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/

Ultimate in Vacuum

Basic Corporate Philosophy/Management Policies

Corporate Profile of the ULVAC Group

Business Segments of the ULVAC GroupName:ULVAC, Inc.

Vacuum Equipment Business

Trademark:ULVAC

FPD and PV production equipment

Head Office:2500 Hagisono, Chigasaki,
Kanagawa Prefecture, Japan

Established:

August 23, 1952

Capital:¥20,873,042,500

Number of
Employees:

Non-consolidated 1,293
Consolidated 6,439 (As of June 30, 2018)

Business Areas:

Development, manufacturing, sale andcustomer support for vacuum equipment,
peripheral devices, vacuum components andmaterials for the display, solar cell, semiconductor, electronic, electric, metal, machinery,automobile, chemical, food product andmedical product industries, as well as universities and research labs, and import andexport of various equipment. Additionally,
research guidance and technical advice forvacuum technologies in general.

Liquid crystal display (LCD) production
equipment
OLED production equipment
Roll coaters
Solar cell production equipment

Semiconductor and electronic device
production equipment
Semiconductor production equipment
LED production equipment
Electronic device production equipment

Components

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

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

Basic Corporate Philosophy

The ULVAC Group aims to contribute to the development of industries and science bycomprehensively utilizing its vacuum and peripheral technologies through the mutual cooperationand collaboration of the Group companies.

Vacuum Application Business
Materials

Sputtering target materials
High-melting-point materials and productionof components
Nano-metal inks

Others

Surface analyzers
Controllers
Mask blanks

Management Policies

Improve Customer Satisfaction
Innovations in Production Technology

Major Vacuum Equipment
Sputtering equipment, vacuum evaporation equipment, CVD
equipment, etching equipment, ashing equipment, ion implantation equipment, annealing equipment, etc.

Development of Original Products
Free and Open-minded Organization
Enhancing Corporate Value1

ULVAC Value Report 20182

Table of Contents/Editorial Policy

About ULVACULVAC’s Vision

Basis for Value Creation

Financial Data/Corporate Information

ULVAC’s History …………………………………………………… 5

Commitment of Top Management ………………… 19

Management Structure …………………………………… 33

Business Results ………………………………………………… 49

ULVAC’s Businesses ……………………………………………… 7

Corporate Governance ……………………………………… 35

Consolidated Balance Sheets …………………………… 51

Compliance ………………………………………………………… 37

Consolidated Statements of Income/ULVAC’s Value Creation <Process> …………………………… 9

Revised Mid-term Management Plan and
Growth Strategies …………………………………………… 23
Feature ………………………………………………………………… 25

Risk Management ……………………………………………… 38

Consolidated Statements of Comprehensive Income … 53

ULVAC’s Value Creation <The Value ULVAC Offers> … 11

To Maximize Global Synergy

Quality Assurance and Product Safety …………… 39

Consolidated Statements of Cash Flows………… 54

13

Vacuum Equipment Business (1) ……………………… 27
FPD and PV Production Equipment

Procurement ……………………………………………………… 40

Company Data/Stock Information/ULVAC’s Value Creation <Source of Value> ………………

Human Resources ……………………………………………… 41

ULVAC Group Companies ……………………………… 55

Consolidated Financial and Non-financial Highlights … 15

Vacuum Equipment Business (2) ……………………… 28
Semiconductor Production Equipment

Occupational Safety and Health ……………………… 45

Vacuum Equipment Business (3) ……………………… 29
Electronic Device Production Equipment

Social Contribution Activities ………………………… 48

Environment ……………………………………………………… 46

Vacuum Equipment Business (4) ……………………… 30
Industrial Equipment
Vacuum Equipment Business (5) ……………………… 31
Components
Vacuum Application Business ………………………… 32
Materials/Others

Editorial Policy

Report’s Scope and Period

ULVAC’s Communication Tools

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 to facilitate
stakeholders’ understanding of our activities and deepen dialogue with them.

Scope: ULVAC Group
While the report covers the ULVAC Group as a whole, any portions for which
the scope differs are indicated.

Summarized

Published:
November 2018 (Previous issue published in November 2017)
Guidelines Referenced:
ISO26000: 2010 (Guidance on social responsibility) First Edition
The International Integrated Reporting Framework, the International Integrated Reporting Council (IIRC)

3ULVAC VALUE REPORT (Japanese and English version)

Period: Year ended June 30, 2018
(July 1, 2017 to June 30, 2018, Fiscal 2017)
Some portions of the report include activities and initiatives from July 2018 onward.
<Disclaimer>
Figures shown in tables and graphs in this report may not add up to the indicated total because of rounding. Some figures have been revised from previous years’ data because the scope of reporting was expanded or calculating
methods have been changed.

Detailed

Securities report

Financial information

Business report

Corporate governancereportBusiness results presentationmaterials (Japanese/English)

CSR initiatives (Website)

Non-financial information

We endeavor to achieve the optimum information disclosure by making various communication tools available tomeet your needs.
To help you deepen your understanding of the ULVACGroup, our communication 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.
ULVAC Value Report 20184

About ULVACULVAC’s History

The story of ULVAC’s foundation

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

Fascinating!
Y’all must do it!

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

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 tothe market and addressing the needs of customers in diverse industries. ULVAC will continue tackling technological innovation to speed progress toward the “smart society” to which we aspire.

At the time when Japan was engaged in post-war recovery, a groupof talented young researchers andengineers gathered with the aim of“contributing to the revival of Japanese industry through vacuum tech-

Challenging new industrial sectors

First president

visionary young people, invested inEngineering Co., Ltd., the forerunner of present-day ULVAC.

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

Yoshijiro Ishikawa
President of Keifuku
Electric Railroad

NRC
Equipment
Corporation

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

Consult

We will provide
wholehearted support to acompany wishing to establish the vacuum technology
business in Japan.

impressed by the passion of these
the establishment of Japan Vacuum

Kohnosuke Matsushita Tamesaburo Yamamoto Aiichiro Fujiyama
President of Panasonic President of Asahi Beer

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

nology.” In 1952 six angel investors,

Ever since its foundation, ULVAC has been refining its capability to flexibly manipulate vacuum technology. In
step with the changing industrial structure, we have always boldly sought to develop new technologies while
expanding application fields to include the production of automobiles, chemicals, pharmaceuticals, and food,metallurgy, as well as mass production of semiconductors and electronic devices, flat-panel displays, and organic
light-emitting diode displays.
Inspired by the promise of the emerging “smart society” where electronics support and connect every industry and lifestyle, we are confident that our vacuum technology will be a key to the advance of the cluster oftransformative technologies, including IoT, big data, artificial intelligence, and self-driving vehicles, that will underpin next-generation lifestyles.

Soughtinvestment

Japan Vacuum Engineering Co., Ltd.

Yoshio Osawa
President of Osawa-ShokaiSecond president Third president

1941: Vacuum Clubwas established

Cooperation

U.S. vacuum equipment
manufacturer

Sixinvestors*1950: Renamed Vacuum
Technology Association

Jin Imachi

Chikara Hayashi

Mazda ResearchLaboratory of Toshiba

Sagane Lab of the
University of Tokyo

1960〜

1962〜

1973〜

1975〜

1983〜

1992〜

2016〜

Automotive

Chemical/
pharmaceutical/foodMetal/steel

Liquid crystal display

Semiconductor

Electronic storage media

FPD

OLED

Reflectors for automobiles

Pharmaceuticals

Special steel

LCD calculator display

ComputerCompact discs

Flat-panel display

Customers’ products

1952〜(Photo: Courtesy of IBM Archives)

OLED

Corresponding
ULVAC products

OLED production equipment
System 731
Vacuum evaporation equipment
High-vacuum distillation equipment for plasticizers

100 kg-class vacuum induction melting
furnace

Transparent conductive film deposition
equipment

In-line sputtering equipment

LCD production equipment

2001

2005

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

1955
Opened the Omori Plant in Tokyo tostart manufacturing equipment inJapan.

1959
Opened the Yokohama Plant in
Kanagawa Prefecture.

1952
1952

5

1964
Established the first overseas subsidiaryin Hong Kong.

1968
Head Office/Plant completed in
Chigasaki, Kanagawa Prefecture.

1969
Changed the company name in English
to ULVAC CORPORATION to promote
exports.

1971

Established a subsidiary in Hamburg,
then West Germany, as a base for cultivating the western European market.

1972

Opened the Institute for Super Materials
as ULVAC’s first research facility.

1975

Opened the North American Office. Established a subsidiary in North America
as a base for exports to the U.S.

1977

Established KYUSYU ULVAC CORPORATION (present-day ULVAC KYUSHUCORPORATION) in Kagoshima Prefecture to expand sales activities in the
Kyushu area.

1960

1970

1982
Established a subsidiary in Taiwan.
Established the Tsukuba Institute forSuper Materials in Tsukuba Science
City (present-day Tsukuba City), Ibaraki
Prefecture.

1983
Opened the Beijing Office in China.

1987

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

1995
Established a vacuum pump production
base in China.
Established a subsidiary in South Korea.

Established ULVAC TOHOKU, Inc. in
Aomori Prefecture to strengthen production of large-scale equipment.

1980

Changed the company name to
ULVAC, Inc.

2002
Established a subsidiary in Singapore.

2003
Established a base for full-scale production and field support in China.

2004
Listed on the First Section of the Tokyo
Stock Exchange.
New buildings of the Head Office/Plant (Chigasaki, Kanagawa Prefecture)completed.

1990

2000

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

2006
Established a production subsidiary forlarge LCD production equipment in
Taiwan.

2007
Established a base in India.

2005

2010

Relocated the Chiba Institute for Super
Materials to the Tomisato Industrial Parkin Chiba Prefecture to enhance R&D.

2011

Established the South Korea Institutefor Super Materials to enhance R&D in
South Korea.

2015

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

2016

Began manufacturing production equipment for large displays in China.

2018

2018

Celebrated the 50th anniversary of thecompletion of the Head Office/Plant(Chigasaki, Kanagawa Prefecture).

2010

ULVAC Value Report 20186

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

Net sales by business segment (amount and %)Vacuum Application
Business¥32.6 billion

13

Vacuum Equipment
Business¥216.7 billion%

Others

Net sales by region (amount and %)¥15.2 billion

Sputtering target
materials for FPD
production equipment

ULVAC is a source of electronic materials,
such as sputtering targets, for diverse
industries. In addition, in the high-performance materials sector, ULVAC is asource of integrated manufacturing
and precision processing technologies for titanium, tantalum, zirconium, niobium, etc.

Industrial
equipment¥23.7 billion

As befits a company involved in a range of FPD
and PV manufacturing technologies, ULVAC not
only develops production equipment but alsooffers solutions worldwide that leverage its development of advanced materials.

6
9

13

7

With a long history of producing vacuum
equipment for industrial use, ULVAC has
been involved in this business sector since theemergence of vacuum technology in the 1950s.
Leveraging the fundamental technology
it has developed so far,ULVAC currently provides various
solutions across wide-ranging
industries, including the automotive, pharmaceutical, and foodindustries.

¥51.6 billion

Components¥6.7 billion

7South Korea

15

3 7
30
Net sales infiscal 2017¥249.3billionHigher integration and higher performance at lower
cost are demanded for next-generation semiconductors
and other high-performance devices. Based on its development of super-miniaturization technologies for suchsemiconductors and other electronic devices, ULVAC delivers a stream of new technologies and products to theworld that underpin the progress of society.

38
China

¥95.0 billion

Cryopump

As a comprehensive vacuum product manufacturer, ULVAC is also
dedicated to the development of components. ULVAC pursues
cutting-edge vacuum technology while providing a wide range of
product lines, extending from vacuum pumps and measurement/
analysis equipment, to components, such as power generators forvarious types of deposition equipment and vacuum valves.

7%

OLED production equipment

Semiconductor and electronic
device production equipment

Leak detector

Other Asia

¥38.3 billion

billion21

Vacuum melting furnace¥32.8 billion

LCD production equipment

billion¥16.7 billion¥17.8 billion

44%

Europe, North America
and elsewhere

TaiwanNet sales infiscal 2017¥249.370 ¥74.8 30
Japan¥174.5 billion¥108.5 billion

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

Materials%

FPD and PV production
equipment

X-ray photoelectron
spectroscopy equipment¥17.4 billion

87

Overseas

Dry vacuum pumpSputtering equipment forelectronic devices

Sputtering equipment for
semiconductors

ULVAC Value Report 20188

About ULVACULVAC’s Value Creation<Process>

As a comprehensive vacuum products manufacturer, ULVAC offers
solutions that contribute to the resolution of issues confronting
society and thus to the overall progress of society.

Vacuum technology is at the heart of industrial and scientific development.
As a comprehensive manufacturer of products utilizing vacuum technology, ULVAC seeks tomaximize synergy throughout the Group, encompassing diverse business fields and formats, whilestrengthening collaboration with partners to offer high-value-added solutions that contribute to
the resolution of issues confronting society and moreover facilitate the realization of lifestyles thatare not only safe and secure but also affluent and convenient.

Contribution to res o lu t io n o f pr i

n c ip a l s o c i al is s u e sContribute to industrial andscientific development
M a xi m i z

Coatingbusiness
Advancedmaterials Materials

Social issues

Equipment
controlSurfaceanalysis

no

fS

yn

er
gy

Automotive

Services

Partners

FPD
PV

VacuumBiomedical/
pharmaceuticalproducts

Customers
Research institutes
Universities
Companies in diverse
industries
Suppliers

VacuumEquipment
Business

Quality

Procurement

Human
Resources

Occupational
Safety and
HealthManagement
Corporate Governance
Basic Corporate
Philosophy

9092_0627058583012.indd

Realize lifestyles thatare not only safe andsecure but also affluent
and convenient

Nextgeneration
display

Semiconductors
Electronics

Industrial
equipment
Components

Value
Assurance
Creation Product Safety

Social contribution
Support customers’
value creation

Equipment

Basis for

Semiconductor

Customer
supportVacuumApplication
Business

Control
Analysisa ti oEnvironment

SocialContribution
Activities

NextgenerationenergySensors/
smart devices

P.33
The

rs
ffe
O
C
LVA
U
e
Valu

ULVAC Value Report 2018

すべてのページ

2018/12/20

10
14:44:43

About ULVACULVAC’s Value Creation

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

<The Value ULVAC Offers>
ULVAC’s business activities

Social issues● Establishment of global network infrastructure and thesmart society, progress of 5G
and IoT

Market opportunities● Aspiration for the progress of
all industries and technologicalinnovation

ULVAC’s six business areas
Priority domains

FPD and PV Semiconductor
production
production
equipment
equipment

Realization of the smart society

Electronic device Industrial
production
equipment
equipment

See

See

Self-driving, agriculture, healthcare, virtual currency, etc.

● 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

SeeComponents

Materials

See

Main value offeredby the business

Customers and their products

Response to new semiconductor and electronic device fields andneeds by applying vacuum deposition andother technologies andR&D of cutting-edge
processes through collaborative creation withcustomers

FPD, semiconductors, electronic equipment and devices manufacturers● Global energy issues due to dependence on finite resources● Progress of renewable andlow-carbon energy systems

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

Contribution to realization of an advanced,
convenient, safe andsecure, global society

3D-NAND,PCRAM, CPU,etc.

Functional devices:
Sensing, communication (5G), display

See

IoT, cloud, AI, robots, big data, drones● Environmental issues, such as
global warming and climatechangeSemiconductors:
Memory, logic

Contribution toresolution ofprincipal social
issues*

MEMS, SAW/FBAR
devices, OLED, etc.

See

Enhancement of performance of solar cells
and power devices byvacuum deposition, ion
implantation and othertechnologies

Solar cell manufacturers, battery man- Contribution to creufacturers, etc.
ation of a sustainable
society by power genEnergy:
eration, energy storage,
Heat generation,
power storage,
and energy saving
conversion
Solar cells, all-solidstate batteries, powerdevices, magnets forwind turbines● Food safety and security, population explosion and sharp increase in demand for food in
emerging countries, increase infood loss● Longer preservation of foodand pharmaceuticals, volume
reduction

Healthcare,life innovation

Longer life and volume
reduction of freezedried food, powder
vaccines, drugs, etc. byvacuum freeze drying
and other technologies● Longevity, needs and progressof health promotion andhealthcare● Aging of infrastructure in developed countries● Development of industrial infrastructure in emerging countries● Wider gap between rich andpoor● Development of safe, secureand comfortable infrastructure

Construction,social infrastructure,mobility

Enhancement of performance of industrial
materials and responseto new materials byapplying vacuum heat
treatment and othertechnologies

Food manufacturers, pharmaceuticalmanufacturers, etc.
Foodstuffs,
pharmaceuticals:
Freeze drying
Freeze-dried foods,
emergency provisions,
supplements, powder
vaccines, etc.

Chemical and materials manufacturers, steelmakers, transportation equipment manufacturers, etc.
Industrial materials:
Heat treatment

Contribution to human health,the future of medicine, and realization of a sustainable society with minimal food loss bymeans of safe and secure foods
and pharmaceuticals

Contribution to creation of a sustainable
society that is safe andsecure and comfortable

Glass building materials,
industrial materials,
materials for transportation equipment, etc.

*Indicates relationships with the United Nations’ Sustainable Development Goals (SDGs).

11

ULVAC Value Report 201812

About ULVACULVAC’s Value Creation <Source of Value>
Research & Development

Global Network

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

Sales & service networks offering solutions to support industrial development worldwide

ULVAC has long been a source of vacuum-technology-based products and materials indispensable forwide-ranging industries. With vacuum technology at the heart of everything we do, we will continue to promote innovative, pioneering R&D capable of addressing actual and potential needs and create high-added-value products and technologies, thus contributing to the progress of society.

Deploying the capabilities of the Group’s 50 companies, we have established sales & service networks optimized for each region, such as Japan, the United States, Europe and Asia. Vacuum technology, one of the keys
for many other cutting-edge technologies, will be increasingly required for a wide range of industries andgrowth fields in the future.

Eight priority areas

R&D Organizations—Toward affluent and safe lifestyles
We have designated eight priority areas for development. Furthermore, we are pursuing development and enhancement in each area
through the cooperation of the marketing manager (CPM), designand cost reduction manager (CDM) and the technology manager(CTM).

Priority areas

Power generation, energy
Sophisticated Hyperfine
storage, and energy
information field wiringsaving field High-density

Highfunctional
films

R&D
Headquarters

Institute for Super Materials

Electronic devices
and MEMSPower devices

Research and Development Planning Department
Research and Development Division

mounting

China:(Consolidated basis)

South Korea:

6,439

Taiwan:Southeast Asia:(As of June 30, 2018)

North America:

3,208
1,757
616
551
151
156

50 companies in the Group

Number of bases

119(As of September 30, 2018)

Customer Support
ULVAC CS Solutions pool the Group’s knowledge

ULVAC’s R&D Structure (as of July 2018)

Next-generation
displays

High-efficiency
Next-generation
solar cells
non-volatilememoryULVAC has a global R&D structure in place. Through integration of
the Group’s R&D organizations, we are accelerating R&D while endeavoring to create differentiated technologies by capitalizing ontechnological innovation and fusion of technologies.
Furthermore, while conducting product development to ensure
short- to medium-term profits through development and business
operations in our designated priority areas, the Future Technology
Research Laboratory is sowing the seeds for the long term, with atime horizon of 10 to 20 years.

Japan:

Number of
employees (Persons)Institute of Semiconductor & Electronics Technologies

We are pursuing outstanding service by pooling the knowledge we have cultivated, including original technologies and service knowhow.
Our customer support network (71 bases in 14 countries) in Japan and around the world underpins our customers’ production operations in a manner that meets their needs throughout the lifecycle. 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.

Future Technology Research Laboratory

Future areas

Innovation anticipating change

New energy

Field support(maintenance)

South Korea: ULVAC KOREA, Ltd./Korea Institute for Super Materials

Creating added value by
refining technology

Modification/
improvement

U.S.A.: ULVAC Technologies, Inc.

Environment

MedicalParts sales

Taiwan: ULVAC TAIWAN INC.
China: ULVAC Research Center SUZHOU Co., Ltd.

Before refurbishing

After refurbishing

Sales ofrefurbishedusedmachines

Cleaning andsurfacetreatment

Capital Expenditures and R&D Expenses (Actual and Forecast)
R&D investments (capital expenditures for R&D and R&D expenses) are expected to continue increasing. Active development is expected to leadto future growth, along with efforts in next-generation displays/ logic, next generation non-volatile memory.
Depreciation

Capital expenditures (actual and forecast)

R&D

Total investment(Billions of yen)
20

R&D expenses (results and forecast)

Repairs, buildings, etc.

(Billions of yen)
10.0

15

8.3

0

13

5.6

9.6
6.7

5

7.5

12.9

10

7.6

7.0 6.9
4.1

3.9
2014

2015

8.3
4.1

6.4

7.2

6.5

Global CIP (continuous improvement program)This service informs customers of effective usage techniques while also offering improvements in yield rate
and productivity over many generations for the equipment they are already using.
Factory outsourcing (FOS)We provide support by contract or the dispatch ortransfer of personnel for the operation and maintenance of equipment and facilities, as well as for the ordering of components, selection of equipment, andprocess development.

9.7

15.6
6.3

6.9

5.0

7.6

2.5

2016

2017

2018

Forecast

0.0
(FY)

2014

2015

2016

2017

2018

Forecast

Equipment maintenance service
Emphasizing close communication with ourcustomers, we offer timely service.

(FY)

Rejuvenation, precision cleaning, andresource recovery
We aim for overall cost reductions through extensionof component life and the cleaning cycle, and recoveryof valuable materials, etc. Based on our extensive
knowledge of vacuum equipment as a whole, we propose the optimal surface treatment and cleaning foryour needs.

Component maintenance
Pump maintenance
We provide maintenance of components suchas vacuum pumps.
JCSS vacuum gauge calibration service
ULVAC is an MRA/JCSS* accredited calibration laboratory in the pressure (vacuum gauges) category.
*JCSS (Japan Calibration Service System): Calibration laboratory
accreditation system under the Measurement Act*International MRA (mutual recognition agreement)

Components and consumables
We achieve high-quality, swift, and reliable delivery
through in-house manufacturing of components.

Analysis service
We conduct an analysis service using the ULVACGroup’s analysis and evaluation equipment.

Sale and purchase of pre-owned
equipment
We sell, purchase, refurbish, relocate, import and export pre-owned products, ranging from components to
production equipment.

Training service
We provide training services for ULVAC products(equipment, vacuum pumps and components).

ULVAC Value Report 201814

About ULVAC

Consolidated Financial and Non-financial Highlights

Consolidated Financial Highlights

Non-financial Highlights

Net sales

Operating profit(Billions of yen)

231.8

250
200

173.9

179.2

249.3

Rate of lost-work-time injuries(Billions of yen)

2.0

35.4

36

1.58

29.5

192.4

1.0

17.9

18

12.0

100

11.1

0.0
0

2013

2014

2015

2016

2017

(FY)

0

2013

2014

0.94

1.06

1.06

1.63
1.15

2015

2016

2017

(FY)

1.66
1.02
0.37

0.5

9

50

1.61

1.5

27

150

1.66

ULVAC (non-consolidated)
All industries
Manufacturing industry

0.00

0.00

0.00

0.00

2013

2014

2015

2016

2017

(FY)

*Source for average data for all industries and manufacturing industry: “Survey on Industrial
Accidents 2017” by the Ministry of Health, Labour and Welfare of Japan.

Annual paid leave utilization rate (%)

Net income(Billions of yen)

(%)

40

50

35.9

30

40.2

24.5

29.2

67.6

2014

2015

59.0

58.8

2016

2017

25

49.5

40

69.4
58.0

50

Equity ratio

32.8

0

33.2

According to a report by the Ministry of Health, Labour and Welfare, the number of workers who suffered fatal or occupational
accidents causing four days or more lost work-days has stopped
decreasing in recent years and is flatlining at around 110,000.
Although the proportion accounted for by the manufacturingindustry has been gradually decreasing, it still accounts for about
a quarter, indicating the difficulty faced by the industry in its efforts to eliminate occupational accidents. It is in this context that
ULVAC has been promoting various safety initiatives, including
risk assessment, through the operation of the safety management system, which led to a lower rate of occupational accidents
compared with the industry average. With “safety first” as theGroup’s principle, we will redouble our efforts to eliminate occupational accidents.

Work-life balance

100

75

Commitment to safety

2013

(FY)

Measures are in place to encourage employees to take annual
paid leave so they can deliver results with high productivity.
The entitlement of ULVAC employees to annual paid leave
begins on the day they join the company. The “spot-leave campaign” has proved effective in encouraging employees to takeannual paid leave. The paid leave accumulation system enables
employees to use unused, expired annual paid leave for the
purpose of long-term hospitalization, nursing care, or childcare.
Load levelling is an ongoing issue and we will consider measuresin view of the diversity of workstyles and employee preferences.

30

16.7

20

11.5
10

Localization ratio of presidents of overseas subsidiaries (%)

20

8.9

100

10

78.8
0

2013

2014

2015

2016

2017

(FY)

0

2013

2014

2015

2016

2017

(FY)

75

78.8

81.8

Training of next-generation executives as well as recruitment and promotion of global human resources

87.8

66.7

50

25

0

ROE (Return on equity)

2013

2014

2015

2016

2017

(FY)

Interest-bearing debt

The ULVAC Group operates globally and comprises 119 bases.
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 have assigned local employees to important positions
overseas. With a view to accelerating business promotion and in
preparation for the next leap forward, our new mid-term management plan positions human resources development as a key
element in strengthening the management base. We will continue training next-generation executives as well as cultivation andpromotion of global human resources.

Number of people participating in vacuum demonstration classes (Persons)
(%)

28.5

30

29.2

Supporting education of the next generation and contributing to local communities(Billions of yen)
100

89.6

21.9
20

800

82.6

75

18.8
12.1

62.7

437
42.7

50

605

600

400

35.7

10

200

25

0

15

2013

2014

2015

2016

2017

(FY)

0

2013

2014

2015

2016

2017

(FY)

0

112
2013

172

2014

252

2015

2016

2017

(FY)

ULVAC holds vacuum demonstration classes and plant tours,
mainly for local public institutions, such as elementary schools,
and for people in local communities and shareholders. Adheringto the Basic Corporate Philosophy, “The ULVAC Group aims
to contribute to the development of industries and science bycomprehensively utilizing its vacuum and peripheral technologies
through the mutual cooperation and collaboration of the Group
companies,” we will support education of the next generationand contribute to local communities through vacuum demonstration classes and other initiatives.

ULVAC Value Report 201816

About ULVAC

Consolidated Financial and Non-financial Highlights

Financial Data

(Unit)

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY20172008.62009.6

2010.62011.62012.62013.62014.62015.62016.62017.62018.6

Key financial results
Net sales*1

Millions of yen

241,212

223,825

221,804

232,040

196,804

163,351

173,878

179,174

192,437

231,831249,271

Operating profit (loss)

Millions of yen

9,081

3,483

4,809

1,850

(6,384)

6,115

11,996

11,132

17,86429,46835,351

Ordinary profit (loss)

Millions of yen

5,075

835

4,942

1,441

(6,497)

6,264

13,384

12,475

18,37329,71636,907

Net income (loss)*

Millions of yen

3,610

811

2,138

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

11,538

8,874

16,69824,46935,904

Net assets

Millions of yen

91,85390,158102,504

92,023

41,18759,436

72,23884,92878,032

104,917

154,069

Total assets

Millions of yen

303,069

318,076

313,784

313,616

249,651

243,289

230,791

242,348

219,561

245,306

297,754

Cash flows from operating activities

Millions of yen

32,068(31,891)

44,312

17,730(8,492)

22,35732,213

21,992

23,70837,81819,086

Cash flows from investing activities

Millions of yen(25,944)(14,051)(10,876)(14,833)(11,328)(4,506)(3,023)(4,055)(5,593)(13,713)(1,564)

Cash flows from financing activities

Millions of yen(1,750)51,325(23,418)

2,159

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

Cash and cash equivalents at end of period

Millions of yen

16,977

21,827

29,72135,722

28,18044,20457,012

61,67044,86247,55554,348

Net assets per shareYen

2,052.48

1,961.08

1,992.06

1,787.51

751.00806.381,040.23

1,398.66

1,477.29

2,002.90

2,994.12

Net income per share

Yen

84.16

18.90

46.60

(176.43)(1,012.94)(87.79)223.18172.73338.37496.35728.68Equity ratio

%

29.1

26.4

31.3

28.1

14.8

22.7

29.2

32.8

33.2

40.2

49.5

ROE (return on equity)*

%

4.0

0.9

2.3

—

—

—

18.8

12.1

21.9

28.5

29.2

Ratio of ordinary profit to total assets*4

%

1.6

0.3

1.6

0.5

—

2.5

5.6

5.3

8.0

12.8

13.6

Times

44.68

146.79

37.34

—

—

—

9.66

10.91

9.21

10.88

5.82

Capital expenditureBillions of yen

23.4

19.6

11.1

17.8

12.7

6.8

6.2

6.7

7.0

8.3

12.9

R&D expenses

Billions of yen

8.6

8.3

8.0

8.3

7.1

5.0

5.2

5.6

6.3

6.9

8.3

Interest-bearing debt

Billions of yen

86.7

136.1

100.2

105.1

120.2

106.1

89.6

82.6

62.7

42.7

35.7

Dividends

Yen

21.0

21.0

21.0

—

—

—

—

10.0

30.0

50.0

95.0

Dividend payout ratio

%

25.0

111.1

45.1

—

—

—

—

5.8

8.9

10.1

13.0

Number of employees

Persons

6,356

6,871

7,169

7,878

6,981

6,579

5,971

5,904

5,886

6,072

6,439

2

Key performance indicators

3

Price-earnings ratio*

5

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 ofparent” is presented instead of “net income.”
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.

17

ULVAC Value Report 201818

ULVAC’s Vision

Commitment of Top Management

Take up the challenge of creating value
for the future by fostering humanresources for the next round of
corporate growth

Setsuo Iwashita
President and Chief Executive Officer

ProfileMarch
August1984 Joined the Company
1992 Manager of Beijing Business Office and Shanghai
Business Office, Overseas Operation Division
September 1995 Director and Chief Executive Officer of ULVAC(NINGBO) CO., LTD.
July
1998 General Manager for Chinese Region,
Asia Division of the Company
March 2006 Director and Chief Executive Officer of ULVAC(CHINA) HOLDING CO., LTD.
October 2006 Chairman of ULVAC (Shanghai) Trading Co., Ltd.
Chairman of ULVAC (SUZHOU) Co., Ltd.
September 2011 Director of the Company
July2012 Director and Executive Officer
September 2013 Managing Executive Officer
July2015 Senior Managing Executive Officer
Chairman of ULVAC (CHINA) HOLDING CO., LTD.
September 2016 Director and Senior Managing Executive Officerof the Company
July2017 President and Chief Executive Officer(current position)

19

Systems and mechanisms toreform employee mindset
Promote every employee’s
personal growth by emphasizing“knowing the outside world andlooking in from the outside”
At the start of my second year as president
Since taking the helm at ULVAC in July 2017, I have beenendeavoring to strengthen the solidarity of the Groupand to change the awareness of our employees to a
globally oriented perspective, while remaining true to
ULVAC’s corporate DNA of leveraging its “human resources,” upholding its corporate culture of boldly seeking out challenges and contributing to industrial andscientific advancement through the comprehensive utilization of vacuum technology. The priority in my first year
as president was to lay a foundation for transformationof the corporate culture. Starting from fiscal 2018 (fiscal
year ending June 30, 2019), I intend to speed up our reforms in an effort to cultivate new possibilities as a“comprehensive vacuum products manufacturer.”
Although ULVAC is performing well at present, thedrastic changes brought on by the wave of technologicalinnovation and global competition have awakened asense of urgency for the need to promote reforms thatwill ensure our survival. Although living in Japan tends tomake us oblivious to our global situation, I have witnessed
the rapid changes taking place with our customers and on
the market through my experience at the overseas bases.
I believe that is is also essential to utilize this very
perspective of being outside looking in to reaffirm ourstrengths and potential. Through the manufacture ofsemiconductor production equipment and electronic device production equipment, which promises growth inperipheral markets, in addition to the manufacture of
the current mainstay FPD (Flat Panel Display) production
equipment, we have been diplaying growth potential ina broad range of fields amid the wave of technologicalinnovation. Ouroperating base capable of generating
stable revenues including such businesses as the components and materials businesses and the customer support
business may be counted as one of our strength.
Under the “Run at triple speed!”, which is my policy,
I intend to encourage our employees to speed up reforms while building “systems and mechanisms” to ensure that the entireULVAC Group is growing and heading
towards the same direction.

My challenges as president
My first challenge as president is to assess the value of
ULVAC by “knowing the outside world and looking infrom the outside” so as to envisage what ULVAC’s configuration should be five to ten years ahead. In line withthe progress of the smart society, embodied by IoT, theemergence of self-driving vehicles, and greater utilizationof AI and robots, dramatic changes are taking place astechnological innovation increasingly intensifies. As technologies become increasingly sophisticated and diversified, enhancement of ULVAC’s corporate value hinges on
our ability to come up with leading-edge technologies
by deploying our R&D capabilities to maximum effect.
Therefore, to fuel our progress as a comprehensive vacuum products manufacturer, we are reallocating resources
and promoting optimization of the business portfolio
and cultivation of new fields.
Our next challenge is to establish a system to maximize Group synergy to achieve global growth by aligning
Group companies in a unified direction as mentioned
earlier. We aim to put in place an efficient global management system capitalizing on specialization and regional characteristics, that is, the strengths of eachGroup company.
Moreover, we will promote alliances with external
parties, including industry peers, to establish complementary relationships so as to realize manufacturing thatmeet the needs of the global market. As ULVAC operates
worldwide, it will be essential to secure advantages andeconomies of scale through collaboration with external
parties with the aim of expanding business attuned tothe market in each region.
Furthermore, it is necessary to provide support for
employees’ personal growth. For ULVAC to survive in the
global competitive environment, it is crucially important
to encourage every employee to display his or her individuality to the full, as this will enable us to leverage thediversity of human resources for competitive advantage.
From Group companies, we will select personnel withthe potential to flourish in a global milieu, encouragethem to gain wide-ranging managerial experience, andtrain them as next-generation executives. Meanwhile, for
directors, senior executives and general managers, wehave positioned the fostering of subordinates as theprincipal item in their performance evaluation. Moreover,each individual will cultivate the “perspective” requiredof his or her position and to share the “issues.” The objective is to promote total optimization geared to growth
based on “systems and mechanisms” designed to develop the capabilities ULVAC requires through assignment
to managerial positions. My job is to take the lead inbuilding “systems and mechanisms” where people are
the most important resources and our future depends onthem. By focusing on the development of human resources, we will establish a basis for sustainable growth.

ULVAC Value Report 201820

ULVAC’s Vision

Commitment of Top Management

Strengthen profit structure andfinancial strength throughmanagement reform targeting net
sales of ¥300 billion and an
operating profit margin of 16% infive years
Highest sales ever, record breaking profits forthre consective terms
In fiscal 2017, the first year of the three-year mid-term
management plan, orders received exceeded the previous fiscal year’s level and we recorded our highest-evernet sales. Profitability also improved significantly, with all
profit categoriesachieving record highs for three consective terms.
FPD and PV production equipment remained strong
in terms of both orders received and sales, thanks to thecontinued high level of investment in LCDs for largescreen TVs and OLEDs for smartphones, centering on
China. Meanwhile, regarding semiconductor and electronic device production equipment, there were significant increases in orders received for and sales of
production equipment mainly for memory (NAND,
DRAM, next-generation non-volatile), backed by buoyant
demand for servers. Additionally, for components andmaterials, orders received and sales remained brisk. In
terms of profits, the expansion of the semiconductor andelectronic device production equipment business contributed to a substantial increase in profit.
As a result, for fiscal 2017, on a consolidated basis,
orders received increased 3.2% year- on-year to ¥243.0
billion, net sales increased 7.5% to ¥249.3 billion, operating profit surged 20.0% to ¥35.4 billion, ordinary profit grew 24.2% to ¥36.9 billion, and net income surged
46.7% to ¥35.9 billion, reflecting the effects of recording deferred tax assets and gains from sales of stocks.
The operating profit margin increased from 12.7% for
the previous fiscal year to 14.2% and the equity ratio
improved significantly from 40.2% to 49.5%.
In view of this financial performance, ULVAC paid an
end-of-term dividend fiscal 2017 of ¥95 per share (anincrease of ¥45 per share from the previous fiscal year).
Upward revisions to the targets of the mid-term
management plan
The three-year mid-term management plan (from fiscal
2017 to fiscal 2019) had originally aimed for “net salesof ¥250 billion” and “operating profit of ¥35 billion” ona consolidated basis in the final year of the plan. However, given that in the initial year we are already nearing
the target for netsales and we have already overshot theoperating profit target, we revised upward our quantitative targets for the final year of the plan to “net sales of¥265 billion” and “operating profit of ¥38 billion.” Nochanges have been made to the framework of the planin which the key strategies are “promotion of business21

growth” and “enhancement of power to create value.”
In order to achieve the new quantitative targets, we will
aim at further growth primarily in semiconductor andelectronic device production equipment.
In addition, as for R&D investment(capital expenditures for R&D + R&D expenses), we will strengthen thedevelopment of logic and next-generation non-volatilememory, as part of efforts to aggressively expand thesemiconductor and electronic device production equipment businesses, while proactively engaging in development that will lead to future growth.
Furthermore, as well as the revisions to the targetsof the mid-term management plan, we have set “netsales of ¥300 billion” and “operating profit margin of16%” on a consolidated basis as targets for the fiscal
year ending June 30, 2023, five years from now, as outlined in our “growth strategy” for the next leap forward.

Further enhancing corporate value
by establishing a managementbase for sustainable growththrough human resources
development and enhancement of
manufacturing capabilities
Multifaceted strengthening of the management base
ULVAC is implementing multifaceted initiatives to achieve
more powerful business promotion capabilities and manufacturing capabilities so as to strengthen the management base. Regarding human resources, in addition to
the training of next-generation executives mentioned
above, we will emphasize education and training tostrengthen global human resources and provide opportunities for personal growth through assignments tooverseas posts and exchanges with external parties.
My first action on taking office as president was tocall for cultivation of workplaces where every employee
can work with vigor and enthusiasm while achieving personal growth. In this regard, initiatives to strengthen theunity of employees as well as vitalize and improve theefficiency of operations have taken root. At the sametime, we are promoting workstyle reforms, advancementof women, and health management to ensure that every
employee enjoys physical and mental health, is full ofenergy, and displays his or her full potential.
Meanwhile, regarding the manufacturing structure,
we have secured a competitive edge in global businessdevelopment by optimizing the location of development
and production. In terms of product development, wehave put in place a system such that our global development bases centering on Japan collaborate while development bases close to the customer precisely respond tothe customer’s exacting requirements. In terms of production, our plants in Japan, China, South Korea, andTaiwan, with their established local supply chains, collaborate with one another while taking advantage of theirproximity to customers.
Under this manufacturing structure, the Advanced
Manufacturing Division at ULVAC Head Office is spearheading the Group’s efforts to maintain and improve
quality, secure occupational safety, protect the environment and will provide more guidance to plants overseas.
These initiatives are indispensable for protecting the ULVAC brand, a vital element of our management base.
Marketing also has an important bearing on thestrengthening of the management base. At ULVAC, theGlobal Market & Technology Strategy Division, which has
specialized knowledge concerning advanced technologies, is playing the central role in identifying customer
needs around the world in order to navigate markets toward the future and work on development that constitutes the base for the next round of growth.
Growth strategy going forward
Under the growth strategy based on the mid-term management plan, ULVAC will focus on the following
themes.
Firstly, regarding semiconductor production equipment, we aim to achieve growth related to both memory
and logic by vigorously tapping demand for logic, which
is a new field for ULVAC, while responding to rising demand for memory, the existing strength of ULVAC. We
will accelerate efforts to win orders while accumulatinga track record in logic by providing production equipment for mass production.
Secondly, regarding electronic device production
equipment, in order to catch the trend toward a smart
society accelerated by the spread of 5G, we will capitalize on our flexible engineering capabilities while promoting joint development with customers.
Regarding FPD production equipment, in light ofcontinuing long-term investment in the market, we willseek to maintain a high market share for G10.5 substrate-compatible FPD production equipment for largescreen TVs, while addressing needs for lower cost andhigher definition. Also, in view of growing demand for
OLED, we will strive to secure orders.
In the components and materials businesses and thecustomer support business, we aim to achieve further
growth of these businesses as stable revenue bases, forwhich purpose we will take advantage of our ability tooffer comprehensive solutions together with equipment.
In the China market, which is the main driver for
growth of demand for FPD production equipment, semiconductor and electronic device production equipment,
and components and materials, we will take advantageof the 15 ULVAC Group companies and their 1,757 employees (as of June 30, 2018) in China to realize further
growth.
Based on the market prospects and the key measures outlined above, for fiscal 2018, the fiscal year ending June 30, 2019, we forecast net sales of ¥255.0
billion, up 2.3% year on year, operating profit of ¥36.5
billion, up 3.3%, ordinary profit of ¥37.5 billion, up
1.6%, and net income of ¥25.5 billion, down 29.0%.

The decrease in net income will be in reaction to theposting of deferred tax assets in the previous fiscal year,
and the overall trend remains upward with higher sales
and higher profit expected.
The year-end dividend for fiscal 2018 is expected tobe ¥105 per share, an increase of ¥10 per share fromfiscal 2017.

Contributing to a sustainable society
by offering solutions to social issues
as a comprehensive vacuum products
manufacturer
Strengthened recognition of sustainability andits practiceIn recent years, global efforts are made with a view todeveloping a sustainable society, such as initiatives toachieve the United Nations’ sustainable development
goals (SDGs) and environmental, social, and governance(ESG) investment. Efforts by private-sector companies arealso called for, as more and more companies are advocating the resolution of social issues through businessactivities as management themes and proactively working on solutions.
ULVAC recognizes its corporate social responsibility
more than ever and is eager to contribute to the achievement of a sustainable society. The Group will make aconcerted effort to resolve social issues through collaborative creation with stakeholders. We intend to further
clarify materiality (important issues) as a group throughthe promotion of sustainability-oriented managementfrom a medium- to long-term perspective.
Our products and services contribute to energy saving and the development of emerging countries. Goingforward, we will create greater value by comprehensively
utilizing vacuum technology, continue to be an enterprise valued by society, and grow together with our
stakeholders.

ULVAC Value Report 201822

ULVAC’s Vision

Revised Mid-term Management Plan and Growth

Strategies
Targets for FY2022

Whereas ULVAC’s targets under the mid-term management plan announced in August
2017 were net sales of ¥250 billion and operating profit of ¥35 billion on a consolidated basis for the fiscal year ending June 30, 2020 (fiscal 2019), the final year of the plan,
we made upward revisions to these targets for the final year in view of the strong
financial performance in the fiscal year ended June 30, 2018 (fiscal 2017). Moreover,considering the growth strategies for the next round of growth, we target net sales of¥300 billion and an operating profit margin of 16% on a consolidated basis for the fiscal year ending June 30, 2023 (fiscal 2022), five years from now.

(Fiscal year ending June 30, 2023)

r
e
h
rt

u
f
ard

Market backgroundTow

Major turning point for technological innovation
Establishment of a smart society, progress of 5G and IoT
Progress of renewable and low-carbon energy systems, improvement ofenergy conversion efficiency

e

lu
a
v
e
at

rpor

Opportunities to create new value

a
h
t
w
ro

ti

o
ves t

tia
i
n
i
te

a
r
e
l
e
Acc

a
n
i
a
t
sus

h

Net sales:
Operatingprofit:Operatingprofitmargin:23¥249.3
¥35.4
14.2

%

Strengthening ofmanagement baseInitial target: ¥35 billion

e

s
a
b
t
men

¥265

billion¥38

billionbillion%VisionHuman resources development for
the next leap forward and a corporate culture that relishes challenges(+¥15 billion)(+¥3 billion) Key strategies

e

g
a
n
a
fm

Promotion of business growth● Semiconductor production
equipment business

Achieve growth in tandem with memory and logic

Human resources
development

More powerful businesspromotion capabilities● Electronic device production
equipment business

Achieve growth by seizing business opportunities brought
about by technological innovation accelerated by 5G

Deepening relationships andcoordination within the Group

More powerfulmanufacturing capabilities● FPD and PV production
equipment businessRespond to continuous long-term investments
centering on large-screen TVs and OLEDs

Information platform
development

Improve businessjudgments● Components business, materials business,
Achieve growth as stable revenue bases
and customer support business

Financial strength
improvement

Improve capabilities for
growth investment● China market

billionbillionOperatingprofit:

s
e
i
g
e
t

K

t
g
n
e
r
St
Results for FY2017

Initial target: ¥250 billion

ra
ey st

o
g
n
i
n
e

New targets
for FY2019

Net sales:

groOperatingprofitmargin:¥300
16Highly profitable corporate management by comprehensively utilizing
vacuum technology, maximizing synergy among equipment, materials,
deposition processing, analysis &services, and cooperating with global business partners(Fiscal year ending June 30, 2020)

p
m
i
nd

ble g

ward

co
d
e
v
ro

h
t
w

Net sales:

Reinforce sales and production, achieve businessgrowthULVAC Value Report 201824

ULVAC’s Vision

FeatureTo M a x i m i z e G l o b a l

ULVAC aims to equip itself with more powerful manufacturing capabilities by deepening relationships and coordination within the Group. Strengthening global development, sales and production systems will enable ULVAC to establish a base forsustainable growth supporting further expansion of the business.

R&D
Synergy with sales and production
The critically important role of research & development operations consists of determining the direction of R&D in cutting-edge fields and accelerating R&D to enable timely
product launches. In order to continuously increase sales andprofit in the rapidly changing semiconductor and electronic
devices field, we have to conduct advanced development ofpromising innovative technology at an early stage based on
accurate analysis of customer needs and future market trends.
Consequently, there is a growing need to integrate R&D withboth sales and production departments so as to unleash synergy leading to the timely launch of products desired by customers.

"Open R&D"

Enhancing ULVAC’s technology portfolio
Group
companies

Complementing and reinforcing technologies

South
Korea

U.S.
Japan

China

TaiwanIntegration Sales

Customers

25

Sales & marketing operations focus on when and where innovative technology is developed, identify customer needs fromvarious perspectives, and determine how best to deliver solutions to “end users,” feeding back all this information to R&D
and production operations so as to achieve synergy and enhance corporate value.
Moreover, by building a formidable sales & marketing
foundation through strengthened collaboration among the

ULVAC Group’s sales & marketing departments, we will pursue customer satisfaction while raising the productivity ofsales & marketing. For this purpose, we intend to establish a
new organization designed to facilitate and support collaboration among sales & marketing departments throughout ULVAC Group companies and promote a system for sharing sales& marketing information to support sales & marketing activities.

Production

R&D

Timely productoffering

Along with the technological innovation of recent years, competition between device manufacturers, which are ULVAC’s
customers, has been intensifying. One consequence is the
emergence of major players based in China, South Korea, andTaiwan. Device development by overseas manufacturers is a
rapid process. Even for ULVAC, which derives around 70% ofsales from outside Japan, it has become essential for its development structure to match the speed and urgency of theoverseas device manufacturers in global business development. Accordingly, it is imperative that any local subsidiaries
conducting R&D close to overseas customers promptly sharethe information gained with the rest of the ULVAC Group’s
R&D departments. In other words, they should engage inwhat we call “open R&D.” To maximize synergy geared to
global growth, we are pursuing initiatives to raise R&D efficiency, enhance ULVAC’s technology portfolio, and complement and reinforce technologies.

Open innovation
In recent years, our customers, the device manufacturers, havebeen making increasingly sophisticated demands of us interms of equipment quality and productivity. In response, ULVAC is sharing ideas with customers of products at an earlystage of development with a view to collaborative development.
In fact, collaborative development with major device
manufacturers and research institutes overseas is underway.
In-house commercialization of products and technology devel-

Sales

Production

Open R&D to spur global R&D synergy
Raising R&D efficiency

S yn e rg y

While ULVAC operates globally with production systems basedon Japan, China, South Korea, and Taiwan, each production
base has built its own supply chain. Going forward, we arepromoting the initiatives described below to achieve growthof the Group as a whole.
1) Collaboration among production bases and improvementof production efficiency
We will pursue optimization of delivery dates and costs through dispersion of the workload and sharing of suppliers by visualizing production
statuses of our principal production bases. Moreover, by deploying systems to support manufacturing and boosting production capacity by improving production efficiency, we will flexibly respond to rising demandfor equipment in line with the progress toward a smart society.

2) Strengthening and standardization of quality
management systems
Ideally, manufacturing operations should be a source of productsof consistent quality regardless of which plant they are produced
at. We will continue Group-wide implementation of Front Loading, which is an activity to build in quality from the initial phase byidentifying all risks and implementing countermeasures in advance, such as technical reviews, simulations, and verification before receiving orders. We are also working to improve efficiency of

Front Loading itself. Furthermore, we will promote sharing oftechnologies, skills, experience, knowhow, and related information and data among sales & marketing, engineering, design, andmanufacturing departments throughout the ULVAC Group andstep up efforts to reflect all of this in the development and design
processes.

3) Horizontal deployment of safety and environmental initiatives

Safety and environmental considerations are integral to manufacturing. Considering that safety and environmental criteria are aspects of production, we conduct stringent monitoring and reviewof these criteria. As well as implementing thorough measures toprevent accidents and trouble through information sharing andhorizontal deployment of measures at production bases, we are
pursuing sustainable manufacturing through efficient utilization oflimited resources and energy saving realized by production technology.

Through the initiatives described above, we are pursuing closer
global collaboration among production bases and having the
production department engage in the projects of each businessfrom an early stage, to further strengthen the Group’s production systems.

●Principal production bases ●Production bases

Major characteristics of principal production bases

oped internally is becoming ever more difficult in view of theneed to accelerate development, while collaboration and integration with external human resources and technologies are
becoming keys for success. Going forward, we intend to enhance synergy by prioritizing assignment of personnel fromoverseas Group companies to important positions, acquisitionof talent and new technologies from outside the Group, andcollaborative development with leading universities and customers.

Suzhou, China

Pyeongtaek, South Korea

Tainan, Taiwan

Head Office/Plant, Japan

Fuji-susono, Japan

Hachinohe, Japan

Kagoshima, Japan

Supplies FPD production equipment
and electronic device
production equipment to the China
marketSupplies FPD production equipment andsemiconductor production equipment
to the South KoreanmarketSupplies FPD production equipment
and electronic device
production equipment to the Taiwan
marketMother plant of theGroup

Mother plant for
semiconductor production equipment

Model plant for FPD
production equipment, industrial
equipment, materials, and production
and processing
technologies

Model plant for
FPD production
equipment, electronic device production
equipment, materials, and production
systems

ULVAC Value Report 201826

ULVAC’s Vision

FPD and PV Production Equipment

Vacuum Equipment
Business (1)Overwhelming market share for G10.5 sputtering
equipment for LCDs for large-screen TVs
Ready for next-generation equipment other than FPDs
Regarding LCDs for large-screen TVs, device manufacturers rapidly expanded capital investment for G10.5 that is
capable of producing multiple 65- or 75-inch panels fromone substrate. Capitalizing on abundant experience accumulated in the TV market, ULVAC has secured an overwhelming share of this market segment by introducing
sputtering equipment offering superior productivity
ahead of competitors. We are also ready to enter themarket for vacuum equipment for printed OLED TVs,
which are promising next-generation large-screen TVs.
Although the market scale of the solar-cell field is notlarge business opportunities are emerging since a leading
research institute in China demonstrated the performanceof ULVAC’s high-efficiency silicon heterojunction solar cell
production equipment. Moreover, we secured orders fordeposition roll coaters for high-performance capacitors required for electric vehicles (EVs), which constitute a promising growth market. In addition, with regard tolarge-capacity lithium-ion batteries, we have reached thetrial manufacturing phase following vigorous basic R&D, amilestone pointing to business development from now on.
FPD-related investment expected to continue over the long term(Million m²)
200

TV panel demand forecast

Vacuum Equipment
Business (2)Semiconductor Production Equipment

Advanced development of successor products attuned
to customer needs, leading to greater market share

Strategic growth by expanding customers in memory
and entering the logic/foundry market

Growing semiconductor equipment market share in
the age of the smart society

Capital investment is in full swing in the FPD field. China
has become the largest producer of LCDs for large-screen
TVs and G10.5-compatible factories have come on stream.
OLED TVs, which are gaining traction as premium largescreen TVs, promise to be a future growth engine in viewof ongoing technological innovation. With regard tosmall and medium-sized displays, flexible displays adopting OLED are the key to further growth.
With differentiated proprietary technologies, such as
low-particle large glass substrate transportation technology, ULVAC aims to expand its market share, includingthat in the OLED-TV market. Meanwhile, we are developing products for small and medium-sized displays with aview to reducing particles, which have a direct impact onyield.
Continued growth is expected for the solar-cell market until 2030, with high-efficiency solar cells showing
particularly high growth. ULVAC is the only company witha track record in mass production of high-efficiency solar
cells using silicon heterojunction solar cell production
equipment. Aiming to set a de facto standard for high-efficiency solar cells, we will promote development of new
products unmatched by competitors. We are also preparing our new deposition roll coater, which is capable ofhandling high functional films necessary for large-capacity lithium-ion batteries used in EVs, for market entry andbusiness operation.

Through vigorous investment in the memory market we
received orders from both repeat customers, and newly
acquired customers with new processes applications. Our
progress is largely attributable to one of our key businessstrategies; cultivation of ever-stronger relationships withtechnology-initiative-partners. Additionally, we accomplished full-scale entry to the logic/foundry markets, alongstanding goal, and progressed in establishing thesebusinesses as new growth drivers in accordance with ourbusiness strategy. Having started business with customers
in China, one of the growing markets, we are poised for
future growth of this business.
Atop of these gratifying accomplishments and progress, we are promoting initiatives to further reinforce thefoundation for growth by strengthening sales & marketing, production, and customer support systems.

The requirements of semiconductor devices and related
components are evolving to support the emergence of
IoT’s big data demand and servers for edge computing.
Growth opportunities are increasing not only for traditional DRAM and NAND but also for storage-class memory. Miniaturization is fueling innovation in processor
technology.
ULVAC intends to grow memory and logic/foundrybusiness through these technical innovations.
We will focus on growth engine keywords: “Miniaturization Process Requirements”, “Nonvolatile memory
film formation”, “Wafer level package deposition”, and“Logic/Foundry miniaturization mass production support”. Based on a business growth strategy unique to ULVAC, we will pursue business development different fromother major competing equipment manufactures.
As a medium-term strategic plan we are promoting
the development of leading edge technologies that willleverage our strengths in native oxide removal and sputtering equipment.

100

Semiconductor equipment market expansion due tothe rising tide of IoT related data and soaring server
demand.
Number of connected IoT devices worldwide

Total amount of data generated(Billions)
50

(ZB)
900

25

450

0

0

Key Measures

Key Measures

0

2016

2017

2018

2019
OLED

LCD

2020

2021

2022

(Prepared based on data from HIS Markit)

Mobile phone panel demand forecast(Million units)
2,000

1. Further enhance quality and ensure reliable manufacturing
2. Strengthen systems responding to demand fornext-generation displays and develop a global business structure
3. Cultivate high functional film and PV markets anddevelop successor products
Conceivable Risks

1,000

0

2016

2017

2018

2019
OLED

LCD

2020

2021

2022

(Prepared based on data from HIS Markit)

1. Rapid change in the trend of the FPD market (slowdown in the large-screen TV market in China, advent ofalternative technology, etc.)
2. Delay in development of technically challenging technology

2016

2021

(Prepared based on IHS IoT Trend Watch 2018)

2016

2021

(Prepared based on Cisco Global Cloud Index 2016-2021, Jan 2018)

Semiconductor production equipment market forecast(Billions of U.S. dollars)
80

Forecast

Conceivable Risks

60
40
20
0

2013

2014

2015

2016

2017

2018

2019

(Prepared based on SEMI Mid-Year Forecast announced on July 9, 2018)

Further growth by strengthening the global business structure

Yasuo Shimizu

General Manager of FPD•PV Division

The quality enhancement initiatives launched five years ago have yielded good results and we have
set in motion a virtuous cycle capable of securing profit. While maintaining these initiatives throughout the business unit, including Group companies, we will not only provide customers with superior
products and technologies but also promote development and sales of successor products, thus expanding ULVAC’s share of the market for FPD, PV and high functional films.

27

1. Achieve growth in memory and logic/foundry to double market share
2. Promote technology development and strengthen
relationships with technology-initiative partners forstrategic business development
3. Accelerate business development in the growing China market

1. Delay in development of technically challenging technologies
2. Intensifying of competition
3. Growth speed of the China market
4. Growth rate of the leading-edge device market

For the semiconductor equipment operation to become the second
pillar and achieve substantial global business expansion

Tomoyasu Kondo

Executive Officer, General Manager of Semiconductor Equipment Division

Our aim is to expand the semiconductor equipment operation as ULVAC’s second pillar and achieve
substantial global business development by continuing to ride a robust investment trend in the semiconductor market. To accomplish this, we will endeavor to seize business opportunities based on our
growth strategy emphasizing responsiveness to customer needs and by earning customer confidence in ULVAC.

ULVAC Value Report 201828

ULVAC’s Vision

Vacuum Equipment
Business (3)Electronic Device Production Equipment

Brisk business supported by the buoyant
equipment market for electronic devices
IoT-related demand is vigorous, such as equipment forcommunication devices, equipment for MEMS and othersensors, optical films for electronic devices, and microdisplays. The equipment market is booming, with the emergence of the supersmart society providing a tailwind.
ULVAC began actively pursuing R&D in these fields several
years ago and we are now receiving numerous inquiries.
Viewing further growth of the electronic devices market
fueled by the progress of IoT as a huge business opportunity, we aim to expand our business by following a cyclefrom development and installation of equipment throughto identification of new needs. Amid brisk order-taking
for equipment, responding to customers’ requested delivery dates is an issue. We are working to establish a mechanism enabling us to seize opportunities without fail by
flexibly responding to customers’ requests, for example,
by reviewing our approach to procurement.
Priority fields

sensing, and optical devices, are bound to further increase. Development of these devices is progressing concurrently around the world. The ongoing evolution of
production equipment for them is predicated on the development of innovative new technologies and improvement of existing technologies.
In Europe and North America, where many new devices are developed, ULVAC is strengthening the customer
support system and technical proposal capabilities
through collaboration among Group companies with theaim of vigorously cultivating new customers.
Furthermore, we are cultivating collaborative relationships with customers to develop new equipment thatpromises a strong presence in the market.
On the other hand, in Asia where many of our customers have production bases, we will focus on enhancing customer satisfaction by leveraging the Group’s
well-established production and service bases in addition
to our delivery track record so far. Through these initiatives, we aim to expand business globally in order to increase the presence of ULVAC in the electronic device
field which supports the supersmart society.

Key Measures
1. Further expand global business development in Asia
as well as in Europe and North America
Electronic
devices

Next-generation sensors,
optical devices,and communication devices
for the IoT era

Electronic
mounting

High integration and highdensity for
ultracompact
and ultrathin
devices

Power devices

Electrification,energy-saving,labor-saving
EV, smart infrastructure

Expand equipment sales worldwide whilefurther strengthening our presence in China, as
well as in Europe and North America, tobecome a truly global enterpriseWith the advent of the supersmart society, needs for electronic devices that support IoT, such as communication,

Industrial Equipment

Offering solutions for higher-value-added productsof superior quality based on a sure grasp of customer
needs across the full spectrum of industries

Application of existing technologies tocultivate growth markets and pioneer newmarkets

Industrial equipment constitutes the infrastructure ofhigh-tech industry. ULVAC supports customers’ innovationby combining vacuum technology with fundamental technologies, such as heat treatment of parts to increase
hardness and luster, melting for development and production of high-performance materials, brazing for bonding different kinds of materials, and drying anddistillation to increase purity and preservability.
In order to respond to customers’ global business development, we are implementing measures to maximize
synergy among our bases, thereby capitalizing on ULVAC’s
comprehensive capabilities. In fiscal 2017, both orders received and net sales of industrial equipment exceeded
those for the previous fiscal year, led by vacuum heat
treatment furnaces for the production of automotive
components and leak testers.

Regarding systems employed in the manufacture of therare-earth magnets widely used in wind turbines, electricvehicles, and mobile phones, we will meet customer
needs for higher performance by optimizing hydrogen
furnaces, pulverizers, and SC melting furnaces.
In the automotive components field, we anticipate
growing demand associated with the development ofheat exchangers for exhaust gas recirculation (EGR) coolers used in internal combustion engines and heat exchangers for electronic parts cooling in EVs. We intend tosecure our market share for vacuum brazing furnaces,
which are ULVAC’s forte.
In the pharmaceuticals field, investment in genericdrugs is booming. This is creating opportunities for ULVAC to display its strengths in freeze-drying equipment
and high-precision transportation mechanisms.
New applications of ULVAC’s unique Micro Powder Drytechnology for producing porous powder include bloodplasma preparation, ceramic capacitors, and new materials.
In the food field, distinctive drying technologies, suchas superheated steam drying and puffed freeze drying,
have made it possible to preserve and commercialize
foodstuffs that were previously disposed of as waste. We
aim to offer solutions to alleviate food shortages andfood losses worldwide.

Contributing to the full spectrum of industries
The industrial equipment business is contributing to the full spectrumof industries.
Heat exchangers

Rare-earth magnets for electric motors

Radiators, EGR coolers, electronicparts cooling, etc.
Vacuum brazing furnaces, vacuum
leak testing

HVs, EVs, wind turbines, home
appliances
Vacuum sintering furnaces andmelting furnaces

2. Continue development of cutting-edge technologies
for the supersmart society

Key Measures

3. Build partnerships with customers by leveraging
Group capabilities

1. Swiftly identify customer needs and market needs
and develop new processes

4. Win more orders by vigorously tackling new projects(related to optical films and microdisplays)

2. Resolve social issues through business

Conceivable Risks
1. Delay in the takeoff of fields that are expected to besources of new demand
2. Delay in business development in China, Europe andNorth America
3. Slowdown in the Japanese market
4. Longer manufacturing lead times for equipment attributable to difficulties in parts procurement

Advent of the supersmart society
Further expand global business development of equipment for electronic devices

Tetsuya Shimada

Executive Officer, General Manager of Advanced Electronics Equipment Division

Sensors are the key electronic devices for the IoT era and trillions of them will eventually be required.
Furthermore, electronic devices are indispensable for next-generation communication technology,
including 5G.
ULVAC will vigorously promote substantial global business development with the aim of achieving further growth in the globally expanding electronic devices market.

29

Vacuum Equipment
Business (4)3. Further strengthen supply chains
Resin fuel tanks
Vacuum leaktesting

4. Strengthen collaboration among production bases
and Group companies to achieve integrated operation
Conceivable Risks

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

Contributing to industries and society withvacuum technology involving thermal application

1. Progress of commoditization and intensifying pricecompetition
2. Delay in the takeoff of projects for products to be introduced in new markets

Hisanao Kusaba

General Manager of Industrial Equipment Division

The Industrial Equipment Division offers vacuum technology solutions involving thermal application.
We are developing the equipment customers require in order to create higher-value-added
products of superior quality. Our solutions contribute to the full spectrum of industries and coversuch processes as vacuum heat treatment and brazing of internal combustion engine parts, vacuum
melting of magnetic materials, vacuum freeze drying of pharmaceuticals, high-purity refining of vitamin E, eicosapentaenoic acid (EPA), and docosahexaenoic acid (DHA) using vacuum distillation, andspecial vacuum drying of food without spoiling the taste.

ULVAC Value Report 201830

ULVAC’s Vision

Vacuum Equipment
Business (5)Components

Achieve further growth through Group synergy
Vacuum components (vacuum pumps, vacuum gauges,
vacuum valves, vacuum leak testers, gas analyzers, power
generators for deposition processes, etc.) are used inmany industries. In fiscal 2017, supported by robust markets for FPD panels, semiconductors, electronic devices,
and automobiles, we achieved sales targets in all categories (pumps, measurement equipment, mechatronics, andpower generators for deposition processes). In particular,centering on Asia, we expanded the scale of business of
power generators for deposition processes by enriching
the product lineup.
The vacuum pump business is conducted by ULVACCRYOGENICS, which is a manufacturer specializing incryopumps and cryocoolers, and ULVAC KIKO, which handles compact vacuum pumps, as well as ULVAC, Inc. In order to achieve growth in the global market, we aim toenhance the efficiency of production and sales throughsynergy among ULVAC Group companies in Japan andoverseas involved in the components business and expand
collaboration with business partners.
Components
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.
Application examples
Applications for OLED
production equipment

Vacuum Application
Business

Regarding product development, we released products attuned to market needs that offer both superior
productivity and energy saving, including the new LS series of dry pumps (for details, please refer to Page 47). We will
step up development of products offering higher productivity and environmental friendliness.

Reaching out from Japan to China, Europe andNorth America in pursuit of global businessdevelopment
The vacuum components business is already borderless.
The rapidly expanding semiconductor and display production equipment market in China is a huge business opportunity for components manufacturers. Tackling thismarket inevitably involves competing against powerful
European and American manufacturers. In order to prevail, we are strengthening our global marketing structureand establishing systems for developing products attuned
to market needs. Moreover, we seek to enhance the valueof the ULVAC brand by pursuing business development,
including enrichment of the lineup through alliances.
By offering the optimum products for various fields,
including analysis, medicine, and food, we will cultivate
vacuum applications and promote expansion of the cryocooler business.

Such a great opportunity comes only once in decades

In fiscal 2017, sales of LCD materials in China greatly increased and sales of semiconductor materials were also
robust. Moreover, for high-performance superconductive
materials, we were able to establish a track record overseas and are laying the foundation for future business expansion.

Technological innovation, with IoT, 5G communication,
and AI to the fore, has brought us to the threshold of thesmart society. One consequence of this trend is that new
high-performance materials are coming into their own inthe semiconductor, cutting-edge electronic device, andthe display field. They are destined to eventually supersede traditional materials. With a view to facilitating the
emergence of the smart society, we are developing newmaterials required in this expanding application field incooperation with ULVAC’s equipment divisions and research institutes and together with our customers.

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

Sputtering equipment
for large-screen TV
manufacturing

Sputtering equipment
for semiconductor
manufacturing

Key Measures
1. Capture the demand from increasing equipment operation in China
2. Meet the increasingly sophisticated demand associated with FPD and semiconductor production processes
3. Provide support for high-tech applications besides thedeposition process (develop high-performance materials)
4. Enhance production capacity in Japan and overseas

Acceleration cavity
for high-performance accelerators(use of high-purity
Nb materials)

SputteringtargetConceivable Risks
1. Stably securing raw materials suppliers in view of increasing demand
2. Price competition in the promising China market
3. Investment for growth and recoupment

Key Measures
Vacuummeasurement

Advanced research,
medical, etc.

Helium leak detectors
4K cryocoolers for coolingsuperconductive magnets

Cryopumps

1. Establish an R&D structure attuned to market needs

3. Expand vacuum applications (general industries) andthe refrigerator business (advanced technology, etc.)
Conceivable Risks

Film deposition
controllers

Be a pioneer in offering excellent materials to the market

Seigou Kinugawa

General Manager of Materials Division

Sputtering equipment, ULVAC’s mainstay products, requires target materials as a source for deposition substances. We are endeavoring to develop products such as target materials endowed withfunctions required in the emerging smart society, power-generation markets, and corrosion-resistant, superconductive high-performance materials, in cooperation with the equipment divisions andresearch institutes. Moreover, we aim to be first-to-market so that our customers can be the first to
enjoy their benefits.

1. Stronger competitors expanding business through M&A
VacuumgaugesVacuum valves

Gas analyzers

Liquid nitrogengenerators

Become a pillar of ULVAC’s global businesswith an extensive product lineup

2. Intensifying price competition, market entry by low-cost
manufacturers

Ju Hoon Shin

General Manager of Components Division

Vacuum technology is essential for diverse industries. As a comprehensive manufacturer of vacuum
components supporting the industrial infrastructure, we offer an extensive lineup of vacuum pumps,
measurement equipment, and power generators for deposition processes. Whereas previously expectations of the components business were largely limited to ensuring the reliability of components
so as to enhance the competitiveness of equipment businesses, from now on, through the enhancement of our global competitiveness, we aim to become a pillar of ULVAC’s global business.

31

Steady business expansion

Sputteringtarget2. Reform the operational system of the components
business
Dry pumps

Materials

Others
Semiconductor mask blanks market

Surface analyzer market

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

Whereas university and company laboratories werepreviously the principal 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 moreregions and markets throughout the world. ULVAC
will continue offering surface analyzers with functions attuned to customer needs.

ULVAC Value Report 201832

Basis for Value Creation

Management Structure

Directors and Auditors

Isao Utsunomiya

Senshu Asada

External Auditor

External Auditor

Shigemitsu Sato
Director and Managing Executive Officer
General Manager of Advanced
Manufacturing Division

33

Mitsuru Yahagi

Makoto Ito

AuditorHisaharu Obinata
Director and Senior Adviser

AuditorSetsuo Iwashita
President and Chief Executive
Officer

Akira Mihayashi

Norio Uchida

Dr. Kozo Ishida

Yoshimi Nakajima

External Director

External Director

External Director

External Director

Mitsuru Motoyoshi
Director andExecutive Vice President

Dr. Choong Ryul Paik
Director and Managing
Executive Officer
General Manager of
R&D Headquarters

Masahiko Ishiguro
Director and Managing
Executive Officer
General Manager of Corporate
Sales & Marketing Division

ULVAC Value Report 201834

Basis for Value Creation

Corporate GovernanceIn accordance with its Basic Corporate Philosophy:“The ULVAC Group aims to contribute to the development of industries and science by comprehensively
utilizing its vacuum and peripheral technologies
through the mutual cooperation and collaborationof the Group companies,” we work to ensure thorough corporate governance in order to increase corporate value over the medium to long term. From
this perspective, 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 has adopted a company with a board ofcorporate auditors as its management structure. Particularly important institutional structures include theBoard of Directors, the Board of Standing Directors
and Executive Officers, the Board of Corporate Auditors, and the Committee for Appointment and Remuneration, etc.
Firstly, ULVAC 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 to ensure flexibility. The Board of Directors comprises 10
members, of whom four are external directors. Threeof the external directors are designated as independent external directors. By virtue of this structure,

ULVAC is not only able to make swift and efficientjudgments concerning important management 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 executive functions, having been granted a certain amount ofresponsibility and authority over their designated areas, through delegation by the Board of Directors.
ULVAC also has a Board of Executive Officers thatcomprises a total of 16 internal directors and executive officers. The Board of Executive Officers holds
regular meetings once a month, as well as ad hoc
meetings as necessary. By virtue of this structure, wehave achieved more flexible and swifter business operations that are appropriate for a rapidly changing
business environment, based on a clear expression of
the responsibilities and authority of each executive
officer.
In addition, ULVAC has a Board of Corporate Auditors, which performs auditing and supervision ofmanagement decision-making and business operations. The Board of Corporate Auditors comprises four
members, of whom two are external auditors. Both ofthe 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

General Meeting of Shareholders
Appointment/Dismissal

Appointment/Dismissal

Appointment/Dismissal
Audit

Board of Corporate Auditors

Collaboration

Board of Executive Officers

Risk Management Committee

Holding a meeting of ULVAC’s Board of Directors at a
subsidiary in China and conducting a business tour
In June 2018, a meeting of the Board of Directors of ULVAC, Inc.
was held at ULVAC (SUZHOU) Co., Ltd., a subsidiary in China whose
growth is expected to continue. This was the first time ULVAC held
its Board of Directors meeting overseas. In addition to a plant tour,
exchanges with management of Group companies and joint venture partners in China were a great opportunity for ULVAC directors to deepen their understanding of ULVAC’s business development in China while familiarizing themselves with Chinese culture.

ULVAC’s management and operationof the Board of Directors
For ULVAC to become a leading global enterprise

Accounting audit

Audit

Collaboration

Executive Officers

Collaboration

Divisions of the Company
Internal Auditing OfficeGroup companies

ULVAC needs to make efforts to further enhance corporate
value by strengthening not only technological capabilities
and manufacturing innovation but also global competitiveness and entry to new business fields. At the same time, it isessential to enhance the effectiveness of governance by the
Board of Directors.

My rolePresident and CEO

Compliance Committee

35

TopicsAudit

Norio Uchida
External Director

Independent Auditor

Recommendations

Committee for Appointment
and Remuneration, etc.

require objective determination of important matters, such as the appointment and remuneration of
directors and executive officers. The Committee for
Appointment and Remuneration, etc., comprises seven members, of whom five are independent external
directors or independent external auditors. Of theremaining two members, one is an external director.
By having these kinds of advisory bodies for the
Board of Directors, we are able to achieve fair, impartial, and highly transparent deliberations with regard
to especially important management decisions, andincrease the effectiveness of the Board of Directors.

Message from an External Director

Corporate Governance Structure (As of September 30, 2018)

Board of Directors

auditor, whose independence is ensured, as well as
through attendance and comments by auditors at important meetings, such as meetings of the Board of
Directors and the Board of Standing Directors and Executive Officers, and through regular meetings between the Internal Auditing Office and the President,
etc. By virtue of this structure, we have achieved rigorous, fair, impartial, and transparent auditing andsupervisory functions, ensuring that each auditor obtains sufficient information.
Furthermore, we have a Committee for Appointment and Remuneration, etc., for instances that

Utilizing the knowledge I have accumulated in the course of
my career, I will supervise management in terms of businessorientation and risk management from an objective stanceas an independent officer.
My guiding principles are to act swiftly, share information, and ensure corporate governance and compliance.
With the aim of further enhancing the effectiveness of governance, I am committed to taking actions and making decisions that are in the interest of our stakeholders and willmeet with their approval.

My expectations regarding ULVAC’s sustainable growthWith a view to enhancing corporate value and achieving
sustainable growth so as to become a leading global enterprise, human resources development is the top priority. I
think it is important to develop excellent personnel with a

global perspective who are well versed in the liberal arts,
can adapt to conditions around the world, are decisive
when they encounter issues involving contradictions, canenvisage various scenarios, are sensitive to risk, and can exercise leadership.
Secondly, it is vital to strengthen technological capabilities. You can’t create a world’s first without imagination andsensitivity, and you can’t create the best in the world without innovation. So it will be necessary to further globalize
R&D and seek cooperation with other companies and external human resources that transcends the conventionalframework.
Thirdly, it is important to strengthen global information
capabilities. I would like to see business management accelerated by enhancing the quality of operations to a global
standard and through information sharing.
Finally, I would like to see ULVAC’s group-wide initiatives
for sustainable management flourish as such initiatives havean increasingly powerful impact on corporate value.
I will do my utmost to contribute to the success of ULVAC’s ongoing efforts to achieve sustainable growth, enhance
corporate value, and become a leading global enterprise.

ULVAC Value Report 201836

Basis for Value Creation

Compliance

Risk Management

The ULVAC Group 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 and operating a range of institutions and regulations to ensure
thorough compliance.

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 long-term improvement of corporate value. We are expanding systems thatcan respond appropriately to risk factors through identification, classification, analysis, andevaluation, and we are working to increase corporate value by reflecting them in our management strategy.

Establishment of Corporate Code of Conduct
Risk Management System

The ULVAC Group has established a Corporate Codeof Conduct comprising 18 items, conducted education, and distributed booklets to inculcate a cultureof compliance, in order to ensure that the executionof the duties of officers and employees is compliant
with laws and regulations and internal rules, andthat we fulfill our corporate social responsibility.

In regard to risk management initiatives, ULVAC hasestablished rules concerning its risk management system, classifying a broad range of risks from various
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 tothem. We work to ensure that these offices efficiently gather important information in operating the risk
management system. In addition, in order to shareand evaluate information concerning the operationof the risk management system on a company-widebasis, we have a Risk Management Committee, which

Compliance Education
ULVAC is working to create a culture of compliancethrough awareness-raising activities. As part of thiseffort, we are providing opportunities for regularand ad hoc education and training.

Whistleblowing System
ULVAC 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 the Compliance Committee, and
it is structured to give full consideration to confidentiality throughout the process of investigating the content of reports. This system does not prevent theperson making the report from selecting other institutions or organizations within the Company as the destination for the report, and in such case, the reportshall also be handled appropriately.
Individuals making reports are not treated unfavorably in any way. Reports can also be submitted

Risk Management Systemanonymously.
After a whistleblower report has been received,
the initial response is for the Compliance Committee
to conduct an investigation in order to establish thefacts. This investigation is particularly mindful of fairness, and is conducted judiciously and thoroughly. If
necessary, assistance may be sought from external
experts, such as lawyers, and thorough interviews
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.

37

immediate effect and improvement measures will be
implemented, and those involved in the violation will
be dealt with after deliberation by the appropriate
bodies. In addition, the root causes of the violation
are also investigated in order to formulate effective
measures for preventing recurrence.

ULVAC, Inc.

ULVAC Group companies

Chief Risk Officer =Chief Risk Officer =President and CEO

President and CEO

Reporting andinstructions for
improvement

Risk Management Committee

Risk
control
officeHandling of Violations
In the event that, based on the results of an investigation by the Compliance Committee, it is deemedthat a violation of laws or regulations has been committed, then the opinion of an external expert, suchas a lawyer, may be sought as necessary, steps will betaken to ensure that the violation ceases withis 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-yearlymeetings as an umbrella organization for risk management, and it determines company-wide basic policies, monitors the state of management andadministration, and considers any improvements thatcan be made, etc. Furthermore, initiatives at ULVAC
are implemented at ULVAC Group companies as appropriate for the scale and business type of the company in question.

Risk
control
officeRisk
control
officeRisk Management Committee

Risk
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 size ofthe company in question and other factors.

ULVAC Value Report 201838

Basis for Value Creation

Quality Assurance and Product Safety

Procurement

The ULVAC Group is engaging in initiatives worldwide to meet customer expectations for

Suppliers are important partners that support MONODZUKURI. The ULVAC Group promotes

1high-level, safe ULVAC quality through assurance activities centered on Front Loading.*

communication with suppliers, values cooperative frameworks, and engages in initiatives tobuild relationships of trust.

ULVAC Group Quality Policy“Product quality assurance strengthens our customers’ confidence in ULVAC.”
The ULVAC group is committed to promote ULVAC quality
through front-loading in all business processes including development, sales, production and service and through offering
products and services which include needs from all parts of
the world.
Each employee within the ULVAC group strives to ensure that
their personal efforts contribute to the creation of value necessary to maintain the customer as an everlasting partner.

work by performing technical reviews, simulations,verification, and other tasks before receipt of orders.
In fiscal 2017, Front Loading again contributed substantially to preventing nonconformities, improving
quality, and increasing profits.

2.3

Maintaining andpromoting fairand freecompetition

1.6

2.0

1.0

1.0

0.9

0.6

0.5

As of the end of December 2017, 38 ULVAC Group companies had completed integrated certification for the2015 versions of ISO quality and environmental management systems. We have aligned quality policies
groupwide and put in place a framework for addressing quality issues and deploying improvements globally.
Quality Management System
Global Quality Assurance Committee(Central secretariat: ULVAC)

Group-wide implementation of the quality policy
Companies inJapan

Companies inSouth Korea

Companies in
China

Companies inSoutheast Asia

Companies in
Europe andNorth America

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

Under this system, the Group will further promote
Front Loading, operation of integrated Group regulations, coordination of internal auditing, and common qualification schemes (qualified quality
inspectors and safety assessors*2) and work to further
improve quality through groupwide quality system
operation.

0

2013

2014

2015

2016

2017

(FY)

The Group promotes quality creation by implementing Front Loading in all business processes. At ULVAC,
the term Front Loading refers to activities to ensurethat nonconformities do not occur in the subsequent
processes. Front Loading involves identifying all risks
and considering countermeasures before starting
39

Compliance withlaws andregulations

Basic
Procurement
PolicyHealthy and good
relationships withbusiness partners
and affiliates

Product Safety Activities
To deliver safe and secure ULVAC brand products tomarkets around the world, qualified safety assessors
play a leading role in product safety assessments andcontinuously engage in activities to verify the required safety and quality at the drawing release andproduct shipment phases. In recent years, we haveconducted group training and personnel exchanges
at various locations, in addition to periodic exchanges of information, for the purpose of constructing independent verification systems at the overseas
production bases in step with expansion of production in the Asia region. In addition, foreign national
qualified safety assessors belonging to overseas production bases have begun to actively contribute toproduct esafety. We intend to continue to promote
integrated Group product safety activities and linkthem to increases in customer satisfaction.

Advancing global
procurement

Advancing green
procurement

We also communicate our requirements for suppliers with respect to the environment, human rights,
labor, compliance and other procurement-related
matters to fulfill our social responsibilities not only
within the Group but also throughout the supply
chain.
➡︎ For details, please see:https://www.ulvac.co.jp/company/purchase/purchase2/

Global Production Bases Capable of Responding
to the Shift to Larger Products and Mass Production
To respond to a shift to mass production of semiconductor production equipment for logic and a shift tolarger equipment, such as FPD production equipment
for G10.5 and OLED, our Japanese production basesin the Kyushu and Tohoku regions and overseas basesin China, South Korea, and Taiwan are continuing activities to build supply chains in their vicinity of thesame level and quality as that of the ULVAC head office. In this way, by having the production bases takethe lead in implementing local and optimal procurement, we aim to utilize the advantage of customer
proximity in order to engage in global production at
appropriate locations that flexibly responds to market conditions.
Communication with Suppliers
ULVAC holds supplier meetings three times a year tocommunicate production plans from the divisions ina timely manner and operations briefing meetings
once a year as a forum for ULVAC management to directly explain to suppliers the business environment
and prospects. To share policies and deepen relationships of trust with our suppliers, we take care to meticulously respond to their needs. For instance, we
provide information for each business segment thatincorporates delivery dates for procurement items
based on the status of trade inquiries.

Supply Chain Management

Supply Chain Management (SCM) Innovation at ULVAC

Number of qualified safety assessors in the ULVAC Group(Persons)
60
40
20

Quality Improvement through Front Loading

To conduct procurement activities in keeping with
the Basic Corporate Philosophy and Management
Policies, ULVAC has established, observes, and promotes the Basic Procurement Policy.

Year-on-year comparison of costs related to nonconformity after delivery (non-consolidated)
(%)
2.5

1.5

Global Integrated Certification for ISO 9001 and ISO 14001

Procurement Policy

02006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(FY)

*1 “Front Loading” ordinarily refers to arranging or planning so that a large portion ofwork occurs in the initial phase. At ULVAC, it is an activity to create quality by identifying issues as soon as possible.
*2 Safety Assessor (SA) Qualification is a qualification scheme based on third-party certification of machine safety knowledge and competence under international safety standards.

In the current era of globalized production, accuracy of information on lead times, cost, and required
specifications for materials and parts procurement is crucially important. If we do not introduce the rightquantities of materials into production processes at the right times, goods will pile up in the supply chain,inconveniencing suppliers. To avoid this, we must further develop procurement mechanisms that utilize IT
and data.
Much of the production in the equipment businesses, which account for the majority of ULVAC’s
sales, is made-to-order production of unique products to meet individual customer needs, and in principle we do not hold inventory. We consider parts or materials piling up anywhere in the supply chain to
be inventory and aim for total optimization of the supply chain by using indices to prevent inventory accumulation and visualizing inventory.

ULVAC Value Report 201840

Basis for Value Creation

Human Resources
To achieve sustained growth, vitalized organizations must serve as a foundation enabling
diverse human resources to fully demonstrate their potential. ULVAC will strengthen its management base by actively engaging in organization and human resources development andfocusing on cultivating the leaders of tomorrow.
Human Resources and Organizational Development
In accordance with the Basic Policy for Human Resources Development, we are promoting the creation of synergy by diverse human resources.
ULVAC Basic Policy for Human Resources Development
We are conscious that the most important resources for corporate vitality and competitiveness are the personnel and theorganizations 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 each other and fulfill their responsibilities
2. Human resources who can see the true nature of each issue and create revolutionary technologies and projects with passion
and tenacity
3. Human resources who are full of aspirations to improve themselves and take voluntary actions to achieve goals
4. Human resources who have a global perspective and aim to take leadership in exploring the world

Establishment of the Human Resource Center
In recent years, a shift toward smart societies has begun worldwide and seismic changes are taking place,
namely, a wave of technological innovation andglobal intensification of competition. On January 1,
2018, ULVAC launched the Human Resource Center,
which is under the direct control of the president, toreinforce development of global human resources
capable of thriving in a changing external environment in order to successfully compete in this unprecedented business environment.
We recognize that the development of a company, technological innovation, and product competitiveness depend on human resources and that people
are ULVAC’s most important asset. The Human Resource Center is a dedicated human resources development organization whose purpose is to maximize
the value of this critical asset.
The Center flexibly and proactively implements
job rotation within the Group. Its mission and role isto enhance knowledge and information, cultivate
and refine experience, and vitalize, develop, andmaximize the asset value of organizations and human resources by actively pursuing interactions with
universities, research institutes, and companies in Japan and abroad.

Through the development of the capabilities ofpeople and organizations, ULVAC will improve business promotion capabilities, strengthen the management base for sustained growth, contribute tofurther creation and accomplishments, and increase
corporate value.
Development and Operation of a Groupwide
Education and Training System
The Human Resource Center is developing a groupwide education and training system. It will promote
the growth of individuals by providing stratified
training, skills training, and language and cultural
programs for all employees, from new recruits to employees rehired after mandatory retirement. In the
future, the Center will also consider a groupwide
mechanism for evaluating employees on the basis ofknowledge, language abilities, and other skills required of employees at each organizational level.
The Center will also further inculcate the corporate philosophy groupwide, promote personnel development to take the next leap forward by putting
the philosophy into practice, and further foster a corporate culture of boldly taking on challenges.
Strengthening of Global Adaptability
Since ULVAC plans to further expand its businessoverseas, it is necessary to systematically develop employees capable of flourishing on the global stage
and increase global adaptability. We will reinforce
the operating foundation groupwide by focusing on
training to cultivate not only language ability, a necessary business skill, but also sensitivity to different
cultures and international business acumen as well as
human resources development at overseas Group
companies.

Keywords related to human resources development at ULVAC

41

Developing the Next Generation of Executives
To develop the next generation of executives, the ULVAC Group will strive to cultivate the leaders of tomorrow by arranging opportunities to discuss afuture vision for the ULVAC Group. We will also aim
to build human networks by actively promoting personnel exchanges within and beyond the Group.
Through such activities, we will promote diverse human resources and engage in flexible organizational
operation.
ULVAC Academy Portal
ULVAC is implementing the ULVAC Academy Portalgroupwide under the concept of creating an environment that facilitates learning throughout the Groupthrough the provision of training materials necessary
for ULVAC’s production to those who need them. TheULVAC Academy Portal provides an environment thatenables employees to study anytime, anywhere there
is an Internet connection, even outside the company.
In this way, ULVAC is creating mechanisms for raising
the level of employee skills and demonstrating individual capabilities as well as those for consolidating,systematizing, and providing educational materials
that are currently scattered among individuals, departments, and Group companies. With the portal,
we aim to create a space where individuals can continuously manage their learning (progress and degree of comprehension) and their licenses andqualifications.

The ULVAC Academy Portal is a platform not only
for more effective study driven by individual initiative through e-learning and training materials but
also for group training, including practical skills training. It also presents ULVAC’s history and disseminates
the latest Group information. In addition, the portal
is used for distributing presentation materials andvideos of lectures and briefings. Indeed, extensive
use is made of video.
Since the portal supports Japanese, English, andChinese and handles everything from signing up for
lectures to aggregation of post-lecture questionnaire
results, it serves as a backbone system for educationthat supports the efforts of individuals, departments,
companies, and the Group to achieve their future

visions. The number of registered users already exceeds 3,000, and the objective is to complete registration groupwide (6,439 persons as of June 2018)
during fiscal 2018.
For management of licenses and qualifications
we are in the process of introducing functions not
only for the management of internal qualifications
and obtaining national licenses, but also assessmentand management of the skill levels of customer support personnel and engineers by equipment type andgeographical area, and we are proceeding with development to enable systematic planning of education using a global groupwide skills map.
Knowing the Outside World and Looking infrom the Outside
ULVAC conducted overseas training for directors andexecutives (in Europe, the U.S., and South Korea) in
May 2018. We also actively engage in secondment
and temporary assignment of employees, collaborative research, and other personnel exchanges with
universities, research institutes, and companies. We
will continue to engage in initiatives to enable employees at every level of the organization to recognize anew ULVAC’s strengths and potential throughknowledge of the world beyond ULVAC and a perspective of looking in from the outside.
During the six-month period from January 2018,
we held 16 lectures conducted by internal and external lecturers as part of an effort to encourage employees to learn about the world beyond ULVAC anddevelop a global mindset. More than 800 employees
attended the lectures, and many employees unable
to attend in person viewed videos of the lectures at
ULVAC Academy Portal. In a post-lecture questionnaire survey, more than 80% of participants indicated that they had learned or become aware ofsomething. In fiscal 2018, in addition to holding lectures, we will provide a forum for discussing how toutilize the lecture content in the actual practice ofbusiness.

Examples of Lectures
Growth secrets and development strategies, expectations for Japan (CEO of a fast-growing foreign company)
The current state and future of the semiconductor industry (director of a leading overseas research institute)
The latest technological trends in 5G (professor at aleading Japanese university)
The latest technological trends in bio-nanodevices (professor at a leading overseas university)
Means of survival for Japanese manufacturing companies in the digital era (professor at a leading Japanese
university)
The latest market trends (leading overseas research firm)
Motivation design methods (external consultant)
How to cultivate a strong mind (external consultant)

ULVAC Value Report 201842

Basis for Value Creation

Human Resources
Global Vitalization Programs
ULVAC utilizes the diversity that results from different ways of thinking and different cultures to stimulate the awareness of organizations and individuals.
By sharing among departments and throughout theGroup processes that lead to the resolution of organizational and individual issues, we maximize the effects.

Ideal form

Further
improvement

Competitions

Global Manufacturing Technology Competition
Global Business Improvement Competition

Skills Challenge

Training
Daily business

Administration

Engineering

KAIZEN Proposal Program
Skills

The aim of the Global Manufacturing Technology
Competition is value creation through the improvement and innovation of the value chain process
based on the central theme, “Groupwide innovationof production technology to increase value.”
With the Global Business Improvement Competition, we aim to create mechanisms and measures toinculcate ULVAC’s management policies in day-to-day
work, maximize groupwide synergy, and strengthencross-organizational functions.
The purpose of the Skills Challenge is to develop
a groupwide atmosphere of respect for skills andpromote the sharing and transmission of skills byholding a skills level competition among Group companies.
Through these programs, we aim to make all employees aware of the importance of putting the corporate philosophy and management philosophy into
practice in their work and linking their work to outcomes that contribute to achieving ULVAC’s vision.

Creating Excellent Workplaces

Environment

To enable each employee in our diverse
enthusiasm, increase productivity, and disenvironment that enables employees to
In fiscal 2018, we will work to create anthemes shown in the diagram to the right.
We will develop an environment andchange his or her awareness of work styles

workforce to demonstrate his or her strengths with vigor andplay creativity, it is necessary to create an excellent workplace
work with a greater sense of security and peace of mind.
excellent workplace environment, focusing mainly on the key

Aspiring to be a company where every employee
enjoys physical and mental health, is full ofenergy, and displays his or her full potential

Priority Activity 1 Health Risk Reduction:
Making Walking a Habit

In keeping with the belief that human resources are thesource of value creation, ULVAC actively engages in initiatives to promote the health of employees.
To vigorously engage in health promotion activities,
we have appointed an executive officer to serve as theChief Health Promotion Officer and put in place a healthpromotion structure led by department general managers
and the Health Promotion Office.
We have articulated a mission, namely, that of “Creating a corporate climate in which employees can energetically pursue work goals in good health,” and arepromoting employee health, the foundation of MONODZUKURI, in accordance with two strategies: “Health risk
reduction” and “Wellness improvement.”

Demonstration of creativity
Productivity improvement

enhance and operate programs to enable each employee toand lifestyles and increase productivity.

Our health risk reduction targets are “Health age*1
3.0 years lower than actual age by fiscal 2020” and“Percentage of people with regular exercise habits of
25% or higher by fiscal 2020.”
We consider it important to create the habit ofwalking and exercise to ensure that our employees arehealthy in mind and body and able to fully demonstrate their capabilities. Accordingly, together with thehealth insurance association, we promote activities
such as physical strength age measurement and walking events.
As a result of engaging in these activities, thenumber of people who walk regularly is increasing
each year (Fig. 1), and health age is 2.86 years lower
than actual age at ULVAC.

Programreview andexpansion

Change ofawareness

Also, the number of employees taking leave due
to illness has decreased dramatically compared to fiscal
2014, when ULVAC began actively implementing organization vitalization measures (Fig. 4).
1.20

1.13 1.15

1.16

1.10

1.00

0.90

1.20

1.00

0.91
0.70

0.80

0.46

1.00

2014

0.40

2015

2016

2017 (FY)

Fig. 3 Ratio of employees who work
enthusiastically*³

0.00

2014

2015

2016

2017 (FY)

Fig. 4 Ratio of the total number ofworking months lost

These activities have been admired, andULVAC was recognized as a 2018 Certified Health and Productivity Management Organization (White 500).

Analysis and Evaluation
Human Resources Data
Employee gender ratio (non-consolidated)
MaleManagement gender ratio (non-consolidated)

FemaleMale

257 malemanagers
98.1%

5 femalemanagers
1.9%

74 female
employees
5.7%

Physical strength age measurement at ULVAC

Female

(%)
30.0

20.0

There is someone I
can consult in theworkplace.

29.0
17.7

20.5

24.1

63
I utilize mystrengths andindividuality
to take onchallenges in
my work.

68

10.0

1,219
male
employees
94.3%

Number of new graduate recruits (non-consolidated)

30

0Female

2
4

3

20
10

Male

14

40

20
2015

25
2016

2014

2015

2016

2017 (FY)

Fig. 1 Percentage of people who walkregularly*2(Persons)
50

33

35

2017

2018(Plan)

(FY)

62
60

73
I know what work
is expected of me.

0

No regular exercise habits
Regular exercise habits

75

51

55

I feel I am
valued at
work.

67
72

When I facedifficulties, I candeal with thempositively.

Fig. 2 Difference in vitality toward work
according to exercise habits

Priority Activity 2 Wellness Improvement:
Organization Vitalization
Our wellness improvement target is “An increase of 20%
in the number of people who work energetically by fiscal
2020 compared to fiscal 2014.”
Senior management and line managers, who play animportant role in ensuring that employees work energetically, are taking the lead in promoting organization vitalization activities, utilizing the results of a health checksurvey independently conducted at ULVAC.
The number of departments that engage in these activities is gradually increasing, and the number of ULVAC
employees who work enthusiastically is increasing eachyear (Fig. 3).

Analysis of data from ULVAC’s health check survey
indicates that people with regular exercise habits
show strong work vitality, especially “strengths andchallenges” necessary for enthusiastic work (Fig. 2). AtULVAC, we will continue to reinforce human resources
development and improve business promotion capabilities through health promotion activities.
*1 An index developed by JMDC Inc. based on the medical checkup data andmedical expenses of 1.6 million people*2 Aggregated from questionnaire responses of employees at the time of medical checkup application*3 The average score for all items of the percentage of people answering “5.
I strongly agree” for the vitality toward work items (five-point scale) in thehealth check survey. The ratio with fiscal 2014 as 1.0.

Comment by the Chief Health Promotion Officer
Ryo Matsumoto
Executive Officer in charge of General Administration& Personnel Department

ULVAC is implementing initiatives relating to employee health. Our walking program has been
particularly popular, with some 50% of employees
participating. We also provide health assistance atthe presymptomatic stage in cooperation with the
Kanagawa Prefectural Government.
We will continue efforts to further develop
health promotion activities to enable each employee to work with vigor and enthusiasm.

Participating in the Skills Challenge

43

ULVAC Value Report 201844

Basis for Value Creation

Occupational Safety and Health

Environment

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 usedby our customers and create dynamic workplaces where Group employees can work in good
physical and mental health.

Based on its environmental policy, the ULVAC Group provides products that allow customers
to embrace the feeling 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 ISO14001 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.

Approach on Occupational Safety and HealthIn the execution of development, manufacturing,transport, installation, maintenance and other business processes, everyone in the ULVAC Group, fromsenior 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 Safety Basic Policy

Companies in Japan
Companies in South Korea

ULVAC, Inc.

Companies in Europe and North America

Group as a whole

1.00

2. Assure safety of ULVAC’s products

0.50

4. Promotion of mental health care
Promote mental health care achieve a health, vigorous workplace enviroment.

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 of our businesses.

Aiming for a Type-V 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 Committee, and allGroup companies promote safety and health activities in an integrated manner. Each Group company
operates the safety management system, and everyone is engaged in safety and health activities, such as
management reviews conducted by the CEO and risk
assessments performed by each employee. The Chigasaki Plant achieved a Type-IV zero accident record(total of 10.5 million hours) in 2017 and now aims toachieve a Type-V zero accident record (total of 15.8
million hours), the highest level provided by the Ministry of Health, Labour and Welfare. With “Safety
First” as their motto, all Group companies will continue their efforts to extend the zero accident record.

Environmental Philosophy

Environmental Policy

The ULVAC Group is tackling protection of the
global environment, one of the major issues
confronting people worldwide. We will consider environmental conservation in all aspectsof our business activities and will contribute torealization of a better living environment anda more affluent society.

Develop energy-saving products, reduce the use ofnatural resources and protect the environment.
1) ULVAC Group products/Final products
2) ULVAC Group manufacturing process

Frequency ratio of occupational accidents

Comply with Codes of Occupational Safety & Health Management and Rules according to ULVAC’s OSHMS, and conduct Risk Assessment in order to perform Occupational Safety & Health Management activities with the help of all the 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 China
Companies in Southeast Asia

1.50

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

Companies in Taiwan

Global Safety
Committee

President and CEO

1. Compliance to the code/regulations, and implementationof risk assessment

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

45

Safety Management System

1.00

Japan

China

1.08

South Korea

0.97

1.03

2016

2017

Taiwan

0.74

0

2013

2014

2015

(FY)

*This graph shows the rate of occupational accidents for each fiscal year, with the value for fiscal
2013 (as of June 2014) as 1.00. The number of accidents remained low in fiscal 2017.

Safety and Health Activities
ULVAC KOREA, Ltd. has installed digital signage andshows videos on safety, health, and the environment
to raise employee safety awareness. ULVAC CRYOGENICS KOREA INCORPORATED has installed employee-designed notice boards at workplace entrances
for use in providing safety, health, and environmental information toemployees. These Group
companies will continue
to update information
Playing a video on safety informationand campaign activities as
at lunchtime
necessary to ensure that
(ULVAC KOREA, Ltd.)
their employees fully recognize the importance ofsafety, health, environmental considerations
and adherence to company rules.
Provision of safety, health, and environmental information at a workplaceentrance(ULVAC CRYOGENICS KOREA INCORPORATED)

Environmental Activities in Fiscal 2017
Although production volume increased, total waste
emissions decreased by approximately 14% compared with the previous fiscal year. This decrease waslargely attributable to the increase of the recovery
rate of valuable materials to 29%. As recovery ofvaluable materials is important also from the perspective of material recycling, we will continue topromote it throughout the ULVAC Group.
We are also implementing groupwide initiatives,
including visualization of wattage, preparation andMaterial balance (Source: Aggregate data for fiscal 2017)

INPUT
Electricity
consumption

174,794 thousand kwh

Gasconsumption

LPG:
106 t
LNG:
584 t
City gas: 1,690 thousand m3

Fuelconsumption

Heavy oil:
224 kL
Kerosene oil: 30 kL
Diesel oil:
192 kL

Water
consumption

Packagingmaterials

OUTPUT

CO2emissions

utilization of a manual for energy saving, concentration of locations 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 to reduce
environmental impacts derived from its business activities.

CO2 emissions

1,127 thousand m3

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

1,200

75,000900(Emissions due to consumption of electricity,gas, and fuels)

50,000600

25,000300

7,556 tTotal amount of waste
recycled: 7,197 t

2013 2014 2015 2016 2017 (FY)

Finallandfill
disposalrateoverseas.

Amount of landfill (t)Final landfill disposal rate (%)

313

4.9
254

240

5,000

6,216

2,500

1,769

* The above data are based on the data from 38 Group companies in Japan and* The volume of packaging materials is based on the data from 17 Group compa-

2013 2014 2015 2016 2017 (FY)

Amount of valuable materials recycled (t)Total amount of waste recycled (t)(t)
10,000

3.7

4.2%

0

Waste emissions

7,500

1,712 tGroup companies overseas
Group companies in Japan(Thousand m3)

91,822 t-CO2

0

Total
waste
emissions

Water consumption

0

2012

289
5,613

1,288

2013

359

214
3.7
6,556
2,040

2014

7,072

8,479
3.6

4.2

4.5

7,197
3.0

2.9
1,920

2015

2,313

2016

(%)
6.0

2,222

2017

(FY)

1.5

0

nies in Japan and overseas.

ULVAC Value Report 201846

Basis for Value Creation

Environment

Social Contribution Activities

Initiatives through Products

The ULVAC Group will continue to contribute to local communities and the global community
by effectively utilizing its technologies and human resources to help resolve various social

LS series new dry vacuum pump achieves both high pumping speed and low power consumption
Components Division, ULVAC, Inc.

This product’s principal characteristic is the simultaneous achievementof both high pumping speed and low power consumption. Whileachieving high pumping speed at near atmospheric pressure thanks to
the newly developed screw rotor, the built-in patented ECO-SHOCK
minimizes power consumption, resulting in realization of seemingly
contradictory technological features. Product reliability has been enhanced through operation tests in high-temperature, low-temperature, and dusty (equivalent to IP*144) environments, in addition torepeated atmospheric vacuum pumping at short intervals. The Components Division develops and sells dry vacuum pumps. Rising demandfor electronic devices, smartphones and communication technology-related items in the global market are a tail wind for this product.

issues.

Malaysia

ULVAC conducts plant tours and vacuum
demonstration classes, mainly for elementary
schools and other public institutions, local residents, and shareholders. In 2017, on more than
five occasions we engaged in joint projects with
Chigasaki City, holding events for the purposeof contributing to community youth development and education activities followed by plant
tours and vacuum demonstrations. We will continue to deepen ties to local communities andeducational groups through activities designed
to encourage as many people as possible totake an informed interest in science.

In March 2018, a water stoppage occurred in
Selangor State due to an accident at a water
purification plant. ULVAC MALAYSIA SDN.
BHD. hastened to supply 20,000 liters of water
reserved for use at a special cleaning treatment
plant to nearby residents. The ULVAC Group willcontinue to engage in activities to help resolve
various social issues and seek harmonious coexistence with local communities.

Japan (Chigasaki)

Thailand

Syonokai, a social welfare corporation locatedin Chigasaki, Kanagawa Prefecture, sells homemade cookies once a month at the ULVAC Head
Office/Plant, thus providing an opportunity for
persons with disabilities to participate in society.
Syonokai has sold cookies at a space provided next to the cafeteria at lunchtime since 2010.
We will continue to encourage employment of
persons with disabilities by supporting the purchase of cookies.

At the request of Thai-Nichi Institute of Technology, in February 2018 ULVAC (THAILAND) LTD.
gave a lecture on the fundamentals of vacuums,
covering the types and structure of vacuum
pumps, vacuum measurement, and related topics for students of the institute. The company’s
acceptance of student interns since 2017 led to
the request.
Although vacuum technology is an unfamiliar field in Thailand, when an engineer explainsthat it is a building block of industry, many
students develop an interest. The company willcontinue to support thedevelopment of the next
generation of engineers
by various means, including the acceptance of student interns.

Plant tour and demonstrations

LS120A dry vacuum pump

*1 IP ratings indicate the level of protection against dust and water.

Cat-CVD equipment for silicon heterojunction solar cells improves conversion efficiency
FPD•PV Division, ULVAC, Inc.

Renewables are attracting attention as sources of environmentallyfriendly energy because they do not emit CO2. For photovoltaic power
generation, in which solar cells are used to obtain power, heterojunction solar cells capable of converting energy from sunlight into electricity more efficiently are a focus of high expectations. Consisting of
monocrystalline silicon and amorphous silicon thin films, silicon heterojunction solar cells are distinguished by their higher energy conversion efficiency compared with conventional monocrystalline siliconsolar cells. ULVAC has developed a system that employs the catalytic
chemical vapor deposition (Cat-CVD*2) method, which is subject to lessdamage by plasma, to provide high-quality amorphous silicon thinfilms offering greater conversion efficiency.
*2 Cat-CVD: A chemical vapor deposition method that uses a heated catalyzer to chemically decompose source gas molecules by catalytic cracking reaction and forms thin films by transporting the free radicals to the substrate.

Japan (Chigasaki)

Water supply assistance during a water stoppage

Cat-CVD equipment forsilicon heterojunction solar cells

Initiatives through corporate activities
Heat recovery by increasing wastewater recovery
ULVAC COATING CORPORATION

Massive water consumption in the film deposition process
was an issue at ULVAC COATING CORPORATION. The company is working to minimize its environmental impact bysetting the reduction of water consumption as a quality andenvironmental objective.
The company has reduced water consumption by recycling wastewater discharged from the production line andalso reduced consumption of energy used for heating water, because the temperature of wastewater is higher thanthat of tap water. The reduction in LNG consumption isequivalent to approximately 250 tons of CO2 emissions ayear.
Mindful of the impact on water resources in the community where it operates, ULVAC COATING continues topromote recycling of wastewater so as to reduce water andenergy consumption.

Tree planting

ULVAC (SUZHOU) CO., LTD.

In March 2018, ULVAC (SUZHOU) CO., LTD. held its fourthtree-planting event, planting 29 cherry trees as part of its
ongoing effort to enrich the environment.
The company will continue this initiative to raise awareness of the importance of environmental protection.

47

LNG consumption(t)
900Sale of cookies by a social welfare corporation

Lecture on the fundamentals of vacuums at Thai-Nichi Institute of Technology

800
700
600
500
400

2009 2010 2011 2012 2013 2014 2015 2016 2017(FY)

ULVAC Value Report 201848

Financial Data/Corporate Information

Business Results: Review of Operations for Fiscal 2017

and Outlook

Business results for Fiscal 2017

Review of Operations by Business Segment

In the electronics market in which the ULVAC Group
operates, semiconductor memory manufacturers increased capital investment in response to expanding
memory demand fueled mainly by greater demand
for servers for data center applications. In the flat
panel display (FPD) sector, continued capital investment for manufacturing OLED panels for smartphones and large LCD panels for TVs remained brisk.

In these circumstances, for the fiscal year ended
June 30, 2018 (fiscal 2017), orders received increased
3.2% year on year to ¥243.0 billion, net sales rose
7.5% to ¥249.3 billion, operating profit rose 20.0%
to ¥35.4 billion, and ordinary profit increased 24.2%
to ¥36.9 billion. Net income surged 46.7% to ¥35.9
billion mainly because of additional recording of deferred tax assets.

Greater Profitability
Because of an increase in the proportion of semiconductor and electronic devices production equipment,
which have high profit margins, both the gross profit
margin and the operating profit margin rose. While
total assets increased in line with increases in orders
received and net sales, net assets also increased by¥49.2 billion as a result of increases in net income
and market valuation of investment securities. Thus,
the equity ratio improved to 49.5%. Interest-bearing
debt decreased by ¥7.0 billion to ¥35.7 billion.

Sputtering equipment
for semiconductors

Cryopump

Net sales/Operating profit margin

Net sales(Billions of yen)
300

200

173.9

179.2

192.4

Equity ratio/Interest-bearing debt

Operating profit margin

12.7
231.8

14.2
249.3

(%)
15

(Billions of yen)
120

10

80

89.6

9.3
100

0

49

6.9

2013

5

6.2

2014

2015

2016

2017

0
(FY)

40

0

29.2

2013

Equity ratio

82.6
32.8

2014

(%)
60

40.2
40

62.7
33.2

2015

42.7

2016

35.7

2017

Orders received for FPD production equipment were
below the level of the previous fiscal year because
order-taking in the second half was temporarily lackluster despite recording of orders received, mainly
from customers in China, for large LCD production
equipment for TVs and small to medium-sized OLED
production equipment for smartphones. On the other hand, net sales were robust and virtually the samelevel as the previous fiscal year.

Both orders received and net sales exceeded thosefor the previous fiscal year, led by vacuum heat treatment furnaces for production of automotive components and leak testers.

FPD and PV production equipment

Regarding semiconductor production equipment, inline with the expansion of investment for memory,
demand for sputtering equipment and the naturaloxidized film removing system for NAND flash memory, DRAM, and next-generation non-volatile memory increased. Regarding electronic device production
equipment, demand for high-performance device
production equipment for mobile devices was firm,
and as a result, orders received and net sales greatly
exceeded those for the previous fiscal year.
Components

Both orders received and net sales exceeded thosefor the previous fiscal year because of robust demand

Industrial equipment

Vacuum Application Business
For the vacuum application business, orders received
amounted to ¥33,273 million, orders back-log was¥5,812 million, net sales were ¥32,619 million, andoperating profit amounted to ¥2,957 million.
Materials

Both orders received and net sales exceeded the previous year’s level, centering on sputtering target materials for LCDs.
OthersDemand for mask blanks was generally firm, reflecting an increase in demand for high-definition,
high-performance display panels and semiconductors
for in-vehicle and industrial applications. On the other hand, analysis equipment-related net sales werelower than the previous fiscal year’s level.

OutlookInterest-bearing debt

49.5

for cryopumps for mounting on OLED production
equipment, as well as for vacuum pumps and measuring equipment for the FPD, semiconductor, andelectronic device industries and for the automotive-related industry.

Semiconductor and electronic device production equipment

Products making big contributions to sales

LCD production
equipment

Vacuum Equipment Business
For the vacuum equipment business, orders received
amounted to ¥209,707 million, orders back-log was¥94,171 million, net sales were ¥216,652 million, andoperating profit amounted to ¥32,411 million.

20

0
(FY)

The ULVAC Group is implementing the mid-term
management plan that covers the period up to June30, 2020. For fiscal 2017, the first year of the plan,
net sales, operating profit, ordinary profit, and net
income exceeded the initial forecast. Moreover, operating profit for fiscal 2017 exceeded the target set
for the final year (fiscal 2019) of the mid-term management plan.
The framework of the current mid-term management plan, including “strengthening of managementbase” and “key strategies,” will remain unchanged
from fiscal 2018 onward, but we revised the targets
for net sales and operating profit for the final yearof the plan to ¥265 billion (+¥15 billion) and ¥38 billion (+¥3 billion), respectively. We are tackling “management reform” to achieve the next round ofgrowth following the current mid-term management
plan and aim for net sales of ¥300 billion and an operating profit margin of 16% in fiscal 2021. Seizing
the business opportunities created by technologicalinnovation, ULVAC will strive to further improve theprofit structure and financial strength to accelerate
initiatives toward sustainable growth and improved
corporate value.

Forecast of net sales by business segment(Billions of yen)

249.3
17.4

265.0 (forecast)
255.0 (forecast)
18.0

15.2

18.0

23.7

24.0

32.8

34.0

51.6

56.0

OthersMaterials

Industrial
equipment

Components

108.5

105.0

2017

2018

Semiconductor andelectronic device
production equipment
FPD and PV production
equipment

2019

(FY)

ULVAC Value Report 201850

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Balance Sheets(Millions of yen)

FY2016FY2017FY2016FY2017

As of June 30, 2017

As of June 30, 2018

As of June 30, 2017

As of June 30, 2018

AssetsLiabilities

Current assets

Current liabilities

Cash on hand and in banks

56,43457,074

Notes and accounts payable, trade

48,82955,566

Notes and accounts receivable, trade70,51987,276

Short-term loans payable

30,19921,539Merchandise and finished goods

5,097

4,615

Lease obligations

315

300

Work in process

15,88023,618

Income taxes payable

2,525

4,534

Raw materials and supplies

9,240

10,847

Advances received

16,90816,739Deferred tax assets

6,027

5,032

Deferred tax liabilities

10

16

Other

7,299

9,509

Accrued employees’ bonuses

2,738

3,185

Allowance for doubtful accounts

(811)

(914)

Accrued directors’ bonuses

401

512

169,685

197,058

2,069

1,742

785

1,074

Other

11,175

13,637

Total current liabilities

115,954

118,845

12,52814,150692

607

Total current assets
Non-current assets

Accrued warranty costs
Provision for loss on order received

Property, plant and equipment
79,24680,982

Accumulated depreciation(47,018)(49,168)

Buildings and structures, net

32,22931,814Long-term loans payable

Machinery, equipment and vehicles

65,34369,543

Lease obligations

Accumulated depreciation(50,892)(53,161)

Deferred tax liabilities

1,408

343

Machinery, equipment and vehicles, net

14,451

16,382

Net defined benefit liability

8,311

8,370

Tools, furniture and fixtures

14,153

14,738

Accrued directors’ retirement benefits

335

272

Accumulated depreciation(12,506)(12,899)

Provision for board benefit trust

74

134

Buildings and structures

Long-term liabilities

1,647

1,839

Asset retirement obligations

392

395

Land

8,096

8,624

Other

694

568

Leased assets

1,836

1,872

Total long-term liabilities

24,436

24,840(1,002)(1,142)

834

731

140,389

143,685

Leased assets, net
Construction in progress

3,049

4,907

Total property, plant and equipment

60,30664,297

Capital stock

20,873

20,873

Leased assets

67

81

Capital surplus

3,912

3,912

Software

690

844

Retained earnings

73,801

107,238

Other

2,815

2,529

Treasury shares

3,454

Total shareholders’ equity

Tools, furniture and fixtures, net

Accumulated depreciation

Intangible assets

Total intangible assets

3,573

Total liabilities

Net Assets
Shareholders’ equity

(271)

(266)

98,315

131,756

491

14,950

Accumulated other comprehensive income

Investments and other assets
Investment securities

4,389

25,562

Valuation difference on available-for-sale securities

Deferred tax assets

2,298

2,620

Foreign currency translation adjustment

2,480

2,579

Other

7,107

6,812

Remeasurements of defined benefit plans(2,599)(1,753)

Allowance for doubtful accounts(2,051)(2,048)

Total accumulated other comprehensive income

372

15,775

Total investments and other assets

11,74332,946

Non-controlling interests

6,229

6,538

75,622

100,697

Total net assets

104,917

154,069

245,306

297,754

Total liabilities and net assets

245,306

297,754

Total non-current assets
Total assets

51(Millions of yen)

ULVAC Value Report 201852

Financial Data/Corporate Information

Consolidated Statements of Income

Consolidated Statements of Cash Flows(Millions of yen)

FY2016FY2017FY2016FY2017(July 1, 2016–June 30, 2017)(July 1, 2017–June 30, 2018)(July 1, 2016–June 30, 2017)(July 1, 2017–June 30, 2018)

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
Rent income
Insurance and dividends income
Foreign exchange gains
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 non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on sales of non-current assets
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

231,831
168,001
63,829249,271
176,163
73,10814,81819,54334,361
29,46815,70322,05437,75735,351

117
302
297
259
—
203
572
1,750

157
470
300
463
352
426
464
2,631

511
992
1,503
29,716

349
727
1,076
36,907

35
81
117

—
2,002
2,002

643
423
1,065
28,7684,556(1,599)2,957
25,811
1,342
24,469382—
382
38,527
7,309(5,937)
1,372
37,1551,250
35,904

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

53(Millions of yen)

(Millions of yen)

FY2016FY2017(July 1, 2016–June 30, 2017)(July 1, 2017–June 30, 2018)

25,811

37,155

364
3,390
224
10
3,989
29,79914,456113845
215,41652,57028,2001,599

51,307
1,263

Cash flows from operating activities
Income before income taxes

28,76838,527

Depreciation

6,418

6,541

Increase (decrease) in allowance for doubtful accounts

(171)

97

Increase (decrease) in accrued employees’ bonuses

401

473

Increase (decrease) in net defined benefit liability

(247)

182

Increase (decrease) in accrued directors’ retirement benefits

16

(63)

Increase (decrease) in provision for board benefit trust

74

60

Increase (decrease) in accrued warranty costs

32

(321)

Increase (decrease) in provision for loss on order received

227

289

Interest and dividend income

(419)

(628)

Interest expenses

511

349

Subsidy income

(98)

(96)

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

(203)

(426)

Loss (gain) on sales of investment securities(81)(2,002)

Loss (gain) on sales of non-current assets

387—(10,732)(16,748)(161)(9,878)

Increase (decrease) in notes and accounts payable - trade

12,680

6,789

Increase (decrease) in advances received

2,634

(123)

Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories

Increase (decrease) in accrued consumption taxes

76

(241)

Other

1,948

1,230

Subtotal

42,06024,011

Interest and dividend income received

488

720

Interest expenses paid

(510)

(350)

Income taxes paid

(4,219)(5,295)

Net cash provided by (used in) operating activities

37,81819,086

Cash flows from investing activities
Payments into time deposits(12,317)(12,755)

Proceeds from withdrawal of time deposits

4,347

18,873Purchase of property, plant and equipment and intangible assets(6,515)(9,869)Proceeds from sales of property, plant and equipment and intangible assets

234

19

Proceeds from sales of investment securities

323

2,171

Payments for investments in capital of subsidiaries and associates

—

(290)

Proceeds from subsidy income

240

237

Other

(25)

48

(13,713)(1,564)(11,668)(5,157)

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable

—

9,400

Repayments of long-term loans payable(8,313)(11,282)

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

(368)

(344)

(1,477)(2,464)

(260)

(0)

(494)

(886)

(22,580)(10,734)

Effect of exchange rate change on cash and cash equivalents

1,168

4

Net increase (decrease) in cash and cash equivalents

2,693

6,793

Cash and cash equivalents at beginning of period

44,86247,555

Cash and cash equivalents at end of period

47,55554,348ULVAC Value Report 201854

Financial Data/Corporate Information

Company Data/Stock Information
Company Profile

Stock Information

Directors, Auditors and Executive Officers

As of June 30, 2018

As of September 27, 2018Name:

ULVAC, Inc.

President and Chief Executive Officer

Setsuo Iwashita

Trademark:

ULVAC

Director and Executive Vice President

Mitsuru Motoyoshi

Head office:2500 Hagisono, Chigasaki,
Kanagawa Prefecture, Japan

Director and Managing Executive Officer

Dr. Choong Ryul Paik

Dr. Kazuya Saito
Kiyokazu Yanagisawa

Executive Officer

Akira Umeda

Executive Officer

Ryo Matsumoto

Executive Officer

Yu Jer Tsai

Shareholder’s name
Nippon Life Insurance Company

Director and Managing Executive Officer

Masahiko Ishiguro

Executive Officer

Kazuo Ikeda

Capital:¥20,873,042,500

Director and Senior Adviser

Hisaharu Obinata

Executive Officer

Tomoyasu Kondo

Executive Officer

Sadao Aoki

Executive Officer

Tetsuya Shimada

External Director

Akira Mihayashi

External Director

Norio Uchida

External Director

Kozo Ishida

External Director

Yoshimi Nakajima…………………………………… 339………………15,134……………………………………………………… 221…………………………………… 339……………………………………………………………………… 69……………………………………………………… 221……………………………………………………………………… 63……………………………………………………………………… 69…………………………………………………………………………… 32……………………………………………………………………… 63
Treasury stock: 1 shareholder…………………………………………………………………………… 32

Senior Executive Officer

Shigemitsu Sato

Non-consolidated 1,293
Consolidated 6,439………………15,134

Foreign Companies
Individuals and Other
Domestic Companies
Foreign Companies
Securities Companies
Domestic Companies
Financial Institutions
Securities Companies
Foreign Investors
Financial Institutions

Senior Executive Officer

Director and Managing Executive Officer

Number of
employees:

Individuals and Other

Total number of shares issued ………………………… 49,355,938

Masasuke Matsudai

August 23, 1952

Total number of shareholders ……………………………… 15,859

Major Shareholders
Number of shares Shareholding(Thousands)
ratio (%)
3,242
6.57

Japan Trustee Services Bank, Ltd. (Trust account)

3,048

6.18

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

2,023

4.10

Mizuho Bank, Ltd.

1,916

3.88

Sumitomo Mitsui Banking Corporation

1,864

3.78

Auditor

Makoto Ito

TAIYO HANEI FUND, L.P.

1,050

2.13

Auditor

Mitsuru Yahagi

STATE STREET BANK AND TRUST COMPANY 505019

979

1.98

External Auditor

Senshu Asada

External Auditor

Isao Utsunomiya

MUFG Bank, Ltd.

910

1.84

STATE STREET BANK AND TRUST COMPANY

907

1.84

Japan Trustee Services Bank, Ltd. (Trust account 5)

885

1.79

Foreign Investors

Financial Institutions of Shares Held
Number……………19,358,420
Total 49,355,938
sharesForeign Companies
Financial Institutions
Individuals and Other
Foreign Companies
Domestic Companies
Individuals and Other
Securities Companies
Domestic Companies
Foreign Investors
Securities Companies………………… 17,626,222……………19,358,420………………………………………………… 7,587,870………………… 17,626,222……………………………………………………………… 2,518,291………………………………………………… 7,587,870……………………………………………………………… 2,233,548……………………………………………………………… 2,518,291……………………………………………………………………… 28,121……………………………………………………………… 2,233,548

Foreign Investors……………………………………………………………………… 28,121
Treasury stock: 3,466 shares

Note: Treasury stock (3,466 shares) is excluded from the calculation of shareholding ratios.

ULVAC Group Companies

Total 15,859 shareholders

Total number of shares authorized ……………… 100,000,000
Senior Managing Executive Officer

Established:

Number of Shareholders

As of June 30, 2018

As of September 30, 2018

Bases of ULVAC, Inc.
Bases of ULVAC Group companies in Japan/overseas
R&D bases

North America

Sales and service bases• ULVAC Technologies, Inc.
• 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 KYUSHU CORPORATION • NISSIN SEIGYO Co., LTD.

• ULVAC (Shanghai) Trading 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• 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, Inc. India Branch• ULVAC-PHI, Inc.
• TIGOLD CORPORATION• SHOWA SHINKU CO., LTD.

• ULVAC Coating Technology (HEFEI) Co., Ltd.

55ULVAC Value Report 201856