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THE CANON STORY 2009/ 2010

© Michel GUNTHER / WWF-Canon

Contents

01 Kyosei: Canon’s Corporate Philosophy 02 Message from Top Management 04 Canon Now 06 Canon Ahead 20 Excellent Global Corporation Plan 22 Canon up to Now 25 Corporate Activities 35 Product Operations

Kyosei

The corporate philosophy of Canon is kyosei. A concise definition of this word would be “Living and working together for the common good,” but our definition is broader: “All people, regardless of race, religion or culture, harmoniously living and working together into the future.” Unfortunately, the presence of imbalances in our world in such areas as trade, income levels and the environment hinders the achievement of kyosei. Addressing these imbalances is an ongoing mission, and Canon is doing its part by actively pursuing kyosei. Truly global companies must foster good relations, not only with their customers and the communities in which they operate, but also with nations and the environment. They must also bear the responsibility for the impact of their activities on society. For this reason, Canon’s goal is to contribute to global prosperity and the well-being of mankind, which will lead to continuing growth and bring the world closer to achieving kyosei.

01

Message from Top Management

02

Improving management quality through continued innovation and progress.

In 2009, Canon’s business performance is feeling the impact of the global economic crisis. But for Canon, these tough times present a golden opportunity to bolster our corporate structure. We are making a major change in course for Phase III of the Excellent Global Corporation Plan, launched in 2006, from sound growth to improved management quality, and are now preparing for our next leap. Through the Excellent Global Corporation Plan, introduced in 1996, we transformed the company’s corporate mindset with a focus on total optimization and profit, and carried out innovative management reforms. These efforts contributed to creating the foundation on which Canon stands today. “Improved management quality” refers to the achievement of real-time management that immediately puts into practice strategies based on well-honed decision-making processes. To realize real-time management and become a truly global corporation, we will strengthen both cash flow management and supply chain management while enhancing product competitiveness and profitability to deliver results even amid shrinking markets. Canon sees itself growing and prospering over the next 100, or even 200 years, and is committed to becoming an excellent global company respected the world over. Based on our corporate philosophy of kyosei, we make every effort to contribute to society and fulfill our corporate responsibilities by constantly refining technology that benefits society. At the same time, we are also focusing on the needs of business and the environment so that our planet may flourish and the people who live on it prosper. As Canon moves forward, we look forward to your continued understanding and support.

For Canon, 2009 is a year to focus our energies on the next great leap forward. Amid an economic crisis of unprecedented proportions, we are working hard to improve management quality so that we can hit the ground running once the business climate turns around. More crucial than anything in this effort is the timely release of highly competitive new products realized through a range of innovations, including the development of key components. As we aim for the overwhelming No.1 market position in all current business areas, we are doubling our efforts to establish “cross-media imaging,” enabling people to freely and vividly express themselves, giving form to their imagination and creativity through advanced synergies between Canon imaging devices. Additionally, we are working to realize advanced supply chain management through IT innovations aimed at consolidating information for all business processes throughout the company. We are also promoting in-house production and automated production systems, realizing regionally optimized production bases worldwide, nurturing new core businesses, and developing next-generation technologies. We remain committed to further strengthening our environmental management, improving product quality, and promoting corporate governance and compliance activities to fulfill our corporate responsibilities. Canon today is the product of having overcome many past trials and tribulations. As we work toward our Excellent Global Corporation Plan goal of joining the ranks of the world’s top 100 companies in terms of all key business performance indicators, we continue to innovate, always keeping in mind the spirit of “Speed and Quality” under which the plan was first launched. In closing, I look forward to your continued understanding and support.

Fujio Mitarai

Tsuneji Uchida

Chairman and CEO, Canon Inc.

President and COO, Canon Inc.

03

Canon Now

Other areas 18%

Japan 21%

2008 Net sales

$44,991

The start line for the next challenge.

Europe 33%

Canon U.S.A., Inc.

million

Americas 28%

Canon Europe Ltd. (U.K.)

Canon Europa N.V. (The Netherlands)

Americas

Europe, Russia, Middle East & Africa

Net sales

Net sales

$12,688 million

$14,741 million

Employees

Employees

11,112

12,735

Major operational sites Research & Development Manufacturing Sales & Marketing

Canon business fields

Sales contribution from business lines (%)

Office imaging products

Computer peripherals

sOffice network MFDs sColor network MFDs sPersonal MFDs sOffice copying machines sColor copying machines sPersonal copying machines sOther products 27% 04

sLaser printers sMultifunction Inkjet printers sInkjet printers sImage scanners sOther products

36%

2008 Consolidated subsidiaries

2008 Net income

$3,397

2008 Employees Other areas 42%

245

Japan 43%

166,980

million Europe Americas 8% 7%

2008 top ten US patent holders by company Rank

Canon Inc. Headquarters

Canon (China) Co., Ltd.

Canon Marketing Japan Inc.

Organization

Number of patents

1

IBM

2

Samsung Electronics

3,518

3

Canon

2,114

4

Microsoft

2,027

5

Intel

1,777

6

Panasonic

1,737

7

Toshiba

1,614

8

Sony

1,499

9

Fujitsu

1,493

10

Hewlett-packard

1,420

4,164

Based on weekly patent counts issued by the United States Patent and Trademark Office.

A look at Canon in world rankings

Asia & Oceania

Best Global Brand

Net sales

$17,562 million

Overall ranking

BusinessWeek September 29, 2008 issue

36 th

2008 brand value ranking based on future earnings potential

Employees

Fortune

FORTUNE Global 500

143,133

July 21, 2008 issue

Total sales: Global ranking Profits: Global ranking

189 th 126 th

Evaluation of five performance measures for fiscal 2007, including total sales, profits, and total assets

F T Global 500

Financial Times June 24, 2008 edition

Market capitalization global ranking

Canon Australia Pty. Ltd.

110 th

Market capitalization ranking on March 31, 2008 (the number of outstanding shares multiplied by share price)

Business information products

Cameras

sDocument scanners sHandy terminals sCalculators & electronic dictionaries

sOther products

2%

Optical and other products sDigital cameras sDigital video camcorders sLenses for SLR cameras sLCD projectors sOther products

25%

sSemiconductor exposure systems

sLCD exposure systems sBroadcast equipment sMedical equipment sLarge-format inkjet printers sComponents sOther products 10%

Notes: 1. Regional net sales and employee numbers are based on consolidated financial statements for the fiscal year ended December 31, 2008. 2. U.S. dollar amounts are translated from yen at the rate of JPY91=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2008, solely for the convenience of the reader.

05

“I had to walk two kilometers just to print out a single copy.” How Canon turned a troublesome printer system into a story of the past.

More than 300 Canon office network multifunction devices are installed in “print points” located throughout Frankfurt Airport. 06

Catering to some 54 million passengers every year, Frankfurt Airport is the eighth busiest airport in the world. Every aspect of its management and operation is overseen by Fraport AG. About 70,000 people work in the airport’s many buildings and operating facilities. With a large zone of operation, many employees take a mobile computer along with them as they go about their work. This is a workplace with demanding information-management needs, and the company’s Canon Ahead Printing Solution

printer system is scattered throughout the offices of each department. In the past, this meant that even if a printer was close at hand, an employee may have had to travel more than a kilometer back to his or her own office just to find a printer that could actually be used. To solve this problem, Fraport went looking for someone who could build a system that both reconciles the seemingly contradictory requirements of security and convenience while keeping waste to an absolute minimum. Fraport chose Canon as its partner in this venture. Fraport started by establishing “print points” in more than 300 locations around the airport, equipping them with Canon office network multifunction devices. Canon customized printer management software for Fraport that enables any one of 20,000 employees access to the nearest “print point” where they can freely print, copy, fax, and even scan and deliver documents to their own computer simply by entering their password. The new system makes it possible to accurately charge the printing costs of each department on the basis of actual usage. Thanks to centralized management, the result is far fewer printers and much lower running costs. With the addition of this streamlined, smart printer system, one more hurdle in development has been overcome for the ever expanding Frankfurt Airport.

Using Canon uniFLOW print management software, anyone is free to print from any “print point.”

Roughly 450,000 flights arrive and depart at the 1,700-hectare Frankfurt Airport every year.

07

Budding artists should never have to compromise on color.

Canon Ahead Color Management

Over the years, countless artists have come to study at the School of the Art Institute of Chicago, an institution adjacent to the Art Institute of Chicago that consistently ranks among the top three art schools in the United States. Students in the photography department have access to the school’s photography studio 24 hours a day, where they are free to process and print their work using computers. Uncompromising by virtue of their youth, these budding artists harbor a sense of creativity that at times demands subtle expressions of color. For this reason, color matching for the printout that represents their work in its final form is especially crucial. Since color output differs subtly from printer to printer, students used to perform constant color recalibrating and re-printing to achieve the colors they wanted. In the end, some students even discovered “favorite printers” that produced the colors they had in mind, but this search took precious time away from the creative process. The school introduced Canon large-format inkjet printers to solve this problem. The decision was based on Canon’s sophisticated color management technology, which the company uses to realize consistent high-quality color in its entire lineup of input and output devices, including cameras and printers. No matter who uses which printer at what time, students at the School of the Art Institute of Chicago can now produce artwork with reliable color expression. With its printers being used 24 hours a day in what one professor describes as “rough handling,” Canon responds to the enthusiasm of these young artists in their bid to express a new kind of beauty with consistent color performance, today and every day.

08

In the 24-hour photography studio, printers not only need to reproduce color rapidly and accurately, they must also be durable and easy to maintain.

Established 143 years ago, the School of the Art Institute of Chicago is now America’s premier fine arts school with more than 2,900 students from all over the world.

A photography lab where students apply and hone creative techniques. The photography department at the School of the Art Institute of Chicago is working on a plan to provide every student with a digital SLR camera. 09

“School is fun!” Sparking curiosity in children.

Canon Hope School in Hebei Province, 250 kilometers northeast of Beijing and a four-hour journey by car. Completed in November 2008, the school has new desks and chairs.

10

Canon Ahead Canon Hope Schools

China is developing at an astonishing pace. But across the vast territory of the world’s most populous nation are mountain villages and other remote places where children are unable to receive adequate education. To change this for the better, the China Youth Development Foundation started the Hope Project. Be it from a lack of schools, a lack of writing materials, or any other reasons, children in remote regions are unable to continue their studies. When Canon established its manufacturing subsidiary Canon Dalian in 1995, it took the opportunity to begin giving aid to the Hope Project. In 2008 and 2009, Canon provided support with six new Canon Hope Schools throughout China. Canon has supplied funds to build and renovate schoolhouses, establish a scholarship system, and supply teaching and writing materials. But Canon’s educational aid has expanded to personal support. Canon China employees volunteer at Canon Hope Schools to conduct photo classes and other activities using digital cameras and printers in a way that greatly broadens children’s perspectives. Canon is also preparing photo exhibitions and international exchanges that revolve around photography. In the spirit of its corporate philosophy of kyosei, Canon continues its endeavors to contribute to the communities that have welcomed it with open arms.

170 children study and play everyday in the threestory, 15-classroom school with an onsite cafeteria.

A photography class led by Canon China volunteer staff. The plan is for the children to eventually interact with children from other schools. 11

“Bring the forest back to life!” 200,000 people take a big first step toward replanting forests.

In recent years in California, each autumn has come with raging wildfires, causing one loss after another of forests that serve not only as water sources, but also recreational destinations. Southern California’s San Bernardino National Forest, surrounded by desert and prone to an arid climate, has suffered repeated wildfires. The destruction has been so severe that it is impossible to even imagine the former appearance of the forest based on its charred remains. In 2008, Canon U.S.A. designated its environmentally conscious inkjet printers, scanners, and laser multifunction printers as Generation Green products as part of a sales promotion. At the same time, it launched the Canon Forest Program, Canon Ahead Canon Forest Program

in which the company would plant one seedling for every ten customers who purchased and registered a Generation Green product on the campaign’s website. In just three months, some 200,000 users registered their products. Impressed by the enthusiastic response, Canon concluded the campaign and followed it with a decision to support the efforts of forest workers as they continue to rejuvenate the San Bernardino National Forest one seedling at a time. Because the tree species that thrive in this expansive national forest system differ by location, foresters choose suitable seeds for each area and carefully cultivate them to preserve their ecosystems. Once these seeds grow into seedlings, they are planted to replenish the forest. Canon is proud to have provided a tangible outlet for some 200,000 people to express their support for the environment.

The San Bernardino National Forest, located about 150 kilometers, or 90 miles, from the center of Los Angeles.

12

Canon U.S.A. designates select environmentally conscious printers, scanners and other products, which offer energy and environmental efficiency, as Generation Green products.

San Bernardino forests were damaged by wildfires in 2003. In 2008, an additional 5,800 square kilometers, or almost 2,250 square miles, of forestland across California was destroyed by fires. 13

Products in demand line the shelves at a store in Prague as supply chain management functions on a global scale. 14

A printer changes course mid-Atlantic.

It’s only natural for customers to think that when they see a product they’d like to purchase at a store, they can simply buy it on the spot. But on sales floors all over the world, the crucial management issue of reducing inventory has made maintaining stock more challenging than ever. For instance, about two months ago, an inkjet printer at a retail store here in Prague had left a factory in Thailand and was on a vessel bound for Western Europe. But Canon Ahead Supply Chain Management

based on the latest ever-changing sales data, the printer was rerouted while still at sea from Western Europe to Prague, where sales are brisk. As a result, the printer stayed on the vessel until it reached Hamburg, where it was shipped directly to a warehouse in Bratislava and then delivered to Prague. In the past, the printer would have been received at a warehouse in Western Europe—its original destination—and then resent on a long truck voyage. Avoiding wasteful and unnecessary truck shipments not only shortens delivery times and lowers costs, it also reduces CO2 emissions. Changing the shipping destination while still at sea is one of the many things made possible through well-developed supply chain management (SCM), which consolidates all the information about a product—from ordering to parts procurement, production, shipping, sales, and servicing—in a single location. With further innovation, it may be possible to limit inventories to only those products that are currently en route to their destinations. IT innovations make the flow of goods even more efficient, and for this reason Canon is committed to further improving its SCM systems.

Promoting a modal shift, Canon ships products from Hamburg to Eastern Europe by rail, which reduces CO2 emissions.

A Canon warehouse in Bratislava, Slovakia, an important Eastern European rail center. From here, Canon products are delivered to retailers all over Eastern Europe. 15

”Why don’t we take a closer look at that?” Helping neighborhood clinics one day detect cancer.

The neighborhood physician is where people go first when they are concerned about their health. If the sort of precision examination equipment found at major hospitals were also available at neighborhood clinics, it would enable the detection of cancer, lifestyle diseases, and other disorders in their earliest stages. This is one of the goals of “medical imaging,” a field Canon has targeted as a next-generation business domain. Consider this: the development of sensors with unprecedented levels of precision would not only make it possible to Canon Ahead Medical Imaging

diagnose conditions whose very detection still proves difficult, but would also give way to compact diagnostic imaging equipment that doesn’t require large examination spaces. Giving patients easy access to detailed examinations at neighborhood clinics would lead to extremely early detection of illnesses, thereby greatly improving chances for a complete recovery. Canon medical imaging challenges conventional thinking about medical diagnostics. The heart of the enterprise is the Canon-Kyoto University Joint Research Project, a venture between Canon and Kyoto University, a learning institution that is home to many world-renowned scholars. In the initiative, nicknamed the CK Project, several dozen researchers in the fields of medicine, engineering, and information studies from Kyoto University and Canon collaborate on research and development across a wide range of themes in the field of cutting-edge medical imaging diagnostics, including optical imaging, ultrasound, magnetic measurement, and molecular probes. These researchers continue to make progress one step at a time, envisioning the day when advanced precision diagnostic systems are available to neighborhood clinics.

Progress is being made on the development of devices that use optical coherence tomography (OCT), a retinal 3D image analysis effective in the early detection of vascular disease. CK Project laboratory at Kyoto University Hospital 16

Clinical testing at one of the world’s leading medical schools. Accurate medical advice drives the advance of applied medical imaging technology.

A molecular probe test (Kyoto University)

The CK Project conducts joint research on magnetic sensors in pursuit of compact yet precise diagnostic equipment. 17

Without a new generation to carry on manufacturing traditions, the way we live today will come to an end.

Canon Ahead Manufacturing Training

The advances and comforts we enjoy today—rockets and aircrafts, skyscrapers, mobile telephones, medicine and chocolate—did not occur overnight. The art of manufacturing results from the technology and traditions accumulated from collective wisdom, as well as the expert craftsmanship and knowledge that have been acquired by virtue of their long-standing history. It is the reason the things around us have evolved into what they are today. Merely following a blueprint or recipe does not enable one to create something. Like cultural traditions and language, if manufacturing is not handed down from person to person, we will not be able to pass on the world as we know it. Without this type of transition, it is entirely possible that in 30 years Canon will no longer be able to produce the cameras and lenses it makes today. As a company committed to manufacturing, Canon newly opened the Oita Manufacturing Training Center in 2009 alongside existing training facilities to ensure that skilled Canon technicians pass on the manufacturing skills they have acquired over Canon’s 70-year history to younger generations. These include techniques and knowledge related to lens grinding and automation devices, and the operation of such machine tools as lathes and milling machines. Manufacturing supports the future of mankind. As a company that will always be built on manufacturing, Canon will continue to do its part in passing down and developing the art of manufacturing.

18

The Oita Manufacturing Training Center carries out field training for lens polishing and metallic molding while focusing on the acquisition of measuring technologies essential to manufacturing.

The Oita Manufacturing Training Center, which accepts trainees from the Japanese government’s Job Card program, will continue contributing to the improvement of Japanese manufacturing.

When hiring new employees, Canon Virginia works with a local junior college and conducts a jointly developed training curriculum to provide students with education and training needed for manufacturing. 19

Excellent Global Corporation Plan Phase III

Strengthening management for the Through the five key strategies of Phase aims to become a truly excellent global

20

Compact digital cameras

SEDs (Surface-conduction Electron-emitter Displays)

Achieve the overwhelming No. 1 position worldwide in all current core businesses

Expand business operations through diversification

Canon aims to attain the overwhelming No. 1 position in each of its core businesses. Using technological innovations to accomplish this goal, the company is focusing on the development of both key components to produce competitive products, and platform technologies that can be shared company-wide. Canon is also hard at work on “cross-media imaging” to enable users to intuitively express and re-create images at will through advanced synergies between Canon imaging devices.

Diversification and globalization have enhanced Canon’s corporate value. Having diversified by moving into new business areas such as large-format inkjet printers, digital production systems, and business solutions, Canon is also working to establish organic light-emitting diode (OLED) displays, SEDs, and other display technologies. Group companies are also independently diversifying their businesses by exploiting their own unique technical specialties and regional advantages.

next big step III of Canon’s Excellent Global Corporation Plan, the company company, joining the ranks of the world’s top 100 companies.

Research collaboration on semiconductor devices with Stanford University

Automated toner cartridge production

A compliance card

Identify new business domains and accumulate required technologies

Establish new production systems to sustain international competitiveness

Nurture truly autonomous individuals and promote effective corporate reforms

To continue growing beyond 2010, Canon is targeting new business domains in the fields of medical imaging, intelligent robots for automated production, and safety. Along with the advancement of research and development by strengthening its industry/academia partnerships with numerous global research institutions, Canon is strengthening its fundamental research in new material properties, advanced sensor technology, and other leadingedge technologies to secure long-term growth.

In order to boost international competitiveness and ensure consistent product quality, Canon is working to establish fully automated production lines built around automated machinery and robots. Besides moving to the inhouse production of key components and major parts to enhance product differentiation, Canon is putting in place a globally optimized production system that takes into account not only production costs, but also transport costs and employment practices.

A truly excellent company requires excellent employees. Canon is making a concerted effort to nurture future global leaders by handing down its corporate DNA—respect for humanity, an emphasis on technology, and an enterprising spirit—through employee training programs and practices. At the same time, the company is taking measures to increase compliance awareness among all employees with the goal of cultivating individuals society can rely on.

21

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The history of Canon started with the enterprising spirit to make the world’s best camera.

NP-1100, Japan’s first plain paper copying machine

A modest beginning in a small room

Striving for the world’s best camera

In 1933, a small laboratory dedicated to making high-quality cameras was set up in a simple apartment room in the Roppongi area of Tokyo. At the time, all high-quality cameras were European with the majority coming from Germany. It was in this small room that young people with a big dream earnestly began their work on producing a high-quality Japanese camera, marking the beginning of Canon. Through hard work and with an enterprising spirit, they eventually succeeded in building a prototype, which was named Kwanon after the Buddhist goddess of mercy. The following year, in 1935, Japan’s first-ever 35 mm focal-plane-shutter camera, the Hanza Canon, was born, along with the origin of the Canon brand.

In 1950, Canon’s first president, Takeshi Mitarai, went to America for the first time to attend an international trade fair. Having seen modern factories and a high standard of living first hand, upon his return, he built a fireproof factory of steel-reinforced concrete in the Shimomaruko area of Tokyo, which he saw as essential for Canon to succeed in doing business with the world at large. Mitarai also made clear his respect for humanity by stressing the importance of the Sanji, or “three selfs” spirit, the guiding principle for Canon employees. In 1955, Canon made its first step into the global market with the opening of a U.S. office in New York City. In 1957, Canon set up its sole European distributor, Canon Europa, in Geneva, Switzerland. By 1967 exports already topped 50% of the company’s total sales.

Canon’s Corporate DNA Behind Canon’s 70-year history and development as a business lies its corporate DNA: a respect for humanity, an emphasis on technology, and an enterprising spirit that the company has consistently passed on since its foundation. The enterprising spirit on which Canon was started as a venture company and the relentless drive to distinguish oneself through technology permeate the company, and have continued to provide society 22

Respect for Humanity

with new value made possible by original technologies. These motivating factors are in turn supported by a respect for humanity, which encompasses meritocracy based on fairness and equality, an emphasis on good health, and a family-first principle that prioritizes the individual. Canon is committed to passing its corporate DNA on to future generations to ensure the company grows for another 100, or even 200 years.

Canon Corporate DNA Emphasis on Technology

Enterprising Spirit

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The challenge of diversification

Averting disaster with the Premier Company Plan

Soon after its founding, Canon was hard at work in 1941 on diversifying itself with the introduction of Japan’s first indirect X-ray camera and other products. In the 1960s, the company took further steps toward diversification by adding electrical, physical and chemical technologies to its optical and precision technologies. In 1964, Canon entered the office equipment market with the debut of the world’s first 10-key electronic calculator. In 1967, the management slogan “cameras in the right hand, business machines in the left” was unveiled and in 1969 the company changed its name from Canon Camera Co., Inc. to Canon Inc. Canon took on the challenge of developing Japan’s first plain paper copying machine, which it introduced in 1970, and realized further diversification from one challenging field to the next.

By 1970, Canon grew to 44.8 billion yen in sales and more than 5,000 employees. But hit by dollar and oil shocks, followed by problems with a defective electronic calculator display component in 1974, Canon fell on hard times, and in the first half of 1975 failed to pay a dividend for the first time since becoming a public company. In 1976, Canon unveiled its Premier Company Plan, an ambitious strategy to transform Canon into an “excellent global company” through such means as introducing a vertical business group constitution and establishing a horizontal development, production and sales system. The plan proposed high ideals and pooled the strength of its employees, enabling the company to promptly recover.

The San-ji (Three Selfs) Spirit The Three Selfs, the foundation of the company’s guiding principles that have been passed down since Canon was founded, are self-motivation, self-management and selfawareness. For Canon, which strives to be a truly excellent global corporation while maintaining the legacy of its corporate DNA, the Three Selfs continue to serve as the company’s most important guiding principles.

Self-motivation

Take the initiative and be proactive in all things

Self-management

Conduct oneself with responsibility and accountability

Self-awareness

Understand one’s situation and role in all situations 23

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EOS-1Ds high-end professional digital SLR camera

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Canon’s second inauguration

The Excellent Global Corporation Plan

Canon continued to grow under the Premier Company Plan. With the dawn of the personal computer age, Canon introduced to the world a series of products never before seen, among them a personal copying machine based on an all-in-one cartridge system, a laser printer with semiconductor laser, and a Bubble Jet inkjet printer. Canon also began promoting global production in earnest on the road to becoming an excellent global company. Then, in 1988, the 51st anniversary of the company’s founding, Canon announced its second inauguration and unveiled its corporate philosophy of kyosei, an unfamiliar term at the time. It also began promoting such progressive and environmentally sound activities as toner cartridge recycling in addition to globalizing its development sites.

Canon had developed unprecedented technologies and carefully nurtured them to create business opportunities and products unrivaled by any other company. But by the mid-1990s, the business division system that had been in place since the 1970s was showing signs of wear. Canon also carried debt of more than 840 billion yen, meaning the company needed to improve its financial constitution if it was to carry out long-term R&D projects and launch new businesses. Fujio Mitarai became Canon’s 6th company president in 1995, and in 1996 the Excellent Global Corporation Plan was launched. Transforming the corporate mindset from partial to total optimization and from a focus on sales to a focus on profits, the new plan was the start of the innovations that characterize today’s Canon.

The Excellent Global Corporation Plan The Excellent Global Corporation Plan, a mid- to long-term management strategy aims to make the company admired and respected the world over by contributing to society through technological innovation. Through the plan, Canon strives to become a global top 100 company in terms of all major management indicators. 24

Phase I

1996-2000

Phase I targeted a new corporate mindset, with a focus on total optimization and profits, and a strong financial structure through cash flow management and the selection and concentration of business areas.

Phase II

2001-2005

Aiming to become No.1 in all major business areas, Canon implemented Phase II to keep the company in step with technological trends and strengthen product competitiveness through such measures as a shift to digital products.

Phase III

2006-2010

Besides cultivating next-generation businesses and establishing new production systems, Phase III aims to further strengthen Canon’s business constitution through such efforts as total supply chain management.

Corporate Activities Striving to enrich lives by creating the best products possible while reducing environmental impact through technological innovation.

Research and Development

Recycling

Design

Post-purchase Services

Procurement

Sales and Marketing

Quality Production

Distribution Environment

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Research / Development / Design

Research and development on 3D recognition technology to realize super machine vision

Pursuing technological innovation to bring cross-media imaging to life. Canon is promoting “cross-media imaging,” a concept that enables advanced synergies among Canon imaging products. Canon’s ideas are giving way to new technologies with a high degree of integration that enable people to realistically communicate and reproduce at will their ideas and vision, as well as a variety of images and information anytime, anywhere.

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Cross-Media Imaging Personal imaging & communication

Digital medical care

Cross-Media Imaging

Professional imaging

Office imaging solutions

Display Development From input to output devices and still to dynamic images, Canon is pursuing cross-media imaging—advanced synergies between imaging products— to enable consumers to realistically express their ideas and thoughts at will. While fostering new possibilities in business and culture, this endeavor expands Canon’s involvment in printing, medicine, and the arts.

In pursuit of next-generation highquality flat-panel displays, Canon is researching and developing both largescreen SEDs with the same high image quality as conventional CRT monitors, and low-energy OLED displays for mobile devices, with preparations for mass production under way.

Organic LED display

Super Machine Vision

Enhanced processing spots defects the human eye cannot.

Naked eye

Robotic eye

Nano-technology Nano-technology manipulates matter and light on the order of nanometers— no more than a few dozen atoms. Canon researches orderly arrays of nano-structural materials and molecular imaging to discover the possibilities of the “nano world,” where properties of matter and time are completely different from what we know.

This imaging technology uses optics and image recognition technologies to achieve a greater sense of “vision” than human beings. Currently used in systems to detect component defects the human eye cannot discern, this technology is expected to debut in monitoring systems for people and activities in the future.

Visual inspection with a robotic eye

Tera-hertz image of a chili pepper

High-accuracy Color Management System

Key Components Key components, such as digital camera CMOS sensors and DIGIC imaging processors, as well as office network MFD iR controllers, are the key to competition in digital imaging products. Canon applies the technologies and expertise it has cultivated in its commitment to develop these key components.

Kyuanos, Canon’s high-accuracy color management system, precisely matches colors among input and output devices, which have varying ranges of color expression. Not only does Kyuanos faithfully reproduce color, it automatically compensates for variances in color appearance due to lighting and other factors. LCOS, a key component of LCD projectors

Concurrent Framework

3D-CAD Design

By linking its development and production divisions, Canon promotes concurrent processes to ensure cooperation from initial conception stages. Early-stage consideration of production processes and the identification of potential problem areas have significantly reduced the time and cost of mass producing new products.

Canon uses 3D computer-aided design (CAD) to develop products. Besides being able to confirm positional relationships of components from all angles, CAD supports Canon innovation through simulated function and performance evaluations and the sharing of data between company divisions. 3D-CAD for digital camera design

A network MFD development meeting

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Procurement / Production / Distribution

Compact digital camera cell production

Canon production reforms never stop, integrating information technology in the ongoing evolution toward the ultimate production system. Canon has advanced such production innovations as cell production, in-house production, and automation to deliver high-quality products to customers when and where they need them. Each stage—procurement, production and distribution—uses IT innovations to further shorten the distance between development and the sales floor, all in pursuit of optimal supply chain management (SCM).

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Unified Production Information System

Automation

Canon reviewed its production management and streamlined systems developed at each production site across the entire company to establish sophisticated SCM. This resulted in efficient parts-ordering, production, and shipping processes that enable factories across the world to immediately respond to new product designs and order information.

Canon is currently building automated production lines that run nonstop every day of the year. Design, production technology, and manufacturing expertise combine through the sharing of know-how and knowledge to advance development while research is underway targeting total automation.

Automated toner cartridge production

In-house Production

Green Procurement Canon promotes the in-house development and production of its proprietary key components and key devices. Promoting the in-house production of functional parts and circuit boards, as well as production equipment and molds for lenses and other parts, Canon aims to produce original products as well as reduce costs.

CMOS sensor production

Green Procurement prioritizes the purchase of products with minimal environmental burden. As a parts buyer, Canon issued its Green Procurement Standards in 1997 and began evaluating the chemical substance management of its parts suppliers. Results of chemical evaluations are utilized in the development of new products. Verification at a parts factory in Vietnam

Cell Production

Intelli-Tech At Canon, “intelli-tech” refers to the tools and equipment created by production workers to make their work more efficient. Today, these innovative, space-saving tools and equipment are appearing at Canon factories around the world—and at a fraction of the previous cost.

All Canon factories across the world use the cell production system, which eliminates conveyor belt assembly lines in favor of small teams of workers in charge of several procedures, or “cells,” to complete a product. The system allows workers to change the number of procedures they do according to skill level and freely adjust production output. Canon Suzhou in China

A cart made from bamboo at Canon Vietnam

The Expert (Multi-skilled Worker) System

The Master Craftsman System Canon formally recognizes employees with exceptional skill who have received awards from public institutes as master craftsmen, of which there are currently 24. They apply their outstanding skills to lens polishing, precision machining and other processes, and pass them onto the next generation.

Canon’s Expert System certifies employees with exceptional work skills. Workers are evaluated according to the number of operations they can perform, specialized knowledge, work speed and other skills. The system contributes to the improvement of cell production quality and productivity.

A Super-grade Expert

A master craftsman makes a mold

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Sales / Service

EOS Discovery in Paris, France

Canon determines customers’ needs to deliver solutions that provide genuine customer satisfaction. Canon, a registered trademark in over 180 countries and regions, offers a diverse variety of products globally. Canon U.S.A. is in charge of the Americas and Canon Europe oversees Europe, Russia, Africa and the Middle East; Asia (excluding Japan and Korea) is handled by Canon China; Oceania by Canon Australia; and Japan by Canon Marketing Japan. By communicating closely with its customers, Canon works daily to deliver solutions and services that fulfill real needs and provide deeper customer satisfaction.

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EOS Discovery

Quick Response and Repair (QR) Centers To enrich service in China, Canon has set up QR Centers in Beijing, Shanghai, Guangzhou, and Chengdu to provide prompt repair by staff knowledgeable in digital cameras, inkjet printers and other Canon products. By the end of 2010, Canon plans to have 25 QR Centers in operation.

In addition to showcasing the appeal of EOS-series digital SLR cameras, this event aims to inspire photographers while increasing user photography skills and customer communication. Featuring lectures by professional photographers, EOS Discovery sessions have attracted large numbers of attendees in France, Spain, Italy and the Netherlands. A QR Center in Shanghai

Consolidation of Canon Business Solutions

MEAP MEAP, Canon’s office network MFD application development platform, enables flexible customization of machine functions and operations to meet specific tasks and objectives. Users can customize devices by simply installing application software tailored to their individual needs.

In 2008, Canon U.S.A. integrated its Canon Business Solutions officeequipment direct sales operations, which had been divided across three regions in the United States. Besides improving its structure to provide highquality sales and services across the U.S., Canon has expanded offices and staff to ensure even greater customer satisfaction. Customized network MFD

UEFA EURO 2008™

Canon Ru As Russia develops into a major market, Canon Ru, a sales subsidiary in Russia, has grown from a focus on servicing office equipment into a comprehensive sales and service company for all Canon products. The creation of a distribution network, the establishment of warehouse facilities in Moscow, and other endeavors have enabled a smooth supply of Canon products.

As an official tournament sponsor of UEFA EURO 2008™, Europe’s biggest soccer tournament, Canon not only provided all eight game arenas with camera and lens maintenance services for professional photographers, but also supported the news media through the latest in document imaging equipment. Product exhibition in St. Petersburg, Russia

Cabasse

Canon U.S. Life Sciences A long-standing brand of premium speakers from France, Cabasse is an independent business of Canon Europe that uses cell production to individually produce unique speakers based on an original acoustic theory that has earned global acclaim for stunning sound quality.

Canon U.S.A. is working to commercialize molecular diagnostic equipment in the United States, which leads the world in gene diagnosis. Canon U.S. Life Sciences, a subsidiary of Canon U.S.A., applies Canon’s imaging and precisionprocessing technologies in its research and development toward the realization of commercial viability.

Production at Canon Bretagne (France)

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Environment / Quality Assurance Activities

Oita Canon Materials considered local biodiversity in its decision to preserve this land inhabited by crabs.

Environmental awareness and quality assurance, the cornerstones of a trustworthy company, are the most basic and important themes of the Canon brand. How does a company minimally and effectively use limited resources? While applying innovative technologies and efficient management at every stage of the product lifestyle—production, use, and recycling—to minimize environmental burden, Canon also facilitates thorough quality assurance worthy of the digital age so as not to betray the trust of its stakeholders.

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Lifecycle Assessment

Bio-based Plastic Lifecycle assessment is a quantitative and objective analysis of a product’s effects on the environment throughout its entire lifecycle, from raw material and parts procurement to production, transport, use, recycling, and disposal. Canon has adopted the lifecycle assessment method to ascertain the environmental impact of all its corporate activities and reduce its CO2 emissions.

Environmental Activities at Production Sites

Canon and Toray Industries, Inc. have jointly developed bio-based plastic, an environmentally conscious material that incorporates plant-based and organic components, with the world’s highest level of flame retardance. Canon plans to use this new material in exterior parts of new network MFDs and other products.

Compact Packaging Along with products that are smaller in size and weight, Canon reduces packaging materials and modifies package design to conserve resources. Digitizing portions of user manuals to further reduce packaging sizes increases load capacity per shipment and reduces CO2 emissions.

Canon has already achieved zero waste output at all of its plants around the world. In addition to carrying out such environmental measures as natural energy use, wastewater recycling, and chemical substance management, the company works to preserve local ecology and biodiversity through greening and other activities. A free cooling system at Canon Precision

Comparison of old (right) and new digital camera packaging

Environmentally Conscious Offices

Toner Cartridge Recycling

Canon sales bases and other general offices also strive to conserve energy and resources. Environmentally conscious features of Canon Belgium and Canon Espana’s new head offices include effective rainwater recycling, automatic solar blinds and insulation, and motion-sensitive sensors.

A rainwater recycling system at Canon Belgium

In 1990, Canon led the world in introducing a collection and recycling program for used toner cartridges. Canon has achieved a closed loop recycling system by recycling reusable parts, and crushing and sorting plastic to reuse in cartridges. All other materials are also recycled to achieve 100% recovery. Canon Virginia (U.S.A.)

Tamagawa Measurement and Testing Facility

Pursuing Comfortable Operation Canon simulations assess body stress when unpacking and using its products to help deliver an even more comfortable user experience, measuring such factors as actual muscle stress and joint angle through physiological response measurement to minimize product burden and enhance usability.

Desired quality tests for digital products are becoming more sophisticated and diverse. A comprehensive test facility established by Canon in Kawasaki City, Japan, measures radio waves, electrical stress, ambient noise, and other phenomena with state-of-the-art facilities under one roof. Canon plans to obtain authorization for in-house accreditation testing. Anechoic chamber

Measuring physiological response when unpacking a product

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Social and Cultural Support Activities

As part of the Tsuzuri Project, a replica of Sansui Choukan, a scroll of landscapes designated a Japanese national treasure is mounted by Hirokazu Yokoyama of Yokoyama Seiwado in Kyoto.

Under its corporate philosophy of kyosei, contributing to society is one of Canon’s global corporate responsibilities. Endeavoring to be a truly excellent global company admired and respected across the world, Canon considers it a matter of course to return profits to its many stakeholders. With a broad perspective, Canon actively supports environmental preservation, youth education, and a wide range of other activities for the benefit of society and culture. The Tsuzuri Project (Cultural Heritage Inheritance Project) Canon digital technology and traditional Japanese craftsmanship come together in the Tsuzuri Project, an initiative cosponsored by NPO Kyoto Culture Association to recreate Japanese cultural assets. The project enables original artwork to be preserved while replicated treasures can be put on display.

Canon Envirothon Canon sponsors the Canon Envirothon, North America’s largest environmental science competition for high school students, in which more than 500,000 people take part each year. Participants deepen their understanding of the environment through field work, presentations, and other activities.

Support: Nakanuma Art Screen Co., Ltd.

Red Cross Partnership

China Wildlife Photography Training Camp Since 2006, when Canon signed a partnership agreement with the Red Cross in the pan-European region, it has contributed to youth education and aid projects conducted by the 13 Red Cross National Societies across Europe. Canon actively provides economic support and manpower.

Class on international humanitarian law at the University of Paris

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Environmental activists and researchers from across China attend this training camp co-organized by Canon and Wild China for lectures on wildlife photography and hands-on training. The program contributes to the protection of endangered species and environmental research activities.

Product Operations

Contributing to society through digital imaging

Personal

Business

Industry

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Personal

Digital SLR Cameras

Compact Digital Cameras

Lenses for SLR Cameras

Enriching everyday communication through digital imaging Binoculars

Business

Digital Production Systems

Office Network Multifunction Devices

Laser Printers

Creating various solutions through digital imaging to support business Toner, Photosensitive Drums, Toner Cartridges

efficiency

Toner Cartridges

Industry

Semiconductor Exposure Systems

LCD Exposure Systems

Ophthalmic Equipment

Utilizing imaging technologies to support industry professionals

Non-mydriatic Digital Retinal Camera

Digital Radiography Systems

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Digital Video Camcorders

Multifunction Inkjet Printers

Inkjet Printers

Image Scanners

Compact Photo Printers

Personal Information Products

Calculator

Large-Format Inkjet Printers

Broadcast Equipment

Liquid Crystal Display (LCD) Projectors

Components

Micro Laser Interferometer

Die Bonders

Network Cameras

Color Label/Card Printers

Document Scanners

Handy Terminals

IAMS* Mass Spectrometer

Organic LED Panel Manufacturing Equipment

*IAMS=Ion Attachment Mass Spectrometry

Vacuum Thin-Film Deposition Equipment

Sputtering System for Hard Disk Drives Windows is a trademark of Microsoft Corporation. IBM is an abbreviation for International Business Machines Corporation. FORTUNE Global 500 is a registered trademark of Time Inc. in the United States. Screen images may be simulated.

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CANON INC.

www.canon.com

CANON U.S.A., INC. www.usa.canon.com

CANON LATIN AMERICA, INC. www.canonlatinamerica.com

CANON CANADA, INC. www.canon.ca

CANON EUROPE LTD.

www.canon-europe.com

CANON EUROPA N.V.

www.canon-europe.com

CANON (UK) LTD. www.canon.co.uk

CANON FRANCE S.A.S. www.canon.fr

CANON DEUTSCHLAND GmbH www.canon.de

CANON (CHINA) CO., LTD. www.canon.com.cn

CANON SINGAPORE PTE. LTD. www.canon.com.sg

CANON AUSTRALIA PTY. LTD. www.canon.com.au

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©Canon Inc.

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