Sustainability Report 2011
Year ended March 31, 2011

SUSTAINABILITY REPORT 2011

USHIO Group at a Glance
USHIO INC. began operations as a manufacturer of industrial light sources in 1964.
The company has since evolved into a “light creator” that provides light units,
equipment, and systems as well as “light solutions” through developing new lightsources and developing and applying proprietary optical technology.

Net Sales

Segments
Other
Businesses

Equipment Business

2%
Equipment
Business

58%

FY2010¥145.1 billion
Light Sources Business
Light Sources
Business40%

As of March 31, 2011

Company NameUSHIO INC.

Head Office2-6-1, Otemachi,
Chiyoda-ku, Tokyo, Japan

EstablishedMarch 1964

Paid-In Capital¥19,556,326,316

Employees

5,269 (Group-wide)

Other Businesses

Our Goals for this Sustainability Report
In planning USHIO’s Sustainability Report 2011, we thought about what kind of
stakeholders would be taking the time to read it, and what information weshould provide for those stakeholders. We decided to report different information in the booklet and online versions to suit each respective format. We also
added a glossary of specialist terminology at the bottom of each page. This
report was written in our own format based on: Global Reporting Initiative(GRI) Sustainability Reporting Guidelines, Generation 3 (GRI G3), and theEnvironmental Report Guidelines (Fiscal Year 2007 Version) from the Japanese
Ministry of the Environment.

Approach to Materiality at the USHIO GroupHigh

Importance to stakeholders

Corporate Profile

High

Rank C

Rank B

Rank A

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Reportingin printed
material

Reporting throughweb and other media

tri

In

High

Importance to USHIOContents

Sub-segments and Main Products
Visual image equipment· Digital projectors for cinemas· Digital projectors for non-cinema applications(control rooms, simulators, signage, virtual reality,
and others)

Optical equipment· Optical equipment for manufacturing semiconductors, flat panel displays and electronic
components (exposure systems, photo-cleaning
units, photocuring systems, and others)· UV phototherapy devices and other medical
equipment· EUV light sources for next-generation semiconductor lithography

Discharge lamps· UV lamps for manufacturing semiconductors, flat
panel displays, and electronic components· A range of lamps and industrial LEDs for use incinema projectors, data projectors, office equipment, illumination, and other optical equipment

Halogen lamps· For use in office equipment· For illumination applications (commercial facilities,
stage and studio lighting, specialized lighting,and others)· Halogen heaters

Key Strengths· Global market share for digital cinema projectors 45%

C2

USHIO Group at a Glance

2

Top Message

5

Feature:10

USHIO’s CSR

13

GovernanceCorporate Governanceand Compliance· Global market share for UV curing equipment forbonding LCD panels 70%· Global market share for step-and-repeat projection
lithography tool for flip chip substrates 95%· Global market share for roll to roll projection lithography
tool for TAB/COF 100%14

PeopleRelationship with Employees
16

Quality

Relationship with Customers
and Business Partners· Global market share for· Global market share for lamps
UV lamps for lithography
for cinema projectors 55%
75%· Global market share for· Global market share forlamps for document
surface cleaning equipscanners 70%
ment for LCD panels 85%

1820· Plastic forming applications, peripheral machinery· Industrial machinery and systems• Scope of Report

In addition to preparing the Sustainability Report 2011
based on the approaches outlined on the left, we provide
more comprehensive and detailed reporting on our Web
site. Please refer to the USHIO corporate Web site fordetails at the link shown below.

Time Period:

This report basically covers FY2010(April 1, 2010 to March 31, 2011),
but also includes some continuing
activities from before FY2010, andsome activities in FY2011.
Organizations: All USHIO business sites and groupcompanies worldwide• The Tri-colored Leaf–A Symbol of the USHIO Group’s Activities
The Tri-colored Leaf that appears on the cover of this report is designed to symbolize the three
primary colors of light in a budding leaf motif that symbolizes the natural environment. At the sametime, the design represents three elements of sustainable management—financial viability (red),social responsibility (blue), and regard for the environment (green). Our goal is to grow each of theseleaves through steady, daily activities, until they produce a powerful trunk.

Environment

Environmental Vision
and Management
Global WarmingCountermeasures
Contributing to theEnvironment
Through Products
Conserving Resources· Global market share for lamps for fixing toners 65%• Use of Web site

Society

Relationship with Society

Machinery for industrial uses and others

http://www.ushio.co.jp/en/csr/index.html

Nurturing Plants
with Light
How Agriculture
Becomes a Science

24

Financial Reporting

25

Third-Party Opinion
Response to Third-Party Opinion

For detailed information about
the USHIO Group’s businessactivities, please see our
Annual Report 2011, and our
Web site.

1Top Message
In March 2011, Japan was struck by an earthquake andtsunami of unprecedented size. I would like to start byextending my deepest sympathies to those who wereaffected by the Great East Japan Earthquake, and offering
my prayers for their swift recovery.
USHIO responded to the earthquake by immediately
establishing a Disaster Response Headquarters and working
as a group to gather information and respond as needed.
Fortunately, no employees in Japan were injured or suffered
any physical losses, and Group companies were quickly able
to recover despite slight damage sustained by production
facilities. From April onward, USHIO established an Operation
Countermeasures Committee under the president, to make astronger framework for ongoing cooperation and links inoperations company-wide.
This disaster has caused industries to reflect long andhard. They have been made to see that many of the capacitors, ICs and other high-use, core electrical components
used widely around the world are made in factories locatedin the Tohoku area; more so than they had thought. Even one
missing part can prevent the assembly of a product that uses
hundreds or thousands of parts. To sustain society, we must
be able to provide products and services under any circumstances. This is the reason that companies exist, and it is
one of their most important responsibilities to society. In thissense, the aftermath of the disaster has been a painful
reminder to corporate management of the importance ofmanaging risk.

<Ushio’s measures in response to the Great East
Japan Earthquake>· Donated relief funds through the Japanese Red Cross
Society and other organizations· Supported recovery of suppliers in disaster-affected areasand secured relief support items (sent drinking water andrelief funds, dispatched delivery trucks, etc.)· Supported recovery activities for customers in disasteraffected areas and established a product delivery system
in line with recovery status.
· Established an Emergency Power-Saving Committee torespond to rolling blackouts due to supply shortages,
revised production shifts, reorganized production bases,
and implemented measures to reduce fixed power
consumption.

2

USHIO has many products that have a high market share.

Steady Development of the Digital Cinema Business

Now more than ever, people are asking us about how we

For example, the USHIO Group has the top share of theraise efficiency in daily operations, and how we implement

global market for cinema projectors, and we are vigorously

risk management for rare but significant events.

promoting a shift from conventional film projectors to digital
cinema projectors.

CSR Derives from Everyday Operations

A reel of cinema film for a single movie has a diameter of

The USHIO Group has set out the 2020 Environmental

around 1.5 meters, containing several kilometers of film.

Vision. In fiscal 2010, we formulated our Third Environmental

Numerous copies of this film must be made and distributed

Action Plan and took steps to help preserve the environment.

to cinemas throughout the world, requiring significant

At the same time, we moved quickly to establish a frame-transport-related use of petroleum resources. By contrast, thework to strengthen our corporate social responsibility (CSR)

digital format allows a movie to be contained in a single small

activities in general. From fiscal 2011 we formulated andhard disk—and in some cases, even this is not needed as

published a CSR Action Plan to clarify our focus areas forthe movie can also be distributed via satellite communication.

CSR initiatives. We believe that creation of this plan will help

Moreover, in addition to energy- and resource-saving ben-our existing CSR activities penetrate further into the daily

efits, digital cinema projectors are also capable of rendering

operations of every part of the Group, thereby promoting

finer quality images, 3-D and other advantages to enrich the

CSR even further.

cinema experience. As such, they are rapidly being adopted

In fiscal 2010 especially, the overseas portion of our net

at cinemas in mature regions such as Japan and the U.S.

sales surpassed 70%, and the number of overseas employees in the Group reached 3,041 persons, versus 2,228 in

Solid-state Light Sources BusinessJapan (USHIO and group companies in Japan). We will work

White LEDs for common everyday lighting needs are drawing

to strengthen interaction and links across the Group and toattention recently as an environmentally friendly technology

match operations to diverse regions and personnel. We willthat saves electricity. The adoption of solid-state lightalso ensure that compliance is rigorously upheld throughout

sources in projectors has proved to be a challenge however,the Group.

as projectors require an unusually powerful light source. To

In October 2010, USHIO formally declared its support formeet this challenge, and hasten the development of a

the United Nations Global Compact of principles concerning

powerful laser light source for use in cinema projectors,

human rights, labor standards, the environment, and anti-

USHIO made U.S. semiconductor laser manufacturer Necsel

corruption. As the spheres of corporate activity become

Intellectual Property, Inc. into a wholly owned subsidiary.

global, we believe it is important that the scope of CSR
initiatives also expands internationally.

A great benefit of lasers is their long operating life. Anotheradvantage is their potential ability to produce more vivid
images. In the near future, USHIO plans to lead the industry

USHIO Group’s Medium-term Management
Plan and CSR

by introducing a laser light source for projectors on to the

The USHIO Group’s medium-term management plan, known

this goal.

market. The entire USHIO Group is working together towards

as the Medium-Term Vision, sets out targets for net sales,
operating income and other financial measures. It also lists
six themes for key business strategies. These themes set out
a clear direction for USHIO to develop a sustainable business. They show how USHIO can contribute to the creationof an abundant society by providing products and technological solutions through its light-related businesses.

3Top Message

Promoting Environmentally Friendly Businesses

Another example of further application is in using artificial

USHIO’s environmental initiatives take two forms: reducing

light both to grow plants and to control weeds. This exciting

impact on the environment at factories, and making environ-field is explored in the feature section of this report. We hopementally responsible products. Since its inception, USHIO

that readers will find it informative and interesting.

has worked to produce light more efficiently and make lightsources with longer replacement cycles. At present, theWe aim to continue to provide satisfaction and hope to all

equipment business has grown to account for around 60%

of our stakeholders. To this end USHIO will continue to seekof our operations, and our environmentally-focused R&D

new fields where it can make a unique contribution.

activities cover not only light sources, but the power supply
and all other components that they need. Another project
under development is modules for manufacturing solar cells.
Looking ahead, we believe there are even wider environmentrelated applications for light, such as safe, reliable chemicalfree processes for disinfection and water purification.

Shiro Sugata
President and Chief Executive Officer

USHIO’s Vision for the Three Years to March 31, 2014
Quantitative
Targets

Key Business Strategies
1. Aiming at steady growth of digital cinema
business and further development of noncinema business
2. Reinforcing the development of leading-edge
photo lithography and promotion of its business3. Promotion of solid-state lighting business4. Developing the product lineup for LCDs, semi
and fine PCB markets
5. Focusing on environment-friendly business6. Promotion of business alliances, joint ventures,and M&A· Acquired Luminetx· Acquired 49% of NECSEL· Capital and business alliance with ADTEC Engineering· Agreement with Philips to acquire the EUV business· NECSEL became a wholly owned subsidiary· Agreement with Shochiku and Warner Mycal tointroduce a program for digitalizing cinemas in JapanNet Sales¥210 billion

ROE
At Least 10%

Operating
Income¥27.5 billion

2008

4

2009

2010

2011

2014

Feature

Nurturing Plants with Light
How Agriculture
Becomes a Science
Business activities that help protect the environment
Global population growth is creating problems involving food, water and the environment. Healthcare systems are needed to care for aging populations. Energy problems are emerging as more
people worldwide enjoy better living standards. Dealing with these problems will demand
extensive and well-planned initiatives.
USHIO believes that “light” is one pathway to solving these problems. We have many years ofexperience in the use of a broad array of optical technologies. Using our accumulated expertise,
we believe we can make an even greater contribution to society as a manufacturer of industrial
light sources, medical devices and environmentally responsible devices.
USHIO is currently participating in more than 30 projects in Japan and overseas that bring
together private-sector, public-sector, academic, venture capital and other partners in a cooperative framework to help create a recycling-based society. We are using this collaboration to transform new types of light into viable products and businesses. All manufacturers today haveenvironmental obligations including energy conservation, the 3Rs,* the efficient use of materials,
developing “green” products and other activities. But our commitment to social responsibility
goes farther. We will utilize the full potential of light to create a better future and innovative ideas
for new types of light. We strongly believe that this is the mission of USHIO as a manufacturer thatspecializes in light.
* The three R’s are Reduce, Reuse and Recycle. They are key words in the drive to achieve a recycling-based society that places aminimal burden on the environment.

5

Feature

New Industries Originating From Agriculture

Nurturing Plants with Light
Today, we can purchase a rich variety of fresh fruits and vegetables almost any time of the year. Since
agriculture shifted from open fields to greenhouses and other enclosed environments in the 1970s,
farmers have been able to meet the needs of consumers for fresh produce throughout the year.
Today, consumer needs involving food have advanced even further to include preventive healthcare. In response, the agricultural sector has started to create “plant factories” that grow producewith both nutritional and medicinal benefits.

Our constantly evolving perception of food
People have always perceived food as a source of calories, minerals, vitamins and other vital nutrients.
But since the 1970s, there has been a growing demand for food that tastes better and makes life
more enjoyable and fulfilling. In Japan, one result was demand for a year-round supply of fresh
vegetables that are normally seasonal and cannot be imported. The need for these vegetables grewsteadily since the 1970s, mainly in the restaurant industry. Today, about 80% of Japan’s tomatoes,
cucumbers, bell peppers and other vegetables are grown in artificial environments to maintain a steadysupply all year round.

The transformation of agriculture
Seeking ways to grow vegetables and other agricultural products continuously and efficiently has beena major theme of agricultural research for many years. The goal is to grow these plants even in locations and seasons where they do not survive in nature. Traditional agriculture relies on experience andintuition to grow crops outdoors where they are vulnerable to changes in the weather. But agriculture
today uses high-tech equipment and environmental control systems to grow plants scientifically. Onlyin this way can the needs of consumers be satisfied. To advance to the next step, research is currently
focused on two new themes. One is “plant factories” that use artificial light. The other is “functional
vegetables” that incorporate antibiotics, vaccines or other substances that enable the prevention ofhealth problems through food.

6

Using Light to Control Plant Growth
My research involving the relationship between light and plants has revealed that light is the mostimportant factor that influences how plants grow. My goal is to accumulate detailed data about lightand functional plants. For example, I want to know how much 310nm wavelength light is needed tohave a molokheiya plant produce a particular amount of chlorogen, which is a type of polyphenol.
My research is greatly assisted by LEDs, which generate light at precise wavelengths. Incidentally,
growing rice requires light with 10 times the intensity of ordinary artificial light. That means moreheat is produced along with the light. I asked USHIO LIGHTING, INC. to develop an LED unit for
growing rice. They created a unit that has fewer LEDs and uses an advanced heat removal system.
Eiji Goto,

Agriculture is not the only beneficiary of USHIO’s breakthrough. The new LED unit also holds much

Professor of Agriculture
Chiba University

potential for speeding up the use of LED illumination systems in all types of primary industries.

The shared origins of functional vegetables and medicinal foods
Many common foods contain well-known substances that promote good health. For instance,
tomatoes have lycopene, tea has catechin and blueberries have anthocyanin. New substances arestill being discovered. One example is lutein, which is found in large quantities in turnip leaf andspinach. A powerful antioxidant, lutein is believed to help prevent eye problems like cataracts andmacular degeneration. Basic research in fields like genetic engineering may produce more breakthroughs. One current research theme involves incorporating an influenza vaccine in rice. This
“edible vaccine” would eliminate the need for injections. Agricultural products with both nutritionaland medicinal value have many advantages. They can be consumed safely by people of all ages,
and effectively provide vaccines in unsanitary regions without the use of syringes. The same
technology can also be used to place vaccines and drugs in animal feed. Overall, there is muchpotential for preventing infectious diseases and other hazards.

Light and plant factories
How do you grow functional vegetables? The main requirement is an environment that is not affectedby the weather, regional characteristics or other aspects of the natural environment. Plant factories
with completely artificial environments are the answer. These facilities can use a number of advantages to provide a consistent supply of fruits and vegetables: no agricultural chemicals are needed
because the factory shuts out insects and diseases; harvest volumes and times can be accurately
predicted; and furthermore, only the minimum amounts of water and fertilizer are required. Anotheradvantage is the ability to artificially control temperature, humidity, air currents, the level of CO2 andother items that determine the growing environment. With this flexibility, growers can produce cropsthat have added value by consistently including desired properties and functions. Critical to creating
this added value is the most important factor affecting the growth of plants: light.

7

Feature

Light gives life to plants

How Agriculture
Becomes a Science
Light—Essential to the survival of plants and animals
We tend to take the immense benefits that light provides for granted.
But we still have much to learn about the properties of light.

Do plants “see” light?
Seeds sprout in the spring. Then plants grow rapidly in the warmth of summer and produce flowers. In the autumn, we harvest fruit and other end results of this growth. How do plants know when
the time is right for each step? Plants are subject to fluctuations in temperature, humidity and otherenvironmental conditions. The most importance of these is the wavelength of light, and the duration of exposure. Red light is needed for seeds to sprout. For growth (photosynthesis), plants
require red and blue light. Flowers bloom when there is even more red light along with long hours
of exposure. Then fruit, grain or other types of food emerge under red and blue light. Ultraviolet
light is needed to make agricultural products even more nutritious. Plants time their growth to precisely match seasonal changes in the wavelengths of light and hours of sunlight. Clearly, plants
have some type of “eye” that detects the wavelengths and the duration of exposure to light. This
enables them to control the timing of their growth.

Growing plants with light from USHIO
Skillful use of this “eye” allows growing plants to achieve specific objectives. For instance,
photosynthesis produces sugar when a plant’s chlorophyll is exposed to light with a wavelength of
400–700nm. The amount of sugar is almost directly proportional to the intensity of the light. We
can use this knowledge to expose plants to light of a specific frequency during each phase of its
development. Growing plants in this manner will open the way to producing functional vegetables
while controlling cultivation times and the amount of nutrients they contain.

The relationship between light and how plants growRed light

Ultraviolet lightBlue light

Red light(large volume)
Red light
Blue light

Red light

Seeds sprout

8

Plant growth(photosynthesis)

Flowers bloom

Fruit forms

More nutrients

Weed Control Using Light
Plastic greenhouses used to grow tomatoes in Japan are often surrounded by horsetail, (equisetum
arvense) one of the most difficult weeds to eradicate even with herbicides. I asked USHIO to makea UV device to test how UV rays affect about 20 varieties of weeds. My experiments succeeded indemonstrating that horsetail grows hardly at all when exposed to UV light. Next, I want USHIO todesign a UV device that requires no special power unit by using solar cells or other power sources.
The unit should be effective in only a short time and consume as little electricity as possible. Many
researchers are studying weeds in Europe and the U.S. But no one is using light. Our researchteam wants to be at the forefront of progress in the field of weed control.
Masaru Ogasawara,
Professor of Agriculture
Utsunomiya University

One example is the use of rice as an “edible vaccine.” Scientists want to know what kind ofcompounds will develop in rice with variations in the timing, wavelengths, and length of exposure
to light. Research has been performed with a variety of light sources. To support studies using
LEDs, USHIO partnered with Chiba University to develop a high-output LED unit to enable grain to
be grown under artificial light for the first time.* The unit produces two types of light. Red LEDs
generate the 660nm wavelength light needed for photosynthesis. Blue LEDs provide the lightrequired for morphogenesis, the biological process in which a plant forms its distinctive structure.
USHIO combined these LEDs with its exclusive technologies for dissipating heat, mounting LEDs
and creating optical designs. Using this device facilitates very efficient tests to ascertain how eachwavelength of light generated by LEDs influences the growth of plants. Chiba University is alreadyusing USHIO’s innovative LED unit to perform this research.
* First time in the world for grain (as of October 31, 2010)

Weeds vs. UV light
In other research, scientists are studying ways to use light to intentionally prevent plants from growing. Currently, herbicides and manual labor are the only ways to remove weeds. Although modern
herbicides are safe to use, there are concerns about the considerable detrimental effect on theenvironment. Furthermore, herbicides are not suitable for parks, along highways and railroads, andin many other locations. Removing these weeds by hand is a costly task for local governments andcompanies. The solution is to use ultraviolet rays to prevent weeds from growing.
Plants grow as chlorophyll uses the energy in light to synthesize adenosine triphosphate (ATP). For
red light, plants take in only the amount of light that they can use. But when exposed to a type of UVrays that normally do not reach the Earth’s surface, the energy in this light combines with oxygen to
produce reactive oxygen. The resulting oxidation causes the plant to die. At Utsunomiya University,
scientists are using USHIO’s UV-XEFL® mercury-free light source to expose plants briefly to UV radiation. The aims are to stop the growth of vines and prevent flowers from blooming and pollinating. This
research may lead to new ways to block growth and the production of seeds by unwanted plants.

Rice is bathed in light from
USHIO’s high-output LED
units. This trial is the firsttime in the world that grain
has been grown underartificial light.

USHIO’s vision
As you can see, there are still many unexplored frontiers in the field of light. Agriculture is just oneof many areas where progress in the use of light can yield major benefits. USHIO has much expertise in optical technologies cultivated in industrial fields like semiconductors, LCDs and electronic
components. We are determined to extend this know-how to other areas. Air and water pollution,
optical medical care and diagnoses, and new energy sources are just a few of the many fields
where we are applying our expertise. We will continue to take on these global challenges, finding
innovative solutions that use light.
The mercury-free UV-XEFL®
is the world’s first UV lightsource that permits selectionof a particular wavelength.

9

USHIO’s CSR
Approach to Corporate Social Responsibility (CSR)
We consider it natural that a corporate citizen should observe
laws and regulations, contribute to society, and take steps toprotect the environment. These are the foundations of all corporate activity. In addition, a corporation should build good relationships with its various stakeholders and advance by creating andoffering new value to contribute to society. This is the kind of
corporation that USHIO is working to become.

Society

Provide new value to society
through excellent products
and excellent service
USHIO

Build good
relationships

Stakeholders

Compliance

USHIO Group Management Philosophy

10 Action Guidelines

The USHIO Group’s approach to CSR can be seen in the management philosophy underpinning all activities of USHIO andUSHIO Group members. In 1965, the year after the Company
was founded, four key emphases were created based on thedesire to make USHIO an indispensable company for everyone
by drawing on the wisdom of employees to grow. The wordingof these four key emphases has been revised over the years toreflect the changing times.

To translate our management philosophy into concrete action,
we abide by the 10 Action Guidelines listed below. These guidelines shape the goals and behavior of every USHIO employee.
Chapter 1
We shall aim to be a company that accepts diverse individual
qualities and values and where people work together
and pursue self-learning and self-improvement.
Chapter 2
We shall strive for the company’s sustainable growth throughour innovative, proactive and prompt management.
Chapter 3
We shall respect the basic human rights of all individuals
and endeavor to create bright, safe and pleasant working environment.
Chapter 4
We shall provide high-quality, safe products and services
at appropriate prices and carry out fair and equitable business
transactions.
Chapter 5
We shall work to earn the understanding and trust of society.
Chapter 6
We shall comply with laws and regulations and carry out
fair business activities in accordance with socially accepted practices.
Chapter 7
We shall fulfill our duties to the best of our abilities
in conformity with internal regulations and standards.
Chapter 8
We shall promote environmental protection
and the efficient use of resources.
Chapter 9
We shall carry out proactive public relations activities while respecting
the value of information and intellectual property rights of third parties.
Chapter 10
We shall contribute to the development of respective regions
where we conduct business as a member of the international community.

Glossary
CSR (Corporate Social Responsibility): The responsibility of a company as anentity in global society.
Stakeholders: People who are concerned or affected in some way by the decisions and actions of an organization. Generally described as people who have a
stake in a company.

10Compliance: Literally, compliance with laws and regulations. At one point this was
all the word was taken to mean, but in recent years it has come to include observing
the rules and norms of society, and contributing to society.

http://www.ushio.co.jp/en/csrprogram (Toward Realizing a Sustainable Society)

Formulation of a CSR Action Plan
From fiscal 2011, USHIO has created a CSR Action Plan (Policy)
and taken steps to reinforce its CSR initiatives. The plan covers
items classified under the five pillars of governance, people,

Five pillars

Governance

IssuesEstablish a compliance thatencompasses international
standards in global corporate
activities, work to publicize CSRrelated information and establish
stakeholder communication,and strengthen and enhance thegovernance framework

Page 13

Considering workplace environments, human rights, anddiversity of values in hiring andusing human resources

Page 14

Specific action policies

Promulgation
throughout thecompany

Further promulgate management philosophy and 10 action guidelines

Internal control

Establish a system for internal control and step up implementation

Global measures

Establish a global CSR promotion system (Understand the current status ineach country)

BCP

Conduct activities to raise awareness of CSR inside the Company

Establish and promulgate a system for disaster preparation and accident
prevention (Safety standards, disaster preparation standards, etc.)
Review and strengthen product supply systems

Compliance andethicsBuilding
information
security systems

Specify the laws and regulations that relate to USHIO’s operations,and ensure they are observed, along with relevant internal rules.
Stay abreast of changes and trends in relevant laws and regulations.
Restructure information security levels to meet regulation levels.
Expand internal education about information security

Fair and impartial
business activities

Maintain and develop sound relationships with all stakeholders

Protecting
property rights

Observe intellectual property protection policy

Human rights

Peoplequality, society, and environment. These items are then broken
down further into action policies.

Promotion ofdiversity

Promote education on human rights, cultivate and practice a spirit of respect forother people, respect the dignity of the individual, eliminate discrimination
Promote the 10 principles of the United Nations Global Compact throughout
the Company
Achieve and maintain a ratio of employees with disabilities above the legallyrequired minimum
Increase the ratio of female employees on the main and management career tracks
Work to reduce working hours as a way of promoting work-life balance

Promotion ofwork-life balance

Give consideration to employees who are raising children
Make child-raising programs easily accessible, and promote an environment freefrom gender-role prejudice

Health and safetymeasures

Work to reduce the number and severity of work-related accidents

Human resources

Employ a wide range of personnel, review and improve systems for training,
human resource management, and evaluation
Carry out CSR awareness raising activities in the supply chain

Quality

Initiatives to meet the needs ofcustomers, shareholders, andbusiness partners based on
observance of market rules,
and regulations

Page 16Society

Engage widely with society at alllevels from local to international,
cooperating and coordinatingwith other groups in contributing
to education, culture, welfare,development and other aspectsof society

CSR Procurement

Examine options for carrying out CSR awareness raising activities in supply chainsof Group companies

Quality

Inculcate measures to raise quality, product safety and customer satisfaction

Creation ofsolutions to meet
new social needs

Develop products with global application and create markets

Social contribution
activities

Increase activities to contribute to local communities, and step up participation inenvironmental activities

Environment

Promote Phase Three of the Environmental Action Plan (Refer to Phase Three of
the Environmental Action Plan for details)

Page 18

Environment

Engage in corporate activities toprotect the environment. Strive tomeet both environmental and business needs, including addressing
global environmental problems
affecting biotopes

Page 20

Internal control: The process of forming rules for conducting business appropriately within an organization such as a company, and ensuring business is conductedin accordance with these rules. In the wake of incidents of large-scale financial
reporting and accounting fraud in the U.S., compliance has become an important
issue worldwide.

Social needs: Among the various needs in the world today, this refers to needsin public or social areas such as the environment, poverty, human rights, welfare
and health.

11

USHIO’s CSR

CSR Promotion Framework

United Nations Global Compact’s Ten Principles

USHIO has established a CSR Committee, which is chaired by
the president. The committee decides on policies for the whole
Company relating to CSR initiatives. The CSR Committee
establishes subcommittees as needed to oversee practicalimplementation of the policies it has decided, and discusses
specific initiatives and ways to promote them.

USHIO has declared its support for the United Nations Global
Compact of principles concerning human rights, labor standards,
the environment and anti-corruption. We have joined the local UN
network supporting the compact, Global Compact Japan Network,and have taken an active role in various sectional activities.

CSR Promotion Framework

CSR Committee(Chairperson: president)
CSR
Department
Separate subcommittees
for each initiative

UGN

Group
companies

Business Divisions

United Nations Global Compact’s Ten Principles and Our Initiatives
United Nations Global Compact’s Ten Principles

Human
RightsLabor
Standards

Environment

AntiCorruption

USHIO’s Related Initiatives

Principle 1

Businesses should support and respect the protection of internationallyproclaimed human rights; andPrinciple 2

make sure that they are not complicit in human rights abuses.

Principle 3

Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining;

Principle 4

the elimination of all forms of forced and compulsory labor;

Principle 5

the effective abolition of child labor; andPrinciple 6

the elimination of discrimination in respect of employment and occupation.

Principle 7

Businesses should support a precautionary approach to environmental
challenges;

Principle 8

undertake initiatives to promote greater environmental responsibility; andPrinciple 9

encourage the development and diffusion of environmentally friendly
technologies.

Principle 10

Businesses should work against corruption in all its forms, including
extortion and bribery.

The third section of USHIO’s 10 Action Guidelines
sets out clear requirements for respecting basic
human rights for all people, and prohibits unfair
discrimination, among other measures.
e Pages 10, 14
The USHIO Group respects the International
Labour Organization’s Declaration on Fundamental
Principles and Rights at Work. Under the third
section of USHIO’s 10 Action Guidelines, theCompany strives to promote good labormanagement relations, abolish discrimination in
the workplace, and create working environmentsthat are cheerful, safe, and comfortable.
e Pages 10, 14
Section 8 of USHIO’s 10 Action Guidelines
clearly states the Company’s position on actively
working to protect the environment. We also
formulated our 2020 Environmental Vision andare now working to implement Phase Three of theEnvironmental Action Plan.
e Pages 10, 20
Under section 6 of the 10 Action Guidelines,
USHIO strives to prevent corruption and to
conduct fair business activities. We have also
set up a Compliance Committee and the USHIO
Hotline (internal reporting system).
e Pages 10, 13

Glossary
The United Nations Global Compact: This initiative was set up in 1999 by Kofi
Annan, the United Nations secretary general at the time. The Global Compact calls
for organizations to take practical steps to follow ten principles relating to humanrights, labor standards, the environment and anti-corruption.

12

UGN: Ushio Green Network. An organization for promoting environmental action andinformation sharing at USHIO Group sites.

http://www.ushio.co.jp/en/governance (Corporate Governance System)

Governancehttp://www.ushio.co.jp/en/compliance (Compliance)

Corporate Governance and Compliance
The basic policy of the USHIO Group is to ensure the transparency and efficiency of the Group’s management, andincrease corporate value to meet the expectations of all of the Group’s stakeholders. To this end, we place theestablishment and maintenance of systems of internal control, incorporating compliance with laws, regulations,social norms, corporate ethics, and J-SOX regulations, as a top management priority and make every effort topromote these systems.

Corporate GovernanceWithin the management control structures of USHIO, we haveestablished the Board of Directors, which determines management policies and makes decisions about other matters of thehighest importance. The directors also oversee the managementof business operations. Meanwhile, the representative directors
are responsible for conducting business operations. The Boardof Directors has a regular meeting once a month in principle, andunscheduled meetings are held when necessary. We also have a
Board of Corporate Auditors as an auditing body with six members including three outside corporate auditors. Each corporate
auditor conducts audits within their specialized field of auditing.
Furthermore, to assist the Board of Directors in reaching decisions, we established the Executive Council and the Group
Coordination Council. These advisory units examine and discuss

management strategies and medium- and long-term management policies with respect to USHIO and the entire Group. In
addition, the USHIO Group has a business unit structure and an
executive officer system for the purposes of strengthening andspeeding up the execution of business operations by the representative directors.

Compliance
It is widely recognized that breaches of compliance can undermine the very foundations of the public’s trust in a company or
government, and carry a risk of significant losses through claims
for damages, and sharp declines in sales. At USHIO we haveestablished a Compliance Committee to address compliancerelated concerns, including potential risks, across the entire
Group as early as possible.

USHIO’s Internal Control Framework

General Meeting of Shareholders
Appointments andremovals

Appointments
and removals

Board of Directors

Appointments
and removals

Reporting
ReportingBoard of Corporate Auditors

Auditing• Appointments Reporting
and removals• Supervision

Appointments
and removals

Independent Auditing Firm

• Approval of appointments andreappointments• Evaluation of appropriatenessof financial audits

Auditing

Reporting

Reporting

Representative Directors
Product Liability Committee
Instructions andsupervision

Reporting about
important matters

Security Export Control Committee
CSR Committee

Executive Council

Compliance Committee• Deliberate important matters• Oversee implementation

Business Auditing Department
Submitting policy
proposals and plans

Authorization of policy
proposals and plans

Divisions, subsidiaries, affiliates* Established July 2011

Glossary
Corporate governance: This refers to a company’s mechanisms for management
and supervision. Supervision refers not to monitoring for suspicious activity inmanagement, but rather setting targets for management and evaluating performance.
In other words, a mechanism for ensuring that management is managing thecompany for the shareholders.

J-SOX: This refers only to the section of Japan’s Financial Instruments andExchange Law of June 2006 that relates to the obligation to submit an internal
control report. As the Japanese version of the SOX law, it is referred to as J-SOX.
PL: This refers to Product Liability. Japan’s Product Liability Act sets out the liabilityof a manufacturer for loss of life, injury or loss of property suffered by anyone as aresult of using a defective product.

13

PeopleRelationship with Employees
By working to fulfill its responsibilities to society, the USHIO Group aims to create a company where employees canwork with enthusiasm and a sense of purpose. As is clear from the first item in the Group’s management philosophy:“Build both a prosperous Company and prosperous employees,” this goal has remained the same since theCompany’s foundation.

Respecting Human Rights
The USHIO Group respects the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work.
Our 10 Action Guidelines for business activities commit us toworking to eliminate discrimination on the basis of race, sex,
religion and nationality and for any other reason unrelated toability or job performance, and to forming and maintaining goodlabor-management relations through dialogue based on goodfaith and mutual trust. USHIO also declared its support for theten principles of the United Nations Global Compact in October2010. The principles relate to human rights, labor, the environment, and anti-corruption. USHIO is promoting initiatives toensure adherence to them.

to continue promoting employment of people with disabilities andworking to make the workplace more comfortable for them.
Employment of People With Disabilities
(%)

2.1

2.0

1.9

1.8

FY2008FY2009FY2010

Diversity
Utilizing Global Human Resources
We are working to develop and utilize global human resources byintroducing an international study program for employees, hiring
international students, sending personnel from Group companies
overseas to work at the parent company in Japan, and providing
opportunities for interaction between Group companies.
Support for Working Women
USHIO INC. strives to help employees balance their work
responsibilities with having and raising children, which is a major
reason women quit their jobs, and to create a company where
women can work easily. As a result, the percentage of women
employees in sales and technical positions has been increasing.
Employment of People With Disabilities
USHIO INC. employs 40 people with disabilities as of March 31,
2011. Employees with disabilities make up 2.02% of the company’s workforce, which is above the legal requirement of 1.8%.
Various initiatives are also conducted to promote employment ofpeople with disabilities. They include holding workplace tours,
participating in group presentations and actively recruiting at local
schools. Workplace considerations include putting sliding doors
on restrooms, installing handrails on stairways and other measures to improve disabled access at our business sites. We intend

Work-Life Balance
Support Programs
We are committed to developing a working environment thatenables both men and women to balance their jobs and home
life without excess worry. We offer childcare leave and othersupport programs that go beyond legal mandates. In March2009 we created the Work-Life Balance Handbook, which contains information on programs for balancing work. It also contains information on child-raising and maternal welfare, howmanagers should respond, and other tips for employees who
would use the programs and for their managers. In June 2009
we earned Kurumin certification under the Act for Measures to
Support the Development of the Next Generation for the second
time. There are only 67 companies nationwide that have earned
the certification twice (as of June 2009 and announced by the
Ministry of Health, Labour and Welfare).
Employees Using Childcare Leave
FY2008FY2009Men

00

FY2010

2

Women

23

26

29

Total

23

26

31

Glossary
ILO: The International Labour Organization was established by the 1919 Treaty of
Versailles. As an international organization, the ILO works in all countries to improvelabor conditions and realize social justice.
Diversity: The principle of diversity calls for the creation of organizations that allows
diverse people to achieve their full potential, regardless of race, gender, age, or beliefs.

14

Work-life Balance: This refers to regulating the workplace and the social environment to allow people to enjoy full lives while working. The concept extends further
than the simple reduction of overtime, calling for initiatives that improve the quality ofboth work and private life to achieve synergies.

http://www.ushio.co.jp/en/peoples (Working Together with Employees)

Paid Vacation and No-Overtime Days
Based on a commitment to work-life balance, we designate
certain days as no-overtime days and prearrange paid vacation
days to give employees time to spend with their friends andfamily or on their own pursuits and to help create a more
dynamic working environment. We believe that performance
improves when employees maintain their physical and mental
health by taking time off to relax and rejuvenate.

Percentage of Paid Vacation Days Used(%)

Education and Training for Human Resources
Development
Various training programs have been established to facilitate thedevelopment of personnel capable of acting independently andto make it possible to align the company’s prosperity withenriching the lives of individual employees.
Globalization Training
International study program: This program is designed toprovide employees with specialized knowledge and technicalskills and give them an international outlook through exposure toculture and knowledge in Japan and overseas.

100
75
50
25
0

FY2008FY2009FY2010Occupational Health and Safety
Preventing Work-Related Accidents
Safety patrols are conducted at each office and worksite with thegoal of completely eliminating work-related accidents. We arealso switching to alternatives to organic solvents that have been
implicated in health problems.

Support for Self-Development
Correspondence courses: This fiscal year we have a lineup ofroughly 296 courses on subjects ranging from management tocomputer skills, in addition to basic classes on foreign languages
and technical topics and certification courses. When employees
finish a course, they are paid a bonus. The courses accommodate the desire of employees to keep learning. In fiscal 2010, a
total 336 courses were taken.
TOEIC testing: TOEIC tests are given to employees who want
to gauge their English ability and further improve it. The company
pays a portion of the testing fees. A total of 95 employees took
the test in fiscal 2010.

Frequency of Work-Related Accidents
FY2008FY2009FY2010

0.59

0.30

0.00

Building Good Industrial Relations
USHIO provides regular opportunities for management and labor
representatives to come together for discussions. This is one
way that we strive to improve the workplace environment, and tobuild good industrial relations.

Kurumin: The Kurumin symbol is used by companies who receive certification fromJapan’s Ministry of Health, Labour and Welfare after creating and implementing anaction plan for supporting employees in child-rearing, and meeting certain standards.

Frequency of Work-Related Accidents: This number shows the frequency of
accidents as the number of work-related fatalities or injury-accidents occurring per 1
million labor hours.

15Quality

Relationships with Customers and Business Partners
To accurately grasp the needs of our customers, we think from their perspective, then work as one with our business
partners to improve our product development and quality. In this way we provide products and services withappealing quality that goes above and beyond the run-of-the-mill.

Quality Policy

UPS (Ushio Production System)

USHIO has created unified quality policies for the entire Groupand continued its efforts to improve quality.

UPS (Ushio Production System) is the name of a new initiative
aiming to establish a unique new production system at USHIO’s
Harima Division from fiscal 2011. Amid a rapidly changing business environment, it is important to be able to efficiently supply
high-quality products in any environment. To achieve this, we
saw the need to return to the basics of manufacturing and bringall employees together to establish our own unique production
system. The main thrust of the UPS initiative is ZD (zero-defects)
activities, which seek to eliminate defective work by stimulating
individual autonomy and enthusiasm among employees andfostering creative thinking. Using the ZD activities as a framework, each division will establish parallel working groups,
including a “Worksite Improvement Team,” “Quality Assurance
System Improvement Team,” and an “Education Improvement
and Awareness Promotion Team,” to build a truly robust
production system.

Basic Philosophy
USHIO regards product quality as an overriding priority
and will promptly provide global markets with high quality,
safe products and services that are highly reliable andeconomical in order to fulfill the requirements of customers.
Action Guidelines
1. We will act rigorously in putting the customer first andputting quality first, and will develop appealing productswith cutting-edge technology to fulfill the requirementsof customers and earn their trust.
2. We will strive to further improve quality by developing
entity-level quality management systems and continually working to improve their effectiveness in order tomeet the needs of customers.
3. We will work to share information with customers,
make cost improvements, develop new products,
pioneer new markets, and promptly provide global
markets with high quality, safe products that are highly
reliable and economical.
April 1, 2010
Shiro Sugata
President andChief Executive Officer
USHIO INC.

Mechanism for Establishing UPS

Establishing UPS

A System for Zero-defect Production
ZD activities
Reform manufacturing (Reduce variation)
Reform quality assurance system

Strengthen infrastructure

Promoteawarenessraising

Reform personnel development (training)
Reform awareness-raising activities forall employees

Lamp Handling Manual
Many of the lamps that USHIO handles are extremely specialized
and require users to have specialist knowledge. Realistically,
many of the people using our lamps in their workplaces do nothave specialist knowledge, and USHIO has received numerous
enquires from customers asking about the correct way to use its
products. To meet one area of this need, we created a dedicateduser’s manual for the xenon lamps that are used in cinema projectors, and distributed it to cinemas throughout Japan. The
manual uses photographs to enable even first time users to

Glossary
Due Diligence: Originally this was a financial term referring to general research
activities relating to a company, real estate asset or financial instrument targeted forinvestment or an M&A. In the 2008 United Nations report on human rights issues byJohn Ruggie, due diligence was proposed as necessary for corporations to fulfill their
responsibilities regarding human rights. Due diligence is also included in the ISO26000
international guideline on CSR activities as an item for organizations to undertake.

16

Conflict Minerals: Conflict minerals are gold, tin, tantalum and tungsten mined in
the regions around the Republic of Congo that find their way into products. Underthe 2010 U.S. financial reform bill, SEC registered companies are obliged to reporton their use of such minerals. This disclosure is required because of concerns thatsuch mining products are a source of funding for armed groups that are known tocommit serious human rights abuses in the Republic of Congo.

http://www.ushio.co.jp/en/customer (Working Together with Customers)
http://www.ushio.co.jp/en/supplier (Working Together with Business Partners)

understand, and covers the construction of the lamp, the operation of each component, handling and disposal, troubleshooting,and more. We also offer to dispatch staff to conduct onsite
training sessions on request.

CSR Procurement and Checking for Conflict Minerals
Cooperation from business partners is crucial for USHIO tocontribute to the world through excellent products and services.
CSR procurement initiatives are intended to build relationships ofsustainable coexistence between USHIO, its business partners,
and society. In fiscal 2011 we will conduct a CSR survey of our
suppliers and analyze the results. We have also started a survey
to ascertain the usage of conflict minerals in components, aspart of our due diligence.

Green Procurement Standards
At USHIO, we have established Green Procurement Standards
to guide material purchasing, and these standards are posted on
our Web site. While complying with the RoHS directive and otherlaws and regulations specific to each country we operate in, we
stipulate our own list of chemical substances with an environmental impact, and comply with both internal and externalrequirements relating to chemical substances contained in
products. Under the Green Procurement Standards, we issue
forms for self-assessment of standard compliance systems, andrequest that our business partners put in place an environmental
management system (EMS). From March 2008 we have alsojoined the JAMP consortium and become involved in creating
industry-wide systems.

Supplier Seminars
Following the revisions to the USHIO Group’s Green Procurement Standards, a seminar for suppliers was held at the Harima
Division in June 2010 to explain the revisions. This briefing
included the latest trends in REACH and other environmental
regulations, and USHIO’s environmental and CSR initiatives. We
worked to further strengthen relations with suppliers by promoting greater understanding of USHIO’s current status and activities. Between November 2010 and March 2011, USHIO also ran
17 seminars on how to present data in JAMP/AIS formats. We
will continue these seminars from April 2011, and work to allay
our business partners’ concerns about surveys of chemical
substances contained in products. We will work to further

Environmental Management System: Often abbreviated as EMS, an environmental management system is a system where companies, groups and other organizations set their own environmental policies and targets then take measures to achieve
them. Examples include the ISO14001 international management standard, theEco Action 21 standard of Japan’s Ministry of the Environment and the EU EcoManagement and Audit Scheme, EMAS.

strengthen relations
with suppliers by promoting greater understanding of USHIO’s
current status andactivities.

Support for Acquiring Eco-Action 21
Certification

Seminar for explaining Green Procurement
Standards

We have held Eco-Action 21 (EA21) seminars since fiscal 2006
in order to help develop harmonious relations with business
partners based on mutual prosperity. In fiscal 2009, we
expanded and enhanced the EA21 seminar and held a courseon acquiring EA21 certification. As a result, in fiscal 2010, thepercentage of certified business partners of USHIO INC.’s
Gotemba Division acquiring environmental management
system (EMS) certification stood at 63.9%, above our target of
60%. Activities are underway in fiscal 2011 to achieve our goalof having at least 70% of certified suppliers acquire EMS
certification. Many suppliers of USHIO INC.’s Harima Division
have also joined in the program, with several acquiring EA21
certification in fiscal 2010.

Fair, Impartial, Stable Procurement Activities
USHIO INC. regards free and fair competition between companies as the source of dynamic development for society. In our
relationships with business partners, we always respect theposition and rights of suppliers, comply with relevant legal
requirements, observe social norms and engage in soundbusiness practices.
Procurement activities are the responsibility of staff in procurement divisions who have received special training and instruction.
For new transactions, quality, cost, delivery dates, environmental
performance and other factors are determined on the basis ofobjective criteria and fair, impartial transactions are conducted.
Moreover, since the Great East Japan Earthquake, procurement staff have also conducted prior risk analysis, and stepped
up reviews of business continuity management (BCM) for materials, mainly by preparing manuals for responding to risk eventsand upgrading information on material supply, production sites
and transport routes, including for secondary and tertiary suppliers.

JAMP: JAMP stands for Joint Article Management Promotion-consortium. The consortium was established in 2006 by volunteer corporations to help strengthen managementof chemical substances throughout supply chains at the industry-wide level.
BCM: BCM stands for Business Continuity Management. It is a management
method for establishing policies and plans for continuing business operations andresponding quickly and effectively in the event of a natural disaster or other situation
where normal supplies and systems may be impaired.

17

Society

Relationship with Society
We shall contribute to the development of respective regions where we conduct business as a member of theinternational community.

The USHIO Foundation
The USHIO Foundation was established in 1994 to commemorate the 30th anniversaryof the founding of USHIO. Its purpose is to contribute to the development of humanresources, learning and culture. The foundation was designated as a public interest
incorporated foundation by the Japanese government in April 2011 and made a new startas the USHIO Foundation. Its main projects include supporting the development of the next
generation of human resources who will be responsible for leading the world in the future
by providing scholarships to assist with their studies, and promoting further interaction andmutual understanding between Japan and other countries. In 2010, the foundation provided scholarships to 50 graduate students (including overseas students) and 13 students
in specialized courses at colleges of technology.

Factory Tours for High School Students

Lectures at Universities(USHIO Gotemba Division)
USHIO gives factory tours to local high school students as a way
to communicate with the local community. In 2010, high school
students from a local high school in Gotemba made two trips tovisit the respective sites of the Gotemba Division, where theyobserved production lines and other operations. The students
toured UV lamp production lines and manufacturing processes
for equipment with lamps embedded in them. These experiences served as good opportunities to deepen their interest andunderstanding of USHIO as a specialized lighting company.

Lecture on Environmental Concepts(CHRISTIE DIGITAL SYSTEMS CANADA)
For two years running, CHRISTIE DIGITAL SYSTEMS CANADA
has given lectures on environmental concepts at Wilfrid Laurier
University in Waterloo, Ontario. The university is well known for
its outstanding business and economics programs, and hastaken a leading role in promoting educational quality by integrating sustainability practices in its education programs. These
programs include units on ISO14001, sustainable development
and environmental accounting. When students of the lecture
voiced a request to see how environmental concepts were put inpractice in a real-world context, CHRISTIE DIGITAL SYSTEMSCANADA responded by organizing a factory tour.

High school students visit the Gotemba Division

Glossary

18

Scholarship recipients at a scholarshippresentation ceremony

Lecture on Optical Technologies (USHIO)USHIO conducts lectures on optical technologies each year at
the University of Tokyo, as part of its involvement in CORAL, theConsortium on Education and Research on Advanced Laser
Science. In 2010 we gave the lectures for the third time, with thelesson in June consisting of a lecture on “UV light from lamps,
methods of generating VUV light, and industrial applications forlight,” and practical modules on “the spectroscopy and photochemical reaction of UV light.” A large number of students
researching light participated eagerly in both the lectures and thepractical modules. As part of its contribution to society, USHIO
will continue to support the development of young students whowill be the optical technicians of the future.

http://www.ushio.co.jp/en/contribution (Working Together with Local Communities)
http://www.ushio.co.jp/en/society (USHIO Group Support for Culture and Learning)

Participation in Himeji Akari Fantasy World(USHIO LIGHTING, INC.)
USHIO LIGHTING supports the non-profit organization (NPO) Akari
no Machi Himeji, which participates in the Himeji Castle Festival
as part of activities to promote education about light, as well as
culture, the arts, and healthy development of children. At one of
the events, called “The Spirit of Love for Himeji Castle Expressed
Through Sand,” which is held by the Himeji Junior ChamberInternational, a 6-meter-high replica of Himeji Castle is created in
Higashi Oyashiki Ato Koen, a park sited on a former samurai
residence, using sand carried from the Tottori Sand Dunes.
Around the sand castle stand another 60 or so sand sculptures
made by city residents. When night falls, the spectacle is lit up
with halogen lamps provided for the occasion by USHIO LIGHTING. The company
also helps with “StarNight Zoo”—the illumination of the local zoo
which has become a
traditional part of the
Himeji Castle Festival.
In this way, USHIOLIGHTING helps toIllumination of sand sculptures made byenliven local events.
city residents

USHIO Angels (USHIO AMERICA, INC.)
Employees of the Oregon Operation Division, located in the townof Newberg, are called “USHIO Angels” by some members of thecommunity. The nickname was given by people aware of thecharitable spirit and activities of the employees of the Oregon
Operation Division, which started in 2005 when a co-worker
succumbed to cancer. It is now the name of the team formed by
employees for the Relay for Life, an event held in cities and towns
around the country every year by the American Cancer Society.

The Relay for Life involves continuous walking for 24 hours, on
the grounds of local schools, through parks and on sidewalks,with teams taking part in a relay format. Walking for 24 hours
without resting is meant as a way of signifying support for people
battling cancer, which is a 24 hour-a-day fight that takes a toll on
the body. USHIO employees also raise money by selling homemade cakes and cookies and auctioning off handmade gift baskets and other items no longer used at home. Through these
activities in fiscal 2010, the team donated over $3,736 to theAmerican Cancer Society.

Donations for the Victims of the Great East Japan
Earthquake (Group)
Donations in response to the Great East Japan Earthquake ofMarch 11, 2011 came not only from Japan, but from Groupbusiness sites in Europe, the U.S. and Asia. At CHRISTIEDIGITAL SYSTEMS
U.S.A., employees madeuse of their remaining
holiday leave to collect
donations as they had
after the Haiti Earthquake,with CHRISTIE DIGITALSYSTEMS contributing aFundraising initiatives at USHIO INC.’sfurther 50% of the amount
Gotemba Division
as a matching gift.

Participation in the Prefectural Citizens’
Forestation Project (NIHON DENSHI GIJUTSU)
In June 2010, five employees from NIHON DENSHI GIJUTSU
participated in a prefectural citizen’s forestation project operated
by the Kanagawa Trust Midori Foundation, helping to cut backthe undergrowth in a patch of planted forest. In total, around 100
participants joined the event. After the work was finished, volunteers heard a mini-seminar on forests.

Members of the USHIO Angels
Participants in a prefectural citizens’ forestation project

NPO: NPO stands for Non-Profit Organization. NPOs conduct a range of social
contribution activities, and do not aim to distribute profits to their constituent members.
Businesses that aim to create profits may themselves be recognized as NPOs, but the
profits they generate are allocated to fund various social contribution activities.

Matching Gift: When corporations or other groups collect gifts or donations, they
may contribute an additional amount equal to the collected amount. This is known
as a matching gift.

19http://www.ushio.co.jp/en/environmental (Environmental Management System)

Environment

Environmental Vision and Management
2020 Environmental Vision
The USHIO Group formulated its 2020 Environmental Vision withthe goal of becoming a company able to contribute through its
business activities to the realization of a low-carbon, recyclingoriented society that preserves biodiversity by the year 2020.

2020 Environmental Vision
Through Lighting-edge technologies, we willcontribute to: creation of a low-carbon society,conservation of resources, and preservationof biodiversity.

Under Phase Three of the Environmental Action Plan, whichstarted in fiscal 2010, we extrapolated back in time from ourvision for 2020, and broke down our vision into a set of specificgoals through a process called “back casting.”

USHIO’s vision for the Company in 2020
Low-carbon society
Recycling-oriented society

Goals and Targets of
Phase Three of
USHIO’s Environmental
Action Plan
2010

Biodiversity-preserving society
Back casting

2013

2020

Phase Three of the Environmental Action Plan
Phase Three of the Environmental Action Plan provides the following four environmental themes: environmental management,
activities to promote environmentally conscious product performance, activities to promote environmentally conscious operations, and environmental and social contribution activities. The
plan also sets out 17 specific measures and targets, and sets out

four environmental issue committees for each measure to promote activities: a Global Warming Countermeasures Committee,
a Green Products Committee, a 3R Committee, and a Green
Procurement Committee. Please refer to the corporate Web site
for information on these activities and results for fiscal 2010.
http://www.ushio.co.jp/en/csr/eco/manage/plan.html

Four Environmental Themes of Phase Three of the Environmental Action Plan
Environmental
management· Strengthen environmental
governance· Carbon management

Activities to promote
environmentallyconscious productperformance

Activities to promote
environmentallyconscious operations

Environmental andsocial contribution
activities· Expand lineup of environmentally conscious products· Strengthening global warming
countermeasures· Conserving resources· Chemical substance management system (CMS)· Communication withstakeholders· Social contribution activities· Preserve biodiversity

Committees for Each Measure Promote Activities
Global WarmingCountermeasures Committee

Green Products Committee

Green Procurement Committee

3R Committee

Glossary
Low-carbon Society: A society that reduces its CO2 emissions to prevent global
warming.
Recycling-oriented Society: A society that uses resources carefully, promoting
sustainable recycling through reuse and other means.

20

Biodiversity-preserving Society: A society that supports a rich variety of life byprotecting diversity in genes, living organisms, and biotopes.
Back casting: A technique for setting targets by working backward from a future
vision to the present.

http://www.ushio.co.jp/en/energy (Global Warming Countermeasures)

Global Warming Countermeasures
We have set goals for 2012 of reducing baseline CO2 emissions (the average for fiscal 2006 to fiscal 2008) fromenergy consumption by 4% and in logistical operations by 10%.

Fiscal 2010 Targets and Results

Reducing CO2 Emissions in Logistics Operations

Reduce CO2 emissions from energy consumption
Reduce by 1% from base level e 6.6% increase
Reduce CO2 emissions in logistical operations
Reduce by 2% from base level e 17% reduction at USHIO
INC., examined methods for quantifying Group emissions

USHIO INC. reduced CO2 emissions in logistics operations by
17% compared with base levels (the average for fiscal 2006 to
fiscal 2008). Specifically, the Harima Division and the Gotemba
Division conducted joint transport, shortening domestic transportdistances, and reducing deliveries by consolidating loads. Fiscal
2010 emissions increased compared to fiscal 2009, but this islargely due to an increase in deliveries in line with increased
production. Our main focus in CO2 reduction initiatives is ontransport costs. Efforts include downsizing packaging toincrease loading efficiency and improving loading methods.

Despite a targeted 1% reduction in emissions from base levels,
emissions in fiscal 2010 increased by 6.6%. The main reason
was an increase in production activity in line with businessexpansion. In order to increase production at Group companies
in Asia, some sites started operating new production lines.
However, even when the impact of these new lines is discounted,
overall Group emissions increased 1.8% from the base level.
On the other hand, successful measures at each site to reduce
power usage and changes in the product mix meant that emissions per unit sale decreased by 1.5% from the base level.

Group CO2 Emissions and Breakdown

CO2 Emissions in Logistics Operations
(w)

800

744.7
654.9

CO2 emissions (tons)

Measures to Reduce CO2 Emissions from Energy
Consumption

675.4

600

400

200

(tons of CO2)

30,000026,83625,17924,626

Fiscal 2010
Target:24,92722,721

20,00010,0000Base level

2008

2009

2010 (Fiscal year)n Base level n USHIO Group n USHIO INC. n USHIO PHILIPPINESn USHIO (SUZHOU) n CHRISTIE DIGITAL SYSTEMS n Other* Top four contributing companies to USHIO Group total CO2 emissions* Separate emissions coefficients are used to calculate results for each region.

2008

2009

2010 (Fiscal year)

Initiatives Ahead
With our production volume increasing, it has become extremely
difficult to achieve our target reductions on CO2 emissions fromenergy use. Despite having to take other measures in response
to power shortages following the March 2011 earthquake, wewill also focus on the following initiatives.
1) Take measures and reinforce links between all sites with thepremise that energy is a cost2) Focus on measures and information sharing targeting the top
four CO2-emitting sites.
3) To reduce CO2 in logistics operations, create mechanisms totie cost-cutting through efficiency to CO2 reduction.
4) Examine other options for reducing emissions apart fromreducing fixed energy consumption, such as emissions
trading, etc.

CO2 coefficient: CO2 coefficients represent the amount of CO2 emitted per 1kWh ofelectricity supplied. The USHIO Group uses the published figures from the respective
power companies that supply each site.

21http://www.ushio.co.jp/en/greenproducts (Green Products)

Contributing to the Environment Through Products
We will strive to ensure that our activities benefit customers who use our products, while aiming to develop Super
Green (SG) products and to achieve a 25% improvement in the eco-efficiency of products by 2012.

Fiscal 2010 Targets and Results

Development of SG Products

Enhance range of super green products
Develop a total of five or more certified SG productsGroup-wide e Five products certified
Enhance eco-efficiency
Enhance the eco-efficiency of core products by 15% eAchieved for 10 of 18 core products
Improve the recycling ratio of specific materials
Establish materials collection systems, establish designs thatmake products more easily reusable, monitor materials collection results and consider numerical targets for 2011 andbeyond e Established a collection system for xenon cinema
lamps, implemented a collection service

Products eligible for certification as an SG product must be thebest in their class, while offering superior environmental performance in terms of energy efficiency, extended lifetime, 3R
design, materials used, applications and so forth. In addition,
the product must satisfy our new USHIO environmental factor*
requirement, which was established to clarify our standards
following a fiscal 2009 review ofcertification requirements inlight of recent trends in society.
As of March 2011, the Grouphas certified five SG products,
and plans to certify a further
Super Green Products Labelfive during fiscal 2011.

Development of Environmentally Conscious
Products
At USHIO, we incorporate our Environmentally Conscious
Product Assessment Manual into our Design Standards so we
can preevaluate the environmental impact of our products
starting in the design stage. When the environmental performance of a product has been improved based on this evaluation, it is certified as an environmentally conscious product. If a
product is outstanding even among environmentally conscious
products, and uses innovative environmental technology on acompletely different level from existing products, it is certified
as an SG product.
USHIO’s System of Environmentally Conscious Products

Development Road Map

SG
Products

Environmentally
Conscious Products

SG Product Standards· 80 points or higher in environmentallyconscious product standards· Environmental factor of 1.5 or higher· Transparency assurance

Environmentally Conscious
Product Standards· Satisfies essential conditions· 60 points or higher· Factor improvement* USHIO Environmental factor= (Power output ratio x lifetime ratio) {(Input ratio)2 + (3R volume ratio)2 +(Chemical substance content ratio)2}

LCA (Life Cycle Assessment) Initiatives
No matter how much CO2 emissions are reduced at factories,
these activities are not meaningful if CO2 emissions increase
when the manufactured products are actually used by customers. Meanwhile, products can provide both cost and environmental benefits for customers if they use energy-efficient products.
Therefore, to quantitatively measure the environmental impact of
products and services over the entire life cycle, USHIO formulated LCA guidelines in 2006 and has implemented LCAs eversince. In fiscal 2009, LCAs were implemented for all major USHIO
lamp products. Going forward, we will expand LCA activities tovarious devices in order to satisfy the needs of customers.

Initiatives Ahead
In fiscal 2011, USHIO will not only certify SG products, but it will
also take steps to provide information about these products,
and to put them into use.
1) Certification of SG products (Group total so far: 10 products)
2) Promote SG products’ systems in Group companies
3) Enhance the eco-efficiency of core products by 20% compared with fiscal 2000.
4) Make the sales contribution from environmentally conscious
products visible, thereby raising awareness in each division.

Glossary
Environmental Factor: A comparison of the environmental efficiency of a newly
developed product and past products can be expressed numerically as an environmental factor. Higher numbers represent greater improvements.

22

LCA (Life Cycle Assessment): A method of assessing the environmental impact ofa product not only during its use, but at every stage throughout its life cycle, fromraw material to manufacture, distribution and disposal.

Conserving Resources

http://www.ushio.co.jp/en/conserve (Conserving Resources)

We intend to improve our ratio of waste volume to material input by 10% from fiscal 2009 levels by fiscal 2012 bylinking environmental initiatives with business performance. This will be accomplished by eliminating inefficiencies
through material flow cost initiatives, improving recycling rates for specific materials and other measures.

Fiscal 2010 Targets and Results
Reduce waste emissions
Promote zero emissions e Share waste processing information between Group companies and sites in Japan, andpromote conversion of waste into valuable resources
Improve the ratio of waste volume to total input of core materials
Improve the ratio of waste volume to material input at lamp
production sites in Japan by 2% e Ratio of quartz glass waste
improved 18% at USHIO INC.’s Harima Division, started implementing material flow cost accounting at Group companies
Effectively utilize water resources
Reduce input by 2% from input basis e 0.5% improvement
Eliminate the usage of hazardous chemical substances
Selection of key chemical substances e Agreed to advanceto first target on elimination of VOCs

Initiatives for Reducing Waste
Efforts to reduce waste resulted in further sharing of information
on waste processing at each business site, with many making
progress toward achieving zero emissions. As a result, the costof processing waste for the Group in Japan was down 29.8%
compared with fiscal 2008.
At USHIO INC.’s Harima Division, we worked to turn waste
into a valuable resource, reduced processing costs and utilizedmaterial flow cost accounting to improve the waste ratio forquartz glass material by 18%.
Waste Volume(t)(t/100 million yen)

1,500
1,283

1,213

1,000

500

1.10

1.08
1,301

1.00

1.00

0.90
386

Implementation of Material Flow Cost Accounting(MFCA)
We continued to promote use of MFCA, mainly at the Harima
Division. By improving our processes, in particular reducing quartz
glass off-cuts, we improved the waste volume to input ratio by
about 9% in fiscal 2010, compared with fiscal 2009. A monthly
resource production improvement meeting is held at Harima
Division, to report on and promote initiatives in each department.
We are also promoting measures to reduce the waste
volume to input ratio of quartz glass at the Fukuzaki Plant of
USHIO LIGHTING.

Initiatives to Reduce Water Use
This theme has been newly added to Phase Three of theEnvironmental Action Plan. During fiscal 2010 we analyzed water
usage by the USHIO Group as a whole for fiscal 2009, andcame up with measures to suit the level of need. At USHIOPHILIPPINES where water use was found to be particularly high,we switched to a recycling system for reusing water from April
2011, enabling us to reduce water use by 45% compared to theprevious year.

Initiatives Ahead
We will continue our activities from fiscal 2010 in 2011. The main
initiatives are as follows.
1) Share information throughout the Group on waste processing methods, and promote conversion of waste into valuable resources
2) Promote material flow cost accounting, and examine otherareas to apply it apart from quartz glass
3) Reduce water use by installing water-saving equipment
4) Continue analyzing water use at each site, and determine themain sites where action needs to be taken5) Develop a clear picture of VOC use at each site, and propose
measures to reduce use

0.90

352
253

0

2008

2009

0.80
2010 (Fiscal year)n Waste volume (left scale) n Final disposal volume (left scale)
Waste volume per unit of sales (right scale)Zero Emission: Zero emission is a concept under the Resource-Circulating Society
proposed by the United Nations University. The goal is not only to reduce the amountof waste generated, but to utilize waste substances as resources in production.
Material Flow Cost Accounting (MFCA): Material flow cost accounting focuses
on resource and energy losses that occur in production processes, and performs an
overall cost evaluation including material cost, processing cost, and equipment
depreciation costs.

VOC (Volatile Organic Compounds): VOCs are found in many substances,including paint, printing ink, adhesives, detergents, gasoline, and thinners containing
toluene, xylene and ethyl acetate. VOCs can cause atmospheric pollution and affecthuman health.

23

Financial Reporting
Key Performance Indicators
Net sales

Operating income/Operating income ratio(Billions of yen)(Billions of yen)
19.7
20

200

Net income/Return on equity (ROE)
(%)

20.0

20

(%)

(Billions of yen)

20

12
10.3

150

151.4

148.1

145.1
120.8

15

13.0

14.0

13.5

15

15

10

10

16.5

9.4

9

15.4

119.0

100

9.7

10

8.9

6.2
4.7

7.2
7.4

5

50

2.3

5

5

6.1

6
9.5

7.0

3

3.4

0

2006 2007 2008 2009 2010 (Fiscal year)

Total assets/Equity ratio(%)(Billions of yen)

300
250
200

71.5
237.5

74.3

78.5

216.6
184.4

90
76.8

202.1

71.9

0

n Net income (left scale)
Return on equity (right scale)

Capital expenditures/R&D expenses

Net income per share/
Dividends per share(Billions of yen)

(Yen)

10.0

60
45

100

30

50

15

0

0
2006 2007 2008 2009 2010 (Fiscal year)

120

7.6
6.7
5.1

4.8

5.0

(Yen)

24
22

120.1620

20

112.96

5.4

5.8

90

5.5

15

4.8

71.72

60

0

20

25

6.7

2.5

n Total assets (left scale)
Equity ratio (right scale)

24

150
8.4

7.5

150

0
2006 2007 2008 2009 2010 (Fiscal year)

n Operating income (left scale)Operating income ratio (right scale)

75

217.2

0

0
2006 2007 2008 2009 2010 (Fiscal year)

25.76

30

2006 2007 2008 2009 2010 (Fiscal year)

0

10

52.95

5

0
2006 2007 2008 2009 2010 (Fiscal year)n Capital expenditures
n R&D expenses

n Net income per share (left scale)
Dividends per share (right scale)North America

Europe(Billions of yen)(Billions of yen)Overseas Sales
Asia(Billions of yen)

50

47.1

50

25
44.1

40

37.8

40

21.2

39.2

20
35.2

34.5

30

30

20

20

10

10

10

5

0

24

41.3
35.7

2006 2007 2008 2009 2010 (Fiscal year)

0

27.6

27.5

2006 2007 2008 2009 2010 (Fiscal year)

15

0

14.7
13.2

15.9
14.2

2006 2007 2008 2009 2010 (Fiscal year)

Third-Party Opinion

Masaatsu Doi
Associate Professor
Faculty of Regional Policy
Takasaki City University of Economics

USHIO’s Sustainability Report 2011 has two major changes

Another point that was also made last year is that it is difficultcompared with the report for the previous year. The first is an

to see what kind of fundamental policy informs the Company’s

exciting new feature on pages 5 to 9, that discusses light, agri-

social contribution activities. USHIO has been active up until

culture and plants, (specifically nurturing plants and preventing

now in a wide range of social contribution activities, including

weeds with artificial light). Here the report explores the potential

through a foundation, but with the current presentation of theseof USHIO’s unique optical technologies and the new ways that

activities, the external observer could be forgiven for forming

the Company is engaging with society in a way that is easy forthe impression that they are largely ad hoc. I think this should

readers to grasp. In fiscal 2010, USHIO’s performance received

be addressed.

a boost from strong sales in the 3-D and digital cinema projector

In the section on “specific action policies,” the current disclo-

sub-segment. Now we see that USHIO has a bright future in thesure shows basic policies, but it would be desirable to show

medium- and long-term in these new business fields of agricul-

specific numeric targets and plans here also. Stakeholders also

ture and the environment. The second change lies in the formu-

expect companies to apply PDCA cycles to their CSR action

lation for the first time in fiscal 2011 of a CSR Action Plan, whichplans to gradually evolve the issues and activities each year.

sets out five pillars and focus areas of CSR at USHIO, and spe-

USHIO plays a vital role in today’s industry as the producer ofcific action policies for achieving them (see page 11). In giving

numerous industrial light sources. The Company’s activities

my third-party opinion in last year’s report, I noted that it was

extend beyond the field of illumination, to using light as energy,

difficult to see the position of CSR within the Company’s busi-

and to phototherapy technologies in the field of healthcare; theness processes. This year this issue appears to have been rem-potential and expectations for USHIO seem to expand con-edied. As USHIO’s CSR gradually evolves, there are still somestantly. In this year’s CSR Action Plan, the initiative “Creation ofother areas that require attention. I will address them below.

solutions to meet new social needs” could be taken as mean-First of all, the CSR Action Plan for fiscal 2011 is presented

ing creation of social innovation that generates new social

as a breakdown of “five pillars,” “issues” and “specific action

value. This has become an increasingly important area of focus

policies.” However, there is a need to explain why USHIO

in recent years as companies’ roles in society have become

picked up on each of the “issues” that the Company should

more prominent. As USHIO continues to lead us into a new era

tackle. These explanations should also be expanded upon inof light, I hope the company will develop its abilities in social

separate pages. To give an example, there is no really clear

innovation to channel the ability of business to solve a range of

explanation as to why USHIO needs to promote diversity.

social problems, while aiming for sustainable management.

Response to Third-Party Opinion
Tadashi Taki
Director, Officer in Charge of CSR

We appreciate receiving valuable feedback once again this year

topics into our business processes in our CSR Action Plan,from Dr. Masaatsu Doi, Associate Professor of the Faculty ofwhich started from the fiscal year ending March 2012. We will

Regional Policy, Takasaki City University of Economics, on ourcontinue these initiatives going forward.

Sustainability Report 2011.
This year’s report carries a feature section on light, agriculture

Moreover, we will strive to play a leading role as a social innovator, using our business capabilities to address social problems

and plants. With this feature, we hope to provide a concrete

while communicating closely and continuously with our stake-example of how we are practicing our management philosophy,

holders from a more global perspective. Through these initiatives,“contribute to society through superior products and innovative

the Group will work together to fulfill its social responsibilities,

research and development.” We were also encouraged by Dr.

and continue to merit trust and respect as a company.

Doi’s favorable evaluation of our efforts to incorporate CSR

25

Environmental Consciousness of this Publication
This publication is printed on paper approved by the Forest Stewardship Council at a green
printing certified plant using waterless printing, which is highly effective in reducing volatileorganic compounds (VOC). In addition, the computer-to-plate (CTP) method of printing isused to eliminate the intermediary materials required for the plate-making process.

Environmental Management Group
Corporate Social Responsibility Department
Administration Division
USHIO INC.
2-6-1, Otemachi, Chiyoda-ku, Tokyo 100-8150, Japan
E-mail:kankyo@ushio.co.jp
www.ushio.co.jp/global/

1110G①-2000S①
Printed in Japan