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

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

Basic Corporate Philosophy/Management Policies

ULVAC’s Vacuum Technology

Vacuum Technology, ULVAC’s Core CompetenceStated simply, a vacuum is a space where the pressure islower than the atmospheric pressure. A vacuum has interesting properties: for example, materials’ lower boiling points
in a vacuum mean they are more likely to evaporate and gas
molecules can travel in a straight line in a space. ULVAC hasdeveloped various application technologies that exploit theproperties of a vacuum in its quest to realize the remarkablepotential inherent in vacuum technology.
For example, using vacuum technology, it is possible tocreate ultrathin films with micron- to nanometer-order thickness. Since such thin films cannot be produced by physicallystretching materials, advanced vacuum deposition technology
is required for depositing layers of atoms or molecules of materials in a vacuum.
Led by IoT, 5G, and AI, a tremendous wave of technologicalinnovation has brought about the advent of the smart society. Vacuum deposition is destined to fulfill a vital role in thefundamental technologies underpinning the smart society.

ULVAC’s Business Segments
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.
Management Policies

Vacuum Equipment Business
FPD and PV production equipment

Components

Liquid crystal display (LCD) production

Vacuum pumps

Sputtering target materials

equipment

Vacuum gauges

High-melting-point materials and

OLED production equipment

Helium leak detectors

production of components

Roll coaters

Process gas monitors

Nano-metal inks

Solar cell production equipment

Thin-film measuring equipment

Semiconductor and electronic
device production equipment
Semiconductor production equipment

Improve Customer Satisfaction
Innovations in Production Technology
Development of Original Products

Vacuum Application Business

LED production equipment
Electronic device production 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

Materials

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

Rare-earth magnet production equipment

Free and Open-minded Organization
Enhancing Corporate Value
1

Vacuum freeze-drying equipment
High-vacuum distillation equipment
Automatic leak testers
ULVAC VALUE REPORT 20192

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

Corporate Governance ……………………………………… 31

11-year Financial Data ………………………………… 53

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

Aiming for sustainable growth and resolution ofsocial issues by capitalizing on vacuum technology

Management Structure …………………………………… 35

Business Results ……………………………………………… 55

Dialogue ……………………………………………………………… 37

Consolidated Financial Statements ………… 57

The sustainable management towhich ULVAC aspires

Company Data/Stock Information/ULVAC’s Value Creation <Process> …………………………… 9
ULVAC’s Value Creation <Priority Issues> ………………… 11

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

ULVAC Group Companies …………………………… 61

Compliance ………………………………………………………… 41

ULVAC’s Value Creation <Value Offered by ULVAC’s Business> … 13

Vacuum Equipment Business (1) ……………………… 25
FPD and PV Production Equipment

ULVAC’s Value Creation<Research & Development and Global Expansion> ………… 15

Vacuum Equipment Business (2) ……………………… 26
Semiconductor Production Equipment

Quality Assurance and Product Safety …………… 43

Consolidated Financial and Non-financial Highlights … 17

Vacuum Equipment Business (3) ……………………… 27
Electronic Device Production Equipment

Human Resources ……………………………………………… 45

Risk Management ……………………………………………… 42
Procurement ……………………………………………………… 44

Vacuum Equipment Business (4) ……………………… 28
Industrial Equipment

Occupational Safety and Health ……………………… 49

Vacuum Equipment Business (5) ……………………… 29
Components

Social Contribution Activities ………………………… 52

Environment ……………………………………………………… 50

Vacuum Application Business ………………………… 30
Materials/Others

Editorial Policy
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.
Published:
November 2019 (Previous issue published in November 2018)
Guidelines Referenced:
ISO26000: 2010 (Guidance on social responsibility) First Edition
The International Integrated Reporting Framework, the International Integrated
Reporting Council (IIRC)

3

Report’s Scope and Period

ULVAC’s Communication Tools

Scope: ULVAC GroupIn principle, this report covers the ULVAC Group; any portions that cover only
ULVAC, Inc. are indicated as such.

Summarized
ULVAC VALUE REPORT (Japanese and English version)

Period: Year ended June 30, 2019
(July 1, 2018 to June 30, 2019, Fiscal 2018)
Some portions of the report include activities and initiatives from July 2019 onward.
<Disclaimer>
Figures shown in tables and graphs in this report may not add up to theindicated total because of rounding. Some figures have been revised fromprevious years’ data because the scope of reporting was expanded or calculating methods have been changed.

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 20194

About ULVACULVAC’s History

At the time when Japan was engaged

When ULVAC was founded back in 1952, vacuum technology had not yet entered widespread use in Japan.

in post-war recovery, a group of tal-

As a trailblazer, we championed vacuum technology by introducing new technologies to the market and ad-

ented young researchers and engineers

dressing the needs of customers in diverse industries. ULVAC will continue tackling technological innovation togathered with the aim of “contribut-

speed progress toward the “smart society” to which we aspire.

ing to the revival of Japanese industry

The story of ULVAC’s foundation

through vacuum technology.” In 1952

1952: Japan Vacuum Engineering Co., Ltd. was founded.
Each invested ¥1 million (equivalent to ¥25 million today) of their own money.

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

1952~

1960~

Reflectors for automobiles

Pharmaceuticals

Kohnosuke Matsushita Tamesaburo Yamamoto

Aiichiro Fujiyama

President of Matsushita ElectricIndustrial

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

I want to establish avacuum technology
company to help drive
Japan’s recovery.

Second president

President of Asahi BeerSix
Gen Hirose

Yoshio Osawa

President of Nissay

President ofOsawa-Shokai

Third president

1941: Vacuum ClubNRC
Cooperation
Equipment Corporation
U.S. vacuum equipment
manufacturer

investors

was established.

*1950: Renamed Vacuum
Technology Association

Jin Imachi

Chikara Hayashi

Mazda ResearchLaboratory of Toshiba

Sagane Lab of
the University of Tokyo*Names of companies, organizations and titles are those at the time mentioned.

1962~

1973~

1975~

1983~

1992~

2016~

Metal/steel

Liquid crystal display

Semiconductor

Electronic storage media

FPD

OLED

Special steel

LCD calculator display

Computer

Discs

Flat-panel display

Customers’ products

Automobile

Chemical/
pharmaceutical/foodthe forerunner of present-day ULVAC.

President of Keifuku
Electric Railroad

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

ple, invested in the establishment ofJapan Vacuum Engineering Co., Ltd.,

Yoshijiro Ishikawa

Consult

passion of these visionary young peo-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, weare confident that our vacuum technology will be a key to the advance of the cluster of transformative technologies, including IoT, bigdata, artificial intelligence, and self-driving vehicles, that will underpin next-generation lifestyles.

Sought investment

Japan Vacuum Engineering Co., Ltd.

six angel investors, impressed by the

Challenging new industrial sectors

Fascinating!
Y’all must do it!

(Photo: Courtesy of IBM Archives)

OLED

Corresponding
ULVAC products

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

100 kg-class vacuum induction melting
furnace

Transparent conductive film deposition
equipment

In-line sputtering equipment

LCD production equipment

History
1952
1964
Japan Vacuum Engineering Co.,
Established the first overseas
Ltd. was founded.
subsidiary in Hong Kong.
1955
1968
Opened the Omori Plant in Tokyo
Head Office/Plant completed in
to start manufacturing equipment
Chigasaki, Kanagawa Prefecture.
in Japan.
1969
1959
Changed the company name inOpened the Yokohama Plant inEnglish to ULVAC CORPORATION
Kanagawa Prefecture.
to promote exports.

1952
1952

5

1960

1971
Established a subsidiary in Hamburg, thenWest 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 ULVACCORPORATION (present-day ULVAC
KYUSHU CORPORATION) in Kagoshima
Prefecture to expand sales activities in
the Kyushu area.

1982
Established a subsidiary in Taiwan.
Established the Tsukuba Institutefor Super Materials in Tsukuba
Science City (present-day Tsukuba
City), Ibaraki Prefecture.
1983
Opened the Beijing Office in China.
1987
Established ULVAC TOHOKU, Inc.
in Aomori Prefecture to strengthen
production of large-scaleequipment.

1990
Opened the Fuji Susono Plant in
Shizuoka Prefecture, as a plant
dedicated to semiconductor
production equipment.
1995
Established a vacuum pumpproduction base in China.
Established a subsidiary in South
Korea.

2001
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 theTokyo Stock Exchange.
New buildings of the Head Office/Plant (Chigasaki, Kanagawa
Prefecture) completed.

2005
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
for large LCD production
equipment in Taiwan.
2007
Established a base in India.

2010
Relocated the Chiba Institute for Super
Materials to the Tomisato Industrial Parkin Chiba Prefecture to enhance R&D.
2011
Established the South Korea Institute for Super
Materials to enhance R&D in South Korea.
2015
Established the Future Technology ResearchLaboratory in Tsukuba, Ibaraki Prefecture.
2016
Began manufacturing production
equipment for large displays in China.
2018
Celebrated the 50th anniversary of thecompletion of the Head Office/Plant(Chigasaki, Kanagawa Prefecture).

1970

1980

1990

2000

2005

2010

2018
ULVAC VALUE REPORT 20196

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

Net sales by region (amount and %)Net sales by business segment (amount and %)Vacuum Application
Business

33.0 billion¥

Vacuum Equipment
Business

15

%

¥

85

187.7 billion%

Other Asia

Ratio of sales
overseas¥4.7 billion 2%

FPD and PV production equipment

ULVAC is a source of technology de-

As befits a company involved in a range of FPD and PV manufacturing tech-

rived from vacuum-based production

nologies, ULVAC not only develops production equipment but also offers

equipment for diverse industries.

solutions worldwide that leverage its development of advanced materials.

¥17.7 billion

Taiwan¥16.2 billion 8%

61

7%

%

OthersEurope, North America
and elsewhere

Japan

South Korea

Net sales in fiscal 2018¥23.7 billion

11%

220.7

¥

billion¥85.6 billion

39%

X-ray photoelectron spectroscopy equipment

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

Materials¥72.8 billion¥18.7billion¥14.4 billion 8%
Industrial
equipment

33%

7%¥23.4 billion Net sales in fiscal 2018

Sputtering target materials for FPD production
equipment

11%

Components

220.7

¥

billionFPD and
PV production
equipment

ULVAC has been involved in this busi-

LCD production equipment¥86.8 billion

39%

Employees by region (number and %)¥34.2 billion

Industrial equipment

OLED production equipment

16%

Semiconductor and electronic
device production equipment

ness sector since the emergence of
vacuum technology in the 1 9 5 0s. Lever-¥43.3 billion 20%

aging thefundamental

Semiconductor and electronic device production equipment

technology it has

Higher integration and higher performance at lower costdeveloped so far, ULVAC
currently provides various solutions acrosswide-ranging industries, including the autoVacuum melting furnace

China

OthersMaterials

mobile, pharmaceutical, and food industries.

are demanded for next-generation semiconductors and other highperformance devices. Based on its development of super-miniaturization technologies for such semiconductors and other electronic
devices, ULVAC delivers a stream of new technologies and products
to the world that underpin the progress of society.

Components
As a comprehensive vacuum product manufacturer, ULVAC is also dedicated to thedevelopment of components.
ULVAC pursues cutting-edge vacuum
technology while providing a wide rangeof product lines, extending from vacuum
pumps and measurement and analysis
equipment, to components, such as power
generators for various types of deposition
equipment and vacuum valves.

7

Ratio of employees
overseas

49%

United States

164

Southeast Asia

150

persons2%

persons3%

Taiwan560
9%South Korea
654 Number of employees in fiscal 2018
Japan
10%
3,278
persons51%(As of June 30, 2019)
persons

persons6,424

persons

China

1,618
25%

persons

Leak detector
Cryopump
Dry vacuum pump

Electronic device
production equipment

Semiconductor production
equipment

ULVAC VALUE REPORT 20198

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

ULVAC will contribute to the realizationof a sustainable society.
M

Value ULVAC Offers to Stakeholders

iz a ti o n o f S y n e r g y
axim

Customers

Human Capital

Contribution to customers’ business activities, technological innovation, and value creation;offering of cutting-edge production technology, enhancement of productivity and quality, andreduction of environmental impacts through equipment and services

Number of employees*1

6,424Intellectual Capital

persons

Shareholders and investors
Enhancement of corporate value, greater returns

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

Number of patents owned*2

2,391
Overseas: 2,445
Japan:

Suppliers

Priority Domains

R&D and capital expenditures¥12.9 billion
R&D expenses¥9.2 billion

Manufacturing Capital

17
10Japan:
Overseas:¥35.6 billion

Social issues

Equipment
control

Shareholders’ equity*1¥150.9 billion
D/E ratio*1

Employees
Workplaces offering job satisfaction

Advancedmaterials Materials

Financial CapitalInterest-bearing debt

Surfaceanalysis

Control
Analysis

Realization of the smart society
Fundamental technology forrealization of the smart society

Customer
supportServices
Energy management,
next-generation energy

FPD
PV

VacuumContribution to realization of a sustainable society*
Major contributions through products and services

VacuumApplication
Business

0.24

Value Offered by ULVAC’s Business

VacuumEquipment
Business

Healthcare, life innovation

P.13

Major contributions through processes
Partnerships for the goals

Social andEquipment

Relationship CapitalIndustrial
equipment
Components

Participation in consortia
and collaboration with
universities and other institutions

Quality Assurance
Product Safety

P.43

ESG

ULVAC’s major initiatives Relevant SDGs

E

Environmental management
Environmentally friendly products
Contribution to reductionof power consumption ofvarious devices(Environment)

Semiconductors
Electronics

Construction,social infrastructure, mobility

S(Social)Relationships of trust withcustomers and suppliers
worldwide

Basis for Value
Creation

Local communities
Creation of employment opportunities, industrial development, reduction of environmental impacts

Coatingbusiness

Principal production bases*1

Achievement of growth together with ULVAC based on trust and collaboration, fair and freecompetitive environment

P.11

Reference pages

P.50

Quality management
CSR procurement
Occupational safety andhealthP.43

Social contribution activities

Procurement

P.44

Human
Resources

P.45

Occupational Safety Environmentand Health
P.50
P.49

Corporate GovernanceManagement Structure
Basic Corporate Philosophy

P.31

P.44

P.49

P.52

Social Contribution
Activities

P.52

G(Governance)

Corporate governanceManagement structure
Compliance
Risk management
Human resources development
Diversity & inclusion
Health management
Creating motivating
workplaces

P.31

P.35

P.41

P.42

P.45

P.1
*Indicates relationships with the United Nations’ Sustainable Development Goals (SDGs).

*1 As of June 30, 2019 *2 As of September 30, 20199

ULVAC VALUE REPORT 201910

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 offer-<Priority Issues>ing value utilizing vacuum technology, which is indispensable for industrial and scientific development.
We will continue helping to resolve social issues in cooperation with our customers through the provision of
products and solutions to them.

ULVAC’s business activities
Social issues

Establishment of global network
infrastructure and the smart society,progress of 5G and IoTMarket opportunities

Aspiration for the progress of allindustries and technologicalinnovation

ULVAC’s six businesses
Priority domains

FPD and PV
production
equipment

Realization of the smart society

Semiconduc- Electronic device Industrial
tor production
production
equipment
equipment
equipment

See

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

See

Diversification of semiconductor
and electronic device applications
and needs
Trend toward devices with smallersize, more speed, larger capacity
and lower power consumption

Fundamental technology forrealization of the smart society

SeeComponents

See

IoT, cloud, AI, robots,

Materials

See

Main value offeredby the business

Customers and their products

Response to new
semiconductor ande l e c t ro n i c d e v i c efields and needs byapplying vacuum
deposition and othertechnologies andR&D of cutting-edge
processes throughcollaborative creation
with customers

FPD, semiconductor, electronic equipment, and device manufacturers

big data, drones

Environmental issues, such as
global warming and climatechangeGlobal energy issues due todependence on finite resources

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

Progress of renewable and lowcarbon energy systems

Energy management,
next-generation energy

Improvement in energy conversion
efficiency

Longer preservation of food andpharmaceuticals, volume reduction

Healthcare,life innovation

Longevity, needs and progress ofhealth promotion and healthcare

Aging of infrastructure in developed countries
Development of industrial infrastructure in emerging countries
Wider gap between rich and poor

Development of safe, secure andcomfortable infrastructure

Construction,social infrastructure, mobility

Semiconductors:
Memory, logic

Contribution toresolution of principal
social issues*

Contribution to realizationof an advanced, convenient, safe and secure,global society

3D-NAND,PCRAM, CPU, etc.

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

See

Enhancement of performance of solar cells
and power devices byvacuum deposition,ion implantation andother technologies,
contribution to lower
power consumptionof various devices

Longer life and volume reduction offreeze-dried food,powder vaccines,
drugs, etc. by vacuum freeze drying andother technologies

Enhancement of
performance ofindustrial materials
and response to newmaterials by applying vacuum heat
treatment and othertechnologies

Solar cell manufacturers, battery
manufacturers, etc.
Energy:Heat generation,
power storage,
conversion

Contribution to creationof a sustainable society bypower generation, energy
storage, and energy saving

Solar cells, all-solidstate batteries, powerdevices, magnets for wind turbines

Food manufacturers, pharmaceuticalmanufacturers, etc.
Foodstuffs,
pharmaceuticals:
Freeze drying

Contribution to human health, thefuture of medicine, and realizationof a sustainable society with minimal food loss by means of safe andsecure foods and pharmaceuticals

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

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

Contribution to creation ofa sustainable society that issafe and secure 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 201912

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

ULVAC supports the smart society

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

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

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

Smart society
Sustainable cities
and communities

Industry, innovationand infrastructure

Concentration on cities, traffic
congestion and accidents

Good health andwell-being

R&D of vaccines and drugs

Fundamental technology forrealization of the smart society

Unmanned delivery

Powder vaccines
Vacuum freeze-drying equipment

Semiconductor production
equipment

Good healthand well-being

Autonomous-driving

IoT

Limited access tohealthcare services

AR/VR

Countermeasures for
infectious diseases

Semiconductors

Sterile preparation

Micro Powder Dry system
Liquid nitrogen generator
Big data

Remote medicine

AI

Electronic devices

Electronic device production
equipment

Promotion of welfare

Zero hunger

Regenerative medicine

Edge server

Response to labor shortages
in agriculture, weather, etc.

Cloud

Agricultural infrastructure

Network infrastructure

No poverty

Displays
Display production
equipment

Vacuum freeze-drying equipment

Reduction of food disposal
and food loss
Zero hunger

Freeze-dried foods,
emergency
provisions

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

Food packaging

Responsible
consumption
and production Elimination of hunger

and malnutrition

Roll coaters

Supplements

High-vacuum distillation equipment

Contributing to development of infrastructure in emerging countries
Affordable andclean energy

Soaring electricity demand

Finite resources

Advanced miniaturized devices(Lower power consumption)

Electric vehicles/
hybrid vehicles

Semiconductors Electronic devices

Global warming

High-efficiency solar cells

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

Electronic device
production equipment

Lithium-ion
batteries

Roll coaters

Power devices

No poverty

Ion implantation equipment

Cat-CVD equipment
for siliconheterojunction solar
cells

Climate action

13

Semiconductor
production
equipment

Vacuum circuit breakers for
substation systems

Infrastructure in emerging
Industry,
innovation and countries
infrastructure
Heat exchangers

Vacuum furnace

ULVAC VALUE REPORT 201914

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

Global Network

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

Solution networks offering solutions to support industrial development worldwide

ULVAC has long been a source of vacuum-technology-based products and materials indispensable for wide-

ULVAC has established optimal networks covering development, sales, manufacturing, and services not only

ranging industries. We will continue to promote innovative, pioneering R&D capable of addressing actual andfor Japan but also for the United States, Europe and Asia.

potential needs and create high-added-value products and technologies, thus contributing to the progress of society.

Global production system

Raising R&D efficiency

Regional supply chain

Enhancing ULVAC’s technology portfolio

To continue to provide innovative technologies and products in theeverchanging market, our R&D projects undergo selection and focus bymaking a clear distinction between “development for improvement ofexisting products” and “development of fundamental technologies in
preparation for the future” based on analysis of customer needs andmarket trends. Moreover, our development structure leverages business
partnerships with various companies and research institutions.
We are also striving to equip ourselves with the advanced technologies necessary to respond swiftly to the progress of 5G and IoT inline with the establishment of global network infrastructure and thesmart society while flexibly addressing social issues such as global
warming and climate change, thus establishing a foundation for
long-term sustainable growth.
Principal themes

Complementing and reinforcing technologies

South
Korea

TOPICS

Cleaning

U.S.

Relevant SDGs

Head Office/Plant Kagoshima Plant

Japan

ULVAC-Osaka University Joint Research Laboratory for
Future Technology opens at Osaka University
Establishment of a base for fundamental research andinitiatives for human resources development

China

Procurement

Fuji Susono Plant Hachinohe Plant

TaiwanChina Plant

On November 1, 2018, ULVAC, Inc. and the Graduated School of Engineering at
Osaka University established the ULVAC-Osaka University Joint Research Laboratory for Future Technology (hereafter referred to as the “Joint Research Lab”)
in the Central Terrace Building of the University’s Suita Campus. Through Osaka
University’s industry-academia collaboration framework, the Joint Research
Lab aims to promote mutual exchange among researchers and build an R&D
network, contribute to scientific advancement and the resolution of technicalissues in the medical engineering field, and develop highly creative university
human resources. ULVAC aims to emply its own in-house technologies to create new value, which include applications for next-generation FPDs, fabricationof semiconducting quantum dots for artificial photosynthesis and technology
for their mass-production, as well as ultra-high-speed freeze-drying technology
for medical applications such as cell preservation.

ResearchthemesNext-generation non-volatile memory
High-density packaging
Electronic devices, MEMS/sensors
Hyperfine wiring
Next-generation displays
Power devices
Next-generation batteries
High-efficiency solar cells
High-functional films
The environment
New energy
MedicalGroup
companies

Customer
service Equipment

South Korea Plant Taiwan Plant

ULVAC conducts R&D near customers and shares

ULVAC has an extensive production system in Japan,

the outcomes throughout the Group.

China, South Korea, and Taiwan and has established a

Manufacturing

Inspection/
installation

supply chain for each site.

Customer Support
ULVAC’s customer support solutions pool the Group’s knowledge
Our customer support network (66 bases in 13 countries) in Japan and around the world underpins our customers’ production operations in a manner that meets their needs throughout the 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.

1) Development of cryogenic cold storage materials using rareearth nitride2) Development of alloy powder that is anisotropic andproperty-controlled
3) Establishment of a cell preservation technique using ultrafast
freeze-drying technology,etc.

Field support(maintenance)
Modification/
improvement

Before refurbishing

After refurbishing

Central Terrace Building at
the Suita Campus of Osaka
University

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

TOPICS

Sales ofrefurbished usedmachines

Parts sales

Cleaning andsurfacetreatment

Effective utilization of resources throughout the life cycle andaddressing environmental issues

Relevant SDGs

R&D investments (capital expenditures for R&D and R&D expenses) are expected to continue increasing. Active development is exInitiatives for enhancement ofequipment recyclability and production technology improvement

pected to lead to future growth, along with efforts in next-generation displays/logic and next-generation non-volatile memory.

Buildings, repairs, etc.
Depreciation

5

0

15

12.9
7.0 6.9
4.1
2015(Billions of yen)
10.0

17.2

15

10

R&D expenses (actual and forecast)

R&D

Capital expenditures (actual and forecast) Total investment(Billions of yen)
20

8.3
4.1

6.4

6.5

8.3
7.5

12.9
9.8

7.2

6.6

6.9

8.7

6.3

9.2

9.6
Mining of materials
for products

6.9

5.0

2.5

2016

2017

2018

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

2019

Forecast

0
(FY)

2015

2016

2017

2018

2019

(FY)

Procurement of parts and consumables

ULVAC is contributing to reduction of
power consumption, waste, and consumption of raw materials throughout the life
cycle, including at the stage of customer
support.

ULVAC’s plants

Customers’ plants

Modification of equipment, sales of refurbishedused machines
Rejuvenation, precision cleaning, and resource recovery(extension of component life and the cleaning cycle, recovery of valuable materials, etc.)

Forecast

ULVAC VALUE REPORT 201916

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

179.2

249.3

(Billions of yen)

2.0

29.5
23.8

27

150
100

1.66
1.06

Voluntary retirement rate (%)

All industries

1.61

1.63

1.06

1.15

1.5

17.9

18

1.83

1.66

6.0

1.02

2014

2015

2016

2017

2018

(FY)

0.5

0

0.0

2014

2015

2016

2017

2018

(FY)

0.37
0.00

0.00

0.00

2014

2015

2016

49.6

(%)

(Billions of yen)
40

50

35.9

32.8

24.5

0.00
0

2014

2018

2017

(FY)
*Source for average data for all industries and manufacturing industry: “Survey on Industrial
Accidents 2018” by the Ministry of Health, Labour and Welfare of Japan.

2015

100

78.8

33.2

78.8

81.8

87.8

10

2014

2015

2016

2017

2018

0

2014

(FY)

2015

2016

2017

For details

50

400

25

200

2018

(FY)

0

2014

2015

2016

2017

2018

For details

605

0

P.39

465

2017

2018

252

172

2014

(FY)

437

2015

2016

28.5

30

29.2

Interest-bearing debt

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

100

82.6

21.9
75

12.1

12.5

33,213

42.7

50

35.7

10

50,000

35.6

25

0

2014

2015

2016

2017

2018

(FY)

0

91,712
31,76475,00062.7

2093,017172

87,40628,248Group companies in Japan

91,88633,31888,961

59,94859,15958,568

2015

2016

2017

2018

(FY)

0

2014

2015

2016

2017

55,165

Final landfill disposal rate (%)

(%)
6.0

359

214
3.7

5,000

6,556

2,500

2,040

0
(FY)

Recognizing that electricity accounts for a large proportion of energy consumption, we are promoting
energy saving in production and product development and evaluation while introducing facilities withexcellent energy-saving performance.
For details
P.50

17

Amount of landfill (t)Total amount of waste recycled (t)313

33,7962018

Amount of valuable materials recycled (t)10,00025,0002014(t)7,500 254

59,804

P.52

Waste emissions
Group companies overseas

100,000(FY)

ULVAC holds vacuum demonstration classes and plant tours for local schools and other public institutions and for people in local communities. As part of our collaboration with Chigasaki City on education in recent years, we are vigorously conducting activities designed to encourage as many young
people as possible to take an informed interest in science, since the future leaders will be drawn fromtheir ranks, for example by holding classes for high school students on the world of work and offeringjunior high school students opportunities to gain experience in the workplace.
For details

(%)

P.47

Number of people participating in vacuum demonstration classes (Persons)

600

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

ROE (Return on equity)

(FY)

800

82.4

75

8.9

0

2018

2017

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

20
10

2016

30

18.7

16.7

20

1.06

1.5

53.5

40.2
40

30

2.21

1.71

Localization ratio of presidents of overseas subsidiaries (%)

Equity ratio

2.54

3.0

ULVAC has been promoting various safety initiatives, including risk assessment, through the operation of the Occupational Safety and Health Management System (OSHMS), resulting in workplaces
whose safety greatly surpasses the industry average. With “safety first” as the Group’s principle, wewill redouble our efforts to eliminate occupational accidents.
For details
P.49

Net income

4.13

4.5

1.20

1.0

9

ULVAC, Inc. (non-consolidated)

Manufacturing industry

11.1

50
0

ULVAC, Inc. (non-consolidated)

35.4

36

220.7

192.4

Rate of lost-work-time injuries

2014

7,072

8,479
3.6

385
4.2

4.5

7,197

7,093
3.0

2.9
1,920

2015

2,313

2016

4.5

2,222

2017

2,236

2018 (FY)

1.50

We are taking steps to reduce landfill disposal of waste and increase the recycling rate while promoting resource-conscious manufacturing, including design to reduce processing losses and minimize
waste materials.
For details
P.50
ULVAC VALUE REPORT 201918

ULVAC’s Vision

Commitment of Top Management

Aiming for sustainable growth and resolution ofsocial issues by capitalizing on vacuum technology
ULVAC’s vacuum technology:
supporting a sustainable society

Setsuo Iwashita
President and Chief Executive Officer

19

ULVAC’s mission and vision
Ever since our foundation in 1952, adhering to the Basic Corporate Philosophy stating ULVAC’s aspiration “tocontribute to the development of industries and scienceby comprehensively utilizing its vacuum and peripheraltechnologies,” we have developed various application andprocessing technologies capitalizing on the properties of
vacuum, expanding application fields—ranging from automobile to chemical, pharmaceutical, and food, metallurgy,
semiconductor and electronic devices, including LCD panels (FPD) and OLED—by embracing a succession of newtechnologies as industry continues to evolve.
Going forward, ULVAC is committed to supporting
the smart society in which diverse industries will become
increasingly electronics-oriented as it engages in technological innovation. In terms of management, according
greater emphasis to maximizing our contribution to thesustainable development of society and resolution of social
issues through the development of industries and scienceby comprehensively utilizing vacuum technology, ULVAC
aims to achieve sustainable growth over the medium tolong term and enhancement of corporate value.
Sustainable growth by supporting technologicalinnovation for the smart society
In view of increasing urban concentration and population
aging, the contemporary world is exposed to risks, including shortages of energy, water, and food, traffic congestion, inadequate healthcare, and changes in the naturalenvironment. Meanwhile, as a mighty wave of technological innovation, the like of which is thought to occur only
once in several decades, opens up extraordinary new possibilities, moves are afoot to resolve social issues throughspeedier telecommunications, lower power consumption,
automation of transportation and logistics, major gains inagricultural productivity, and progress in healthcare to extend healthy life expectancy.
As technological innovation progresses, with AI, IoT,
and 5G communication to the fore, diverse industries are
becoming electronics-oriented amid rising expectations
that the advent of the smart society will lead to resolutionof various social issues. In this regard, semiconductor memories and logic devices, MEMS/sensors, power devices, and
OLED are key devices. In these growth markets, ULVAC
will support the realization of a smart society by providing
deposition processing technology and equipment fundamental technologies. Moreover, by integrating such coretechnologies and creating and offering new applications,
we will contribute to the progress of the smart society andthe related expansion of business opportunities.

Contribution to resolution of social issues as acomprehensive vacuum product manufacturer
As a comprehensive vacuum product manufacturer mindful of ESG and determined to address the SDGs, there are
numerous fields where ULVAC is in a position to contribute to the resolution of environmental and social issues on
the global stage.
Among the fundamental technologies that support
the smart society, there is a need for semiconductors withhigher processing speed and lower power consumption, in
response to rapidly growing volumes of data and to curb
the explosive rise in demand for electrical power. ULVAC
is responding to these needs by offering technology andproduction equipment in the field of advanced miniaturized devices, such non-volatile memory and packaging.
We are also addressing the demand for the high-density
packaging technology essential for the AI chips that will beapplied in increasingly sophisticated computing systems.
In addition, we will help bring about new applications inthe smart society, including CASE transformation in theautomotive industry, advances in mobile devices, and the
expansion of 5G communications networks, through key
enabling technologies for high-performance displays, batteries, power devices, MEMS/sensors, and more. By seizing
such opportunities in the market, we will contribute to therealization of an affluent society that is safe and secure.
Turning to energy management and next-generationenergy that can help resolve social issues such as global
warming and climate change as well as resource depletion,
the progress of renewable low-carbon energy systems
and the enhancement of energy conversion efficiency aremarket requirements. We will contribute to the creation ofa sustainable society by power generation, energy storageand energy saving through solar cells, lithium-ion batteries,
and power devices by capitalizing on vacuum deposition
and ion implantation technologies.
Expanding market opportunities in the healthcare field
and the life innovation field are also relevant to such social issues as the need to enhance healthcare and extend
healthy life expectancy and to satisfy rising demand forfood. For biomedical devices used for handling cells andDNA, sophisticated microfabrication technology is required.
ULVAC can meet such needs through the application andfurther development of the thin-film formation technology it has cultivated in the semiconductor field. Vacuum
technology can also be utilized for longer life and volume
reduction of freeze-dried food, powder vaccines, drugs,
etc. by vacuum freeze drying, evolution of regenerative
medicine supported by cryogenic technology, enhancement of the efficiency of farming by smart agriculture, andpromotion of remote medicine.

ULVAC VALUE REPORT 201920

ULVAC’s Vision

Commitment of Top Management

By developing advanced technologies and deploying its
broad technical coverage, ULVAC will be able to offer multifaceted support for the development of a sustainable society
as it aims to be an enterprise indispensable to society.

billion (-17.0%). We are actively making R&D investments
in future growth fields such as semiconductor memory andlogic, MEMS and sensors, power devices, and OLED displays. We plan to invest ¥9.8 billion in capital expenditures
for R&D (+¥3.2 billion year on year) and ¥9.6 billion in
R&D expenses (+¥0.4 billion). Based on our current threeyear mid-term management plan (covering the period fromfiscal 2017 to 2019), we have set earnings targets of “netsales of ¥265 billion” and “operating profit of ¥38 billion,”but as mentioned previously, our earnings are forecast to
fall short of these targets. However, the future targets that
we have set for fiscal 2022 remain unchanged. We aim toachieve “net sales of ¥300 billion” and “operating profit
margin of 16%” on a consolidated basis under our growthstrategy, based on the mid- to long-term market prospects.

Review of operations for fiscal
2018 and future prospects
Sales and profit declined due to the postponements of capital expenditures
During fiscal 2018, market conditions, which had beenfavorable until the previous fiscal year, becam subduned,
and the ULVAC Group failed to achieve the performance
initially planned.
Looking back on business conditions for fiscal 2018,
orders received and net sales of FPD and PV production
equipment declined year on year despite the contributionof orders received, especially from China, for LCD production equipment for large-screen TVs and OLED production equipment for smartphones. Orders received and net
sales of semiconductor and electronic device production
equipment both declined year on year due to the impactof the postponement of capital expenditures by semiconductor memory manufacturers, despite of the robust
performance from items such as production equipment for
high-performance devices for mobile devices and power
semiconductors.Components performed well, with growthin orders received and net sales because of strong demandfor cryopumps for mounting on OLED production equipment, as well as for vacuum pumps and measuring equipment for the FPD, semiconductor, and electronic device
industries and for the automotive-related industry. However, orders received for general industrial equipment decreased partly because of the postponement of investment
in manufacturing of high-performance magnets in China,
and net sales remained at the same level as in the previous
fiscal year, centering on vacuum heat treatment furnaces
for production of automotive components and leak testers.
Orders received and net sales of materials declined year on
year, under the impact of factors such as reduced equipment operation in South Korea, despite recording of orders
received for and sales of sputtering target materials for
LCDs and other items.
The operating profit margin decreased to 10.8% from
14.2% in the previous fiscal year, and all profit categories
declined, as an increase in selling, general and administrative
expenses compounded the decrease in net sales.
As a result, for fiscal 2018, on a consolidated basis,
orders received decreased 10.1% year on year to ¥218.5
billion, net sales decreased 11.5% to ¥220.7 billion, operating profit decreased 32.6% to ¥23.8 billion, ordinary
profit decreased 30.7% to ¥25.6 billion, and net income
decreased 48.0% to ¥18.7 billion.

21

Capital policy

Accelerating the growth strategy in view of midto long-term market prospects, despite expectations that quantitative targets for fiscal 2019 will
not to be achieved
At present, we face a business environment where capital
expenditures are temporarily weaker due to delays in theresumption of investments by semiconductor memory
manufacturers, and factors such as a hiatus in business negotiations regarding capital expenditures for LCD production equipment for large-screen TVs. In the semiconductor
memory market in particular, active investment by memory
manufacturers in 2017 and 2018 has led to continuing
oversupply and price declines, and a full-scale resumptionof capital expenditures is expected from 2020 or later, as
the market continues to be affected by high-tech trade
friction between the United States and China.
In this environment, in fiscal 2019, the current decline
in orders received and net sales of FPD and PV production equipment is forecast to continue, as we expect toexperience a lull in orders received for LCD production
equipment for large-screen TVs, and it appears likely that
our customers for OLED production equipment investment
plans for smartphones will be from fiscal 2020. On theother hand, an upturn is expected in orders received andnet sales of semiconductor and electronic device production equipment, with growth expected in new non-volatilememory (PCRAM), logic, communications devices, sensors
and power devices, as well as the resumption of investment in semiconductor memory from the second half ofthe fiscal year.
Based on these predictions, for fiscal 2019, on a consolidated basis, we forecast orders received of ¥206.0
billion (-5.7% year on year), net sales of ¥205.0 billion(-7.1%), operating profit of ¥22.5 billion (-5.6%), ordinary
profit of ¥23.5 billion (-8.1%), and net income of ¥15.5

Regarding the capital policy, we take into account the balance among such factors as financial soundness, the capital structure, capacity for growth investment with a viewto the future, and distribution of profit to shareholders.
ULVAC recognizes the sharing of profits with theshareholders as one of its most important policies. On
the other hand, in an industry that undergoes significant
changes in capital expenditure trends and technical innovations, ULVAC recognizes that, for further increasing its
corporate value, it is necessary to enhance its internal reserves for further investments in R&D and strengthening its
financial base. Therefore, the basic policy for distributionof profits to shareholders takes into account such factors
as its financial base, consolidated performance for each fiscal year, and payout ratio.

To achieve sustainable growth andenhancement of corporate value
To prevail in global competition
ULVAC’s core competences are vacuum technology andits peripheral technologies. Synergy among our diverse
business fields—encompassing equipment, materials, deposition processing, analysis, and services; broad technical coverage; the product lineup; and the establishmentof supply chains in growth regions—is the source of ourstrength. Going forward, we will strengthen global strategic marketing functions and expand business partnerships
with diverse companies and institutions to respond to newmarkets and technologies. We will also work to reestablish
systems and strengthen initiatives to realize continuous
development of innovative technologies and products.
Through these endeavors, we will address market needs
that are growing and evolving as technological innovation
advances worldwide.
In terms of marketing, we are closely watching the U.S.
market since many advanced technologies and products
originate in the U.S. While vigorously gathering information, we are working to win projects that will lead to glob-

al collaboration covering every phase from R&D to mass
production.
Meanwhile, in Taiwan and South Korea, which are
driving forces of the world’s semiconductor market, wehave established R&D bases near our customers. Rooted inlocal markets while collaborating with development teams
in Japan, ULVAC is pursuing development based on close
relationships with customers.
In China, the trend is toward higher-value-added manufacturing and amid moves to facilitate high-tech investment. ULVAC is responding by enriching its R&D systems
in China.
ULVAC, Inc. implemented an organizational restructuring as of July 1, 2019. We are working to advancethe integration of oursix business divisions, namely, Semiconductor
Equipment, FPD.PV, Advanced Electronics Equipment, Industrial Equipment, Components, and Materials, as well as
our group companies engaged in related operations. We
have also established the Innovation Center of Excellence,
which supports each business by reviewing operations andsystems from the perspective of enhancing management
efficiency, the New Business Development Center, which
effectively utilizes the Group’s combined management resources to create new business value, the Corporate Sales& Marketing Center, which controls the marketing function and sales management function and strengthens theglobal marketing structure, and the Manufacturing Centerof Excellence, which enhances manufacturing capabilities,
productivity, and collaboration with overseas production
bases. Under this new organizational structure, we will
strive to further enhance the efficiency of group management and transform ourselves company-wide, to prevail inglobal competition.
Corporate growth utilizing external perspectives
The emergence of the smart society is creating new
growth opportunities that ULVAC can benefit from byoffering new value. On the other hand, competition is intensifying. For ULVAC, sustainable growth in these circumstances will require a tenacious and passionate approachto business, with management sharing with all employees
its determination to achieve transformation.
As well as articulating these aspirations and inculcating them in all employees, we are striving to vitalize theBoard of Directors and enhance its effectiveness by taking
to heart the illuminating opinions of our external directors
who bring a wealth of experience to the Board’s deliberations from the perspective of strengthening corporate governance.
By pursuing these initiatives to achieve sustainablegrowth, we are resolved to prevail as an enterprise thatearns the confidence of stakeholders. You can count on
ULVAC to advance boldly into the future and I request our
stakeholders to grant us their continued support over thelong term.

ULVAC VALUE REPORT 201922

ULVAC’s Vision

Revised Mid-term Management Plan and Growth Strategies
Whereas ULVAC’s targets under the current three-year mid-term management plan (covering the period fromfiscal 2017 to fiscal 2019) were net sales of ¥265 billion and operating profit of ¥38 billion on a consolidated
basis for the fiscal year ending June 30, 2020 (fiscal 2019), the final year of the plan, our earnings are forecast
to fall short of these targets owing to delays in the resumption of electronics-related capital expenditures.
However, the future targets set for the fiscal year ending June 30, 2023 (fiscal 2022) remain unchanged. ULVAC
aims to achieve “net sales of ¥300 billion” and “operating profit margin of 16%” on a consolidated basis under
its growth strategy, based on the mid- to long-term market prospects.

VisionHighly profitable corporate management by comprehensively utilizing vacuum technology, maximizing
synergy among equipment, materials, deposition processing, analysis & services, and cooperating with
global business partners
Human resources development for the next leap forward and a corporate culture that relishes challenges

300billion

Targets for FY2022 Net sales: ¥300.0(Billions of yen)

300
231.8
200

Operating profit margin: 16.0%

220.7

Growthindustries

Automobile(autonomous driving)

AR/VR(disaster drills)

Drones(unmanned delivery)

Food(smart agriculture)AI(big data analysis)

Medicine(remote medicine)

Next-generation
semiconductor memory

Solar cells

Communication
devicesSensors

Batteries

Displays

Key devices

Vacuum deposition technology

Key technology

(%)

16.0

18

249.3

192.4

Technology enabling the smart society = Growth market

12.7

205.0
12

14.2
10.8

ULVAC’s technical advantages (examples); Integration of core technologies (semiconductors, electronic devices, energy, packaging)

11.0

AI chips

9.3

Sensing

Non-volatile memory(PCRAM)100

6

Wireless communication
modules (5G)

MEMS/sensors
Cameras

MEMS/sensors
0

2015

2016

2017

2018

2019(Forecast)

2022

0

2015

2016

2017

2018

2019(Forecast)

2022

FPD and PV production equipment
Semiconductor and electronic device production equipment
Components
Industrial equipment
Materials
OthersStrengthening of management base

Current specific measures

More powerful businesspromotion capabilities

Promotion of global human resources and training of next-generation executive candidates
Improvements for fairer assessment to bring out the full potential of employees’ capabilities

Deepening relationships andcoordination within the Group

More powerfulmanufacturing capabilities

Information platform
development

Improve businessjudgments

Financial strength
improvement

Improve capabilities for
growth investment

Establishment of systems for efficient utilization of the Group’s management resources
Reinforcement of the global supply chain system and strengthening of cost competitivenessby enhancing manufacturing capabilities
Strengthening of global strategic marketing functions to respond to new markets and newtechnologies
Facilitation of greater and vigorous use of IT in business processes
Improvement of the equity ratio to 53% (at the end of fiscal 2018) by a ¥3.5 billion increase in
net assets and a ¥15.1 billion decrease in total assets
The amount of R&D investment is scheduled to be unchanged from the amount planned in the mid-term management plan

Human resources
development

Growth strategies
Promotion of business growth
Expand business in growthmarkets

The smart society in which industries become increasingly electronics-oriented is a growthmarket for ULVAC.

Provide solutions capitalizing Create new application fields through integration of core technologies for semiconductors,
on technical advantage
electronic devices, energy, packaging, etc. to address new market needs
Further active strategic
collaboration

Acquire top position in both technology development and business development

Further develop business in Utilize local production systems, supply chains, and networks built in the high-growth regional
growth regions
markets
Promote initiatives torealize new value
23

Attract new customers and strengthen marketing by using ULVAC’s wide technical coverage

Data

Processors

Wireless
communication
modules

CamerasInterposers

Converters

Thin-film lithium-ion secondary batteries

Solar cells

Solar cells

Creation of new applications and services

Thin-film lithium-ion
2nd batteries

Thin-film processing technology and new materials are needed to support these technologies

Example of strategic collaborations (PiezoMEMS)

China

EuropeAdvanced technology development
Collaboration with leading foundries

Next giant MEMS market
Entry into China’s ecosystem

U.S. (Silicon Valley)
Technical collaboration with startup companies
New business model with system ownercompanies

Southeast Asia
New growth market
Collaboration with leading
research institutes andAustralia
foundries
New applications(biomedical, digital agriculture)
Technical collaboration with leading
research institutes

Acquire top position in bothtechnology development andbusiness development
ULVAC VALUE REPORT 201924

ULVAC’s Vision

Vacuum Equipment
Business (1)FPD and PV Production Equipment

Creation of growth drivers and profit-oriented cost structure reform to achieve further growth
We have been working to create growth drivers and achieve profit-oriented cost structurereform since the previous year. By further
promoting these initiatives, we will not only
provide customers with superior products andtechnologies but also promote development
and sales of new products for growth markets,
thus expanding ULVAC’s share of the market
for FPD, PV and high functional films.

General Manager of FPD . PV Division

Maintaining high market share by receiving orders for
LCD production equipment for large-screen TVs and
OLED production equipment for smartphones in China

Regarding LCDs for large-screen TVs, device manufacturers rapidly expanded capital expenditures for G10.5 thatis capable of producing multiple 65- or 75-inch panelsfrom one substrate. Capitalizing on abundant experience in supporting the trend toward large screens in
the TV market, ULVAC introduced sputtering equipment
offering superior productivity ahead of competitors andengaged in continuous improvement programs, maintaining an overwhelming share of this market segment.
Furthermore, regarding equipment for OLED, a key measure of the growth strategy, we won repeated orders forevaporation equipment from smartphone panel manufacturers in China. Regarding vacuum equipment for
printed OLED TVs, which are promising next-generation
large-screen TVs, the launch of the business proceeded
well and we took an important step in the expanding
OLED market. With regard to high-capacity lithiumion batteries, whose market is expected to enjoy strong
growth along with the FPD market, we have advanced
from the basic development phase for metal lithium
evaporation technology to the phase for examination of
pre-production technology with a leading manufacturer,
and expectations rose regarding the market launch of
ULVAC’s roll coater for lithium-ion batteries.
FPD capital expenditure trends(Billions of yen)
300

96

(Forecast)

72
48

0

2015

2016

2017

2018

2019 (FY)with a high degree of design flexibility as the interface of choice in the smart society driven by 5G and
IoT, companies are competing in the developmentof such displays. Compared with LCD, flexible OLED
is characterized by light emittance, wide viewing angle, and high contrast. Their application is expected
to grow in various fields, such as for automotive displays indispensable in the era of “connected cars.”
In line with the strengthening of environmental regulations across the world, electrification ofcars will be facilitated and various preferential
measures are expected to spur expansion of thelithium-ion battery market. ULVAC is aiming for
the No. 1 market share by developing new modelsof sputtering equipment for OLED, organic evaporation equipment for OLED, and roll coaters forlithium-ion batteries. Moreover, although robust
market growth of the production equipment forsolar cells, a promising source of renewable energy,
is expected to continue centering on China, pricecompetition is fierce. Therefore, we will switch to
production in China to enhance competitiveness.
Recognized Business Opportunities
1. Expansion of the medium/large-sized OLED market
2. Expansion of new display applications and of the lithium-ion battery
market in the smart society
3. Robust growth of the solar cell production equipment market of China

Conceivable Risks
1. Delay in development of technically challenging technology for new applications and markets
2. Slowdown of the Chinese market
3. Intensifying competition and market entry of Chinese manufacturersof low-priced equipment

200

100

2018

2019
Medium/large-sized OLED

2020
Large-screen LCD TVs

2021
Small/medium-sized mobile phones

2022(Source: Interviews by ULVAC)

New products supporting the smart society
In the FPD market, owing to the trend toward
lower prices because panel supply capacity greatly
exceeded demand, investment in LCD production
equipment is expected to be soft in the near term.
However, in view of the demand for flexible OLED

25

120

24

Yasuo Shimizu

0

Orders received (Billions of yen)

Measures for Reducing Risks and Maximizing Opportunities
1. Collaborate with leading manufacturers in development for mass
production for new applications and markets
2. Develop highly competitive new products
3. Thoroughly eliminate waste in manufacturing processes andreestablish the supply chain to generate profit
4. Promote overseas production to reduce cost

Vacuum Equipment
Business (2)Semiconductor Production Equipment

Continued growth through creation of new products and cultivation of customers
Our objective is to grow the semiconductor production equipment operation as one of ULVAC’s
primary pillars of revenue, and advance global
business development by continuing to capitalize on investment trends in the semiconductor
market. To accomplish this, we will endeavor
to seize business opportunities based on our
growth strategy emphasizing responsiveness tothe needs and trust of customers.

Tomoyasu Kondo

Executive Officer, General Manager of Semiconductor Equipment DivisionPreparation is underway and aligned with thebusiness strategy despite temporary postponement of investment by memory manufacturers

Whereas memory manufacturers made vigorous investments in 2017 and 2018, many of them are temporarily
postponing investment due to oversupply and pricedeclines of memory products since the end of 2018.
However, investment is expected to resume moderatelyfrom 2020 onward and we are steadily preparing forthat.
In the logic/foundry market several major customers
recently adopted our sputtering equipment for the process step that requires extreme ultraviolet lithography(EUV) and we were able to establish a foundation for
future growth.
Regarding the sputtering process of PCRAM nonvolatile memory, which has good prospects for future
market growth, our equipment is being adopted not
only by existing customers for their new lines but also
for development and pilot lines by all other customers
who are planning mass production.
To build on these gratifying accomplishments andprogress, we are promoting initiatives to further reinforce the foundation for growth by strengthening
sales & marketing, production, and customer support
systems.

Increase market share in the semiconductor
production equipment market that is continuing to grow in the smart society
The requirements of semiconductor devices andrelated 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 consisting of
non-volatile memory. Miniaturization is fueling innovation in processor technology.
Amid these technical innovations in semiconductors, in addition to NAND and DRAM memory,ULVAC positions PCRAM and the logic/foundrybusiness as the axles of growth.
We will focus on growth engine keywords: “Miniaturization process requirements,” “Nonvolatile

Orders received (Billions of yen)
35
28

(Forecast)
21
14
7
0

2015

2016

2017

2018

2019 (FY)

memory deposition,” “Wafer level package deposition,” and “Logic/foundry miniaturization mass
production support.” Based on a business growthstrategy unique to ULVAC, we will pursue businessdevelopment different from other major competing
equipment manufacturers.
As for mid-term strategic products, we are promoting the development of leading-edge technologies that leverage our strengths in the native oxide
removing system and sputtering system.
Recognized Business Opportunities
1. Full-scale mass production of leading-edge 7-5nm logic devices
2. New processes for leading-edge DRAM and 3D-NAND products andchange in materials
3. Expansion of wafer level package deposition process
4. Mass production of PCRAM

Conceivable Risks
1. Intensifying of competition
2. Slowing growth of the leading-edge device market
3. Delay in expansion of the PCRAM market

Measures for Reducing Risks and Maximizing Opportunities
1. Develop products by embracing customer requirements throughmeticulous marketing and achieve differentiation
2. Strengthen support for development and mass production launch by
new customers
3. Strengthen support for development and mass production of leadingedge devices
4. Provide thorough support to PCRAM customers and maintain 100%
market share

ULVAC VALUE REPORT 201926

ULVAC’s Vision

Vacuum Equipment
Business (3)Electronic Device Production Equipment

Advent of the smart society—Further expand global business development of equipment for electronic devices
In addition to various devices indispensable forthe realization of IoT and the smart society,such as communication devices, sensing devices, optical devices, and power devices, thedevelopment of compact miniaturized packaging technology for such devices is bound toaccelerate. We aim to further expand this business in the electronic device market.

Tetsuya Shimada

Executive Officer, General Manager of Advanced Electronics Equipment Division

Ongoing establishment of systems to seize opportunities without fail in a buoyant market

Orders received in fiscal 2018 were lower than the result
for the previous fiscal year, reflecting the temporary
stagnation of the market. In fiscal 2019, amid robust
growth in capital expenditures eyeing the smart society, we will work to win more orders by further
strengthening and fostering sales engineers.
In the electronics device-related business, delivery
lead times are very short for manufacture and shipmentof equipment. We are establishing a front-loading system from the order-forecasting phase onward.
How to meet customers’ delivery requirements is an
issue. We will continue to establish a system for seizing
opportunities without fail through flexible responses,
such as by reviewing the procurement method.
Priority fields
Priority fields
Communication devices

Contributing to industries and society with vacuum technology involving thermal application

Orders received (Billions of yen)30

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

(Forecast)

24
18
12
6
0

Industrial Equipment

Hisanao Kusaba
2015

2016

2017

2018

2019

General Manager of Industrial Equipment Division(FY)

In Europe and North America, where many new devices are developed, we are cultivating collaborative
relationships with customers through collaboration
among Group companies. To play the role of a trailblazer, we aim to vigorously cultivate new customers.
In Asia where many of our customers have production bases, we will vigorously implement activities toexpand sales while strengthening innovative proposal
capabilities in addition to building on our delivery trackrecord so far. Through these initiatives, we aim to expand business globally.
Recognized Business Opportunities
1. Realization of the smart society by IoT and 5G
2. Technological innovation by leading companies in Europe and North
America
3. Manufacturing and mass production of electronic devices in Asia

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

Industrial Equipment constitutes the infrastructure forhigh-tech industry. ULVAC supports customers’ innovation by combining vacuum technology with fundamental technologies, such as heat treatment of parts toincrease 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 businessdevelopment, we enhanced activities targeting customers in the Chinese market in fiscal 2018. Going forward,
we will strengthen approaches to the Southeast Asianmarket and the Indian market.
Contributing to the full spectrum of industries
The industrial equipment business is contributing to the full spectrum of industries.

Final products
Smartphones
Smart devices

Optical devices

Vacuum Equipment
Business (4)3D sensors

Conceivable Risks
1. Slowdown of the Japanese electronic device production equipment market
2. Intensifying competition due to customers’ shift of production locations
3. Longer equipment production lead times because parts production
and supply cannot keep up with the short delivery lead time

Heat exchangers

Rare-earth magnets for electric motors

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

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

In-vehicle displays

Electronic devices (MEMS)

5G-ready equipment

Power devices

Devices for EV application
Industrial robots
Energy-saving equipment

Electronic packaging

Smartphones
High-speed data servers
IoT devices

Expand equipment sales worldwide to becomea truly global enterpriseWith the advent of the smart society, needs for electronic devices that support IoT will 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 improvementof existing technologies.

27

Measures for Reducing Risks and Maximizing Opportunities
1. Cultivate a range of applications
2. Establish relationships with leading European and North Americancompanies and grasp market trends
3. Continue development of cutting-edge technologies eyeing the smart
societyOrders received (Billions of yen)
35

(Forecast)

28
21
14
7
0

2015

2016

2017

2018

2019 (FY)needs by optimizing hydrogen furnaces, pulverizers,
and SC melting furnaces. China is the principal market.
We will provide high-quality equipment manufactured
in China at reasonable prices.
In the automotive components field, we will meet demand for heat exchangers for exhaust gas recirculation(EGR) coolers used in internal combustion engines andheat exchangers for electronic parts cooling in EVs by offering vacuum brazing furnaces, which are ULVAC’s forte.
In the pharmaceuticals field, investment in genericdrugs and in high potency active pharmaceutical ingredients, such as for anticancer drugs, is booming.
This is creating opportunities for ULVAC to display its
strengths in vacuum freeze-drying equipment.
New applications of ULVAC’s unique Micro Powder
Dry technology for producing porous powder include
blood plasma preparation, ceramic capacitors, and newmaterials. We will meet customers’ expectations byrealizing mass-production technology and sterilization
technology at an early stage.
In the food field, distinctive drying technologies,
such as superheated steam drying and puffed freeze
drying, have made it possible to preserve and commercialize foodstuffs that were previously disposed ofas waste. We aim to offer solutions to alleviate foodshortages and food losses worldwide.
Recognized Business Opportunities
1. Expansion of demand for magnets, automotive parts, and pharmaceutical formulation
2. Rising awareness about food safety and security and reduction offood waste and food losses

Resin fuel tanks
Vacuum leak testing
Pharmaceuticals and food
Generic drug manufacturing
Extraction of high-purity substances
Vacuum freeze-drying equipment, vacuum distillation equipment

Conceivable Risks
1. Progress of commoditization and intensifying price competition
2. Customer retention by first-movers

Measures for Reducing Risks and Maximizing Opportunities
1. Enhance production efficiency through integration of production bases

Cultivating growth markets and pioneering
new markets

Regarding systems employed in the manufacture of therare-earth magnets widely used in wind turbines, electric vehicles, and mobile phones, we will meet customer

2. Cultivate new application fields for porous powder production
3. Develop competitive new products
4. Expand the domain for creation of added value by using the vacuum
process in the food products field

ULVAC VALUE REPORT 201928

ULVAC’s Vision

Components

Vacuum Equipment
Business (5)Vacuum Application
Business

Become a driving force of ULVAC’s global business with an extensive product lineup
Vacuum technology is essential for diverse
industries. As a comprehensive manufacturerof vacuum components supporting industrial
infrastructure, we offer an extensive lineup of
vacuum components. Bringing our comprehensive capabilities into full play, we will develop
business from both aspects of regions andindustrial fields in an aim to become a driving
force of ULVAC’s global business.

General Manager of Components Division

Achieve further growth through Group synergy

In fiscal 2018, despite a slowdown of investment by FPD
and semiconductor manufacturers following several
years of buoyant investment, OLED-related investment
supported ULVAC’s business results.
The vacuum pump business is conducted by ULVACCRYOGENICS, which is a manufacturer specializing incryopumps and cryocoolers, and ULVAC KIKO, whichhandles compact vacuum pumps, as well as ULVAC, Inc.
By enhancing the efficiency of production and sales
through integrated management of the Group, we areestablishing a system that will enable us to aim for further growth.
Regarding product development, we released lownoise, compact high-vacuum pumping equipment targeting R&D applications. We will step up developmentof products offering higher productivity and environmental friendliness.
Components business
Components essential for vacuum equipment.
ULVAC supplies vacuum pumps, vacuum gauges, vacuum valves, vacuum
leak testers, gas analyzers, power generators for deposition processes, etc. tovacuum equipment manufacturers, machinery manufacturers, etc.
Application example
Applications for OLED
production equipment

Vacuum measurement

Advanced research,
medical, etc.
4K cryocoolers
for coolingsuperconductive
magnets

Dry pumps

Helium leak detectors

Vacuum valves

29

Vacuum gauges Gas analyzers

Orders received (Billions of yen)

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

40(Forecast)
32
24
16

0

2015

2016

2017

2018

2019

Liquid nitrogengenerators

Executive Officer, General Manager of Materials Division(FY)

Reaching out from Japan to China, Europe and North
America in pursuit of global business development

Despite uncertain prospects in the near term, it is evident that manufacturers will make major investmentswith a view to the big data era and the smart society
over the medium to long term.
The vacuum components business is becoming increasingly borderless. Tackling this market inevitably involves
competing against powerful European and American
manufacturers. In order to prevail, we are strengthening
our global marketing structure, enhancing efficiency of
production systems, and establishing systems for developing products attuned to market needs.
By offering the optimum products for various fields,
including analysis, medicine, and food, we are cultivating vacuum applications and promoting expansion of
the cryocooler business so as to contribute to the enhancement of the comprehensive value of the ULVAC
brand.
Recognized Business Opportunities
1. Large-scale investment in view of big data and the smart society
2. Expansion of market in emerging countries
Conceivable Risks
1. Stronger competitors expanding business through M&A
2. Intensifying price competition, market entry by low-cost
manufacturers

Steady growth in the markets that are expected
to expand in the future

In fiscal 2018, sales grew steadily in the markets that are
expected to expand in the future, namely, target materials for cutting-edge semiconductors, Cu and IGZO target
materials for FPD, and high-performance materials. On
the other hand, sales of materials mainly for OLED for
smartphones were sluggish.
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

SputteringtargetSputtering equipment
for semiconductor
manufacturing

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

SputteringtargetSuch a great opportunity comes only once in decades

With IoT, 5G communication, and AI to the fore,technological innovation geared to the needs of theOrders received (Billions of yen)
20

(Forecast)

16
12
8
4

Seigou Kinugawa

Measures for Reducing Risks and Maximizing Opportunities
1. Expand business fields by strengthening alliances
2. Enhance efficiency of production and sales to reduce cost

Cryopumps
Film deposition
controllers

Be a pioneer in offering excellent materials to the market

8

Ju Hoon Shin

Materials

0

2015

2016

2017

2018

2019 (FY)emerging smart society is underway. One consequenceof this trend is that new high-performance materials are coming into their own in the semiconductor,
cutting-edge electronic device, and the display field.
They are destined to eventually supersede traditional
materials. With a view to facilitating the emergenceof the smart society, we are developing new materials
required in this expanding application field in cooperation with ULVAC’s equipment divisions and research
institutes and together with our customers.
Recognized Business Opportunities
1. Increases of sputtering thin-film processes due to increases insemiconductors and electronic devices in the smart society
2. Switching to new materials as device performance improves
3. Switching to new materials in line with the trend toward larger,
higher-definition, and flexible display panels
4. Expansion of the superconductive material business

Conceivable Risks
1. Difficulty of securing stable supply of raw materials in view ofincreasing demand
2. Intensifying price competition

Measures for Reducing Risks and Maximizing Opportunities
1. Promote joint development with leading manufacturers andinfluential private or public institutions
2. Invest and manufacture in growing markets (regions and products)
3. Further promote recycling of materials
4. Promote alliances

Others
Semiconductor mask blanks market

Surface analyzer market

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

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

ULVAC VALUE REPORT 201930

Basis for Value Creation

Corporate Governance

Basic corporate governance policy and structureFirstly, ULVAC, Inc. has a Board of Directors, which
is a decision-making body for important management issues. The Board holds regular meetings oncea month, as well as ad hoc meetings as necessary toensure flexibility. The Board of Directors comprises
nine members, of whom four are external directors.
Three of the external directors are designated as independent external directors. By virtue of this structure, ULVAC, Inc. is not only able to make swift andefficient judgments 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 of responsibility and authority over their designated areas, throughdelegation by the Board of Directors. ULVAC, Inc. also
has a Board of Executive Officers that comprises a total of 15 internal directors and executive officers. The
Board of Executive Officers holds regular meetings
once a month, as well as ad hoc meetings as neces-

In 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 collaboration of
the Group companies,” ULVAC, Inc. works 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 onlyof shareholders, but also of business partners, local
communities, employees, and other stakeholders thatare related to our business activities. We also value
competitive and efficient operation, while ensuring
strict compliance with laws and corporate ethics.
ULVAC, Inc. has adopted a company with a boardof corporate auditors as its management structure.
Particularly important institutional structures include
the Board of Directors, the Board of Executive Officers, the Board of Corporate Auditors, and the Committee for Appointment and Remuneration, etc.

sary. By virtue of this structure, we have achieved
more flexible and swifter business operations that areappropriate for a rapidly changing business environment, based on a clear expression of the responsibilities and authority of each executive officer.
In addition, ULVAC, Inc. has a Board of Corporate
Auditors, which performs auditing and supervision ofmanagement decision-making and business operations. The Board of Corporate Auditors comprises
four members, of whom two are external auditors.
Both of the external auditors are designated as independent external auditors. We ensure full auditing
and supervisory functions through close links between auditors and the Internal Auditing Office andthe independent auditor, whose independence is ensured, as well as through attendance and comments
by auditors at important meetings, such as meetingsof the Board of Directors and the Board of Executive
Officers, and through regular meetings between theInternal Auditing Office and the President, etc. By
virtue of this structure, we have achieved rigorous,
fair, impartial, and transparent auditing and super-visory functions, ensuring that each auditor obtains
sufficient information.
Furthermore, we have a Committee for Appointment and Remuneration, etc. for instances that require objective determination of important matters,such as the appointment and remuneration of directors and executive officers. The Committee for Appointment and Remuneration, etc. comprises sevenmembers, of whom five are independent external
directors or independent external auditors. Of the remaining two members, one is an external director. By
having these kinds of advisory bodies for the Boardof Directors, we are able to achieve fair, impartial,and highly transparent deliberations with regard to
especially important management decisions, and increase the effectiveness of the Board of Directors.
Members of the Board of Directors, the Board of
Corporate Auditors, the Board of Executive Officers,
the Committee for Appointment and Remuneration,etc. are indicated in the list below.

Corporate Governance Structure (As of September 30, 2019)
Title

General Meeting of Shareholders
Appointment/Dismissal

Board of Directors

Appointment/Dismissal
Audit

Appointment/Dismissal

Collaboration
Board ofIndependent Auditor
Corporate Auditors

Recommendations
Audit

Committee for Appointment
and Remuneration, etc.

Board of Executive Officers
Risk Management
Committee

Accounting audit

President and CEO

Collaboration

Executive Officers

Divisions of the Company

Group companies

President and Chief Executive
Officer

Setsuo Iwashita

Director and Executive Vice
President

Mitsuru Motoyoshi

Director and Senior Managing
Executive Officer

Masasuke Matsudai

Director and Managing
Executive Officer

Dr. Choong Ryul Paik

Director and Executive Officer

Sadao Aoki

External Director

Akira Mihayashi

External Director

Norio Uchida

External Director

Dr. Kozo Ishida

External Director

Yoshimi Nakajima

Auditor

Makoto Ito

Auditor

Mitsuru Yahagi

External Auditor

Senshu Asada

External Auditor

Isao Utsunomiya

Board of Directors

Board of Corporate
AuditorsCommittee for AppointBoard of Executive
ment and Remuneration,
Officers (Note)etc.

Collaboration

Compliance Committee

Audit

Name

Internal Auditing Office

Chairman

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

31

ULVAC VALUE REPORT 201932

Basis for Value Creation

Corporate GovernanceDirectors’ remuneration

Evaluation of effectiveness of the Board of Directors

Name of external
director/auditor

Reasons for selection as an external
director/auditor

Attendance and principal activities

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

For the purpose of enhancing functions of the Boardof Directors and thus enhancing corporate value, at
ULVAC, Inc. an annual self-assessment survey of directors and auditors is conducted concerning the effectiveness of the Board of Directors.
Anonymity is secured as directors and auditors
provide their responses to the survey directly to an
external institution. Based on the external institution’s report on the survey results, the Board of Directors of ULVAC, Inc. conducts analysis and evaluation.
As a result of analysis and evaluation about theeffectiveness of the Company’s Board of Directors
for fiscal 2018, it is judged that effectiveness of theCompany’s Board of Directors is secured. However, inview of proposals for further enhancement of the effectiveness of the Board of Directors that have been
submitted by members of the Board of Directors, wewill continue to strive to enhance the effectivenessof the Board of Directors.

Akira Mihayashi

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

Attended all 14 meetings of the Board of Directors held during the fiscal year
and provided opinions for deliberation of the agenda as necessary, based on
his extensive experience and advanced insight as a corporate manager of othercompanies.

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

Attended all 14 meetings of the Board of Directors held during the fiscal year
and provided opinions for deliberation of the agenda as necessary, based on his
extensive experience and advanced insight in Japan and overseas as a corporate
manager of other companies.

Dr. Kozo Ishida

To receive valuable opinions basedon his extensive experience, technicalexpertise and broad perspective as acorporate manager of other companies

Attended all 14 meetings of the Board of Directors held during the fiscal year
and provided opinions for deliberation of the agenda as necessary, based on his
extensive experience and technical expertise as a corporate manager of othercompanies.

Yoshimi Nakajima

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

Attended all 11 meetings of the Board of Directors held after taking office on
September 27, 2018 and provided opinions for deliberation of the agenda asnecessary, based on her extensive experience and advanced insight as a corporate manager of other companies both in Japan and overseas.

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

Attended all 14 meetings of the Board of Directors and all 19 meetings of theBoard of Corporate Auditors held during the fiscal year and provided opinions
for deliberation of the agenda as necessary, mainly from a specialist perspective
as an attorney.

Isao Utsunomiya

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

Attended all 14 meetings of the Board of Directors and all 19 meetings of theBoard of Corporate Auditors held during the fiscal year and provided opinions
for deliberation of the agenda as necessary, mainly from a specialist perspective
as a certified public tax accountant.

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

33

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

Policy on training of directors and auditors

Policy on strategic shareholdings

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

ULVAC, Inc. makes distinction between investment
shares held for pure investment purposes and those
held for purposes other than pure investment purposes. We classify shares held for the purpose of receiving gains from changes in the share value or from
dividend income as shares held for pure investment
purposes and shares held for other purposes (strategic shareholding) as shares held for purposes otherthan pure investment purposes.
ULVAC, Inc. may acquire shares of a listed company with which it has transactions only when it
is judged that maintaining and strengthening thebusiness relationship with the entity by acquiring its
shares contributes to ULVAC’s sustainable growth andenhancement of corporate value over the medium tolong term.
Regarding strategic shareholdings, an annual assessment is conducted on whether or not to hold eachindividual strategic shareholding, examining whether
the purpose is appropriate in terms of the benefits
and risks from each holding or the Company’s cost ofcapital, and the results of this assessment are reported
at a meeting of the Board of Directors. If, as a result of
the assessment, it is judged that the holding of certain
shares has little significance, the Company considers
reduction of the shareholding of such shares.
ULVAC VALUE REPORT 201934

Basis for Value Creation

Management Structure
Directors
Setsuo Iwashita

Mitsuru Motoyoshi

Akira Mihayashi

Norio Uchida

President and Chief Executive Officer

Director and Executive Vice President

Director

Director

External

External

March 1984
August 1992

Joined the Company
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 of 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
July 2012
Director and Executive Officer
September 2013 Managing Executive Officer
July 2015
Senior Managing Executive Officer of the Company; Chairman of ULVAC (CHINA)HOLDING CO., LTD.
July 2016
Senior Managing Executive Officer and Senior Manager of Management
Planning Department of the Company
September 2016 Director and Senior Managing Executive Officer, Senior Manager of Management
Planning Department of the Company
July 2017
President and Chief Executive Officer of the Company
January 2019
President and Chief Executive Officer and General Manager of Human Resource
Center of the Company (current position)

April 1980
Joined the Company
July 1995
Senior Manager of Management Department, Ultra-High Vacuum Products Division
July 1998
Staff Manager of Management Planning Department
July 2000
Senior Manager of Accounting Department
September 2005 Director and Senior Manager of Accounting Department
July 2010
Director and Senior Manager of Management Planning Department
July 2012
Director and Executive Officer, Senior Manager of Management Planning Department
July 2013
Chairman of ULVAC TAIWAN INC.
July 2014
Director and Managing Executive Officer, Senior Manager of Management
Planning Department of the Company
July 2015
Director and Senior Managing Executive Officer, Senior Manager of Management Planning Department
July 2017
Director and Senior Managing Executive Officer, Senior General Manager of Business; Strategy Headquarters Chairmanof ULVAC (Shanghai) Trading Co., Ltd. (current position); Chairman of ULVAC (SUZHOU) CO., LTD. (current position);
Chairman of ULVAC SINGAPORE PTE LTD (current position); Chairman of ULVAC MALAYSIA SDN. BHD. (current position)
July 2018
Director and Executive Vice President of the Company
January 2019
Chairman and Chief Executive Officer of ULVAC (CHINA) HOLDING CO., LTD. (current position);
Chairman of ULVAC Automation Technology (Shanghai) Corporation (current position)
July 2019
Director and Executive Vice President, General Manager of Management Empowerment
Center of Excellence of the Company, responsible for associate companies (current position);
Chairman of ULVAC Tianma Electric (Jingjiang) Co., Ltd. (current position)

April 1978
March 1999
March 2001
March 2002
July 2005

Joined Nippon Life Insurance Company
Branch General Manager of Ota Branch
General Manager of Metropolitan Area Corporate Finance Dept.
General Manager of Actuarial Dept.
Director, General Manager of Marketing Planning Dept. and Marketing andWorking Dept., Sales Manager and Head of Operational Reform Office
January 2007
Director and Executive Officer, General Manager of Sales Representatives Operations
Management Dept. and Head of New Sales Operations Promotion Office
March 2007
Director and Executive Officer, General Manager of Sales Representatives
Operations Management Dept. and Deputy Director-General(Corporate Planning Dept.)
March 2008
Managing Executive Officer, General Manager of Risk Management Dept.
July 2008
Director and Managing Executive Officer, General Manager of Risk Management Dept.
April 2009
Advisor of Nissay Credit Guarantee Co., Ltd.
June 2009
President (current position)
June 2010
External Statutory Auditor of RAITO KOGYO CO., LTD.
September 2014 External Director of the Company (current position)

Independent

April 1973
June 1980
February 1989
October 1994

Joined Tokyo Optical Co., Ltd. (currently TOPCON CORPORATION)
General Manager of Topcon Singapore Pte. Ltd.
President of Topcon Australia Pty Ltd.
Senior Vice President of Topcon Laser Systems, Inc.
(currently Topcon Positioning Systems, Inc.)
July 1999
President of Topcon Laser Systems Japan, Inc.
June 2003
Executive Officer of TOPCON CORPORATION
July 2003
President of Topcon Sales Corporation (currently TOPCON SOKKIA POSITIONING
JAPAN CO., LTD.)
June 2005
Director and Executive Officer of TOPCON CORPORATION
June 2007
Director and Managing Executive Officer
June 2010
Director and Senior Managing Executive Officer
June 2011
Representative Director, President & CEO
June 2013
Advisor to the Board
June 2015
External Director of Nabtesco Corporation (current position)
September 2015 External Director of the Company (current position)

Masasuke Matsudai

Dr. Choong Ryul Paik

Sadao Aoki

Dr. Kozo Ishida

Yoshimi Nakajima

Director and Senior
Managing Executive Officer

Director and Managing
Executive Officer

Director and Executive
Officer

Director

Director

Joined the Company
Senior Manager of Technology Group IV,
Advanced Electronics & Ion Equipment Division
July 1997
Senior Manager of Technology Department I,
Advanced Electronics Equipment Division
July 2003
General Manager of FPD Division I
September 2006 Director and General Manager of FPD Division I
July 2012
Director and Executive Officer, Senior General Manager
of Global Manufacturing Promotion Division
July 2013
Director and Executive Officer, Senior General
Manager of Corporate Sales & Marketing Division
External Director of SHOWA SHINKU CO., LTD. (current position)
June 2014
July 2014
Director and Managing Executive Officer, Senior General Manager
of Corporate Sales & Marketing Division of the Company
July 2015
Director and Senior Managing Executive Officer, Senior
General Manager of Corporate Sales & Marketing Division
July 2016
President of ULVAC TECHNO, Ltd.; Senior
Managing Executive Officer of the Company
January 2019
Senior Managing Executive Officer, Senior General
Manager of Customer Support Headquarters
Senior Managing Executive Officer, General Manager of New Business
July 2019
Development Center of the Company and Chairman of ULVAC TECHNO, Ltd.
September 2019 Director and Senior Managing Executive Officer; General
Manager of New Business Development Center of theCompany; Chairman of ULVAC TECHNO, Ltd. (current position)

April 1991
Joined the Company
September 1999 Joined ULVAC KOREA, Ltd. as Senior Director
September 2000 President of ULVAC KOREA, Ltd.
September 2012 Executive Officer of the Company
July 2015
Managing Executive Officer of the Company
September 2016 Chairman of ULVAC KOREA, Ltd. (current
position)
July 2018
Managing Executive Officer, Senior General
Manager of R&D Headquarters of theCompany
September 2018 Director and Managing Executive
Officer, Senior General Manager of R&D
Headquarters
July 2019
Director and Managing Executive Officer,
General Manager of Innovation Center of
Excellence (current position)

April 1981
July 1992

April 1986

Joined The Dai-Ichi Kangyo Bank, Limited(currently Mizuho Bank, Ltd.)
Deputy Head of Uchisaiwaicho Sales
Department No. 5, Mizuho Corporate Bank, Ltd.
April 2005
Seconded to SEIBU RAILWAY Co, Ltd. as Deputy
Head of Management Planning Headquarters
March 2006
Corporate Examiner, Corporate Promotion
Department No. 1, Mizuho Corporate Bank, Ltd.
October 2007
Chief Relationship Manager, Sales Department
No. 15, Mizuho Corporate Bank, Ltd.
April 2009
Examiner, Corporate Examination
Department No. 1, Mizuho Bank, Ltd.
May 2011
General Manager, Shinjuku-Shintoshin
Branch, Mizuho Bank, Ltd.
December 2014 Seconded to Forum Engineering Inc. asManaging Executive Officer
August 2015
Joined Forum Engineering Inc. as Managing Director
May 2016
Joined the Company as Assistant Staff Manager
to Senior Manager of Finance Department
July 2016
Senior Manager of Finance Department
July 2018
Executive Officer, Senior Manager of Finance Department
January 2019
Executive Officer, Senior Manager of Finance& Accounting Department
September 2019 Director and Executive Officer, Senior Manager ofFinance & Accounting Department (current position)
July 2002

External

Independent

March 1970
Joined HORIBA, Ltd.
June 1982
General Manager of Product Department I, Development and Sales Division
June 1988
Director
June 1991
Managing Director
June 1996
Senior Managing Director
June 2002
Vice President and Director
June 2005
Executive Vice President and Representative Director
March 2011
Director and Advisor of HORIBA STEC Co., Ltd.
March 2014
Vice Chairman and Representative Director of HORIBA, Ltd.
March 2016
Senior Advisor
September 2016 External Director of the Company (current position)
March 2017
External Director of Seiko Electric Co., Ltd. (current position)
April 2018
Fellow of HORIBA, Ltd. (current position)

External

Independent

April 1980

Joined The Yasuda Trust and Banking Co., Ltd.
(currently Mizuho Trust & Banking Co., Ltd.)
Joined AVON PRODUCTS CO., LTD.
Joined Citibank, N.A. as Vice President
Joined Societe Generale Securities Services as Senior General Manager
Joined American Express International, Inc. as Vice President in charge of Global
Traveler’s Check & Prepaid Card Service, Japan Branch
August 2011
Country Manager in Singapore (President)
February 2014 Senior Vice President of Japan Branch
April 2014
President and Representative Director of American Express Japan Co., Ltd.
June 2017
External Director of Yamaha Corporation (current position); External Director of
AEON Financial Service Co., Ltd. (current position)
June 2018
External Director of Japan Freight Railway Company (current position)
September 2018 External Director of the Company (current position)
February 1982
May 1997
June 2000
April 2002

Auditors
Makoto Ito

Mitsuru Yahagi

Senshu Asada

Isao Utsunomiya

Auditor

Auditor

Auditor

AuditorExternal

April 1984
March 2008

Joined Nippon Life Insurance Company
General Manager of 1st Osaka Corporate Finance Dept.
and Kyushu Area Corporate Finance Dept.
March 2012
General Manager of Metropolitan Area Corporate Finance Dept.
April 2015
Joined the Company. Counselor to Senior Manager of Management Planning
Department
September 2015 Audit & Supervisory Board Memeber (current position)

35

April 1983
July 1995

Joined the Company
Manager of Product Development Section, Vacuum Pumps Department, Precision
Machinery Division
July 1996
Manager of Section I, Product Development Department, Components Division
July 1999
Manager of Section II, Precision Machinery Technology Department, Components Division
July 2004
Senior Manager of Research Department II, Research and Development Division
June 2011
General Manager of Research and Development Division
July 2018
Adviser to Senior Manager of Management Planning Department
September 2018 Audit & Supervisory Board Memeber (current position)

Independent

April 1977
Registered as an attorney. Joined the Daini Tokyo Bar Association
October 1996
Jointly established Koju Law Firm
June 2001
External Audit & Supervisory Board Member of HIMIKO Co., Ltd.
September 2007 External Auditor of the Company (current position)
April 2012
Auditor of Judo Federation of Tokyo (current position)
March 2014
Councilor of All Japan Judo Federation (current position)
June 2017
External Director of Ahkun Co., Ltd.

External

Independent

April 1997
July 1999
June 2011

Registered as Certified Public Tax Accountant
Opened Isao Utsunomiya Certified Public Tax Accountant Office
Manager of Welfare Department of Kyobashi Branch, Tokyo Certified Public Tax
Accountants’ Association
June 2012
Representative Partner of Tsukiji Accounting Tax Corporation (current position)
June 2013
Director of Tokyo Certified Public Tax Accountants’ Association
June 2015
Director and Deputy Manager of General Administration Department
June 2017Manager of General Administration Department of Kyobashi Branch
September 2017 External Auditor of the Company (current position)
June 2019
Deputy General Manager of Kyobashi Branch, Tokyo Certified Public Tax
Accountants’ Association (current position)ULVAC VALUE REPORT 201936

Dialogue

External Director Yoshimi Nakajima

President and Chief Executive Officer Setsuo Iwashita

The sustainable management
to which ULVAC aspires
Ever since ULVAC was founded, we have always placed the Basic Corporate Philosophy at thecore of our business and contributed to the development of industry and science through thecomprehensive utilization of vacuum technology and peripheral technologies. Ms. Yoshimi Nakajima,
who became an ULVAC external director in 2018, and President and Chief Executive Officer Setsuo
Iwashita exchanged views on issues and initiatives for ULVAC to continue contributing to the creationof a sustainable society through its business activities.

ULVAC businesses closely linked topeople’s lives
Iwashita A year has passed since you became an
external director at ULVAC. Now that you have become
actively involved in management, what impression haveyou formed of ULVAC?
Nakajima ULVAC is a company honestly committed tobusinesses that benefit the world, and I am delighted to
be a member of the management team. Since ULVAC
is a B2B company, I had an image of ULVAC being
somewhat far from consumers. However, while learning
about the business from the inside during the past year, I
have come to understand that ULVAC is closely involved
with consumers in many ways. I think that the task now
is to find a way to more effectively communicate these
aspects of ULVAC to the world.
Also, although it appears that ULVAC does not actively
publicize its global presence, I now have a renewed
awareness that it is in fact a global company in termsof geographical coverage, business scale, and market
share.
Iwashita That’s right. Although ULVAC is involved in
manufacturing in a wide range of fields, the substanceof our business is difficult to communicate. For instance,
our employees even have trouble explaining it to theirown families. Although for many years an issue was that
we were not very adept at marketing or communicating
information to the outside world, we have strengthened
our capabilities in these areas during the past few years.
Nakajima It may be that many employees aren’t
ordinarily conscious of the fact that their work provides asecure livelihood and a prosperous and comfortable wayof life for their families. I think that focusing attention on
this issue will create an opportunity for employees to think
about solutions to social issues and social contributions
through ULVAC’s businesses. I also think that looking
back on the company history will provide the reason why
ULVAC has maintained continuity in society.
Iwashita During the course of ULVAC’s history, there
have been surprisingly many examples of productsthat have played important roles in areas closely tiedto people’s lives. For instance, packaging made ofaluminum vapor-deposited package contributes tothe long-term storage of food products in developing
countries. Although in Japan, where high-tech fields
attract attention, ULVAC is known mainly for production
equipment for flat-panel displays, semiconductors, andelectronic parts, we are deeply involved in people’s lives
through numerous industrial fields.

The high extensibility and expanding
potential of vacuum technology

37

Yoshimi Nakajima

Setsuo Iwashita

External Director

President and Chief Executive Officer

Iwashita In today’s world, we face numerous social
problems, including shortages of energy, water, and food,traffic congestion, inadequate medical care, and changes
in the natural environment. The term “smart society”
provides us with a means of solving these problems.
ULVAC supports the propagation of the advanced key
technologies and applications that constitute a smart

society by providing vacuum deposition processing
technology and equipment fundamental technology.
In that context, looking at energy-related applications,
reduction of semiconductor power consumption isrequired in a smart society, where data growth entails
consumption of enormous amounts of electricity. For
the past 25 years or so, ULVAC has been involved in thedevelopment of fundamental technology that has led to
PCRAM, a new type of non-volatile memory that reduces
power consumption to 1/100th of the previous amount.
Nakajima I think the story of PCRAM you justmentioned is symbolic in that ULVAC’s effort in embarking
on the basic research that led to PCRAM some 25 years
ago, at a time when mass consumption indicated social
prosperity, has led to results in the present era thanks
to our steady pursuit of development. It’s also symbolicthat the technology is now required worldwide. In asmart society, in which information processing is carriedout on an unprecedented scale, I think the fact that
ULVAC unerringly grasped this key point and has led thetechnology essential for end-to-end is a selling point.
Iwashita It’s not as if we engage in this type ofdevelopment project with the form of the final productor technology application clearly in mind from the start.
Rather, as society changes and social issues change
as the development process unfolds, an approach forutilizing the product or technology comes into focus, andshifting to that approach leads to practical application. In
other words, the curiosity and sprit of inquiry of engineers
eventually leads to results, sometimes after twenty
years or longer. This R&D approach may be said to be a
tradition at ULVAC. What then becomes necessary is toearn higher profits as a business.
Nakajima Since ULVAC has ample capabilities tocreate things society requires, the question is how topublicize those capabilities to the world and broaden
ULVAC’s reach. I have high expectations for ULVAC’s
marketing operations, which have been beefed up in
recent years, and I also think it will become important
going forward to listen to external feedback and utilize it
in development.
Iwashita That’s right. We now promote developmentfrom a B2B2C perspective that involves approaching theend users of our customers and are engaging in productdevelopment and manufacturing based on a mediumto long-term outlook. To achieve this, it is important that
researchers and business operation leaders alike are able
to picture a vision and have a dream for the future.
I previously mentioned the example of packaging
processed with vapor-deposited aluminum. ULVAC
has created tremendous value in the healthcare and life
innovation sectors as well as in the electronics and energy
sectors. In particular, vacuum freeze-drying technology,
which enables long-term storage and volume reduction offood products and pharmaceuticals, is widely used in the
manufacturing of freeze-dried foods, emergency rations,powder vaccines, and other products. This technology
contributes to solving social problems by handling issues
such as reducing food loss, ensuring food supply during
disasters, and spreading medical care. Also, our originalMicro Powder Dry technology, with which liquid sprayed
ULVAC VALUE REPORT 201938

Dialogue

External Director Yoshimi Nakajima

President and Chief Executive Officer Setsuo Iwashita

made at our plants meet the stringent environmental
performance conditions of customers and deliver added
value in the form of reduced power consumption andimproved energy conversion efficiency.
And, our development outcomes give rise to thedevelopment of applications, such as PCRAM, solar
cells, lithium-ion batteries, power devices, and other final
products, and contribute to the environment throughpower generation, energy saving, and energy storage.
Thus, I want to proactively convey the fact that we
protect the environment in multifaceted ways throughout
the entire supply chain with which ULVAC products areassociated.
Nakajima That means that there are environmental
impact reduction and environmental conservation effects
available only from vacuum technology. I do think ULVAC
should push forward the concept of “vacuum is clean.”

Yoshimi Nakajima
Personal Profile
Joined The Yasuda Trust & Banking Co., Ltd. (currently Mizuho Trust & Banking
Co., Ltd.) in 1980. After working at manufacturing companies, Citibank, N.A., andSociete Generale Securities Services, joined American Express International, Inc.
in 2002, serving as a senior vice president of Japan branch and later as president
and representative director of American Express Japan Co., Ltd. Appointed an
external director of ULVAC, Inc. in September 2018.

under vacuum is freeze dried, is attracting attention foruse in the production of sterile products and a variety ofother applications ranging from food and cosmetics raw
materials to electronic materials.
Nakajima It would seem that the high extensibility of
vacuum technology expands the application field, andpotential usages became apparent in the development
process, enabling value creation covering a number offields.
Turning to another subject, I think that responding to
global climate change is an important challenge in theindustrial world. What are your views on environmental
initiatives at ULVAC, in relation to the solving of social
problems in the energy sector you mentioned earlier?
Iwashita We engage in environmental initiatives
centered on three themes: pursuing environmental
protection in our business activities, delivering
environmental performance that meets the needs ofcustomers, and contributing to the environment throughfinal products.
ULVAC operates six main production plants, locatedmainly in East Asia. Each plant not only conforms toand complies with local environmental standards andregulations but also undertakes environmental impact
reduction by promoting energy and resource conservationand striving to reduce CO2 emissions, water use, andwaste emissions.
The vacuum deposition systems and other products
39

Sustainable initiatives
supporting the realiza
society 50 years andIwashita If our customers didn’t use vacuum
technologies at their production sites, they would use
more energy and need greater quantities of depositionmaterials. I think that ULVAC will need to communicate
to the world in an easy-to-understand way the expanding
potential and diverse value inherent in vacuums
themselves.

HR policies for the realization ofsustainable management
Nakajima Nowadays, work style reforms and diversity
are important management issues facing companies,
and workers are asking themselves again “What do I
work for?” There is growing momentum for people toreexamine the relationship between him/her and company
as well as between him/her and work. At ULVAC, what
are your thoughts about human resources, a criticalfactor for companies to realize sustainable management?
Iwashita ULVAC currently has around 6,400
employees, half of whom work overseas, and localizationof top management personnel has progressed at ouroverseas subsidiaries throughout the world. At the sametime, although we are increasing the number of foreign
nationals promoted to executive positions at the head
office, nearly all of the top management personnel at thehead office are Japanese nationals.
When I reflect on this Group management situation,
I wonder whether our employees who work overseas

under orders from the head office really share a common
mission and are able to fully play an active role with asense of purpose in their work. This is because, withregard to the question “What do I work for?” that you
mentioned, people’s values and sense of purpose differ
from country to country, or region to region. So, I thinkthat ULVAC is at the stage where we should reconsider
whether our traditional way of engaging in global
management under one set of rules and a single policy isthe best approach.
Also, at ULVAC there is no discrimination of employeeson the basis of gender or race. Nevertheless, with respect
to promoting the participation and advancement of
women, the number of women promoted to a managerial
position remains low. I recognize that this is the matter I
must consider to make improvements.
Nakajima Promoting the participation and advancement

are important fortion of a sustainable
100 years ahead.
of women isn’t based on achievement of a target ratio of
women in management positions. I think that, first of all, it
is important to recognize differences in the way men andwomen think and in the work at which they excel andcreate workplaces that enable people to demonstrate
their capabilities free from unfavorable treatment due tothose differences.
I don’t sense preconceptions or stereotypes toward
women in ULVAC’s corporate culture, and I think
diversity has taken hold in that regard. However, I thinkthat what will be required going forward is inclusionthat brings about a new culture arising from diversity.
The transformation to global management, such as thepromotion of foreign nationals to executive positions thatyou mentioned, is something that can be achieved as
ULVAC promotes inclusion, and I believe that ULVAC is
now in that transition period.
Iwashita Another topic I would like to discuss
concerning HR policies is initiatives to develop people.
A company should be a place where people grow anddevelop, and I think that companies should provide
opportunities for growth and assistance for constantdevelopment of skills and abilities. I think that, in addition
to operation of education and training programs, what’s
important is for employees to venture out of their current
workplaces, think about things in circumstances different
from those they have experienced before, and come toknow themselves. This is true in development of nextgeneration executives as well. For instance, I want division

general managers to gain management experience atoverseas subsidiaries and develop their talents while
actually exercising authority and responsibility.
Nakajima This process of developing next-generation
executives can be considered a succession plan uniqueto ULVAC, which has many overseas subsidiaries.
Various skills are required of the executives of a global
corporation, and this approach will also provide an
opportunity to study management deeply rooted in eachcountry.

Future aspirations and expectations
for ULVAC
Iwashita You have been involved in the management ofmany companies, and I would like to create opportunities
for you to speak to our employees and their families
about ULVAC from an outside perspective. Also, I would
be very grateful for your assistance in making Boardof Directors meetings a forum for more free and frank
discussion.
Nakajima I intend to continue to be thoroughly involvedin the management of ULVAC as an outside director.
Since I have a strong personal interest in people andcorporate culture, I want to directly meet more people
and support the development of ULVAC, which hasa unique, open-minded corporate culture, and highpotential. I particularly want to assist in establishing thebrand and actively communicating ULVAC’s uniquenessto the world.
Although in the past ULVAC followed a growthtrajectory without taking major risks, I have highexpectations that ULVAC will surely be able to secure
even greater growth opportunities by focusing on andthoroughly discussing social and environmental risks thatlie 50 years or 100 years ahead.
ULVAC VALUE REPORT 201940

Basis for Value Creation

Compliance

Relevant SDGs

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 thoroughcompliance.

Relevant SDGs

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 oflegal requirements and the creation of internal control structures, and by extension, the medium- to long-term improvement of corporate value. We are expanding systems that can respond
appropriately to risk factors through identification, classification, analysis, and evaluation, andwe are working to increase corporate value by reflecting them in our management strategy.

Corporate Code of Conduct

Whistleblowing System

Risk Management System

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

ULVAC, Inc. has adopted a whistleblowing system operated through the Internal Auditing Office, which
is an independent body. The Internal Auditing Officealso 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 notprevent the person making the report from selecting
other institutions or organizations within the Company as the destination for the report, and in suchcase, the report shall also be handled appropriately.
Individuals making reports are not treated unfavorably in any way. Reports can also be submitted
anonymously.
After a whistleblower report has been received,
the initial response is for the Compliance Committeeof ULVAC, Inc. to conduct an investigation in orderto establish the facts. This investigation is particularly
mindful of fairness, and is conducted judiciously andthoroughly. If necessary, assistance may be soughtfrom external experts, such as lawyers, and thoroughinterviews that are as wide-ranging as necessary may
be conducted and analyzed.
The president chairs the Compliance Committee
and the members of the Committee observe a strict
duty of confidentiality in carrying out their duties.

In regard to risk management initiatives, ULVAC, Inc.
has established 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-wide

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

41

Risk Management

basis, we have a Risk Management Committee, which
is chaired by the president, and mainly comprises representatives of the risk control offices with primary
responsibility for risk management. The Risk Management Committee holds regular twice-yearly meetingsas an umbrella organization for risk management,
and it determines company-wide basic policies, monitors the state of management and administration, andconsiders any improvements that can be made, etc.
Furthermore, initiatives at ULVAC, Inc. are implemented at ULVAC Group companies as appropriate for the
scale and business type of the company in question.

Risk Management System

ULVAC, Inc.

ULVAC Group companies

Chief Risk Officer =Chief Risk Officer =President and CEO

President and CEO

Reportingandinstructionsfor
improvement

Risk Management Committee

Risk Management Committee

Risk
control
officeRisk
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
be taken to ensure that the violation ceases with 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.

Risk
control
officeRisk
control
officeRisk
control
officeRisk
control
officeRisk 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 considerationof the size of the company in question and other factors.

ULVAC VALUE REPORT 201942

Basis for Value Creation

Quality Assurance and Product Safety

Procurement

Relevant SDGs

The ULVAC Group is engaging in initiatives worldwide to meet customer expectations for*1high-level, safe ULVAC quality through assurance activities centered on Front Loading.

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

ULVAC Group Quality Policy“Product quality assurance strengthens our customers’ confidence
in ULVAC.”
The ULVAC group is committed to promote ULVAC quality throughfront-loading in all business processes including development,
sales, production and service and through offering products andservices 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.

Global Integrated Certification for ISO 9001 and ISO 14001
As of the end of December 2017, 38 ULVAC Group
companies had completed integrated certification
for the 2015 versions of ISO quality and environmental management systems. We have aligned quality
policies groupwide and conduct activities to address
quality issues and deploy improvements globally.
ULVAC Group’s Comprehensive Quality Management
Value Chain

Front Loading

Customers

Services

Installation

Logistics

Tests

Assembly

Parts manufacturing

Purchasing

Sales

Product
development

Concept design
Mass production
designDetailed design

Processdevelopment

Feedback

Comprehensive Quality Management System

The ULVAC Group promotes quality creation by implementing Front Loading in all business processes.
At ULVAC, the term Front Loading refers to activities
to solve problems and resolve issues in the concept
design phase prior to order-taking by reflecting technologies cultivated to respond to change in needs
and seeds.

(%)
2.5

2.3
1.6

2.0
1.5

1.0

0.9

2015

2016

1.0

0.6

0.9

0.5
0

2013

2014

2017

2018

(FY)

In fiscal 2018, the ratio of costs related to nonconformity to net sales deteriorated by 0.3 percentage
points from the previous fiscal year. This is the resultof our vigorous verification of development to meetincreasingly stringent market requirements. Accumulated knowledge is shared throughout the Group toachieve comprehensive quality management.

Product Safety Activities
To deliver safe and secure ULVAC brand products tomarkets around the world, qualified safety assessors*2
play a leading role in product safety assessments andcontinuously engage in activities to verify the required
safety and quality at the drawing release and productshipment phases. Whereas our activities to promote
product safety systems have been centered on Japan,
in the current fiscal year we have shifted the emphasis to promotion overseas in line with the gaining of
global integrated certification for quality management systems. With the aim of establishing a framework in which each Group company assures safety
and quality of its products to realize swift provision ofsafe and secure products, ULVAC is promoting productsafety activities throughout the Group, which will leadto greater customer satisfaction.
Number of qualified safety assessors in the ULVAC Group

Global Quality Assurance Committee(Central secretariat: ULVAC, Inc.)(Persons)
60
40

Group-wide implementation of the quality policy
Companies
in JapanCompaniesinSouth Korea

Companies
in Taiwan

Companies
Companies
Companiesin Southeast in Europe andin China
Asia
North 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

2002006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Relevant SDGs

Suppliers are important partners of ULVAC for MONODZUKURI. By linking procurement activities with development and design activities based on the information flow, the ULVAC Groupis working to enhance efficiency of the entire supply chain, including suppliers, from the development and design phases while always being conscious of the environment and society.
Procurement Policy
ULVAC has established, observes, and promotes the Basic Procurement Policy. In fiscal 2018, ULVAC reviewed
and revised the Basic Procurement Policy and established the Purchasing Code of Conduct to maintain“sound, good relationships with business partners andaffiliates,” and strove to renew the thorough understanding of employees engaged in purchasing.
Regarding “promoting CSR procurement,” which isan item added to the revised Basic Procurement Policy, in
July 2019, we conducted a questionnaire survey on CSR
targeting our major suppliers in terms of the amount oftransactions, with a view to ensuring that the operationof the supply chain contributes to the fulfillment of social responsibility.
Moreover, ULVAC conducts self-assessment and forthat purpose refers to the RBA Code of Conduct, a setof social, environmental and ethical industry standards
issued by the Responsible Business Alliance (RBA).

Promoting CSR
procurement

Basic
Procurement
PolicyPromoting global
procurement

Maintaining andpromoting fair andfree competition

Sound, good
relationships withbusiness partners
and affiliates

Global Production Bases
Taking advantage of their proximity to customers, ULVAC’s principal production bases conduct local procurement and seek to optimize procurement as part of their
ongoing efforts to establish a global supply chain.
Previously, when suppliers delivered parts foroverseas production, all cargo was shipped via ULVAC’s Chigasaki Plant.
With the introduction of a new transfer center,
suppliers can now directly deliver parts to the center
where all the processes from acceptance of delivery toexport procedures are handled in an integrated manner, resulting in a great reduction of transportation
distances in the supply chain and consequently lower
energy consumption and lower exhaust gas emissions.

Global Logistics

Compliance withlaws andregulations

Promoting green
procurement

manufacturing methods in products and production,
we hold technology exchange meetings in which design engineers and personnel in charge of purchasing
also participate, as well as new product briefings, asnecessary.

Purchasing Code of Conduct

Recognized for legal compliance concerning customs
clearance procedures and self-management of cargo
security, ULVAC is certified by Japan Customs as an
authorized economic operator (AEO).
To simplify and expedite export customs clearance
and prevent trade incidents, ULVAC holds meetingsof the Export/Import Management Committee andimplements trade risk management.

Communication with Suppliers
ULVAC holds operations briefing meetings once a year as aforum for ULVAC management to directly explain to suppliers the business environment and prospects and suppliermeetings three times a year for the person in charge tocommunicate production plans in a timely manner.
At supplier meetings, ULVAC notified the revisionof the Basic Procurement Policy mentioned above as
well as initiatives concerning the RBA Code of Conduct
and the questionnaire survey. Moreover, in order toreflect suppliers’ proposals for improvement of parts

AEO post-clearance audit by Yokohama Customs(FY)*1 “Front Loading” ordinarily refers to arranging or planning so that a large portionof work occurs in the initial phase. At ULVAC, it is an activity to create quality byidentifying 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 internationalsafety standards.

Workshop on trade risk management
Operations briefing meeting

43

ULVAC VALUE REPORT 201944

Basis for Value Creation

Human Resources

Relevant SDGs

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.
Basic Policy
In recent years, a shift toward the smart society has
begun worldwide. With the advent of a wave oftechnological innovation, global competition is intensifying. Amid such tremendous changes, ULVAC,
whose overseas sales account for 60% of total sales,cannot operate business sustainably unless it provides
an environment where people with diverse personalities and strengths can maintain physical and mental health, bring their differing capabilities into fullplay, and enhance one another’s capabilities throughfriendly competition.
At ULVAC, people with different backgrounds, interms of nationality, ethnicity, philosophy, culture,
language, gender, age, and specialty, are flourishing. Respecting such diversity and promoting inclusion, we aim to innovate to resolve customers’ andsociety’s issues while continuing to deliver new valuethat also leads to the personal growth of each employee.
Based on this policy, in 2018, ULVAC, Inc. launchedthe Human Resource Center, which is under the
direct control of the president, to reinforce the development of global human resources capable ofthriving in a changing external environment in orderto successfully compete in a business environment
characterized by dramatic change. Recognizing thatthe development of a company, technological innovation, and product competitiveness depend on
human resources and that people are ULVAC’s mostimportant asset, we will implement measures to maximize the value of this critical asset.

We are conscious that the most important resources for corporate vitality and competitiveness are the personnel and the organizations in which
they work. We are conducting the following human resources development, based on our corporate philosophy and basic management policy.

Groupwide Education and Training
Starting with the introductory program for new
employees, ULVAC also provides a program for employees in their third year as well as stratified training programs. Programs include ones designed toenhance motivation and management capabilities
according to the roles expected from employees at
each organizational level.

Engineering education on technology, design, manufacturing, etc.
Mandatory education for onsite employees, such as
basic product safety education
Education on trading and security trade control, etc.

ULVAC Academy Portal now supports Japanese,
English, Chinese, and Korean. Over 6,000 ULVAC employees have registered and are using the portal.

Developing the Next Generation of Executives

We are promoting e-learning throughout ULVAC
based on the concept of providing an environmentthat enables learning anytime anywhere.
Since its launch in 2016, the contents posted on
ULVAC Academy Portal have grown to include some
600 items.

ULVAC has put in place an education and training
framework for developing next-generation executives that includes programs on such subjects as thequalities ULVAC leaders should possess and is designed to cover the entire Group cross-functionally.
Next-generation executives and future-generation
executive candidates receive education and training
based on a development plan in accordance with theeducation and training framework.

Message from the President
Video clips of seminars held in ULVAC
45

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 totake leadership in exploring the world

ULVAC Academy Portal

Principal contents

We are vigorously promoting human resources rotationin the Group, especially between ULVAC Head Office andoverseas Group companies, as a measure to promote thediversity and inclusion mentioned above. Moreover, byvigorously promoting assignment of ULVAC employees
to companies outside the Group on loan and vice versa,
we are striving to vitalize human resources and establish
human networks while also expecting to achieve innovation through technical exchange.
Human resources rotation between ULVAC Head Office and Group companies
Number of employees transferred (Persons)
120
100
80
60
40
20
0

60

46

12

19

42

37

35

37

2014

2015

2016

2017

Number of expatriates in Japan (overseas Group companies
Number of expatriates overseas (ULVAC Head Office

58

2018

Furthermore, in the current fiscal year we haveincreased opportunities for discussion by holding seminars in combination with panel discussions and workshops. These formats encourage participants to express
their opinions and as discussion becomes broader anddeeper, the participants gain more fresh perspectives.
We will continue to use seminars for human resources development throughout the Group.
Seminars held
FY2017FY2018

Total

Engineering and MONODZUKURI

6

11

17

Human resources development

4

9

13

Marketing

1

9

10

Other

6

4

10

Total

17

33

50

Global Manufacturing Technology/Business Improvement Competitions

51
(FY)

ULVAC Head Office)overseas Group companies)

Holding of Seminars

ULVAC Basic Policy for Human Resources Development

1. Human resources who respect other individuals, trust eachother 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

Human Resources Rotation

Since its establishment in 2018, the Human Resource
Center has been vigorously holding seminars. It held
50 seminars with a cumulative total of participants
exceeding 3,200 employees. These seminars are designed to inspire ULVAC employees to support therealization of the smart society and develop business in new growth markets, without being constrained by conventional businesses.
As mentioned above, as technological innovationis advancing and already bringing about dynamicchange, it is crucially important to understand thevalue ULVAC can offer and embody that value in avision looking five to ten years ahead. Based on therecognition that the enhancement of ULVAC’s corporate value depends on R&D of leading-edge technology, seminars are wide ranging. In addition to
information on leading-edge technology, the trends
reshaping industry, and situations of competitors,
seminars also cover approaches concerning management, marketing, intellectual property, humanresources development, and other topics, as well ascase studies to understand how certain companies
shifted decisively to growth trajectories. Experts withtrack records of success in particular fields are actively sought out and invited as external lecturers.
Our expectation is that seminar participants willrealize much that they might not encounter or recognize in their daily routine, and this will expand theirawareness to be sensitive and proactive to changes in
the market, developing human resources capable ofseizing the initiative and thriving in a global setting.

ULVAC aims to achieve the shared vision of individuals,
divisions, the Company, and the Group by vitalizing
individuals through their daily work, education andtraining, seminars, and other means, and by sharing
the outcomes and utilizing them as ULVAC’s assets.
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, “Group-wide innovation of production technology to increase value.” At
the Global Manufacturing Technology Competition,
participants present the outcomes (benefits) of theirinitiatives and processes for resolving issues.
The theme of the Global Business Improvement
Competition is “business process improvement applicable throughout the Group.” The aim is to create
mechanisms and measures to inculcate ULVAC’s management policies in day-to-day work, maximize groupwide synergy, and strengthen cross-organizational
functions to support resolution of issues relevant to
two or more Group companies. In the Global Business
Improvement Competition, participants make presentations on topics such as cost-reduction impacts, process improvements to tackle issues, enhancement ofoperational efficiency and productivity.
Through these competitions, we aim to makeall employees aware of the importance of putting
the Basic Corporate
Philosophy and the
Ideal form
Management Policies
Further
into practice in theirimprovement
Global Competitions(Manufacturing Technology/
work and linking theirBusiness Improvement)
Competitions
work to outcomes that
Training
contribute to achieving
Daily business
ULVAC’s vision.
Administration

Engineering

SkillsULVAC VALUE REPORT 201946

Basis for Value Creation

Promotion of

Human Resources

HealthCreating an Excellent Working Environment
ULVAC, Inc. is creating a working environment inwhich employees can demonstrate their strengths andoriginality while enhancing their productivity, and furthermore we are developing conditions and programs
that minimize the impact of life events, so that diverse
human resources can flourish and perform well.
Retention of human resources and transfer of technological expertise
Mindful that technological innovation is triggered by the
integration of accumulated technology, new knowledge,
and creativity, ULVAC, Inc. emphasizes the retention of
employees and the transfer of technological expertise.
For example, we conduct a questionnaire survey of new
employees six months after they join ULVAC, Inc. and theirsuperiors, and if gaps in recognition are revealed, steps
are soon taken to resolve the issue. Moreover, the system
for rehiring senior employees after mandatory retirement
is contributing to the transfer of technological expertisefrom skilled engineers to the next generation.
Systems for supporting childcare
With the aim of creating a workplace where employees
can achieve a balance between work and childcare, in fiscal 2018, ULVAC, Inc. introduced support systems that go
beyond the statutory requirements. Childcare leave canbe taken until the first April 30 after the child reaches two
years of age. The short-working-hours system for childcare
is available for employees who have a child up to the third
grade in elementary school. All employees who took childcare leave have returned to work.
Improvement of systems for flexible workstyles
In addition to the staggered working hour system andthe flextime system, which have been available, ULVAC,
Inc. has introduced an annual paid leave system whereby
a portion of the leave can be taken by the hour (up to a
maximum of 4 0 hours per year). Thus, systems for more
flexible workstyles have been established.
Human Resources Data (non-consolidated)
Employee gender ratio
MaleManagement gender ratio

FemaleMale

93 female employees

Female364 male
employees

11 female
employees

7.0%

97.0%

3.0%

93.0%
Male

Female

50
40
30

2
4

0

47

21

25

33

36

2015
2016
2017
2018
2019

33

2015 2016 2017 2018 2019
(Plan)

Number of employees who took childcare leaveand the number of returnees (Persons)of employees who Number of returnees after(FY) Number
started to take childcare leave taking childcare leave

4

3

20
10

14

(FY)

Return rate: 100%

Management
Priority Activity 1 Boosting Employee Motivation

Priority Activity 2 Laying a Foundation for Increasing Vigor in Work

Future Measures and Outlook

In the belief that enhancing the personal qualities of the executives and managers who form
the backbone of the organization is closely
linked with enabling employees to personallyexperience the meaning of work and to feelthat each individual applies his or her strengths
and is valued, ULVAC, Inc. provides executives
and managers with training on the meaning ofwork, self-understanding assisted by psychological tests, and psychological safety.
In addition, ULVAC, Inc. utilizes its own organizational health survey to periodically conductorganization vitalization training in which executives come join forces to consider together
policies and measures for creating workplaces
where each employee has a dream, work is fun,and everyone looks forward to going to work.
In fact, scores in an organizational healthsurvey of employees at divisions that participated in organization vitalization training have
improved following the training (Figure 1).
ULVAC, Inc. is enhancing employee motivation
through these activities.

We believe that inculcating appropriate exercise habits not only prevents illness, but also leads to increases
in employee memory retention, mental capacity, andconcentration.
To instill exercise habits, we have held events suchas the Walking Rally Workplace Competition and ULfit’s RUN (a relay race held on company premises).
The results of analysis of the findings of ULVAC’s
organizational health survey indicate that scores forwork engagement (UWES*1), which measures vigor,
dedication, and absorption in work, are high among
employees who answered that they have regular exercise habits (Fig. 2).

A survey by Gallup, Inc., a public opinion survey
and consulting firm, finds that when organizations
with high engagement scores and those with low
engagement scores are compared, it is evident thatorganizations with high scores have excellent resultsfor performance indicators such as productivity andearnings.
(State of the Global Workplace Report, Gallup, Inc.)
Since fiscal 2013, ULVAC, Inc. has included questions concerning employee engagement (“Do you
understand the role expected of you?” “Do you feelvalued in the workplace?” etc.) among the indicesin the ULVAC organizational health survey, andscores are gradually improving through the abovementioned activities.
We think that for the purpose of putting the Basic
Corporate Philosophy into practice and contributing
to the development of industry and science in a business field in which the pace of change will further
accelerate, it is important to create mechanisms thatwill increase engagement and enable each employee
to further personally experience the meaning ofwork. For this reason, going forward, we will enhance our health management measures.
In fiscal 2019, in addition to existing measures,such as organization vitalization training for managers and walking rallies for all employees, we will
launch new initiatives. Specifically, we will promotemutual improvement of problem-solving skills forcomplex problems, enhancement of human qualities, and organizational development by holding a
Mistake and Setback Case Study Review Meeting asa regular event for managers to experience a simulation of such cases. Also, we will continue to focus
on engagement in essential health and productivity management measures, such as the provision of“Power Lunches—Meals to Increase Afternoon Concentration” utilizing the employee cafeteria, which
is used by more than 90% of employees.

There is someone I canconsult in the workplace.

I utilize mystrengths andindividuality totake on challenges
in my work.

80

47

Before training
After training

86

76

I feel I am
valued at work.

32

68
I know whatrole expected of
me.

74
84

31.2

28.8

Regular exercise
habitsNo regular exercise
habits0

65

68*1 The Utrecht Work Engagement Scale (Work engagement is thought to be related
to psychological health improvement and productivity enhancement. Source fordetailed information (in Japanese): Akihito Shimazu Laboratory, Faculty of Policy
Management, Keio University / URL: https://hp3.jp/tool/uwes)

When I facedifficulties, I candeal with thempositively.

Fig. 1 The organizational health survey was administered at the time of
application for a health check. At departments that conductedorganization vitalization training, the percentage of employees
who answered “5. Strongly agree” or “4. Agree” to each question(5-point rating scale) has increased since the training began.

Fig. 2 Comparison of status of exercise habits and work engagement scores (mean values)

ULVAC, Inc. was commended for these activities andhas been recognized as a Certified Health and Productivity Management Organization (White 500) for two
consecutive years, and ULVAC EQUIPMENT SALES, Inc.
has also been recognized as a certified Health andProductivity Management Organization.
ULVAC will continue integrated group-wide promotion of health management activities.

Comment from the President and Chief Executive Officer

1,242
male
employees
Number of new graduate recruits (Persons)

ULVAC, Inc.’s corporate creed states, “People determine whether the company will prosper or fail.” To put our Basic
Corporate Philosophy into practice and contribute to the development of industry and science, we must make further
progress in creating an environment in which each individual employee is healthy in mentally and physically, full of vitality and able to demonstrate his or her capabilities to the fullest.
ULVAC, Inc. aims to be a company where “each employee has a dream, work is fun, and everyone looks forward
to going to work”, and the president, the Chief Health Promotion Officer, the general manager of the General Administration & Personnel Department, and occupational health physicians and occupational health nurses act in unison topromote health management with the objective of “enhancing human qualities.”

2
5
0
4
4

3
2
0
5
6

Amid the growing trend toward the smart society, ULVAC
continues to pursue technological innovation. In the belief
that it is our people who get things done and that it ishealth and family that support our people, we will continue to promote health management as an importantmanagement priority for realizing sustained growth andenhancement of corporate value.

Setsuo Iwashita

President and Chief Executive Officer

ULVAC VALUE REPORT 201948

Basis for Value Creation

Occupational Safety and Health

Environment

Relevant SDGs

The ULVAC Group has made “Safety First” the fundamental principle of business management.
By operating our Occupational Safety and Health Management System (OSHMS) focused onrisk assessment, we endeavor to ensure safety of the products and services used by our customers and create dynamic workplaces where Group employees can work in good physical andmental health.
Approach on Occupational Safety and HealthIn the execution of development, manufacturing,transport, installation, maintenance and other businessprocesses, everyone in the ULVAC Group, from senior
management to line workers, is encouraged to seize theinitiative in continuously undertaking improvements
placing the highest priority on safety, striving to maintain and improve the safety of everyone involved andensure a healthy working environment.
ULVAC Basic Policy on Occupational Safety and Health Management System (OSHMS)

Relevant SDGs

Based on its environmental policy, the ULVAC Group provides products that allow customers toembrace 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 ISO
14001 certification so as to strengthen governance, ensuring information sharing among Group
companies and swift implementation of instructions issued by top management. The ULVACGroup will continue its efforts to reduce environmental impacts through its products.

ULVAC’s Safety Management System

Global Safety
Management
Committee

President and CEOULVAC, Inc.

Companies in Japan

Environmental Philosophy

Environmental Policy

Companies in South Korea

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.

Companies in Taiwan
Companies in China
Companies inSoutheast Asia
Companies in Europe
and North America

1) ULVAC Group products/Final products
2) ULVAC Group manufacturing process

Frequency ratio of occupational accidents at ULVACGroup as a wholeJapan

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

1.50

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 & HealthManagement activities with the help of all the employees.

1.00

2. Assure safety of ULVAC’s products

0.50

1.00

China

South Korea

0.90

0.95

1.00

2016

2017

2018

Taiwan0.68

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.
0

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

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

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 Management Committee, and all Group companies promote safety
and health activities in an integrated manner. EachGroup company operates the OSHMS, and everyone
is engaged in safety and health activities, such as
management reviews conducted by the president andother executives and risk assessments performed byeach employee. In 2019, the Chigasaki Plant achieved
a Type-V zero accident record (total of 15.7 million
hours), the highest level provided by the Ministry of
Health, Labour and Welfare. With “Safety First” astheir motto, all Group companies will continue theirefforts to extend the zero accident record.
49

2014

2015

(FY)

* This graph shows the rate of occupational accidents for each fiscal year, with the value for fiscal
2014 (as of June 2015) as 1.00. The number of accidents remained low in fiscal 2018 with thelowest number of accidents with lost working hours.

Environmental Activities in Fiscal 2018
Total waste emissions decreased somewhat comparedwith the previous fiscal year.
As recovery of valuable materials is important also
from the perspective of material recycling, we willcontinue to promote it throughout the ULVAC Group.
We are also implementing group-wide initiatives, including visualization of wattage, 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. CO2 emissions
decreased compared with the previous fiscal year.
Water consumption increased greatly at Group companies in Japan.
The ULVAC Group will continue to promote environmental management activities in order to reduce
environmental impacts derived from its business activities.

Safety and Health Activities
In recent years, hazards associated with chemical substances have been attracting attention and laws havebecome stricter. ULVAC, Inc. provides special seminars
to employees on chemical substances, covering key
points of risk assessment and procedures for filing
applications with the authorities, to prevent occupational accidents and ensure compliance with laws
and regulations.

Material balance (Source: Aggregate data for fiscal 2018)

INPUT
Electricity
179,752 thousand kWhconsumption
LPG:
149 t
Gas
LNG:
656 t
consumption
City gas: 1,568 thousand m3
Heavy oil:
58 kL
Fuel
Kerosene oil: 32 kL
consumption
Diesel oil:
181 kLWater
1,278 thousand m3
consumption

Packaging
1,375 tmaterials

Special seminar on chemical substances

OUTPUT

CO2emissions

88,961 t-CO2(Emissions due toconsumption of electricity,gas, and fuels)

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

Total
waste
emissionsFinallandfill
disposal
rate

Total amount ofwaste recycled:
7,093 tAmount of landfill
385.2 t75,0001,050

50,000700

25,000350

02013 2014 2015 2016 2017 2018 (FY)2013 2014 2015 2016 2017 2018 (FY)

Waste emissions(t)
10,000

Amount of valuable materials recycled (t)Amount of landfill (t)

7,500

3.7

4.5%
2,500

0

6,216

5,613

1,769

1,288

2012

2013

359

214
3.7

289

6.0

313
254

240

Final landfill disposal rate (%) (%)

Total amount of waste recycled (t)

4.9

5,000

* The above data are based on the data from 37 Group companies in Japan and overseas.
* The volume of packaging materials is based on the data from 16 Group companies inJapan and overseas.

Group companies overseas
Group companies in Japan(Thousand m3)

1,400

0

8,549 tWater consumption

6,556

2,040

2014

7,072

8,479
3.6

4.2
7,197

385

4.5

4.5

7,093
3.0

2.9
1,920

2015

2,313

2016

2,222

2017

2,236

2018

(FY)

1.5

0

ULVAC VALUE REPORT 201950

Basis for Value Creation

Environment

Social Contribution Activities

Major initiatives

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

ECO-SHOCK series
For many years, ULVAC, Inc. has offered products that contribute to energy conservation. We
released ECO-SHOCK ES10 in 2002 and ECO-SHOCK ES4A in 2015 and cumulative sales ofthese dry vacuum pump attachments reached 1,500 units. Since dry vacuum pumps consume large amounts of electricity on production lines that use vacuum pressure, reducing
energy consumption was a big challenge when we first introduced ECO-SHOCK. The mainfeature of ECO-SHOCK accessories is that connecting them to dry vacuum pumps makes it
possible to substantially reduce energy consumption. We released the LS series of dry vacuum pumps with built-in ECO-SHOCK technology in 2018 and sales of these products, which
offer both high pumping speed and low power consumption, continue to rise.

Japan
Chigasaki Space Lesson
Vacuum experiments
ECO-SHOCK ES4A

Receipt of an incentive award for environmental safety from the governor of Gyeonggi Province, South Korea
On June 19, 2019, Pure Surface Technology, Ltd. received an incentive award for environmental safety from the governor of Gyeonggi Province, South Korea.
Due to the distinctive characteristics of Pure Surface Technology’s business of surface
processing of parts for film deposition equipment, environmental regulations have an important bearing on its operations. On the recommendation of the chairman of the Gyeonggi
Province Society of Environmental Engineers, the company received the award in recognition of its major contributions to environmental protection, including improving air pollution
prevention facilities along with atmospheric pollutant reduction activities as well as improving wastewater treatment facilities in tandem with water pollutant reduction activities.

Receiving a certificate of commendation

Management of chemical substances

In March 2019, Chigasaki Space Lesson, an event organizedby the Chigasaki Education Committee (Kanagawa Prefecture) to foster dreams and aspirations about space amongchildren, was held at ULVAC, Inc. Chigasaki Head Office/Plant.
Since the previously held space lesson was so popular thata draw was held to select from among the many applicants,
this time the capacity was increased, and a total of 116 primary and junior high school students and their parents participated. The lesson consisted of various vacuum experiments
and a plant tour, and the children’s eyes sparkled at the sightof the strange phenomena demonstrated in the experiments.
In addition to simply showing the experiments, the numberof hands-on experiments was increased this year, and thesmiling faces of delighted children when they accomplished atask made a powerful impression. We will continue to create
opportunities for children to enjoy studying science throughexposure to vacuum and peripheral technologies.

China
Donation of a liquid nitrogen generator to
Chengdu Research Base of Giant Panda Breeding
ULVAC has donated a liquid nitrogen generator capableof generating liquid nitrogen from the surrounding air to
Chengdu Research Base of Giant Panda Breeding in China.
The director of the facility expressed his gratitude, indicating
the intention to use the liquid nitrogen generator for preserving panda sperm, eggs, stems cells, and other materials aswell as for protecting and breeding rare animals other thanpandas.
The liquid nitrogen generator is an essential apparatus forthe facility, where demand for liquid nitrogen is expected tofurther increase in the future. ULVAC will continue to utilize
vacuum and cryogenic technologies for the purpose of contributing to causes including the protection of rare animals
around the world.

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

Introduction of energy-saving products and activities to visualize electric power consumption
ULVAC, Inc. has pursued various initiatives to reduce electricity consumption. Specifically, while giving due consideration to the impact on businessactivities and employees, we have increased the space between lights, converted cleanroom lighting to LED fixtures, standardized air-conditioning
temperature settings, curtailed use of cleanroom air conditioning, and improved cooling and heating efficiency through thermal insulation measuresand have worked to raise employee awareness of energy conservation.
In the previous fiscal year, we cut electric power consumption by 2.45% year on year by reducing consumption 343 MWh through conversion oflighting to LED fixtures and 183 MWh by updating office air-conditioning equipment.
We have set a target of a 1% annual reduction in energy intensity* beginning in the current fiscal year and will eradicate waste by such means
as reinforcing the system we have instituted requiring that an application be submitted for permission to operate equipment during three or moreconsecutive business holidays.
At the Chigasaki Head Office/Plant, we visualize energy use for the entire plant and for each unit of equipment and, as a further measure, ensure there is no wasteful operation and promote energy saving in the operation of equipment by ascertaining in real time the status of operation of
selected plant equipment on a trial basis. In this way, we review our methods of equipment operation and engage in activities that lead to energy
savings in equipment use and the development of energy-saving products. Going forward, we will promote group-wide deployment and integrationof these activities.
*Energy intensity: Energy consumption per unit of output (calculated as electric power consumption divided by sales)

Japan
Participation in Kanogawa rivercleanup activity
More than 100 employees of nearby companies and local residents participated in a river cleanup activity organized by the
Kanogawa Water System Water Quality Conservation Committee (Shizuoka Prefecture). Participants from ULVAC, Inc. spearheaded by new employees, engaged in cleanup activities near
Goryu Falls.
Shizuoka Prefecture is undertaking plastic waste reduction through 6R activities, adding refuse, return, and recoverto the 3Rs of reduce, reuse, and recycle. River cleanups area form of recovery activity. ULVAC, Inc. will continue helping
preserve nature in Shizuoka through river cleanup activities.

TaiwanDonation of firefighting equipment to Tainan
City Government Fire Bureau Nanke Station
The Tainan Plant (Taiwan) holds a fire drill once every six
months, receiving tremendous cooperation from the Tainan
City Government Fire Bureau.
To show its appreciation, in May 2019 the Tainan Plant
donated firefighting equipment to the Fire Bureau Nanke Station, which covers the Southern Taiwan Science Park, where
the plant is located.
The Tainan Plant will continue to deepen ties and cooperation with the local community and engage in activities
contributing to disaster prevention and safety.

Electric power visualization system screen

51

ULVAC VALUE REPORT 201952

Financial Data/Corporate Information

11-year Financial Data
Financial Data

(Unit)

FY20082009.6

FY20092010.6FY20102011.6FY20112012.6FY2012
2013.6FY20132014.6FY20142015.6FY20152016.6FY20162017.6FY20172018.6FY20182019.6

Key financial results
Net sales*1

Millionsof yen223,825

221,804

232,040

196,804

163,351

173,878

179,174

192,437

231,831249,271

220,721

Operating profit (loss)

Millionsof yen

3,483

4,809

1,850

(6,384)

6,115

11,996

11,132

17,86429,46835,351

23,828

Ordinary profit (loss)

Millionsof yen

835

4,942

1,441

(6,497)

6,264

13,384

12,475

18,37329,71636,90725,575

Net income (loss)*2

Millionsof yen811

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

11,538

8,874

16,69824,46935,904

18,665

Net assets

Millionsof yen90,158102,504

92,023

41,18759,436

72,23884,92878,032

104,917

154,069

157,588

Total assets

Millionsof yen318,076

313,784

313,616

249,651

243,289

230,791

242,348

219,561

245,306

297,418

282,302

Cash flows from operating activities

Millionsof yen(31,891)

44,312

17,730(8,492)

22,35732,213

21,992

23,70837,81819,086

18,282

Cash flows from investing activities

Millionsof yen(14,051)(10,876)(14,833)(11,328)(4,506)(3,023)(4,055)(5,593)(13,713)(1,564)(9,448)Cash flows from financing activities

Millionsof yen51,325(23,418)

2,159

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

Cash and cash equivalents at end of period

Millionsof yen21,827

29,72135,722

28,18044,20457,012

61,67044,86247,55554,34855,859Net assets per share

Yen

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

3,062.39

Net income per share

Yen

18.90

46.60

(176.43)(1,012.94)(87.79)223.18172.73338.37496.35728.68378.78Equity ratio

%

26.4

31.3

28.1

14.8

22.7

29.2

32.8

33.2

40.2

49.6

53.5

ROE (return on equity)*3

%

0.9

2.3

—

—

—

18.8

12.1

21.9

28.5

29.2

12.5

Ratio of ordinary profit to total assets*4

%

0.3

1.6

0.5

—

2.5

5.6

5.3

8.0

12.8

13.6

8.8

Times

146.79

37.34

—

—

—

9.66

10.91

9.21

10.88

5.82

9.02

Capital expenditureBillionsof yen

19.6

11.1

17.8

12.7

6.8

6.2

6.7

7.0

8.3

12.9

12.9

R&D expenses

Billionsof yen

8.3

8.0

8.3

7.1

5.0

5.2

5.6

6.3

6.9

8.3

9.2

Interest-bearing debt

Billionsof yen

136.1

100.2

105.1

120.2

106.1

89.6

82.6

62.7

42.7

35.7

35.6

Dividends

Yen

21.0

21.0

—

—

—

—

10.0

30.0

50.0

95.0

105.0

Dividend payout ratio

%

111.1

45.1

—

—

—

—

5.8

8.9

10.1

13.1

27.7

Number of employees

Persons

6,871

7,169

7,878

6,981

6,579

5,971

5,904

5,886

6,072

6,439

6,424

Key performance indicators

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.

53

ULVAC VALUE REPORT 201954

Financial Data/Corporate Information

Business Results: Review of Operations for Fiscal 2018 and Outlook

Business Results for Fiscal 2018

Financial Position at the End of Fiscal 2018
As a result, the equity ratio at the end of fiscal

In the electronics market in which the ULVAC GroupIn these circumstances, for the fiscal year ended

Total assets at the end of fiscal 2018 amounted tooperates, semiconductor memory manufacturers con-June 30, 2019 (fiscal 2018), orders received decreased¥282,302 million, having decreased ¥15,116 million

tinued capital expenditures in response to expanding¥24,433 million or 10.1% year on year to ¥218,547 mil-compared with the figure at the previous fiscal

memory demand fueled mainly by greater demandlion and net sales decreased ¥28,550 million or 11.5%

year-end. The main factors were a ¥11,764 million

Company has applied “Partial Amendments to Ac-

for servers for data center applications. However,to ¥220,721 million. On the profit front, operating

decrease in investment securities and a ¥10,040 mil-counting Standard for Tax Effect Accounting” (ASBJ

semiconductor memory manufacturers have started

profit decreased ¥11,523 million or 32.6% to ¥23,828

lion decrease in notes and accounts receivable, trade,Statement No. 28, February 16, 2018) and other standards.

to postpone new capital expenditures in view of themillion, ordinary profit decreased ¥11,332 million orwhereas deferred tax assets increased ¥2,865 million.

Comparison of the financial position uses figures at

slowdown of demand in the near term. Neverthe-

30.7% to ¥25,575 million, and net income decreased

Total liabilities amounted to ¥124,714 million, hav-

the previous fiscal year-end after the retrospective ap-

less, investment related to the emergence of the¥17,239 million or 48.0% to ¥18,665 million.

ing decreased ¥1 8,6 3 4 million compared with the fig-

smart society is expected to gain momentum over

Net sales/Operating profit margin

ure at the previous fiscal year-end. The main factors

the medium to long term. On the other hand, in theflat panel display (FPD) sector, in line with the trend(Billions of yen)300

toward larger, higher-definition panels for TVs, capital expenditures for manufacturing large LCD panels

200

179.2

249.3

192.4

231.8
12.7

Operating profit margin

14.2

(%)
15

220.7
10.8 10

9.3

for TVs continued, mainly in China. Whereas capital
expenditures for OLED panels for smartphones was

Net sales

100

payable, trade and a ¥6,6 2 4 million decrease in short-

Effective from the beginning of fiscal 2018, theplication of the said accounting standards.
Equity ratio/Interest-bearing debt

term loans payable, whereas long-term loans payable
increased ¥6,519 million.

5

6.2

increased ¥3,519 million compared with the figure at the

82.6

80

32.8

55

(%)
60

40.2
40

62.7
33.2

42.7

35.7

35.6

2017

2018

20

previous fiscal year-end. The main factor was a ¥13,747 mil0

2014

2015

2016

2017

2018

0
(FY)

Review of Operations by Business Segment
For the vacuum equipment business, orders received
amounted to ¥185,077 million, orders back-log was ¥90,217
million, net sales were ¥187,698 million, and operating
profit amounted to ¥20,819 million.
FPD and PV production equipment
Orders received for and net sales of FPD and PV production
equipment were below the level of the previous fiscal year
despite recording of orders received, mainly from customers in China, for large LCD production equipment for TVs
and OLED production equipment for smartphones.
Semiconductor and electronic device production equipment
Both orders received and net sales were below the levelof the previous fiscal year because, for semiconductor
production equipment, demand for sputtering equipment and the natural oxidized film removing system for
NAND flash memory, DRAM, and next-generation nonvolatile memory was affected by the current slowdown ofmemory-related investment. For electronic device production equipment, demand for production equipment for
high-performance devices applied in mobile equipment
and for power semiconductors was robust.
Components
Both orders received and net sales exceeded those forthe previous fiscal year because of strong demand forcryopumps for mounting on OLED production equipment,
as well as for vacuum pumps and measuring equipment
for the FPD, semiconductor, and electronic device industries and for the automotive-related industry.

Interest-bearing debt

53.5

49.6

40

lion increase in retained earnings, whereas accumulated

0

2014

other comprehensive income decreased ¥10,385 million.

Vacuum Equipment Business

Equity ratio(Billions of yen)120

Net assets amounted to ¥157,588 million, having

curtailed in South Korea, it continued unabated inother regions.

were a ¥14,818 million decrease in notes and accounts

2018 was 53.5%.

2015

2016

0
(FY)

Outlook
Industrial equipment
Net sales remained at the same level as in the previous
fiscal year, centering on vacuum heat treatment furnaces
for the production of automotive components and leaktesters. On the other hand, orders received were below
the level of the previous fiscal year, partly because of the
postponement of investment in the manufacturing of
high-performance magnets in China.
Vacuum Application Business
For the vacuum application business, orders received
amounted to ¥33,471 million, orders back-log was ¥6,182
million, net sales were ¥33,023 million, and operating
profit amounted to ¥2,986 million.
Materials
Both orders received and net sales were below the levelof the previous fiscal year, under the impact of factors
such as reduced equipment operation in South Korea,
despite recording of orders received for and sales of sputtering target materials for LCDs and other items.
OthersOrders received and net sales were higher than those of
the previous fiscal year owing to firm demand for mask
blanks, reflecting an increase in demand for high-definition, high-performance display panels and semiconductors for in-vehicle and industrial applications, with theadded contribution of demand for surface analyzers.

For fiscal 2019, the final year of the current mid-term
management plan, we forecast net sales of ¥205.0 billion (¥60.0 billion lower than the target of the mid-term
management plan) and operating profit of ¥22.5 billion(¥15.5 billion lower than the target of the mid-term
management plan) owing to delays in the resumptionof electronics-related capital expenditures. However,targets set for the fiscal year ending June 30, 2023 (fiscal
2022), four years from now, remain unchanged: net salesof ¥300 billion and operating profit margin of 16%.
Diverse industries are becoming increasingly electronics-oriented in line with the progress of the smart
society, with 5G, IoT, and AI to the fore, and markets
for semiconductor memory and logic, new non-volatilememory, sensors, communication devices, power devices, lithium-ion batteries, electronic packaging, OLED
displays, etc. are expected to grow greatly along withtechnological innovation in the medium to long term.
By supporting technological innovation and expansion of these electronics markets with thin-film processing technology and materials development capabilities,ULVAC aims to achieve the next round of growth.

Forecast of net sales by business segment

300(Billions of yen)

249.3
17.4
15.2
23.7
32.8

220.7
18.7
14.4
23.4

Others

205.0
17.0
14.5

Materials

21.0
34.2

Industrial equipment

34.0

51.6
43.3

43.5

Components

Semiconductor andelectronic device
production equipment

108.5
86.8

2017

results

2018

results

75.0

2019

forecast

2022

FPD and
PV production
equipment(FY)targetULVAC VALUE REPORT 201956

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Balance Sheets(Millions of yen)

FY2017FY2018FY2017FY2018(As of June 30, 2018)(As of June 30, 2019)(As of June 30, 2018)(As of June 30, 2019)

AssetsLiabilities

Current assets

Current liabilities

Cash on hand and in banks

57,07458,557

Notes and accounts payable, trade55,56640,748Notes and accounts receivable, trade87,276

77,236

Short-term loans payable

21,53914,915Merchandise and finished goods

4,615

3,937

Lease obligations

300

306

Work in process

23,61824,033

Income taxes payable

4,534

2,802

Raw materials and supplies

10,847

11,803

Advances received

16,73915,849

Other

9,509

6,840

Accrued employees’ bonuses

3,185

3,625

Allowance for doubtful accounts

(914)

(444)

Accrued directors’ bonuses

512

485

192,026

181,962

Accrued warranty costs

1,742

1,632

Provision for loss on order received

1,074

1,099

Other

13,637

13,041

Total current liabilities

118,829

94,501

14,15020,668

Total current assets
Non-current assets
Property, plant and equipment

80,98280,546

Accumulated depreciation(49,168)(50,595)

Buildings and structures, net

31,81429,951Long-term loans payable

Buildings and structures

Long-term liabilities

69,54371,500

Lease obligations

607

551

Accumulated depreciation(53,161)(54,042)

Deferred tax liabilities

22

16

Machinery, equipment and vehicles, net

16,382

17,459Net defined benefit liability

8,370

7,846

Tools, furniture and fixtures

14,73814,338

Accrued directors’ retirement benefits

272

75

Accumulated depreciation(12,899)(12,358)

Provision for board benefit trust

134

145

1,839

1,981

Asset retirement obligations

395

399

Land

8,624

8,357

Other

568

512

Leased assets

1,872

1,813

Total long-term liabilities

24,52030,213(1,142)(1,099)Leased assets, net

731

715

143,348

124,714

Construction in progress

4,907

7,226

Total property, plant and equipment

64,29765,687

Capital stock

20,873

20,873

Leased assets

81

55

Capital surplus

3,912

3,912

Software

844

1,030

Retained earnings

107,238

120,985

Other

2,529

2,361

Treasury shares

(266)

(247)

Total intangible assets

3,454

3,446

Total shareholders’ equity

131,756

145,522

Investment securities

25,562

13,797

Valuation difference on available-for-sale securities

14,950

6,652

Deferred tax assets

7,315

10,180Foreign currency translation adjustment

2,579

266

Other

6,812

11,690Remeasurements of defined benefit plans(1,753)(1,528)

Total accumulated other comprehensive income

15,775

5,390

6,538

6,676

Machinery, equipment and vehicles

Tools, furniture and fixtures, net

Accumulated depreciation

Intangible assets

Investments and other assets

57(Millions of yen)

Total liabilities

Net Assets
Shareholders’ equity

Accumulated other comprehensive income

Allowance for doubtful accounts(2,048)(4,462)

Total investments and other assets

37,641

31,207

Non-controlling interests

Total non-current assets

105,392

100,340

Total net assets

154,069

157,588

Total assets

297,418

282,302

Total liabilities and net assets

297,418

282,302ULVAC VALUE REPORT 201958

Financial Data/Corporate Information

Consolidated Statements of Income(Millions of yen)

FY2017FY2018FY2017FY2018(July 1, 2018–June 30, 2019)(July 1, 2017–June 30, 2018)(July 1, 2018–June 30, 2019)249,271
176,163
73,108220,721155,845
64,876

15,70322,05437,75735,351

18,217
22,83041,047
23,828

157
470
300
463
426
816
2,631

183
687
296
610
346
694
2,816

349
—
727
1,076
36,907

293
139
637
1,069
25,575

2,002
—
—
2,002

1,710
303
75
2,088

382
—
—
382
38,527
7,309(5,937)
1,372
37,1551,250
35,904

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

Consolidated Statements of Comprehensive Income(Millions of yen)

FY2017FY2018(July 1, 2017–June 30, 2018)

59(Millions of yen)

(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
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission for syndicated loans
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Gain on change in equity
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Other
Total extraordinary losses
Income before income taxes
Current income taxes
Deferred income taxes
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

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

Consolidated Statements of Cash Flows(July 1, 2018–June 30, 2019)37,15519,98814,456113845
215,41652,570(8,298)(2,773)
226
190(10,655)
9,334

51,307
1,263

8,280
1,054

Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued employees’ bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in accrued directors’ retirement benefits
Increase (decrease) in provision for board benefit trust
Increase (decrease) in accrued warranty costs
Increase (decrease) in provision for loss on orders received
Interest and dividend income
Interest expenses
Subsidy income
Loss (gain) on sales of investment securities
Loss (gain) on sales of non-current assets
Share of (profit) loss of entities accounted for using equity method
Loss (gain) on change in equity
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in advances received
Increase (decrease) in accrued consumption taxes
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Proceeds from sales of investment securities
Payments for investments in capital of subsidiaries and associates
Proceeds from subsidy income
Other
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
Repayments of long-term loans payable
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
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period

38,527
6,541
—
97
473
182
(63)
60
(321)
289
(628)
349
(96)
(2,002)—(426)—(16,748)(9,878)
6,789
(123)
(241)
1,230
24,011
720(350)(5,295)19,08627,148
6,938
331
2,048
505
(100)
(197)
11
(82)
27
(870)
293
(74)
(1,710)
(75)
(346)
(303)
7,508
(3,185)(13,913)
(328)
677
1,457
25,761
1,222(270)(8,432)
18,282(12,755)
18,873(9,869)
19
2,171
(290)
237
48
(1,564)(5,589)5,602(11,338)
231
1,779
—
216
(348)
(9,448)(5,157)9,400(11,282)(344)(2,464)(0)(886)(10,734)
4
6,793
47,555—54,348(7,288)
15,100(7,929)(358)(4,683)(0)(687)(5,844)(908)
2,082
54,348(571)
55,859ULVAC VALUE REPORT 201960

Financial Data/Corporate Information

Company Data/Stock Information
Company Profile As of June 30, 2019

Directors, Auditors and Executive Officers As of September 27, 2019Name:

ULVAC, Inc.

President and Chief Executive Officer

Trademark:

ULVAC

Director and Executive Vice President

Mitsuru Motoyoshi

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

Director and Senior Managing Executive Officer

Masasuke Matsudai

August 23, 1952

Director and Managing Executive Officer

Dr. Choong Ryul Paik

Established:
Capital:Number of
employees:¥20,873,042,500
Non-consolidated 1,335
Consolidated 6,424

Director and Executive Officer

Setsuo Iwashita

Sadao Aoki

External Director

Akira Mihayashi

External Director

Norio Uchida

External Director

Dr. Kozo Ishida

External Director

Yoshimi Nakajima

Stock Information As of June 30, 2019

Number of Shares Held by Shareholder TypeManaging Executive Officer

Shigemitsu Sato

Total number of shares authorized ……………… 100,000,000

Managing Executive Officer

Masahiko Ishiguro

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

Senior Executive Officer

Dr. Kazuya Saito

Total number of shareholders ……………………………… 17,166

Executive Officer

Yu Jer Tsai

Executive Officer

Tomoyasu Kondo

Major Shareholders

Executive Officer

Tetsuya Shimada

Shareholder’s name

Executive Officer

Seigou Kinugawa

Nippon Life Insurance Company

Executive Officer

Zheng Ming ZengJapan Trustee Services Bank, Ltd. (Trust account)

3,087

6.25

Executive Officer

Dr. Koukou Suu

TAIYO FUND, L.P.

2,546

5.16

Executive Officer

Shinji Takahashi

JP MORGAN CHASE BANK 385151

2,380

4.82

Auditor

Makoto Ito

Auditor

Mitsuru Yahagi

TAIYO HANEI FUND, L.P.

1,639

3.32

External Auditor

Senshu Asada

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

1,452

2.94

SMBC Nikko Securities Inc.

1,232

2.50

STATE STREET BANK AND TRUST COMPANY 505227

1,039

2.11

External Auditor

Isao Utsunomiya

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

Mizuho Bank, Ltd.

1,916

3.88

Sumitomo Mitsui Banking Corporation

1,864

3.78

Securities Companies
2,089,530 shares
4.23%
Domestic Companies
2,304,506 shares
4.67%
Individuals
and Other
8,498,705 shares
17.22%

Foreign Investors
34,294 shares
0.07%

Total
49,355,938 shares

Treasury stock
3,522 shares
0.01%
Financial Institutions
18,265,720 shares
37.01%

Foreign Companies
18,159,661 shares
36.79%

Note: Treasury stock (3,522 shares) is excluded from the calculation of shareholding ratios.

ULVAC Group Companies As of September 30, 2019
Bases of ULVAC, Inc.
Bases of ULVAC Group companies in Japan/overseas

North America

R&D base• ULVAC Technologies, Inc.

Sales and service bases• Physical Electronics USA, Inc.

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

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

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

• ULVAC Materials (Suzhou) Co., Ltd

TaiwanSouth Korea

Southeast Asia

• ULVAC TOHOKU, Inc.

• ULVAC Human Relations, Ltd.

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

• ULVAC TAIWAN INC.

• ULVAC KOREA, Ltd.

• ULVAC SINGAPORE PTE LTD• ULVAC KIKO, Inc.

• SHINKU CERAMICS CO., LTD.

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

• Ulvac Korea Precision, Ltd.

• ULVAC MALAYSIA SDN. BHD.

• ULVAC EQUIPMENT SALES, Inc.

• FINE SURFACE TECHNOLOGY CO., LTD.

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

• ULCOAT TAIWAN, Inc.

• Pure Surface Technology, Ltd.

• ULVAC (THAILAND) LTD.

• ULVAC CRYOGENICS INCORPORATED• REJ Co., Ltd.

• ULVAC Research Center SUZHOU Co., Ltd.

• ULVAC AUTOMATION TAIWAN Inc.

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

• SHOWA SHINKU CO., LTD.

• Hong Kong ULVAC Co., Ltd.

• ULVAC SOFTWARE CREATIVE TECHNOLOGY, CO., LTD.

• ULVAC Materials Korea, Ltd.

India

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

• ULVAC Materials Taiwan, Inc.

• UF TECH, Ltd.

• ULVAC, Inc. India Branch• TIGOLD CORPORATION• ULVAC Coating Technology (HEFEI) Co., Ltd.

61

ULVAC VALUE REPORT 201962