposal for
performance-linked stock incentives and exercise of stock options.

2.

Matters regarding dividends

The Company distributes semiannual interim dividends by resolution of the Board of Directors and annual dividend byresolution of the General Meeting of Shareholders.
Semiannual interim dividends are paid to the common shareholders of the Company as of semiannual period-end and annual
dividends are paid to the common shareholders of the Company as of year-end.
Resolution date, total dividends, and dividend per share for the years ended December 31, 2023 and 2022, were as follows:
2023
Resolution date2022

Total dividends Dividends per share(Millions of yen)(yen)

Resolution date

Total dividends(Millions of yen)

Dividends per share(yen)

Annual dividends

March 29, 2023

¥ 6,484¥ 50

March 29, 2022

¥ 5,835¥ 45

Interim dividends

July 26, 2023

¥ 6,484¥ 50

July 25, 2022

¥ 5,187¥ 40

Annual dividends of ¥ 9,077 million (¥ 70 dividend per share) were resolved by the General Meeting of Shareholders held on
March 27, 2024.
Total dividend per share was ¥ 120 and ¥ 90 for the years ended December 31, 2023 and 2022, respectively.

19

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

16

Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate,
resulted in a statutory income tax rate of approximately 31% for the years ended December 31, 2023 and 2022.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets andliabilities at December 31, 2023 and 2022, were as follows:(Millions of yen)
2023

2022

DEFERRED TAX ASSETS:¥ 5,880¥ 10,071

1,118

1,163

Accrued business tax and business office tax

881

815

Asset retirement obligations

755

758

Recording of estimated future variable consideration

749

559

Loss on disposal and devaluation of inventories

504

555

Excess amortization of software

497

509

Excess depreciation of long-lived assets

480

624

Loss on impairment of investments in securities

265

264

Allowance for long-term continuous service rewards

224

233

Loss on valuation of golf club membership

98

96

Accrued product warranties

8475

Lump-sum depreciable assets

76

55

Loss on impairment of long-lived assets

31

31

Tax loss carryforwards

29

43

Accrued pension and severance costs
Accrued bonuses

Other

1,197

1,264

Gross deferred tax assets

12,868

17,115

(446)

(472)

¥ 12,422¥ 16,643¥ 3,089¥ 2,332

Deferred capital gain

1,280

1,280

Prepaid pension and severance costs

1,184

125

Customer-related intangible assets

1,057

—

Less: valuation allowance
Total deferred tax assets
DEFERRED TAX LIABILITIES:
Unrealized gain (loss) on available-for-sale securities

73

2

Total deferred tax liabilities¥ 6,683¥ 3,739

Net deferred tax assets¥ 5,917¥ 12,904

Net deferred tax liabilities

¥

Other

178

—

A reconciliation between the statutory income tax rate and the effective income tax rate for the year ended December 31,
2023 and 2022 were not presented since the difference between the statutory income tax rate and effective income tax rate
was less than 5% of the statutory rate.
The Company and some of its domestic consolidated subsidiaries have applied the group tax sharing system from the fiscal
year ended December 31, 2023, and implements accounting treatment of corporate tax and local corporate tax or accounting treatment of tax effect accounting thereon, as well as disclosure, in accordance with the “Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System” (ASBJ Practical Issues Task Force No. 42, August 12, 2021).

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

20

Data
Notes to Consolidated Financial Statements

17

Revenue
Information on the disaggregation of revenue based on contracts with customers(a) Disaggregation of revenue
As stated in Note 27, the Group has four reportable segments (Consumers, Enterprise, Area, and Professional). The
revenue disaggregated and the reconciliation of the disaggregated revenue with the four reportable segments for the
fiscal years ended December 31, 2023 and 2022, were as follows:
For the year ended December 31, 2023
(Millions of yen)

Overall sales of IT solutions
SI services
Maintenance and operation
service / outsourcing
IT products and system sales
Other
Revenue from contracts
with customers
Other revenue
Total

Consumers

Enterprise

Area

Professional

Other

Total

¥       0¥ 71,311¥ 12,207¥ 15,063—¥ 98,581

16

34,232

10,752534¥ 4,163

49,697

29,373
105,303

37,682
56,975

47,114
151,027

923,4271,137
8115,315
336,740

134,692

200,200

221,100

39,033

5,308

600,3331¥ 134,693

7,790¥ 207,990

1,349¥ 222,449—¥ 39,033—¥ 5,308

9,140¥ 609,473

Note: “Other” is a business segment that is not included in the reportable segments of the Company and includes the shared service business.

For the year ended December 31, 2022
(Millions of yen)Consumers

Overall sales of IT solutions
SI services
Maintenance and operation
service / outsourcing
IT products and system sales
Other
Revenue from contracts
with customers
Other revenue
Total

¥

Enterprise

Area

0

¥ 62,493¥

Professional

Other

Total

9,945

¥ 9,601—¥ 82,0392

32,91010,071407¥ 3,53146,921

29,257
107,316

33,34256,82745,099148,674830,361

1,108
13

108,814343,191

136,575

185,572

213,789

40,377

4,652

580,965

0¥ 136,575

5,936¥ 191,508

1,231¥ 215,020—¥ 40,377—¥ 4,652

7,167¥ 588,132

Note: “Other” is a business segment that is not included in the reportable segments of the Company and includes the shared service business.

(b) Basic information for understanding revenues from contracts with customers
The basic information for understanding revenues is listed under (u) Standards for Recognizing Significant Revenues andExpenses in Note 2. Summary of Significant Accounting Policies.
(c)Contract balances
The receivables from contracts with customers and contact liabilities as of December 31, 2023 and 2022, and January 1,
2022, were as follows:(Millions of yen)

Receivables from contracts with customers
Contract assets
Contract liabilities included in other current liabilities

December 31, 2023

December 31, 2022

January 1, 2022

¥ 98,899
11,493
19,278¥ 97,272
11,94017,639¥ 95,369
11,03817,055

Note: Contract assets refer to the Group’s right to consideration for goods and services, primarily in terms of outsourced software development, for which the Group has fulfilledpart of or all of its performance obligations at the year-end but has not yet billed to customers.
Contract assets are recognized as receivables based on contracts with customers when the Group’s right to consideration becomes unconditional.
Contract liabilities refer to, primarily, advances received from customers as payments for products and, in cases where the Group provides services on an ongoing basis,
advances paid to the Group for services not yet performed.
Contract liabilities are reversed following the recognition of revenues.
The amounts of revenue recognized for the years ended December 31, 2023 and 2022, that were included in the contract liability balance at beginning of year were ¥ 8,865
million and ¥ 10,469 million, respectively.
The amounts of revenue recognized for the fiscal years ended December 31, 2023 and 2022, from performance obligations satisfied or partially satisfied in previous years
were immaterial.
Notes, accounts receivable-trade and contract assets as of December 31, 2023 and 2022 mainly consist of follows:(Millions of yen)

Notes receivable-trade
Accounts receivable-trade
Contract assets

21

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

2023

2022

¥ 10,777
88,122
11,493¥ 11,053
86,21911,940(d) Transaction price allocated to the remaining performance obligation
The revenue expected to be recognized in the future fiscal years related to performance obligations that are unsatisfied
as of December 31, 2023 and 2022, were as follows:(Millions of yen)
2023

2022

¥ 9,369¥ 7,761

Between 1 year and 2 years

3,332

3,232

Between 2 and 3 years

1,891

1,736

Between 3 and 4 years

1,172

1,075

Between 4 and 5 years

427

425

Within 1 year

Later than 5 years
Total

52

62

¥ 16,243¥ 14,291

Note 1: Among the Group’s maintenance contracts for business devices, the contracts where revenues are recognized based on the amount calculated by multiplying the unit
price stipulated in the contract by the volume of product used, are not included in the above table.
Note 2: T he Group applies the convenience method of practice in noting the transaction price allocated to the remaining performance obligations and does not include in thenotes contracts with an initially expected contract term of one year or less.

18

Research and Development Costs
Total research and development costs included in selling, general and administrative expenses and cost of sales for the years
ended December 31, 2023 and 2022, were ¥ 455 million and ¥ 712 million, respectively.

19

Stock-Based Compensation
Based on the approval of the Board of Directors, the Company granted stock options to its directors and executive officers. In
accordance with the provisions of the stock acquisition rights agreement between the Company and a holder of the stockacquisition rights, the number of granted stock acquisition rights that may be exercised by such holders is adjusted (range
from 0% to 100% of granted) based on the level of consolidated net income before taxes for the fiscal year that stock acquisition rights were granted and the holder of the stock acquisition rights shall be entitled to exercise the number of exercisablestock acquisition rights only in a lump sum within a period of 10 days (or the next business day, if the tenth day is a holiday)
from the day immediately following the day when they cease to hold any position as a director or an executive officer of theCompany.
Details of stock option plans were as follows:
Grant date
Fair value of the option (per share)
Exercise price (per share)
Service period
Exercisable period
Grantee, number of grantees
Class and number of shares to be acquired

2023 stock option

2022 stock option

April 28,2023¥ 3,149¥
1
March 29, 2023 to March 27, 2024
April 29, 2023 to April 28, 2053
4 directors (excluding outside
directors), 2 Senior Vice President and4 executive officers for a total of 10
14,600 shares of common stock

April 28,2022¥ 2,606¥
1
March 29, 2022 to March 29, 2023
April 29, 2022 to April 28, 2052
4 directors (excluding outside
directors) and 7 executive officers fora total of 11
20,000 shares of common stock

The compensation cost recognized for these stock options for the years ended December 31, 2023 and 2022, were ¥ 32
million and ¥ 29 million, respectively, and it was included in selling, general and administrative expenses in the consolidated
statements of income.
The fair value of the option award was estimated on the date of grant using the Black-Sholes option pricing model thatincorporates the assumptions presented below:
Expected term of option (in years)
Expected volatility

2023 stock option plan

2022 stock option plan

[2.8 years / 33 months][3.1 years / 37 months]

22.81%

29.34%

Dividend yield

2.66%

2.65%

Risk-free interest rate

(0.04)%(0.04)%

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

22

Data
Notes to Consolidated Financial Statements

A summary of option activity under the stock option plans for the years ended December 31, 2023 and 2022, was presented
below:
Weighted-average
exercise price(Yen)

SharesFair value
at the grant date
(Yen)

Granted

20,000¥1¥ 2,606

Forfeited

5,100

—

—

Exercised———

Outstanding as of December 31, 2022

14,900¥1—

Granted

14,600¥1¥ 3,149

Forfeited

5,000

—

—

Exercised

1,100

—

—

Outstanding as of December 31, 2023

23,400¥1—

Granted shares outstanding as of December 31, 2023 and 2022, consist of vested shares of 21,000 and 11,175, respectively,
and unvested shares of 2,400 and 3,725, respectively.
The total fair values of shares vested for the years ended December 31, 2023 and 2022, were ¥ 59 million and ¥ 29 million
respectively.
The number of forfeited shares was determined based on the level of consolidated net income before taxes.

20

Selling, General and Administrative Expenses
The primary components of “Selling, general and administrative expenses” for the years ended December 31, 2023 and2022, were as follows:(Millions of yen)

Salaries and allowances
Accrued bonuses

2023

2022

¥ 70,084¥ 68,454

2,830

2,753

107

118

Accrued directors’ bonuses

297

312

3,038

2,743

Accrued product warranties

256

234

Provision (reversal) of allowance for doubtful receivables

19

150

Provision of allowance for long-term continuous service rewards
Net periodic retirement benefit costs

21

Other Income (Expenses)
The components of “Gain on sales of long-lived assets” for the years ended December 31, 2023 and 2022, were as follows:(Millions of yen)
2023

23

2022

Buildings and structures¥0—

Machinery and vehicles—¥1

Furniture and fixtures3

1

Rental assets—

0Software

—

1

Total

¥3

¥3

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

The components of “Loss on sales and disposal of long-lived assets” for the years ended December 31, 2023 and 2022, wereas follows:(Millions of yen)
2023

22

2022

Buildings and structures

¥ 59

¥ 18

Furniture and fixtures

33

40

Rental assets

63

51

Software

142

15

Other

183

0

Total

¥ 480

¥ 124

Lease Transactions
Operating lease transactions
1.

Lessees’ accounting
The following table shows future minimum lease payments as of December 31, 2023 and 2022, for non-cancelable
operating leases:(Millions of yen)
2023

2022

Due within 1 year

¥ 2,498¥ 2,539

Due after 1 year

4,245

6,155

¥ 6,743¥ 8,694

Total

2.

Lessors’ accounting
The following table shows future minimum lease income as of December 31, 2023 and 2022, for non-cancelable
operating leases:(Millions of yen)
2023

2022

Due within 1 year

¥ 3,230¥ 2,987

Due after 1 year

6,691

8,907

¥ 9,921¥ 11,894

Total

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

24

Data
Notes to Consolidated Financial Statements

23

Financial Instruments
1.

Information on financial instruments(1) Policies for financial instruments
The Group limits its asset management to financial instruments characterized as low default risk and believes that
financing should mainly be conducted through the use of Group finances, if necessary. The Company enters into
derivative transactions to hedge against foreign exchange fluctuation risks and not for speculative purposes.

(2) Types and risks of financial instruments and systems to control those risks
Operating receivables, consisting of notes and accounts receivable-trade, are exposed to credit risks of customers. The
Group strives to mitigate these risks by strict credit control utilizing credit information provided by external credit agencies, as well as by credit insurance and other risk-hedging means.
Short-term loans receivable are mainly loans to the parent company by the Company, rendered in compliance with theinternal regulations for investment and management of funds.
Investments in securities consist of held-to-maturity debt securities and equity securities issued by business counterparties of the Group, and are exposed to market price fluctuation risk. Regarding this risk, the Group periodically monitors
the fair values of the securities and the financial condition of their issuers, i.e., business counterparties. In addition, forsecurities other than held-to-maturity debt securities, the Group continuously reviews the status of security holdings,
taking market conditions and relationships with business counterparties into consideration.
Trade payables, consisting of notes and accounts payable-trade, 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. Hedge accounting methods are described in “(x) Key Hedge Accounting
Methods” of Note 2 Summary of Significant Accounting Policies.
2.

Fair values of financial instruments(1) Fair value and book value of financial instruments
The book values of financial instruments in the consolidated balance sheets as of December 31, 2023 and 2022, theirfair values, and the differences between the two are as follows:(Millions of yen)
2023

(1) Investments in securities(2) Derivative transactions (Note 2)

2022

Book value

Fair value

DifferenceBook value

Fair value

Difference¥ 13,707¥ 13,707—¥ 10,887¥ 10,887

—

¥ 126

¥ 126

—

¥

¥

—

(21)

(21)

Note 1: Cash and cash equivalents, notes and accounts receivable-trade, short-term loans receivable, and notes and accounts payable-trade are not included in the table above
as they are cash and settled within a short period of time and, accordingly, the book values approximate their fair values.
Note 2: Assets and liabilities arising from derivative transactions are indicated in net amounts, whereas items that amount to a net liability are shown in parentheses.

The fair value measurements of financial instruments are classified into the following three levels based on the observability
and significance of the inputs used to measure fair value measurements.
Level 1: F air value measurement is determined based on quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2: Fair value measurement is determined using directly or indirectly observable inputs other than Level 1 inputs.
Level 3: Fair value measurement is determined using significant unobservable inputs.
When multiple inputs with a significant impact are used to determine the fair value, the fair value of the financial instrument
is classified into the lowest level in the fair value measurement among the levels to which these inputs belong.

25

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

(2)	Financial Instruments Measured at Fair Value on the Consolidated Balance Sheet
Fair value measurement levels of fair value as of December 31, 2023 and 2022 were as follows:(Millions of yen)
2023

2022

Fair Value

Category
Level 1

Level 2

Fair Value

Level 3

Total

Level 1

Level 2

Level 3

Total

Investments in securities
Available-for-sale securities
Stocks¥ 13,707—— ¥ 13,707 ¥ 10,887—— ¥ 10,887

—

¥ 126

—

—

—

—

¥ 13,707¥ 126— ¥ 13,833 ¥ 10,887—— ¥ 10,887

—

—

—

—

—

¥ 21

—

¥ 21

—

—

—

—

—

¥ 21

—

¥ 21

Derivative transactions
Forward exchange contracts
Total assets

126—

Derivative transactions
Forward exchange contracts
Total liabilities

Note: Description of the valuation methods and inputs used to measure fair value measurements

Investments in securities
The fair values of investments in securities are measured at the quoted market price of the stock exchange for listed
stocks. The fair values of listed stocks are classified into Level 1 as they are traded in the active market.
Derivative Transactions
The fair values of forward exchange contracts are determined based on the quoted prices obtained from counterparty
financial institutions and, accordingly, are classified into Level 2.
Note a: The redemption schedule of monetary claims as of December 31, 2023 and 2022, was as follows:(Millions of yen)
2023

2022

Due within 1 year

1 year to 5 years¥ 89,691—¥ 84,632—

10,777—

11,053—

Cash and cash equivalents
Notes receivable-trade

Due within 1 year

1 year to 5 years

Accounts receivable-trade

89,379—87,438—

Short-term loans receivable

170,005—

180,013—¥ 359,852—¥ 363,136

—

Total

Note b : The repayment schedule of lease obligations as of December 31, 2023 and 2022, was as follows:(Millions of yen)
2023

Lease obligations

2022

Due within
1 year

1 year to
2 years

2 years to
3 years

3 years to
4 years

4 years to
5 years

Due within
1 year

1 year to
2 years

2 years to
3 years

3 years to
4 years

4 years to
5 years

¥ 100

¥ 86

¥ 62

¥ 44

¥ 15

¥ 46

¥ 32

¥ 23

¥ 14

¥5

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

26

Data
Notes to Consolidated Financial Statements

24

Related Party Information
Transaction conditions and policies for deciding transaction conditions with the parent company (Canon Inc.)(a)	Purchases of products are decided based on price negotiations each year, after considering market prices and theCompany’s proposals regarding desired prices.
(b) Sales of office equipment, consumables, and other inventories are subject to similar conditions as general transactions.
(c)	Loans of capital and interest rates on loans are decided rationally after considering market interest rates. Furthermore,collateral is not accepted.
Transaction with the parent company for the fiscal year ended December 31, 2023, and related balance as of December 31,
2023, were as follows:
Category

Name ofcompany

Address

Investments
in capital(Millionsof yen)ParentOhta-ku,Canon Inc.
¥ 174,762
companyTokyo

Business contents
or occupation

Development andmanufacturing in
the office, imaging
system, and industrial
equipment areas

Percentage
possession ofRelationshipvoting rights with related party(Ownership) (%)(Ownership)
Direct 58.5%
Indirect 0.0%

Contents of transactions

Transaction
amount(Millionsof yen)Accounts

Balance at
end of year
(Millionsof yen)Purchases of
products¥ 153,655

Accounts
payable-trade¥ 14,503¥   6,137

Accounts receivable¥   1,800
trade and others¥ 10,000

Short-term loans
receivable

Operating Sales of office
Manufacturing transactions equipment andconsumables,of products soldand otherby Canon MJ
inventories
NonCollection ofoperatingcapitaltransactions¥ 170,000

Transaction with the parent company for the fiscal year ended December 31, 2022, and related balance as of December 31,
2022, were as follows:
Category

Parentcompany

Name ofcompany

Canon Inc.

Address

Ohta-ku,Tokyo

Investments incapital(Millionsof yen)¥ 174,762

Business contents
or occupation

Development andmanufacturing in
the office, imaging
system, and industrial
equipment areas

Percentage
possession of
voting rights(Ownership) (%)(Ownership)
Direct 58.5%
Indirect 0.0%

Relationshipwith related party

Manufacturingof products soldby Canon MJ

Contents of transactions

Transaction
amount(Millionsof yen)Accounts

Balance at
end of year
(Millionsof yen)Purchases of
products¥ 158,803

Accounts
payable-trade¥ 17,385

Operatingtransactions

Nonoperatingtransactions

Sales of officeequipment andAccounts receivable¥   4,755
consumables, andtrade and others
other inventories
Loans of capital

Note: Transaction amounts do not include consumption tax or other taxes, however, the account balances include consumption tax.

27

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023—

Short-term loans
receivable¥   1,309¥ 180,000

25

Per Share Data
A reconciliation of the numerators and denominators of basic and diluted income attributable to owners of the parent per
share computation for the years ended December 31, 2023 and 2022, was as follows:(Millions of yen)

Net income attributable to owners of the parent

2023

2022

¥ 36,493¥ 35,552(Thousands of shares)
2023

Average common shares outstanding

129,678

129,67633

31

129,711

129,707

Effect of diluted securities
Diluted common shares outstanding

2022

Note: The effect of diluted securities of 33 thousand shares for the fiscal year ended December 31, 2023, was due to the grants of performance-linked stock incentives and stock
option and the effect of diluted securities of 31 thousand shares for the fiscal year ended December 31, 2022, was due to the grants of performance-linked stockincentives.

A reconciliation of the numerators and denominators of shareholders’ equity per share as of December 31, 2023 and 2022,
was as follows:(Millions of yen)
2023

2022

¥ 435,509¥ 400,372

Less – Non-controlling interests

(730)

(801)

Less – Stock acquisition rights

(59)

(29)

¥ 434,720¥ 399,542

129,678

129,676

2023

2022

¥   281.41¥   274.16

Total equity at end of year

Shareholders’ equity
Shares outstanding at year-end (thousands of shares)

Computed per share data were as follows:(Yen)

Net income attributable to owners of the parent per share
Basic
DilutedShareholders’ equity per share

281.34274.103,352.30

3,081.07

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

28

Data
Notes to Consolidated Financial Statements

26

Other Comprehensive Income
The following table shows amounts arising during the year, reclassification adjustments, pre-tax amount, tax effect, andnet-of-tax amount for each component of other comprehensive income for the years ended December 31, 2023 and 2022:(Millions of yen)
2023

2022

Unrealized gain (loss) on available-for-sale securities:
2,519¥ (3,207)

(114)

(656)

Pre-tax amount

2,405(3,863)Tax effect

(746)

1,190

Net-of-tax amount

1,659(2,673)147(54)

Pre-tax amount

147

(54)

Tax effect

(45)

16

Net-of-tax amount

102

(38)

Amount arising during the year

94

194

Reclassification adjustments

(29)

—

Pre-tax amount

65

194

Tax effect——Net-of-tax amount

65

194

Amount arising during the year

15,522

6,444

Reclassification adjustments(1,118)(1,221)

Amount arising during the year
Reclassification adjustments¥

Deferred gain (loss) on derivatives under hedge accounting:Amount arising during the year

Foreign currency-translation adjustments:

Defined retirement benefit plans:

Pre-tax amount

14,4045,223

Tax effect(4,461)(1,623)Net-of-tax amount

9,943

3,600

¥ 11,769¥ 1,083

Total other comprehensive income

29

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

27

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 andassess their respective operating results.
(Major companies and organizations in each segment)
Reportable segment

Major business areas and Group companies

Consumers

Sells products such as digital cameras and inkjet printers primarily to individual customers.

Enterprise

Sells Canon input and output devices and provides solutions that contribute to solving businessproblems in each industry primarily for large corporations, quasi-major and upper medium-sizedenterprises.
[Major Group company]
Canon IT Solutions Inc.

Area

Sells Canon input and output devices and provides solutions that help customers solve businessproblems primarily for small and medium-sized enterprises in Japan.
[Major Group company]
Canon System & Support Inc.
Provides solutions for customers in each area.
• Production Printing
Provides high-speed continuous feed printers and high-speed cut sheet printers to the printing
industry.
[Major Group company]
Canon Production Printing Systems Inc.

Professional• Industrial Equipment
Provides products such as semiconductor manufacturing systems and inspection and measurement devices mainly to semiconductor manufacturers and other electronics device
manufacturers.
• Healthcare
Provides IT solutions, system development, network construction, and hardware mainly for the
medical and healthcare field.
[Major Group company]
Canon ITS Medical Inc.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

30

Data
Notes to Consolidated Financial Statements(2) Methods of measurement for sales, segment income (loss), assets, and other items for reportable segments
Accounting methods for reportable segments are the same as the accounting methods described in the notes on“Summary of Significant Accounting Policies.” Segment income (loss) is measured based on the amount of operating
income. Intersegment sales and transfers are based on market prices.
(3) Information by reportable segment as of and for the years ended December 31, 2023 and 2022, was as follows:
As of and for the year ended December 31, 2023
(Millions of yen)

Reportable segment
Consumers

Enterprise

Area

Professional

Other(Note a)¥ 39,033¥ 5,308 ¥ 609,473

Adjustments Consolidated(Note b)(Note c)Total

Net sales:
External customers¥ 134,693 ¥ 207,990 ¥ 222,449
11,464

1,170

Total

¥ 134,713 ¥ 220,327 ¥ 233,913¥ 40,203¥ 13,026 ¥ 642,182 ¥ (32,709) ¥ 609,473

Segment income (loss)¥ 13,355 ¥ 19,651 ¥ 18,249¥ 3,612¥  (2,224) ¥ 52,643 ¥Segment assets¥ 45,313 ¥ 130,344 ¥ 77,029¥ 24,099¥ 3,877 ¥ 280,662 ¥ 276,704 ¥ 557,366

Intersegment20

12,337

7,718— ¥ 609,473

32,709 ¥ (32,709)—(148) ¥ 52,495

Other items:
Depreciation and amortization

687

6,693

1,865

290

20

9,555

487

10,042

Amortization of goodwill

—

96

—

32

71

199

—

199

Changes in the amount ofproperty, plant and equipment
and intangible assets

447

15,055

2,267

646

19

18,434

177

18,611

As of and for the year ended December 31, 2022
(Millions of yen)

Reportable segment
Consumers

Enterprise

Area

Professional

Other(Note a)¥ 40,377¥ 4,652 ¥ 588,132

Adjustments(Note b)

Total

Consolidated(Note c)Net sales:
External customers
Intersegment¥ 136,575 ¥ 191,508 ¥ 215,020
38

11,222

11,541

1,293

7,630

31,724— ¥ 588,132¥ (31,724)

—

Total

¥ 136,613 ¥ 202,730 ¥ 226,561¥ 41,670¥ 12,282 ¥ 619,856¥ (31,724) ¥ 588,132

Segment income (loss)¥ 13,940 ¥ 17,073 ¥ 15,564¥ 5,240¥ (1,750) ¥ 50,067¥    (120) ¥ 49,947

Segment assets

47,480109,103

70,912

20,253

3,436

251,184

292,556

543,740

Depreciation and amortization

685

6,422

1,710

294

18

9,129

464

9,593

Amortization of goodwill

—

—

—

—

30

30

—

30

Changes in the amount ofproperty, plant and equipment
and intangible assets

349

7,286

1,166

124

3

8,928

137

9,065

Other items:

Note a: “Other” is a business segment that is not included in the reportable segments of the Company and includes the shared service business.
Note b: Adjustments are as follows:(1) Adjustment of segment income (loss) eliminates intersegment transactions.
(2) A djustment of segment assets is for corporate assets that do not belong to reportable segments. These assets mainly comprise surplus funds (cash and marketablesecurities) and assets related to head office land, buildings, and head office administrative units.
(3) Adjustment of depreciation and amortization is for head office building expenses that do not belong to reportable segments.
(4) Adjustment of increase in property, plant and equipment and intangible assets consists of capital investments in head office buildings that do not belong to reportablesegments.
Note c: Total segment income (loss) after adjustments for reportable and other business segments equals operating income in the consolidated statements of income.

31

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

2.

Related information

As of December 31, 2023 and 2022
(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(a) Sales
Disclosure of information on sales by geographical area is omitted since sales to domestic external customers
account for more than 90% of consolidated net sales.
(b) Property, plant and equipment
Disclosure of information on property, plant and equipment by geographical area is omitted since the amount ofdomestic property, plant and equipment accounts for more than 90% of total property, plant and equipment
recorded in the consolidated balance sheets.

(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.

(4) Information on remaining balance of goodwill by reportable segment
As of December 31, 2023
(Millions of yen)

Reportable Segments

Balance at year-end

ConsumerEnterprise—¥ 4,484

Area

Professional

—

¥ 128

Other

Total

¥ 256

¥ 4,868

Amountrecorded on
Adjustments consolidated
financialstatements—¥ 4,868

As of December 31, 2022
(Millions of yen)

Reportable Segments

Balance at year-end

ConsumerEnterprise

—

—

Area

Professional

—

—

Other

Total

¥ 327

¥ 327

Amountrecorded on
Adjustments consolidated
financialstatements

—

¥ 327

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

32

Data
Notes to Consolidated Financial Statements

28

Business acquisitions
On October 2, 2023, the Company acquired 93.1% shares of TCS Inc. (former TOKYO NISSAN COMPUTER SYSTEM CO.,LTD) (hereinafter “TCS”) through a tender offer.
On November 1, 2023, the Company acquired remaining 6.9% shares though demand for sales. Total consideration of cash
for acquisitions was ¥11,009 million.
TCS engages information related business and is wholly owned subsidiary of the Company after acquisitions.
The Company considers that this acquisition contributes to expand ITS business with profit and accelerate the implementationof IT solutions strategies for different customer groups. Also, this acquisition allows the Company to expand stock businessby the service-type business model where services are continuously provided for customers. In addition, the Company
considers it possible to increase the corporate value of TCS by promoting coordination with a wide range of businesses of theGroup, and by further strengthening the relationship with existing customer of TCS.
The purchase price allocation was based on estimated fair values of the assets acquired and liabilities assumed at acquisition
date. Acquisition-related costs mainly consist of remuneration foradvisory services of ¥ 246 million were expensed as incurred.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed, goodwill, andconsideration at acquisition date.
(Millions of yen)

Current assets
Customer-related intangible assets
Other long-term assets¥ 4,477
3,712
836

Total assets acquired¥ 9,025

Current liabilities¥ 1,156

Long-term liabilities

1,439

Total liabilities assumed¥ 2,595

Net assets¥ 6,430

Cash consideration

11,009Goodwill¥ 4,579

Net cash payment for this acquisition was as follows:(Millions of yen)

Cash consideration
Cash and cash equivalents hold by TCS
Liabilities of TCS
Net cash payment¥ 11,009(2,731)(759)¥ 7,519

Intangible assets acquired, which are subject to amortization, mainly consist of customer-related intangible assets of ¥3,712
million. The weighted average amortization period for all intangible assets is 14.9 years. Goodwill recorded is primarily
attributable to excess earning power in the future. Goodwill is amortized over 12 years using straight-line method.
The Company’s consolidated financial statements for the year ended December 31, 2023, included the result of operationsof TCS from October 1, 2023, (deemed acquisition date) to December 31, 2023. The unaudited pro forma information of
TCS for the years ended December 31, 2023, as if TCS had been included in the Company’s consolidated statement ofincome from the beginning of the year ended December 31, 2023, were as follows.
(Millions of yen)

Net sales
Operating income
Net income before income taxes¥ 6,916(1)(151)

Net income attributable to owners of the parent(195)

Basic income attributable to owners of the parent per share (yen)(1.51)The unaudited pro forma information was calculated based on net sales and income (loss) of TCS for the period from January2023 to September 2023. The amortization of goodwill and customer-related intangible assets was included in thecalculation as if the business combination had been completed on January 1, 2023.

33

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

29

Subsequent Events(Establishment of a subsidiary)
The Company decided to set up a corporate venture capital (hereinafter “CVC”) fund at a meeting of the Board of Directors
held on January 29, 2024. The CVC fund is a consolidated subsidiary of the Company. The Company (limited liability partner)
owned 99.5% of ownership and Global Brain Corporation (unlimited liability partner), management company owned 0.5%of ownership. Global Brain Corporation was established on January 14, 1998, and engages venture capital business. Head
office is located Shibuya-Ku, Tokyo, and the President and CEO is Mr. Yasuhiko Yurimoto.
On January 2024, the Company launched the R&B (Research & Business Development) Promotion Center, a professionalorganization with an R&B function that works to create new businesses in order to solve social issues in a future-oriented
manner. The center will work on creating new value by promoting open innovation worldwide together with like-minded
start-up companies, educational institutions, and administrative bodies. As an R&B initiative, the Company set up the CVC
fund “Canon marketing Japan MIRAI Fund (registered name is Canon Marketing Japan Future Investment Limited Liability
Partnership)” to speed up open innovation with start-up companies with cutting-edge technology and business ideas. The
investment areas are based on social issues envisioned for the future without being limited to the existing businesses of theGroup. There are two investment areas, Well-being and Business Transformation.
Total value of funds of CVC fund is ¥ 10,000 million and investment period is 10 years under the plan.
(Business acquisitions)
The Company resolved to acquire all shares of Primagest, Inc. (hereinafter “Primagest”) and thereby make Primagest and its
three subsidiaries the Company’s consolidated subsidiaries at a meeting of the Board of Directors held on March 5, 2024, andconcluded a stock transfer agreement on the same day.
Primagest and its subsidiaries engage in image information solutions; development, manufacturing and system integration of
hardware and software for image information processing; contracted services related to image information processing;maintenance of the above hardware and software, and sales of consumables.
The Company considers that the Group will promote Primagest’s services throughout its broad customer base by making
these companies its subsidiaries. The Company also believes that both operational efficiency and service quality could further
improve and expand the business by incorporating Primagest’s knowledge and expertise into the Group’s BPO business.
Furthermore, the two companies will be able to cooperatively create new services by combining Primagest’s services with thetechnologies and system development capabilities that the Group has cultivated in areas such as image solutions and digital
document services.
In accordance with the stock transfer agreement, the Company acquires all shares of Primagest at total consideration of cash
amounting to ¥ 37,000 million on March 29, 2024, and the deemed acquisition date is March 31, 2024.
Acquisition-related cost and the estimated fair values of the assets acquired and liabilities assumed and the amounts ofgoodwill are not yet determined.

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

34

Data

Independent Auditor’s Report

35

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

36

Data
Independent Auditor’s Report

37

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

38

Data
Independent Auditor’s Report

39

Canon Marketing Japan Inc. Consolidated Financial Statements FY2023

Canon Marketing Japan Inc.
16-6, Konan 2-chome, Minato-ku, Tokyo 108-8011, Japan

Canon Marketing Japan Group Website
Investor Relations

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