Canon

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Marking 70 years in business, Canon will further
accelerate its pursuit of sound growth

This year we celebrate our 70th anniversary. Established
in 1937 as a camera manufacturer, Canon has grown into a
global company by diversifying into new business fields,
beginning with office equipment.

In keeping with our corporate philosophy of kyosei, in 1996
we launched the Excellent Global Corporation Plan with the
aim of building a corporate group that continuously contributes
to society through technological innovation and is worthy of
admiration and respect worldwide. Under the plan we introduced
two major changes in our corporate mindset: total optimization
and a focus on profit over sales.

Additionally, we carried out a range of development and
production reforms, and boosted the competitiveness of our
products. As a result, Canon has emerged with a highly profitable
business structure and transformed itself from a company relying
on a 20th-century sales-oriented management approach, to one that
employs a 21st-century profit-oriented approach.

In Phase III of the Excellent Global Corporation Plan, launched in
2006, we aim to achieve sound growth through new technologies while
maintaining our highly profitable business structure. Amid economic
globalization and the spread of broadband networks, we are
implementing further business reforms that will enable us to
continually evolve as a truly excellent global company, and continue
to thrive for the next hundred, or even two hundred years into the future.

Additionally, we will continue to focus our energies on environmental
protection, social contribution, sound corporate governance, and
compliance activities befitting a company that espouses the kyosei
philosophy.

I look forward to your continued understanding and
support in our endeavors.

Fujio Mitarai Chairman & CEO, Canon Inc.

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In 2006, the first year of Phase III of the Excellent Global
Corporation Plan, we posted strong business results, achieving
our seventh consecutive year of sales and profit growth.

In Phase III, through the pursuit of sound growth, we have set
for ourselves the goal of securing by 2010 a place among the
world's 100 leading companies in terms of key business indicators.
Based on our performance in 2006, we have made a solid start
toward achieving this objective.

Without becoming complacent with our past achievements, we are
pressing ahead with a range of initiatives to realize our Phase
III objectives. These include further cultivating our technologies
to achieve the overwhelming No. 1 position in our core businesses,
firmly establishing our display businesses, and establishing
automated production lines.  Toward these objectives, we
continue to focus on reforms targeting improved quality in every
facet of our operations. In addition, we are actively exploring
next-generation business domains to support growth five
years—even ten years—into the future.

Also, as a manufacturer, product quality and safety represent
two priorities of vital importance for Canon.

To ensure that such problems do not occur, we will focus renewed
attention on this area and carry out activities targeting further
improvements in the quality of Canon products.  For these
initiatives to succeed, it is important that all Canon employees
constantly question the nature of things, and think and act
accordingly. On the basis of Canon's "Three Selfs" guiding
principle, we will accelerate the pace of sound growth through the
strong will and determination that enables us to continue to
innovate.  I ask for your continued understanding and support
of Canon in the coming years.

Tsuneji Uchida President & COO, Canon Inc.