ULVACVALUE REPORT

2017

Ultimatein VacuumBasic Corporate Philosophy/Management Policies

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

Improvement of Customer Satisfaction
Innovative Production Technology
Innovative Product Development
A Free and Open Culture
Enhancement of Corporate Value
1

Corporate Profile of the ULVAC Group

Business Segments of the ULVAC GroupName:ULVAC, Inc.

Vacuum Equipment Business

Trademark:ULVAC

FPD and PV production equipment

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

Established:

August 23, 1952

Capital:¥20,873,042,500

Number of
Employees:

Non-consolidated 1,225
Consolidated 6,072 (As of June 30, 2017)

Business Areas:

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

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

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

Components

Vacuum pumps
Vacuum gauges
Helium leak detectors
Process gas monitors
Thin-film measuring equipment
EB, RF and DC power generators
Vacuum valves
Deposition controllers
Vacuum transfer robots

Industrial equipment

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

Vacuum Application Business
Materials

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

Others

Surface analyzers
Controllers
Mask blanks

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

ULVAC Value Report 20172

Table of Contents/Editorial Policy/Tool Map

About ULVACULVAC’s Vision

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

Commitment of Top Management……………………… 17

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

New Mid-term Management Plan………………………… 21

ULVAC’s Value Creation <Process>………………………… 9

Vacuum Equipment Business (1)…………………………… 23
FPD and PV Production Equipment

ULVAC’s Value Creation <Source of Value>…………… 11
Consolidated Financial and Non-financial Highlights……… 13

Vacuum Equipment Business (2)…………………………… 24
Semiconductor Production Equipment
Vacuum Equipment Business (3)…………………………… 25
Electronic Device Production Equipment
Vacuum Equipment Business (4)…………………………… 26
Industrial Equipment
Vacuum Equipment Business (5)…………………………… 27
Components
Vacuum Application Business……………………………… 28
Materials

Editorial Policy

Report’s Scope and Period

We have integrated the previous Annual Report and the CSR Report into thisULVAC VALUE REPORT. We consider this report to be an important communication tool to promote the understanding of the ULVAC Group’s operating
results and CSR activities among our stakeholders.

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

Published:
November 2017 (Previous issue published in November 2016)
Guidelines Referenced:
ISO26000: 2010 (Guidance on social responsibility) First Edition
The International Integrated Reporting Framework, the International Integrated Reporting Council (IIRC)

3

Period: Year ended June 30, 2017
(July 1, 2016 to June 30, 2017, Fiscal 2016)
Some portions of the report include activities and initiatives from July 2017 onward.
<Disclaimer>
Figures shown in tables and graphs in this report may not add up to the indicated total because of rounding. Some figures have been revised from previous years’ data because the scope of reporting was expanded or calculating
methods have been changed.

Basis for Value Creation

Financial Data/Corporate Information

Feature 1………………………………………………………………… 29

Business Results……………………………………………………… 47

ULVAC’s R&D

Consolidated Balance Sheets………………………………… 49

Feature 2………………………………………………………………… 31

Consolidated Statements of Income/Consolidated Statements of Comprehensive Income…… 51

ULVAC’s Future Envisaged by
Senior Fellows

Consolidated Statements of Cash Flows……………… 52

Management…………………………………………………………… 33

ULVAC Group Companies……………………………………… 53

Company Data/Stock Information……………………… 53

Quality Assurance and Product Safety………………… 39
Procurement…………………………………………………………… 40
Human Resources…………………………………………………… 41
Occupational Safety and Health…………………………… 43
Environment…………………………………………………………… 44
Social Contribution Activities……………………………… 46

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

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 value, in addition to information on business activities, management strategies, andfinancial information. Please also refer to our website forthe latest information.
ULVAC Value Report 20174

About ULVACULVAC’s HistoryULVAC was founded at a time when vacuum technology had not yet entered widespread use in Japan. As a trailblazer, we championed vacuum technology by introducing new technologies to themarket and addressing the needs of customers in diverse industries. ULVAC will continue tacklingtechnological innovation to speed progress toward the “smart society” to which we aspire.

Challenging new industrial sectors
Ever since its foundation, ULVAC has been refining its capability to flexibly manipulate vacuum technology. In step withthe changing industrial structure of the era, 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 supports every industry and lifestyle, we areconfident that our vacuum technology will be a key to the advance of the cluster of transformative technologies, including IoT, big data, artificial intelligence, and self-driving vehicles, that will underpin next-generation lifestyles.

1952〜 1960〜 1962〜 1973〜
Automotive

Chemical/
pharmaceutical/foodMetal/steel

Liquid crystal display

Reflectors for automobiles

Pharmaceuticals

Special steel

LCD calculator display

100 kg-class vacuum induction melting
furnace

Transparent conductive film deposition
equipment

Vacuum evaporation equipment
High-vacuum distillation equipment for plasticizers

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

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

1959

Opened the Yokohama Plant in
Kanagawa Prefecture.

1952
1952

5

1964
Established the first overseas
subsidiary in Hong Kong.

1968
Chigasaki Head Office and Plant in
Kanagawa Prefecture completed.

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

1971
Established a subsidiary in Hamburg,
then West Germany, as a base forcultivating the western European
market.

1972
Opened the Institute for Super Materials as ULVAC’s first research facility.

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

1977
Established KYUSYU ULVAC CORPORATION (present-day ULVAC KYUSHUCORPORATION) in Kagoshima Prefecture to expand sales activities in the
Kyushu area.

1960

1970

1982
Established a subsidiary in Taiwan.

1982
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 tostrengthen production of largescale equipment.

1980

The story of ULVAC’s foundation
At the time when Japan was engaged in post-war recovery, a groupof talented young researchers andengineers gathered with the aim of“contributing to the revival of Japanese industry through vacuum technology.” In 1952 six angel investors,
impressed by the passion of thesevisionary young people, invested in
the establishment of Japan Vacuum
Engineering Co., Ltd., the forerunner of present-day ULVAC.

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

Fascinating!
Y’all must do it!

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

Soughtinvestment

Japan Vacuum Engineering Co., Ltd.

First president

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

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

Father-in-law

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

Yoshijiro Ishikawa
President of Keifuku
Electric Railroad

Yoshio Osawa

Consult

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

NRC
Equipment
Corporation

Six inves-

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

tors

President of Osawa-ShokaiSecond president Third president

1941: Vacuum Clubwas established

Cooperation

U.S. vacuum equipment
manufacturer

Jin Imachi

Chikara Hayashi

Mazda Research Laboratory of Toshiba

Sagane Lab of the
University of Tokyo*1950: Renamed to
Vacuum Technology
Association

1975〜 1983〜 1992〜 2016〜
Semiconductor

Electronic storage media

FPD

Computer Compact discs

Flat panel display(Photo: Courtesy of IBM Archives)

OLED

OLED

OLED production equipment
System 731
In-line sputtering equipment for magnetic
disks

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 Chigasaki Head
Office and Plant completed.

1990

2000

LCD production equipment

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.

2005

2010
Relocated the Chiba Institute for Super
Materials to the Tomisato Industrial Park in
Chiba Prefecture to enhance R&D.

2011
Established the South Korea Institute forSuper Materials to enhance R&D in South
Korea.

2015
Established the Future Technology ResearchLaboratory in Tsukuba, Ibaraki Prefecture.

2017

2016

Began manufacturing production equipment for large displays in China.

2010

ULVAC Value Report 20176

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

Net sales by business segment (amount and %)Vacuum Application
Business¥31.2 billion
OthersVacuum Equipment
Business

13 ¥200.6 87%

FPD and PV production
equipment

X-ray photoelectron
spectroscopy equipment¥16.7 billion¥110.9 billion

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

Materials¥14.6 billion

Sputtering target
materials for FPD
production equipment

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

Industrial
equipment¥21.5 billion%

billionAs befits a company involved in a range of FPD*1 andPV*2 manufacturing technologies, ULVAC not only develops production equipment but also offers solutions
worldwide that leverage its development of advanced
materials.

7%

6%
9%

14%

Net sales in fiscal year
ended June 30, 2017¥231.8With a long history of producing vacuum
equipment for industrial use, ULVAC has
been involved in this business sector since theemergence of vacuum technology in the 1950s.
Currently, leveraging the fundamental
technology it has developed
so far, ULVAC provides various
solutions across wide-ranging
industries, including the automotive, pharmaceutical, and foodindustries.

48%
LCD production equipment

billion

16%

OLED production equipment

Semiconductor and electronic
device production equipment¥36.4 billion

Vacuum melting furnace
Leak detector

Higher integration and higher performance at lower cost are demanded fornext-generation semiconductors and other high-performance devices. Basedon 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¥31.8 billion

Cryopump

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

7

Dry vacuum pumpSputtering equipment forelectronic devices

Sputtering equipment for
semiconductors

Net sales by region (amount and %)Overseas¥151.4 billion

65 ¥80.4
Japan%billionEurope andNorth America, etc.

35%

¥12.1 billion
Other Asia

¥4.8 billion
Taiwan¥21.1 billion
South Korea¥37.8 billion

16%

9%

2% 5%
35%

Net sales in fiscal year
ended June 30, 2017¥231.8billion33%
China¥75.6 billion

ULVAC Value Report 20178

About ULVACULVAC’s Value Creation <Process>As a comprehensive vacuum products manufacturer, ULVAC offers
solutions that contribute to the resolution of issues confronting
society and thus to the overall progress of society.

Coatingbusiness
Advancedmaterials Materials

Social issues

Equipment
control Control

Customer/market needs

Analysis

Surfaceanalysis

Customer
supportServices

Vacuumapplication
business

FPD
PV

VacuumVacuumequipment
business

Equipment
Industrial
Components

9092_0627058582912.indd

すべてのページ

Semiconductors
Electronics

Partners
Customers
Research institutes
Universities
Companies in diverse
industries
Suppliers

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

Contribute to industrial andscientific development

Automotive

Semiconductor

Biomedical/
pharmaceuticalproducts

Social contribution
Realize customers’
value creation

Realize lifestyles that are
not only safe and secure
but also affluent andconvenient

Nextgeneration
display

NextgenerationenergySensors/
smart devices

ULVAC Value Report 20172018/01/05

10
9:44:26

About ULVACULVAC’s Value Creation <Source of Value>
Research & Development
Ongoing value creation from a medium- to long-term perspective
The ULVAC Group has long been a source of vacuum-technology-based products and materials indispensable forwide-ranging industries. With vacuum technology at the heart of everything we do, we will continue to pursue innovative, pioneering R&D capable of addressing actual and potential needs and create high-added-value products
and technologies, thus contributing to the progress of society.

Priority market needs and creation of
profitable products

R&D Organizations
Under the Supervisor of Development, a global R&D structure is in place covering not only the domestic arm but also overseas arms of the Group.
We are accelerating development through unification while endeavoring

By unlocking the tremendous potential of vacuum technology,

to create differentiated technologies by capitalizing on Group companies’

ULVAC creates new value for the future while contributing totechnological innovation and fusion of their technologies.
Furthermore, while conducting product development to ensure short- to

the progress of a safe and affluent society.

medium-term profits through development and business operations in our• Key technologies for growing and developing fields• Technological solutions to deepening social issues

Priority areas

designated priority areas, the Future Technology Research Laboratory is sowing the seeds for the long-term future, with a time horizon of 10 to 20 years.

Next-generation displays(High-definition displays and flexible displays)
Sophisticatedinformation field

Next-generation non-volatile memory (large-capacity andlow-power-consumption memory) and hyperfine wiring
Electronic components, MEMS (devices and sensors to
support IoT), and high-density mounting

Energy-saving andpower generation field

High-efficiency solar cells, high-brightness LEDs, powerdevices, and next-generation automobiles

ULVAC’s R&D Structure (as of July 2017)

Supervisor ofDevelopment

Research and Development Planning Department

Research and Development Division

Institute for Super Materials

Institute of Semiconductor and Electronics Technologies

Nine priority areas—Toward affluent and safe lifestyles

Future Technology Research Laboratory

In order to leverage ULVAC’s strengths, we have designated nine priority areas

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

for development. Furthermore, we are pursuing development and enhancement in each area through the cooperation of the marketing manager (CPM),
design and cost reduction manager (CDM) and the technology manager

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

(CTM).
Taiwan: ULVAC TAIWAN INC.

Priority areas
Next-generation
non-volatilememoryHigh-efficiency
solar cells
High-brightness Energy-saving and
LEDs

Power devices
Electronic
devices andMEMS

Future areas
Innovativeness anticipating change
Creating added value by refining
technology

11

China: ULVAC Research Center SUZHOU Co., Ltd.

Sophisticatedinformation fieldpower generation field

Next-generation
automobiles

Next-generation
displays

HyperfinewiringHigh-density
mounting

Source of ULVAC’s Value Creation
ULVAC’s R&D

P29

ULVAC’s Future Envisaged
by Senior Fellows

P31, 32

New energy

Environment
Medical

These sections offer a closer look at ULVAC’s R&D.

Global Network
Sales & service networks offering solutions to support industrial development worldwide
Deploying the capabilities of the Group’s 49 companies, we have established sales & service networks optimized foreach region, such as Japan, the United States, Europe and Asia. Vacuum technology is one of the keys for manyother cutting-edge technologies, and will be increasingly required for a wide range of industries and growth fields
in the future.

Number of employees

6,072

ULVAC Group Companies in Japan

China:South Korea:
Taiwan:Southeast Asia:
North America:

3,066
1,588
584
530
155
149

49 companies in the Group

Number of bases

118

ULVAC TECHNO, Ltd.
ULVAC KYUSHU CORPORATIONULVAC TOHOKU, Inc.
ULVAC KIKO, Inc.
ULVAC EQUIPMENT SALES, Inc.
ULVAC CRYOGENICS INCORPORATEDULVAC-PHI, Inc.
TIGOLD CORPORATIONULVAC COATING CORPORATIONNISSIN SEIGYO Co., LTD.
ULVAC Human Relations, Ltd.
SHINKU CERAMICS CO., LTD.
FINE SURFACE TECHNOLOGY CO., LTD.
Reliance Electric Limited
SHOWA SHINKU CO., LTD.

(As of June 30, 2017)

Overseas ULVAC Group Companies
North America

ULVAC, Inc.

(Consolidated basis)

Japan:ULVAC Group

TaiwanULVAC Technologies, Inc.
Physical Electronics USA, Inc.
EuropeULVAC 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 (Shanghai) Trading Co., Ltd.
ULVAC Materials (Suzhou) Co., Ltd
ULVAC Opto-electronics Thin Film Technology (Shenzhen) Co., Ltd.
ULVAC CRYOGENICS (NINGBO) INCORPORATEDULVAC NONFERROUS METALS (NINGBO)
CO., LTD.
ULVAC Research Center SUZHOU Co., Ltd.
Hong Kong ULVAC Co., Ltd.
ULVAC VACUUM EQUIPMENT (SHANGHAI) CO., LTD.

ULVAC TAIWAN INC.
ULTRA CLEAN PRECISION TECHNOLOGIES CORP.
ULCOAT TAIWAN, Inc.
ULVAC AUTOMATION TAIWAN Inc.
ULVAC SOFTWARE CREATIVE TECHNOLOGY, CO., LTD.
ULVAC Materials Taiwan, Inc.

South Korea
ULVAC KOREA, Ltd.
Ulvac Korea Precision, Ltd.
Pure Surface Technology, Ltd.
ULVAC CRYOGENICS KOREA INCORPORATEDULVAC Materials Korea, Ltd.
UF TECH, Ltd.

Southeast AsiaULVAC SINGAPORE PTE LTDULVAC MALAYSIA SDN. BHD.
ULVAC (THAILAND) LTD.

Customer Support
ULVAC CS Solutions pool the Group’s knowledge
We are pursuing outstanding service by pooling the Group’s knowledge, including the original technologies andservice knowhow cultivated by the Group companies, in order to support our customers’ production operations ina manner that meets their needs. 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.

Equipment maintenance service
Emphasizing close communication withour customers, we offer service swiftly.
Global CIP (continuous improvement program)This service provides our overseas customers,in addition to our domestic customers, witheffective usage techniques, and improvements
in yield rate and productivity over many generations for the equipment they are already using.
Factory outsourcing (FOS)We provide support for the operation andmaintenance of equipment and facilities, aswell as the ordering of components, selectionof equipment, and process development, bycontract, dispatch or personnel transfer.

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

Component maintenance

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

Analysis service
We provide analysis services using the ULVACGroup’s analysis and evaluation equipment.

Pump maintenance
We provide maintenance of components suchas vacuum pumps.
JCSS vacuum gauge calibration service
ULVAC is an MRA/JCSS* accredited calibrationlaboratory in the pressure (vacuum gauges)
category.

Sale and purchase of pre-owned
equipment*JCSS (Japan Calibration Service System): Calibration laboratory accreditation system under the Measurement Act*International MRA (mutual recognition agreement)

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

We sell, purchase, refurbish, relocate, importand export pre-owned products, ranging fromcomponents to production equipment.

Training service

ULVAC Value Report 201712

About ULVAC

Consolidated Financial and Non-financial Highlights

Consolidated Financial Highlights
Net sales

Operating income(Billions of yen)

200

(Billions of yen)

231.8

250

163.4

173.9

179.2

192.4

100

10

50

2013

17.9

20

150

0

29.5

30

2014

2015

2016

2017

(Years ended June 30)

Net income

0

12.0

11.1

2014

2015

6.1

2013

2016

2017

(Years ended June 30)

Equity ratio(Billions of yen)

(%)

30

50

24.5

40.2
40

16.7

20

11.5
10

29.2
30

8.9

32.8

33.2

2015

2016

22.7

20
0

10

(3.8)
-10

2013

2014

2015

2016

2017

(Years ended June 30)

ROE (Return on equity)

0

2013

2017

(Years ended June 30)

Interest-bearing debt(%)

(Billions of yen)

28.5

30

120

106.1

21.9

89.6

90

18.8

20

2014

82.6
62.7

12.1

60

42.7

10
30

*
0

13

2013

2014

2015

2016

2017

(Years ended June 30)*ROE for the fiscal year ended June 30, 2013 is not presented because the Company recorded
a net loss for that fiscal year.

0

2013

2014

2015

2016

2017

(Years ended June 30)

Non-financial Highlights
Rate oflost work-time injuries

ULVAC (non-consolidated)
All industries
Manufacturing industry

2.0

1.59

1.58

1.66

1.61

1.06

1.06

1.63

1.5

1.00
1.0

0.94

1.15

0.5

0.00

0.00

0.00

0.00

0.00

2013

2014

2015

2016

2017 (Years ended June 30)

0.0*Source for average data for all industries and the manufacturing industry: “Survey on Industrial
Accidents 2016” by the Ministry of Health, Labour and Welfare of Japan.

Annual paid leave utilization rate (%)
100

68.4

68.0

58.0

59.0

50

25

*
2013

2014

2015

2016

2017 (Years ended June 30)*The figure for the year ended June 30, 2013 is not indicated because control by the new systemstarted in the year ended June 30, 2014.

Localization ratio of presidents of overseas subsidiaries (%)

causing four days or more lost work-days has stopped decreasing inrecent years and is flatlining at around 110,000. Although the proportion accounted for by the manufacturing industry has been gradually
decreasing, it still accounts for about a quarter, indicating the difficulty
faced by the industry in its efforts to eliminate occupational accidents.
It is in this context that ULVAC has been promoting various safety
initiatives, including risk assessment, through the operation of the
Occupational Safety and Health Management System (OSHMS), whichlead to five consecutive years of zero frequency rate of occupational
accidents. With “safety first” as the Group’s principle, we will redouble
our efforts to eliminate occupational accidents.

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

62.5

78.8

78.8

2015

2016

81.8
The ULVAC Group operates globally and comprises 118 bases. Basedon the conviction that it is preferable to appoint people of the respective countries and regions to be in charge of management of overseas
bases, we have been fostering and promoting local managers and haveassigned local employees to important positions overseas. With a viewto accelerating business promotion and in preparation for the next

66.7

50

25

0

the number of workers who suffered fatal or occupational accidents

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

100

75

According to a report by the Ministry of Health, Labour and Welfare,Work-life balance750Commitment to safety

2013

2014

2017 (Years ended June 30)

leap forward, our new mid-term management plan positions humanresources development as a key element in strengthening the management base. We will continue training next-generation executives aswell as cultivation and promotion of global human resources.

Number of people participating in vacuum demonstration classes
Supporting education of the next generation and contributing to local communities
800

605

ULVAC holds vacuum demonstration classes and plant tours, mainly for
local public institutions, such as elementary schools, and for people inlocal communities and shareholders. Adhering to the Basic Corporate
Philosophy, “The ULVAC Group aims to contribute to the developmentof industries and science by comprehensively utilizing its vacuum andperipheral technologies through the mutual cooperation and collaboration of the Group companies,” we will support education of thenext generation and contribute to local communities through vacuum2017 (Years ended June 30)

demonstration classes and other initiatives.

600

400

200

72
0

2013

112

2014

172

2015

252

2016

ULVAC Value Report 201714

About ULVAC

Consolidated Financial and Non-financial Highlights

Financial Data

(Unit)

FY2006

FY2007

FY2008FY20092007.6

2008.62009.6

2010.6

Key financial results
Net sales*1

Millions of yen

239,151

241,212

223,825

221,804

Operating income (loss)

Millions of yen

16,625

9,081

3,483

4,809

Ordinary income (loss)

Millions of yen

16,105

5,075

835

4,942

Net income (loss)*2

Millions of yen

7,335

3,610

811

2,138

Net assets

Millions of yen

94,36591,85390,158102,504

Total assets

Millions of yen

317,557

303,069

318,076

313,784

Cash flows from operating activities

Millions of yen

1,131

32,068(31,891)

44,312

Cash flows from investing activities

Millions of yen(26,850)(25,944)(14,051)(10,876)

Cash flows from financing activities

Millions of yen

23,738(1,750)51,325(23,418)

Cash and cash equivalents at end of period

Millions of yen

11,664

16,977

21,827

29,721

Net assets per shareYen

2,105.48

2,052.48

1,961.08

1,992.06

Net income per share

Yen

170.99

84.16

18.90

46.60

Equity ratio

%

28.4

29.1

26.4

31.3

ROE (return on equity)*3

%

8.5

4.0

0.9

2.3

Ratio of ordinary income to total assets*4

%

5.5

1.6

0.3

1.6

Times

25.91

44.68

146.7937.34

Capital investment

Billions of yen

32.1

23.4

19.6

11.1

Research and development expense

Billions of yen

8.9

8.6

8.3

8.0

Interest-bearing debt

Billions of yen

84.3

86.7

136.1

100.2

Dividends

Yen

47.0

21.0

21.0

21.0

Dividend payout ratio

%

27.5

25.0

111.1

45.1

Number of employees

Persons

5,543

6,356

6,871

7,169

Key performance indicators

Price-earnings ratio*5
Other indicators

Notes:
1. Net sales do not include consumption taxes.
2. Effective from FY2016, the Company has applied the “Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013) and “net income
attributable to owners of parent” is presented instead of “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 income 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.

15

FY2010FY2011FY2012FY2013

FY2014FY2015FY20162011.62012.62013.62014.62015.62016.62017.6232,040

196,804

163,351

173,878

179,174

192,437

231,8311,850(6,384)

6,115

11,996

11,132

17,86429,4681,441(6,497)

6,264

13,384

12,475

18,37329,716(8,706)(49,984)(3,807)

11,538

8,874

16,69824,46992,023

41,18759,436

72,23884,92878,032

104,917313,616

249,651

243,289

230,791

242,348

219,561

245,306

17,730(8,492)

22,35732,213

21,992

23,70837,818(14,833)(11,328)(4,506)(3,023)(4,055)(5,593)(13,713)

2,159

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

35,722

28,18044,20457,012

61,67044,86247,555

1,787.51

751.00806.381,040.23

1,398.66

1,477.29

2,002.90(176.43)(1,012.94)(87.79)223.18172.73338.37496.35

28.1

14.8

22.7

29.2

32.8

33.2

40.2

—

—

—

18.8

12.1

21.9

28.5

0.5

—

2.5

5.6

5.3

8.0

12.8

—

—

—

9.66

10.91

9.21

10.88

17.8

12.7

6.8

6.2

6.7

7.0

8.3

8.3

7.1

5.0

5.2

5.6

6.3

6.9

105.1

120.2

106.1

89.6

82.6

62.7

42.7

—

—

—

—

10.0

30.0

50.0

—

—

—

—

5.8

8.9

10.1

7,878

6,981

6,579

5,971

5,904

5,886

6,072

ULVAC Value Report 201716

ULVAC’s Vision

Commitment of Top Management

Achieve growth by creating new value,
seizing the opportunity at the big turning
point of technological innovation

Setsuo Iwashita
President and Chief Executive Officer

ProfileMarch1984 Joined the Company
August1992 Manager of Beijing Business Office and Shanghai Business
Office, Overseas Operation Division
September1995 Director and Chief Executive Officer of ULVAC (NINGBO)
CO., LTD.
July1998 General Manager for Chinese Region, Asia Division of theCompany
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
Chairman of ULVAC (CHINA) HOLDING CO., LTD.
September2016 Director and Senior Managing Executive Officer of theCompany
July2017 President and Chief Executive Officer (current position)17

People are the source of value creation.
By cultivating excellent humanresources capable of transcendingorganizational borders, we will unleash
our potential as a comprehensive
vacuum products manufacturer.
ULVAC’s DNA
Founded 65 years ago when Japan was engaged in postwar recovery, ULVAC aspired to contribute to the revival ofindustries through vacuum technology. Relishing a challenge, our founders applied themselves to the manufacturing of vacuum equipment, the first company in Japanto accomplish this technological feat, opening up new
possibilities in a tough era. Their remarkable achievements
continue to inspire us.
The vision of ULVAC’s founders is expressed by the
corporate creed integral to our corporate DNA. In thecourse of 65 years, while the market environment has
drastically changed, ULVAC’s business has grown morethan a hundredfold and our products have evolved remarkably. Despite these extraordinary developments, thecorporate creed is a precious inheritance of wisdom that
continues to illuminate our path forward.
Firstly, the priority is emphatically on “people” as thebeating heart of the business. Our corporate creed states,“People determine whether the company will prosper or
fail.” Whereas divisional strategies tend to focus on products and the user experience, rather than utilization of human resources, people remain the source of ULVAC’s value
creation. Based on this conviction, my first action on taking office as president was to call for cultivation of workplaces where every employee can work with vigor andenthusiasm while achieving personal growth. ULVAC will
be able to maximize value creation when every employee
enjoys physical and mental health, is full of energy, anddisplays his or her full potential. In the new mid-term management plan, which I discuss below, human resources development is a key strategy for establishing a formidable
management base.
The corporate creed also states, “We shall pursue appropriate profit.” This is another point we should bear in
mind. For sustainable growth and development of ULVAC,
profitable business expansion is essential and the level ofprofit should be appropriate. This has been clearly statedsince our foundation. In terms of the nature of the business to be conducted in pursuit of profit, the corporate
creed states, “Our business shall be comprehensive utilization of vacuum technology.”
Global perspective and synergy
In the course of ULVAC’s growth and development as acomprehensive vacuum products manufacturer, we have
expanded the scope of our business to include not only
equipment but also components, materials, and surface
analysis. However, from the viewpoint of “comprehensive
utilization of vacuum technology,” collaboration among
businesses is insufficient and their respective strengths are
not fully deployed. In other words, synergy has yet to be
fully achieved. In order to accelerate global business development commensurate with our growth potential and to
expand our contribution to the industrial sector throughvacuum technology, it is essential for the 49 companies in
the ULVAC Group operating at 118 bases (as of June 30,2017) to have keener interest in one another, deepening
their understanding of other Group companies’ businessareas, and strengthening links.
In this regard, we are promoting the “Window Project” initiative whose objective is to enhance communication throughout the ULVAC Group through visualizationand sharing of information on the activities of Group companies and divisions. We are introducing a system in which
information displays serve as “windows.” By looking
through the “windows,” business bases will always be up
to date with each other’s statuses.
At the same time, by cultivating excellent human resources capable of transcending organizational borders,
we are endeavoring to establish the foundation for achieving the synergy required for “comprehensive utilization of
vacuum technology.” For this purpose, we are promoting
personnel exchanges within the Group more than ever,while streamlining the head office functions.
Having succeeded Mr. Hisaharu Obinata, the current
chairman, as president, my mission is to build a firm foundation through human resources development while encouraging everyone in the ULVAC Group to cultivate a
global perspective. Through these endeavors, I want tounleash the tremendous potential of ULVAC as a comprehensive vacuum products manufacturer.

Record-high profit for the second
consecutive year
Review of the previous mid-term management plan
ULVAC’s financial performance is on an upward trajectory.
For the fiscal year ended June 30, 2017 (fiscal 2016), orders received, net sales, and profit all greatly exceeded thetargets of the initial plan, and ULVAC achieved record-highprofit for the second consecutive year. Underpinned bycontinuing vigorous capital investment, the FPD production equipment, semiconductor and electronic device production equipment, and components businesses led
increases in orders received and net sales. Regarding profit, in addition to the impact of increased sales, inculcationof “Front Loading” that emphasizes the early stages ofoperations to prevent additional costs and implementationof corporate-wide cost reduction measures through visualization of costs were effective, resulting in higher profit.
As a result, consolidated financial results for fiscal
2016 were: orders received of ¥235.5 billion, up 5.3%
year on year, net sales of ¥231.8 billion, up 20.5%, operating income of ¥29.5 billion, up 65.0%, ordinary incomeof ¥29.7 billion, up 61.7%, and net income of ¥24.5 billion, up 46.5%. We were able to wrap up the mid-term
management plan covering the three years from July 2014
to June 2017 (fiscal 2014 to 2016) with good results.
Under the previous mid-term management plan whose
theme was “Stronger profitability by changing awareness,” we promoted relentless research and development
and efforts to improve the efficiency of the Group’s production system in response to expanding demand brought
about by changes in the market, such as the shift to OLEDand to larger LCDs, while improving profit. Through these
initiatives, over the past three years, net sales increased
1.3 times of those of fiscal 2013 while the operating income margin ratio increased from 6.9% of fiscal 2013 to
12.7%. In terms of the financial position, the equity ratio
ULVAC Value Report 201718

ULVAC’s Vision

Commitment of Top Management

improved to 40.2% and the dependence on interest-bearing debt greatly decreased.
Thanks to the achievements under the previous midterm management plan, ULVAC overcame the crisis it
faced five years ago and our people have regained confidence. To use this as a springboard for further progress,
we will take up new value-creation challenges through implementation of the new mid-term management plan.

Tackle technological innovation andcreate new value by leveraging Groupsynergy as a comprehensive vacuum
products manufacturer accelerating
global business development

Key targets of the new mid-term
management plan: net sales of ¥250
billion, operating income of ¥35 billion
and operating income margin ratio of
14% on a consolidated basis for the
fiscal year ending June 30, 2020S
 eize the business opportunity at the big turning
point of technological innovation
FPD-related technological innovation, such as production
equipment for OLED panels for smartphones and large
production equipment for large-screen TV LCD panels, remains a focus of high expectations.
In addition, progress toward a smart society as seen in
the emergence of the Internet of things (IoT), electrification of vehicles, the advent of self-driving vehicles, andgreater utilization of AI and robots, require memory devices with larger capacity and higher speed, as well as improvements such as miniaturization, sophistication,
improved efficiency, energy saving of equipment including
various sensors, communication devices, power devices,
next-generation batteries, with rising needs and expectations of technological innovation. We believe that ULVAC’s
vacuum technologies are among the keys for addressingthese needs and resolving the issues.
As a comprehensive vacuum products manufacturer,
technological innovation and creating new value by leveraging Group synergy are integral to ULVAC’s enduring aspirations to contribute to the development of industries
and science by utilizing vacuum technologies for an affluent future.
I am convinced that the present era of rapid change
and technological innovation is creating extraordinary opportunities for businesses utilizing ULVAC’s vacuum technologies.
With a view to seizing these opportunities, we haveset “enhancement of power to create value” as a key
strategy in the new mid-term management plan, and will
strengthen marketing to be nimble to identify technological issues in society, markets, final product development
manufacturers, customers, etc., and promote developmentof ingenious technologies and products to create equipment with high added value.
In technological development, we are focusing on thefollowing priority areas: “next-generation displays,”“next-generation non-volatile memory,” “hyperfine wiring,” “electronic components and MEMS,” and “high-density mounting” in the sophisticated information field, and“high-efficiency solar cells,” “high-brightness LEDs,”“power devices,” and “next-generation automobiles” inthe energy-saving and power generation field.
We will also promote strengthening of global procurement and production systems and cost reduction.
Through the execution of the new mid-term management plan, ULVAC aims to realize highly profitable corporate management by comprehensively utilizing vacuum
technology, maximizing synergy among equipment, materials, deposition processing, analysis & services, and cooperating with global business partners. At the same time,
we will emphasize human resources development for the
next leap forward while cultivating a corporate culturethat relishes challenges.

S ecure enduring strength of the FPD business andestablish the semiconductor and electronic devices
business as the second pillar
Under the new mid-term management plan, our quantitative targets for fiscal 2019 are net sales of ¥250 billion,
operating income of ¥35 billion, and operating income
margin ratio of 14%. The plan calls for an increase of approximately 8% in net sales and approximately 19% in
operating income compared with fiscal 2016. Growth drivers for accomplishing the plan are the FPD business whose
enduring strength we intend to secure through vigorous
capital investment and the semiconductor and electronic
devices business, which we will strengthen as the second
pillar.
Regarding the FPD business, manufacturers of LCD
panels for large-screen TVs are expected to step up efforts
to expand production facilities. Leveraging ULVAC’s competitive advantages, namely, advanced technologies forlarge sputtering equipment and the market superiority in
China, we will strive to secure more orders. OLED panels
for smartphones are also expected to be a focus of vigorous capital investment. We are collaborating with our customers to expedite efforts to achieve mass production of
OLED panels. At the same time, we will also work to capture demand arising from the trend toward greater application of OLED to diverse fields, such as smartwatches andfoldable smartphones, exploiting the flexibility of OLED
panels, virtual reality, and in-car displays.
Regarding the semiconductor and electronic devices
business, in view of the trend toward a smart society, we
will tackle technological innovation to resolve technological issues related to miniaturization, higher efficiency andlarger capacity of sensors, communication devices,
next-generation batteries, etc. We will respond to needs
associated with next-generation non-volatile memories, inaddition to NAND and DRAM for which demand remains
high as well as logic, which is a new field for ULVAC, andfollow the trend toward strengthening of production systems in China based on the Chinese government’s policyof promoting domestic production. Through these efforts,
we aim to increase sales of the semiconductor and electronic devices business by 40% in three years.
For fiscal 2017, the first year of the new mid-term
management plan, the plan calls for net sales of ¥239.0
billion, up 3.1% year on year, operating income of ¥31.0
billion, up 5.2%, ordinary income of ¥31.0 billion, up
4.3%, and net income of ¥25.5 billion up 4.2%.
19

Market environment and global business development
The market environment for ULVAC is upbeat. Vigorous
capital investment in the electronics field is continuing. In
particular, the mainstay FPD business is expected to enjoya high level of sales in line with hefty capital investment
for LCD panels for large-screen TVs and OLED panels for
smartphones. In addition to the rising investment in NAND
and DRAM, investment is expected to grow for the development of next-generation non-volatile memory to realize
large-capacity, high-speed servers and various devices tosupport the progress of the smart society, including IoT
and self-driving vehicles. In view of these trends, the semiconductor and electronic devices business is a promising
driver of ULVAC’s next round of growth.
I believe the opportunities are greater than ever before for applying ULVAC’s vacuum technology in diverse
ways that benefit the individual and society in virtually every sphere.
As for the composition of ULVAC’s net sales by region,
sales in Japan account for approximately 35%, sales in
East Asia (China, South Korean, and Taiwan) account foraround 50%, and sales in Europe and North America andSoutheast Asia account for the rest. Although the ratio ofoverseas sales is high, sales in Europe and North America,
which account for roughly half of the global GDP, only account for about 5%. ULVAC has established global product development and production systems centering on
East Asia to create a framework for swiftly and precisely
meeting corporate customer needs. Our ongoing issue isto increase sales in Europe and North America and in
emerging-market countries while accelerating global business development by taking advantage of our strengths.

Aim to become an enterprise withwhich stakeholders feel fortunate to
be involved with.
Aspire to be an enterprise valued by society
Under the new mid-term management plan, ULVAC will
pursue the strengthening of its management base throughfour measures: “human resources development,” “deepening relationships and coordination within the Group,”“information platform development,” and “financial
strength improvement.” Among these, we are according
the top priority to “human resources development,” whichis the source of value creation. In light of the need to unleash Group synergy, collaboration with global business
partners, development of creative technologies and products, strengthening of global procurement and production
systems, and other strategies, ULVAC will facilitate vigorous exchange of employees, centering on younger people,
within and outside the Group, encouraging them to tackle
diverse themes, in order to develop human resources capable of leading ULVAC to success in the coming years.
In regard to our initiatives to cultivate workplaces
where every employee can work with vigor and enthusiasm and achieve personal growth, I think it is necessary tohelp make employees feel “excited” about their work so
as to bring out their capabilities 120%. Managers should
always consider how to make people in their workplaces
feel “excited” and take every opportunity to encourage
them. I would like to change the mindset of our employees by transforming the structure of our organizations toan inverted pyramid where managers who make a greater

contribution to human resources development are highly
valued.
Above that inverted pyramid, in which employees areat the top of the hierarchy, are customers. From the viewpoint of strengthening relationships with stakeholders, it iscertainly important to maintain and improve the quality ofour technologies and products and fulfill our responsibilities as a supplier, thus enhancing our customers’ confidence in ULVAC, but it is also crucially important to securechannels for accurate communication of the voice of thecustomer and to swiftly respond to it. Such a corporate
culture is required in relationships with suppliers. We will
deepen relationships with our business partners on an
equal footing through fair and equitable transactions
based on mutual respect.
We will actively disseminate accurate information on
our business, management strategies, and financial performance in an easy-to-understand manner to our shareholders and investors who are supporting our business andcreate opportunities for communication with them. We
hope these efforts will lead to the cultivation of constructive, durable relationships with them so that they will hold
ULVAC shares continuously with an eye to the long term.
In the distribution of profit to our shareholders, we
comprehensively take into consideration our financialbase, consolidated financial performance for each fiscal
year, payout ratio, and other factors, while enhancing theinternal reserve necessary for investing in R&D for further
growth and strengthening the financial base. ULVAC paid
an end-of-term dividend for fiscal 2016 of ¥50 per share(an increase of ¥20 per share from the previous fiscal
year). The end-of-term dividend for fiscal 2017 is expected
to be ¥60 per share.
We will deepen communication with our stakeholders bycultivating relationships and engaging in dialogue so that
ULVAC will continue to be an enterprise valued by society.
ULVAC aspires to be an enterprise whose employees,
customers, and all other stakeholders feel that ULVAC is asource of happiness.

ULVAC Value Report 201720

ULVAC’s Vision

New Mid-term Management Plan (from FY2017 to FY2019)
Through the implementation of the new mid-term management plan, we will steadily respond tostrong demand for FPD production equipment that is underpinned by vigorous capital investment
mainly in LCDs for large-screen TVs and OLED panels for smartphones. At the same time, by pursuing innovation in line with the trend toward the smart society, we will continue cultivating new
demand for equipment in the semiconductor and electronic devices business to achieve sustainablegrowth and improve corporate value.

Market backgroundBig turning point for technological innovation• Expanding demand for LCDs for large-screen TVs and OLED panels for
smartphones, etc.
• Expanding requests for miniaturization, high-efficiency and large-capacity
technologies in anticipation of the smart society

ain

ab

le g

row

th

an

di

mp

rov

ed

cor

po

rat

ev

alu
e

Opportunity for the ULVAC Groupto create new values

Ac

cel
era
te

ini
tia
tiv
e

s to

wa

rd
s

ust

K

St

e
h
t
g
ren

f
o
g
nin

Strengthening ofmanagement base

s
y
e

e
t
a
tr

e
m
e
ag
n
a
m

Deepening relationships andcoordination within the Group

More powerful businesspromotion capabilities

Training of next-generation executives
Cultivation and promotion of global human resources

21

se
a
b
nt

More powerfulmanufacturing capabilities

Strengthening of global development, procurement and production systems and cost reduction
Expansion of investment in research and development (*) (around ¥50 billion in three years)
Acceleration of global marketing and technology strategies(*) Amount of capital investment for research and development + research and development expense

Information platform development
Human resources
development

s
e
i
g

Improve business judgments

Improvement of efficiency of information management applying optimized IT
Financial strength improvement

Improve capabilities for
growth investment

Further improvement in financial strength including equity ratio

th!
urt
her
gro
w
rd f
Tow
a

VisionFY2019 targets(Fiscal year ending June 30, 2020)¥250
Operating¥35
income:Operating14
income ratio:
Net sales:billionbillionHighly 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
A corporate culture that relishes
challenges%

Enhancement of power to create value

Key strategies

Strengthening of marketing and development of creative technologies and products
Strengthening of global procurement/
production systems and cost reduction

Implement market and technology strategies
from the medium- and long-term perspectives
Final product development
manufacturer

Promotion of business growth
Securing enduring strength of FPD businessRespond to large demand
Strengthening of semiconductor and electronic devices businessTechnological innovation challenge in linewith the trend toward the smart society
Drive growth as the second pillar
Global development
Global development of the components andmaterials business, etc. as a stable revenue base

Final product development manufacturers are increasingly playing a leadingrole to set the trend of devices.

Device manufacturer(memory, MEMS...)
Divisions and sales forces provide value
and gather information through daily
activities.

ULVAC: Core technologies,
products and solutions
Create new value and challenge cutting-edge
technological issues through direct
cooperation with final productdevelopment manufacturers

ULVAC Value Report 201722

ULVAC’s Vision

Vacuum Equipment Business (1)FPD and PV Production Equipment
Maintain virtuous cycle of quality
enhancement while promoting
development of successor productsShigemitsu SatoThe quality enhancement initiatives launched four years
ago have yielded good results and we have entered avirtuous cycle capable of securing profit. We will work
to maintain this virtuous cycle, secure our share of the
FPD market by proposing technological innovations,and promote development of successor products.

Managing Executive Officer
General Manager of FPD and
PV Division

Greater market share andcompetitive advantage throughearly development

Identify development needs
through constructive relationships
with customers

In the FPD field, device manufacturers are expected to continue
capital investment in production equipment for LCDs for largescreen TVs in China. They also plan vigorous capital investmentin production equipment for small and medium-sized panels inline with the shift from LCD to OLED.
For LCDs for large-screen TVs, the mainstream production
equipment will be G10.5 (using 3 m x 3 m substrates or larger)
that is capable of producing multiple 65- or 75-inch panels fromone substrate. ULVAC has a large share of the market for suchlarge sputtering equipment and we expect our market share toincrease further because our products offer low particle counts,
superior productivity, and superior reliability, thanks to continual
development of element technologies. On the other hand, regarding OLED for small and medium-sized panels, we will target
demand associated with capital investment in product diversification, notably the introduction of flexible displays. In these circumstances, ULVAC will accelerate development of element
technologies to secure a competitive edge.
With regard to products other than FPD, although still in a
nascent stage, solar cell- and automotive-related capital investment in China is also promising.

Our sales and profit are growing as we respond globally in terms
of production and sales & marketing while stepping up quality
enhancement and information sharing, riding the wave of vigorous capital investment in the FPD field.
We will continue promoting these initiatives while, at thesame time, we intend to actively introduce new technologies
and enter new markets. In this regard, we envisage joint development projects attuned to customer needs, rather than development solely by ULVAC. Through this approach we hope tostrengthen relationships of trust with our principal customers,
thereby increase our market share, and secure orders associatedwith their increasing capital investment. Specific development
themes in the FPD field include high-definition OLED technology, new evaporation sources (high productivity, high usage efficiency), new process development, and OLED production
equipment for large substrates.
We will pursue development also with an eye to businessexpansion in non-FPD fields (thin-film battery-related, OLED
lighting, high-efficiency solar cells, etc.).

Key measures

Secure the FPD market share by accelerating technological innovation
Enhance quality of manufacturing to streamline the process and promote customer
satisfaction
Vigorously enter promising markets early with products attuned to customer needs

23

Vacuum Equipment Business (2)Semiconductor Production Equipment
For the semiconductor equipment
operation to become the second
pillar and achieve substantial
global business development

Tomoyasu Kondo

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

Executive Officer
General Manager of Semiconductor
Equipment Division

Dynamic strategy addressing
emerging needs to capturebusiness opportunities

Business development based on abreakthrough growth strategy withpeerless expertise

The emergence of the smart society is fueling continued growthof the semiconductor market. Demand for servers and other devices to handle big data is also expanding along with the development of infrastructure supporting the IoT era. In thesecircumstances, semiconductor devices are becoming ever more
highly integrated and various innovations in semiconductor
technology are creating new business opportunities.
The Semiconductor Equipment Division has traditionally focused on products for interconnect metallization processes for
DRAM and NAND in the memory market. Besides these conventional memories, storage class memory (SCM) comprising
non-volatile memories is a new category of semiconductor devices that has emerged in recent years. In the previous mid-term
management plan, we positioned deposition equipment for
SCM as a growth field and have been focusing our efforts on it.
In response to rising demand, we are about to see our efforts
bear fruit.
Along with the higher integration of semiconductors, processor performance also increases along with miniaturization.
Regarding ULVAC’s entry to the logic and foundry markets, oursystems are poised for introduction in customers’ mass-production operations. We will promote our business by meticulously
monitoring changes in markets, technologies and materials.

Carrying on with the four growth drivers of “process responding to miniaturization,” “deposition for non-volatile memory,”“deposition for wafer-level packaging,” and “full-scale entry to
the logic and foundry mass-production equipment markets,”
we will sharpen our focus on business related to them. Basedon a growth strategy unique to ULVAC’s semiconductor equipment business, we will pursue business development differentiated from that of other major manufacturers offering solutions.
Going forward, in the booming memory market we intend
to expand sales of the native oxide removing system that employs ULVAC’s proprietary technology. We will also pursue development of new technologies utilizing our industry-leading
prowess in sputtering equipment. Moreover, in pursuit of inorganic growth, we will address needs related to SCM, which is a
new category of semiconductor devices, and offer equipment
for the mass production of processors, which is a new market
for ULVAC.
The U.S. and East Asia are currently the principal geographic markets for semiconductor equipment. In order to develop
our business in China in ULVAC’s next growth phase, we will expedite construction of a framework for that purpose.

Key measures

 ouble the market share by promoting order-taking related to the four growth drivers
DP romote technological development for strategic business development andstrengthen relationships with partners that have pioneering technologies
Enrich the semiconductor business unit targeting global business development andhuman resources development

ULVAC Value Report 201724

ULVAC’s Vision

Vacuum Equipment Business (3)Electronic Device Production Equipment
Expand global businessdevelopment in the electronic
devices field

Tetsuya Shimada

Electronic devices are indispensable for IoT, which willbe the infrastructure of the emerging supersmart society, and demand for electronic devices is ever increasing. Responding to the development of newtechnologies in Europe and North America and expansion of mass production in Asia, ULVAC will vigorously
promote business development in the globally expanding electronic devices market.

General Manager of Advanced
Electronics Equipment Division

Electronic devices for realization of
the supersmart society

Global rollout of equipment toexpand the market

The installed base of IoT devices worldwide is expected to exceed 30 billion units by 2020. A consequence of the advent of
the supersmart society, the successor to the current informationsociety, is that all industrial processes from development to production, sales, and services will be connected by utilizing IoT, bigdata, AI, robots, etc. For semiconductors and electronic devices,
greater capacity, miniaturization, thickness reduction, and lower
power consumption are required. In line with the progress inpackaging technology and high-density technology to realize
these needs, the size of substrates has also increased from wafer size to panel size and technological development for larger
substrates on which to embed more devices is underway.
In the electronic devices field, the market for production equipment is expanding worldwide, centering on development needs in
Europe and North America and mass-production needs in Asia, creating new business opportunities globally. ULVAC offers a wide
choice of process equipment attuned to market needs. To expand
sales worldwide, we will accelerate initiatives while strengthening
collaboration with overseas Group companies.

In terms of its scope and scale, the electronic devices field is
growing remarkably centering on communication devices, sensing devices, optical devices, and other devices supporting IoT,
while development is underway simultaneously at multiple locations worldwide. In the market for equipment in this field, whilerefining fundamental technologies, it is necessary to develop
cutting-edge technologies to support the continuous evolutionof equipment.
Therefore, ULVAC will vigorously cultivate new customers in
Europe and North America, which are the sources of new devices, while strengthening the service structure. By establishing acollaborative structure with leading contenders, we will alsoemphasize development of new equipment capable of securing
a strong presence in the market. On the other hand, in Asia wewill promote sales & marketing while swiftly catching the technological orientation and market trends by taking advantage of
the ULVAC Group’s numerous production sites there.
Through these initiatives, we will strengthen the global rollout of equipment to expand the market, with the aim of positioning electronic device production equipment as ULVAC’s
second pillar alongside FPD production equipment.

Key measures

 each out from Japan to Asia and to Europe and North America to promote globalRbusiness development
Maintain the tempo of development in order to be an enterprise at the forefront oftechnology, with a view to the emerging supersmart society
Strengthen collaboration with Group companies and cultivate relationships with customers and partners

25

Vacuum Equipment Business (4)Industrial Equipment
Serving the full spectrum of
industries with vacuum technology
involving thermal application

Youichi Oohinata
Executive Officer
General Manager of Industrial
Equipment Division

Supply tools for developing
higher-value-added products ofsuperior quality
The industrial equipment business covers an extensive field. Our
products include equipment for heat treatment of engine partsin the aerospace industry; equipment for heat treatment ofparts for power systems and vacuum brazing of energy-saving
exhaust gas recirculation (EGR) cooling systems in the automotive industry; and systems employed in the manufacture of therare-earth magnets widely applied in electric motors and generators. Moreover, vacuum equipment is used in many fields that
affect people’s health and wellbeing in everyday life, such as
high-purity refining of vitamin E, eicosapentaenoic acid (EPA)
and docosahexaenoic acid (DHA); freeze drying of pharmaceuticals, raw materials of pharmaceuticals, and functional materials;
special vacuum drying of food without spoiling the taste; andhigh-sensitivity leakage detection processes for preventing leakage of refrigerant and fuel. All these processes performed in aclean vacuum environment in the absence of air (oxygen, nitrogen, etc.) lead to high-added-value products of superior quality.
As our customers headquartered in Japan expand their business
operations in China and Southeast Asia, we will fully utilize our production bases in Japan and China to supply development tools that
contribute to the prosperity of industries.

The Industrial Equipment Division offers vacuum technology solutions involving thermal application. Basedon a sure grasp of customer needs across the full spectrum of industries, we are developing the equipment
customers require in order to create higher-value-added
products of superior quality. Our solutions cover suchprocesses as heat treatment, brazing and melting, serving the needs of the electronic materials, chemical,
pharmaceutical, food and other industries.

Enhance presence by utilizing basesin Japan and China
ULVAC produces industrial equipment at two bases in Japan andtwo bases in China. The sites in Japan focus on planning anddevelopment of value-creation-type products based on new
production processes and a new business model. The bases in
China are engaged in the development of products geared to
local needs, mainly in China and Southeast Asia where consumption is expanding, in addition to existing process technology, and promote ULVAC products as highly reliable branded
products to expand sales and enhance ULVAC’s presence in local
markets.
Going forward, we are sharpening our focus on fields suchas energy saving and the environment, pharmaceuticals and regenerative medicine, and food. Vacuum technology is widelyused in these fields and major growth is expected worldwide.
From production bases in Japan and China, ULVAC will offer
equipment to realize the optimum processes in these fields.

Key measuresSwiftly identify needs and develop new processes
Promote localization of development bases attuned to market needs in each region
Reduce equipment costs through global procurement
Develop human resources through global personnel exchanges

ULVAC Value Report 201726

ULVAC’s Vision

Vacuum Equipment Business (5)Components
Reaching out to the global market
with an extensive product lineup

Kiyokazu Yanagisawa

Vacuum technology is essential for diverse industries.
As a comprehensive manufacturer of vacuum components supporting the industrial infrastructure, we offer
a full lineup of vacuum pumps, measurement equipment, and power generators for deposition processes.
By offering an extensive product lineup corresponding
to various applications from R&D to mass production in
many industrial fields, we are reaching out to the global market.

Executive Officer
General Manager of Components
Division

Addressing the needs of various
markets
Vacuum components are used not only in production equipment for FPD panels, semiconductors, and electronic devices,
but also in numerous other major industries, such as the automotive, medical, analysis, and food industries. To meet diverse
needs in this extensive market, we offer the optimum vacuum
pumps, measurement equipment, and power generators fordeposition processes.
The vacuum pump business is led by ULVAC CRYOGENICS,
which is a manufacturer specializing in cryopumps and cryogenic
freezers, ULVAC KIKO, which handles compact vacuum pumps, andULVAC, Inc., which handles other vacuum pumps in general. Demand for vacuum pumps has been robust in the semiconductor andautomotive industry, as well as across a broad swath of industry. In
particular, in the FPD market, sales of cryopumps for OLED production have increased greatly.
Reflecting an increasing focus on quality control, demand formeasurement equipment is rising. Process gas monitors are increasingly used for management of yields of various types of vacuum
equipment to control the vacuum quality in addition to pressure control. Moreover, demand for vacuum equipment and for leak testing
related to automobiles and electronic devices has been rising year by
year in view of the importance of quality control.
ULVAC’s power generators for deposition processes haveearned confidence as power generators developed by a vacuum
equipment manufacturer and are leading to stronger relationships
with customers.

Sustainable, stable growth withcustomers based on superior
quality and technology
We believe we can continue to enhance the value of our business by offering the optimum products for various industrial
fields as a comprehensive manufacturer of vacuum components
with a balanced portfolio of pumps, measuring equipment, andpower generators.
We emphasize the critical roles of individual creativity andorganizational vitality in business promotion. Thus, we endeavor
to enhance the quality of our work and offer products of superior quality to deepen the relationships of trust with customers.
We conduct product development from customers’ viewpoints
based on the technologies we have nurtured and promote cultivation of new markets and new applications. While contributing
to the prosperity of our customers with ULVAC quality and technologies, we are resolved to achieve sustainable, stable growthof ULVAC.
Our business development so far has been successful centeredon Japan and East Asia. We are also promoting vigorous overseas
business development in Southeast Asia and in Europe and North
America by deepening cooperation with local subsidiaries. Goingforward, we will work to expand our network of business partners,
aiming at further global growth.

Key measures romote individual creativity and organizational vitalityPEstablish relationships of trust with customers by enhancing the quality of our workand offering products of superior quality
Cultivate new markets and new applications through product development from customers’ viewpoints
Promote global business development by deepening cooperation with Group companies and expanding our network of business partners

27

Vacuum Application Business

Materials
Be a pioneer in offering excellent
materials to the market

Seigou Kinugawa
General Manager ofMaterials Division

Aspiring to leadership indevelopment of new materials
We aspire to become a global leader in target materials andhigh-melting-point metals through collaboration of companies
within the ULVAC Group and industry-leading customers infields related to the smart society, as well as to energy saving
and power generation.
Materials embodying ULVAC’s technological strengths,
namely, high-melting-point metals, special alloys, oxides, dielectric materials, and magnetic materials, are indispensable fornext-generation displays, next-generation non-volatile memory,
hyperfine wiring, electronic devices, MEMS, etc. We will develop
materials required in such cutting-edge fields and deliver themto our customers ahead of the competition. For this purpose,
we launched MiniLabo, consisting of facilities for prototyping
and evaluation in the development of target materials and othersmall samples as well as an operational framework, in fiscal
2016 and established a system for advanced development, including basic research.

Sputtering equipment, ULVAC’s mainstay products, require target materials as a base for deposition substances. We are endeavoring to develop products
endowed with functions required in the emerging
smart society and in the energy-saving and power-generation markets, such as target materials and corrosion-resistant, superconductive high-melting-point
metals, in cooperation with the equipment divisions
and research institutes, and aim to be the first to introduce them to the market.

Active in both niche andmass-market segments,
collaboration with competitors
As the market becomes more global, there will be segmentswith intensifying competition because of the entry of competitors and niche segments where competition is relatively moderate. We intend to vigorously tap into promising niche segments
by taking advantage of the characteristics of our materials. In
particular, our policy is to address all the business opportunities
whenever our customers introduce new products in line withthe progress in performance of panels and devices. Previously, it
was difficult for ULVAC alone to promote business in segments
and regions with fierce competition, considering profitability.
From now on, we will not eliminate collaboration with competitors and establish complementary partnerships with a view toexpanding profit both in niche and mass-market segments.

Key measures evelop and release oxide semiconductor and Cu/Al/Mo alloys for next-generation panelsDDevelop and release high-melting-point metal silicide, magnetic materials, oxides,and dielectric materials for semiconductors and electronic devices
Increase production capacity in Japan of materials for semiconductors and electronic
devicesPromote investment and alliances in various countries

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 of self-driving vehicles, and the ramp-up of demand related to IoT and artificial intelligence (AI).

Surface analyzers are used not only for R&D in the laboratories ofuniversities and companies but also for daily routines such as
product inspection. Application fields are wide ranging and so
are geographical regions and markets. ULVAC will offer surface
analyzers with new functions and increasingly sophisticated functions.
ULVAC Value Report 201728

Basis for Value Creation

FeatureULVAC’s R&D
Source of Value Creation

We will workthrough R&D
of leading
Integration of development via “Open R&D”

Mission to accelerate development
This is my third year as Supervisor of Development. I previously spent several years involved with production technology and sales at one of our subsidiaries in South Korea, andbefore that I was working in development, based at Head
Office. My mission since returning to Japan to head the R&D
organizations has been to speed up our development efforts by inculcating the solutions and perspectives requiredfor global development, that is, to strengthen what wasinsufficient in the traditional Japan-centered development
structure.
The reason for this is that the competition between thedevice manufacturers, which are ULVAC’s customers, hasintensified. We have seen the emergence of major players
based in South Korea, China and Taiwan. Device development by overseas manufacturers is a rapid process. ULVAC
already derives around 60% of sales from outside Japan.
However, as we build this global business, it has become
essential for our development structure to match the speed
and urgency of the overseas device manufacturers.
Starting from fiscal 2016, the first year of the mid-term
management plan, we have been working to build a fasterdevelopment structure to help us accomplish the plan objectives and to accelerate change so we can achieve concrete
results.

29

In fiscal 2015 when I became Supervisor of Development, I
advocated the “Open R&D” approach for the ULVAC Group.
Not only does the ULVAC Group have R&D operations atthe Head Office and research laboratories, but also Group
companies have their own independent development capabilities and we have development functions based overseas
as well. There has not been enough technological exchangeor sharing of information within this framework.
To boost the speed of development, we need to forge
stronger links connecting the Group’s development operations as a whole, and we must also increase efficiency
based on an open approach to research content and related
knowledge. In addition, it is becoming increasingly important for our global business development that any local subsidiaries conducting R&D close to overseas customers sharethe information gained with the rest of the ULVAC Group’s
R&D departments. “Open R&D” has shifted the Group in
this direction through initiatives aimed at integration of
R&D.
“Selection and concentration” are also vital in thisregard. It is important that we make better selections ofdevelopment themes at an early stage so that we can concentrate resources and achieve results quickly. Another
trend we are seeing in recent years is for our customers, thedevice manufacturers, to make increasingly sophisticateddemands of us in terms of equipment quality and productivity. The ULVAC Group is responding to such demands bymaking proposals to customers based on products at an
early stage of development with a view to joint projects.
One of the policies underpinning the projects undertaken by the R&D divisions in fiscal 2017 is the “evolution andreinforcement of core technologies.” By this, we mean thefurther evolution and reinforcement of the Group’s common
technological assets, irrespective of application. These assets
include vacuum deposition technologies (such as sputtering or evaporation) with multiple applications and othercore ULVAC equipment technologies based on precision
cleaning that are directly linked to higher product yields.

together in the ULVAC Group
in pursuit of our common dreamtechnological innovation.
Dr. Choong Ryul Paik
By developing such technologies, we expect to hone ourcompetitiveness in areas with major growth potential andcapture demand.

Organizational structure, roles andfunctions of R&D divisions
In terms of organizational structure, the Research and Development Planning Department at the Head Office is the
hub of our global network of development bases.
The Research and Development Planning Department
is responsible for evaluating trends of the leading technologies worldwide to ensure we are aligned with the directionof technological developments in the future. While accurately grasping technological trends in relevant fields, thedepartment liaises with CTOs in Japan, South Korea, China,
Taiwan and the U.S. and reports to management.
The Research and Development Division provides support to business divisions to boost the competitiveness of
ULVAC Group-supplied equipment, mainly through thedevelopment of element technologies. This involves performing various types of analysis to support materials development and equipment manufacturing.
The Institute for Super Materials is engaged in thedevelopment of LCD, OLED and other thin-film deposition
processes and in manufacturing process development for
high-purity, magnetic and other materials. Its role underpins
the mid-term management plan’s objective of securing theenduring strength of the FPD business.
The Institute of Semiconductor & Electronics Technologies develops manufacturing technology for next-generation
semiconductors and power devices, aligned with progress
toward the smart society. These efforts are closely linked
to attaining the mid-term management plan’s objective ofstrengthening the semiconductor and electronic devices
business.
The Future Technology Research Laboratory is responsible for conducting research into the seeds of the Group’s
future growth based on a long-term perspective. We areworking to accelerate the translation of these efforts into
concrete outcomes.

Managing Executive Officer
Supervisor of Development

We established our first overseas R&D base in South
Korea. We have put in place a structure in South Korea for
conducting joint development with a South Korean manufacturer that has the top share of the global memory chipmarket. Recently, we have also been working to speed up
development by allocating the tasks between sites in Japanand South Korea. In Taiwan, we have created a development structure that meets the needs of leading manufacturers of LCDs and system LSIs. Our development framework in
Taiwan is designed to cater to the diversity of the Taiwaneseelectronics industry. In China, we plan to upgrade our local
development bases to reflect the expanding capital investment in semiconductor facilities in line with the Chinese
government’s policy form domestic production.
In South Korea, Taiwan and China, we have establishedfacilities to have an “in-market” presence. On the other
hand, in the case of our R&D base in the U.S., we emphasize the gathering of information in cutting-edge technology fields.

Winning the global competition in R&D
My belief is that ULVAC’s growth and prosperity has been
underpinned by our corporate culture, which combines awillingness to take calculated risks with the resolve to embrace bold new technological challenges. In my role as Supervisor of Development, my aspiration is that we pass on
this culture to the younger generation and make a Groupwide effort to attain our common dream of leading technological innovation through R&D.
Looking ahead, R&D will require more people capableof achieving success in a global setting. We will need to create a more integrated “Global ULVAC” by accelerating efforts to assign Japanese personnel to overseas bases, deploy
more non-Japanese nationals, and promote more exchangesof personnel. Through these initiatives, we can leverage
greater diversity of ideas and experience in new R&D projects. This is the key to winning the global competition in
R&D. We relish the challenge.

ULVAC Value Report 201730

Basis for Value Creation

FeatureU LV A C ’s F u t u r e
Miniaturization, higher efficiency,
larger capacity, and lower power
consumption are the keys to theemerging “ecosystem”

Dr. Koukou Suu
Senior Fellow
General Manager of Global Market & Technology Strategy Division

Fueling ULVAC’s growth by focusing
on the devices and key technologies
supporting technological innovation
Responding promptly to the shift
toward the “smart society”
The Global Market & Technology Strategy Division was established three years ago to evaluate market needs and thelatest technological trends so this information can be reflected in the development strategy for ULVAC technologies
and products. Since ULVAC is targeting growth in the fieldsof semiconductors and electronic equipment, the most important strategic theme for us is to catch the trend of theemerging “smart society” that promises to transform theworld, and to respond promptly to this trend. In view of ULVAC’s global business development, we assess the growthfields and related developments in each region and areworking from a systematic medium-to long-term perspective on the devices and key technologies that will support
technological innovation.
Currently our efforts are focused on the four fields ofsemiconductors, electronic devices, new energy, and flexible
electronics. With an emphasis on the quality, quantity andspeed of development at ULVAC, we are also promoting
collaboration to enhance each of these aspects, both within
the Group and with outside partners.

31

We expect the markets for semiconductors and electronicequipment to expand rapidly due to the shift toward thesmart society in which electronics are at the heart of every
industrial sector and everyday life. This is leading to the development and mass adoption of IoT and other technological advances such as cloud computing, big data, artificial
intelligence, wearables, virtual/augmented reality, self-driving vehicles, biomedical equipment, and the blockchain. As
links develop organically between these technologies andcompanies, people and objects, a new value chain will form
resembling an “ecosystem.”
The keys to this ecosystem will be miniaturization, higher efficiency, larger capacity, and lower power consumption
to enable high-speed processing of vast amounts of data,
reductions in energy losses and other benefits. This is thetechnological challenge facing the manufacturers of devices
and final products that form ULVAC’s customer base. ULVAC
is channeling resources into joint development programs toaddress these technological issues so we can supply production equipment, manufacturing solutions and materials to
support the drive toward miniaturization, higher efficiency,
larger capacity, and lower power consumption.
The diversity and comprehensive capabilities of the technology platforms cultivated by ULVAC are now attracting
plaudits, as evidenced by the growing number of inquiries
we are receiving from final product developers and manufacturers with which we had little or no connection previously.
This trend creates new business opportunities for us.

Semiconductor and electronicequipment fields set for strong
growth over next five years
The example of self-driving vehicles shows how the shift tothe smart society can translate into expanding growth opportunities for ULVAC. In the current safety assistancephase, vehicles are being equipped with multiple cameras,
radar, ultrasound and other sensors to gather data on driving conditions. Five years from now, when semi-autonomous vehicles are on the road, the number of such sensors
per vehicle will increase to at least 20, and this figure is expected to rise to more than 30 with the advent of fully
self-driving vehicles. (See *Reference 1)
In line with this transition, there will be a need for highspeed communication devices as well as semiconductors capable of processing vast amounts of visual data rapidly.
Hence, major technological innovation over the next
five years in the fields of semiconductors and electronicequipment is expected to drive significant growth in related
markets. Based on accurate assessments of technological innovation and markets, the Global Market & Technology
Strategy Division will seek to fuel the growth of ULVAC.
*Reference 1: “Imaging Technologies for Automotive,” Yole Development, 2016

Envisaged by Senior Fellows
Research focusing on spintronics andquantum dots

Dr. Hirohiko Murakami
Senior Fellow
General Manager of Future Technology Research Laboratory

Innovation: The challenge of going beyond
existing knowledge and technology toanticipate the future and capture markets
In quest of originality to create ones
from zeros
Targeting the “creation of innovation” to support the future
development of ULVAC, the Future Technology ResearchLaboratory is engaged in developing the seeds for theGroup’s long-term growth. The prerequisite for any R&D
undertaken by a company is that it should yield benefits forsociety once it is commercialized so that the company doing
so can generate profits. However, with companies targeting
growth by offering value oriented toward globalization or
standardization, most R&D activities seek to modify, improveor adapt existing knowledge and technology. The resulting
tendency is to reject the challenge of adopting a stancebased on originality, in which the goal is to create a “1”from a “0.”To anticipate the future and capture greater market
share, ULVAC needs to adopt a long-term view and take up
the challenge of creating innovation that goes beyond existing knowledge and technology. The efforts of the Future
Technology Research Laboratory are helping to define thesort of enterprise ULVAC could be 10 or 20 years from now
by opening up new possibilities and options.

The Future Technology Research Laboratory has identified
around 20 basic research themes for which we are promoting joint projects with external research and educational institutions, as well as other companies. Our research focuseson spintronics and quantum dots, two areas that we believe
have high growth potential as future technologies.
Taking advantage of the charge and spin properties
of electrons, spintronics achieves data storage by going
beyond electronics, which is based on the charge property
alone. The applications of spintronics are expected to resultin major advances in terms of processing larger quantities of
information using less energy.
Quantum dot technology is based on semiconductor
crystals that have special electrical attributes. Besides realizing next-generation display technology that will replace LCD
and OLED panels, this technology is expected to contributeto major technological advances in areas such as lasers, solar cells and quantum computing. We are currently involvedin the joint development of a next-generation display basedon quantum dot technology.

Helping researchers grow into “value
inventors”
For ULVAC, research into future technologies not only defines new possibilities and choices for the future, but is alsosignificant from the viewpoint of contributing to humanresources development of researchers.
The researchers we want at the Future Technology Research Laboratory are those who can articulate their own research vision and the related narrative. To help cultivate suchresearchers, we want them to have as many opportunities
as possible to present papers at international conferences
so they can experience the external feedback and appraisal
process. Gaining feedback from people outside with different viewpoints helps our researchers grow from people who
simply get results into “value inventors” who can extract
meaning from research findings. I am confident that this will
nurture the qualities needed to accomplish highly original
research.
By anticipating the future and taking up the challengeof technological innovation, we will contribute to society
and the development of the ULVAC Group.

ULVAC Value Report 201732

Basis for Value Creation

Management
Basic Policy on Corporate Governance

The ULVAC Group works to ensure thorough corporate
governance in order to increase corporate value overthe medium to long term, in accordance with its Basic
Corporate Philosophy: “The ULVAC Group aims to contribute to the development of industries and science bycomprehensively utilizing its vacuum and peripheraltechnologies through the mutual cooperation and collaboration of the Group companies.” From this perspective, we respect the interests not only of shareholders,
but also of business partners, local communities, employees, and other stakeholders that are related to ourbusiness activities. We also value competitive and efficient operation, while ensuring strict compliance withlaws and corporate ethics.
ULVAC has adopted a company with a board of corporate auditors as its management structure. Particularly important institutional structures include the Boardof Directors, the Board of Standing Directors and Auditors, the Board of Corporate Auditors, and the Committee for Appointment and Remuneration, etc.

Firstly, ULVAC has a Board of Directors, which is a
decision-making body for important management issues. The Board holds regular meetings once a month,
as well as ad hoc meetings as necessary to ensure flexibility. The Board of Directors comprises eight members,of whom three are external directors. Two of the external directors are designated as independent external directors. By virtue of this structure, ULVAC is not only
able to make swift and efficient judgments concerning
important management issues, but is also able toachieve 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, through delegation by the Board of Directors. ULVAC also has a
Board of Standing Directors and Auditors, which comprises a total of 18 internal directors and executive officers. The Board of Standing Directors and Auditors

ULVAC Management Structure (As of September 30, 2017)

General Meeting of Shareholders
Appointment/Dismissal

Board of Directors

Appointment/Dismissal
Audit

Board of Corporate Auditors

Collaboration

Appointment/Dismissal

Independent Auditor

Recommendations
Audit

Committee for Appointment
and Remuneration, etc.

Board of Standing Directors
and Auditors

President and CEO

Risk Management Committee

Executive Officers

Accounting Audit

Collaboration

Collaboration

Compliance Committee
Divisions of the Company
Internal Auditing OfficeGroup companies

33

Audit

holds regular meetings twice a month, as well as ad hoc
meetings as necessary. By virtue of this structure, wehave achieved more flexible and swifter business operations that are appropriate for a rapidly changing business environment, based on a clear expression of the
responsibilities and authority of each executive officer.
In addition, ULVAC has a Board of Corporate Auditors, which performs auditing and supervision of management decision-making and business operations. The
Board of Corporate Auditors comprises four members,of whom two are external auditors. Both of the external auditors are designated as independent external auditors. Furthermore, we ensure full auditing andsupervisory functions through close links between corporate auditors and the Internal Auditing Office andthe independent auditor, whose independence is ensured, as well as through attendance and comments bycorporate auditors at important meetings, such as meetings of the Board of Directors and the Board of Standing Directors and Auditors, and through regularmeetings between the Internal Auditing Office and thePresident, etc. By virtue of this structure, we haveachieved rigorous, fair, impartial, and transparent auditing and supervisory functions, ensuring that each corporate auditor obtains sufficient information.
In addition, we have a Committee for Appointment
and Remuneration, etc., for instances that require objective determination of important matters, such as theappointment and remuneration of directors and executive officers. The Committee for Appointment and Remuneration, etc., comprises six members, of whom four
are independent external directors or independent external auditors. Of the remaining two members, one isan external director. By having these kinds of advisory
bodies for the Board of Directors, we are able to achieve
fair, impartial, and highly transparent deliberations withregard to especially important management decisions,and increase the effectiveness of the Board of Directors.

Message from an External Director

ULVAC’s Corporate Governance
Viewed by a n External Director
Dr. Kozo Ishida
External Director

ULVAC’s management and operation of the Boardof Directors
Since I took office as an external director of ULVAC in September 2016, I have been familiarizing myself with ULVAC’s
philosophy, the nature of the business, and the corporate
culture through in-depth communication with other directors and employees.
I have been greatly impressed by the cohesion andstrength of purpose evident among ULVAC’s Board of Directors and the tenacious corporate culture rooted in tradition
that enabled ULVAC to overcome a challenging situation
brought about by deterioration of the financial performance. In the operation of the Board of Directors, a commitment to both decisive management reform andoperational reform based on faith in the Company’s growthpotential bore fruit.
I am convinced that respect for the views of external
parties, continued vigorous pursuit of reform, and open discussion with a sense of urgency will enable the Board of Directors to achieve effective corporate governance.

My roleThe role of external directors is to supervise execution ofmanagement. In addition, I think my role is to offer advice
on overall management from a broad perspective, drawing
on my many years of experience as an executive, especiallyconcerning the management of subsidiaries in Europe andNorth America and in M&A, so as to contribute to ULVAC’s
development.

Sustainable growth of ULVAC is key
Since the FPD business accounts for such a large proportionof sales, I would like to see strategic investment in the next
round of growth, for example, by focusing on a new business in addition to the globalization of existing businesses.
In particular, it is critically important to foster diverse global
human resources and invest in development of new technologies. In view of increasing complexity and accelerated
globalization of markets and businesses, it is vital to reformthe enterprise system to facilitate flexible and fast management.

ULVAC Value Report 201734

Basis for Value Creation

Compliance
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 ofcompliance, we are establishing and operating a range of institutions and regulations to ensure
thorough compliance.

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

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

Whistleblowing System
ULVAC has adopted a whistleblowing system operated
through the Internal Auditing Office, which is an independent body. The Internal Auditing Office also serves
as the secretariat for the Compliance Committee, and
it is structured to give full consideration to confidentiality throughout the process of investigating the content of reports. This system does not prevent theperson making the report from selecting other institutions or organizations within the Company as the destination for the report, and in such case, the reportshall also be handled appropriately.
Individuals making reports are not treated unfavorably in any way. Reports can also be submitted
anonymously.

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

Handling of Violations
If it is deemed that a violation of laws or regulations
has been committed based on the results of an investigation by the Compliance Committee, then the opinion of an external expert, such as a lawyer, may besought as necessary, immediate cessation or improvement measures will be implemented, and those35

involved in the violation will be dealt with after deliberation by the appropriate bodies. In addition, thefundamental causes that brought about the violation
are also investigated in order to formulate effective
measures for preventing recurrence.

Risk Management
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 mediumto 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.
Risk Management System
In regard to risk management initiatives, ULVAC hasestablished rules concerning its risk management system, classifying a broad range of risks from various
perspectives, and designated the control offices primarily responsible for risk management according to
the classification of risks. Furthermore, these risk control offices identify more specific risks and respond tothem. We work to ensure that these offices efficiently
gather important information in operating the risk
management system. In addition, in order to share andevaluate information concerning the operation of therisk management system on a company-wide basis, wehave a Risk Management Committee, which is chairedby the president, and mainly comprises representativesof the risk control offices with primary responsibility
for risk management. The Risk Management Committee holds regular twice-yearly meetings as an umbrellaorganization for risk management, and it determines
company-wide basic policies, monitors the state ofmanagement and administration, and considers any
improvements that can be made, etc. Furthermore,
initiatives at ULVAC are implemented at ULVAC Group
companies as appropriate for the scale and businesstype 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

Reporting andinstructions for
improvement

Risk Management Committee

Risk
control
officeRisk
control
officeRisk
control
officeRisk Management Committee

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

ULVAC Value Report 201736

Basis for Value Creation

Directors, Auditors, and Executive Officers

1
■

2
■

8
■

3
■

9
■

4
■


■

Directors and Auditors
1
■

2
■

3
■

Isao Utsunomiya Senshu Asada Seiichi Takahashi
External Auditor
Tax accountant

External Auditor
Attorney at law

Auditor

4
■

5
■

6
■

7
■

Makoto Ito Akira Mihayashi Norio Uchida Dr. Kozo Ishida
AuditorExternal Director
President of Nissay Credit
Guarantee Co., Ltd.

External Director

External Director
Senior Advisor for HORIBA, Ltd.

Executive Officers
Masasuke Matsudai Hideyuki Odagi Dr. Choong Ryul Paik Shigemitsu Sato Dr. Kazuya Saito Akira Umeda Ryou Matsumoto
Senior Managing Executive Officer
President of ULVAC TECHNO, Ltd.

37

Managing Executive Officer

Managing Executive Officer

Supervisor of Manufacturing

Supervisor of Development

Managing Executive Officer
General Manager of FPD•PV Division

Executive Officer
Executive Officer
General Manager of Institute of General Manager of IR Department
and Marketing Department
Semiconductor & Electronics
Technologies and Research andDevelopment Planning Department

Executive Officer
General Manager of Internal
Auditing Office

5
■

6
■

7
■


■

8
■


■

9
■


■


■


■

Hisaharu Obinata

Setsuo Iwashita

Akinori Bo

Mitsuru Motoyoshi

Junki Fujiyama

ChairmanPresident and Chief Executive Officer

Director and Executive Vice President

Director and Senior Managing Executive Officer
General Manager of Business Strategy Headquarters

Director and Senior Managing Executive Officer
Supervisor of Corporate Sales & Marketing

Youichi Oohinata

Kiyokazu Yanagisawa

Yu Jer Tsai

Kazuo Ikeda

Takeshi Haginouchi

Executive Officer
General Manager of Industrial
Equipment Division

Executive Officer

Executive Officer
President of ULVAC TAIWAN INC.

Executive Officer

Executive Officer

Executive Officer

President of ULVAC TOHOKU, Inc. andULVAC KYUSHU CORPORATION

General Manager of Corporate Sales& Marketing Division II

General Manager of Semiconductor
Equipment Division

General Manager of Components
Division

Tomoyasu Kondo

ULVAC Value Report 201738

Basis for Value Creation

Quality Assurance and Product Safety
The ULVAC Group will engage in initiatives to meet customer expectations for high-level, safe
ULVAC quality through assurance activities centered on Front Loading.*1

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 and services
which include needs from all parts of the world.
Each employee within the ULVAC group strives to ensure that theirpersonal efforts contribute to the creation of value necessary tomaintain the customer as an everlasting partner.

Action Policies
We comply with all rules and procedures.
W e do not deliver any nonconforming products to the next
process.
W e observe delivery times to the next process.
We commit to the production budget.

Completion of Global Certification for ISO 9001 and ISO 14001
As of the end of December 2016, 38 ULVAC Group
companies had completed integrated certification for
quality and environmental management systems. This
has enabled the Group to align quality policies groupwide, ascertain quality status, and realize a reporting
system pertaining to quality issues and improvement.
The ULVAC Group’s Quality Management System
Global Quality Assurance Committee(Central secretariat: ULVAC)
Group-wide implementation of
the quality policy

Companies
in JapanCompanies inSouth Korea

Companies
in China

Companies inSoutheast Asia

achieving management plan objectives through theglobal integration of quality and environmental management systems.

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

2.3

2.0

1.6
1.5

1.0

0.9

1.0

0.5

0

2013

2014

2015

2016

(FY)

Increasing the Number of Qualified Safety Assessor
The ULVAC Group assigns persons with mechanicalsafety knowledge to each company and division forthe purpose of maintaining and improving the safetyof ULVAC brand products. We are training qualified
safety assessor (SA)*2 to contribute to safe manufacturing by utilizing mechanical safety knowledge based oninternational safety standards to validate product safety in risk assessment performed at the design stage.
We intend to continue groupwide training of qualified
SA through internal mechanical safety education so as
to increase customer satisfaction by contributing tosafe and secure manufacturing.
Number of qualified safety assessors in the ULVAC Group

Companies in
Europe andNorth America(Persons)
60

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

Under this system, ULVAC engages in groupwide
Front-Loading activities.
Future plans call for further integration with management systems, quality improvement, and earnings
structure improvement through the development of
ISO 9001:2015 and ISO 14001:2015 management systems with the aim of strengthening governance and
39

40

20

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

(FY)

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

Procurement
The ULVAC Group strives to create state-of-the-art products and win the trust of end users byengaging in high-quality communication with suppliers, who play a critical role in manufacturing,and further deepening supplier relationships through new initiatives.

Communication with Suppliers

Business Continuity Planning (BCP) Surveys

ULVAC holds supplier meetings three times a year andoperations briefing meetings once a year as forums forcommunication with suppliers.
At supplier meetings, we present forecasts for eachbusiness segment that incorporate delivery dates for
procurement items based on the status of orders received and trade inquiries and disclose timely information to facilitate mutual adjustment of delivery dates.

Since fiscal 2014, the Group has conducted business
continuity planning (BCP) surveys, verifying management systems and emergency parts supply structure to
manage the parts supply chain and minimize parts supply risk from natural disasters or accidents. We follow
up to vitalize activities, mainly at suppliers that havenot established systems.
Global Procurement

At operations briefing meetings, we express ourappreciation to suppliers for their day-to-day cooperation. The president of ULVAC explains the business environment and future outlook, and we confirm ourintention to further deepen relationships of trust with
suppliers and develop and grow together throughshared recognition of the mutual importance of quality, delivery, and price. We also strive to strengthen
partnership with suppliers by conducting plant tours toincrease supplier understanding of ULVAC and conducting vacuum demonstrations to deepen understanding of vacuums.

V o i c eo fAccompanying the globalization of production ULVAC
has pursued since successfully producing large FPD production equipment at ULVAC (SUZHOU) CO., LTD (Suzhou, China), we have proceeded with supply chain
development and construction and human resource
development to ensure smooth local procurement activities, with local production for local consumption as
the key concept.
Chamber fabrication
Materials

Plating
DedicatedSuzhou Plant processing
centerPurchased
items

Surface treatment

Frame

S u p p lier

From a major supplierWe celebrated our 45th anniversary in 2016. Our recent developments include the construction of the Usaginai
Coating Plant, construction of additional clean rooms, and introduction of new facilities at the head office plant andIshinomaki Plant.
ULVAC accounts for more than 70% of our sales, and we will continue to broaden our horizons so we are able
to meet a wide variety of needs, from large items to small, and push forward without fear of change.
Some 30 years have already passed since our business relationship with the ULVAC Group began. We are growing steadily together with the
ULVAC Group under the concept that business partners are family. I am deeply grateful for ULVAC’s patronage over the years.
I am convinced that ULVAC’s technologies are essential to the future of humanity. I believe expertise and preeminent skills cultivated overmany years will retain their value, even if the times change. I hope to integrate ULVAC’s leading-edge technologies with the technologies wehave developed at our plants over many years so that both companies achieve growth while increasing their value to society, all employees andtheir families attain happiness, and we contribute to local communities.
Mr.

Eiji Tazawa

President
Tohoku Miyoshi Industry CO., LTD.

ULVAC Value Report 201740

Basis for Value Creation

Human Resources
To promote ULVAC’s businesses, it is necessary that vitalized organizations serve as a foundation onwhich diverse human resources fully demonstrate their potential. We strive to create value by actively
engaging in organizational and human resources development.
Human Resources and Organizational Development

ULVAC Academy for Professional Production-Related Training

Integration of the ULVAC GroupULVAC is strengthening the MONODZUKURI structure by providing specialized training to Group employees. The ULVAC Academy conducts
groupwide training under the concept of “providing training materials
necessary for ULVAC’s production to those who need them and creating
an environment that facilitates learning throughout the Group.” The
Academy not only encourages self-study through e-learning and training
materials, but also more effectively conducts grouped training, including
practical skills training. It enables the individuals who will create thenext-generation of products to receive professional training in fields suchas manufacturing, manufacturing technology, engineering and design,
while also imparting the historyof ULVAC and disseminating thelatest Group information. In thisway, the Academy supports therealization of the ideal form forindividuals, divisions, companies,
and the Group as a whole.
In fiscal 2017, ULVAC integrated the functions of the ULVAC Academy and the education
system of the Personnel Department and expanded the curriculum to provide comprehensive
education including not only
production-related training, butalso administrative training tocover the entire Group.

We are proceeding with the integration of the ULVAC Group in the areasof human resources and education. We are enhancing the content ofstratified training, which has long been provided at the parent company
and Group companies, with the aim of inculcating the corporate philosophy. We have also convened the Group Personnel and General Administration Meeting to consider multifaceted integration with respect toorganizations, regulations, systems, and education.

Diverse Education Programs
Education plans are developed based on the ULVAC Basic Policy for Human Resource Development. We promote the growth of individuals by offering various programs, such as stratified training, skills training, OJT,
and support for self-development, and also actively engage in education
targeted at specific areas.
In particular, as globalization has progressed in recent years, wehave enhanced pre-transfer training for staff assigned overseas and education to boost the language abilities of young employees.

Hiring and Utilization of Human Resources
We are increasing the hiring of young people to maintain an appropriate
employee age structure. Furthermore, employees who have reached retirement age can make use of a program for elder employees. In this way,in addition to creating an environment in which seniors can continue towork actively, we have instituted a mechanism for passing on skills toyounger employees.

Self-Reporting System
ULVAC has a self-reporting system for employees to share their careerplans with their superiors and the company. To maximize the growth ofindividuals and the company, in determining employee rotations, we take
into account the contents of the self-reporting.

Future Issues and Initiatives
We recognize that responding to globalization and developing the next
generation of employees are essential for further organizational vitalization. We will take every opportunity to engage in personnel exchanges
and provide education with human resources diversity in mind and practice flexible organizational management.

ULVAC Basic Policy for Human Resources Development

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.
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
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

41

ULVAC Group Vitalization Programs
ULVAC utilizes the diversity that results from different ways of thinking
and different cultures to stimulate the awareness of organizations andindividuals. By sharing groupwide processes that lead to the resolution oforganizational and individual issues, we maximize its effects.
We have made Front Loading the central theme of the Global Manufacturing Technology Competition, Skills Challenge, and Global Business
Improvement Competition programs with the aim of ensuring that all
employees are aware of Front Loading in their own work not limited toengineering and linking this awareness to outcomes.
Ideal form

Further
improvement

Competition

Global Manufacturing Technology Competition
Global Business Improvement Competition

Skills Challenge

Training
Daily business

Administration

Engineering

SkillsCreating Excellent Workplaces
At ULVAC, we strive to institute human resources programs
that help employees lead fulfilling professional and private
lives, and we continually enhance the effectiveness of thesesystem.
Program Examples
 ranting of annual paid leave from the first day of emGployment
Holding of “spot-leave campaigns” to encourage all employees to take paid annual leave
Selective summer leave system
Assignment of a person in charge of labor managementin each department and rigorous control of overtime
Staggered working hours alternative work schedule system and flextime system
No-overtime days
A noteworthy outcome of these programs has been
particularly high rates of parental leave utilization and returning to work. Although we have few female employees,
in fiscal 2016 five female employees took parental leaveand two returned to work after completing leave. The utilization rate and return-to-work rate were 100%.
Fiscal year

Commencement of parental
leave (utilization rate)

Return to work after
completing parental leave(return-to-work rate)

FY20165 persons (100%)

2 persons (100%)

FY20152 persons (100%)

3 persons (100%)

FY20142 persons (100%)

6 persons (100%)

Supporting Product Development andMONODZUKURI through Health Promotion
1) Walk Rallies
In fiscal 2016, the ULVAC Group began organizing walk rallies
using wearable devices for the purpose of making autonomous health management a habitual practice. Even in thefirst year of this activity, 1,327 employees of the ULVAC Group
have participated and enjoyed Walk Rallies for a year. In addition, thanks to physical fitness measurement and other initiatives in self-care training, health management is becoming
habitual practice to our employees. As a result, the percentage of ULVAC employees who walk at least 60 minutes per
day increased to 24.3% in fiscal 2016.

2) Organization Vitalization Training Using the Results of Stress CheckULVAC conducts organizational vitalization training using theresults of stress checks that examine the physical, mental andsocial health of employees. We aggregate the results by organizational unit and utilize them in training. Based on the results, managers have set targets at each department andsection and are proceeding with workplace vitalization.
The number of departments requesting training is increasing, and in fiscal 2016, 141 employees from nine departments participated.
1) Walking habits

2) Annual number of participants in organizational
vitalization training (managers)

More than 60 minutes
per day(%)

30.0(Persons)

141

150

24.3
17.8

20.0

20.5

100

17.7

76

10.0

50

0

2013

2014

2015

0

2016 (FY)

35

2014

2015

2016

(FY)

*Aggregated from employee responses toa health check survey questionnaire

V o i c eo f

E mp lo yee

Parental leave

Human Resources Data
Employee gender ratio (non-consolidated)

Management gender ratio (non-consolidated)

68 female
employees
5.6%

8 femalemanagers
2.2%

Male

I took parental leave in 2013 and 2015 and now work at
the same workplace as before I took leave, using theshort working hours system. The system of shortening
morning and afternoon working hours by one hour
each made it so much easier forme to take my children to andfrom nursery school when they
were unable to attend the sameschool.
Childrearing brings various
restrictions, and I owe my ability
to work energetically to the understanding and cooperation of
my workplace colleagues, forwhich I am deeply grateful.

Erika Kato

Advanced Electronics Equipment Division

FemaleMale

1,157 male
employees
94.4%

350 malemanagers
97.8%

Employment of persons with disabilities (non-consolidated)
Number of persons with disabilities
Employment ratio(Persons)

50

2.08

2.19

2.14

2.11

40
30

28

28

27

26

2.00

25

20

Number of new graduate recruits (non-consolidated)(%)(Persons)

2.5

30

2.0
1.5

0.5

5
0

2016

(FY)

21

10

0

2015

4

20

0

2014

Female
5

25

10

2013

Male

15
1.0

2012

Female

25

0
0 1

4

2013

2014

2015

2016

(FY)

ULVAC Value Report 201742

Basis for Value Creation

Occupational Safety and Health
The ULVAC Group has made “Safety First” the fundamental principle of business operations. By operating our
Occupational Safety and Health Management System (OSHMS), which is focused on risk assessment, we endeavor
to ensure safety of the products and services used by our customers and in operations at our customers’ plants aswell as to create dynamic workplaces where ULVAC employees can work in good physical and mental health.
Receipt of Type-IV Zero Accident Record Certificate

Safety and Health Activities

To ensure the safety and good health of its customers
and employees, the ULVAC Group regularly holds
meetings of the Global Safety Committee, and allGroup companies promote safety and health activities
in an integrated manner. Each Group company operates the OSHMS system and everyone is engaged insafety and health activities, such as management reviews conducted by the CEO and other executives andrisk assessments performed by each employee. As a result of efforts to prevent occupational accidents, theChigasaki Plant has achieved a Type-IV zero accident
record (10.5 million hours). With “Safety First” as theirmotto, the Group companies will continue to move
forward with efforts to achieve a zero accident record.

Disaster Drills
The 2016 Kumamoto Earthquake and other disasters andaccidents that have recently occurred around the world
have raised worldwide awareness of the importance of local emergency preparedness. In addition to conducting basic drills in evacuation, initial firefighting and otheremergency operations, ULVAC has investigated methods
and equipment for effectively conducting emergency medical drills and shared them with the Group companies tohelp them prepare for emergencies. The Chigasaki Plant
has concluded an agreement with Chigasaki City and contributes to local disaster preparedness, such as by making
the plant premises available for use by local residents as anevacuation area.

ULVAC Group Safety Management System
Companies in Japan
Companies in South Korea

Global Safety

Companies in Taiwan

Committee

Companies in China
ULVAC CRYOGENICS INCORPORATED
Disaster drill

Companies in Southeast AsiaULVAC KOREA, Ltd.
Emergency medical drill

Companies in Europe and North America

Zero Accident Record

Safety and Environmental Patrols

Type-IV zero accident record certificate

Receiving the certificate

Frequency ratio of occupational accidents throughout the ULVAC Group
Group as a whole

Japan

China

South Korea

Taiwan

North America

To prevent occupational accidents, after providing education and conducting risk assessments, it is important to create safe workplaces by using patrols to confirm theeffectiveness of safety and environmental measures andimplementing a PDCA cycle. ULVAC has integrated safety
and environmental patrols and implements measures to
identify improvement opportunities from both perspectives. ULVAC also conducts patrols of Group companies toeliminate hazard sources apt to be overlooked.

Southeast Asia

1.20

1.00
0.81

0.87
0.74

0.80

0.60

0.40

0

2012

43

2013

2014

2015

2016

(FY)

* This graph shows the rate of occupational accidents in the entire ULVAC Group for each fiscal
year, indicating the value for fiscal 2012 (as of June 2013) as 1.00. In fiscal 2016 (as of June2017), the rate of occupational accidents decreased by 26% compared with that in fiscal 2012.

ULVAC Orient (Chengdu) Co., Ltd.
Safety patrol

ULVAC TAIWAN INC.
Pledging commitment to a safety declaration

Environment
Based on its environmental policy, the ULVAC Group provides products that allow customers to embrace thefeeling that they have made environmental contributions. Through management and reduction of energy
consumption and other efforts, we are working to minimize environmental impacts. As we have a global
production system, we are working to gain integrated ISO14001 certification so as to strengthen governance,
ensuring information sharing among Group companies and swift implementation of instructions issued by top
management. The ULVAC Group will continue its efforts to reduce environmental impacts through its products.
Environmental Philosophy

Environmental Policy

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

Develop energy-saving products, reduce the use ofnatural resources and protect the environment.

The ULVAC Group is conducting energy-saving activities

This increase is thought to be mainly attributable to thewith the target of reducing energy costs by 10% in fiveincrease in production volume. The recovery rate ofyears compared to fiscal 2013. In fiscal 2016, we achieved

valuable materials was unchanged at 26%. As recovery

a 1.4% reduction in energy (electricity) consumption com-of valuable materials is important also from the perspec-

pared with the previous fiscal year. Reduction since fiscal

tive of material recycling, we will continue to promote it2013 totaled 2.5%, indicating that an awareness of en-

throughout the ULVAC Group.

ULVAC Group products/Final products
ULVAC Group manufacturing process

ergy conservation has taken root throughout the ULVACGroup.

The ULVAC Group will continue to promote environmental management activities in order to reduce environ-On the other hand, waste emissions increased by ap-

mental impacts derived from its business activities.

proximately 21% compared with the previous fiscal year.

Material Balance

CO2 emissions

INPUT

OUTPUT

Water consumption
Group companies overseas
Group companies in Japan(t-CO2)

1,800

100,000

Electricity
consumptionGas
consumption

Fuelconsumption

Water
consumption

155,639 thousand kwh

LPG:
155 t
608 t
LNG:
City gas: 1,493 thousand m3
Heavy oil:
70 kL
Kerosene oil: 18 kL
Diesel oil:
229 kLCO2
emissions

90,154 t-CO2

75,000(Emissions due to consumption of electricity,gas, and fuels)

50,0001,118 thousand m3

8,792 tTotal amount of waste
recycled: 8,479 t
Landfill: 313 t

25,51657,329Packagingmaterials

1,731 t3.6%

pan and overseas.

31,7331,500
31,002
1,200

60,996

2012

2013

391

59,80459,928600

59,152

387

370

729

775

803

2013

2014

2015

343
960

2014

2015

0

2016 (FY)

2012

406

712

2016 (FY)

Waste emissions
Amount of valuable materials recycled (t)Total amount of waste recycled (t)(t)

10,000

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

5,000

6,216

3.7

2,500

0

254

240

289

2012

7,072

6,556

2014

4.5

3.6
3.0

2.9

2,040

1,288

2013

6.0

8,479

214

3.7

5,613

1,769

(%)

313

4.9

* 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 28 Group companies in Ja-

33,213

300

7,500

Final
landfill
disposalrate

32,212900

25,000

0

Total
waste
emissionsGroup companies overseas
Group companies in Japan(Thousand m3)

2,313

1,920

2015

2016

(FY)

1.5

0

ULVAC Value Report 201744

Basis for Value Creation

Environment
Ion Implanters for Power DevicesAdvanced Electronics Equipment Division, ULVAC, Inc.
SOPHI

In the smart society, power devices will be the technology and products essential for reducing electricity consumption and using energy more efficiently. Powerdevices convert electricity to the correct voltage andfrequency when power is supplied to home appliances,trains, automobiles, and more recently, to electric vehicles, which are expected to grow rapidly. Increasingly,
new materials such as silicon carbide (SiC) and gallium
nitride (GaN) are applied in power devices in order tohandle higher voltages, minimize energy loss, and increase conversion speed. The Advanced Electronics
Equipment Division has developed and sells pioneering
ion implanters that can be adapted to these materials.

Receipt of the Kanagawa Global Environment Award
Corporate Environment, Safety and Health Department, ULVAC, Inc.
ULVAC, Inc. received the 2016 Kanagawa Global Environment Award. ULVAC was recognized for its achievements,
notably reducing its Fiscal 2014 CO2 emissions by approximately 37% compared tobase year emissions (FY2009)
during a five-year period at
the Chigasaki Plant, a research and development basefor vacuum systems and related equipment. This was accomplished throughoperational improvements
such as the shutting down ofclean rooms and R&D facilities as standard practice on
non-business days and atnight and integration of office areas. ULVAC will continue to vigorously practiceefficient energy use and engage in activities to maintain
Environmental Management Representative
optimized energy consumption.
Youichi Oohinata receiving the award

Hotaru (Firefly) Projection implanter for insulated-gate
bipolar transistors (IGBTs)

IH-860ion implanter for SiC power devices

Receipt of the Environment and Safety Excellence Award
from the Governor of Gyeonggi-do, South Korea
Management Dept., Pure Surface Technology, Ltd.
On December 1, 2016, Pure Surface Technology, Ltd. received the Environment and Safety Excellence Award fromthe governor of Gyeonggi-do, South Korea at the Human
Resources Development Association, Gyeonggi-do. The
company was commended for significantly contributing toenvironmental protection by reducing emissions of oil vapor into the atmosphere throughrecovery and recycling oil vapor using
an oil vapor recovery
system. The citation
was awarded on therecommendation of
the Head of the Environmental Engineers Association,
Gyeonggi-do for acontribution thatserves as a model forAwarding of the citation
other companies.

Kagoshima Office

The Kagoshima Office, which constitute of ULVAC KYUSHU CORPORATION, ULVAC, Inc., and ULVAC TECHNO, Ltd., created a biotope on its grounds in 2016 in a nature conservation initiative that is contributing to the local community. It has
began discharging plant wastewater into the biotope to create a great habitat for fireflies, the Hotaru Project was
launched by employees eager to enjoy firefly’s natural light show at dusk. In fiscal 2015, several firefly larvae released
into the biotope on an experimental basis emerged. In the second year of the project, many larvae hatched from eggs
have grown and are expected to develop into adult fireflies. In May 2017, the Kagoshima Office invited students from anelementary school in the neighborhood for a medaka (Japanese killifish) release event at the biotope, thus contributing
to environmental education. The Kagoshima Office intends to continue engaging in activities together with the local
community.

45

Social Contribution Activities
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.

Harmonious Coexistence with Chigasaki City
Career Advice Lecture forHigh School Students

In March 2017, a young ULVAC employee
and alumnus of Kanagawa Prefectural
Tsurumine High School gave a lecture to
first-year students of his alma mater tooffer insights useful in their future career choices. He discussed the nature ofcompanies and the world of work, provided suggestions on what the students
should do during their school years, andoffered advice on future job-seeking.

Shuuji Aoyama, an employee in the
Advanced Electronics Equipment Divisionof ULVAC, Inc., with 8 years of service withthe company, addressing the students

Clean Partner

01 Industrial Complex Clean-Up Activity

ULVAC TOHOKU, Inc. and ULVAC Human Relations, Ltd. engage in clean partner activities to beautify the environmentof the Hachinohe North-Interchange Industrial Complex.
Sixteen people participated in 2016, with cooperation fromthe Hachinohe City Environmental
Department. The amount of trash
has continued to decrease after
peaking in 2013, and the companies will continue regular environmental activities with the aim ofmaintaining an attractive landscape.
Clean-up activity

Activity Case Study

38th Chigasaki Space Lesson
The 38th Chigasaki Space
Lesson was held at the ULVAC, Inc. Chigasaki Head
Office/Plant in June 2017.
The lesson was sponsoredby the Chigasaki Education
Committee at the requestof the Young Astronauts
Club-Japan Chigasaki Chapter, whose first leader was
the late Dr. Chikara Hayashi, the third president of
ULVAC. The response to thelesson was tremendous,
with more than 300 applications received, exceeding
the capacity of 100 children.

Activity Case Study

Volunteer Activities at the South

02 Korea ULVAC Group*

The South Korea ULVAC Group engages in wide-ranging volunteer activities in local communities. Group employees participate in
DIY work to improve the living environment for elderly people living
alone who require volunteer assistance, provision of coal briquettes
and kimchi-making for those on
low incomes, and athletic meetsand cultural experiences that support orphans and the disabled. The
volunteer circle extends beyond the
ULVAC Group to include joint activities with SEPAS, a volunteer groupaffiliated with Samsung.
A vacuum demonstration

Making kimchi*ULVAC KOREA, Ltd., Ulvac Korea Precision, Ltd., ULVAC Materials Korea, Ltd., Pure Surface
Technology, Ltd. and UF TECH, Ltd.

ULVAC Festival 2016

Activity Case StudyULVAC Festival 2016 was held in November 2016 at the
ULVAC, Inc. Chigasaki Head Office/Plant to express gratitude to the employees and their families and to local
residents. The festival, held for the first time in six years,
featured a number of attractions, including a planttour, refreshment booths,
and stage events such as
wind-instrument music performed by local junior andsenior high school students,
all of which were well received. Visitor turnout exceeded initial expectations.
ULVAC Festival 2016 commemorative
photograph (taken from the rooftop)

03

ULVAC and MIT Establish the
Hayashi-ULVAC MISTI Seed FundULVAC, Inc. has agreed to establish the Hayashi-ULVAC MISTI Seed Fund to support opportunities for collaboration between researchers of a Massachusetts Institute ofTechnology (MIT) educational assistance organization andtheir counterparts at research institutions in Japan. First established in 2008 by the late Dr.
Chikara Hayashi, the third president of ULVAC, the fund will support development of the next
generation of researchers andcontribute to the advancement ofleading-edge technologies aroundSigning ceremony at MIT
the world.
ULVAC Value Report 201746

Financial Data/Corporate Information

Business Results: Review of Operations for Fiscal 2016
Business results for Fiscal 2016
In the electronics market in which the ULVAC Group
operates, trends toward more sophisticated and slim
mobile devices continued and demand for semiconductor and electronic devices was generally firm, despite
slowing growth in the number of smartphones sold.
Regarding flat panel display (FPD) production equipment, robust capital investment continued for OLED
production equipment for mobile handsets and large
LCD production equipment for TVs.
Against the backdrop of buoyant capital investment by flat-panel and semiconductor manufacturers,
demand increased centering on FPD production equipment, semiconductor and electronic device production
equipment, and components, leading to increases inorders received and net sales. In terms of profit, both
the gross profit margin ratio and the operating income
margin ratio improved owing to increased sales andongoing cost reduction.
As a result, for the fiscal year ended June 30, 2017
(fiscal 2016), orders received increased 5.3% year on
year to ¥235.5 billion, net sales rose 20.5% to ¥231.8
billion, operating income surged 65.0% to ¥29.5 billion, ordinary income jumped 61.7% to ¥29.7 billion,
and net income increased 46.5% to ¥24.5 billion. Orders received, net sales, and all exceeded the targets
set at the beginning of the fiscal year and record-highresults were achieved for the second consecutive year.

Stronger Profitability
Targeting “stronger profitability by changing awareness” under the previous mid-term management plan,
ULVAC worked to improve profitability by promoting
continuous R&D and enhancing efficiency of theGroup’s production system in response to changes in
the market, such as the trend toward larger LCDs andthe shift to OLED. As a result, net sales increased 1.3
times in three years and the operating income margin
ratio improved from 6.9% for fiscal 2014 to 12.7% forfiscal 2016.
Regarding financial strength, the equity ratio improved to 40.2% and the amount of interest-bearing
debt and the debt-to-total-assets ratio both improved
greatly.

Net sales/Operating income margin ratio

Products making big contributions to sales

LCD production
equipment

Sputtering equipment
for semiconductors

Cryopump

Equity ratio/Interest-bearing debt/Debt-to-total-assets ratio

Net sales

Operating income margin ratio(Billions of yen)
300

(%)
15

Equity ratio

106.1
200

179.2

173.9

163.4

34.1

89.6

231.8
10

192.4

80

32.8

33.2
28.6

82.6

29.2

6.9

(%)
45

40.2

38.8

12.7

9.3

Interest-bearing debt

Debt-to-total-assets ratio(Billions of yen) 43.6
120

30

62.7

22.7

17.4

6.2
100

5

40

0

0

42.7

3.7

0

2013

47

2014

2015

2016

2017 (Years ended June 30)

15

0

2013

2014

2015

2016

2017 (Years ended June 30)

Outlook
Review of Operations by Business Segment
Vacuum Equipment Business
For the vacuum equipment business, orders received
amounted to ¥205,142 million, orders back-log was¥101,145 million, net sales were ¥200,601 million, andoperating income amounted to ¥26,846 million.
FPD and PV production equipment
Orders received for FPD and PV production equipment
exceeded the level of the previous fiscal year because
orders received for OLED production equipment andlarge LCD production equipment for TVs were at ahigh level despite a decrease in orders received forsmall to medium-sized LCD production equipment. Net
sales greatly exceeded the level for the previous fiscal
year as sales of large LCD production equipment forTVs as well as sales of OLED production equipment increased.
Semiconductor and electronic device production equipment
Regarding semiconductor production equipment, in linewith the expansion of investment for memory, demand
for sputtering equipment and the natural oxidized film
removing system increased. Regarding electronic device
production equipment, demand for high-performancedevice production equipment for mobile devices wasfirm. As a result, orders received and net sales exceeded
those for the previous fiscal year.
Components
Both orders received and net sales greatly exceeded those for the previous fiscal year centering on

components for the FPD, semiconductor, and electronic
device industries and for the automotive-related industry. In particular, cryopumps for mounting on OLED
production equipment contributed greatly to net sales.
Industrial equipment
Both orders received and net sales exceeded those forthe previous fiscal year, led by vacuum heat treatment
furnaces for production of automotive components.
Vacuum Application Business
For the vacuum application business, orders received
amounted to ¥30,318 million, orders back-log was¥5,164 million, net sales were ¥31,230 million, and operating income amounted to ¥2,600 million.
Materials
Orders received and net sales centered on sputteringtarget materials for LCDs. Both orders received andnet sales were lower than those for the previous fiscal
year, affected by intensifying price competition.
OthersDemand for mask blanks was generally firm, reflecting
an increase in demand for high-definition, sophisticated display panels and semiconductors for in-vehicle
and industrial applications. On the other hand, regarding analysis equipment, both orders received and net
sales were generally sluggish.

Outlook
Regarding FPD production equipment, capital investment for OLED production equipment for mobile
handsets and large LCD production equipment for TVs

Forecast of net sales by business segment(Billions of yen)300

is expected to remain robust. As technological innovaview of the trend toward the smart society, capital investment by semiconductor and electronic device man-

16.7
200

14.6
21.5

ufacturers is expected to be buoyant.

31.2

Vacuumapplication
business

36.4

15.5
22.0

39.5

200.6

strength. At the same time, seizing the business oppor110.9

115.0

will accelerate initiatives toward sustainable growthand improved corporate value.

32.5

Vacuumapplication
business

206.5

Vacuumequipment
business

Vacuumequipment
business

100

tunities created by technological innovation, ULVAC

17.0

OthersMaterials

30.0

31.8

Under the mid-term management plan, ULVAC will
strive to further improve profitability and financial

239.0

231.8

tion centering on the electronics field is accelerating inIndustrial
equipment

Components

Semiconductor andelectronic device
production equipment
FPD and PV production
equipment0Year ended June 30,
2017 (results)

Year ending June 30,2018 (forecast)ULVAC Value Report 201748

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Balance Sheets(Millions of yen)

FY2015FY2016(As of June 30, 2016)(As of June 30, 2017)

AssetsCurrent assets
Cash on hand and in banks

45,71356,434

Notes and accounts receivable, trade57,95870,519Merchandise and finished goods

4,645

5,097

Work in process

16,80815,880Raw materials and supplies

8,009

9,240

Deferred tax assets

4,746

6,027

Other

6,356

7,299

Allowance for doubtful accounts

(621)

(811)

143,616

169,685

78,132

79,246

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation(44,765)(47,018)

Buildings and structures, net

33,36732,229Machinery, equipment and vehicles

63,88565,343

Accumulated depreciation(50,194)(50,892)

Machinery, equipment and vehicles, net

13,69014,451Tools, furniture and fixtures

13,28614,153

Accumulated depreciation(11,961)(12,506)

1,325

1,647

Land

8,109

8,096

Leased assets

1,516

1,836

(884)

(1,002)Tools, furniture and fixtures, net

Accumulated depreciation
Leased assets, net

632

834

Construction in progress

3,252

3,049

Total property, plant and equipment

60,37460,306

Leased assets

112

67

Software

754

690

Other

3,051

2,815

Total intangible assets

3,916

3,573

4,035

4,389

Intangible assets

Investments and other assets
Investment securities
Deferred tax assets

1,924

2,298

Other

8,075

7,107

Allowance for doubtful accounts(2,379)(2,051)

Total investments and other assets

11,655

11,74375,94575,622

219,561

245,306

Total fixed assets
Total assets

49

(Millions of yen)

FY2015FY2016(As of June 30, 2016)(As of June 30, 2017)

Liabilities
Current liabilities
Notes and accounts payable, trade35,303

48,829

Short-term loans payable

39,45330,199319

315

Income taxes payable

2,039

2,525

Advances received

13,59816,908

Lease obligations

11

10

Accrued employees’ bonuses

2,206

2,738

Accrued directors’ bonuses

368

401

1,964

2,069

558

785

Other

10,331

11,175

Total current liabilities

106,150

115,954

23,237

12,528

546

692

Deferred tax liabilities

Accrued warranty costs
Provision for loss on order received

Long-term liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities

1,399

1,408

Net defined benefit liability

8,711

8,311

Accrued directors’ retirement benefits

319

335

Provision for board benefit trust—

74

Asset retirement obligations

336

392

Other

831

694

35,37824,436

141,529

140,389

Total long-term liabilities
Total liabilities

Net Assets
Shareholders’ equity
Capital stock

20,873

20,873

Capital surplus

4,582

3,912

Retained earnings

50,81373,801

Treasury shares
Total shareholders’ equity

(10)

(271)

76,25898,315130491

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment

(667)

2,480

Remeasurements of defined benefit plans(2,822)(2,599)Total accumulated other comprehensive income(3,359)372

Non-controlling interests

5,133

6,229

Total net assets

78,032

104,917

Total liabilities and net assets

219,561

245,306

ULVAC Value Report 201750

Financial Data/Corporate Information

Consolidated Statements of Income(Millions of yen)

FY2015FY2016(July 1, 2015–June 30, 2016)(July 1, 2016–June 30, 2017)

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 income
Non-operating income
Interest income
Dividend income
Rent income
Foreign exchange gains
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission for syndicate loan
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Reversal of impairment loss on non-current assets
Total Extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on sales of non-current assets
Impairment loss
Loss on sales of investments in capital of subsidiaries and affiliates
Total extraordinary losses
Income before income taxes and minority interests
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

192,437
141,314
51,122

231,831
168,001
63,82915,74017,51833,25917,864

14,81819,54334,361
29,468

113
251
360
578
299
1,019
2,619

117
302
297
—
203
831
1,750

797
244
1,070
2,110
18,373

511
170
822
1,503
29,716

60
—
241
301

35
81
—
117

749
—
31
109
888
17,786
3,892(3,433)459
17,327629
16,698

643
423
—
—
1,065
28,7684,556(1,599)2,957
25,811
1,342
24,469Consolidated Statements of Comprehensive Income

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

51(Millions of yen)

FY2015FY2016(July 1, 2015–June 30, 2016)(July 1, 2016–June 30, 2017)17,32725,811(588)(8,781)(2,107)(36)(11,512)
5,815

364
3,390
224
10
3,989
29,7995,877(63)

28,2001,599

Consolidated Statements of Cash Flows(Millions of yen)

FY2015FY2016(July 1, 2015–June 30, 2016)(July 1, 2016–June 30, 2017)

Cash flows from operating activities
Income before income taxes

17,78628,768Depreciation

6,931

6,418

Impairment loss
Increase (decrease) in allowance for doubtful accounts

31

—

1,520

(171)

Increase (decrease) in accrued employees’ bonuses

443

401

Increase (decrease) in net defined benefit liability

(263)

(247)

Increase (decrease) in accrued directors’ retirement benefits

(75)

16

Increase (decrease) in provision for board benefit trust—

74

Increase (decrease) in accrued warranty costs

69

32

Increase (decrease) in provision for loss on order received

435

227

Interest and dividend income

(364)

(419)

Interest expenses

797

511

Subsidy income

(151)

(98)

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

(299)

(203)

Loss (gain) on sales of non-current assets
Decrease (increase) in notes and accounts receivable - trade

(60)

387

(5,888)(10,732)

Decrease (increase) in inventories

(328)

(161)

Increase (decrease) in notes and accounts payable - trade

3,844

12,680

Increase (decrease) in advances received

700

2,634

Increase (decrease) in accrued consumption taxes

162

76

Other

1,461

1,866

Subtotal

26,75042,060429

488Interest and dividend income received
Interest expenses paid

(805)

(510)

Income taxes paid

(2,666)(4,219)Net cash provided by (used in) operating activities

23,70837,818

Payments into time deposits(1,950)(12,317)

Proceeds from withdrawal of time deposits

1,896

4,347

Purchase of property, plant and equipment and intangible assets(5,947)(6,515)

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

316

234

Payments for investments in capital of subsidiaries and associates

(286)

—

Proceeds from subsidy income

293

240

Cash flows from investing activities

84

298

(5,593)(13,713)

Net increase (decrease) in short-term loans payable(23,752)(11,668)

Proceeds from long-term loans payable

13,610—

Repayments of long-term loans payable(9,196)(8,313)Other
Net cash provided by (used in) investing activities
Cash flows from financing activities

Repayments of lease obligations

(397)

(368)

Cash dividends paid

(491)

(1,477)(11,854)(260)

Purchase of treasury shares

(368)

(494)

(32,448)(22,580)

Effect of exchange rate change on cash and cash equivalents(2,474)

1,168

Net increase (decrease) in cash and cash equivalents(16,808)

2,693

Cash and cash equivalents at beginning of period

61,67044,862

Cash and cash equivalents at end of period

44,86247,555

Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities

ULVAC Value Report 201752

Financial Data/Corporate Information

Company Data/Stock Information

Company Profile  As of June 30, 2017

Stock Information  As of June 30, 2017Name:

ULVAC, Inc.

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

Trademark:

ULVAC

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

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

Total number of shareholders……………………………………12,385

Established:

August 23, 1952

Capital:¥20,873,042,500

Number of
employees:

Non-consolidated 1,225
Consolidated 6,072

ULVAC Group Companies
ULVAC Group Companies in Japan

Overseas ULVAC Group Companies

Bases of ULVAC, Inc.

Overseas ULVAC Group companies

Bases of ULVAC Group companies in Japan

Sales and service bases

Service bases (ULVAC TECHNO, Ltd.)

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

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

• ULVAC Materials (Suzhou) Co., Ltd• ULVAC TOHOKU, Inc.

• ULVAC Human Relations, Ltd.

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

• ULVAC KIKO, Inc.

• SHINKU CERAMICS CO., LTD.

• ULVAC CRYOGENICS (NINGBO) INCORPORATED• ULVAC EQUIPMENT SALES, Inc. • FINE SURFACE TECHNOLOGY CO., LTD.

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

• ULVAC CRYOGENICS INCORPORATED • Reliance Electric Limited• ULVAC Research Center SUZHOU Co., Ltd.

• ULVAC-PHI, Inc.
• TIGOLD CORPORATION53• ULVAC (Shanghai) Trading Co., Ltd.

• SHOWA SHINKU CO., LTD.

• Hong Kong ULVAC Co., Ltd.
• ULVAC VACUUM EQUIPMENT (SHANGHAI) CO., LTD.

Number of Shareholders

Total 12,385 shareholders……………11,800

Individuals and Other
Foreign Companies…………………………………………281

Domestic Companies…………………………………………………………163

Securities Companies………………………………………………………………………64

Financial Institutions………………………………………………………………………55

Foreign Investors……………………………………………………………………………21
Treasury stock: 1 shareholder

Number of Shares Held

Total 49,355,938 shares………… 19,623,417

Foreign Companies
Financial Institutions……………… 18,001,420

Individuals and Other…………………………………………………… 6,232,747

Domestic Companies…………………………………………………………… 3,331,028

Securities Companies……………………………………………………………… 2,141,006

Foreign Investors……………………………………………………………………… 22,913

Major Shareholders
Number of shares Shareholding(thousands)
ratio (%)

Shareholder’s name
Nippon Life Insurance Company

3,242

6.57

Japan Trustee Services Bank, Ltd. (Trust account)

3,193

6.47

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

1,983

4.02

Mizuho Bank, Ltd.

1,916

3.88

Sumitomo Mitsui Banking Corporation

1,864

3.78

THE BANK OF NEW YORK, NON-TREATY JASDEC ACCOUNT

1,098

2.23

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

910

1.84

TAIYO HANEI FUND, L.P.

884

1.79

THE BANK OF NEW YORK MELLON 140044

878

1.78

STATE STREET BANK AND TRUST COMPANY 505019

772

1.56

Note: T reasury stock (3,407 shares) is excluded from the calculation of shareholding ratios.

Treasury stock: 3,407 sharesNorth America• ULVAC Technologies, Inc.
• Physical Electronics USA, Inc.

TaiwanSouth Korea

Southeast Asia

• ULVAC TAIWAN INC.

• ULVAC KOREA, Ltd.

• ULVAC SINGAPORE PTE LTD• ULTRA CLEAN PRECISION TECHNOLOGIES CORP.

• Ulvac Korea Precision, Ltd.

• ULVAC MALAYSIA SDN. BHD.

• ULCOAT TAIWAN, Inc.

• Pure Surface Technology, Ltd.

• ULVAC (THAILAND) LTD.

• ULVAC AUTOMATION TAIWAN Inc.

• ULVAC CRYOGENICS KOREA INCORPORATED• ULVAC SOFTWARE CREATIVE TECHNOLOGY, CO., LTD.

• ULVAC Materials Korea, Ltd.

India

• ULVAC Materials Taiwan, Inc.

• UF TECH, Ltd.

• ULVAC, Inc., India Branch
ULVAC Value Report 201754

Corporate Communications Team
General Administration 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/