The Company previously recorded expenses related to the development and management of the Group operating systems that were outsourced to certain

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2 The Company previously recorded expenses related to the development and management of the Group operating systems that were outsourced to certain consolidated subsidiaries in cost of sales. However, because the importance of the amount of such expenses increased as a result of the progress of in-house production within the Group, effective from the first quarter of the consolidated fiscal year under review, the Company has changed its accounting method and now records these expenses in selling, general and administrative expenses. For reference, this change does not affect operating income. 1

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4 The Company previously recorded expenses related to the development and management of the Group operating systems that were outsourced to certain consolidated subsidiaries in cost of sales. However, because the importance of the amount of such expenses increased as a result of the progress of in-house production within the Group, effective from the first quarter of the consolidated fiscal year under review, the Company has changed its accounting method and now records these expenses in selling, general and administrative expenses. For reference, this change does not affect operating income. 3

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6 [Business Solutions] Net sales declined by 1% from a year ago to 78.5 billion in the third quarter, mainly due to a drop in sales of LBP toner cartridges. Operating income rose by 100 million yen to 1.4 billion yen due to an improved gross margin and reduced costs. (MFP) While MFPs changed direction to register growth in the third quarter compared with the previous year, unit sales only showed slight growth from last year as the uphill battle in the second quarter served as a drag on the first half of this term. Unit sales turned around to post major growth in the second half of this term and has been trending in recovery mode. (Production printing) Remained solid due to the success of new products, among other items. (LBP) Unit sales increased from a year ago primarily due to proactive measures aimed at cultivating demand for new sectors and businesses as well as garnering major transactions. Sales of toner cartridges fell from the year-ago level due to a tendency of a certain delay in shipments compared with shipments of the main body. (Large-format Ink-Jet Printers) Unit sales edged up from a year ago on strong performance centered on the distribution business. (Maintenance Service) Sales were down slightly from a year ago due to a continued decline in unit prices of maintenance services despite the continued solid demand for printing. (Canon System & Support Inc.) While business equipment remained at solid levels, sales fell 3% from a year ago to 27.9 billion yen and operating income declined by 300 million yen from the previous year to 600 million yen due to the end of special demand to replace PCs that occurred in association with the termination of Windows XP support. (Canon Production Printing Systems Inc.) Sales increased by 1% from the same period the previous fiscal year to 3.0 billion yen and operating income was up 100 million yen, reflecting the healthy performance of POP advertising production printers. 5

7 [IT Solutions] Net sales declined by 2% from a year ago to 33.5 billion yen in the third quarter. Operating income rose by 400 million yen to end at 400 million yen due to an increase in sales in highly profitable businesses. (System Integration Business) Sales increased from the same period the previous year due in part to an increase in the number of individual systems development projects for securities firms and banks as well as the impact of new consolidation of MAT in Thailand. (IT Infrastructure & Service Business) While the Nishi-Tokyo Data Center received steady orders, sales dropped from a year ago due to a low level of orders for platform solutions projects. (Embedded System Business) Staged a recovery due to projects for major customers in the manufacturing industry. Sales rose from the level a year ago also following an increase in projects for auto-related industries. (Products business) Security solutions, including ESET, remained solid. Product solution projects increased as a result of new consolidation A&A Co., Ltd. joining the group in June this year. However, sales fell from a year ago due to the end to the special demand to replace personal computers among corporate customers in association with the termination of support for Windows XP. (Canon IT Solutions Inc.) Sales increased 8% year on year to 20.5 billion yen. Operating income rose 400 million yen year on year to 600 million yen. (Canon Software Inc.) Sales rose 8% year on year to 5.3 billion yen, and operating income increased by 100 million yen to 400 million yen. [Orders Received and Order Backlog] Both orders received and order backlog increased substantially. Orders are trending strongly in system integration services in addition to major project orders at the Nishi-Tokyo Data Center. 6

8 [Imaging System] Net sales fell 15% year on year to 39.9 billion yen and operating income declined by 1.5 billion yen on the year to 2.0 billion yen in the third quarter due to a drop in sales of products including interchangeable-lens digital cameras and ink-jet printer cartridges due to the impact of the consumption tax hike. (Interchangeable-Lens Digital Cameras) Unit sales at the Company dropped from the year-ago level due to the impact of sluggish demand in the overall market triggered by the consumption tax hike. However, the Company secured an overwhelming top position in the third quarter and the cumulative period from January through September. (Compact Digital Cameras) The Company was impacted by sluggish market conditions, but it retained its cumulative top position in market share for January through September in all categories and secured unit sales similar to the year-ago level. (Ink-Jet Printers) Had the largest cumulative market share for January through September, with unit sales rising from a year ago. Sales of cartridges fell from the previous year due to the impact of inventory adjustment. (Commercial Imaging Equipment) CINEMA EOS SYSTEM and portable lenses remained strong. In the meantime, sales fell from a year ago when a large project for information cameras was ongoing during the same period last year. 7

9 [Industrial / Medical] Net sales in the third quarter fell 2% from a year ago to 6.2 billion yen, while operating loss improved by 100 million yen from the previous year as a result of cost cutting to end at 400 million yen. (Industrial Equipment) Sales increased from a year ago as a result of a strong showing by Zygo Corporation s inspection and measuring equipment and 3D printers. (Medical) Sales fell from a year ago as a result of a delayed recovery in the areas of ophthalmic and medical preparation equipment due to the consumption tax hike despite large projects, including those for CTs and MRs, and solid performance by sterilizers. 8

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13 [Business Solutions] Net sales and operating income are expected to rise in the fourth quarter. For the year, net sales are expected to rise by 2% from a year ago to billion yen and operating income up 2.3 billion yen to 7.8 billion yen. Net sales in the previous projection announced in July was downwardly revised by 2.6 billion yen, while the operating income was revised upward by 300 million yen. (MFP) Revised downward from the previous projection because of a delay in progress made through the third quarter despite an expected increase in annual unit sales from a year ago. (LBP) Unit sales for the year are expected to rise from a year ago as a result of expanded sales of new products and an increase in projects for specific business applications. Meanwhile, sales of toner cartridges are expected to decline from a year ago. (Large-Format Ink-Jet Printers) Unit sales for the year are expected to increase from the previous year due to strong poster and CAD markets. (Maintenance Service) Sales in the fourth quarter are expected to decline due to a recovery trend that took place in the second half of last year. As a result, sales for the year are expected to edge down. 12

14 [IT Solutions] Net sales are expected to decline in the fourth quarter due to a major drop in business personal computers despite a healthy performance in system integration services centered on projects for financial institutions. Operating income is expected to increase as a result of an expansion in highly profitable projects. Sales for the year are expected to rise by 5% from the previous year to billion yen, and operating income is expected to increase by 2.8 billion yen to 3.2 billion yen. Net sales were revised downward by 1.4 billion yen from the previous projection announced in July as a result of the number of orders of corporate platform solutions projects ending up lower than expected in the IT infrastructure & service business. Meanwhile, operating income was revised upward by 200 million yen as a result of a turnaround in the segment s gross margin. (System Integration Business) Sales for the year are expected to increase from the previous year as individual system development for financial institutions, such as securities firms and banks, remained strong. (IT Infrastructure & Service Business) Sales in the fourth quarter are expected to fall slightly from the previous year due to a delay in the progress of platform solutions projects despite an expansion in outsourcing services, such as in data centers. (Embedded System Business) Sales for the year are expected to increase from the previous year due to a continued recovery in projects for major customers in the manufacturing industry, in addition to the strengthening of projects for auto-related industries. (Products Business) Sales are projected to decline in the fourth quarter from the same time the previous year as a result of a reaction to a major increase in business personal computers the same period the previous year. Sales for the year are expected to increase from the previous year as a result of a rise in product solution projects, such as those in security, and the new consolidation of A&A Co., Ltd. 13

15 [Imaging System] Net sales in the fourth quarter are expected to edge down from a year ago partly due to a reaction to prior procurement in December last year by dealers who expected special demand ahead of the consumption tax hike. Operating income is expected to decline as a result of aggressive spending in sales promotion and advertising expenses aimed at invigorating the market. Net sales for the year are expected to decline slightly to billion yen, while operating income is expected to increase by 900 million yen from a year ago to total 13.4 billion yen. Net sales were revised downward by 3.7 billion yen from the previous projection announced in July in light of the actual results through the third quarter. Operating income was revised upward by 900 million yen due to an improved product mix resulting from new product launches as well as cost cuts. (Interchangeable-Lens Digital Cameras) Reservations to buy the new product EOS 7D Mark II, which is slated to go on sale on October 30, are extremely strong, coupled with the user campaign, with the mid-range client base expected to expand even further. Unit sales for the year are expected to decline from a year ago in reaction to prior procurement by major dealers the same time last year, but demand is expected to recover at a healthy pace starting next year. (Compact Digital Cameras) A year-on-year decline in unit sales for the year is expected to be limited on expanded market share as a result of a lineup that consists of an optimal model mix, and profitability also will be secured by realizing unit sales and prices that exceed those of the market. (Ink-Jet Printers) Will continue to work on generating demand for photographic printing through linkage with smartphones and SNS in addition to expanding market share through sales of new products. Will also strengthen sales to the business market by launching the new brand MAXIFY. As a result of such initiatives, unit sales for the year are expected to rise from the previous year, with the Company aiming to secure the top position in market share. Sales of cartridges are expected to remain near year-ago levels. (Commercial Imaging Equipment) Sales for the year are expected to decline from the previous year due to a delay in making progress through the third quarter. 14

16 [Industrial / Medical] Net sales and operating income are expected to rise in the fourth quarter due to expanded sales of existing products in addition to new product launches. Net sales for the year are expected to increase by 12% from a year ago to 29.2 billion yen, and operating loss is projected to improve by 1.0 billion yen to 800 million yen. Meanwhile, sales are expected to be downwardly revised by 200 million yen and operating loss also by 200 million yen compared with the previous projection announced in July after taking into account the delay in progress made through the third quarter. (Industrial Equipment) Sales for the year are expected to increase substantially from the previous year due to an increase in sales of Zygo Corporation s measuring equipment, in addition to a greater number of new products handled, such as industrial 3D printers, as well as an expansion in maintenance services. (Medical) Sales for the year are expected to increase from last year as a result of a strong performance in modality projects, such as in digital radiography, CT/MR, and sterilizers, in addition to focusing on expanding sales of PACS and fully automated packing machines. 15

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