Management Planning Department
ULVAC, Inc.
2500 Hagisono, Chigasaki, Kanagawa Prefecture 253-8543, Japan
TEL. +81-467-89-2033 FAX. +81-467-82-9114

https://www.ulvac.co.jp/en/

Basic Corporate Philosophy/Management Policies/Sustainability Policy

ULVAC’s Vacuum Technology

Vacuum Technology,
ULVAC’s Core Competence

Basic Corporate Philosophy
The ULVAC Group aims to contribute to the development ofindustries and science by comprehensively utilizing its vacuum

Stated simply, a vacuum is a space where the pressure
is lower than the atmospheric pressure. A vacuum hasinteresting properties: for example, materials’ lower boilingpoints in a vacuum mean they are more likely to evaporate
and gas molecules can travel in a straight line in a space.
ULVAC has developed various application technologies that
exploit the properties of a vacuum in its quest to realize theremarkable potential inherent in vacuum technology.
For example, using vacuum technology, it is possible
to create ultrathin films with micron- to nanometer-orderthickness. Since such thin films cannot be produced byphysically stretching materials, advanced vacuum deposition
technology is required for depositing layers of atoms or
molecules of materials in a vacuum.
Led by IoT, 5G, and AI, a tremendous wave of technologicalinnovation has brought about the advent of the smart
society. Vacuum deposition is destined to fulfill a vital rolein the fundamental technologies underpinning the smart
society.

and peripheral technologies through the mutual cooperationand collaboration of the Group companies.

Management Policies
Improve Customer Satisfaction
Innovations in Production Technology
Development of Original Products
Free and Open-minded Organization
Enhancing Corporate ValueULVAC’s Business Segments
Vacuum Equipment Business

Sustainability Policy

Semiconductor andelectronic device production
equipment

ULVAC strives to create economic, social, and environmental value
by comprehensively utilizing its vacuum and peripheral technologies.

◦Semiconductor production equipment◦LED production equipment◦Electronic device production
equipment

FPD and PV production
equipment

1

ULVAC GroupULVAC

Quality Policy

Basic Policy on
Occupational
Safety and HealthManagement
SystemBasic
Procurement
PolicyULVAC GroupULVAC

Environmental Basic Policy for
Philosophy Human Resources
Development
Environmental
Policy◦Liquid crystal display (LCD) production
equipment◦OLED production equipment◦Roll coaters◦Solar cell production equipment

Vacuum Application Business
Components

Materials◦Vacuum pumps◦Vacuum gauges◦Helium leak detectors◦Process gas monitors◦Thin-film measuring equipment◦EB, RF and DC power generators◦Vacuum valves◦Deposition controllers◦Vacuum transfer robots◦Sputtering target materials◦High-melting-point materials andproduction of components◦Nano-metal ink

Industrial equipment◦Vacuum heat treatment furnaces◦Vacuum melting furnaces◦Vacuum brazing furnaces◦Rare-earth magnet production
equipment◦Vacuum freeze-drying equipment◦High-vacuum distillation equipment◦Automatic leak testers

Others◦Surface analyzers◦Controllers◦Mask blanks
Major Vacuum Equipment
Sputtering equipment, vacuum
evaporation equipment, CVD equipment,
etching equipment, ashing equipment,
ion implantation equipment, annealing
equipment, etc.

ULVAC VALUE REPORT 20202

Table of Contents/Editorial Policy

About ULVACULVAC’s Vision

Basis for Value Creation

Financial Data/
Corporate Information

5

ULVAC’s History

19

Commitment of Top Management

7

ULVAC’s Businesses

23

New Mid-term Management Plan

9

ULVAC’s Value Creation

27

Vacuum Equipment Business 1

28

Vacuum Equipment Business 2

51
53
55
59

29

Vacuum Equipment Business 3

30

Vacuum Equipment Business 4

31

Vacuum Equipment Business 5

32

Vacuum Application Business

33
37
39
40
42
43
44
45
48
49

11
13
15
17

ProcessULVAC’s Value Creation
Priority Issues

ULVAC’s Value Creation
Value Offered by ULVAC’s Business

ULVAC’s Value Creation
Research & Development and Global Expansion

Consolidated Financial
and Non-financial Highlights

Electronic Device Production Equipment

FPD and PV Production Equipment

Components

Industrial Equipment
Materials/Other

Editorial Policy

Report’s Scope and Period

We publish the ULVAC VALUE REPORT as a summary of our initiatives in
the past year to achieve sustainable growth and enhancement of corporate
value, our medium- to long-term vision, and our management approach.
We consider this report to be an important communication tool tofacilitate stakeholders’ understanding of our activities and deepen dialogue
with them.

Scope: ULVAC Group■ Published:
November 2020 (Previous issue published in November 2019)■ Guidelines Referenced:
ISO26000: 2010 (Guidance on social responsibility) First Edition
The International Integrated Reporting Framework, the International
Integrated Reporting Council (IIRC)

3

Semiconductor Production Equipment

In principle, this report covers the ULVAC Group; any portions that cover only
ULVAC, Inc. are indicated as such.
Period: Year ended June 30, 2020
(July 1, 2019 to June 30, 2020, FY 2019)
Some portions of the report include activities and initiatives from July 2020
onward.
<Disclaimer>
Figures shown in tables and graphs in this report may not add up to theindicated total because of rounding. Some figures have been revised fromprevious years’ data because the scope of reporting was expanded or
calculating methods have been changed.

Corporate GovernanceManagement Structure
Messages from External Directors
Risk Management

11-year Financial Data
Financial Overview
Consolidated Financial Statements
Company Data/Stock Information/ULVAC Group Companies

Compliance
Quality Assurance and Product Safety
Procurement
Human Resources
Occupational Safety and Health
Environment

ULVAC’s Communication Tools
Summarized
ULVAC VALUE REPORT (Japanese and English version)

Detailed

Securities
reportBusiness report

Corporate
governance report

Business resultspresentation materials(Japanese/English)

Sustainability(Website)

Financial information

We endeavor to achieve the optimum information disclosure by making
various communication tools available to meet your needs.
To help you deepen your understanding of the ULVAC Group, ourcommunication tools range from statutory disclosure documentation
centering on information on financial closing to this report that offers
non-financial information, such as social and environmental initiatives
indispensable for creating corporate value, in addition to information on
business activities, management strategies, and financial information.
Please also refer to our website for the latest information.

Non-financial information

ULVAC VALUE REPORT 20204

About ULVACULVAC’s History

The story of ULVAC’s foundation
At the time when Japan was

When ULVAC was founded back in 1952, vacuum technology had not yet entered widespread use in Japan.
As a trailblazer, we championed vacuum technology by introducing new technologies to the market andaddressing the needs of customers in diverse industries. ULVAC will continue tackling technologicalinnovation to speed progress toward the “smart society” to which we aspire.

Soughtinvestment

Japan Vacuum
Engineering Co., Ltd.

a group of talented young
researchers and engineers
gathered with the aim ofJapanese industry throughangel investors, impressed bychanging industrial structure, we have always boldly sought to develop new technologies while expanding application fields

the passion of these visionary

to include the production of automobiles, chemicals, pharmaceuticals, and food, metallurgy, as well as mass production ofyoung people, invested in thesemiconductors and electronic devices, flat-panel displays, and organic light-emitting diode displays. Inspired by the promiseestablishment of Japan Vacuumof the emerging “smart society,” we are confident that our vacuum technology will be a key to the advance of the cluster

Engineering Co., Ltd., theof transformative technologies, including IoT, big data, artificial intelligence, and self-driving vehicles, that will underpin next-

forerunner of present-day ULVAC.

Kohnosuke Matsushita Tamesaburo Yamamoto

First president
Great idea! Throughvacuum technology let’s
help create an affluent
future for the up andcoming generation.

vacuum technology.” In 1952 six

Ever since its foundation, ULVAC has been refining its capability to flexibly manipulate vacuum technology. In step with theFascinating!
Y’all must do it!

Each invested ¥1 million (equivalent to ¥25 million today) of their own money

engaged in post-war recovery,“contributing to the revival of

Challenging new industrial sectors

1952: Japan Vacuum Engineering Co., Ltd. was founded.

President of Matsushita
Electric Industrial

Yoshijiro Ishikawa
President of
Keifuku Electric Railroad

We will provide
wholehearted support
to a company wishingto establish the vacuum
technology business inJapan.

Consult

NRC
Cooperation
Equipment Corporation
U.S. vacuum equipment
manufacturer

generation lifestyles.

I want to establish avacuum technology
Gen Hirose
company to help drive
President of Nissay
Japan’s recovery.

Second president

President of
Asahi Beer

Yoshio Osawa

Aiichiro Fujiyama

Chairman of Chamber ofCommerce & Industry of Japan
President of Dainihon Sugar
Refining Company
Foreign MinisterSixinvestors

President ofOsawa-Shokai

Third president

1941: Vacuum Clubwas established.

Jin Imachi

Chikara Hayashi

Mazda ResearchLaboratory of Toshiba

Sagane Lab of the
University of Tokyo* 1950: Renamed Vacuum
Technology
Association*Names of companies, organizations and titles are those at the time mentioned.

1952~ 1960~ 1962~ 1973~ 1975~

1983~ 1992~ 2016~ 2018~

Chemical/
pharmaceutical/foodMetal/steel

Liquid crystal display Semiconductor

Electronic storage
media

FPD

Reflectors for automobiles

Pharmaceuticals

Special steel

LCD calculator display

Discs

Flat-panel display

OLED

Advanced semiconductor/
electronic device

Customers’ products

Automobile

Computer(Photo: Courtesy of IBM Archives)

OLED

Advanced semiconductor

Corresponding
ULVAC products

OLED production equipment
System 731
Vacuum evaporationequipment

History 1952

◦ Japan Vacuum Engineering
Co., Ltd. was founded.

1955◦ Opened the Omori Plant inTokyo to start manufacturing
equipment in Japan.

1959◦ Opened the Yokohama Plant
in Kanagawa Prefecture.

High-vacuum distillationequipment for plasticizers

1964◦ Established the firstoverseas subsidiary in Hong
Kong.

1968

◦H
 ead Office/Plant completed
in Chigasaki, Kanagawa
Prefecture.

1969

◦C
 hanged the company
name in English to ULVACCORPORATION to promote
exports.

100 kg-class vacuum induction
melting furnace

Transparent conductive film
deposition equipment

1971

1982

1972

◦ Established the Tsukuba
Institute for Super Materials
in Tsukuba Science City
(present-day Tsukuba City),
Ibaraki Prefecture.

◦ Established a subsidiary in
Hamburg, then West Germany,
as a base for cultivating thewestern European market.
◦ Opened the Institute for Super
Materials as ULVAC’s firstresearch facility.

1975◦ Opened the North American
Office. Established a subsidiary
in North America as a base forexports to the U.S.

1977

1952
5

1960

◦ Established KYUSYU ULVACCORPORATION (presentday ULVAC KYUSHUCORPORATION) in Kagoshima
Prefecture to expand sales
activities in the Kyushu area.

1970◦ Established a subsidiary in
Taiwan.

1983◦ Opened the Beijing Office in
China.

1990◦ Opened the Fuji Susono
Plant in Shizuoka Prefecture,
as a plant dedicated to
semiconductor production
equipment.

1995◦ Established a vacuum pumpproduction base in China.
◦ Established a subsidiary inSouth Korea.

In-line sputtering equipment

LCD production equipment

2001

2005

◦ Changed the company nameto ULVAC, Inc.

2002

◦ Established a subsidiary in
Singapore.

2003◦ Established a base for fullscale production and field
support in China.

2004◦ Listed on the First Section of
the Tokyo Stock Exchange.

1987◦ Established ULVAC TOHOKU,
Inc. in Aomori Prefecture
to strengthen production oflarge-scale equipment.

◦ New buildings of the Head
Office/ Plant(Chigasaki, Kanagawa
Prefecture) completed.

◦ Established a large-scale
production base for large
LCD production equipment
in South Korea.
◦ Established a subsidiary inThailand.
◦ Established R&D bases inSouth Korea and Taiwan.
◦ Established a subsidiary in
Malaysia.

Semiconductor production equipment

2010◦ Relocated the Chiba Institutefor Super Materials to theTomisato Industrial Park in
Chiba Prefecture to enhance
R&D.

2011

◦ Established the South Korea
Institute for Super Materials
to enhance R&D in South
Korea.

2006

2015◦ Established the Future Technology
Research Laboratory in Tsukuba,
Ibaraki Prefecture.

2016◦ Began manufacturing production
equipment for large displays in
China.

2018◦ E stablished the ULVAC-Osaka
University Joint ResearchLaboratory for Future Technology
at Osaka University.

◦ Established a production
subsidiary for large LCD
production equipment in
Taiwan.

2007◦ Established a base in India.

1980

1990

2000

2005

2010

2015
ULVAC VALUE REPORT 20206

About ULVACULVAC’s Businesses
Across a wide range of industries, ULVAC is a source of numerous products and technologies that meetthe needs of our customers and the market.
At present, ULVAC operates businesses in six areas.

Net sales by business segment (amount and %)Net sales by region (amount and %)Europe,North America
and elsewhere

Other Asia

Vacuum Application
Business¥

30.6

OthersVacuum Equipment
Business

17

154.8

%

billion

¥

17.1

¥

billionIndustrial
equipment¥

62.1

billion10%¥15.0billion

64

%

Japan

South Korea¥21.1billion

12%¥66.7billion

Net sales in FY 2019

185.4

¥

36%

billion¥67.5 billion 36%

185.4

¥

billionbillion

29.1

¥

34%
Employees by region (number and %)24%
Components

5%

8%

9%

Net sales in FY 201916%

¥9.4billion

Taiwan

China

18.4

¥

ULVAC has been involved inthis business sector since theemergence of vacuum technology
in the 1950s. Leveraging thefundamental technology it hasdeveloped so far, ULVAC currently
provides various solutions acrosswide-ranging industries, including
the automobile, pharmaceutical, andfood industries.

7

7%

billionULVAC is a source of electronicmaterials, such as sputteringtargets, for diverse industries.
In addition, in the highperformance materials sector,
ULVAC is a source of integrated
manufacturing and precision
processing technologies fortitanium, tantalum, zirconium,
niobium, etc.

%

¥5.6 billion 3%

ULVAC not only develops a range of FPD
and PV production equipment but alsooffers solutions worldwide that leverage
its development of advanced materials.

13.5

¥

83

FPD and PV
production
equipment

ULVAC is a source of technology
derived from vacuum-based
production equipment for diverse
industries.

Materials

billionRatio of sales
overseasbillionAs a comprehensive vacuum
product manufacturer, ULVAC is also
dedicated to the development ofcomponents. ULVAC pursues cuttingedge vacuum technology whileproviding a wide range of productlines, extending from vacuum pumps
and measurement and analysis
equipment, to components, such as
power generators for various typesof deposition equipment and vacuum
valves.

United States

160

Southeast Asia

persons

Ratio of employees 142persons 2%
overseas

Semiconductor
and electronic
device production
equipment

45.1¥

billionHigher integration and higher
performance at lower cost are demanded
for next-generation semiconductors
and other high-performance devices.
Based on its development of superminiaturization technologies for suchsemiconductors and other electronic
devices, ULVAC delivers a stream of newtechnologies and products to the worldthat underpin the progress of society.

49

%

3%

Taiwan563
9%South Korea
Number of employees
661
in FY 201910%
persons

persons

6,370

persons(As of June 30, 2020)

Japan

3,272
51%

persons

China

1,572
25%

persons

ULVAC VALUE REPORT 20208

About ULVACULVAC’s Value Creation <Process>As a comprehensive vacuum product manufacturer,
Value Creation

ULVAC will contribute to the realizationof a sustainable society.

Value ULVAC Offers to Stakeholders

m iz a ti o n o f S y n e r g y
M a xi

Customers
Contribution to customers’ business activities, technological innovation, andvalue creation; offering of cutting-edge production technology, enhancementof productivity and quality, and reduction of environmental impacts throughequipment and services

Human Capital
Number of employees*1

6,370

persons

Intellectual Capital

Shareholders and investors

Customer-oriented
development, design,
procurement,
manufacturing, sales, andservice capabilities

Number of patents owned*1

2,401
Overseas: 2,509
Japan:

Enhancement of corporate value, greater returns

Suppliers

Priority Domains

Local communities

R&D and capital
expenditures¥

Manufacturing
CapitalCreation of employment opportunities, industrial development, reduction ofenvironmental impacts

13.5billion

Employees
Coatingbusiness

Principal production bases*

1

Japan:
Overseas:1710Advancedmaterials

Interest-bearing debt

49.8
154.3
0.32
¥

Social issues

Equipment
controlbillionShareholders’ equity*1¥

SurfaceanalysisbillionD/E ratio*

1

Customer
supportRealization of the smart society
Fundamental technology forrealization of the smart society

Services

Materials

Participation in consortia andcollaboration with universities andother institutions

Energy management,
next-generation energy

FPD
PV

Equipment
Business

Healthcare, life innovation

Equipment

Industrial
equipment
Components

Semiconductors
Electronics

Major contributions through processes

Quality
Assurance
Product Safety

P.43

ESG

ULVAC’s major initiatives

E・Environmental management(Environment)

Construction, social
infrastructure, mobility

S(Social)Procurement

P.44

Human
Resources

P.45

Occupational
Safety and
HealthP.48

Corporate GovernanceManagement Structure
Basic Corporate
Philosophy

9

P.13

Value Offered by ULVAC’s Business

Vacuum VacuumControl
Analysis

Relationships of trust withcustomers and business partners
worldwide*1 As of June 30, 2020

Contribution to realization of a sustainable society*³

Partnerships for the goals

Social Capital

Basis for
Value
Creation

Workplaces offering job satisfaction

Major contributions through products and services

VacuumApplication
Business

Financial Capital

Achievement of growth together with ULVAC based on trust andcollaboration, fair and free competitive environment

P.11

P.33
P.1

Environment

P.49

SocialContribution
Activities *2WEB

G(Governance)

Relevant SDGs

Reference pages

P.13

P.49

・Quality management
・CSR procurement

P.43

P.44

・Occupational safety andhealthP.48

・Social contribution activities

WEB

・Corporate governance・Management structure

P.33

P.37

P.40

P.42

・Environmentally friendly
products

・Contribution to reductionof power consumption ofvarious devices

・Compliance・Risk management
・Human resources
development

*2

※3

P.45

・Diversity & inclusion
・Health management
・Creating motivating
workplaces*3 Indicates relationships with the United Nations’ Sustainable Development Goals (SDGs).

▶ Website>>Sustainability>Social Contribution Activities*2 For details ●ULVAC VALUE REPORT 202010

About ULVACULVAC’s Value Creation <Priority Issues>

We are committed to realizing a society that is not only safe and secure but also affluent and convenient byoffering value utilizing vacuum technology, which is indispensable for industrial and scientific development.
We will continue helping to resolve social issues in cooperation with our customers through theprovision of products and solutions to them.

ULVAC’s business activities
Social issues

Progress of the smart society,advances in 5G and IoT, andestablishment of network
infrastructureMarket opportunities

Aspiration for the progress of
all industries and technologicalinnovation

ULVAC’s six businesses
Priority domains

Realization of the smart society
Autonomous driving, agriculture, healthcare,virtual currency, etc.

Semiconductor
production
equipment

Electronic
deviceproduction
equipment

FPD and PV
production
equipment

Components

Industrial
equipment

See

See

See

Diversification of semiconductor
and electronic device
applications and needs
Trend toward devices withsmaller size, more speed,larger capacity and lower power
consumption

Fundamental technology forrealization of the smart society

SeeMaterials

See

IoT, cloud, AI, robots, big data, drones

Main value offeredby the business

Customers and their products

Response to new
semiconductor andelectronic device fields
and needs by applying
vacuum deposition andother technologies andR&D of cutting-edge
processes throughcollaborative creation withcustomers

FPD, semiconductor, electronic equipment,
and device manufacturers
Semiconductors:
Memory, logic

Contribution toresolution of principal
social issues*

Contribution to realization of anadvanced, convenient, safe andsecure, smart society

DRAM, PCRAM,
3D-NAND, CPU, etc.

Functional devices:
Sensing,communication (5G),
display
MEMS, SAW/FBAR devices,
OLED, etc.

Environmental issues, such as
global warming and climatechangeGlobal energy issues due todependence on finite resources

Food safety and security,
population explosion and sharp
increase in demand for food in
emerging countries, increase infood loss

Progress of renewable and lowcarbon energy systems

Energy management,
next-generation energyImprovement in energy
conversion efficiency

Longer preservation of foodand pharmaceuticals, volume
reduction

Healthcare, life innovation

Longevity, needs and progressof health promotion andhealthcare

Aging of infrastructure indeveloped countries
Development of industrial
infrastructure in emerging
countries
Wider gap between rich andpoor

Development of safe, secureand comfortable infrastructure

Construction,social infrastructure, mobility

See

Enhancement of
performance of solar cells
and power devices byvacuum deposition, ion
implantation and othertechnologies, contribution
to reduction of power
consumption of various
devices

Solar cell manufacturers,
battery manufacturers, etc.

Longer life and volume
reduction of freeze-dried
food, powder vaccines,
drugs, etc. by vacuum
freeze drying and othertechnologies

Food manufacturers,
pharmaceutical manufacturers, etc.

Enhancement of
performance of industrial
materials and response to
new materials by applying
vacuum heat treatment
and other technologies

Chemical and materials manufacturers,
steelmakers, transportation equipment
manufacturers, etc.

Energy:Heat generation,
power storage,
conversion

Contribution to creation of asustainable society by power
generation, energy storage andenergy saving

Solar cells, all-solid-statebatteries, power devices,magnets for wind turbines

Foodstuffs,
pharmaceuticals:
Freeze drying

Contribution to human health, thefuture of medicine, and realizationof a sustainable society withminimal food loss by means of safe
and secure foods andpharmaceuticals

Freeze-dried foods,
emergency provisions,
supplements, powder
vaccines, etc.

Contribution to creation of asustainable society that is safe andsecure and comfortable

Industrial materials:
Heat treatment
Glass building
materials, industrial
materials, materials fortransportation equipment,etc.
* Indicates relationships with the United Nations’ Sustainable Development Goals (SDGs).

11

ULVAC VALUE REPORT 202012

About ULVACULVAC’s Value Creation <Value Offered by ULVAC’s Business>
Through implementation of the Basic Corporate Philosophy stating that the ULVAC Group aims tocontribute to the development of industries and science by comprehensively utilizing its vacuum andperipheral technologies, ULVAC aims to be an enterprise indispensable for society.

ULVAC supports the smart society

Contributing also to the food and pharmaceutical fields through comprehensive utilization of vacuum technology

The smart society, whose emergence is accelerated by IoT and 5G, is expected to become social infrastructure that can balance
the resolution of the social issues addressed by the SDGs and economic development. ULVAC is helping bring about a smart
society, whose attributes will include sustainable cities and communities, good health and well-being, and zero hunger, throughtechnological innovation in semiconductors, electronic devices, displays, and other fields, thus contributing to realization of anadvanced, convenient, safe and secure, smart society.

While the population explosion and sharp increase in demand for food in emerging countries highlight the need to eliminate hunger and malnutrition, indeveloped countries, the disposal of food and food loss are increasing. There are also ever-greater needs for healthcare, including countermeasures for
infectious diseases, greater access to healthcare, promotion of welfare, and development of vaccines and drugs. ULVAC contributes to human health, thefuture of medicine, elimination of hunger and malnutrition, and realization of a sustainable society with minimal food loss by enabling longer preservation offood and pharmaceuticals and safe transportation through longer life and volume reduction of food, powder vaccines, drugs, etc. using vacuum technology.

Smart society
Sustainable
cities andcommunities

Good healthand wellbeing

Industry, innovationand infrastructure

Concentration on cities,
traffic congestion andaccidents

Unmanned delivery

R&D of vaccinesand drugs

Fundamental technology for realizationof the smart society

Powder vaccines

Vacuum freeze-drying
equipment
Semiconductor production
equipment

Good healthandwell-being

Limited access tohealthcare services

Autonomous driving

IoT

AR/VR

Countermeasures for
infectious diseases

Semiconductors

Sterile preparation

Micro Powder Dry
systemRemote medicine

Big data

AI

Electronic devices

Electronic device production
equipment

Liquid nitrogengenerator

Regenerative medicine

ZerohungerPromotion of welfare
Edge server

Response to labor
shortages in agriculture,
weather, etc.

No poverty

Cloud

Agricultural infrastructure

Network infrastructure

Vacuum freeze-drying
equipment

Displays

Display production equipment
Zero hunger

Reduction of fooddisposal and food loss

Freeze-dried foods,
emergency provisions

Addressing soaring electricity demand and environmental and energy issues
Environmental issues, such as climate change and global warming, and global energy issues due to dependence on finite
resources are intensifying. ULVAC will contribute to the creation of a sustainable society by power generation, energy storageand energy saving through enhancement of the performance of solar cells, batteries, power devices, and other products. ULVAC
will offer comprehensive support for digitization by helping address the issue of soaring electricity demand that entails the
emergence of the smart society.

Food packaging

Responsible
consumption
andproduction

Elimination of hunger
and malnutrition

Roll coaters

High-vacuum distillationequipment

Supplements

Contributing to development of infrastructure in emerging countries
Affordable andclean energy

Soaring electricity
demandAdvanced miniaturized devices(Lower power consumption)

Semiconductors

Electronic devices

Finite resources

Electric vehicles/hybrid vehicles

Lithium-ion
batteries

Power devices

Global warming

High-efficiency solar cells

ULVAC has been contributing to diverse industries through vacuum heat treatment technology ever since Japan’s postwar
economic boom. ULVAC will also contribute to development of safe, secure and comfortable infrastructure in emerging
countries by enhancing the performance of industrial materials.

Electronic device
production equipment

Roll coaters

No poverty

Vacuum circuit breakers
for substation systems

Ion implantationequipment

Cat-CVD equipment
for siliconheterojunction solar
cells

Climateaction13

Semiconductor
production
equipment

Industry,
innovation andinfrastructure

Infrastructure in
emerging countries
Heat exchangers

Vacuum furnace

ULVAC VALUE REPORT 202014

About ULVACULVAC’s Value Creation<Research & Development and Global Expansion>
Research & Development

Global Network

Ongoing value creation from a medium- to long-term perspective

Networks offering solutions to support industrial development worldwide

ULVAC has long been a source of vacuum-technology-based products and materials indispensable for wideranging industries. Building on our strengths in vacuum technology, we will continue to promote innovative,
pioneering R&D capable of addressing actual and potential needs and create high-added-value products andtechnologies, thus contributing to the progress of society.

ULVAC has established optimal networks covering development, sales, manufacturing, and services not only forJapan but also for the United States, Europe and Asia.
To spur development by capitalizing on the global development system, ULVAC is promoting joint developmentwith leading companies and research institutions around the world.

To continue to provide innovative technologies and products inthe everchanging market, our R&D projects undergo selection
and focus in which a clear distinction is made between“development of innovative technology for principal productsof the mainstay business” and “development of fundamental
technologies in preparation for the future” based on analysis ofcustomer needs and market trends. Moreover, our development
structure leverages business partnerships with various
companies and research institutions.
We are also striving to equip ourselves with the advanced
technologies necessary to respond swiftly to the progress of
5G and IoT in line with the establishment of global network
infrastructure and the smart society while flexibly addressing
social issues, including environmental issues such as global
warming and climate change, thus establishing a foundation for
long-term sustainable growth.
Principal themes

Relevant SDGs

Initiatives of the ULVAC-Osaka University Joint ResearchLaboratory for Future Technology
On November 1, 2018, ULVAC, Inc. and the Graduate School ofEngineering at Osaka University established the ULVAC-Osaka
University Joint Research Laboratory for Future Technology (hereafterreferred to as the “Joint Research Lab”) in the Central Terrace Buildingof the University’s Suita Campus. Through Osaka University’s industryacademia collaboration framework, the Joint Research Lab is working
to achieve practical applications of the seeds of basic research in
the engineering field, contribute to academia and industry based on
medicine-engineering collaboration in the medical field, and develop
highly creative human resources by promoting industry-academia
exchanges. ULVAC positions the Joint Research Lab as a center of
excellence for basic research and aims to create new value, including
creation of quantum dot phosphors employing ULVAC’s proprietary
technologies, which will lead to next-generation displays including fullcolor illumination, as well as technology for their mass-production, andthe establishment of fundamental technologies in medicine and nextgeneration ceramics as part of development of application for the ultrafast freeze-drying technology.
1) Development of next-generation displays (quantum dot, LED)

Researchthemes· Logic· NAND/DRAM· Next-generation non-volatile memory· Next-generation displays· Next-generation batteries· Communication devices· Power devices· Electronic devices, MEMS
· Electronic packaging· Optical devices

TOPICS
Head Office/Plant

Kagoshima Plant

China Plant

South Korea Plant(Billions of yen)

15

10

5

12.9

10.3

8.3
4.1

12.9

6.4

7.2

6.5

6.6

6.9 5.1

7.8

15

2016

2017

2018

2019

• On-site• Remote

TOPICS

After refurbishing

Sales ofrefurbished usedmachines

Field
support(mainttainance)

Parts sales

Cleaningand surface
treatment

Effective utilization of resources throughout the life cycle
and addressing environmental issues
Initiatives for enhancement of equipment
recyclability and production technology improvement

Relevant SDGs

Modification of equipment and machines alreadyin operation, reduction of power consumption,
maintenance that also covers components

R&D expenses (actual and forecast)(Billions of yen)

10.0

8.3
7.5

9.2

8.4

6.9

8.0

8.2

0

Mining of materials
for products

Procurement of parts and consumables

ULVAC is contributing to reductionof power consumption, waste, andconsumption of raw materials throughout
the life cycle, including the customer
support phase.

5.02020 (FY)

Website>>Support>Service Center

Our customer support network (66 bases in 13 countries) in Japan and around the world underpins our customers’
production operations in a manner that meets their needs throughout the life cycle. We offer comprehensive
maintenance service covering components and make proposals for improvement and refurbishment covering
customers’ processes. Furthermore, by using information on customer needs as feedback for the development of
new equipment, we aim to offer even more sophisticated vacuum technologies and service. We will also expand
remote customer support packages utilizing IoT equipment for the future.

Central Terrace Building
at the Suita Campus of Osaka University

Forecast

Website>>Support>Sales Offices

For details ●▶

ULVAC’s customer support solutions pool the Group’s knowledge

3) Establishment of a cell preservation technique using ultrafast
freeze-drying technology,
etc.

2.5

0

For details ●▶

Customer Support

Before refurbishing

11.7
8.9

Taiwan Plant

Modification/
improvement

R&D equipment
Buildings,
production equipment, etc.
Depreciation

P.26 New Mid-term Management Plan “Enhancing Manufacturing Capabilities”

For details¥50.0 billion in R&D investments (capital expenditures for R&D and R&D expenses) is planned centering on the growing semiconductor andelectronic device fields for the three years covered by the new mid-term management plan.
Total
investment

Hachinohe Plant

2) Creation of next-generation devices using photon spin

Capital Expenditures and R&D Expenses (Actual and Forecast)

Capital expenditures (actual and forecast)

Fuji Susono Plant

In regard to manufacturing, ULVAC has expanded a production system centering
on Japan, China, South Korea, and Taiwan. Going forward, we will emphasize
improvement of production efficiency by promoting optimal production. Whereas eachbase has established its own local supply chain, the ULVAC Group will strive to optimize
procurement by developing a global supply chain.

2016

2017

2018

2019

ULVAC’s plants

Customers’ plants

Modification of equipment,
sales of refurbished used machines

Rejuvenation, precision cleaning, and resource recovery(extension of component life and the cleaning cycle, recovery of valuable materials, etc.)

2020 (FY)Forecast

ULVAC VALUE REPORT 202016

About ULVAC

Consolidated Financial and Non-financial Highlights
Consolidated Financial Highlights

Non-financial Highlights
営業利益

Net sales(Billions of yen)

231.8

250
200

(Billions of yen)

249.3

Rate of lost-work-time injuries
ULVAC, Inc.
(non-consolidated)

35.4

36

220.7

192.4

2.0

29.5

185.4

23.8

27

150
18

年次有給休暇取得率（％）

労働災害度数率

Operating profit

17.9

1.61

1.63

1.06

1.15

1.5

16.0

1.66
1.02

All industries

1.83

1.80

1.20

1.20

Manufacturingindustry

Voluntary retirement rate
ULVAC, Inc.
(non-consolidated)

(%)

6.0

4.5

1.0

3.0

2.54

100

0

2015

2016

2017

2018

2019

(FY)

0

0.37

0.5

9

50

2015

2016

2017

2018

2019

(FY)

0.0

1.71

0.00

0.00

2015

2016

1.5

0.00

0.00

2018

2019

0

2017

(FY)

2015

2016

2.21

1.98

2018

2019

1.06

2017

(FY)

*Source for average data for all industries and manufacturing industry: “Survey on Industrial Accidents 2019” by
the Ministry of Health, Labour and Welfare of Japan.

自己資本比率Net income

Equity ratio(%)(Billions of yen)

40

30

20

60

35.9

45

24.5
18.7

16.7

49.5

53.5

ULVAC has been promoting various safety initiatives, including risk assessment, throughthe operation of the Occupational Safety and Health Management System (OSHMS),
resulting in safe workplaces. With “safety first” as the Group’s principle, we will redouble
our efforts to eliminate occupational accidents.
For details
P.48

We recognize that people are the source of sustainable value creation and our mostimportant asset. Retention of talented human resources is a prerequisite for continuous
technological innovation in a rapidly changing industry. We will continue efforts to retain
human resources by pursuing various initiatives.
For details
P.45

Localization ratio of presidents ofoverseas subsidiaries

Number of people participating in
vacuum demonstration classes

(%)

54.6

(Persons)

100

81.8

78.8

40.2

87.8

82.4

800

79.4

33.2

2015

2016

2017

2018

2019

30

50

400

15

25

200

252

0

(FY)

2015

2016

2017

2018

2019

(FY)

0

2015

2016

2017

2018

2019

(FY)

Convinced it is preferable to appoint people of the respective countries and regions to
be in charge of management of overseas bases, we have been fostering and promoting
local managers and next-generation executives and are promoting assignment of local
employees to important positions overseas.
For details
P.45

0

(FY)
2015
2016
2017
2018
2019
ULVAC holds vacuum demonstration classes and plant tours for local schools and otherpublic institutions and for people in local communities. As part of our collaboration with
Chigasaki City on education in recent years, we are vigorously conducting activities
designed to encourage as many young people as possible to take an informed interest inscience, since the future leaders in the Shonan area will be drawn from their ranks, forexample by holding classes for high school students on the world of work and offeringjunior high school students opportunities to gain experience in the workplace.

For details ●
▶

有利子負債

ROE (Return on equity)
(%)

28.5

30

Interest-bearing debt

29.2

CO2 emissions(Billions of yen)(t-CO₂)80

100,000

62.7

21.9
20

42.7

12.5

0

17

40

7.1

2015

2016

2017

2018

2019

75,000

49.8
35.7

35.6

50,000

20

(FY)

0

2015

172
91,712
31,764

60

10

465

437

10.8
10

0

602

605

600

75

2016

2017

2018

2019

(FY)

59,948Website>>Sustainability>Social Contribution Activities

Waste emissions■ Amount of valuable materials recycled (t)■ Group companies overseas ■ Group companies in Japan

87,40628,24859,15991,88633,31858,56888,96133,79655,16583,92930,51653,412■ Total amount of waste recycled (t)(t)
10,000

7,500

5,000

25,000

2,500

0

0

(FY)
2015
2016
2017
2018
2019
Recognizing that electricity accounts for a large proportion of energy consumption, weare promoting energy saving in production and product development and evaluation while
introducing facilities with excellent energy-saving performance.
For details
P.49

313
8,479

214
7,072

3.6

359

385 4.5

4.2
7,197■ Amount of landfill (t)● Final landfill disposal rate (%)

7,093

4.9

4.5

346
6,007

2.9
1,920

2,313

2,222

2,236

(%)
6.0

1,580

3.0

1.5

0

2015
2016
2017
2018
2019 (FY)We are taking steps to reduce landfill disposal of waste and increase the recycling rate
while promoting resource-conscious manufacturing, including design to reduce processing
losses and minimize waste materials.
For details
P.49

ULVAC VALUE REPORT 2020

18

ULVAC’s Vision

Commitment of Top Management

Achieve sustainable growth through investment
in development for growth, structural change
and contribute to technological innovation
Setsuo Iwashita
President and Chief Executive Officer

Realize the smart society and achieve
steady growth
Contributing to the smart society by supporting
technological innovation
By comprehensively utilizing the vacuum and peripheraltechnologies cultivated since its foundation, ULVAC
has been supporting technological innovation in diverse
industries and achieved growth while contributing
to customers’ business expansion and society’s
development.
The business environment in which ULVAC operates
has been undergoing a phase of unprecedented
transformation in recent years. This transformation
is taking place in the context of various social issues
such as: healthcare systems, water and food, logistics,
and transportation stressed by the concentration of
population in urban areas, population aging coupled witha declining birthrate; and the growing frequency andseverity of natural disasters owing to climate change.
Nevertheless, there are high expectations that theseissues can be resolved through the realization of a smart
society where people’s life styles and industries will
become increasingly electronics-oriented and digitizedthrough technological innovation.
The realization of the smart society is supported by
key devices—such as semiconductor memories andlogic devices, MEMS/sensors, power devices, etc.—andfundamental technologies enabling large capacity andlow power consumption of semiconductor memories
and logic devices as well as miniaturization and enhanced
performance of MEMS/sensors and power devices.
ULVAC will respond to these needs for key devices andfundamental technologies by leveraging its strengths invacuum thin film processing technology and fundamental
technologies for equipment, thus seizing ever-greaterbusiness opportunities in the smart society.
Amid accelerating realization of the smart society
The COVID-19 pandemic has accelerated realizationof the smart society while having a big impact on life
styles and economic activity. Not only have measures
implemented in response to COVID-19 compelled us
to adapt to new ways of life and of doing business,but they also have spurred initiatives—the shift toremote working, digital transformation (DX), remote
medicine, online provision of education, entertainment,
and services—whose progress was previously gradualowing to various constraints.
Realization of the smart society is expected toaccelerate with a view to solving various social issues.
In these circumstances, in order to contribute totechnological innovation, ULVAC needs to strengthen
product development capabilities in the semiconductor
and electronic device fields, which are growing markets,

19

and also improve profitability by enhancing productivity
so as to achieve sustainable growth.
For the new mid-term management plan covering
three years from FY 2020, we set a basic policy that has
two principal elements: “investment in development
for growth (selection and concentration)” and “profitoriented management through structural change.” I
refer to the details below.

Steady progress of initiatives forbusiness growth and value creation
FY 2019 business results and the impact of the
COVID-19 pandemic
In FY 2019, the spread of COVID-19 imposed severe
constraints on economic activity worldwide, resulting
in rapid deterioration of economic conditions in thesecond half of FY 2019. Despite these circumstances,
capital investment of foundries and logic manufacturers
in cutting-edge processes remained firm and that ofmemory manufacturers, which was in an adjustment
phase, showed signs of recovery. In the electronic
device field, rising demand in line with progress toward
the smart society, centering on IoT and AI, led to strong
capital investment. Regarding capital investment in theflat panel display (FPD) sector, business opportunities
on major investment projects related to liquid crystal
display (LCD) for large-screen TVs had come to acyclical downturn and investment related to organic
light-emitting diode (OLED) displays for smartphones
entered a temporary adjustment phase.
Let me review ULVAC’s operations for FY 2019. For
FPD and PV production equipment, orders received for
LCD production equipment for large-screen TVs and
OLED production equipment for smartphones decreased
greatly and net sales of FPD and PV production
equipment declined year on year. Orders received forand net sales of semiconductor and electronic device
production equipment increased year on year because
demand for sputtering equipment for logic devices andproduction equipment for communication devices andpower devices was firm. Orders received for and net
sales of components decreased year on year owing toweakening of automotive- and FPD-related investment.
Orders received for and net sales of general industrial
equipment decreased year on year, reflecting sluggish
capital investment in China and Southeast Asia. Orders
received for and net sales of materials also decreased
year on year, reflecting customers’ lower equipment
utilization. Owing to travel restrictions and constraints
on business activities due to the COVID-19 pandemic,
ULVAC’s business was affected to some extent as
ULVAC operates globally. We established the COVID-19
ULVAC VALUE REPORT 2020

20

ULVAC’s Vision

Commitment of Top Management

Emergency Response Headquarters, which I head as
President and CEO of ULVAC, Inc., in order to ensure atimely and appropriate response to COVID-19 and westrove to minimize the impact on business activities
by implementing measures to prevent the spread of
COVID-19 in accordance with the requirements ofvarious countries.
As a result, consolidated business results for FY
2019 fell short of the initial targets. Orders received
decreased 28.4% year on year to ¥156.6 billion, net
sales decreased 16.0% to ¥185.4 billion, operating
profit decreased 33.0% to ¥16.0 billion, ordinary profit
decreased 29.4% to ¥18.1 billion, and net income
decreased 42.3% to ¥10.8 billion.
Review of the previous mid-term management plan
and achievements
Progress on the previous mid-term management plan
(covering the period from FY 2017 to 2019) began
strongly, but the results for FY2019 fell short ofperformance targets, due to facters such as struggling
sales of OLED production equipment for smartphones,a cyclical downturn in investment in LCD production
equipment for large-screen TVs, reactionary decline ininvestment in semiconductor memory, and compoundedby the impact of COVID-19.
On the other hand, we made steady progress on
the key strategies of “promoting business growth”
and “enhancing the power of value creation.” Forsemiconductor and electronic devices production
equipment, we achieved growth in electronic devices
such as communication and power devices, and theentry into the logic field. For FPD and PV production
equipment, we collaborated with leading companies
to begin development of next-generation large OLEDs.
We also launched manufacturing innovations as the firststep in our drive to enhance productivity and achievetransformation to a profitable structure.

Promote development directly leading
to product competitiveness and improve
profitability through manufacturing
innovations
New mid-term management plan aims at
transformation to a profitable structure
ULVAC formulated and launched the new mid-term
management plan “Breakthrough 2022” (covering
the priod from FY 2020 to 2022). Under this plan, we
apprehend the trend of technological innovation fora smart society as a business opportunity, and willachieve sustainable growth under the basic policies:“Investment in development for growth (selection
and concentration)” and “Profit-oriented management
21

through structural change.” We will expand investment
for the growth in semiconductor and electronic device
fields, to strengthen the growing business. Regarding
research and development, we will strengthen productdevelopment in response to technological innovation in
growing markets. We will also promote manufacturing
innovations on all processes from engineering anddesign to production system, aiming to improve profit
margins.
By pursuing initiatives to expand the semiconductor
production equipment business, we aim to double
our share in the logic market and meet customers’
expectations. In the memory market, we also aim to
expand our share through entry into new processes
while exploiting market recovery. China will be theprincipal market for electronic device production
equipment such as equipment for power devices,
MEMS/optical devices, and communication devices.
Through our policy of strengthening development, sales
and support systems in China where a big market is
emerging, we intend to gain market share and growsales.
On the other hand, regarding FPD, we intend topromote a shift from LCD to large-substrate OLED.
Although sales are expected to decrease comparedwith previous years, we aim to achieve transformation
to a profitable structure by promoting manufacturing
innovations.
* For details of the mid-term management plan “Breakthrough 2022,” such as quantitative targets,
please refer to P.23-26.

Forecast for the first year of the new mid-term
management plan
The business environment at present continues to bepervaded by a sense of uncertainty regarding the future
outlook, with the persistence of US-China trade friction
and the possibility that the COVID-19 pandemic may
continue for a substantial period of time. However, atthe same time, we are witnessing increasingly vigorous
investment related to semiconductors and electronic
devices, in line with the progress of above-mentioned
technological innovation for a smart society.
Sales and profit are anticipated to decline
substantially in FY2020, due to a much lower orderbacklog at the beginning of the fiscal year, but we
expect the orders received to increase, primarily forsemiconductor and electronic devices production
equipment, and FPD and PV production equipment. The
operating profit margin will improve due to the progressof manufacturing innovations.
For FY 2020, on a consolidated basis, we forecast
orders received of ¥180.0 billion (+15.0% year on year),net sales of ¥165.0 billion (-11.0%), operating profitof ¥15.0 billion (-6.0%), ordinary profit of ¥16.0 billion(-11.4%), and net income of ¥10.0 billion (-7.1%).

Capital policy
Regarding the capital policy, we take into account suchfactors as financial soundness, the capital structure,and distribution of profit to shareholders, while securing
capacity for growth investment with a view to the future.
ULVAC recognizes the sharing of profits with theshareholders as one of its most important policies. On
the other hand, operating in an industry that undergoes
significant changes in capital expenditure trends
and technical innovations, ULVAC needs to securesufficient funds for R&D investments in growth fields
and establish a stable financial base, and thus intends
to enhance its internal reserves. Therefore, the basic
policy for distribution of profits to shareholders takes
into account such factors as demand for funds, cash
flows, performance, and the payout ratio for each fiscal
year.

To create social value while achieving
sustainable growth
Contributing to sustainability based on a long-term
visionThe foundation of ULVAC’s business activities is the
Basic Corporate Philosophy stating our aspiration: “tocontribute to the development of industries and scienceby comprehensively utilizing its vacuum and peripheraltechnologies.” ULVAC established the Sustainability
Promotion Committee consisting of internal directors
and general managers in FY 2019 in order to examine
how ULVAC can contribute to sustainability throughits operations over the long term, in view of likely
developments concerning society and the global
environment in the coming years, by rediscovering
ULVAC’s origin and clarifying the current positioning.
The committee formulated the Sustainability Policy:“ULVAC strives to create economic, social, andenvironmental value by comprehensively utilizing
its vacuum and peripheral technologies.” This
policy encompasses ULVAC’s aspirations to reduce
environmental impacts and enhance health andhappiness while pursuing appropriate profit throughcontributions to development of industries and science
together with its stakeholders.
The committee is currently examining key issues(materiality) to be resolved or ameliorated by ULVAC
over the long term. By continuously contributing tosociety through the process of resolving such key
issues, our value creation will be materialized.
ULVAC’s approaches contributing to sustainability
through business can be classified into two categories.
One category encompasses the provision of products
and technologies contributing to reduction ofenvironmental impacts, energy saving, resource saving,
and resolution of social issues. The other category
concerns contributions to society and the environment
in the course of business activities. These approaches
include, for example, responsible procurement andinitiatives to reduce environmental impacts, such as
reduction of CO2 emissions and waste in production
activities.
ULVAC’s business is principally B2B, centering on theprovision of production equipment and technologies tocustomers that are manufacturers of semiconductor andelectronic devices or FPD. Our contribution to resolutionof environmental and social issues is mostly indirect,
mainly conducted in partnership with customers. We
recognize that key issues that ULVAC needs to address
going forward are how to promote our contribution
to sustainability from a long-term perspective as anenterprise aiming at global growth and development,
how to translate that contribution into corporate value,and how to communicate it to stakeholders.
Commitment to our stakeholders
ULVAC aims to achieve an early recovery of earnings
and resume growth by thoroughly implementing
the growth strategy based on the new mid-term
management plan “Breakthrough 2022.”
Viewing this era of transformation as a growth
opportunity, we will help create a more affluent
sustainable future through our contribution to thedevelopment of industries and science. We hope forthe understanding of all of our shareholders that thecompany is taking on new challenges, and look forward
to your continued and increased support.
ULVAC VALUE REPORT 2020

22

ULVAC’s Vision

New Mid-term Management Plan:
Breakthrough 2022
Under the previous mid-term management plan, ULVAC tackled promoting business growth and enhancing the power ofvalue creation in readiness for change in the market environment.
The basic policy of the new mid-term management plan is to promote selection and concentration of investment indevelopment for growth, focused on the semiconductor and electronic equipment business, and pursue profit-oriented
management through structural change. With this policy, ULVAC will emphasize strengthening the growing business,
strengthening research and development, and enhancing manufacturing capabilities in order to improve profitability.

Technological Innovation for the Smart Society Realizationand Lower Power Consumption while Pursuing Growth by
Seizing Opportunities Created by Change
Technological innovation to underpin the emerging smart
society through miniaturization and achieving
high performance and low power consumption

Review of the previous mid-term management plan
Under the previous mid-term management
plan, ULVAC aimed to achieve highly profitablecorporate management by comprehensively
utilizing vacuum technology, maximizing synergy,
and cooperating with global business partners. We
also emphasized human resources development
for the next leap forward and a corporate culturethat relishes challenges. With regard to promoting
business growth, in the FPD business, we secured
an overwhelming market share for sputtering
equipment used in the manufacture of large LCDs
for TVs. Leveraging ULVAC’s strengths, we alsobegan development of next-generation OLED
production equipment. In the semiconductor
and electronic equipment business, we entered
the logic field, which was something we hadlong aspired to do, and steadily expanded theequipment business for electronic devices, such ascommunication and power devices. At the Advanced
Electronics Equipment Division, which is in chargeof this equipment business for electronic devices,
production efficiency has been an issue because awide variety of equipment is offered to meet diverse
customer needs. By promoting manufacturing

innovation, we have achieved productivity
improvement. Regarding global expansion, joint
development with leading companies and advanced
research institutions worldwide has increased.
For enhancing the power of value creation, weemphasized enhancing marketing and originaltechnology and product development, which led toachievements such as entry to the logic field andinvestment in PCRAM. Moreover, we promoted
modularization of electronic device production
equipment.
Regarding strengthening of the management
base, ULVAC promoted human resources
development centering on the next generationof leaders while at the same time we promoted
globalization of the management team byappointing three more directors who are not
Japanese nationals. In order to revise and improvethe management style of Group companies,
motivated young managers with a challenging spirit
were promoted to top management. We also began
strengthening the information system infrastructure.
Regarding financial soundness, the equity ratio
improved from 40.2% to 54.6%.

(Billions of yen)300

■ Others

250.0■ Materials

249.3

231.8

■ General industrial
equipment

220.7

12.7

14.0

10.8

29.5
2016
Result35.0

2019
Initial plan

■ FPD
and PV production
equipment

14.2

100

0

■ Components

185.4

200

35.4

2017
Result23.8
2018
Result■ Semiconductor
and electronic device
production equipment

8.6

ー Operating profit margin

16.0
2019
Result(FY)■ Operating profit

In FY 2017, net sales and operating profit (margin) virtually reached the FY 2019 targets. Thus, we upwardly revised the FY 2019
targets to net sales of ¥265.0 billion and operating profit of ¥38.0 billion. However in FY 2018 and FY 2019, net sales and operating
profit (margin) fell short of the targets owing to a sharp decline in FPD sales and a drop in investment in semiconductor memories
following the previous brisk investment as well as the impact of COVID-19 in FY 2019.
23

Realizationof thesmart society

Low power
consumption
Solving Social Problems

MemoryLogic ICs

Miniaturization
Sputtering
Etching
Vacuum Evaporation

Sensors

Communicating Devices

High performance

Vacuum Thin Film
Processing Technology
Chemical Vapor Deposition

Batteries

Low power consumption
Components
Materials
Customer Support

Contributing to miniaturization, highperformance, and low power consumption
required for realization of the smart society
Progress toward realization of the smart society
is accelerating with the emergence of IoT, AR/VR,
autonomous driving, biometrics, remote medicine,and smart agriculture.
In particular, the COVID-19 pandemic has spurred
digital transformation, including remote work, online
education, and remote medicine, while the shift to adata-driven society is also accelerating.
Realization of the smart society is highly
dependent on numerous semiconductor andelectronic devices. For various sensors as well
as for the communication devices receiving andsending data obtained from them, and also forthe batteries that drive them, higher performance,
multifunctionality, miniaturization, and lower cost are
required. Furthermore, to handle the exponentially
increasing amounts of data, larger storage capacityand faster processing are required for servers andedge computing, and further miniaturization of logic
CPUs and memory is underway to respond to theseneeds.
Meanwhile, the progress of the smart society will
result in a sharp increase in power consumption due
to the use of numerous semiconductor and electronic
devices. Thus, it is critically important to reduce thepower consumption of various devices as well as ofCPUs and memory.

ULVAC’s advantages
ULVAC’s advantages are largely attributable toits involvement across a wide range of fields anddiverse technologies, including vacuum deposition
equipment such as sputtering and evaporation,
components such as vacuum pumps, and materials
used as film deposition targets, as well as its strengthin customer support.
In East Asia, centering on Japan, China, South
Korea, and Taiwan, where the world’s manufacturersof semiconductors, electronic devices, and panels
are concentrated, ULVAC has a broad customer base;a network of relationships with advanced research
institutions; a network of development, sales, andcustomer support bases; and a network of production
bases and suppliers.
In addition, vacuum thin film processing
technology; underlying fundamental technologies
for equipment, processes, materials, etc.; andcollaboration with the world’s leading companies
and advanced research institutions enable ULVAC torespond to technological innovation.
By leveraging these advantages, ULVAC intends tolead technological innovation geared to realization of
the smart society and low power consumption so as
to contribute to society while growing the business.

Leveraging ULVAC’s Advantages for GrowthIntegration ofa wide range of fields
and diverse technologies[Equipment]
Sputtering
Evaporation
CVD
Etcheretc.

Strong networks
in East Asia
Wide customer baseNetwork of advanced research
institutions
Network of development, sales,
and CS bases
Network of manufacturing bases
and suppliersComponents
Materials
Customer Support

Ability torespond to technologicalinnovation
Vacuum thin film processing
technology
Fundamental technology forequipment, processes,
materials, etc.
Collaboration withleading companies and advanced
research institutions worldwide

ULVAC VALUE REPORT 2020

24

ULVAC’s Vision

New Mid-term Management Plan: Breakthrough 2022

3

The basic policy of the new mid-term management plan is twofold: “investment in development for growth (selection
and concentration)” and “profit-oriented management through structural change.” To achieve the goals of the plan,
ULVAC will strengthen research and development capabilities so as to develop products attuned to technologicalinnovation in growing markets, such as those for semiconductors and electronic devices. We will promote horizontal
deployment of manufacturing innovations that achieved good results in the advanced electronics equipment businessacross other businesses and Group companies, in order to enhance productivity throughout the processes fromengineering and design to production and thus improve profitability. We will also implement initiatives to enhance theefficiency of Group management.

• Investment in development for growth (selection and concentration)• Profit-oriented management through structural change

Basic Policy

Enhancing Manufacturing
Capabilities• Improve profitability by enhancing productivity throughout the processes fromengineering and design to production

Enhancing Manufacturing Capabilities
Technical Design Reform

Procurement Reform

Improving the completeness oftechnical drawings
Enhancing design value engineering

Integration of purchasing systems
Global supply chain redevelopment

210.0 billion
Gross profit margin ..... 35% or above
Operating profit margin ..16% or above
ROE ....................... 13% or above
Operating CF ............. ¥29.0 billion
Net sales ............... ¥1

Strengthening
the Growing Business

2(Billions of yen)

185.4

210.0

190.0

165.0

■ Net sales

16.2%
34.0

●

■ Operating profit●

Operating profit
margin

12.4%
23.5

●

8.6%
16.0

9.1%
15.0

●

●

2019

Specialization of production sites
Improving manufacturing productivity

Strengthening the Information
System Infrastructure

Production Process Reform

27.3%
2022 (FY)

2020

2021

2022 (FY)We will promote manufacturing inovations throughout the processes from engineering and design to production andprocurement in order to improve profitability through enhancement of productivity, including a 50% reduction in manhours and manufacturing lead time, as well as reduction of procurement costs. Regarding technical design reform, we will
work to enhance the degree of completeness of technical drawings and strengthen value engineering at the design phaseby clarifying the equipment concept and the design philosophy in advance and grasping the specifications required bycustomers early so as to achieve design that can shorten the production process and reduce the unit cost of parts and the
manufacturing burden. As for production process reform, we will pursue specialization of individual production bases by
eliminating duplication of production so as to enhance productivity. With respect to procurement reform, we aim to reduce
procurement costs by developing a global supply chain through integration of production bases’ purchasing organizations.
We will also promote strengthening of the information system infrastructure to realize business process standardizationand sharing of production information in real time so as to enhance productivity.

• Expand investment for development in the semiconductor and electronic device fields• Enhance components, materials, and customer support• New entry into the logic miniaturization process

Semiconductor

Growth through application to other processes
and adoption by other companies• Resumption of memory investment and entry into new processes• Expansion of proposed equipment through modularization• Strengthening development, sales and support systems

FPD• Development for mass production of large-substrate OLEDs• Transformation to a profitable structure

Components
Materials
Customer Support• Sales expansion in the semiconductor and electronics fields• Growth in parallel with equipment sales in China

in China

1. Shift investment into the development of semiconductors and electronics
2. Strengthen global development system
Joint development of cutting-edge technologies with the world’s leading companies
3. Shift in emphasis from process development to product development
4. Integration of laboratories
5. Share technology and product roadmaps with customers
Semiconductor and Electronic Device: FPD
6:4
Logic (MHM), PCRAM
High-density mounting ashing

7:3

Selection and concentration
Shifting focus to product development

Etching for communication devices Optical film sputter(Billions of yen)G10.5 sputter for large TVs
Magnetic levitation transport for large substrates■ R&D investment
Total of R&D investment
and R&D expenses

25.4

2011-2013

Enhancing Group Management
Efficiency• Promote business unit-based management• Strengthen management of Group companies that have their own products

5

Strengthening the Management
Base
Business and organizational transformation

Goals

Strengthen product development in response to technological innovationin growing markets

5.5 : 4.5

4Regarding Group management, we will promote business unit-based management to enhance management efficiency.
We will also strive to spur growth of Group companies that have their own products.

Electronic Device• Strengthen product development in response to technological innovationin growing markets

We will strengthen product development in responseto technological innovation in the semiconductor andelectronic device fields, which will be pillars for growthfrom now on. Selection and concentration in growthfields will be promoted through integration of laboratories
and sharing of technology and product roadmaps withcustomers. We will also strengthen the global development
system, including promotion of joint development of
cutting-edge technologies with leading companies
worldwide.

25

35% or above

2019

In the semiconductor field, we have entered the logic market.
Moreover, we intend to apply the logic miniaturization
process to other processes and to secure its adoption byother companies. We also intend to enter the segment forequipment used in a new memory process. In the electronic
device field, our aim is to expand orders received formodularization equipment by responding to an increase
in investment in power semiconductors, communication
devices, sensors, etc. and to grow in the China market. With
regard to FPD, we will develop mass-production technology
for large-substrate OLEDs. We will also promote further
strengthening of components, materials, and customer
support, which constitute our stable base.

Strengthening Researchand Development

Gross Profit Margin

Business process standardization
Improvement of productivity
and business management

Quantitative targets
Targets for FY 2022

●Man-hours ・・・・・・・・・・・ 50% reduction●Manufacturing lead time・・・・ 50% reduction●Procurement cost reduction

44.6

50.0

30.9

2014-20162017-20192020-2022(FY)

Achievement of growth

Measures, etc.

Human resources
development and activation• Cultivating human resources with initiative whoare constantly challenging• Creating a framework and environment in which
diverse human resources can play active roles• Nurturing of the next-generation leaders• Visualization of human capital• Diversity

Strengthening of
the information systeminfrastructure• Sharing of Group management information andfaster management decision-making• Improvement of productivity and business
management[Total investment of ¥3.5 billion over 5 years]• Business process standardization• Global and optimal procurement (Efficient ordering)

Strengthening of
the financial base

• Enhancement of development investment
capabilities• Improvement of capital efficiency• Further strengthening of the financial structure• Further improvement of capital efficiency by strengthening cash flow
management• Aim to achieve ROE of 13% or higher and operating cash flow of ¥29.0
billion while maintaining financial stability (Estimated equity ratio: 60%)

In order to ensure R&D and manufacturing capabilities are strengthened, it is necessary to change conventional ways of
doing work. As well as developing human resources with initiative who are predisposed to change, we will endeavor tocreate a framework and environment in which diverse human resources can play active roles. Moreover, we will promotestrengthening of the information system infrastructure, which will support sharing of Group management information andfaster management decision-making and enhancement of productivity. Regarding the financial base, we will strengthen
cash flow management in order to enhance our ability to invest in development in growing fields and to further improve
capital efficiency.

ULVAC VALUE REPORT 2020

26

ULVAC’s Vision

VacuumEquipment
Business

Semiconductor Production
Equipment
We aim to achieve growth of the semiconductor production equipment
business outperforming the market growth rate by continuing tocapitalize on investment trends and advanced technological trends inthe semiconductor market.
To accomplish this, we will endeavor to seize growth opportunities
based on our business strategy emphasizing responsiveness to theneeds and trust of customers.

VacuumEquipment
Business

Electronic Device Production
Equipment
Electronic devices are indispensable in contemporary society.
Emergence of the smart society and the spread of remote work areproviding a tailwind for the electronic device market. Sensor andcommunication technologies will continue to develop and evolve.
Moreover, the trends toward energy saving and electrification are
spurring growth of the power device market.
We aim to further expand business in the electronic device market.

Orders received (Billions of yen)
35
28

(Forecast)
21
14

Tomoyasu Kondo
Senior Executive Officer,
General Manager of Semiconductor Equipment Division

27

24
18

7

Tetsuya Shimada

60Managing Executive Officer,
General Manager of Advanced Electronics Equipment Division

0

2016

2017

2018

2019

2020 (FY)

Review of FY 2019

In the wake of memory manufacturers’ vigorous investmentthat peaked in 2018, the business environment waschallenging in 2019 and in the first half of 2020 because of amarked tendency to postpone investment, albeit briefly, due
to oversupply and price declines. Investment is expected toresume moderately from the second half of 2020 onward
and we expect the recovery trend to give us a tailwind.
Meanwhile, in the logic/foundry market, a growing
number of major customers are adopting our sputtering
equipment for the process that requires extreme ultraviolet
lithography (EUV) and joint development for new processes
is becoming vigorous. Thus, further growth in this market is
expected.
Regarding the sputtering process of PCRAM nonvolatilememory, which has good prospects for future market
growth, our equipment continues to be adopted not only
by our existing customers but also for development andpilot lines by all other customers who are planning mass
production, although investment in mass production has
temporarily halted.
To build on these accomplishments and progress, weare promoting initiatives to further reinforce the foundation
for growth by strengthening sales & marketing, production,and customer support systems.

We got off to a strong start with order-reciving in the firsthalf of FY 2019, benefitting from the momentum of theelectronic device market. However, in the second half,business opportunities stalled and installation of equipment
was suspended owing to travel restrictions becauseof the COVID-19 pandemic. As a result, both orders
received and sales fell short of the annual targets. In thesecircumstances, we continued our efforts to strengthen
manufacturing capabilities and were able to promotetransformation to a profitable structure. By the end of FY
2019, there were indications of a recovery in business
opportunities. In FY 2020, despite the continuing impact of
COVID-19, we will promote new business opportunities andfacilitate installation of equipment by local subsidiaries toexpand the business.

In line with continuing to rise data traffic in the emerging
smart society, semiconductor devices continue to evolveand grow through the expansion of equipment, servers,and edge computing for big data processing. Despite
fluctuations from year to year, investment in the memory
and logic device segments is on an upward trajectory overthe medium to long term.
As we have entered the logic market in addition to
the memory market, we now have two pillars sustaining
ULVAC’s growth. Based on a business growth strategy
unique to ULVAC, we will pursue business development andproduct development different from other major competing
equipment manufacturers to fulfill needs associated withleading-edge devices.

(Forecast)

30

12Review of FY 2019

Medium- to long-term outlook of the market
environment

Orders received (Billions of yen)

Recognized Business Opportunities

1. Investment in mass production of leading-edge 5-3nm logic
devices
2. New processes and change in materials for leading-edge
DRAM and 3D-NAND products
3. Expansion of wafer level package deposition process
4. Mass production of new memory such as PCRAM
Conceivable Risks

1. Intensifying of competition
2. Change in the semiconductor business structure due toprolonged U.S.-China trade friction
3. Delay in new product development and application tomass production
4. Delay in expansion of the new memory market such as
PCRAM

Priority fields
Priority fields

2016

2017

2018

2019

2020 (FY)

Medium- to long-term outlook of the market
environment
Since demand for electronic devices will increase with theadvent of the smart society and owing to the spread of
remote work, the market is expected to continue growing.
Although Japanese companies still have a strong presencein the electronic device field, growth of the electronic device
market is expected to center on China and elsewhere in
Asia. Electronic devices related to the evolution of sensing
technology, communication technology, and low-powerconsumption equipment represent opportunities for theadvanced electronics equipment business. Devices are
evolving and we need to continue offering equipment thatcan keep pace with this evolution. While enhancing existing
technology, careful monitoring of technological trends is
indispensable since we also need to be capable of swift
development in response to innovation.
Recognized Business Opportunities

Final products

1. Realization of the smart society
2. Manufacturing and mass production of electronic devices in Asia

Measures for Reducing Risks
and Maximizing Opportunities

1. Develop products by embracing customer requirements
through steady marketing and develop differentiation
technology
2. Promote joint development with customers leading themarket3. Strengthen support for development and mass productionof leading-edge devices
4. Strengthen support for development and mass-production
launch by new customers
5. Provide thorough support to customers that manufacture
new types of memory such as PCRAM and maintain 100%
market share

Communication devices

Smartphones

3. Exponential evolution and improvement of electronic devices

Smart devices
Optical devices
Electronic devices (MEMS)

Power devices

3D sensors

Conceivable Risks

In-vehicle displays

1. Constraints on the China business due to intensifying U.S.-China
trade friction

5G-ready equipment
Devices for EV application
Industrial robots
Energy-saving equipment

2. Sluggish consumption (automobiles etc.) due to the
COVID-19 pandemic, which may not abate for some time
3. Growth of Chinese competitors

Medium- to long-term outlook of the market
Electronic packaging

Smartphones
High-speed data servers
IoT devices

Measures for Reducing Risks
and Maximizing Opportunities

1. Enhance production efficiency through equipment
standardization
2. Strengthen installation by local subsidiaries
3. Strengthen and increase the speed of equipment
development
4. Disperse development functions overseas

ULVAC VALUE REPORT 2020

28

ULVAC’s Vision

VacuumEquipment
Business

FPD and PV Production Equipment
In the promising OLED and lithium-ion battery markets, we offer evermore advanced products to customers by capitalizing on ULVAC’s
unique strengths in large-substrate sputtering and substrate transporttechnologies, thus strengthening profitability.

VacuumEquipment
Business

Components
The vacuum components business is becoming increasingly borderlessand competition with European and American manufacturers isinevitable. In order to prevail, we are developing a global marketing
structure, enhancing efficiency of production systems, strengthening
quality management systems, and establishing systems for developing
products attuned to market needs.

Orders received (Billions of yen)
120
96
72

Executive Officer,
General Manager of FPD PV Division

0

2016

2017

2018

2019

2020 (FY)

Review of FY 2019
We engaged in continuous improvement activities for G10.5
sputtering equipment for large LCD TVs and maintained an
overwhelming share of this market segment. However, business
opportunities on major investment projects related to large LCD
TVs had come to a cyclical downturn and investment related to
OLED for smartphones entered a temporary adjustment phase.
Moreover, extensive constraints on economic activity in line with
the COVID-19 pandemic resulted in a great decrease in orders
received compared with the previous fiscal year. Although theimpact on net sales was limited because of a substantial orderbacklog at the beginning of the fiscal year, net sales were still far
below the target and the level of the previous fiscal year. In orderto adapt to such a drastic change in the market environment, webegan initiatives in the second half to transform the businessstructure. There are signs that the situation is improving; forexample, we received an order for a large investment project for
sputtering equipment for small and medium-sized OLED.

Medium- to long-term outlook of the market
environment
Remote work and non-face-to-face communication, such as
online meetings, are spreading rapidly owing to the COVID-19
pandemic and a perception that it may not abate for some time.
In response to these changes in the social environment, there
are increasing needs for OLED displays because they can emulate
face-to-face communication with superior color reproduction
and responsiveness to achieve a more realistic and immersive
experience. In line with this trend, developments targeting higher
definition, use of larger substrates and mass-production systems
are gaining momentum.
The impact of the expansion of non-face-to-facecommunication is far-reaching and by no means limited todisplays. Along with the progress of the smart society, an increasein opportunities to use electronic devices, such as wearable
speakers and smartwatches, will expand demand for lithium-ion
batteries that are safe and portable.
We will respond to these expanding new needs, in addition
to existing sputtering technologies, and achieving technologicaldifferentiation through collaboration with leading companies withthe aim of enhancing profitability.

29(Forecast)

32
24
16

24

•

40

(Forecast)48

Yasuo Shimizu

Orders received (Billions of yen)

Ju Hoon Shin

8

Executive Officer,
General Manager of Components Division

0

2016

2017

2018

2019

2020 (FY)

Review of FY 2019
Recognized Business Opportunities

1. Large equipment suitable for mass production ofhigh-definition, large OLED
2. Sputtering equipment for small and medium-sized OLED
3. Evaporation roll coaters for production of electrode parts
that enhance safety of lithium-ion batteries
Conceivable Risks

1. Decline in investment because the COVID-19 pandemic
may not abate for a considerable time and delay in orders
received and sales due to restrictions on movement
2. Constraints on the China business due to intensifying U.S.-China
trade friction
3. Delay in the shift and adaption to complex next-generation
technology

During the first half of FY 2019, order-receiving was sluggish
owing to slowing investment in FPD and automotive markets
as well as a worldwide decline in demand caused by U.S.-China
trade friction and other factors. As soon as signs of recovery
became evident in the second half, COVID-19 emerged and achallenging business environment persisted throughout FY 2019.
In these circumstances, investment by customers incertain markets, such as the OLED and semiconductor
markets, supported our financial performance.
By enhancing the efficiency of production and sales throughintegrated management of the Group, we promoted establishmentof a system that will enable us to aim for further growth.

Medium- to long-term outlook of the market
environment

3. Strengthen manufacturing capabilities and develop
differentiated technology
4. Strengthen the system enabling swift response tocustomers despite travel restrictions

Components

Measures for Reducing Risks
and Maximizing Opportunities

1. Jointly develop advanced technology with leading
companies
2. Strengthen marketing (particularly in FPD and lithium-ion
battery markets)

2. Expansion of market in emerging countries
3. Increase of investment in social infrastructure
improvement and in fields such as medicine, food, and air
conditioning
Conceivable Risks

1. Stronger competitors expanding business through M&A
2. Intensifying price competition, market entry by low-cost
manufacturers
3. Prolonged sluggishness of the market environment

In the OLED and optical device fields, we will develop
business centering on cryopumps. In growth fields, such as
semiconductors and electronic devices, we intend to expand thelineup by launching new products with the aim of increasing ourmarket share and cultivating new customers. In particular, we will
strengthen cooperation with equipment divisions to maximize thecompetitive advantage of ULVAC’s components business with aview to accelerating growth centering on the China market.
By offering the optimum products for various fields, including
analysis, medicine, and food, we are cultivating vacuum
applications and promoting expansion of the cryocooler businessso as to contribute to the enhancement of the comprehensive
value of the ULVAC brand.

4. Declines in sales prices and profit due to price competition

Recognized Business Opportunities

1. Large-scale investment in view of big data and the smart society

Measures for Reducing Risks
and Maximizing Opportunities

1. Expand business fields by strengthening alliances
2. Enhance efficiency of production and sales to reduce cost
3. Develop business focusing on growth fields

Application example
Applications for OLED production
equipment

Components essential for vacuum
equipment.
ULVAC supplies vacuum pumps,
vacuum gauges, vacuum valves, vacuum
leak testers, gas analyzers, power
generators for deposition processes, etc.
to vacuum equipment manufacturers,
machinery manufacturers, etc.

Vacuummeasurement

Advancedresearch,
medical, etc.
4K cryocoolers
for coolingsuperconductive
magnets

Cryopumps

Dry pumps

Vacuum valves

Film deposition controllers

Helium leak detectors

VacuumgaugesResidual gas
analyzers

Liquid nitrogengenerators

ULVAC VALUE REPORT 2020

30

ULVAC’s Vision

VacuumEquipment
Business

Industrial Equipment

The industrial equipment business offers vacuum technology solutions involving thermal application.
Our products include equipment for freeze drying foods and pharmaceuticals combining vacuum
and heating/cooling technology, equipment for high-purity refining using vacuum distillation, andheat-treatment furnaces for various industrial parts. From the current fiscal year, we will promoteconsolidation of products in cooperation with Group companies and enhancement of equipment
quality while strengthening the earnings structure by commencing structural reform of the industrial
equipment business.

Whereas we have a competitive advantage in the market
for freeze-drying equipment due to the technology that wehave cultivated, the market for heat-treatment equipment
was affected by continuing fierce cost competition in China,
the main market for such equipment. In the second half of
FY 2019, we overhauled the industrial equipment business,starting from the manufacturing processes, including
consolidation of large-scale production bases throughorganizational integration with the advanced electronics
equipment business. Positioning vacuum brazing, freeze
drying, and vacuum distillation equipment as the fundamental
elements of the business, we strengthened businessdevelopment in China in order to expand sales in the market
for vacuum melting furnaces and heat-treatment equipment.
Contributing to the full spectrum of industries
The industrial equipment business is contributing to the full
spectrum of industries.
Heat exchangers
Radiators, EGR coolers, electronic partscooling, etc.
Vacuum brazing furnaces, vacuum
leak testing

Rare-earth magnets for electric motors
HVs, EVs, wind turbines, home
appliances
Vacuum sintering furnaces andmelting furnaces

35
28
21

Pharmaceuticals and food
Generic drug manufacturing
Extraction of high-purity substances➡Vacuum freeze-drying equipment,
vacuum distillation equipment

Medium- to long-term outlook of the market
environment
In the rare-earth magnet field, we will address the needs forhigh-efficiency, high-output, compact motors indispensablefor power assist suits in the aging society, drones whose use
is expanding in the service field, and human friendly robots

31

Orders received (Billions of yen)
20

14

8

7

4

2016

2017

2018

2019

(Forecast)

16
12(Forecast)02020 (FY)

2016

2017

2018

2019

2020 (FY)by offering vacuum heat treatment furnaces and vacuum
melting furnaces in China, the main market. In the automotive
components field, we will help meet the demand for heatexchangers for exhaust gas recirculation (EGR) coolers
necessary for improving fuel efficiency by developing andoffering vacuum brazing furnaces with minimal environmental
impacts. In the pharmaceuticals field, new drug development
is being promoted in the Japanese market, the market for
generic drugs is expected to expand early, and sophisticatedproduction technology is required for mass production ofbiopharmaceuticals. To meet demand in this field, we will
introduce vacuum freeze-drying equipment and apply freeze
time control and process monitoring, which are technologies
that create added value. In the health food and electronic
device fields, we will offer vacuum distillation equipment withhigh concentration technology for anti-aging products and highperformance resin materials, which are in demand overseas.

Review of FY 2019

Recognized Business Opportunities

One consequence of the trend toward realization of the smart
society is that new high-performance materials are coming into
their own in the semiconductor, electronic device, and the display

1. Decrease in the market share for FPD materials due to therise of Chinese competitors

3. Country-wide countermeasures for infectious diseases

Materials business2. Intensifying price competition for FPD materials due to priceerosion of large-screen TVs

Conceivable Risks

The materials business centers on target materials
used in sputtering, which is the mainstream method of
vacuum deposition, and also includes development andmanufacturing of functional materials.

1. Growing demand for magnets, automotive parts, andpharmaceutical formulation in China

Although the business environment was challenging owing to
the impact of the COVID-19 pandemic, we managed to securesales virtually the same level as the previous fiscal year. Among
thin-film materials, those for cutting-edge semiconductors
saw a steady increase in sales. Sales of IGZO target materials
for FPD were virtually unchanged from the previous fiscal
year as market expansion fell short of expectations. In China,
the largest FPD market, sales of materials for cutting-edge
displays such as LTPS and OLED grew but sales of materials
for LCD (a-Si) were sluggish because of the rise of Chinesecompetitors. For high-performance materials, we executed
capital investment with an eye to the future and madepreparations to respond to the need for higher-performancematerials and for increased production.

Medium- to long-term outlook of the market
environment

2. New market for services geared to population aging

1. Rapid change in the pharmaceuticals industry due tolarge-scale M&A
Resin fuel tanks
Vacuum leaktesting

Materials

ULVAC offers high-quality, high-performance advanced materials related to vacuum technology to theworldwide market. In view of needs in the emerging smart society and for low power consumption,
we develop thin-film materials (mainly sputtering targets) used in the deposition process forsemiconductors, electronic devices and FPDs as well as corrosion-resistant, superconductive highperformance materials, manufacture them at our plants and supply them to customers.

Orders received (Billions of yen)0

Review of FY 2019

VacuumApplication
Business

2. Decline of existing automotive manufacturers due to theprogress of autonomous driving technology, the spread of car
sharing, and electrification
Sputtering
equipment forlarge-screen TV
manufacturing
Sputtering target

1. Strengthen response to the pharmaceuticals industry overseas
2. Cultivate opportunities for winning new orders created byaccelerated electrification of automotive vehicles
3. Respond to expansion in demand for products in thehealthcare industry

Recognized Business Opportunities

1. Increases of sputtering thin-film processes due to increases
in semiconductors and electronic devices in the smart society
2. Switching to new materials as performance ofsemiconductors and electronic devices improves
3. Switching to new materials in line with the trend toward
larger, higher-definition, and flexible display panels
4. Expansion of the business for superconductive materials
and accelerators that use high-performance materials
Conceivable Risks

3. Restrictions on export and supply chain interruption due to
U.S.-China trade friction
Measures for Reducing Risks
and Maximizing Opportunities

1. Promote joint development with leading manufacturers andinfluential private or public institutions

3. Rapid change in product value in line with the rapidchange in the social environment
Measures for Reducing Risks
and Maximizing Opportunities

fields. They are destined to eventually supersede traditional
materials. With a view to facilitating the emergence of the smart
society, we are actively developing new materials required inthis expanding application field in cooperation with ULVAC’sequipment divisions and research institutes and together withour customers.

Sputtering equipment
for semiconductor
manufacturing
Sputtering target

Acceleration cavity
for high-performanceaccelerators(use of high-purity Nbmaterials)

2. Invest and manufacture in growing markets (regions and products)
3. Promote alliances with partner companies
4. Further promote recycling of materials

Semiconductor mask blanks business

Surface analyzer businessWe will respond effectively to increasing needs forminiaturization and higher definition in line with the
expansion of the application field and the proliferation oftypes, reflecting the improved performance of smartphones,
development of self-driving vehicles, and the ramp-up of
demand related to IoT and artificial intelligence (AI).

Whereas university and company laboratories were previously theprincipal users of surface analyzers, this equipment is increasingly
used nowadays for routine purposes such as product inspection.
Surface analyzers are being applied to more materials in more regions
and markets throughout the world. ULVAC will continue offering
surface analyzers with functions attuned to customer needs.

ULVAC VALUE REPORT 202032

Basis for Value Creation

Corporate Governance
Basic corporate governance policy and structure
In accordance with its Basic Corporate Philosophy, “TheULVAC Group aims to contribute to the developmentof industries and science by comprehensively utilizing
its vacuum and peripheral technologies through themutual cooperation and collaboration of the Group
companies,” ULVAC, Inc. works to ensure thoroughcorporate governance in order to increase corporate
value over the medium to long term. From thisperspective, we respect the interests not only ofshareholders, but also of business partners, local
communities, employees, and other stakeholders thatare related to our business activities. We also value
competitive and efficient operation, while ensuring
strict compliance with laws and corporate ethics.
ULVAC, Inc. has adopted a company with a boardof corporate auditors as its management structure.
Particularly important institutional structures include theBoard of Directors, the Board of Executive Officers, theBoard of Corporate Auditors, and the Committee for
Appointment and Remuneration, etc.
Firstly, ULVAC, Inc. has a Board of Directors, which

is a decision-making body for important management
issues. The Board holds regular meetings once amonth, as well as ad hoc meetings as necessary toensure flexibility. The Board of Directors comprises
eight members, of whom four are external directors.
Three of the external directors are designated as
independent external directors. By virtue of thisstructure, ULVAC, Inc. is not only able to makeswift and efficient judgments concerning importantmanagement issues, but is also able to achieve fair,
impartial, and highly transparent deliberation, as well as
operational supervision.
Next, with the introduction of an executive officer
system, executive officers exercise executivefunctions, having been granted a certain amount ofresponsibility and authority over their designatedareas, through delegation by the Board of Directors.
ULVAC, Inc. also has a Board of Executive Officers thatcomprises a total of 16 internal directors and executive
officers. The Board of Executive Officers holds regularmeetings once a month, as well as ad hoc meetings

as necessary. By virtue of this structure, we haveachieved more flexible and swifter business operations
that are appropriate for a rapidly changing businessenvironment, based on a clear expression of the
responsibilities and authority of each executive officer.
In addition, ULVAC, Inc. has a Board of Corporate
Auditors, which performs auditing and supervisionof management decision-making and business
operations. The Board of Corporate Auditors comprises
four members, of whom two are external auditors.
Both of the external auditors are designated as
independent external auditors. We ensure full auditing
and supervisory functions through close links between
auditors and the Internal Auditing Office and the
independent auditor, whose independence is ensured,as well as through attendance and comments byauditors at important meetings, such as meetings ofthe Board of Directors and the Board of Executive
Officers, and through regular meetings between theInternal Auditing Office and the President, etc. By
virtue of this structure, we have achieved rigorous,

fair, impartial, and transparent auditing and supervisory
functions, ensuring that each auditor obtains sufficient
information.
Furthermore, we have a Committee for Appointment
and Remuneration, etc. for instances that require
objective determination of important matters, such as
the appointment and remuneration of directors andexecutive officers. The Committee for Appointment
and Remuneration, etc. comprises seven members,of whom five are independent external directors or
independent external auditors. Of the remaining two
members, one is an external director. By having thesekinds of advisory bodies for the Board of Directors, weare able to achieve fair, impartial, and highly transparent
deliberations with regard to especially importantmanagement decisions, and increase the effectivenessof the Board of Directors.
Members of the Board of Directors, the Board of
Corporate Auditors, the Board of Executive Officers,
the Committee for Appointment and Remuneration,etc. are indicated in the list below.

Corporate Governance Structure (As of September 30, 2020)
Title

General Meeting of Shareholders
Appointment/Dismissal

Board of Directors

Appointment/Dismissal
Audit

Collaboration
Board ofCorporate Auditors

Appointment/Dismissal

Independent
AuditorRecommendations
Audit

Committee for Appointment
and Remuneration, etc.

Board of
Executive Officers
Risk Management
Committee

Accounting audit

Name

President and Chief Executive Officer

Setsuo Iwashita

Director and Executive Vice President

Mitsuru Motoyoshi

Senior Managing Director

Masasuke Matsudai

Senior Managing Director

Dr. Choong Ryul Paik

External Director

Hiroyuki Nishi

External Director

Norio Uchida

External Director

Dr. Kozo Ishida

External Director

Yoshimi Nakajima

Auditor

Makoto Ito

Auditor

Mitsuru Yahagi

External Auditor

Senshu Asada

External Auditor

Isao Utsunomiya

Board of Directors

Board of Corporate
Auditors

Board of Executive
Officers (Note)

Committee for
Appointment andRemuneration, etc.

President and CEO

Collaboration

Executive Officers

Collaboration

Compliance
Committee
Divisions of the Company

Group companies

Audit

Internal Auditing Office

Chairman

ObserverNote: The Board of Executive Officers also comprises executive officers in addition to the above.

33

ULVAC VALUE REPORT 202034

Basis for Value Creation

Corporate GovernanceDirectors’ remuneration

Evaluation of effectiveness of the Board of Directors

In order to ensure management transparency,
fairness, and appropriateness of remuneration, etc.,
ULVAC, Inc. has the Committee for Appointment andRemuneration, etc. consisting of external directors,
external auditors, and the chairman of the Boardof Directors. The Committee for Appointment andRemuneration, etc. analyzes and compares levels of
remuneration of other companies, and then provides
advice about remuneration, etc. suitable for ULVAC,
Inc. Following the recommendations by the Committee
for Appointment and Remuneration, etc., amountsof remuneration, etc. of directors are determined bya resolution of the Board of Directors within the total
amount of directors’ remuneration approved by the
resolution* of the general meeting of shareholders.
External directors’ remuneration consists only of basic
compensation, which is fixed compensation.
A performance-linked compensation plan is adopted
for part of internal directors’ remuneration, etc.
Performance-linked compensation consists of annual
performance-linked compensation based on businessresults for the corresponding fiscal year and stockbased compensation, etc. based on a performancelinked stock-based compensation plan called Board
Benefit Trust (BBT), which corresponds to the degree ofachievement of annual performance targets. Evaluationof individual directors, which will be reflected in theannual performance-linked compensation, is performed
and the result is determined after reporting to theCommittee for Appointment and Remuneration, etc.
Under the BBT system, the Company’s shares arepurchased through a trust using the money contributedby the Company and are allocated to the directors
in accordance with the Rules for Granting Shares
to Officers set out by the Company. In principle,
directors are granted the Company’s shares and money
equivalent to the fair value of the Company’s shares atthe date of retirement through the trust.
As annual performance-linked compensation is basedon business results for each fiscal year, the Company
does not have a policy as to its specific ratio to the basic
compensation, which is fixed compensation.

For the purpose of enhancing functions of the Boardof Directors and thus enhancing corporate value, at
ULVAC, Inc. an annual self-assessment survey of
directors and auditors is conducted concerning theeffectiveness of the Board of Directors.
Anonymity is secured as directors and auditors
provide their responses to the survey directly to an
external institution. Based on the external institution’sreport on the survey results, the Board of Directors of
ULVAC, Inc. conducts analysis and evaluation.
As a result of analysis and evaluation about theeffectiveness of the Company’s Board of Directors
for FY 2019, it is judged that effectiveness of theCompany’s Board of Directors is secured. However,in view of proposals for further enhancement of theeffectiveness of the Board of Directors that have been
submitted by members of the Board of Directors, wewill continue to strive to enhance the effectiveness of
the Board of Directors.

* The maximum amount of aggregate remuneration for directors was set at ¥500 million
per annum (including a maximum of ¥60 million for external directors) by resolution at
the 114th Ordinary General Meeting of Shareholders held on September 27, 2018. The
maximum amount of aggregate remuneration for auditors was set at ¥100 million perannum by resolution at the 102nd Ordinary General Meeting of Shareholders held on
September 28, 2006. Moreover, Board Benefit Trust (BBT) was introduced, separately fromthe above-mentioned maximum amount of aggregate remuneration for directors (excluding
external directors), by resolution at the 112th Ordinary General Meeting of Shareholders
held on September 29, 2016.

35

Principal activities in FY 2019
Name of external
director/auditor

Reasons for selection as an external
director/auditor

Akira Mihayashi

To receive valuable opinions based on
his extensive experience and broad
perspective as a corporate manager ofother companies

Attended all 12 meetings of the Board of Directors held during the fiscal year and provided
opinions for deliberation of the agenda as necessary, based on his extensive experience andadvanced insight as a corporate manager of other companies

Norio UchidaTo receive valuable opinions based on
his extensive experience and broad
perspective as a corporate manager ofother companies in Japan and overseas

Attended all 12 meetings of the Board of Directors held during the fiscal year and provided
opinions for deliberation of the agenda as necessary, based on his extensive experience andadvanced insight in Japan and overseas as a corporate manager of other companies.

Dr. Kozo Ishida

To receive valuable opinions based on his
extensive experience, technical expertiseand broad perspective as a corporate
manager of other companies

Attended 11 meetings out of 12 meetings of the Board of Directors held during the fiscal
year and provided opinions for deliberation of the agenda as necessary, based on his
extensive experience and technical expertise as a corporate manager of other companies

Yoshimi Nakajima

To receive valuable opinions based on her
extensive experience and broad perspective
as a corporate manager of other companies
both in Japan and overseas

Attended all 12 meetings of the Board of Directors held during the fiscal year and provided
opinions for deliberation of the agenda as necessary, based on her extensive experience andadvanced insight as a corporate manager of other companies both in Japan and overseas.

Senshu AsadaTo receive valuable opinions based on his
experience and insight as an attorney

Attended all 12 meetings of the Board of Directors and all 15 meetings of the Board of
Corporate Auditors held during the fiscal year and provided opinions for deliberation of theagenda as necessary, mainly from a specialist perspective as an attorney.

Isao Utsunomiya

To receive valuable opinions based on his
experience and insight as a certified public
tax accountant

Attended all 12 meetings of the Board of Directors and all 15 meetings of the Board of
Corporate Auditors held during the fiscal year and provided opinions for deliberation of
the agenda as necessary, mainly from a specialist perspective as a certified public tax
accountant.

Policy on selection of external directors and auditors
In order to enhance the effectiveness of the Boardof Directors by realizing multifaceted discussion atmeetings of the Board of Directors, balance among
knowledge, experience, capabilities, etc., diversity, andappropriateness of the size are taken into consideration
regarding the composition of the Board of Directors.
Based on these perspectives, the Board of Directors
carefully selects director candidates. Regarding
attendance at the meetings of the Board of Directors,
efforts are made to ensure an appropriate number fromthe viewpoint of ensuring swift decision-making.

Initiatives to ensure effectiveness of audit
Meetings of the Board of Corporate Auditors of theCompany were held 15 times in FY 2019 at which
important matters concerning audit, including agendas
for meetings of the Board of Directors were reported
and discussed. Based on discussions at meetings of theBoard of Corporate Auditors and expertise of individual
auditors, auditors provide recommendations to directorsof the Company, as necessary, not just at meetingsof the Board of Directors. ULVAC, Inc. secures
opportunities for auditors to periodically exchange views
with directors, staff of the Internal Auditing Office, andthe Independent Auditor on wide-ranging matters suchas compliance and the situation concerning design ofinternal control.

Attendance and principal activities

Policy on training of directors and auditors

Policy on strategic shareholdings

ULVAC, Inc. provides its directors and auditors with
opportunities for training deemed necessary in order forthem to fulfill their roles and responsibilities.
Specifically, training for newly appointed external
directors includes explanation of ULVAC’s organizational
structure, businesses, and the management plan andvisits to ULVAC plants. Moreover, visits to principal
subsidiaries and plants in Japan and overseas are
regularly organized.
For newly appointed auditors, ULVAC, Inc. provides
training opportunities on a par with those for newly
appointed directors upon the request of auditors. Afterthey take office as directors and auditors, ULVAC,
Inc. provides them with financial support for training
deemed necessary in order for them to fulfill their duties
and encourages them to enhance their expertise. These
training opportunities are reviewed on a continuous
basis and updated as necessary.

ULVAC, Inc. makes distinction between investment
shares held for pure investment purposes andthose held for purposes other than pure investment
purposes. We classify shares held for the purpose ofreceiving gains from changes in the share value or from
dividend income as shares held for pure investment
purposes and shares held for other purposes (strategic
shareholding) as shares held for purposes other thanpure investment purposes.
ULVAC, Inc. may acquire shares of a listed company
with which it has transactions only when it is judgedthat maintaining and strengthening the business
relationship with the entity by acquiring its sharescontributes to ULVAC’s sustainable growth andenhancement of corporate value over the medium tolong term.
Regarding strategic shareholdings, an annual
assessment is conducted on whether or not to holdeach individual strategic shareholding, examining
whether the purpose is appropriate in terms of thebenefits and risks from each holding or the Company’s
cost of capital, and the results of this assessment arereported at a meeting of the Board of Directors. If, as aresult of the assessment, it is judged that the holdingof certain shares has little significance, the Company
considers reduction of the shareholding of such shares.
ULVAC VALUE REPORT 202036

Basis for Value Creation

Management Structure
Directors
Setsuo Iwashita

Mitsuru Motoyoshi

Hiroyuki Nishi

Director and Executive Vice President

President and Chief Executive Officer

Norio UchidaDirector

Director

External

March 1984
August 1992
September 1995
July 1998
March 2006
October 2006
September 2011
July 2012
September 2013
July 2015
July 2016
September 2016
July 2017
January 2019
July 2020

Joined the Company
Manager of Beijing Business Office and Shanghai Business Office, Overseas Operation Division
Director and Chief Executive Officer of ULVAC (NINGBO) CO., Ltd.
General Manager of Chinese Region, Asia Division of the Company
Director and Chief Executive Officer of ULVAC (CHINA) HOLDING CO., LTD.
Chairman of ULVAC (Shanghai) Trading Co., Ltd.; Chairman of ULVAC (SUZHOU) CO., LTD.
Director of the Company
Director and Executive Officer
Managing Executive Officer
Senior Managing Executive Officer of the Company; Chairman of ULVAC (CHINA) HOLDING CO., LTD.
Senior Managing Executive Officer and Senior Manager of Management Planning Department of the Company
Director and Senior Managing Executive Officer, Senior Manager of Management
Planning Department of the Company
President and Chief Executive Officer of the Company
President and Chief Executive Officer and General Manager of Human Resource Center of the Company
President and Chief Executive Officer of the Company (current position)

April 1980
July 2000
September 2005
July 2010
July 2012
July 2013
July 2014
July 2015
July 2017
July 2018
January 2019
July 2019
January 2020
July 2020

Masasuke Matsudai

Joined the Company
Senior Manager of Accounting Department
Director and Senior Manager of Accounting Department
Director and Senior Manager of Management Planning Department
Director and Executive Officer, Senior Manager of Management Planning Department
Chairman of ULVAC TAIWAN INC.
Director and Managing Executive Officer, Senior Manager of Management Planning Department of the Company
Director and Senior Managing Executive Officer, Senior Manager of Management Planning Department
Director and Senior Managing Executive Officer, Senior General Manager of Business; Strategy Headquarters
Chairman of ULVAC (Shanghai) Trading Co., Ltd.; Chairman of ULVAC (SUZHOU) CO., LTD.; Chairman of ULVACSINGAPORE PTE LTD (current position); Chairman of ULVAC MALAYSIA SDN. BHD. (current position)
Director and Executive Vice President of the Company
Chairman and Chief Executive Officer of ULVAC (CHINA) HOLDING CO., LTD.;
Chairman of ULVAC Automation Technology (Shanghai) Corporation
Director and Executive Vice President, General Manager of Management Empowerment Center of Excellenceof the Company, responsible for associate companies; Chairman of ULVAC Tianma Electric (Jingjiang) Co., Ltd.
Chairman of ULVAC (CHINA) HOLDING CO., LTD. (current position)
Director and Executive Vice President (in charge of Group companies) of the Company (current position)

April 1983
March 2007
March 2010
July 2011
March 2014
March 2017
March 2018
March 2018
March 2020
April 2020
September 2020

Dr. Choong Ryul Paik

Senior Managing Director

Joined Nippon Life Insurance Company
General Manager of International Planning & Operations Dept. and General
Manager of China Office
Executive Officer, General Manager of Europe, Deputy Director-General and General
Manager of London Representative OfficeDirector and Executive Officer, General Manager of the Americas, General Manager ofEurope, Deputy Director-General, and General Manager of New York Representative OfficeDirector and Managing Executive Officer, General Manager of International Planning & Operations
Dept., General Manager of the Americas, General Manager of Europe, and General Manager of Asia
Director and Senior Managing Executive Officer, General Manager of the Americas, General Manager of Europe,and General Manager of Asia
Director
President and Chief Executive Officer of Nissay Asset Management Corporation
Advisor of Nissay Credit Guarantee Co., Ltd.
President and Chief Executive Officer (current position)
External Director of the Company (current position)

September 2019
June 2020
July 2020
August 2020
September 2020

Joined the Company
General Manager of FPD Division I
Director and General Manager of FPD Division I
Director and Executive Officer, Senior General Manager of Global Manufacturing Promotion Division
Director and Executive Officer, Senior General Manager of Corporate Sales & Marketing Division
External Director of SHOWA SHINKU CO., LTD. (current position)
Director and Managing Executive Officer, Senior General Manager of Corporate Sales & Marketing Division of the Company
Director and Senior Managing Executive Officer, Senior General Manager of Corporate Sales & Marketing Division
President of ULVAC TECHNO, Ltd.; Senior Managing Executive Officer of the Company
Senior Managing Executive Officer, Senior General Manager of Customer Support Headquarters
Senior Managing Executive Officer, General Manager of New Business Development
Center of the Company and Chairman of ULVAC TECHNO, Ltd.
Director and Senior Managing Executive Officer; General Manager of New Business
Development Center of the Company; Chairman of ULVAC TECHNO, Ltd.
Chairman of Japan Vacuum Industry Association (current position)
Senior Managing Director (in charge of New Business Development & CS business) of the Company (current position)
President and Chief Executive Officer of ULVAC EQUIPMENT SALES, Inc. (current position)
Chairman of ULVAC TECHNO, Ltd. (current position)

April 1991
September 1999
September 2000
September 2012
July 2015
September 2016
July 2018
September 2018
July 2019
July 2020

Joined the Company
Joined ULVAC KOREA, Ltd. as Senior Director
President of ULVAC KOREA, Ltd.
Executive Officer of the Company
Managing Executive Officer of the Company
Chairman of ULVAC KOREA, Ltd. (current position)
Managing Executive Officer, Senior General Manager of R&D Headquarters of theCompany
Director and Managing Executive Officer, Senior General Manager of R&D
Headquarters
Director and Managing Executive Officer, General Manager of Innovation Center of
Excellence
Senior Managing Director (in charge of Innovation) of the Company; President andChief Executive Officer of ULVAC-PHI, Inc. (current position)

April 1973
June 1980
February 1989
October 1994
July 1999
June 2003
July 2003
June 2005
June 2007
June 2010
June 2011
June 2013
June 2015
September 2015

Dr. Kozo Ishida

Senior Managing Director

March 1970
June 1982
June 1988
June 1991
June 1996
June 2002
June 2005
March 2011
March 2014
March 2016
September 2016
March 2017
April 2018

Joined Tokyo Optical Co., Ltd. (currently TOPCON CORPORATION)
General Manager of Topcon Singapore Pte. Ltd.
President of Topcon Australia Pty Ltd.
Senior Vice President of Topcon Laser Systems, Inc. (currently Topcon Positioning
Systems, Inc.)
President of Topcon Laser Systems Japan, Inc.
Executive Officer of TOPCON CORPORATION
Director and President of Topcon Sales Corporation (currently TOPCON SOKKIAPOSITIONING JAPAN CO., LTD.)
Director and Executive Officer of TOPCON CORPORATION
Director and Managing Executive Officer
Director and Senior Managing Executive Officer
Representative Director, President & CEO
Advisor to the Board
External Director of Nabtesco Corporation (current position)
External Director of the Company (current position)

Director

Independent

Joined HORIBA, Ltd.
General Manager of Product Department I, Development and Sales Division
Director
Managing Director
Senior Managing Director
Vice President and Director
Executive Vice President and Representative Director
Director and Advisor of HORIBA STEC Co., Ltd.
Vice Chairman and Representative Director of HORIBA, Ltd.
Senior Advisor
External Director of the Company (current position)
External Director of Seiko Electric Co., Ltd. (current position)
Fellow of HORIBA, Ltd. (current position)

Independent

Yoshimi Nakajima

Director

External

April 1981
July 2003
September 2006
July 2012
July 2013
June 2014
July 2014
July 2015
July 2016
January 2019
July 2019

External

External

April 1980
February 1982
May 1997
June 2000
April 2002
August 2011
February 2014
April 2014
June 2017
June 2018
September 2018

Independent

Joined The Yasuda Trust and Banking Co., Ltd. (currently Mizuho Trust & Banking Co., Ltd.)
Joined AVON PRODUCTS CO., LTD.
Joined Citibank, N.A. as Vice President
Joined Societe Generale Securities Services as Senior General Manager
Joined American Express International, Inc. as Vice President in charge of Global
Traveler’s Check & Prepaid Card Service, Japan Branch
Country Manager in Singapore (President)
Senior Vice President of Japan BranchPresident and Representative Director of American Express Japan Co., Ltd.
External Director of Yamaha Corporation (current position); External Director of
AEON Financial Service Co., Ltd. (current position)
External Director of Japan Freight Railway Company (current position)
External Director of the Company (current position)

Auditors
Makoto Ito

Mitsuru Yahagi

AuditorSenshu Asada

AuditorExternal

April 1984
March 2008
March 2012
April 2015
September 2015

37

Joined Nippon Life Insurance Company
General Manager of 1st Osaka Corporate Finance Dept. and Kyushu Area Corporate
Finance Dept.
General Manager of Metropolitan Area Corporate Finance Dept.
Joined the Company. Counselor to Senior Manager of Management Planning
Department
Audit & Supervisory Board Member (current position)

April 1983
July 1995
July 1996
July 1999
July 2004
June 2011
July 2018
September 2018

Joined the Company
Manager of Product Development Section, Vacuum Pumps Department, Precision
Machinery Division
Manager of Section I, Product Development Department, Components Division
Manager of Section II, Precision Machinery Technology Department, Components Division
Senior Manager of Research Department II, Research and Development Division
General Manager of Research and Development Division
Adviser to Senior Manager of Management Planning Department
Audit & Supervisory Board Member (current position)

Isao Utsunomiya

Auditor

April 1977
October 1996
June 2001
September 2007
April 2012
March 2014
June 2017

AuditorIndependent

Registered as an attorney. Joined the Daini Tokyo Bar Association
Jointly established Koju Law Firm
External Audit & Supervisory Board Member of HIMIKO Co., Ltd.
External Auditor of the Company (current position)
Auditor of Judo Federation of Tokyo (current position)Councilor of All Japan Judo Federation (current position)
External Director of Ahkun Co., Ltd.

External

April 1997
July 1999
June 2011
June 2012
June 2013
June 2015
June 2017
September 2017
June 2019

Independent

Registered as Certified Public Tax Accountant
Opened Isao Utsunomiya Certified Public Tax Accountant Office
Manager of Welfare Department of Kyobashi Branch, Tokyo Certified Public Tax Accountants’ Association
Representative Partner of Tsukiji Accounting Tax Corporation (current position)
Director of Tokyo Certified Public Tax Accountants’ Association
Director and Deputy Manager of General Administration Department
Manager of General Administration Department of Kyobashi Branch
External Auditor of the Company (current position)
Deputy General Manager of Kyobashi Branch, Tokyo Certified Public Tax Accountants’ Association (current position)ULVAC VALUE REPORT 202038

Basis for Value Creation

Messages from External Directors

Risk Management

The business environment is changing at dizzying speed. In this challenging environment,
ULVAC’s growth hinges on its ability to cultivate excellent human resources, achieve superiority
in technology and manufacturing capabilities, and share information effectively. ULVAC is aiming
to achieve profitable, sustained growth after a phase of structural reform and management basebuilding. To accomplish this, ULVAC has to overcome the challenges confronting it.
The Company’s financial situation is improving and ULVAC must actively make investmentsthat will win the approval of external stakeholders while making thorough business selection andNorio
concentration the norm. I would particularly like to see a location strategy focusing on countries
Uchidawhere technology and manufacturing are particularly advanced. In addition to maintaining amanagement stance focused on compliance and governance, the Board of Directors will proactively
involve itself in and supervise investment targeting the key priority of becoming a top global company, human resources
development, strengthening of crisis management, and education to improve scenario capabilities for strategy execution.
Global human resources, world-leading technologies and manufacturing capabilities, information sharing, andproper and speedy management decision-making will form the foundation for the ULVAC Group’s future growth.
Whereas reform is top-down, growth is a full-participation, bottom-up process. I ask that all employees maintain crisis
awareness at all times, improve their adaptability and sensitivity to change in the environment, and aim to be businessprofessionals capable of holding their own in the world beyond ULVAC. Let’s all work in unison to create a new ULVAC
corporate culture.

The ULVAC Group considers that responding appropriately to increasingly complex and diverse
risk factors leads to the creation of governance structures that contribute to the fulfillment of legal
requirements and the creation of internal control structures, and by extension, the medium- to longterm improvement of corporate value. We are expanding systems that can respond appropriately
to risk factors through identification, classification, analysis, and evaluation, and we are working toincrease corporate value by reflecting them in our management strategy.

COVID-19 has thrust the world into economic and social turmoil, triggering unprecedented
political challenges for humankind. ULVAC has grown by engaging globally in businesses thatbroadly support industrial and public infrastructure by adding new technologies, such as plasma
technology, to vacuum technology. However, ULVAC is inevitably caught up in the turmoil causedby the COVID-19 pandemic.
To escape from this turmoil, not only conventional thinking, but also wisdom and action, arestrongly needed at this time. I believe it is important to view this enormous social transformation
Kozo
as a great opportunity. We should exploit the next openings for growth boldly and deliberately,
Ishidawith all employees joining forces as a single united team, and return to the fundamentals
of manufacturing, with all divisions and Group companies accumulating improvements andinnovating. Furthermore, the stakeholders expect ULVAC to demonstrate preparedness and the practices necessary
to accomplish the objectives in the mid-term management plan with a sense of alacrity.
To that end, I think it is important to build up the strength needed to confront an unprecedented crisis by actively
undertaking redevelopment of ULVAC’s human resources and accumulated technologies so as to increase resilience
to change in preparation for the future. I intend to tackle this together with the employees.

Expanding its business as “A company needed by society” amid unprecedented change inthe business environment is both a challenge and an great opportunity for ULVAC. Clearly,transformation is required to strengthen manufacturing capabilities while improving our profitability
and continuously increase market share by anticipating market needs. Furthermore, progress isbeing made in cultivating a mindset conducive to boldly taking on challenges without dwelling on
past successes. I have come to this realization in light of management’s strong commitment andthe dynamic bottom-up ideas and autonomous awareness activities emanating principally from
Yoshimiyoung employees.
Nakajima
The challenge for ULVAC, which operates in the global market, is how timely and flexible theorganization can be in changing itself in a rapidly changing enviroment. "Career path to secureand develop human resources that will drive global expansion" and "Strengthen and establish organizational culture forchange" are necessary to solve the challenge.
Based on my management experience at U.S. and European global companies as well as my experience ofbusiness in Asia, I have sought to continuously contribute by focusing primarily on human resources and corporate
culture. I want to help realize effective and speedy reforms by continuing to make effective use of time spent incontact with employees in different regions and at different organizational levels, endeavoring from an external
perspective to grasp the necessary actions and systems while offering advice with an eye to effective execution.
39

Risk Management System
In regard to risk management initiatives, ULVAC, Inc.
has established rules concerning its risk management
system, classifying a broad range of risks fromvarious perspectives, and designated the control
offices primarily responsible for risk management
according to the classification of risks. Furthermore,these risk control offices identify more specific risks
and respond to them. We work to ensure that theseoffices efficiently gather important information in
operating the risk management system. In addition,in order to share and evaluate information concerning
the operation of the risk management system on acompany-wide basis, we have a Risk Management

Committee, which is chaired by the president,
and mainly comprises representatives of the risk
control offices with primary responsibility for risk
management. The Risk Management Committee
holds regular twice-yearly meetings as an umbrellaorganization for risk management, and it determines
company-wide basic policies, monitors the state ofmanagement and administration, and considers any
improvements that can be made, etc. Furthermore,
initiatives at ULVAC, Inc. are implemented at ULVACGroup companies as appropriate for the scale andbusiness type of the company in question.

Risk Management System

ULVAC, Inc.

ULVAC Group companies

Chief Risk Officer= President and CEO

Chief Risk Officer= President and CEO

Reporting andinstructions for
improvement

Risk Management
Committee

Risk control
officeRisk control
officeRisk Management
Committee

Risk control
officeRisk control
officeRisk control
officeRisk control
office● Risk control offices are designated according to risk classifications and they implement risk management through a PDCA cycle.
● Each Group company decides whether it is necessary to establish a Risk Management Committee in consideration of the sizeof the company in question and other factors.

ULVAC VALUE REPORT 202040

Basis for Value Creation

Risk Management (Continued)

ComplianceManagement of risks

ULVAC views compliance as a vitally important issue. In addition to conducting awareness-raising
activities so that each person in the ULVAC Group acts with a spirit of compliance, we are establishing andoperating a range of institutions and regulations to ensure thorough compliance.

Principal risks that may have a significant impact on ULVAC’s financial position, business results, and cash flows
are identified as below. ULVAC examines measures to reduce these risks and utilize them as opportunities
through discussion at a decision-making body such as the Board of Executive Officers.

Market fluctuation
ULVAC has achieved growth by developing andintroducing unique products in the field of vacuum
equipment that are used, in particular, in FPD,
semiconductor, and electronic device production
processes. If a great reduction in customers’ capital
investment occurs or customers’ financial conditions
deteriorate owing to change in the market conditions,ULVAC’s business results and financial position may
be adversely affected.
Under the twofold basic policy, “investment
in development for growth (selection andconcentration)” and “profit-oriented management
through structural change,” of the new mid-term
management plan launched in FY 2020, even in thecase of market fluctuation ULVAC aims to improve
profitability by enhancing productivity and achievesustainable growth by focusing on development ingrowth fields.

countermeasures. Meanwhile, it is expected thatdomestic production of electronic devices andsemiconductors will be encouraged in China. ULVAC
considers this to be an opportunity for businessexpansion and is working to further expand businessin China.

COVID-19 countermeasures

Corporate Code of Conduct

Whistleblowing System

ULVAC has established a Corporate Code of
Conduct comprising 18 items, conducted education,and distributed booklets to inculcate a culture ofcompliance, in order to ensure that the execution of
the duties of officers and employees is compliant
with laws and regulations and internal rules, and that
we fulfill our corporate social responsibility.

ULVAC, Inc. has adopted a whistleblowing system
operated through the Internal Auditing Office,which is an independent body. The Internal Auditing
Office also serves as the secretariat for theCompliance Committee, and it is structured to givefull consideration to confidentiality throughout theprocess of investigating the content of reports.
This system does not prevent the person making
the report from selecting other institutions ororganizations within the Company as the destination
for the report, and in such case, the report shall also
be handled appropriately.
Individuals making reports are not treatedunfavorably in any way. Reports can also be
submitted anonymously.
After a whistleblower report has been received,
the initial response is for the Compliance Committeeof ULVAC, Inc. to conduct an investigation in order toestablish the facts. This investigation is particularly
mindful of fairness, and is conducted judiciously andthoroughly. If necessary, assistance may be soughtfrom external experts, such as lawyers, and thoroughinterviews that are as wide-ranging as necessary
may be conducted and analyzed.
The president chairs the Compliance Committee
and the members of the Committee observe a strict
duty of confidentiality in carrying out their duties.

It is a concern that worldwide travel restrictions anddeterioration of the economic environment due tothe COVID-19 pandemic may persist. ULVAC hasestablished the COVID-19 Emergency Response
Headquarters headed by the President and CEO
and is striving to minimize the impact on businessactivities by implementing measures to prevent
spread of COVID-19.

Recognized business risks
Research and development
By maintaining vigorous R&D investment, ULVAC
has continued to introduce a stream of new productsthat incorporate cutting-edge technology. However, if
development is significantly delayed for a compelling
reason, resulting in delay in introduction of new
products in the market, ULVAC’s business results andfinancial position may be adversely affected.
ULVAC is accelerating development, which
is necessary for growth, through selection andconcentration of investment. At the same time,
periodic monitoring is implemented for progress
management in order to prevent significant delay indevelopment.

Political and economic situations in various
countries and regions
ULVAC operates an array of businesses globally.
Various factors related to change in political andeconomic situations in various countries and regions
may have an adverse impact on ULVAC’s businessresults and financial position.
ULVAC pays particular attention to the risk thattariffs and various regulations may be imposed
as a consequence of intensification of the U.S.China trade conflict and will implement necessary

41

Impact of fluctuations in FPD, semiconductor andelectronic device markets
Impact of research and development
Impact of the global competitive environment
Impact concerning securing of human resources

Compliance Education

Impact concerning laws and regulationsULVAC, Inc. is working to create a culture ofcompliance through awareness-raising activities. As
part of this effort, we conduct periodic and ad hoc
online training and face-to-face training on corporate
ethics, export compliance, prevention of insider
training, prevention of harassment, and other topics,
and test the degree of comprehension.

Impact concerning quality
Impact concerning financing
Impact concerning information security
Impact due to currency fluctuations
Impact concerning intellectual property
Impact concerning safety
Impact concerning environmental responses
Impact of COVID-19

Handling of Violations
In the event that, based on the results of aninvestigation by the Compliance Committee, it
is deemed that a violation of laws or regulations
has been committed, then the opinion of an
external expert, such as a lawyer, may be soughtas necessary, steps will be taken to ensure thatthe violation ceases with immediate effect andimprovement measures will be implemented, andthose involved in the violation will be dealt with after
deliberation by the appropriate bodies. In addition,
the root causes of the violation are also investigatedin order to formulate effective measures forpreventing recurrence.

Other risks(force majeure in various countries and regions)ULVAC VALUE REPORT 202042

Basis for Value Creation

Quality Assurance and Product Safety

Procurement

The ULVAC Group is engaging in initiatives worldwide to meet customer expectations for high-level, safe
ULVAC quality through total quality management (TQM).

Suppliers are important partners of ULVAC for manufacturing. ULVAC is working with them to enhance
efficiency of the entire supply chain (from design, procurement, manufacturing, and sales, through tocustomer support), always being conscious of the environment and society.

was found in the reliability evaluation process fordevelopment of a certain product. We will analyze thecauses, implement measures to prevent recurrence, andshare this throughout the Group to achieve total quality
management.

ULVAC Group Quality Policy
Improve quality & reduce costs and L/T(lead time) to half
Maximize profits and customer satisfaction
Quality Assurance System

Quality Management Education

38 ULVAC Group companies are ISO9001: 2015
certified. The Global Quality Assurance Committee
led by the president of ULVAC, Inc. spearheads
a Group-wide effort to align quality policies andare addressing quality issues and deploying
improvements globally.

In order to raise employees’ awareness concerning quality
at ULVAC, educational materials on quality management
for new employees and for employees engaged inengineering, design, and quality assurance are registeredon the ULVAC Academy Portal*2 so that they can beaccessed remotely. In FY 2019, educational materials
offered by external instructors (Grade 3 level of JSA’s
QC KENTEI (Quality Management and Quality Control
Examination)) became newly available. Moreover, inorder to develop human resources capable of advocating
ULVAC’s quality philosophy, we are preparing to designand establish ULVAC’s unique quality qualifications andskill enhancement education.

Global Quality Assurance Committee(Central secretariat: ULVAC, Inc.)

Group-wide implementation of the quality policy
Companies
in JapanCompaniesin South Korea

Companies
in Taiwan

Companies
in China

Companiesin Europe andNorth America

Companiesin Southeast Asia

Individual companies’ quality policies and target deployment activities in accordance with the Group’s policy
Sharing of case studies and horizontal deployment of achievements and effective approaches

Quality management is promoted by way of thoroughanalysis of defects that occurred at a process within
the process, implementation of recurrence prevention
measures, feedback of findings, implementation of
preventive measures, and process standardization
activities.
ULVAC’s Total Quality Management
Front Loading*1

Customers

Services

Installation

Logistics

Tests

AssemblyParts
manufacturing

Purchasing

Concept design
Mass-production design

Detailed
designProduct
development

Value Chain
Sales

Processdevelopment

Feedback

Product Safety Activities
To deliver safe and secure ULVAC brand products tomarkets around the world, qualified safety assessors*3
play a leading role in product safety assessments andcontinuously engage in activities to verify the required
safety and quality at the drawing release and productshipment phases. In line with expansion of productionin Asia, in order to establish an independent verification
system at overseas production bases, we are promoting
not only periodic information exchange but also groupbased education in each area and exchanges of personnel.
Non-Japanese quality safety assessors at overseas sites
have started to play active roles. ULVAC is promoting
product safety activities throughout the Group, which willlead to greater customer satisfaction.

Procurement Policy

Policy on Conflict Minerals

ULVAC, Inc. has established, observes, and promotes the
Basic Procurement Policy. ULVAC is also promoting CSR
procurement in cooperation with its business partners inaccordance with the “Requests to our business partners,”
which is based on the RBA*1 Code of Conduct. In July
2019, we conducted a questionnaire survey targeting
our major business partners in terms of the amount oftransactions. As a result, no serious problems, such as
child labor, forced labor, inhumane treatment, fraud or
bribery, were detected at any of the business partners.
In FY 2020, in view of the RBA Code of Conduct andthe questionnaire survey results, we will upgrade themanagement system by reviewing the items concerning“assessment materials” for registration of new business
partners and renewals in an effort to enhance CSR
procurement.
Moreover, in order to maintain sound, good
relationships with business partners, ULVAC establishedthe Purchasing Code of Conduct, a set of principles
emphasizing compliance for employees engaged in
procurement, in July 2019. In-house education is provided
every year for employees engaged in ULVAC, Inc.’s
procurement and that of Group companies in Japan
involved in production of ULVAC products.

Conflict minerals are minerals that are sourced fromconflict-affected and high-risk areas (CAHRAs) and whose
extraction and sale directly or indirectly serve as sourcesof funding for armed groups or are root causes of serious
human rights abuses and poor working conditions. The
policy of ULVAC, Inc. is not to purchase or use 3TGs*2 andcobalt raw materials derived from conflict minerals.
ULVAC manufactures and sells sputtering targets
and various tantalum wrought products in the materials
business. We conduct due diligence in accordancewith the guidance of OECD and RMI*3 through conflictminerals surveys covering raw materials suppliers inorder to ensure transparency of transactions. In FY 2019,no procured items that use 3TGs or cobalt derived fromconflict minerals were detected.

Promoting
CSR procurement
Compliance withlaws andregulations

Promotinggreen procurement

Basic
Procurement
PolicyPromotingglobal procurement
Sound, good
relationships withbusiness partners
and affiliates

Number of qualified safety assessors at ULVAC

Year-on-year comparison of costs related tononconformity after delivery (non-consolidated)(%)
2.5(Persons)
60
40

2.3
1.6

2.0
1.5

20

1.0

1.0

0.9

0.6

0.9

1.0
0

0.5
0

2013

2014

2015

2016

2017

2018

2019

(FY)

The ratio of costs related to nonconformity after delivery
to net sales deteriorated in FY 2019 because a defect43

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20182019 (FY)*1 “Front Loading” ordinarily refers to arranging or planning so that a large portion of work
occurs in the initial phase. At ULVAC, it is an activity to create quality by identifying issues assoon as possible.
*2 ULVAC’s e-learning system. See P.46 for details.
*3 Safety Assessor (SA) Qualification is a qualification scheme based on third-party certificationof machine safety knowledge and competence under international safety standards.

ULVAC revised the Green Procurement Standards inAugust 2020 and began use of the chemSHERPA*4
declarable substance list provided by the Joint Article
Management Promotion (JAMP) consortium. In
order to ensure the effectiveness of this practice,suppliers are requested to 1) implement ongoingenvironmental improvement through the introduction ofan environmental management system and other meansand 2) build a system for controlling chemical substances
contained in products.

Integrated procurement system
Maintaining andpromoting fair andfree competition

Purchasing Code of Conduct

Total Quality Management (TQM) System
Quality Assurance

Revision to the Green Procurement Standards

Communication with Business Partners
ULVAC, Inc. has been holding operations briefing
meetings once a year as a forum for ULVAC
management to directly explain to business partners
the business environment and prospects and suppliermeetings three times a year for the person in charge
to communicate production plans in a timely manner.
In view of the COVID-19 pandemic, we have cancelledthese meetings and launched a membership-based
website in September 2020. In addition to the provisionof information at the meetings, we intend to enrich
the content of this website to promote sharing of
information and collaboration with our business partners.

ULVAC is improving procedures, systems and structures
for procurement to realize global procurement at theparts level. Although we had been sourcing many key
parts in Japan, we conducted benchmarking of suppliers
worldwide and identified specific issues in logistics
and trade. As it is necessary to ensure confidentiality,
completeness, and availability of purchasing data ona system supporting global procurement, we havelaunched an integrated system for parts registration andfor registration and evaluation of suppliers and begun
standardization of management procedures.
*1 Responsible Business Alliance. CSR promotion group focused on the electronics industry in global
supply chains*2 Tantalum, tin, tungsten, and gold
*3 Responsible Minerals Initiative. An organization that inspects smelters and refiners handling 3TGs tocertify that they are not using conflict minerals*4 Scheme for enabling sharing of information on chemical substances contained in products throughout
the supply chainULVAC VALUE REPORT 202044

Basis for Value Creation

Human Resources
To achieve sustained growth, vitalized organizations must serve as a foundation enabling diverse humanresources to fully demonstrate their potential. ULVAC will strengthen its management base by actively engaging
in organization and human resources development and focusing on cultivating the leaders of tomorrow.
Basic Policy
In recent years, a shift toward the smart society
has begun worldwide. With the advent of a waveof technological innovation, global competition isintensifying. Amid such tremendous changes, ULVAC,
whose overseas sales account for over 60% of total
sales, cannot operate business sustainably unless it
provides an environment where people with diverse
personalities and strengths can maintain physicaland mental health, bring their differing capabilities
into full play, and enhance one another’s capabilities
through friendly competition.
At ULVAC, people with different backgrounds, interms of nationality, ethnicity, philosophy, culture,
language, gender, age, and specialty, are flourishing.
We respect such diversity and promote inclusion,and innovate to resolve customers’ and society’s
issues. By doing so, we aim to continue to deliver
new value that also leads to the personal growth ofeach employee.
Based on this policy, we are reinforcing thedevelopment of global human resources capable ofthriving in a changing external environment in orderto successfully compete in a business environment
characterized by dramatic change.

Through UL-GAIA, our aim is to ensure all employees
are aware of the importance of putting the Basic
Corporate Philosophy and the Management Policies
into practice in their work and linking their work tooutcomes that contribute to achieving ULVAC’s vision.

Developing the Next Generation of Leaders
In FY 2019, ULVAC conducted the ULVAC Executive
Program (UEP) with the aim of cultivating leaders
who will persistently and aggressively grapple with
global change. A total of 15 participants selectedfrom among candidates at ULVAC, Inc. and domestic
and overseas Group companies participated in the
program over a period of six months. By combining
UEP with the ULVAC Leadership Program (ULP), an
education program for young leaders, we will focus
on developing the next generation of leaders.

ULVAC Academy Portal
We are promoting e-learning throughout ULVAC basedon the concept of providing an environment thatenables learning anytime anywhere. Since its launch in2016, the contents posted on ULVAC Academy Portal
have grown to include some 1,200 items.
ULVAC Academy Portal now supports Japanese,
English, Chinese, and Korean. Some 6,000 ULVAC
employees have registered and are using the portal.
Principal contents◦Message from the President◦Video clips of seminars held in ULVAC◦Engineering education on technology, design, manufacturing, etc.
◦Mandatory education for onsite employees, such as basic
product safety education◦Education on trading and security trade control, etc.

Creating an Excellent Working Environment
Groupwide Education and Training

ULVAC Basic Policy for Human Resources Development
We are conscious that the most important resources for corporate vitality and competitiveness are thepersonnel and the organizations in which they work. We are conducting the following human resources
development, based on our corporate philosophy and basic management policy.
1. Human resources who respect other individuals, trust eachother and fulfill their responsibilities

3. Human resources who are full of aspirations to improve
themselves and take voluntary actions to achieve goals

2. Human resources who can see the true nature of each issue
and create revolutionary technologies and projects with
passion and tenacity

4. Human resources who have a global perspective and aim totake leadership in exploring the world

Productivity
improvement

UL-GAIA 2019ULVAC has held the Global Manufacturing Technology
Competition and Global Business Improvement
Competition for the purpose of enabling individuals
to pursue productivity improvement and share theoutcomes of their efforts. The aim of the Global
Manufacturing Technology Competition is value
creation through the improvement and innovationof the value chain process, and it is positioned as aforum where the participants present the outcomes(benefits) of their initiatives and processes forresolving issues. The aim of the Global Business
Improvement Competition is to create mechanisms
and measures to inculcate ULVAC’s management
policies in day-to-day work, maximize groupwide
synergy, and strengthen cross-organizational
functions to support resolution of issues relevant to
two or more Group companies, and it is positioned asa forum where the participants make presentations
on topics such as cost-reduction impacts, process
improvements to tackle issues, and enhancement ofoperational efficiency and productivity.

45

Further
improvement

Competitions

UL-GAIA 2019
(Production Technology/
Manufacturing Technology/
Business Improvement)

Training
Daily business
Administration

Engineering

ULVAC has long provided level-specific education,
starting with an introductory program for new
employees and a program for employees in their thirdyear. We are now in the process of rebuilding the
education system, including these programs. First, toincrease the basic professional competence of young
employees, we are establishing a manufacturing
education center and administration education center toensure that young employees acquire basic knowledge.
Furthermore, to provide training to employees
from Group companies in Japan and overseas, wewill establish a course on the history, culture, andmanagement strategy of ULVAC as well as othersubjects and implement global personnel exchanges.

SkillsIn FY 2019, we combined the two competitions
into UL-GAIA 2019. Under the slogan Breakthrough:Passion and Challenge, 16 teams that won contests
in their countries or regions gathered together andmade highly original presentations. The name ULGAIA, which is short for ULVAC Global Awards of
Improved Achievement, was chosen to liken the
ULVAC Group to Gaia (the Earth) and create anaward for the pursuit of integration and productivity
improvement on a global scale.

Human Resources Rotation
We are vigorously promoting human resources
rotation in the Group, especially between ULVAC
Head Office and overseas Group companies, asa measure to promote the diversity and inclusion
mentioned above. Moreover, by vigorously promoting
assignment of ULVAC employees to companies
outside the Group on loan and vice versa, we are
striving to vitalize human resources and establish
human networks while also expecting to achieve
innovation through technical exchange.
Human resources rotation between ULVAC Head Office and Group companies
Number of expatriates in Japan(overseas Group companies → ULVAC Head Office)Number of expatriates overseas(ULVAC Head Office → overseas Group companies)

Number of
employees transferred (Persons)

19

46

60

37

35

37

2015

2016

2017

58

46

51

41

2018

2019

(FY)

ULVAC, Inc. is creating a working environment inwhich employees can demonstrate their strengths
and originality while enhancing their productivity,and furthermore we are developing conditions andprograms that minimize the impact of life events,
so that diverse human resources can flourish andperform well.
Improvement of systems for flexible workstyles
ULVAC, Inc. offers a staggered working hour system and a flextime system.
We also introduced an hourly annual paid leave system in 2020. The numberof days of paid leave taken is increasing: the average number of days taken
increased from 10.9 days in FY 2018 to 12.4 days in FY 2019.
Systems for supporting childcare
To assist employees in their efforts to achieve a balance between work andchildcare, ULVAC, Inc. has introduced leave, holidays, and short-working
hours systems that go beyond the statutory requirements. Childcare leave
can be taken until the first April 30 after a child reaches two years of age.
The short-working-hours system for childcare is available for employees who
have a child up to the third grade in elementary school.
All employees who took childcare leave have returned to work. Male
employees also take childcare leave.
Retention of human resources and transfer of technologicalexpertise
Mindful that technological innovation is triggered by the integration of
accumulated technology, new knowledge, and creativity, ULVAC emphasizes
human resources development, the retention of employees, and the transfer
of technological expertise. For example, we conduct a questionnaire surveyof new employees six months after they join ULVAC, Inc. and their superiors,
and any gaps in perception are promptly addressed.
The system for rehiring senior employees after mandatory retirement
has taken root, and furthermore, we have set up a special employee systemfor post-retirement senior employees (after retirement at the age of 65) tocreate an opportunity for experienced employees to display their abilities
and transfer their technological expertise to the next generation.

ULVAC VALUE REPORT 202046

Basis for Value Creation

Human Resources (Continued)

For details ●▶

Website>>Sustainability>Human Resources

Human Resources Data (non-consolidated)● Employee gender ratio● Management gender ratio

Male

Male

Female89

12femaleemployees

femaleemployees

7.0%

3.0%

Female354● Annual paid leave utilization rate (%)
(%)
100

(CY)

male
employees

66.8

97.0%

50

59.0

93.0%

Promotionof HealthManagement

5

2

2017

0

0

2018

4

5

2019

5

6

2020

7

2

58.2

0

2015 2016 2017 2018 2019 (FY)

（年度）

Return rate: 100%

Making further progress in creating a working environment that enables employees in excellent
physical and mental health and good spirits to demonstrate their abilities to the fullest is important
for the ULVAC Group’s future development. At ULVAC, Inc., the president, the Chief Health Promotion
Officer, the senior manager of the General Administration Department, occupational healthphysicians, and occupational health nurses act in unison to promote health management activities.
In addition to legally prescribed health checks, stress checks, and face-to-face guidance for employees
who work long hours by an occupational health physician, the Company pursues initiatives forgeneral health improvement, such as wellness improvement and reduction of health risks.

Priority Activity 1 Wellness Improvement
ULVAC Inc. has set a wellness improvement target of“An increase of 20% in the number of people who work
energetically by FY 2020 compared to FY 2014.”
In addition to organization vitalization training conductedsince FY 2014, since FY 2019 we have held a Case
Study Review Meeting, which encourages organizational
development through the cultivation of complex problemsolving skills and interpersonal skills, including by simulating
the experience of outside parties through failure casestudies and problem case studies. We also provide
wellness support by distributing to employees information
on subjects such as how best to physically and mentallycope with stress caused by change in the working
environment and on the promotion of good habits.
As a result of these activities, according to the findingsof ULVAC’s organizational health survey, the percentageof employees who work energetically*1 has increased
compared to FY 2014 (Fig.1). We will continue to implement
health measures aligned with our organizational policies toenhance organizational health.
Priority Activity 2 Health Risk Reduction
ULVAC, Inc. has set a health risk reduction target of “Healthage*2 3.0 years lower than actual age by FY 2020.”
We provide lifestyle improvement support to all
employees, such as an online education program that
includes education about long working hours, sleep
education, women’s health education, and pre-health checkeducation, and a walking program that utilizes the PepUp
healthcare platform.
Thanks in part to the effects of these measures, thehealth age of employees has gradually improved. In FY
2019, ULVAC, Inc. received the Kanagawa Prefecture
47

58.8

Number of
Number of
employees who returnees after
started to take taking childcare
childcare leave
leave

2016

67.6

1,130

male
employees● Number of employees who took childcare
leave and the number of returnees

Governor’s Award in the Kanagawa Prefecture My ME-BYO
Record inter-company walking program.*3
Fig.1 Percentage of Employees Who Work
Energetically

0.8

2014

2019

(FY)

In the execution of development, manufacturing,transport, installation, maintenance and otherbusiness processes, everyone in the ULVACGroup, from senior management to line workers,
is encouraged to seize the initiative in continuously
undertaking improvements placing the highest
priority on safety, striving to maintain and improve
the safety of everyone involved and ensure a healthy
working environment.

ULVAC Basic Policy on Occupational Safety
and Health Management System (OSHMS)
1. Compliance to the code/regulations, andimplementation of risk assessment
Comply with Codes of Occupational Safety & Health Management andRules according to ULVAC’s OSHMS, and conduct Risk Assessment inorder to perform Occupational Safety & Health Management activities
with the help of all the employees.

Comply with ULVAC’s standard for safety design and perform risk
assessment of our products, in order to deliver our safe products andservices to our customers.

-1.6

（年度）

2016

management reviews conducted by the president andother executives and risk assessments performed byeach employee. For example, hazards associated withchemical substances have been attracting attention,
as indicated by frequent revisions of laws in recent
years. We identify risks at phases from transport andstorage to disposal at the work planning stage and arestrengthening measures to ensure safety.
As a result, the Chigasaki Plant was certified by the
Ministry of Health, Labour and Welfare for achieving
a Type-V zero accident record* (total of 15.7 million
hours) in FY 2019 and the Fuji Susono Plant for a Type-I
zero accident record (total of 3.1 million hours) in FY
2018. These plants are maintaining their zero accident
records. With “Safety First” as their motto, all Group
companies will continue their efforts to extend thezero accident record.
* The number of accident-free hours for recognition of a zero accident record is determined according to thestarting date of the record, the industry type and the number of workers. A certificate of a zero accident
record will be issued by the Ministry of Health, Labour and Welfare when a business site maintains nofatal accidents or accidents with lost working hours for the specified number of hours. Zero accident
record certificates ranges from Type I to Type V, with Type V being the highest level.

ULVAC’s Safety Management System
Companies in Japan-0.8

3. Planned education about Occupational Safety &Health & Product Safety-1.20

Approach to Occupational Safety and Health

2. Assure safety of ULVAC’s products

100
80

The ULVAC Group has made “Safety First” the fundamental principle of business management. By operating
our Occupational Safety and Health Management System (OSHMS) focused on risk assessment, we endeavor
to ensure safety of the products and services used by our customers and create dynamic workplaces where
Group employees can work in good physical and mental health.

Fig.2 Health Age
0

149

160

Occupational Safety and Health

2019

(FY)

*1 The average score for all items of the percentage of people answering “5. I strongly agree” forfive items concerning vitality toward work (five-point scale) in a survey at the time of application
for a health check, with the value for FY 2015 as 100.
*2 An index developed by JMDC Inc. based on the medical checkup data and medical expenses of
1.6 million people. ULVAC, Inc. began measurement in FY 2016.
*3 Kanagawa Prefecture website: https://www.pref.kanagawa.jp/docs/mv4/prs/r2372098.html(Japanese only)

As a result of implementing these measures, ULVAC,
Inc. has been certified by the Ministry of Economy,
Trade and Industry as a Certified Health and Productivity
Management Organization (White 500), and ULVACTECHNO, Ltd., ULVAC EQUIPMENT SALES, Inc., ULVAC
Human Relations, Ltd., and ULVAC-PHI, Inc. have beencertified as Certified Health and Productivity Management
Organizations. ULVAC will continue pursuing various
initiatives at domestic Group companies to maintain andpromote the health of employees.

For all the employees and contractor’s employees, perform Occupational
Safety & Health training based on ULVAC Safety Management system,
while offering scheduled Product Safety training for our users.

Companies in South Korea
Companies in Taiwan

Global Safety
Management
Committee

President and CEOULVAC, Inc.

Companies in China
Companies in Southeast
Asia

4. Promotion of mental health care

Companies in Europe andNorth America

Promote mental health care to achieve a healthy, vigorous workplaceenvironment.

5. Global expansion of ULVAC group
Through the Safety & Health promotion activities by the Global Safety
Management Committee, we will try to create an appropriate work
environment for the whole ULVAC group, and contribute to prosperity ofour businesses.

Frequency ratio of occupational accidents at ULVACGroup as a whole
Japan

China

1.50

Maintaining Zero Accident Record
To ensure the safety and good health of its customers
and employees, the ULVAC Group regularly holds
meetings of the Global Safety Management
Committee, and all Group companies promote safety
and health activities in an integrated manner. EachGroup company operates the OSHMS, and everyone
is engaged in safety and health activities, such as

1.00

1.00

2015

1.32

1.39

1.46

2016

2017

2018

South Korea

Taiwan

1.29

0.50

0

2019 (FY)* This graph shows the rate of occupational accidents for each fiscal year, with the value for FY 2015 (as ofJune 2016) as 1.00. Although the number of accidents had been rising in recent years, this trend reversed
in FY 2019 as various safety activities bore fruit.

ULVAC VALUE REPORT 2020

48

Basis for Value Creation

Environment
Based on its environmental policy, the ULVAC Group provides products that allow customers to embrace thefeeling that they have made environmental contributions.Through management and reduction of energy
consumption and other efforts, we are working to minimize environmental impacts. As we have a global
production system, we are working to gain integrated ISO 14001 certification so as to strengthen governance,
ensuring information sharing among Group companies and swift implementation of instructions issued by top
management.The ULVAC Group will continue its efforts to reduce environmental impacts through its products
and manufacturing processes.
Environmental Activities in FY 2019

Environmental Philosophy
The ULVAC Group is tackling protection of
the global environment, one of the major
issues confronting people worldwide. We
will consider environmental conservationin all aspects of our business activities andwill contribute to realization of a better
living environment and a more affluent
society.
Environmental Policy
Develop energy-saving products, reduce
the use of natural resources and protect
the environment.
ULVAC Group products/Final products
ULVAC Group manufacturing process

Total waste emissions decreased 17% compared withthe previous fiscal year.
This decrease is considered to be attributable to adecrease in the use of acid and alkali in Japan due tothe change of chemical agents and an approximately
50% decrease in waste discharged by Group
companies in South Korea and China.
We are also implementing group-wide initiatives,
including visualization of wattage, concentration oflocations where electricity-intensive activities are
conducted, and 100% conversion to LED lighting
for factories and offices, in order to reduce energy(electricity) consumption.
The ULVAC Group will continue to promote
environmental management activities in order toreduce environmental impacts derived from its
business activities.

Material balance (Source: Aggregate data for FY 2019)

INPUT
Electricity
consumptionGas
consumption

Fuelconsumption

Heavy oil:
33 kL
Kerosene oil: 26 kL
Diesel oil: 166 kL

Water consumption

Group companies overseas
Group companies in Japan(t-CO2)100,000

Group companies overseas
Group companies in Japan(Thousand m3)
1,800

83,929 t-CO2
CO2
emissions(Emissions due toconsumption of electricity,gas, and fuels)

7,062 tTotal waste
emissions

1,419 thousand m3

Total amount of waste
recycled:
6,007 tAmount of landfill
345.5 t1,200

60,00040,000600

20,00002015 2016

2017

2018

0

2019 (FY)2015 2016

2017

2018

2019 (FY)

Waste emissions
Amount of valuable
materials recycled (t)(t)
10,0007,500

Amount of landfill (t)Total amount ofwaste recycled (t)

313
8,479

214

4.2

7,072
5,000

Final landfill
disposal rate (%)

(%)
6.0

4.9

385

359

4.5

3.6

7,197

7,093

2,313

2,222

2,236

4.5

346
6,007

3.0

2.9

Packagingmaterials

990 t

Final landfill
disposal rate

4.9 %

2,500

0

* The above data are based on the data from 37 Group companies in Japan and overseas.
* The volume of packaging materials is based on the data from 18 Group companies in Japan and overseas.

49

1,920

2015

2016

2017

GHD series of oil rotary vacuum pumps equipped with magnet coupling: ULVAC KIKO, Inc.
Conventional oil rotary vacuum pumps have an oil seal at therotor shaft to prevent leakage of oil to the atmospheric side.
However, oil leakage tends to occur owing to wear and tear due
to long-term operation. Also, when the pump is stopped whilethe vacuum status is maintained in the vacuum chamber of theequipment to which the pump is connected, backflow of oil fromthe pump to the vacuum chamber through the air intake pipe
occurs because of atmospheric pressure. In order to prevent
oil backflow when pump operation is stopped, conventionaloil rotary vacuum pumps have a valve. As a solution to these
problems, ULVAC KIKO, Inc. offers the GHD series of oil rotary
vacuum pumps. They are equipped with a non-contact-typemagnet coupling that transmits power using magnetic force
and eliminates the need for a shaft seal at the atmospheric side,
instead of contact-type coupling used for power transmission
from the motor to the pump. They are also equipped with adifferential pressure sealing-type check valve directly below
the intake pipe. Design for environment is adopted for the GHD
series, applying the concept of quiet operation, space saving, andno oil leakage. Compared with conventional contact-type models,the GHD series reduces power consumption by up to 20 W.

GHD-031 oil rotary vacuum pump

Management of chemical substances
Chemical substances are highly versatile and functional and are widely applied in everyday life. On theother hand, some substances are harmful to the human body and the environment. ULVAC uses a wide
variety of chemical substances in the parts and materials composing products (metals, resins, coatings, etc.),
manufacturing processes (organic solvents, lubricants, and other substances used in cleaning, etc.), andtechnology development (chemicals, gases, etc.). We appropriately manage these substances and strive toprevent accidents and environmental pollution.

Plastic reduction initiatives

80,000172,442 thousand kWh

LPG :
214 t
LNG :
680 t
City gas : 1,201thousand m3

Water
consumption

OUTPUT

CO2 emissions

Major initiatives

2018

1,580
2019

(FY)

1.5

0

ULVAC is working to reduce use of plastics, considering that it isimportant to emphasize environmental protection in every aspect ofbusiness activities.
In Japan, the amount of packaging materials purchased was
reduced by 15% year on year at ULVAC Head Office/Plant and at
ULVAC-PHI, Inc. and by 24% year on year at ULVAC TECHNO, Ltd. bypromoting reuse in house of packaging materials for pumps.
ULVAC TAIWAN INC. achieved a 7% year-on-year reduction inplastic consumption by ceasing the use of disposable cushioning
Reusable cushioning materials with antistatic functions
materials and by switching to reusable cushioning materials withintroduced by ULVAC TAIWAN INC.
antistatic functions.
ULVAC CRYOGENICS KOREA INCORPORATED is endeavoring to eliminate the use of vinyl packaging forraw materials. It provided dedicated trolleys to the suppliers for delivery of raw materials. As a result, vinyl
consumption in the first half of FY 2019 was reduced by 30% compared with the same period of the previous
year.
ULVAC will continue initiatives to reduce plastic consumption and promote recycling.

ULVAC VALUE REPORT 202050

Financial Data/Corporate Information

11-year Financial Data
Financial Data

(Unit)

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY20192010.62011.62012.62013.62014.62015.62016.62017.62018.62019.62020.6（ 年度 ）

Key financial results
Net sales*1

Millions of yen

221,804

232,040

196,804

163,351

173,878

179,174

192,437

231,831249,271

220,721

185,402

Operating profit (loss)

Millions of yen

4,809

1,850

(6,384)

6,115

11,996

11,132

17,86429,46835,351

23,82815,958

Ordinary profit (loss)

Millions of yen

4,942

1,441

(6,497)

6,264

13,384

12,475

18,37329,71636,90725,57518,052

Net income (loss)*2

Millions of yen

2,138(8,706)(49,984)(3,807)

11,538

8,874

16,69824,46935,904

18,665

10,769Net assets

Millions of yen

102,504

92,023

41,18759,436

72,23884,92878,032

104,917

154,069

157,588

161,093

Total assets

Millions of yen

313,784

313,616

249,651

243,289

230,791

242,348

219,561

245,306

297,418

282,302282,350

Cash flows from operating activities

Millions of yen

44,312

17,730(8,492)

22,35732,213

21,992

23,70837,81819,086

18,282

18,738Cash flows from investing activities

Millions of yen(10,876)(14,833)(11,328)(4,506)(3,023)(4,055)(5,593)(13,713)(1,564)(9,448)(4,143)

Cash flows from financing activities

Millions of yen(23,418)

2,159

12,616(3,619)(16,881)(14,895)(32,448)(22,580)(10,734)(5,844)

7,455

Cash and cash equivalents at end of period

Millions of yen

29,72135,722

28,18044,20457,012

61,67044,86247,55554,34855,85977,948

Net assets per share

Yen

1,992.06

1,787.51

751.00806.381,040.23

1,398.66

1,477.29

2,002.90

2,994.12

3,062.39

3,132.22

Net income per share

Yen

46.60

(176.43)(1,012.94)(87.79)223.18172.73338.37496.35728.68378.78218.54Equity ratio

%

31.3

28.1

14.8

22.7

29.2

32.8

33.2

40.2

49.5

53.5

54.6

ROE (return on equity)*3

%

2.3

—

—

—

18.8

12.1

21.9

28.5

29.2

12.5

7.1

Ratio of ordinary profit to total assets*4

%

1.6

0.5

—

2.5

5.6

5.3

8.0

12.8

13.6

8.8

6.4

Price-earnings ratio*5

Times

37.34

—

—

—

9.66

10.91

9.21

10.88

5.82

9.02

14.23

Capital expenditureBillions of yen

11.1

17.8

12.7

6.8

6.2

6.7

7.0

8.3

12.9

12.9

10.3

R&D expenses

Billions of yen

8.0

8.3

7.1

5.0

5.2

5.6

6.3

6.9

8.3

9.2

8.4

Interest-bearing debt

Billions of yen

100.2

105.1

120.2

106.1

89.6

82.6

62.7

42.7

35.7

35.6

49.8

Dividends

Yen

21.0

—

—

—

—

10.0

30.0

50.0

95.0

105.0

80.0

Dividend payout ratio

%

45.1

—

—

—

—

5.8

8.9

10.1

13.0

27.7

36.6

Number of employees

Persons

7,169

7,878

6,981

6,579

5,971

5,904

5,886

6,072

6,439

6,424

6,370

Key performance indicators

Other indicators

Notes:
1. Net sales do not include consumption taxes.
2. The Company applies the “Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013) and “net income attributable to owners of parent” is presented instead of “netincome.”3. ROE (return on equity) figures for FY2010 to FY2012 are not presented because the Company recorded a net loss for these periods.
4. The ratio of ordinary profit to total assets for FY2011 is not presented because the Company recorded an ordinary loss for FY2011.
5. Price-earnings ratios for FY2010 to FY2012 are not presented because the Company recorded a net loss for these periods.

51

ULVAC VALUE REPORT 202052

Financial Data/Corporate Information

Financial Overview
Forward-looking statements contained in this document are based on the current assumptions and beliefs of the ULVAC Group
in light of the information available to it as of September 29, 2020.

Business Results
For the fiscal year ended June 30, 2020 (FY 2019),
net sales amounted to ¥185,402 million, a decreaseof 16.0% year on year. Net sales of FPD and PV
production equipment were below the level of theprevious fiscal year in line with decreases in orders
received for both LCD production equipment forlarge-screen TVs and OLED production equipment for
smartphones. Orders received decreased because
investment in LCDs for large-screen TVs had cometo a cyclical downturn and investment in OLEDs for
smartphones entered a temporary adjustment phase.
Net sales of semiconductor and electronic device
production equipment increased from the previous
fiscal year because demand for electronic device
production equipment remained firm, a recovery trendof memory-related investment became apparent, andULVAC’s entry in the field for logic devices was also acontributory factor.
Operating profit margin was 8.6%, down 2.2
percentage points from the previous fiscal year. Thisdecrease was mainly because lower net sales could
not be fully offset by reducing fixed costs.
R&D expenses totaled ¥8,353 million, a decreaseof ¥856 million from the previous fiscal year. The ratioof R&D expenses to net sales was 4.5%, an increaseof 0.3 percentage points from the previous fiscal year
due to a decrease in net sales. Although the amountof R&D expenses decreased from the previous fiscal
year owing to restrictions on movement and so on

Financial Position
because of the COVID-19 pandemic, the ULVAC Groupis continuing to emphasize investment with a view tofuture growth.
Regarding indicators for evaluating the degreeof achievement of the management policies,
management strategies, and management objectives
during the period until FY 2019 covered by the midterm management plan, the ULVAC Group used net
sales, operating profit, and operating profit margin as
key performance indicators. As described on Page
23, the ULVAC Group formulated a new mid-term
management plan, “Breakthrough 2022,” which covers
three years from FY 2020. The basic policy of this midterm management plan is twofold: “investment indevelopment for growth (selection and concentration)”and “profit-oriented management through structuralchange.” Under this policy, the ULVAC Group will use
net sales, gross profit margin, operating profit margin,
return on equity (ROE), and operating cash flow as
new key performance indicators.
Quantitative targets for the third year (FY 2022)of the mid-term management plan are net sales of¥210.0 billion, gross profit margin of 35% or higher,
operating profit margin of 16% or higher, ROE of 13%
or higher, and operating cash flow of ¥29.0 billion. The
Group aims to achieve further growth from a mediumto long-term perspective by implementing specificinitiatives to attain the targets of the new mid-term
management plan.

Total assets at the end of FY 2019 amounted to¥282,350 million, having increased ¥48 million
compared with the figure at the previous FY yearend. The main factors were a ¥22,137 million
increase in cash on hand and in banks, whereas
notes and accounts receivable, trade, inventories,
and deferred tax assets decreased ¥10,534 million,¥4,669 million, and ¥4,072 million, respectively.
Total liabilities amounted to ¥121,256 million,
having decreased ¥3,458 million compared withthe figure at the previous fiscal year-end. The main
factors were a ¥9,309 million decrease in notes andCash Flows
Cash and cash equivalents at the end of FY 2019 amounted to ¥77,948 million, having increased ¥22,089 million
compared with the figure at the previous fiscal year-end. The status of cash flows from operating, investing andfinancing activities and major contributing factors were as follows.
Cash Flows from Operating Activities

Cash Flows from Investing Activities

Net cash provided by operating activities amounted to¥18,738 million compared with net cash provided byoperating activities amounting to ¥18,282 million forthe previous fiscal year. The main factors contributing
to cash inflows were income before income taxes,
depreciation, a decrease in notes and accounts
receivable-trade, and a decrease in inventories. The
main factors contributing to cash outflows included a
decrease in notes and accounts payable-trade and adecrease in advances received.

Net cash used in investing activities amounted to¥4,143 million compared with net cash used ininvesting activities amounting to ¥9,448 million forthe previous fiscal year. The main factors included
purchase of property, plant and equipment andintangible assets and proceeds from sales ofinvestment securities.

Management’s recognition, analysis and discussion of operating results by business segment are as follows.
Vacuum Equipment Business
Segment net sales decreased 17.5% year on year to¥154,773 million. Net sales of FPD and PV production
equipment were below the level of the previous fiscal
year because investment in LCDs for large-screen
TVs had come to a cyclical downturn and investment
in OLEDs for smartphones decreased. Despite theimpact of the COVID-19 pandemic, net sales ofsemiconductor and electronic device production
equipment were above the level of the previous
fiscal year because of firm demand for electronic
device production equipment and the contributionof sputtering equipment for logic devices. Regarding
components, sales of cryopumps, vacuum pumps,
and measuring equipment decreased following robust
sales in the previous fiscal year. Segment profit
margin deteriorated from 11.1% for the previous fiscal
year to 8.8% for the fiscal year under review. This
deterioration was mainly attributable to the fact that53

the decrease in net sales of FPD and PV production
equipment was significant and could not be fully
offset by the growth in net sales of high-margin
semiconductor and electronic device production
equipment and by the reduction of fixed costs.
Vacuum Application Business
Segment net sales decreased 7.3% year on year to¥30,629 million. Lower net sales reflected a decreasein orders received for sputtering target materials
for LCDs in line with the decrease in the facility
utilization rate of customers’ plants whereas mask
blank-related demand remained firm. Segment profit
margin deteriorated from 9.0% for the previous fiscal
year to 5.4% for the fiscal year under review. This
deterioration was mainly attributable to the fact thatthe decrease in net sales could not be fully offset by
the reduction of fixed costs.

accounts payable, trade, a ¥4,280 million decreasein advances received, a ¥3,649 million decreasein short-term loans payable, and a ¥1,462 million
decrease in income taxes payable, whereas longterm loans payable increased ¥17,909 million.
Net assets amounted to ¥161,093 million, having
increased ¥3,505 million compared with the figure
at the previous fiscal year-end. The main factor was a¥5,587 million increase in retained earnings, whereas
accumulated other comprehensive income decreased¥2,143 million. As a result, the equity ratio at the endof FY 2019 was 54.6%.

Cash Flows from Financing Activities
Net cash provided by financing activities amounted
to ¥7,455 million compared with net cash used infinancing activities amounting to ¥5,844 million forthe previous fiscal year. The main factors included anincrease in long-term loans payable, cash dividends
paid, and a decrease in short-term loans payable.

Financial Resources and Liquidity
The ULVAC Group’s funding needs are principallyfor R&D investment and capital investment, which
will underpin a new growth strategy, and forworking capital for business operations. The Groupintends to expand investment for development in
the semiconductor and electronic device fields tostrengthen growing businesses. Such demand forfunds is satisfied by cash flows from operating
activities and borrowings from financial institutions.
In fund procurement, the Group endeavors to level
the annual amount of repayment in order to reducerefinancing and the repayment burden.

While the outlook is unclear owing to the COVID-19
pandemic etc., in order to ensure preparedness forcontingencies, the Group has secured sufficientliquidity in hand through increased borrowings andby other means. The Group has also put in place asystem that enables it to secure additional funds
by concluding commitment-line contracts. Thus,
the Group is capable of stable operation for thetime being. The Group will maintain the system that
ensures timely access to necessary funds so as to becapable of responding to rapid change in the businessenvironment.
ULVAC VALUE REPORT 202054

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Balance Sheets(Millions of yen)

FY2018FY2018FY2019(As of June 30, 2019)

FY2019(As of June 30, 2019)(As of June 30, 2020)

AssetsLiabilities

Current assets

Current liabilities(As of June 30, 2020)

Cash on hand and in banks

58,55780,694

Notes and accounts payable, trade

40,74831,439Notes and accounts receivable, trade77,236

66,702

Short-term loans payable

14,915

11,266Merchandise and finished goods

3,937

3,883

Lease obligations

306

666

2,802

1,340

Work in process

24,03321,004

Income taxes payable

Raw materials and supplies

11,803

10,217

Advances received

15,84911,569

Other

6,840

6,903

Accrued employees’ bonuses

3,625

2,686

Allowance for doubtful accounts

(444)

(419)

Accrued directors’ bonuses

Total current assets

181,962

188,985

Non-current assets
Property, plant and equipment

485

372

Accrued warranty costs

1,632

1,672

Provision for loss on order received

1,099

1,323

Other

13,041

9,952

94,501

72,285

20,66838,57780,54681,850Total current liabilities

Accumulated depreciation(50,595)(52,735)

Long-term liabilities

Buildings and structures, net

29,951

29,115Long-term loans payable

Machinery, equipment and vehicles

71,50076,740

Lease obligations

551

1,999

(54,042)(57,428)

Deferred tax liabilities

16

27

17,45919,312

Net defined benefit liability

7,846

7,363

75

—

Buildings and structures

Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures

14,33813,933

Accrued directors’ retirement benefits

Accumulated depreciation(12,358)(12,295)

Provision for board benefit trust

145

156

1,981

1,638

Asset retirement obligations

399

402

8,357

8,344

Other

1,813

3,851

Total long-term liabilities(1,099)(1,284)

Leased assets, net

715

2,567

Construction in progress

7,226

4,213

65,68765,189Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation

Total property, plant and equipment

Intangible assets
Leased assets

55

53

Software

1,030

973

Other

2,361

2,251

Total intangible assets

3,446

3,278

512

447

30,213

48,972

124,714

121,256

Capital stock

20,873

20,873

Capital surplus

3,912

3,912

120,985

126,571

Total liabilities
Net Assets

Shareholders’ equity

Retained earnings
Treasury shares

(247)

(349)

145,522

151,007

6,652

5,301

266

(572)

Remeasurements of defined benefit plans(1,528)(1,482)

Total accumulated other comprehensive income

5,390

3,246

6,676

6,840

Total shareholders’ equity

Accumulated other comprehensive income

Investments and other assets
Investment securities

13,797

11,869Deferred tax assets

10,180

6,108

Other

11,6909,343

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

Allowance for doubtful accounts(4,462)(2,422)

Total investments and other assets

31,207

24,898100,340

93,365

Total net assets

157,588

161,093282,302282,350

Total liabilities and net assets

282,302282,350

Total non-current assets

Total assets
55(Millions of yen)

Non-controlling interests

ULVAC VALUE REPORT 202056

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Statements of Income(Millions of yen)

FY2018(July 1, 2018–June 30, 2019)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Compensation income
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Gain on change in equity
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Other
Total extraordinary losses
Income before income taxes
Current income taxes
Deferred income taxes
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

FY2019220,721155,845
64,876

185,402
134,805
50,596

18,217
22,83041,047
23,82813,091
21,547
34,63815,958
171
634
779
494
1,433
3,511

293
776
1,069
25,575

437
980
1,418
18,052

1,710
303
75
2,088

3,261
—
47
3,308

156
331
27
515
27,148
6,709
451
7,160
19,988
1,323
18,665

64
175
—
239
21,122
4,790
4,596
9,386
11,736967
10,769FY2018(July 1, 2018–June 30, 2019)57

19,988FY2019(July 1, 2019–June 30, 2020)

11,736(8,298)(2,773)
226
190(10,655)
9,334(1,347)
(759)
48
(142)
(2,200)
9,536

8,280
1,054

8,626
910

(July 1, 2019–June 30, 2020)

Cash flows from operating activities
Income before income taxes
Depreciation

27,148
6,938

21,122
7,849

331

175

2,048

(2,053)

Increase (decrease) in accrued employees’ bonuses

505(1,031)

Increase (decrease) in net defined benefit liability

(100)

(411)

Increase (decrease) in accrued directors’ retirement benefits

(197)

(75)

Increase (decrease) in provision for board benefit trust

11

10

(82)

34

Increase (decrease) in allowance for doubtful accounts

Increase (decrease) in accrued warranty costs
Increase (decrease) in provision for loss on orders received
Interest and dividend income

27

224

(870)

(806)

Interest expenses

293

437

Subsidy income

(74)

(150)

Loss (gain) on sales of investment securities(1,710)(3,261)

Loss (gain) on sales of non-current assets

(75)

(47)

Share of (profit) loss of entities accounted for using equity method

(346)

(494)

Loss (gain) on change in equity

(303)

—

Decrease (increase) in notes and accounts receivable - trade

7,508

9,941

Decrease (increase) in inventories(3,185)

2,718

Increase (decrease) in notes and accounts payable - trade(13,913)(7,985)

Increase (decrease) in advances received(328)(4,186)

Increase (decrease) in accrued consumption taxes

677

(370)

Other

1,457

3,430

Subtotal

25,761

25,071

Interest and dividend income received

1,222

1,111

Interest expenses paid

(270)

(450)

Income taxes paid

(8,432)(6,994)

Net cash provided by (used in) operating activities

18,282

18,738

Payments into time deposits(5,589)(3,728)Proceeds from withdrawal of time deposits

5,602

3,707

(11,338)(8,828)Cash flows from investing activities

Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets

231

1,175

1,779

3,371

Proceeds from subsidy income

216

150

Other

(348)

10

(9,448)(4,143)

Net increase (decrease) in short-term loans payable(7,288)(3,785)

Proceeds from long-term loans payable

15,10026,689

Repayments of long-term loans payable(7,929)(8,607)

Proceeds from sales of investment securities

Net cash provided by (used in) investing activities(Millions of yen)

FY2019(July 1, 2018–June 30, 2019)

Impairment loss

183
687
21
346
1,579
2,816

(Millions of yen)

FY2018(July 1, 2019–June 30, 2020)

Consolidated Statements of Comprehensive Income

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Consolidated Statements of Cash Flows

Cash flows from financing activities

Repayments of lease obligations
Cash dividends paid
Purchase of treasury shares
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities

(358)

(787)

(4,683)(5,175)

(0)

(120)

(687)

(760)

(5,844)

7,455

Effect of exchange rate change on cash and cash equivalents

(908)

39

Net increase (decrease) in cash and cash equivalents

2,082

22,089Cash and cash equivalents at beginning of period

54,34855,859Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period

(571)

—

55,85977,948ULVAC VALUE REPORT 202058

Financial Data/Corporate Information

Company Data/Stock Information
Company Profile
Name

As of June 30, 2020

President and Chief
Executive Officer

ULVAC, Inc.

TrademarkULVAC

Head office2500 Hagisono, Chigasaki,
Kanagawa Prefecture, Japan

Established
Capital
Number of
employees

Directors, Auditors and Executive Officers

August 23, 1952
¥20,873,042,500
Non-consolidated 1,333
Consolidated 6,370

Director and Executive
Mitsuru Motoyoshi
Vice President
Senior Managing
Director

Masasuke Matsudai

Senior Managing
DirectorDr. Choong Ryul Paik

External Director

Hiroyuki Nishi

External Director

Norio Uchida

External Director
External Director

ULVAC Group Companies

Setsuo Iwashita

Dr. Kozo Ishida
Yoshimi Nakajima

As of September 29, 2020

Stock Information

Number of Shares Held by Shareholder TypeAs of June 30, 2020

Managing Executive Officer Tetsuya Shimada

Total number of shares authorized

Senior Executive Officer

Shigemitsu Sato

Total number of shares issued

100,000,000
49,355,938

Senior Executive Officer

Dr. Kazuya Saito

Total number of shareholders

16,410Senior Executive Officer

Tomoyasu Kondo

Senior Executive Officer

Sadao Aoki

Executive Officer

Yu Jer Tsai

Executive Officer

Zheng Ming Zeng

Executive Officer

Dr. Koukou Suu

Executive Officer

Shinji Takahashi

Executive Officer

Yasuo Shimizu

Executive Officer

Kenji Yamaguchi

TAIYO HANEI FUND,L.P.

1,616

3.28

Executive Officer

Dr. Ju Hoon Shin

3D OPPORTUNITY MASTER FUND

1,427

2.89

Auditor

Makoto Ito

Auditor

Mitsuru Yahagi

External Auditor
External Auditor

Major Shareholders
Shareholder’s name

Number of shares Shareholding ratio(Thousands)(%)

Nippon Life Insurance Company

3,242

6.57

TAIYO FUND,L.P.

2,831

5.74

Japan Trustee Services Bank, Ltd. (Trust account)

2,452

4.97

The Master Trust Bank of Japan, Ltd. (Trust account)

2,419

4.90

Mizuho Bank, Ltd.

1,278

2.59

Sumitomo Mitsui Banking Corporation

1,243

2.52

STATE STREET BANK AND TRUST COMPANY 505103

1,173

2.38

Senshu AsadaNORTHERN TRUST CO.(AVFC) RE HSD00

1,093

2.21

Isao Utsunomiya

Note: Treasury stock (3,548 shares) is excluded from the calculation of shareholding ratios.

Securities Companies
1,680,408 shares
3.40%
Domestic Companies
2,048,563 shares
4.15%
Individuals
and Other
8,030,232 shares
16.27%

Foreign Investors
29,569 shares
0.06%

Total
49,355,938 shares

Treasury stock
3,548 shares
0.01%
Financial Institutions
16,208,020 shares
32.84%

Foreign Companies
21,355,598 shares
43.27%

As of September 30, 2020

Bases of ULVAC, Inc.
Bases of ULVAC Group companies in Japan/overseas

North America

R&D base• ULVAC Technologies, Inc.

Sales and service bases• Physical Electronics USA, Inc.

Europe• ULVAC GmbHChina
• ULVAC (CHINA) HOLDING CO., LTD.
• ULVAC (NINGBO) CO., LTD.
• ULVAC (SUZHOU) CO., LTD.
• ULVAC Orient (Chengdu) Co., Ltd.
• ULVAC Automation Technology (Shanghai) Corporation• ULVAC Tianma Electric (Jingjiang) Co., Ltd.
• ULVAC (Shenyang) Co., Ltd.
• ULVAC TECHNO, Ltd.

• ULVAC COATING CORPORATION• ULVAC (Shanghai) Trading Co., Ltd.

• ULVAC KYUSHU CORPORATION• NISSIN SEIGYO Co., LTD.

• ULVAC Materials (Suzhou) Co., Ltd

TaiwanSouth Korea

Southeast Asia

• ULVAC TOHOKU, Inc.

• ULVAC Human Relations, Ltd.

• ULVAC Opto-electronics Thin Film Technology (Shenzhen) Co., Ltd.

• ULVAC TAIWAN INC.

• ULVAC KOREA, Ltd.

• ULVAC SINGAPORE PTE LTD• ULVAC KIKO, Inc.

• SHINKU CERAMICS CO., LTD.

• ULVAC CRYOGENICS (NINGBO) INCORPORATED• ULTRA CLEAN PRECISION TECHNOLOGIES CORP.

• Ulvac Korea Precision, Ltd.

• ULVAC MALAYSIA SDN. BHD.

• ULVAC EQUIPMENT SALES, Inc.

• FINE SURFACE TECHNOLOGY CO., LTD.

• ULVAC NONFERROUS METALS (NINGBO) CO., LTD.

• ULCOAT TAIWAN, Inc.

• Pure Surface Technology, Ltd.

• ULVAC (THAILAND) LTD.

• ULVAC CRYOGENICS INCORPORATED• REJ Co., Ltd.

• ULVAC Research Center SUZHOU Co., Ltd.

• ULVAC AUTOMATION TAIWAN Inc.

• ULVAC CRYOGENICS KOREA INCORPORATED• ULVAC-PHI, Inc.

• SHOWA SHINKU CO., LTD.

• Hong Kong ULVAC Co., Ltd.

• ULVAC SOFTWARE CREATIVE TECHNOLOGY, CO., LTD.

• ULVAC Materials Korea, Ltd.

India

• ULVAC VACUUM EQUIPMENT (SHANGHAI) CO., LTD.

• ULVAC Materials Taiwan, Inc.

• UF TECH, Ltd.

• Ulvac Singapore Pte Ltd, India Branch• TIGOLD CORPORATION• ULVAC Coating Technology (HEFEI) Co., Ltd.

59ULVAC VALUE REPORT 202060