Annual Report 2007
Year ended March 31, 2007

Profile
Shibaura Mechatronics Corporation traces its origins

The 21st century is the age of IT and of the environment.

back to 1939, when it was established as Shibaura

In working to fulfill the demands of the century, theEngineering Works Co., Ltd. Since that time, theCompany is determined to become "e-Shibaura", a truly

Company has gone through many and diverse changes,

IT-based enterprise, and "E-Shibaura", an enterprise that

including a thoroughgoing reform of its business structure

places priority on the Earth's environment, and that pur-in 1998, when it took its present name and redefined itssues global business expansion by encouraging innova-

corporate identity as "The Provider of Infrastructure fortive attitudes and thinking among employees.

The Digital Age". This clearly reflects the Company's rolein providing essential manufacturing equipment for electronic components that support social progress.

History
1932

1939

Tokyo Electric Company

1949

1991 1996

Oct.,1998

Tokyo Shibaura Electric Co., Ltd. (now, Toshiba Corporation)

Shibaura Engineering Works Co., Ltd.

(Industrial Mechatronics Business)

Toshiba Mechatronics Co., Ltd.
Semiconductor manufacturing

Toshiba Automation Co., Ltd. equipment and others
Manufacturing automation equipment

Shibaura Engineering Works Co., Ltd.
Electric motors

Tokuda Seisakusho Co., Ltd.

Shibaura Engineering Works Co., Ltd.
Motors, flat panel displays manufacturing
equipment and others

Vacuum equipment

Contents
01

Financial Highlights

02

To Our Shareholders

05

Topics06

Financial Review

10Medium-Term Management Plan

14

Business Overview
14

Fine Mechatronics Segment

18

Electronic & Vacuum Systems Segment

21

Vending Machines and Systems Segment

Forward-Looking Statements
This annual report contains forward-looking statements concerning Shibaura
Mechatronics' future plans, strategies and performance. These forward-looking statements are not historical facts, rather they represent assumptions andbeliefs based on data currently available. Furthermore, they are subject to a22

Corporate Governance

26

CSR Activities

wide mega-competition in the electronics business, customer demand, for-27

Board of Directors

eign currency exchange rates, tax rules, regulations and other factors.

28

Investor Informationmaterially from our expectations.

number of risks and uncertainties that, relate to economic conditions, world-

Shibaura therefore wishes to caution readers that actual results may differ

Financial Highlights
Year ended
March 31,2007

Year ended
March 31,2006

Year ended
March 31,
2007

(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

Consolidated
Net sales¥

Operating income (loss)¥

74,663$74,913

632,466(13,808)

5,180(1,630)Net income (loss)(1,047)3,393(8,871)

Total assets

73,19775,151620,049

Net assets

25,084

27,670212,483(Yen)

Net income per share (loss)¥(U.S. dollars)¥(20.60)$66.52(Millions of yen)

(0.17)(Thousands of
U.S. dollars)

Non-consolidated
Net sales¥

Operating income (loss)¥

58,144$58,663

492,534(28,862)2,451(3,407)

Net income (loss)(1,420)3,436(12,025)

Total assets

59,94662,027

507,800

Net assets

21,041

24,360178,241(Yen)

Net income per share (loss)¥¥(27.93)(¥Billions)

Net Income(¥Billions)

Net Assets(¥Billions)

24
72

75

75

68
55

3.2
59

56

17
16

64.1

’04

’05

Consolidated

’06

’07

’03

18.9
16.6

-28.4
-29.2

-1.0
-1.4
’04

67.6
66.5

18
17

1.0
0.9

-1.4
-1.5
’03

21
20

58

44

101.9
25

23

3.4
3.4

(0.24)Net Income Per Share (¥)

28

5.1

89

$

67.58

Note 1 : The U.S. dollar amounts in this report represent
translations of Japanese yen, for convenience only, at therate of ¥118.05 = U.S.$1.00, as of March 31, 2007.

Effective for the year ended March 31, 2007, net assets are presented based on the new accounting standard,"Accounting Standard for Presentation of Net Assets in the Balance Sheet" (Accounting Standards Board Statement No.5,
2005/12/9) and the "Implementation Guidance for the Accounting Standard for Presentation of Net Assets in the Balance
Sheet" (Financial Standards Implementation Guidance No.8, 2005/12/9).

Net Sales(U.S. dollars)

’05

’06

’07

’03

’04

’05

’06

’07

’03

-20.6
-27.9
’04

’05

’06

’07

Non-consolidated

01
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONTo Our Shareholders
Shibaura Mechatronics, building on its business foundations as "The Provider of Infrastructure for the Digital Age",
contributes to the realization of a richer society as an
infrastructure provider supporting digitization and a networked society, and by delivering manufacturing equipment for essential electronic components, including flat
panel displays, semiconductors and optical discs.
Shibaura Mechatronics, building on its business foundations as "The Provider of Infrastructure for the Digital Age",
contributes to the realization of a richer society as an
infrastructure provider supporting digitization and a networked society, and by delivering manufacturing equipment for essential electronic components, including flat
panel displays, semiconductors and optical discs.
In promoting business, Shibaura Mechatronics acts in fullaccordance with its corporate philosophy : "Innovative in
All Things", "Pursuit of Rationality" and "Respect for
Humanity", in order to build a global business group characterized by speed and dynamism.
We are concerned to continue to contribute to society
through our business activities. In order to achieve this, it
is essential to have a solid understanding of the voices ofour customers and of rapidly-changing market needs, torespond quickly and flexibly, and to ensure steady implementation of priority measures. Beyond that, we makesure that all employees share our management vision.
Doing so allows us to set essential targets, to take full
responsibility for achieving the desired results throughcommitment management, and to achieve our management vision through full compliance with rules and regulations and by observing fair business practices.

Financial Results for the fiscal year ended March 2007
In the fiscal year ended March 2007, Shibaura
Mechatronics Group operating results showed consolidated sales decreased by 0.3% from the prior fiscal year to74.7 billion yen, an operating loss of 1.6 billion yen, and a
net loss of 1.0 billion yen. Despite this loss, the dividend
President and Chief Executive Officer

was set at the same level as for the prior fiscal year, for a

Shigeki Morita

full year dividend of seven yen.

To Our Shareholders

For the fiscal year ended March 2007, we initiated a mid-integrating technologies such as PI ink jet coater. As aterm business plan rooted in the basic policy of "Achieve

result of these measures the first half consolidated operat-

continuous growth and reinforce a highly profitable busi-

ing loss of 2.2 billion yen was turned around and weness structure". However, the market for LCD panel man-achieved a second half consolidated operating profit ofufacturing equipment was characterized by inventory

0.6 billion yen.

build-up and a fall in panel prices, resulting in strong
requests for reductions in equipment prices that were

Future Initiatives

even more reinforced by the emergence of new competitors in South Korea and Taiwan. The Group sought toTaking the future market trends in LCD panel and semi-

respond to customers' requests by initiating reviews ofconductor manufacturing equipments, we have decided

manufacturing systems and measures for cost reductions.

to revolutionaize our business structure, from LCD-cen-Not being able to respond to such price erosion with cost

tered business to one to a balanced structure of the LCD

reductions, and, furthermore, not meeting customer- semiconductor - media - vacuum equipment business-

demands in respect of equipment for larger panels and ines, in order to achieve a more resilient earning structure.

the transition to new models, resulted in profit deteriora-

We will position "grow the semiconductor business"tion in the first half of the fiscal year.

"improve profitability in the LCD business" and "cultivate
new businesses" as our main policies, and strengthen

In the second half of the fiscal year, reacting to the profit

efforts to promote cost reductions, increase productivity

deterioration of the first half, we changed the emphasis in

and reinforce Procurement Process Innovation.

our basic policy from "Achieve continuous growth andreinforce a highly profitable business structure" to "Realize

To "Grow the semiconductor business" we will raise ourhigh profitability by reinforcing product appeal and overall

share in existing businesses and reinforce our presence

productivity". The most pressing issue is to concentratein emerging businesses. Capital investment in semicon-

on improving profit, and we will implement the policies

ductor manufacturing is positive, particularly for the mem-indicated below in order to achieve an early recovery.

ories used in PCs, mobile phones, portable music players, digital cameras and other digital consumer products.

1. Reinforce a high profit business structure

In addition, the market is in the midst of growth resulting

2. Improve productivity

from migrations to finer process technologies larger

3. Cultivate new and growing businesses

wafers, and Shibaura Mechatronics is bringing to market

4. Reduce assets

strategic products in such areas as etching equipment,

5. Human resources strategy

ashing equipment, semiconductor wet process equip-

6. Enhance governancement, wafer inspection equipment and die attachment
equipment. In addition to this, we are proactively promot-

Toward reinforcing the profit structure, we have reorgan-

ing cooperation with major users in equipment for ultra-

ized design and manufacturing departments, promoted

thin chips and other emerging areas where we plan tostandardization, and made thoroughgoing use of 3D-

expand our business. In order to do that, we are channel-

CAD, amongst other measures, to engineer cost reduc-ing Group resources into the semiconductor business,tions. Beyond this, toward improving productivity and pro-including personnel, production space and research

curement we have been working with our affiliates andfunds. In the fiscal year ending March 2010, we expect

business partners to improve plant and equipment.

the semiconductor business to generate double the sales

Throughout the company, we have been promotingthat we recorded in the fiscal year ended March 2007,

Procurement Process Innovation including measures toand to grow from 25% of all sales to account for 40% of

promote overseas supply. We have also reinforced prod-

all sales.

uct competitiveness by developing strategic products

03
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONTo Our Shareholders

To "improve profitability in the LCD business" we will mod-

Manufacturer, we believe we have responsibility for envi-

ify our business strategy, moving from a growth policy toronmental conservation, and for supporting our customers

emphasize the importance of profit. Since the fiscal year

in manufacturing products that impose the lowest possi-

ended March 2007, we can anticipate positive investment

ble environmental loads. We will continue to make every

in large sized LCD TVs, but we will also see LCD TV priceeffort to bring environmentally conscious products to theerosion and increasingly strong demands for price reduc-market.

tions in LCD manufacturing equipment. In order to guarantee profitability in this business environment, we will

Toward New Development

shift our strategic emphasis from growth to profit, seek torealize continuous cost reductions, reinforce productIn the business environment surrounding Shibaura Group,competitiveness by specializing in strategic products,

technological innovation and the corporate world, eco-and promote other measures that will give us a profitablenomic and social circumstances, all change at a previ-business structure.

ously unseen pace and scale. In these circumstances,continuous stable growth is not simple. We must interact

To "cultivate new businesses" we will take measures towith the market, respond to the voices of our customers

reinforce our presence in manufacturing equipment foragilely, be ready to change ourselves, and constantly

solar batteries and OLED, and in ink jet coaters for theseek ways to create new value and bring it to market. For

LCD panel and semiconductor businesses. Furthermore,that reason, sales, development, technology, manufactur-in existing businesses, we will investigate next generation

ing and procurement must become one and promotemarkets and new markets where growth is anticipated,innovation ; as a result, I am sure, our customers will rec-and consider the positive potential of M&A and alliances.

ognize that Shibaura Group offers value-added manufacturing equipment and services.

CSR Management
We want our shareholders and investors to have positive
We understand corporate social responsibility as a broad

expectations for the start of our new period of growth, andconcept that provides a company with essential founda-

I hope that we may continue to rely on the support andtions for continued growth and development, and thatencouragement that you have extended to us for so long.

embraces such concerns as compliance with laws andregulations, human rights, customer satisfaction, the environment and contributions to society. As such, it is part of
all we do. We must communicate with our many stakeholders, our customers, shareholders, the people in thecommunities where we operate, and our employees. We
must constantly consider the role that we ought to play,and promote CSR management as a Value creating
Innovative Manufacturer.
August 2007
Our initiatives in respect of environmental conservation indevelopment, manufacturing and other business activi-

Shigeki Morita

ties, include efforts to reduce environmental loads by

President and Chief Executive Officer

practicing 3R (Reduce, Reuse, Recycle) and providing
environmentally conscious products that support our customers in saving energy and reducing raw materials intheir own manufacturing activities. As an Innovative

04
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Topics

with a clean room that is dedicated to production of manufacturing equipment for large-scale substrates.
We are also responding to the needs of manufacturers inSouth Korea. Our consolidated subsidiary, Shibaura
Mechatronics Korea CO., LTD. has recently completed asignificant facilities expansion targeting production oflarge-scale substrate manufacturing equipment.

Domestic and South Korean Factory Completions
Shibaura Mechatronics aims to build a total system for
As FPD TVs grow in size, make the transition to high defi-

supply and after sales service of large-sized LCD panel

nition and become increasingly more affordable, the glob-

manufacturing equipment that fully supports our cus-

al market is witnessing fast growing demand. In parallel

tomers in Japan, Korea and Taiwan.

with this, demand for manufacturing equipment for LCD
panels for flat panel TVs has moved beyond the fifth generation glass substrates first realized five years ago to- Yokohama Operations' new facility: 6,100m2

equipment able to handle eighth generation substrate of
2x2 meters plus, and even as large as 3x3 meter substrates. In order to accommodate this dramatic increase- Shibaura Mechatronics Korea
facility expansion: 4,000m2

in demand for larger, more affordable FPD TV, leading
LCD panel manufacturers in Japan, South Korea andTaiwan are planning to boost production - and manufacturing efficiency - of large - scale glass substrates.
At Shibaura Mechatronics, we have reinforced our ability
to supply these manufacturers with manufacturing equipment for large-sized LCD panels. At our Yokohama
Operations we completed a new facility in February 2007,

Yokohama Operations' new facility

Shibaura Mechatronics Korea facility expansion

05
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Financial Review

However, the impact of severe price erosion and additional development costs resulted in severe income deterioration in the first fiscal half. In the course of the second half,
we succeeded in improving profitability through cost-cutting measures and reorganizations of design and production systems.
As a result, sales against the previous fiscal year

Business at a Glance

decreased by 0.3% to 74,663 million yen, the operating
loss decreased by 6,634 million yen to 1,727 million, andIn the fuscal year ended March 2007, our customers in

net loss decreased by 4,440 million yen to 1,047 million

the LCD panel, semiconductor and optical disc industries

yen.

promoted active capital investment on the strength ofsteady expansion in markets for digital consumer prod-

Segment Informationucts, including large-sized LCD TVs, digital cameras,
mobile phones, portable audio players and DVD

1. Fine Mechatronics Segment

recorders. Despite this, some customers in the semicon-

Segment sales increased by 9.8% from the previous fiscal

ductor business postponed capital investments as theyterm to 59,118 million yen, while the operating loss

made production adjustments, and the optical disc indus-

decreased by 5,706 million yen to 2,379 million yen.

try let capital investment slump in the face of a need toadjust the supply and demand balance in DVDs, and theThere was active investment in LCD panel manufacturingissue of standardization of next generation DVD. The cig-

equipment, in both the domestic and overseas markets,

arette vending machine market was stagnant prior to theas companies looked to raise performance and reduce

introduction of vending machines with a built-in age adult

COO by introducing new vertical cleaning equipment,

recognition function.

stripping equipment, and PI ink jet coater for larger LCD
panels. However, some manufactures subsequently post-

In this business environment, Shibaura Group initiallyponed capital investment for production adjustment, duegave first priority to securing new orders and sales.

to inventory build up and revenue decreases resulting

Net Sales(¥Billions)Operating Income(¥Billions)

Sales by Segment(¥Billions)

8.8

Overseas Sales by Region(¥Billions)

45.2

88.5

88.5

74.9 74.7
74.9 74.7

67.5

67.5

32.9

32.3
29.6

5.2

54.8

26.6

54.8
3.2

’03
-1.5
’03

’04

’05

’06

06
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

’07

’03

-1.6
’04

’05

’06

’07

’04

’05

’06

’07

Fine mechatronics
Electronic & vacuum equipment
Vending machines & systems
Real estate leasing

’03

’04

’05

’06

’07

※Major countries or regions includedin each geographical area :Northeastern Asia-Taiwan,
Korea, China
Other regions-America, Europe etc.

Financial Review

from price erosion. They also demanded price cuts inincreased demand for solar energy panel manufacturing

manufacturing equipment that were far outpaced our ini-

equipment.

tial expectations. As a result, the pace of our cost cutting
could not keep up with the sharp pace of price cutting in

3. Vending Machines and Systems Segment

the first half of the fiscal year, and our profit and loss

Segment sales decreased by 40.6% from the previous

deteriorated. In the second half, we concentrated on pro-year to 4,192 million yen. Operating income decreased bymoting cost-cutting measures and improving design and993 million yen to 102 million yen.

production systems, and succeeded in recovering profit
and loss.

The cigarette vending machine market continued its longterm trend to shrinkage and was further restrained by the

Demand for semiconductor manufacturing equipment

slide in demand prior to the 2008 introduction of with anremained steady, supported by favorable capital invest-

integrated adult verification function. We made efforts toment in NAND flash memory for PCs, digital cameras, andexpand market share by enhancing sales and marketing

portable audio players.

activities.

2. Electronic & Vacuum Systems Segment

4. Real Estate Leasing Segment

Segment sales decreased by 21.62% from the previous

Sales decreased by 2.9% from the previous year to 1,823

year to 9,527 million yen. Operating income decreased bymillion yen. Operating income increased by 44 million yen

377 million yen to 319 million yen.

to 721 million yen.

Overall investment in media device manufacturing equip-

Research and Development Costs

ment slowed, and remained stalled at the end of the fiscal
term, as a result of adjustment in the supply and demand

Research and development expenditure by Shibaura

balance for DVDs and the lack of a consensus on theGroup as a whole in the fiscal year under review stood atstandardization of next generation DVD. In other vacuum

2,713 million yen. This included 394 million yen for devel-

application equipment, demand for photocatalytic large

opment of core technologies common to Group compa-

sputtering equipment for automobile mirrors remainednies.

strong both at home and overseas. Laser equipment saw

ROA

(%)

ROE

(%)

DOE

(%)

1.8
10.4

25.1

1.5

D/E Ratio

(%)

99.0
1.5
79.7

6.7

1.4
13.4

3.1

55.8

5.6

45.9

35.7
-2.3

-3.3
’03

’04

’05

’06

’07

-4.0
-8.0

’03

’04

’05

’06

’07

0.1

’03

’04

’05

’06

’07

’03

’04

’05

’06

’07

07
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Financial Review

Proactive R&D activities range from basic technology to

3. Vending Machines and Systems Segment

product development, and involve the Company's corpo-

Segment R&D expenditure amounted to 297 million yen.

rate R&D department, development and design depart-Development work for the vending machines and ticket

ments in operating divisions, and consolidated sub-vending machines covered advanced software for ciga-

sidiaries.

rette vending machines with a built-in adult verification
function, development of parts to replace those in existing

Research activities and results and R&D expenditure incigarette vending machines and development of ticket

each segment are described below :vending machine compatible with non-contact IC cards.

1. Fine Mechatronics Segment

Financial Condition

Segment R&D expenditure totaled 1,611 million yen.
Development work for LCD panel manufacturing equip-

Total assets at the end of the fiscal year amounted toment covered the wet process equipment, cell assembly

73,196 million yen, a decrease of 1,953 million yen fromequipment, PI ink jet coater in readiness for next genera-

the previous fiscal year-end.

tion large glass panels, and outer lead bonders for largesized LCD TVs. Development work for semiconductor

Current assets stood at 52,766 million yen, a decrease of

manufacturing equipment covered cleaning equipment,

3,837 million yen from the end of the previous fiscal year.

etching equipment, ashing equipment for next generation

The main factors contributing to this situation were an

devices, and high-speed flip chip bonders.

increase in notes and accounts receivable, reflecting
higher sales at the end of the fiscal year, and a sharp

2. Electronic & Vacuum Systems Segment

drop in cash and deposits, the result of loss of income

Segment R&D expenditure totaled 410 million yen.

from postponed sales.

Development work for media device and vacuum equipment covered sputtering equipment and bonding equip-

Fixed assets increased to 20,430 million yen, an increase

ment for next-generation DVD and photocatalyst sputter-of 1,883 million yen from the end of the previous fiscal

ing equipment ; for laser equipment, it covered extra fineyear, reflecting moves to increase capacity by construct-processing fiber laser markers and FPD laser repair

ing buildings and structures to add new production facili-equipment.

ties and expand existing facilities.

R&D Expenditures(¥Billions)

Facilities Expenditures(¥Billions)

Number of Employees

Free Cash Flows

1,735 1,744

7.2

2.2

2.9
2.7

(¥Billions)

1,586
1.486

2.3

1,441

5.1

4.5
3.7

1.4

1.4

0.6

0.7
0.5

0.4

-5.7
’03

’04

’05

’06

08
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

’07

’03

’04

’05

’06

’07

’03

’04

’05

’06

’07

’03

’04

’05

’06

’07

Financial Review

Cash Flow

Total liabilities at the end of the fiscal year were 48,112
million yen, 960 million yen higher than at the end of theprevious fiscal year.

Total cash and cash equivalents at the end of the fiscal
year stood at 8,210 million yen, a decrease of 6,125 mil-Current liabilities decreased by 2,629 million yen tolion yen from the end of the previous year.

29,419 million yen, resulting from decreased in advanced
payment received, income taxes payable and short-term

Cash flow from operating activities decreased by 4,373

loans despite an increase in accounts payable on infra-

million yen. The primary reason for this was the declara-

structure.

tion of a current net loss before taxes and others adjustment, payments of corporation tax, and reduced

Fixed liabilities increased by 3,589 million yen to 18,693

accounts receivable.

million yen, due to an increase in long-term loans. Total
net assets at the end of the fiscal year stood at 25,084

Cash flow from investing activities decreased by 1,361

million yen. Shareholder's equity after deduction of minori-

million yen, a result of expenditure on the acquisition of

ty interests from net assets amounted to 24,782 million

tangible fixed assets.

yen, a decrease of 2,887 million yen from the 27, 669 million yen at the end of the previous fiscal year.

Cash flow from financing activities decreased by 415 million yen. The underlying reason for this was, expenditureThis decrease was primarily due to repurchase of treas-on the buyback of shares and payment of dividends,

ury stock and the declaration of a current net loss.

which exceeded income from long-term loans.

Five-year SummaryYear ended March 31,
2006
2005
2004

2007

2003

(Millions of yen)(Thousands of
U.S. dollars)

Consolidated
Net salesYear ended
March 31,2007

¥ 74,663¥ 74,913¥ 88,513¥ 67,521¥ 54,761$ 632,466

Cost of sales

65,32258,01567,49254,30845,428553,340

Operating income (loss)(1,630 )

5,180

8,824

3,168

( 1,502 )(13,808 )Income (loss) before income taxes(1,727 )

5,752

8,260

1,958

( 2,172 )(14,633 )Net income (loss)(1,047 )

3,393

5,134

979

( 1,416 )(8,871 )Depreciation and amortization

1,165

1,133

1,255

1,756

2,080

9,870

R&D expenses

2,713

2,851

2,337

1,415

1,409

22,984

Total assets

73,19775,15170,411

69,24563,615620,049

Net assets

25,084

27,67022,791

18,091

17,066

212,485

66.52¥ 101.92

18.88¥ ( 28.40 )

1,735

1,441

1,486

1,586

(Yen)

Net income (loss) per share
Number of employees¥(20.60 )1,744¥(U.S. dollars)¥$(0.17 )
1,744

09Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Medium-Term Management Plan

We have set ourselves the indicator of achieving an ROA
of more than 10% and an ROE of over 15% as our management indicators the year ending March 2010.

Change Business Structure Through Focus and Selectin
Shibaura Mechatronics Group will steadily carry out

Aiming for a Highly Profitable Business Structure

measures that clarify business strategies, allow us to see
issues from the customers' perspectives, and promte

Management Strategies

improved business procedures. Our ultimate objectives
are to secure profits and the ability to respond more

After fully investigating domestic and international eco-

quickly to the fast changing business environment andnomic trends and anticipated changes in business envi-

market for semiconductors, LCDs and media devices

ronment, we have formulated a mid-term management

manufacturing equipment.

plan covering the three-year period from the fiscal year

Under the mid-term plan we will respond to the many

ending March 2008. The main emphasis of the plan is onchanges in the business environment by transforming aefforts to strengthen profitability and to enhance share-business structure centering on the LCD business to one

holder value. In line with the basic principle of "Realizethat better balances the LCD business with our semicon-

high profitability by reinforcing product appeal and overall

ductor, media and vacuum equipment and other busi-

productivity", we have defined the following key measuresnesses, while at the same time engineering changes into be addressed by the plan.

our profit structure.
We will carry out the following key measures.

1. Reinforce a high profit business structure
2. Improve productivity

1. Expand the Semiconductor Business

3. Cultivate new and growing businesses

Investment in semiconductors has been buoyant, on the

4. Reduce assets

strength of growing demand for such digital home appli-

5. Human resources strategy

ances as FPD TVs, PCs, mobile phones, portable music

6. Enhance governanceplayers and digital cameras. Investment is expected to

Net Sales
74.7(¥Billions)

80.0

90.0

Business Port Folio(Consolidated)

63.0

73.9

Ordinary Income(%)(CAGR)

40

58.1

Year ended March, 2007 → 2010

101.2

Semiconductor Business

82.2(Non-consolidated)

30(¥Billions)

20

CAGR=31.9

7.7
5.5

10

3.0
-1.7

Media Device&
Vacuum Business
CAGR=26.0

LCD Business

0
1.4

4.3

5.7

’08

’09

’10

CAGR=-2.5

-2.8
’07

10
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

-10
-20

Operating income ratio

-10

0

10

20

Medium-Term Management Plan

accelerate, as semiconductors evolve to become ultra-

make their full-fledged entry into the market. In addition,

thin and multi-layered, with even higher levels of integra-

the OLED, a highly promising new display, is now movingtion. In these circumstances, we will take proactive meas-

ever closer to commercialization. These developments

ures to expand our business : we will boost our share inbring opportunities : we will cooperate with our major

the market for conventional semiconductors, enter newusers on sputtering equipment for next generation DVDs,

business fields, reinforce our service system, and strate-

allowing us to expand business and increase market

gically allocate resources to the semiconductor equip-

share ; and we will to bring to market original vacuum

ment business.

bonder and other innovative equipment.

2. Improve Profitability in LCD Business

4. Cultivate New Businesses

The LCD business saw investment freezes and postpone-

In strengthening our operating base from a mid- to long-ments in the year ended March 2007, but capital invest-

term basis, we will identify new and highly promising busi-

ment in large-sized TV is now in a more aggressive

ness areas where we can apply our technologies, andphase. However, this is still accompanied by strong pres-cultivate them as potential future generation core busi-

sure form manufacturers for lower prices for LCD manu-

nesses. We will test this potential in the market for new

facturing equipment. Europe and the Americas, thegenerations of existing products and in prospective newlargest markets for FPD TV's, will see the start of panel

markets. As we promote new businesses, we will also pro-assembly for LCD modules, allowing us to deliver module

mote M&A and strategic alliances.

fabrication equipment to a broader area. In these circumstances, we will shift our focus from growth to profit, and

5. Reinforce Productivity and Procurement

make continuous efforts to reduce costs and to increase

In order to survive and win and further expand our busi-

competitiveness by concentrating on strategic products.

ness in the face of fierce competition from domestic andWe will put in place a business structure able to secureinternational manufacturers, we will enhance our procure-sustained profit.

ment systems, both in Japan and overseas, in readinessfor continued enlargement of substrates for large-sized

3. Expand Business of Media Device and Vacuum Equipment

LCD panels and expansion of the semiconductor busi-

In the fiscal year ending March 2009, Blu-ray Disc andness.

HD DVD next generation optical discs are expected toCompletion of a new facility at Yokohama Operation in

Percentage Sales (Non-consolidated)

Sales by Segment(¥Billions)

Other

10%
13%

14%

15%

Media device
manufacturing
equipment・
Vacuum equipment

1.6
Semiconductor
manufacturing
equipment

25%
33%

37%

1.9
4.2

7.8

9.5

13.6

1.4
5.6

1.5
6.3

18.8

Real estate leasing
Vending machines &systems
Electric & vacuum
systems

16.7

40%

Fine mechatronics
FPD manufacturing
equipment

56%
’07

43%
’08

40%
’09

37%
’10

59.1
’07

57.0
’08

66.3
’09

74.6
’10

11
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Medium-Term Management Plan

February 2007 underlines our determination to respond tobusiness processes to achieve shorter lead times.

demand for larger LCD panels and expansion in the semi-

Through these measures, we will make every effort toconductor business. Our consolidated subsidiary inshorten lead times, improve price competitiveness, andKorea, Shibaura Mechatronics Korea Co., Ltd., also com-increase profit.

pleted an expansion, in November 2006, one that almost
doubled production space by adding a second floor to

7. Reinforce Product Appeal and Development Capabilities

the existing manufacturing facility. These significant

We will provide a comprehensive line-up of competitiveenhancements of manufacturing capacity will support us

equipment in each business area. For example : in thein responding positively to active capital investment in

LCD equipment business, vertical integrated processors,

production facilities for large-sized LCD panels and semi-

PI ink jet coaters and outer lead bonders for large-sized

conductors, both at home and abroad.

LCD TVs ; in the semiconductor equipment business,

In a complementary move, we will also establish an over-high-performance ashing equipment, back side etchingseas procurement section responsible for energeticallyequipment, and high accuracy die bonders ; in the media

promoting overseas procurement of parts and compo-

device and vacuum equipment business, sputteringnents. Other efforts to further cut procurement costs

equipment for Blu-ray Disc and HD DVD ; and in the laser

include carrying out company-wide procurement innova-

business, processing equipment for thin film solar battery

tion activities in cooperation with our suppliers.

panels.

6. Enhance Price and Cost Competitiveness8. Foster and Utilize Human Resources

As prices of digital home appliances fall, so too must theBased on the concept that people are the company's

prices of components used in their manufacture - and themost important assets, we are laying the foundations tosales prices of our manufacturing equipment. Toward

recognize human resources as human assets. The pri-realizing substantial reductions in equipment prices, wemary focus in cultivating human assets is on improving

are promoting various measures to reduce manufacturingpersonnel and training systems and establishing training

costs. These include use of 3D-CAD to increase design

courses to foster prospective next generation leaders.

productivity, value analysis in design, standardization,

Moreover, as an Innovative Manufacturer, we are active inplatformization, cost reductions through overseas pro-conducting in-house training to enhance employees'

curement of parts and components, and streamlining

manufacturing know-how. As we aim to achieve a well-   

2.0＊ROA＝ROS×Turnover of total assets(%)

    

40

5.0

(¥Billions)

4,000
4.4

1.5

30
1.2

1.1

20

  
0.5

3.0

15.0

4.1
3.7

7.3

 ＊

10.0
10

12
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

3.5

2.7

2.7
2.5

3,000

   

2,000

2.0

6.1

7.6

1,000
0

1.0

-4.0
’08

3.7

3.5

1.9



-2.3

’07

 
 

 

12.0
7.2


0.0

1.2

1.0

1.0

4.0

’09

’10

-10

1,744

1,776

1,825

1,846

’07

’08

’09

’10

0.0

0

Medium-Term Management Plan

balanced business structure between the LCD and semi-

Panel assembly will start in Europe and the Americas, theconductor businesses, we will proavtively reassign per-largest markets for FPD TV, and this will stimulate active

sonnel as a means to quickly raise competitiveness, par-investment in LCD module process facilities. The semi-

ticularly in technical and manufacturing sections.

conductor market is expected to grow continuously,
though there will be some impacts form price erosion in

Future Prospects

memories and inventory adjustment.
In the media devices manufacturing equipment market,

In the fiscal year ended March 2007, the markets for LCD

investment in manufacturing equipment of next genera-and semiconductor manufacturing equipment turnedtion DVD will accelerate in readiness for the full-scalefavorable, not least of all because of the broadening

entry of next generation discs into the market in the year

range of target products, including digital home appli-

ending March 2009. In the vending machines and sys-

ances and multimedia equipment. Going forward, we cantems segment, we anticipate a substantial increase in

expect continued economic expansion in the year ending

demand for cigarette vending machines with an age veri-

March 2008, including a gradual increase in consumer

fication function.

spending. However, we can also anticipate intensified

Shibaura Group will reinforce product appeal and overall

price competition in LCD and semiconductor manufactur-

productivity as means to grow out of the present situationing equipment, driven by fierce price competition in digi-of decreasing profit, and put in place a highly profitable

tal home appliances and increases in component andbusiness structure. To this end, we will thoroughly reducematerial costs. Shibaura Group must be responsive incosts, by promoting overseas procurement and value

quickly increasing production capacity and absorbing

analysis at the design stage, enhance product competi-

price reductions. In the LCD manufacturing equipment

tiveness, and improve business efficiency. We will

market, investment will temporarily ease in the year end-

respond to customers' needs quickly, without delay, bying March 2008 as investment schedules are revised toutilizing our newly constructed facilities and improving

accommodate inventory growth and falling panel prices

production efficiency, and we will cut total lead times fromof panels. But active capital investment in large LCD TVs

receipt of order to delivery by increasing production atwill reemerge in the latter half of the year.

Shibaura Mechatronics Korea.

13
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview

Fine Mechatronics Segment

Business Review

Flat Panel Display (FPD)
Manufacturing Equipment

In the first half of the fiscal year ended March 2007, business took a turn for the worse under the combined impactof falling prices, inventory build-up in LCD panels, andstrong demands for price reductions from LCD manufacturers. We responded with a series of measures to restore
profitability in the second half of the fiscal year, and as aresult we were able to recover from a 2.4 billion yen oper-

Main Products

ating loss for the Fine Mechatronics segment in the firsthalf and achieve a second half operating profit of 100 mil-- Cleaning Equipment- Stripping Equipment- Etching Equipment- Development Equipment

lion yen.
Module process equipment business, such as outer leadbonder for large sized LCD TVs, turned in solid performance mainly in Korean and Chinese markets.

- PI Ink Jet Coater- Seal Dispenser- LC Drop Fill Equipment

Achieving a Profit-based System(1) In TFT and color filter processes, we are making the- Vacuum Bondertransition from a growth strategy to a profit-based sys-

- Outer Lead Bonder

tem. "Reinforced price and cost competitiveness" will
be our main strategy as we move to commercialize an
equipment with a new design at lower costs, anddevelop an equipment with selected functions. We will
also promote manufacturing equipment at our facilities in South Korea and Taiwan.
In addition, by utilizing the cutting-edge technology
developed for eighth generation large-sized glass
panels, we continue to develop equipment for largersized ones. We also aim to expand our market sharein spin cleaning equipment for technologicallyadvanced low-temperature polysilicon LCDs andapply the technology to OLED field.

14
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview
Fine Mechatronics Segment
Flat Panel Display (FPD) Manufacturing Equipment(2) In the cell process, we continue to advance growthand build a profitable business structured.
We are shifting the resource to the cell process team,
to increase sales and operating profits.
Panel manufacturers have already installed our PI ink
jet coater into their mass production lines. From thisbase, we plan to promote further business expansion
and to win a 40% market share. Going forward, we willbring to market our color filter ink jet coator.
We expect the launch of a newly developed coatinghead for the high-speed seal dispenser, developed

Pl ink jet coater

for application with large-sized eighth generation
glass panels and beyond, to win back market share.
In liquid crystal drop fill / bonding equipment, we will
apply our high precision filling technology of minuteliquid drops for producing small to medium sized panels for portable and in-vehicle applications.
(3) In the module process, we produce equipment withlow cost and high productivity, and build a profitablebusiness structure.
By bringing to market an equipment with low-cost forlarge-sized panel, we will seek to retain our No.1
share and to boost operating income. Measures will

Outer lead bonder

include the launch of a strong line-up of outer leadbonder for small panels (COG).
(¥Billions)

32.8
27.2

29.9

30.4

In America and in Europe, in response to the openingof module production facilities, we will proactively
strengthen our service capabilities.

’07

’08

’09

’10

FPD manufacturing equipment Net sales (Non-consolidated)

15
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview
Fine Mechatronics Segment
Semiconductor Manufacturing Equipment

Fine Mechatronics Segment

Business Review

Semiconductor Manufacturing
Equipment

A favorable investment climate, particularly in NAND flash
memory, supported steady progress in both front-end andback-end process equipment. Positive results included
orders for inspection-related equipment and achievementof practical application of electrolyzed sulfuric acid generation unit developed in cooperation with major users.
However, there was a falloff in business related to LCD

Main Products- Cleaning Equipment- Etching Equipment- Ashing Equipment

drivers, as manufacturers delayed capital investments.

Towards Higher Sales
Our goal for the fiscal year ending March 2010 is to double current sales figures in fiscal year ended March 2007.

- Die Bonder

Toward accomplishing this, we will promote measures to- Inner Lead Bonder

increase market share in such established fields as ash-

- Flip Chip Bonder- Semiconductor Inspection Equipment

ing equipment, single wafer processinjg cleaning equipment and die bonder, and also advance plans for productlaunches in promising new areas, including high productive ashing equipment, oxide film etching equipment,
MEMS etching equipment and high-speed flip chip bonder.
(1) Dry Process Equipment
The scale of the market is growing along wth finergeometrics and lager wafers. We will bring to market
our high throughput dry ashing equipment by meansof supplying an equipment to a customer for evaluation use. We will also develop and establish aprocess by working with a major manufacturer. And
by utilizing our newly developed high-speed transferring system, we aim to achieve a high throughput
level of over 380 wafers an hour.
In oxide film etching equipment, we are collaboratingwith a major memory manufacturer to develop cuttingedge process that will give market access to affordable, high-throughput equipment. Another goal is toexpand sales of chemical dry etching equipment

16
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview
Fine Mechatronics Segment
Semiconductor Manufacturing Equipment(CDE) for MEMS and other new devices.
(2) Wet Process Equipment and Inspection Equipment
The scale of the market is growing as the number ofmanufacturing processes increases with higher levels
of integration. Shibaura's target is to win increasedorders for high-throughput wet process equipmentfrom major memory manufacturers. In this respect, therealization of a high throughput level of 430 wafers anhour also realizes application in the back side etchingprocess.
We will strengthen sales of wafer inspection equipment by supplying a wafer edge inspection equip-

Wet process equipment

ment to major device manufacturers for evaluationuse. In addition, in cassette shape checking equipment we are taking measures to align products withmarket needs.
(3) Back-end Process Equipment
The scale of the market of bonder for LCD drivers andsemiconductor packages is growing. Shibaura's
response is to reinforce the three poles of its businessin flip chip bonder for LCD drivers, flip chip bonder for
semiconductors and die bonder for memories, by
releasing new high-speed, high-precision equipment,
increasing sales mainly in Asia, and by strengthening
service support for overseas customers.

Flip chip bonder(¥Billions)

The target market for our die bonder for memory is

32.8

major memory manufacturers, and our goal is toexpand our customer base and increase market share

27.0

through our capabilities in SiP and MCP lamination.

21.1

We will also increase our market share in flip chip

14.3

bonder for high performance packages through tieups with major users and the introduction of new
’07

’08

’09

’10

products.

Semiconductor manufacturing equipment
Net sales (Non-consolidated)

17
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview
Electronic & Vacuum Systems Segment
Media Device and Vacuum Equipment

Electronic & Vacuum Systems Segment

Business Review

Media Device and Vacuum Equipment
The optical disc business continued to see sluggishness
in capital investment, the result of declining disc prices,
rising materials costs, adjustment in the balance of supply
and demand of DVD, and issues related to the standardization of next generation DVD (HD DVD and Blu-rayDisc). The market finally showed signs of recovery at theend of 2006, with the launch of game software in the HD

Main Products- Next Generation DVD Sputtering Equipment- Vacuum Bonding Equipment

DVD players and Blu-ray Disc formats.
In the vacuum equipment business, photocatalyst large
sputtering equipment for automobile mirrors and sputtering equipment for R&D continued strong performances.

- Photocatalyst Sputtering Equipment

Sales Expansion Through Original Core Technology
In the optical disc segment, the trend is to larger capacities ; demand for multilayer disc manufacturing equipment is expected to increase on requests from US film
studios for a next generation disc able to record a movie
and extra content (making of, commentary, etc.) on a single disc. Technologies to form a highly uniform reflection
coating, interlayer, and transcription patterns are essential for production of multilayer discs. We are able to provide high quality manufacturing equipment fully capableof meeting such needs.
In the vacuum bonding equipment field, growth indemand for mobile PC displays offering better screen visibility has increased, spurring demand for the related manufacturing equipment. We will continue to introduce
equipment that meets the needs of our customers bybringing our accumulated technological know-how into
our main businesses.
In the vacuum equipment field we will continue to market
high quality, high productivity equipment, in addition tophotocatalyst sputtering equipment.

18
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview
Electronic & Vacuum Systems Segment
Media Device and Vacuum Equipment

In every field, we will meet the diverse needs of our customers in respect of performance, quality and service bypromoting business centering on core technologies in thedisc manufacturing process, high speed sputtering
equipment, bubble-free vacuum bonding technology, andautomation technology.

Replication line for next generation DVD

Photocatalyst sputtering equipment(¥Billions)

12.0
10.3
8.0
6.0

’07

’08

’09

’10

Media device & Vacuum equipment
Net sales (Non-consolidated)

19
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Business Overview
Electronic & Vacuum Systems Segment
Laser Equipment

Electronic & Vacuum Systems Segment

Business Review

Laser Equipment
Demand is increasing for laser equipment, including
newly developed battery welding equipment and solar
battery manufacturing equipment. Small size welding
equipment for use on mobile phone batteries, PC frames,
HDD bonding, and for markers for semiconductors, hasseen steady demand from major users.

Main Products

A Focus on the Automotive and Clean Energy Fields- Laser Markers

Alongside the electronics fields of FPD, semiconductors- Laser Welding Equipment- Solar Energy Panel Manufacturing Equipment

and components for mobile phones, we will start to focus
on the automotive and clean energy fields and nurturethem as new pillars of business by applying laser processing to the production of batteries for vehicles, newbatteries and solar batteries. By incorporating our particular strengths in large substrate transportation technology,
precise positioning technique and technology automating
factory lines, we expect to enjoy a significant advantage
in differentiating Shibaura from its competitors.
Recognized as next generation lasers, fiber lasers can beused for low-output marking, and also in high-output
welding and cutting. As a result, they are ideal for use as
a new processing tool in the automotive and heavy industry markets.

Fiber laser marker(¥Billions)

5.2

5.5

4.4

2.5

’07

Solar energy panel manufacturing equipment

20
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

’08

’09

’10

Laser equipment Net sales (Non-consolidated)

Business Overview
Vending Machines and Systems Segment
Cigarette Vending Machines Ticket Vending Machines

Vending Machines and Systems Segment

Business Review

Cigarette Vending Machines
Ticket Vending Machines

Cigarette vending machines will see the introduction of a
new age verification function in 2008, a measure to prevent minors from buying and smoking cigarettes.
Although cigarette vending machines incorporating thisMain Products

function are gradually being introduced all over Japan,
the market is still sluggish at this point. The ticket vending
machine market has been quiet since the round of pro-

- Cigarette Vending Machines

curement resulting from the 2004 issue of new bank

- Ticket Vending Machinesnotes. Only recently has it started to show a return to an(Food Tickets, Admission Tickets)

upward trend, this time driven by growing demand forticket vending machines that can accept electronic payment via the various non-contact IC cards that arebecoming increasingly common in Japan.

Promoting the Age Verification Function
and Non-Contact IC Cards
We will market cigarette vending machines with an adultrecognition function that can be used only with IC cards
developed exclusively for those machines, and promotereplacement of cigarette vending machines with newmachines with this capability. The scale of the market is
expected to decrease, as cigarette companies are reducing the number of vending machines they buy and lease
Cigarette vending machinewith an age verification function

Ticket vending machine
for a non-contact IC cards

to retailers, due to the increasing burden of management
and investment costs.
We will deliver various solutions suited to an age of elec-

7.8

tronic money by developing ticket vending machines for a
6.3
5.6

wide range of non-contact IC cards, such as Suica, Edy
and PASMO in Japan. Another advance is an integrated

4.2

ordering system for restaurants. This monitors ticket vending machines in real time, and as soon as a customer
buys a meal ticket the details are displayed on a PC
’07

’08

’09

’10

screen in the kitchen. This assures instant provision of
information and cuts customer wait times. We will

Cigarette & Ticket vending machines
Net sales

increase our market presence and share by developing
such high value-added products for our customers.

21
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONCorporate Governanceognizes the need for outside directors who are notcaptive to the company's internal logic, who are able
to draw on their experience to offer an independent,
objective perspective. Going forward, we propose to
identify suitable candidates to become outside directors and to propose them to the general meeting of
the shareholders.

Fundamental Approach to Corporate GovernanceWe also intend to examine measures for further
strengthening corporate governance, in order to

Shibaura Group defines corporate governance as a key

implement optimized policy on management adminis-

management function for developing corporate value

tration (including the size of the board and introducing

with shareholders, customers, employees and society

the executive officer system).

and for a medium - to long - term perspective. We are allof us - the company's executives and offices, all employ-(2) The corporate auditing system currently comprises

ees - responsible for implementing measure that will build

four corporate auditors, all from outside the company,

corporate value, and we must all ask and clarify, "What is

who are charged with further reinforcing corporate

required of us ?" and "What should we do ?" in respect ofgovernance. Two of the corporate auditors are full-the law, social norms, ethics, and the like, and as thetime, able to conduct proactive audits and to work inbasis for compliance and risk management and for draw-

close cooperation with the part-time auditors. The

ing up and applying the "Shibaura Group Code of

auditors receive advance briefings on matters concerning the board of directors, and are able to play a

Conduct".

positive role in bringing matter to the board's attention.

Enforcement and Oversight of Corporate Decision
Making and the Business Management Structure
and Other Aspects of Corporate GovernanceThe corporate auditors and financial auditors cooperate closely to develop and plan audit-related policy(1) The board of directors currently has 12 members.
Outside directors are not elected. The company rec-

and objectives, through such means as informationexchanges and prior consultation.

 

Appoint / Dismiss    Appoint / Dismiss
Statutory
Audit    

      Internal
Auditing
  

Corporate governance system

22
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

   

Corporate GovernanceThe corporate governance system is shown in the(5) Remuneration paid to directors is periodically dis-

illustration below.

closed in the business reports and the Financial
Statement, as a sum total.

(3) Management Audit Division is organized under the
direct control of the CEO and is responsible for audit-(6) General Affairs Division provides the outside directors

ing management. Its mission centers on monitoringwith a support organization. In addition, the division

management appropriateness. The audit function also

provides the full-time auditors with briefings prior to

includes another aspect : auditing for compliance withmeetings, as necessary, and is dedicated to assuring

laws and regulations by a certified public accountant

a structure where there is no deficiency in the provi-(independent auditor). Beyond this, each individualsion of information.

section also carries out its own audit of operations,
under the guidance of Management Audit Division.

(7) The management strategy meeting, in addition to themeeting of the board of directors, is held once a week

The corporate auditors and Management Auditin principle, with a membership comprising the CEO

Division, responsible for internal auditing work in closeand executive directors, as well as the directors

cooperation to define audit objectives, plans, et

responsible for management corporate planning, mar-cetera, and the head of Management Audit Division

keting & sales, technology, production & procure-ensures that audits are enforced and that the results

ment, finance & accounting and general affairs, andare reported to the corporate auditors. In addition, theshall discuss and make decisions on matters related

head of Management Audit Division is to be appoint-

to such functions as management of business, audit-

ed with prior consultations between the corporate

ing and supervision, nomination, and decisions on

auditors and the company.

remuneration.

Basic Approach to and Maintenanceof the Internal Control System(4) At present, policy on providing incentives to directorsof the company is being considered what kind of
incentive is to contribute not restricted to short term
performance, but to be continuously contributions to

Shibaura Mechatronics deploys an internal control system

improve performance in the medium to long term.

that is centered on legal compliance and risk manage-"         
  "      #     
Report / Direct      

Report / Direct$ 

Direct$         
   

DirectDirect   ! $ $  

Audit

Risk management system

23
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONCorporate Governancement, plus management efficiency. We continue to intro-

ing any damage, and for the reasonable disclosure ofduce policy measures to strengthen the internal control

information.

system (establishing official rules, comprehensive education, strengthening audit systems, information management and the like), and to make it the bedrock for further(4) System to guarantee the efficient performance of
directors in carrying out their duties.

improvement.
(a) Meetings of the board of directors shall be held at
In addition, the following has been decided in respect ofa regular time every month, and also be held in recog-

the system to ensure that directors carry out their duties innition of the need for timeliness.

conformity with laws and regulations and the company's(b) In order to achieve rapid decision-making andarticles of incorporation, and the system to assure the effi-

optimized business operations, and to observe rules

cient performance of directors in carrying out their duties.

on final decision-making authority, CEO and executive
directors, as well as the directors responsible for man-(1) System in order to ensure that directors carry out theiragement corporate planning, marketing & sales, tech-

duties in conformity with laws and regulations and thenology, production & procurement, finance &company's articles of incorporation.

accounting and general affairs, will, as a general rule,hold a weekly meeting of management strategy meet-(a) The board of directors, as specified in the regula-ing, to deliberate on and make decisions.

tions for meetings of the board of directors, meets(c) Specialized meetings related to deliberating andevery month, as a general rule.

reporting on the following management matters, the(b) The head of Management Audit Division develops

budget, business, manufacturing, development andand plans audit-related policy and objectives, in close

design, and others, will be held every month, as acooperation with the corporate auditors, and also

general rule.

enforces internal audits by ensuring that all departments(d) The decisions made by the final decision-making

carry out audits of their operations in the same way.

authority including the meetings of the board of directors shall be undertaken pursuant to organization reg-(2) System for preserving and managing information usedby directors in carrying out their duties.

ulations, regulation of division of duties and managerial responsibilities, and assuring observance of regulations in undertaking all professional duties and theImportant documents used by directors in carrying

appropriate performance of business management.

out their duties (minutes of major meetings, documents granting approval, contract documents, confi-(5) System to guarantee conformity with laws and regula-dential documents and all applicable electronic

tions and the articles of incorporation by employees

media), must be preserved and managed pursuant tocarrying out their responsibilities.

company regulations (Documents preserving regulation, Confidential information managing basic regula-(a) The CSR Committee is responsible for taking con-tions, etc.) in an appropriate manner.

crete action to promote thorough penetration of andsystematic compliance with management ethics and(3) The regulations in respect of managing the danger ofa loss and other systems.

laws and regulations. Further to this, the ShibauraGroup Code of Conduct has been established to provide group companies with ethical standards in theirObserving the risk management regulation, risk man-business activities, and the content should be madeagement systems for normal times (identify and ana-

familiar to all employees through training.

lyze (business) risk, develop and deploy countermea-(b) In addition to distributing information through thesures, train employees, make internal reports) andorganization, early detection of problems and antimes of emergency (establish Risk Management

appropriate response making use of an internal report

Committee, centralize information to the Chief Risk

procedure (include a risk consultation hotline for any

Officer, etc.) must be made for preventing or minimiz-

necessary consultation with a lawyer) should be

24
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONCorporate Governanceachieved.

serious breaches of laws and regulations, they shall,
without delay, inform the corporate auditors.

(6) System to ensure business operations appropriate for(b) The auditors shall be allowed to attend manage-a public company by the business group comprising

ment strategy meetings and other important meetings,

the parent company and its affiliated companies.

and committee meetings.

(a) The Shibaura Group Code of Conduct shall apply
to all the the affiliated companies and should be made(10)System to further ensure the practical effectiveness ofaudits by the auditors.

familiar to all the employees.
(b) Shibaura's Management Audit Division also over-(a) The president shall, at certain intervals, exchange

sees management audits at the affiliated companies.

information with the auditors.

(c) In order to supervise the management perform-(b) The corporate auditors shall, at certain intervals,

ance of the affiliated companies, managers from theexchange information with the independent auditors.

Company may be appointed to serve as part-time(c) The head of Finance and Accounting Division

directors.

shall, at certain intervals, exchange information with(d) Both domestic and overseas affiliated companies

the auditors.

must implement and abide by regulations regarding(d) The head of Management Audit Division shall sub-business management (matters requiring prior

mit a report to the corporate auditors in respect of theapproval by or that have to be notified to the parent)

results of internal audits.

pursuant to Domestic affiliated companies and(e) The head of Management Audit Division shall beOverseas affiliated companies respectively.

appointed with prior consultations between the corporate auditors and the company.

(7) System by which auditors carrying out their duties andwho seek assistance can assure the assistance of an
appropriate assistant.
(a) Management Audit Division and General Affairs
Division support the auditors carrying out their duties.
(b) When auditors seek assistance carrying out theirduties, an assistant shall be selected from an appropriate department, in consultation with the auditors.
(8) The independence of the assistant referred to abovefrom directors of the company.
The assistant referred to in (7)(b) above shall be treated as full-time staff, subject to oversight by the auditors, and shall not carry out other assignments concurrently.
(9) The system for reports to the auditors by directors andemployees and the system for reports to the otherauditors.
(a) In the event that directors, the CRO and the headof Management Audit Division discover, in connection
with an internal audit, any material items that will
impact on performance or any actions that represent

25
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONCSR Activities

exert every effort in the twin aspects of our manufacturingsystems and business systems, seeking to raise overall efficiency and to reach a higher level in our environmental
activities.
Across our operations, we promote measures to reduce
environmental impacts from our business activities and tochannel the strengths of the Group into our Products, where

CSR Management

we are working to create environmentally conscious products. In this respect, it is essential to consider and reduce

We established the CSR Committee in April 2005. This

environmental load throughout the product lifecycle, so

move brought a systematic approach to dealing with issues

works in product planning and designing phases are mostand activities previously handled by individual departments

influential. Guided by this understanding, we have devel-

and independent committees. The CSR Committee drafts

oped a "Product Assessment Manual" that is applied toGroup-wide plans related to promoting CSR, and assures

every step of the product planning, development and design

promotion of CSR activities by providing direction andprocess, in order to cut energy consumption, minimize use

impetus for the activities of Global Environment Committee,

of resources, promote recycling rates, and otherwise reduce

the Social & ES (Employee Satisfaction) Activities

environmental loads.

Committee and the Risk Compliance Committee.
One example of an environmentally conscious product is theEnvironmental Initiatives

high speed seal dispenser used on LCD panel manufacturing lines. In the LCD panel manufacturing process, two

The beginning of the Group's "Environmental Charter" statesglass panels are bonded together after sealant has been

that, "Shibaura Mechatronics Group, The Provider ofapplied to their edges. Our equipment adopts a new type of

Infrastructure for the Digital Age, promotes business activi-

dispenser that achieves the industry's highest rate of sealantties with consideration for the environment, and offers envi-

application while cutting the use of nitrogen (process gas)ronmentally conscious products on the global level".

by 83%. Compared to conventional equipment, this new dis-

Furthermore, as a maker of manufacturing equipment, wepenser improves environmental efficiency by a factor of 3.5.

    

Report /DirectReport   

High-speed seal dispenser  
Report    100

   !"#

8060  
            

40
20
0

CSR promotion system

Conventional
dispenser

New typeof dispenser

Process gas : Reduction of process gas (N2)26
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATIONBoard of Directors

Standing, from left ;Sitting, from left ;Hiroshi Hiraoka, Junichi Kanda, Ryoso Kawabe, Sennosuke Yoshida, Nobuyuki Yamaura, Yasutomo Fujimori, Satoshi Shimoda,
Osamu Watanabe, Tadashi Matsumoto, Kazuo Takahashi
Kunihiko Yokoyama, Michiro Ishii, Mikio Haga, Shigeki Morita, Kenji Minami, Noboru Tamura

Directors

Corporate Auditors

President and Chief Executive Officer

Vice Presidents

Junichi Kanda

Shigeki Morita

Yasutomo Fujimori

Satoshi Shimoda

Nobuyuki Yamaura

Tadashi Matsumoto

Executive Vice President

Osamu Watanabe

Sennosuke Yoshida

Mikio Haga

Ryoso Kawabe

Kenji Minami

Kazuo Takahashi
Hiroshi Hiraoka

Senior Vice Presidents
Michiro Ishii
Noboru Tamura
Kunihiko Yokoyama

27
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

Investor Information(As of March 31, 2007)

Date Established

October 12, 1939

Capital6,761Million-Yen

Number of Employees

Consolidated: 1,744

Non-consolidated : 970
Common Stock

Authorized: 100,000,000 shares

Issued and outstanding : 51,926,194 shares
Number of Shareholders

8,370

Stock Listings

The Tokyo Stock Exchange (Code : 6590)

Transfer Agent for

The Chuo Mitsui Trust and Banking Company, Limited

Common Stock

33-1, Shiba 3-chome, Minato-ku, Tokyo 105-8574, Japan

Independent Auditor

Ernst ＆ Young ShinNihon

Headquarters

5-1, Kasama 2-chome, Sakae-ku, Yokohama, Kanagawa Pref. 247-8610, Japan
TEL : +81-45-897-2421

FAX : +81-45-897-2470

http://www.shibaura.co.jp/

Common Stock Price Range(The Tokyo Stock Exchange)
Year ended March 31,

High (yen)
Low

(yen)

2007

2006

2005

2004

2003

1,374

1,759

1,081

985

604

525

864

590

409

201

Principal Shareholders
Number of shares hold

Percentage of total shares
outstanding(thousand shares)(%)

Toshiba Corporation

18,977

36.5

Japan Trustee Services Bank, Limited (trust accounts)

1,269

2.4

The Master Trust Bank of Japan, Limited (trust accounts)

542

1.0

Mitsui & Co., Ltd.

365

0.7

28
Annual Report 2007
SHIBAURA MECHATRONICS CORPORATION

5-1, Kasama 2-chome, Sakae-ku, Yokohama,
Kanagawa Pref. 247-8610, Japan
TEL : +81-45-897-2421
FAX : +81-45-897-2470
http://www.shibaura.co.jp/

SEA0308A 00 0710
07031