Azbil Report 2008

azbil report 2008 Contact Public Relations Section Corporate Planning Department Yamatake Corporation TEL: 81-3-6810-1006 2008 Group Sustainability Report FAX: 81-3-5220-7274 E-mail: [email protected] http://www.azbil.com/

azbil report 2008 Yamatake Corporation Yamatake

This report is printed on FSC-certified paper using the waterless printing process and soy ink. Printed in Japan PR-2101E（0809-2K-EDGE） Yamatake Corporation Contents

To Our Stakeholders Social Report 2 40 Yamatake’s corporate social responsibilities and its ongoing activities in this area as part Business Overview/ of its commitments to the community are 4 The History of Yamatake described here. 42 Promoting CSR Management Highlights 44 Corporate Governance 8 Both sales and earnings increased for the fifth 45 Risk Management straight fiscal year. Some of the key points to fiscal 2007 results are outlined here. 46 Compliance 48 Employee Relations [ázbil] Executive Interview 50 For Local Communities 10 Yamatake Corporation President and CEO Seiji Onoki talks about the Group’s management vision, which targets sustainable growth in harmony with Environmental Report customers and society. 52 The Group engages in a range of activities for protecting the environment under its Environmental Group Philosophy Charter and Environmental Policy. Special Features 54 Environmental Impact throughout By pursuing “human-centered automation,” 16 Our Business Activities To realize safety, comfort and fulfillment in people’s our core businesses contribute to the realiza- 56 Management System lives, and contribute to the global environment through tion of a sustainable society. 58 Environmental Accounting “human-centered automation.” A close-up on the latest technologies and solutions 59 Environment-conscious that the Group is marketing to Products and Services To achieve our philosophy, achieve a low-carbon society. 60 Green Procurement and Chemical Substance Management • We create value together with customers at their site. 61 Introduction of Environment-conscious Products • We pursue our unique value based on the idea of 62 Prevention of Global Warming “human-centered.” 64 Resource Conservation and Waste Reduction • We think about the future and act progressively. 65 Environmental Pollution Prevention Business Overview Yamatake marked its 100th anniversary in October 2006. Using this 24 Executive directors and officers in charge report on Financial Report as an opportunity for the Group to leap ahead into its second business conditions in fiscal 2007 and the policies and 66 century, we created a new symbol to unify all employees of the outlook ahead in each of our business segments. 68 Financial Review Group, enabling them to demonstrate the necessary teamwork to 26 Building Automation Business 72 Consolidated Balance Sheets solve customers’ problems. 28 Advanced Automation Business 74 Consolidated Statements of Income 30 Life Automation Business azbil (Automation . Zone . Builder) reflects our Group philosophy 75 Consolidated Statements of Changes in Equity 32 International Business of “realizing safety, comfort and fulfillment in people’s lives, and 76 Consolidated Statements of Cash Flows 34 Research and Development contributing to the global environment through human-centered 77 Notes to Consolidated Financial Statements automation.” 36 Intellectual Property 86 Independent Auditors’ Report 38 Quality The roundness of the letters signifies tender humanity, and the oval 39 Measurement Standards shape curving upward to the right expresses unlimited potential. 87 87 Corporate Data Unified by azbil, the Yamatake Group will continue to strive to 88 Stock Information create a corporate culture for innovation that will enable the Group 89 Board of Directors, Executive Officers and to meet the expectations of its shareholders, customers, local communities and society at large. Corporate Auditors

What is the azbil report? Cautionary Statement: Statements made in this report with regards to Yamatake’s plans, targets and strategies and other statements without historical facts are forward-looking This azbil report is an important tool for the Yamatake Corporation and its statements about the future performance of Yamatake Corporation and its subsidiaries. These projections are based on management’s assumptions, intent, and expectations in light of the information currently available to it, and therefore these statements are not guarantees of future performance. subsidiaries (the “Group”) in communicating with stakeholders. By com- Due to various factors, actual results may differ from those discussed in this document. Such factors include but are not limited to: 1) general economic conditions in bining the Group’s annual, environmental and social reports into a single Yamatake’s markets, particularly levels of capital investments; 2) exchange rates, particularly between the Japanese yen and U.S. dollar and other currencies in which Yamatake makes significant sales or Yamatake’s assets and liabilities are denominated; and 3) continued acceptance of Yamatake’s products and services offered in highly competitive volume—to enable deeper understanding of its business activities—we markets characterized by development of new technologies and the advancement of the global economy. have compiled an easy-to-understand report on the Group’s philosophy, • The social report was compiled with reference to the Sustainability Reporting Guidelines 2006 (Global Reporting Initiative). Figures and monetary amounts less than whole units business contributions and challenges facing it in the areas of the have been omitted. • The environmental report was compiled with reference to the Environmental Report Guidelines 2007 (Ministry of the Environment) and the Sustainability Reporting Guidelines environment and society. 2006 (Global Reporting Initiative). Figures and monetary amounts have been rounded to the nearest whole unit. • Financial data and financial statements have been prepared based on “Japanese GAAP” and amounts have been rounded. Issued: August 2008 Next scheduled release: August 2009 azbil report editors

azbil report 2008 To Our Stakeholders

We are working to achieve sustainable growth in tandem with our customers and society by creating new value through “human-centered automation.”

Amid the recent fundamental changes in the structure of society, the growing awareness of the need to address global warming and implement energy-saving practices, and the dramatic pace of technological innovation, automation is expected to play a new key role, which Yamatake has been engaged in over the years. Since its founding in 1906, Yamatake has worked to develop and enhance “automation,” or measurement and control technologies, and to offer the kind of innovative solutions that only Yamatake can provide. With the celebration of our 100th anniversary in 2006, we recognize and embrace the challenging demands in the automation field today. Reflecting our commitment to meet these challenges, our new Group philosophy is “to realize safety, comfort and fulfillment in people’s lives and contribute to the global environment through ‘human-centered automation,’” a philosophy which indicates the new direction we will develop our businesses for the next generation. In addition, we also created a new Group symbol, azbil (Automation . Zone . Builder), to represent this new philosophy. Drawing on the beliefs embodied in our new philosophy and symbol, we will leverage our strengths—the technologies and expertise in measurement and control we have cultivated over many years—in order to maximize enterprise value through the pursuit of “human-centered automation” and to play a leading role in the realization of a sustainable society. Toward the establishment and expansion of ”human-centered automation,” the entire Yamatake Group is focusing its efforts on achieving the 10-year, long-term goal scheduled for completion in fiscal 2013, ending March 31, 2014. Fiscal 2007, ended March 31, 2008, marked the first year of our new three-year medium-term plan, which is focused on establishing a firm foundation necessary to achieve our long-term goal. Kimmon Manufacturing Co., Ltd. was converted into a wholly owned subsidiary, and we endeavored to further enhance its business foundation through the “Kimmon-Yamatake Jump-Up Plan.” To strengthen our foundation, overseas sales and service networks were expanded. We also took aggressive steps to broaden the scope of our operations, and results in the fiscal year were ahead of our targets. Net sales totaled ¥248.6 billion in fiscal 2007, and operating income totaled ¥20.5 billion, exceeding ¥20.0 billion for the first time. As a result, both net sales and income have increased for five consecutive fiscal years. We thank our shareholders, customers and other stakeholders for their strong understanding and support in making these achievements possible. Customers, regardless of their industry, need to produce high-added-value products to meet the diversifying and changing needs of their clients. In addition, they must respond to a range of issues, such as maintaining levels of safety and quality, adapting to a declining birthrate and aging population, and reducing their impact on the environment. Founded on our Group philosophy of “human-centered automation,” we are strengthening our business foundation toward the creation of a new corporate group that is able to help each of our customers address these issues and subsequently to contribute to the creation of new value at their worksites. Business conditions are increasingly uncertain amid sharply increasing crude oil and raw material prices, declining capital investment and other negatives. Nonetheless, changing business conditions afford new business challenges and opportunities. We will boldly meet the challenges ahead and strengthen the foundation for attaining further growth.

July 2008

Seiji Onoki President and Chief Executive Officer

azbil report 2008 azbil report 2008 Business Overview Chemical Plants Research Centers Plastic products and chemical fibers and textiles are assem- We help to maintain special room conditions necessary for bled and produced using chemical processes. azbil systems testing and other purposes while using energy and managing preserve the quality of materials during chemical reactions record-keeping in the most efficient way possible. Security of and oversee the blending of materials and other operations. important materials and research units are maintained with azbil’s “human-centered strict precision.

automation” plays a central Waste Treatment Plants and Public Facilities azbil systems, which include bacteria temperature controls at role in many environments, Petroleum Refineries sewage treatment plants, incineration temperature controls Petroleum refineries break down crude oil into gasoline and at waste treatment plants, utility controls at power stations, from plants and factories to kerosene. Precise temperature controls enable the creation emergency response during abnormal operation and other of high-quality gasoline while minimizing the use of energy activities, play important roles for ensuring environmental work and home environments. in production. azbil systems are instrumental for maintaining preservation and safety at plants in the communities we For example… controls and managing production. operate in. We increase comfort and profitability in buildings, production plants and living environments while reducing energy consumption. We are also helping to enhance Food Processing Plants and Pharmaceutical Plants “safety, comfort and fulfillment” in society by creating Semiconductor and Electric Equipment Plants At food processing plants, azbil sensors and systems are Automobile Assembly Plants Integrated circuits (ICs), liquid crystal displays (LCDs) and safer and more reassuring living environments for an aging crucial for mixing ingredients for flavoring, controlling Plants consume huge volumes of energy, and we work other components for mobile phones and personal comput- society and enhancing lifestyles in other ways. temperature, avoiding the use of impurities in production diligently to make electricity use more efficient, enhance the ers are manufactured with azbil sensors and switches in their processes, providing cleansers for sanitizing trays and effectiveness of production methods and reduce environ- inner workings. In addition, azbil systems are instrumental for containers and for the final shipment of products. It is, at mental impact. Production plants depend on many switches maintaining consistent temperatures and humidity and for pharmaceutical plants and hospitals, extremely important for and controllers for assembly. azbil production controls and defect analysis at plants in order to reduce defective parts many kinds of medicines to be rightly compounded with air-conditioning technologies are major contributors to produced. enhancing efficiencies in auto plant operations. thorough and strict quality control. The precision equipment azbil in Many Fields and production control systems of azbil enhance the safety and high quality of pharmaceutical products.

Hirohito Naito Department Stores and Shopping Centers Corporate Planning Department We ensure that the shopping space is comfortable while Yamatake Corporation keeping energy use at minimally suitable levels by tailoring operations to match floor and tenant needs for temperature azbil helps society thrive in many ways through its core controls during peak hours and for cooler atmosphere in measurement and control technologies. Combining our Office Buildings warm weather. expertise in development and manufacturing with our skills in We prepare safe and comfortable working environments in furnishing solutions for customers on-site, we build automation buildings used by a broad array of workers and residents. systems for a wide range of fields. Our services for enriching Our building systems have comprehensive controls over lifestyles, complemented by our “human-centered automa- living conditions and security on each floor and minimize tion” approach, are the foundation of our efforts to create energy costs in the most effective way. value on-site for customers.

Hotels Our priority is maintaining comfortable air-conditioned climates so customers continue to return to the hotels, and Hospitals also reducing environmental impact through varying energy For round-the-clock safe environments at hospitals that are use by taking into account differences in energy consump- vital for maintaining human life, we provide special air- tion when rooms are unoccupied or at night, etc. conditioning systems that prevent in-hospital infections and also install security systems. We analyze energy use and propose ways to curtail energy consumption, thereby helping to support hospital management.

Schools We provide integrated control systems for the buildings and Homes and Lifelines facilities serving many different purposes on school grounds. City gas and LP gas are transported from regional gas Lifestyles We also offer security for the school’s main reference rooms governor stations. azbil supplies gas governor stations with We offer a rapid emergency response service for elderly and research facilities. superior safety features, including highly reliable mecha- persons living alone, as well as lifestyle support services nisms that constantly check for abnormalities and other including daily health management. Other services are features, and home gas meters. We provide central nursing care, nursing consultation and group home air-conditioning systems that control living environments and management. also can reduce energy use and prevent “sick house syndrome” and other health problems among residents.

azbil report 2008 azbil report 2008 The History of Yamatake

1906 1950 1960 1970 1980 1990 2000 2008

Towards Continued Growth 1972 1990 2002 2006 • Samukawa Factory (present-day Shonan Factory) • Honeywell reduces its stake from 50% to • Equity alliance with Honeywell is • Yamatake introduces its new corporate 1953 begins operations 24.15% terminated philosophy and establishes azbil as its • Forms equity-based • Technical license agreement with Honey- Group symbol 1906 alliance with Honey- 1973 well is converted into strategic alliance 2005 • Yamatake celebrates its 100th well Inc. of the U.S., • Isehara Factory begins operations agreement • Corporate headquarters relocates to anniversary • Takehiko Yamaguchi acquiring a 50% stake 1961 Marunouchi, Tokyo, and sales opera- • Yamatake completes the construction establishes Yamatake based on technical • Listing transferred to the Second Section of the 1997 tions are consolidated in Shinagawa of a new technology building at the Shokai license agreement Tokyo Stock Exchange • Strategic alliance agreement with • Yamatake acquires effective control of Fujisawa Technology Center • Fujisawa Factory (present-day Fujisawa Technol- Honeywell is replaced by business unit management of Kimmon Manufactur- 1958 ogy Center) begins operations agreements ing Co., Ltd. 2007 • Public share offering • R&D functions are consolidated at the 1966 1998 Fujisawa Technology Center • Yamatake-Honeywell Keiki Co., Ltd. changes its • Yamatake-Honeywell Co., Ltd. changes its name to Yamatake-Honeywell Co., Ltd. name to Yamatake Corporation 2008 (present-day Yamatake Corporation) • Kimmon becomes a wholly-owned subsidiary through a share exchange 1939 1969 • Kamata Factory begins operations • Listing transferred to the First Section of the savic-net™ 50 Tokyo Stock Exchange

Towards Further Technological Innovation 1972 1984 1995 2000 2006 • Unveils Delta 2000 • Begins sales of FE7 series • Begins sales of Harmonas™ automation • Develops world’s first high-precision, • Begins sales of savic-net™ FX building 1958 central control system of photoelectric switches system for industrial use highly corrosion-resistant sapphire management system, security systems • Begins manufacturing basic for buildings • Develops MagneW™ pressure sensors and Intelligent Compo microswitches in Japan 3000 electromagnetic 1975 flowmeter 2003 2007 1933 1968 • Jointly develops • Begins sales of Infilex™ AC and • Creates lineup of Restriction of Hazard- TDCS™ 2000 distrib- 1985 Infilex™ ZM air-conditioning ous Substances (RoHS)-compliant • Builds dedicated factories for industrial • Develops 6J central uted control system • Develops CV3000 series controllers air-conditioning control systems, instruments, starts manufacturing flowme- air-conditioning for industrial automa- of control valves, the addressing the need to reduce impact ters, float level gauges and carbon dioxide control system tion with Honeywell, world’s most advanced on the environment gas analyzers announces first series of its kind • The Measurement Standards Center product becomes accredited under the Japan 1948 1988 Calibration Service System in three • Begins importing electronic • Begins sales of disaster calibration categories: pressure, meters from Honeywell, of and security systems temperature and humidity the U.S. • Begins sales of WiSensor™ wireless Micro electro-mechanical network system instruments and micro- pneumatic instruments TDCS3000™ LCN Harmonas™ Digital controller for air-conditioning

Towards a Sustainable 1995 2000 2007 Society • Kicks off the Environmental Promotion • ESCO (Energy Service Company) • The new technology 100 Years of History and Our Philosophy Project business is launched building at the Fujisawa Yamatake Corporation celebrated its 100th Technology Center earned anniversary on December 1, 2006. Over the 1996 2001 the highest rank (S) in the course of 100 years, we have contributed to • Fujisawa Factory becomes the first • Yamatake establishes Environ- Comprehensive Assess- Japan’s economic and social development Company facility in the control instrumental Charter summarizing the ment System for Building Hiroshi Gotou ments industry to obtain ISO14001 Group’s philosophy concerning Environmental Efficiency by accurately gauging trends and address- General Affairs Department ing the problems of our customers and Yamatake Corporation • Shonan Factory becomes the first facility environmental protection and “CASBEE-new building” society as a whole in such areas as labor that manufactures field measurement and related activities • Total number of visitors conservation, resource and energy conserva- control instruments for the industrial who have taken part in the tion, comfort and safety by counting on our market to obtain ISO14001 2002 tours of a model factory for expertise and know-how in measurement generation, and they are an important • Yamatake begins tours of a energy conservation at the and control technologies. Takehiko Yamagu- component of the “human-centered 1997 model factory for energy Fujisawa Technology chi, the founder of Yamatake, believed that automation” philosophy. “100 Years of • Isehara Factory becomes the first facility conservation at the Fujisawa Center surpasses 5,000 the pursuit of money and money alone was Yamatake,” which was published in June that manufactures systems for the indus- Factory (now the Fujisawa frivolous and the Company should work to 2007, can be viewed in the Company trial market and systems for the building Technology Center) free people from drudgery. These views history section of our web site, market to obtain ISO14001 have been passed from generation to http://jp.yamatake.com/corp/history/ • Yamatake Control Products Co., Ltd. obtains ISO14001 Fujisawa Technology Center

azbil report 2008 azbil report 2008 Highlights Yamatake Corporation and Consolidated Subsidiaries

Overview of Fiscal 2007, ended March 31, 2008, Consolidated Results Topics in Fiscal 2007, ended March 31, 2008

Operations and Management Life Automation Business Group sales and income rose for the fifth consecutive • Kimmon Manufacturing Co., Ltd. was converted into a • The “Kimmon-Yamatake Jump-Up Plan” was advanced amid fiscal year, with operating income topping ¥20.0 billion wholly owned subsidiary through a share exchange to speed aggressive activities to strengthen business foundation and up initiatives for reinforcing its business structure. underlying quality. for the first time. • Yamatake began building an advanced technology laboratory • Synergies were forged for sales activities, product develop- building with the aim of accelerating research and development and other integrated operations in the Group. ment and further bolstering our product capabilities. • In the Life Assist field, business domains were expanded in Building Automation Business lifestyle disease prevention, nursing care (preventive care) • We recorded a substantial increase in both sales and profits, and other services. with sales surpassing ¥100 billion for the first time. International Businesses Net Sales increased 6.0% year on year, to ¥248.6 billion. • Investment in the market for new buildings remained robust, • Sales of products and systems for manufacturing industries particularly for redevelopment projects in the Tokyo metro- by overseas subsidiaries and affiliates rose steadily in China politan area in Japan. and other Asian countries. • Energy-saving businesses grew sharply in the market for • Overseas subsidiaries, affiliates and offices were strength- existing buildings, backed by growing needs for reducing ened and expanded in Asia and the Middle East to build a Operating Income climbed year on year, to . 18.3% ¥20.5 billion environmental impact (CO2). more solid structure for international operations. Advanced Automation Business Aiding the Environment and Communities • Net sales reached ¥100 billion for the first time even as • More than 5,000 visitors toured the Fujisawa Technology business conditions were characterized by flagging capital Center, a model factory for energy conservation. Net Income rose , to , as we posted extraordinary losses with 0.6% ¥10.7 billion investment in Japan during the fiscal year. • Yamatake was a supporter of the 2008 Shonan International a view to fortifying our business foundation. • Production of electromagnetic flowmeters was shifted to Marathon and promoted an environment-conscious event. Kimmon’s Kyoto plant to enhance business foundation for • The Fujisawa Technology Center was awarded a special attaining business growth. prize by the Commendation Society at the 6th Japan Envi- • We bolstered production facilities at the Shonan Factory ronmental Management Awards. in order to manufacture the next generation of high- ROE (Return on Equity) of 9.0% was achieved for the third straight term. performance products. • We promoted solutions-based businesses for meeting customer needs for safe and stable operations, reductions in energy consumption and advanced controls, which are Annual Dividend Per Share increased by ¥10 per share, and dividends on ordinary shares rose for expected to become the focus of investment going forward. the fifth consecutive term.

Net Sales Operating Income/Net Income Return on Equity (ROE) Cash Dividends Per Share CO2 Emissions/Unit Total Volume of Waste Generated/Rate of Recycling

¥ Billions ¥ Billions % ¥ Tons Tons/100 Millions of yen Tons % 60 98.4 99.2 99.1 300 25 10 60 20,000 15 2,000 94.8 96.9 100 9.3 9.3 9.0 248.6 20.5 50 50 12.2 12.1 234.6 11.9 1,573 20 8 10 16,000 11.6 12 1,600 1,522 80 10.6 1,416 17.3 13,509 1,335 13,045 13,005 200 188.3 40 12,382 13,093 1,238 180.8 40 170.0 15 13.5 6 12,000 9 1,200 60

10.6 10.7 9.8 10 9.4 4 23 8,000 6 800 40 6,601 6,509 100 3.8 20 6,040 6,268 6,495 6.8 3.5 14 5 2 4,000 3 400 20 3.2 3.7

0 0 0 0 0 0 0 0 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 (FY) (FY) (FY) (FY) (FY) (FY) Operating Income Net Income Ordinary dividend Factories Offices Total volume of waste generated Commemorative dividend Unit (right scale) Rate of recycling (right scale)

azbil report 2008 azbil report 2008

100 100

0 0 Executive Interview

Q. What are the goals Yamatake hopes to achieve under the Group’s “human-centered automation” philosophy?

Through the pursuit of “human-centered automation,” we aim to play a pioneering role in the creation of a sustainable society and to maximize our enterprise value. A. Yamatake has been developing automation businesses centered on measurement and control technologies since its founding in 1906. The word “automation” has a slightly negative connotation, conjuring up images of machine control and human subordination. This view was particularly prevalent during the rapid growth period for mass production and mass consumption. However, we believe automation is essentially just a tool for enriching human life and enhancing personal comfort. Automation of the kind where people are used by machines is not the kind we want to create. As change engulfs society and the world around us, the value that customers and society as a whole requires from automation has been shifting from automating machine operations and enhancing efficiency to ensuring safety and quality, addressing the challenges presented by an aging society, allevi- ating environmental impact and manufacturing original, high-added-value products. In October 2006, Yamatake celebrated its 100th anniversary, and we took this opportunity to return to automation’s starting point—“the human in control.” In other words, automation’s role should be to help people have more comfortable and enjoyable lives and enable them to perform their jobs more easily. This resulted in distinctive new roles and priorities for us in the automation field. Global warming is a case in point. Yamatake can help preserve the environment by making diligent efforts to lessen the environmental impact of office buildings, production plants, hospitals, shopping centers, homes and other places, while at the same time ensuring that human comfort and convenience are not sacrificed as a result. Our goal is to minimize environmental impact while taking crucial steps to enhance safety, comfort and fulfillment in our daily lives. This is what our goals for “human-centered automation” entail. Moreover, we have arrived at the conclusion that it is up to us to go ahead of our peers and attempt to deal with these challenges, as we have unparalleled experience in providing automation solutions for the variety of problems that have occurred in our customers’ workplaces over many years. Based on this conclusion, and as expressed in the philosophy underpinning the azbil Group brand, we intend to develop businesses that create the kind of value unique to Yamatake, to maximize our enterprise value through our initiatives and achievements in “human-centered automation” and to play a pivotal role in creating a sustainable society. Our customers fully associate this way of thinking with the azbil brand, and have heaped praise on our approach. The expectations of our customers renew our determina- tion to succeed, and, with this in mind, we are working to further enhance our operations by fortifying our business foundation.

Q. Yamatake’s three-year medium-term plan that got under way in fiscal The Group is realizing reforms in its businesses 2007, ended March 31, 2008, is positioned as a period of firmly estab- by pursuing its philosophy of “human-centered lishing the foundation. What exactly does this entail? Pursuing business reforms based on “human-centered automation,” we are automation,” and aspiring to be a global top-class establishing the strong business foundation to achieve sustainable growth. corporate group. Toward the achievement of A. Yamatake is promoting and developing businesses with the aim of attaining its long-term goal under the 10-year plan running to fiscal 2013, the these goals, it continues to push forward with plan’s final year. Our ultimate goal is to establish “human-centered automation” businesses that are unique to Yamatake and become a global top-class corporate initiatives to strengthen its business foundation. group. To achieve these goals, the plan has been broken down into three periods:

10 azbil report 2008 azbil report 2008 11 the period of fostering Yamatake spirit, fiscal 2004 to fiscal 2006; the period of firmly establishing foundation, fiscal 2007 to fiscal 2009; and the period of growth, fiscal 2010 to fiscal 2013. We have devised strategies and are enacting them in conjunction with the themes for each of these periods. For the current three-year medium-term plan, positioned as the period of firmly establishing the foundation, our emphasis is on enhancing Yamatake’s foundation to achieve ongoing growth by executing three key concepts: creating new businesses, or business structure reform; creating new work styles, or business operation reform; and building Yamatake spirit, or creation of new corporate culture. Based on these three concepts, we will strengthen foundation and achieve sustainable growth by focusing on customer satisfaction and providing Yamatake’s unique value. Through the achievements of our previous three-year medium-term plan, we made major headway in meeting challenges and building a collaborative corporate culture founded on teamwork. As part of the current three-year medium-term plan, we intend to make our operations more transparent and more structured, and also aim to improve our ability to carry out operations by establishing teamwork capable of rapid, precise and high-level responses to any customer need. We will also accelerate our shift to “human-centered automation” businesses. With this in mind, we will pinpoint directions for our core Building Automation President and CEO Seiji Onoki discussing “human-centered automation” with business, Advanced Automation business and Life Automation business and work Policies are being steadily implemented to fortify operations at Kimmon Manufac- employees to achieve tangible successes here. By positively pursuing and realizing changes in turing Co., Ltd. and we are building a new technology laboratory building and

Net Sales our operations, we believe sustainable growth is achievable. We will aggressively expanding our overseas operating bases. enact the necessary policies and make the required investments to further rein- A. Presently, to bolster our business foundation, we are enhancing productivity

¥ Billions force the Group’s foundation and build true underlying strength. and problem-solving capabilities by building alliances across our three core busi- 300 nesses in all functions, from development and production through to services. In

248.6 Q. Looking back at fiscal 2007, the first year of the period of firmly addition, we are cultivating businesses for the next generation, and developing 234.6 establishing the foundation, how would you appraise Yamatake’s crossover fields of our three core businesses.

200 188.3 achievements and results and the progress made in achieving its goals? One such synergy centers on the “Kimmon-Yamatake Jump-Up Plan.” By 180.8 170.0 stepping up cooperation within the Group, we are working to further reinforce the Net sales and income have increased for five consecutive fiscal years, with operating business foundation and improve the profit structure at Kimmon which is the income topping ¥20.0 billion for the first time ever in fiscal 2007. We continued to Group’s mainstay company in the Life Automation business. In April 2008, this 100 strengthen our profit structure and further reinforced our foundation. company was made a wholly owned subsidiary, and management integration with A. Yamatake achieved healthy consolidated growth in fiscal 2007, with both net Kimmon has helped us make greater headway in achieving our goals. sales and income increasing for the fifth consecutive year. For the three-year me- Furthermore, at the Fujisawa Technology Center, an advanced technology 0 dium-term plan that began in this fiscal year, we initially set goals for consolidated laboratory will be constructed during the fiscal year with the aim of speeding up 03 04 05 06 07 (FY) net sales of ¥244.0 billion and consolidated operating income of ¥20.0 billion, but research and development and further enhancing the performance features of our later upwardly revised these forecasts to consolidated net sales of ¥248.5 billion products. For overseas business development, we are further strengthening our and consolidated operating income of ¥20.3 billion. Even so, we cleared both of existing operating bases, adding new offices in Vietnam, India and Dubai and Operating Income these revised targets. Yamatake’s initiatives for bolstering the foundation made expanding business operations in Asia and the Middle East. In these ways, Yamatake steady progress, and I believe we were able to achieve favorable results. We are is implementing a range of decisive measures to strengthen its business foundation. ¥ Billions 25 deeply grateful to our shareholders and customers for their support and for the Internationally, Yamatake has limited experience in acting independently achievements of all the employees of Group companies. Nevertheless, operating because its operations were formerly centered on its alliance with Honeywell Inc., 20.5 20 conditions have been characterized by increasing uncertainties. Starting in the of the U.S. As a result, overseas businesses still account for less than 10% of total 17.3 second half of the fiscal year, raw material and crude oil prices rose appreciably, sales. Still, put in different terms, I think we have considerable scope for growth. and the subprime loan problem slowed the U.S. economy and caused repercus- Operations overseas will reduce our exposure to the Japanese market while 15 13.5 sions elsewhere. Currently, there is a tendency among Japanese companies toward setting the stage for stable and consistent expansion. We are working to install curbing capital investment, and the strengthened yen and weakened dollar has also and better fortify overseas business frameworks as a priority to further enhance 10 9.4 been another challenging factor. To cope with these developments, Yamatake 6.8 the strengths of our corporate foundation. At this point, we are focusing our strove to further strengthen its business foundations and a solid profit structure. resources on the Building Automation and Advanced Automation businesses in 5 Asia, where investment has been robust. Looking ahead, we are setting our sights Q. Can you tell us about Yamatake’s policies for fiscal 2008, the second 0 on Europe and the U.S., which are the growth drivers in the global market, and on 03 04 05 06 07 year of the period of firmly establishing the foundation? newly emerging markets in Eastern Europe, Latin America and other regions in (FY) response to demands from our customers, which are expanding their own global Advanced Technology Laboratory (tentative name)

12 azbil report 2008 azbil report 2008 13 reach. Asia marks the starting point here. We have been building a successful track Exchange Law, which took effect in fiscal 2008. In addition, we have formulated the record and setting the cornerstones for expansion. Basic Policies, concerning the control of the Company and which aim to enhance Cash Dividends Per Share At present, a variety of changes are causing the future of Yamatake‘s operating enterprise value and protect the common interests of shareholders. ¥ 62 60 environment to become increasingly unclear. However, we believe these changes 60 offer us the opportunity to take on the challenge of entering new areas of business. Q. Yamatake has continued to raise dividends. What are your thoughts 50 on returns for shareholders? 50 10 Q. Corporate social responsibility, including actions addressing environ- 40 mental issues, has become a larger component of business operations in Yamatake has increased ordinary dividends for five straight fiscal years and will 40 recent years. Tell us about Yamatake’s initiatives in the CSR field. continue working to maintain and increase dividends. A. For fiscal 2007, we paid a year-end dividend of ¥30 per share. As a result, total 23 Yamatake believes CSR is a key management issue, and it is positively pushing dividends for the fiscal year came to ¥60 per share, including the interim dividend, 20 14 forward with a unique range of CSR initiatives, including social contribution and ordinary dividends have now increased for five consecutive years. Yamatake through its businesses. places great importance on returning profits to shareholders, and Yamatake’s man-

A. Yamatake’s CSR operations are grounded on the understanding that, based on agement is aiming to maintain stable dividends and to increase its dividend payout. 0 its responsibilities as a global enterprise, actively conducting good work in society However, it will also comprehensively consider the levels of consolidated perfor- 03 04 05 06 07 08 (FY) (Plan) should be an important priority. We have set goals for CSR operations under the mance, return on equity (ROE) and dividend on equity (DOE), and retained earnings Ordinary dividend Commemorative dividend current three-year medium-term plan and are actively working to build the appro- that are necessary to strengthen its business base and develop future businesses. priate frameworks and systems to ensure they are achieved. In concrete terms, our With this in mind, Yamatake plans to raise ordinary dividends by ¥2 per share in efforts are centered on six important fields: business ethics and legal compliance; fiscal 2008, for a full-year dividend of ¥62 per share. risk management; internal control for financial reporting; group management (corporate governance); employee relations and health and safety; and quality Q. Fiscal 2008 marks an important threshold for reaching Yamatake’s control and environmental preservation. 10-year long-term goal. Tell us about the Group’s positive efforts toward For environmental issues, we offer on-site education for members of the attaining this goal. public, and other efforts including support of a marathon event focused on promoting an environment-conscious event. We have been making aggressive efforts We are pursing “human-centered automation” businesses unique to Yamatake to reduce our environmental impact throughout our business activities. In June and aim to become a global top-class corporate group. Our stakeholders can

2008, we unveiled new goals for decreasing CO2 emissions in the Group based on expect positive developments from Yamatake in the future. the results of our previous efforts. Looking ahead, Yamatake is aiming to achieve A. Our long-term goal is to become a global top-class corporate group that its environmental goals, including for reducing energy consumption on production contributes to increase safety, security and enterprise value for our customers and lines and for switching to more fuel-efficient vehicles. that helps to address global environmental problems. Reaching this goal requires In addition, a characteristic of the Group is that its business operations them- leveraging the benefits from expansion in our “human-centered automation” selves are helping to address global environmental issues and are benefiting society. businesses and from having established an even more solid business foundation. We create production spaces where people can work efficiently and in comfort, we Judging from the progress we made in fiscal 2007, I think the potential for innova- realize production areas where people can develop their own skills in safety and we tive change is considerable. contribute to society by assuring and maintaining the safety of lifelines and provid- In the core Building Automation, Advanced Automation and Life Automation ing nursing and healthcare support services for communities. Also, we are helping businesses, market characteristics vary considerably. Our business mix is fairly well- address the urgent problem of global warming by utilizing our proprietary Yamatake balanced between the Building Automation and Advanced Automation

technologies and expanding operations for decreasing CO2 emissions. businesses, but if we can attain growth and expansion in the Life Automation business, which focuses on lifeline and lifestyle-related fields, we can build a Q. Yamatake continued electing outside directors to its Board. What are business portfolio with an even more favorable balance. the intentions here? Moreover, the Group supplies measurement and control equipment and systems that play crucial roles in a range of buildings, such as production facilities Yamatake is strengthening its corporate governance by soliciting outside at industrial plants and factories and in office buildings. This necessitates that we opinions, aiming to further enhance enterprise value and shareholder value. stably supply and maintain equipment for prolonged periods. Consequently, A. In accordance with Article 2-15 of the Corporate Law and with a view toward establishing solid business structures and operating foundation for consistent strengthened corporate governance, Yamatake appointed Hajime Ikeda and operations is not only how we respond to the trust our customers place in us, but retained Eugene Lee as outside directors. These are in addition to Makoto Yasuda, also connects to the ongoing growth of the Group. This is synonymous with who was appointed as outside director in 2006. The three outside directors con- increasing enterprise value, and I think it aligns with the interests of our sharehold- tribute to enhanced enterprise value and to shareholder value by monitoring from ers as well. We will continue working to meet the expectations of our shareholders, an independent perspective company management and business implementation. customers, the local communities where we operate and all of our stakeholders, While working to sharpen corporate governance practices, we are also promoting and ask for your continuing understanding and support as Yamatake promotes its mechanisms to ensure the accuracy of financial reporting, in accordance with an “human-centered automation” businesses and seeks to become a global top-class internal regulatory reporting system that is based on the Financial Instruments and corporate group.

14 azbil report 2008 azbil report 2008 15 Special Features FEATURES SPECIAL

By pursuing “human-centered automation,” our core businesses contribute to the realization of a sustainable society.

As problems including global warming, an aging society “Human-centered automation” Supporting Society To help realize a better society, we are applying the concept of “human-centered automation” in a wide range of measures,

and risk management deepen, societal conditions are changing tackling such issues as conserving energy and reducing CO2. with dizzying speed. In addition to individual and regional Group Philosophy Examples of Our Solutions The Society We Want initiatives, these conditions call for technology, ideas and action to Help Create transcending companies and countries. Enabling people to live safely through “lifeline” essential utilities Gas meters and water meters with automatic shut-off functions

Contributing as a corporate citizen to the realization of a Safety Ensuring comfort at work and in everyday life A society where Building automation systems and industrial automation systems people can live safely sustainable society lies at the heart of the Group philosophy. that improve the comfort of living spaces and reduce workloads and in comfort

In order to provide people with “safety, comfort and fulfillment,” Ensuring the safety of food production and logistics Production management systems that prevent operational errors, we will draw on rich human resources, advanced technical skills, logistics management on-site capabilities and measurement and control technologies Ensuring safety at work and in everyday life Comfort Security-support solutions for building security management, plant developed over many years as a leading manufacturer of control security and safety management equipment to play useful roles in a wide array of business areas. Enabling energy conservation in buildings and factories Operational improvement based on analysis of current status to A society with low In core businesses, we pursue “human-centered automation” reduce the CO2 buildings produce and the amount of energy carbon emissions factories use and address such issues as global warming to contribute to the Fulfillment Enabling environmental recycling A society based on creation of a better society. Provision of equipment and consultations for recyclable food recycling emissions resources (kitchen waste)

Standardizing manufacturing and management expertise Creation of databases of experienced employees’ knowledge and A society adapted expertise; provision of systems support Global to an aging population and a declining Environment Providing services, including nursing care, nursing-care prevention and emergency dispatch birth rate Specialist nursing care consultations and creation of care plans, provision of emergency dispatch services for elderly people living alone

16 azbil report 2008 azbil report 2008 17 Special Features

Toward a Low-Carbon Society 1 FEATURES SPECIAL Conserving Energy in Living Spaces Crude oil price hikes have further focused worldwide attention on energy problems and on environment control technologies that offer reliable, effective ways of addressing these problems through highly efficient energy-conserving devices. Furthermore, mindful of

its responsibilities as the chair of the Toyako G8 Summit, the Japanese government has OVERVIEW BUSINESS stepped up energy conservation measures not only in the industrial sector, which accounts for approximately half of the energy Japan uses, but also in the general consumer and transportation sectors, which have seen growing demand for energy in recent years. In response to those trends, azbil is developing one-stop environmental solutions businesses to help realize a low-carbon society. We achieve these solutions by exploiting technology for HVAC control, technology for calculating efficient energy conservation plans based on extensive experience and data, and our employees’ abundant expertise REPORT SOCIAL and technical skills.

ESCO Business Overview Introducing ESCO Business Initiatives* REPORT ENVIRONMENTAL

The ESCO (Energy Service Company) business comprises private-sector companies that advance energy conservation by offering comprehensive services combining technology, facilities, personnel, capital and other resources that are necessary

for saving energy in factories and buildings. The REPORT FINANCIAL investment required for energy-saving and operational improvements are all offset by lowering business expenses through energy savings, and energy reductions and plant refurbishments can be accomplished without harming the environment. This generates earnings for customers and helps preserve the global environment. Reducing CO2 Emissions Winner Silver in the Superior ESCO Realizing Japan’s First Support-type ESCO In Japan, the Group was a pioneering partici- Suma Aqualife Park in Kobe Business Awards Project for Energy Conservation Operations pant in ESCO businesses, and we continue to Based on a CO2 reduction strategy that Kobe City prepared, Kanbara General Hospital SELVA Shopping Center promote comprehensive energy-saving services Suma Aqualife Park became the first aquarium in Japan to At Kanbara General Hospital, we implemented the first At the SELVA shopping center in northern Sendai, in Miyagi centered on our Total Energy Management embark upon an ESCO project. Moreover, it was the first ESCO project for local government in Shizuoka Prefecture. Prefecture, we achieved Japan’s first support-type ESCO Service, or tems™. time Kobe City had taken on such a project at one of their By upgrading heating equipment, we realized approximate project for energy-conserving operations. The project

facilities. Upgrading the control systems for aquarium water annual reductions of 23% for energy usage and 20% for CO2 incorporates an innovative scheme whereby the benefits are circulation pumps and HVAC reduced energy usage of such emissions. As the first of its kind at a Tokai region hospital, distributed not only to the owner and the ESCO provider equipment by 46.1%, the equivalent of 400 tons of CO2 and the ESCO project attracted a lot of attention from the local but to the building management company if the facility more than 260 kl of crude oil annually. community. Also, in 2007 the project won silver at the outperforms energy conservation targets. In 2008, the Second Superior ESCO Business Awards organized by project received a special prize at the Third Superior ESCO the Energy Conservation Center, Japan. Business Awards.

*Shown here are some example orders showcased in our public relations brochure. They are shown with the permission of the customer.

18 azbil report 2008 azbil report 2008 19 Special Features

Toward a Low-Carbon EneSCOPE™ U-OPT FEATURES SPECIAL Utilities Demand Correction Web Specified Cycle 30-minute Cycle 30-minute Cycle Every 30 Minutes Distribution Forecast Load Operation Plan Forecast Model for Heat, Society 2 for 24 Hours for 24 Hours Ahead Steam and Power Loads Energy Automated Ahead Optimal Operation Utilities Demand Forecasts Management Control of Utilities Targets (Minimize (24 Hours Ahead) Weather Conserving Energy in Production Plant CO2 & Costs) Forecasts

Energy Efficiency Start or Stop for Operation Plan Equipment Efficiency Forecast Values Acutual Utilities Demand the Industrial Sector CO2 Efficiency Each Utilities Operations Mode and Operations Daily Pattern Cost Efficiency Equipment Current State of

Conserving energy, manpower, and resources and Equipment Controls OVERVIEW BUSINESS

reducing CO2 emissions in the industrial sector through Prexion Database Heat automated control of utilities production plant Equipment Exchange Chiller/Heat Thermal Storage Air-conditioning Power-receiving Electricity Equipment Exchanger Tank 1 Load 1 Chiller/Heat Tank 2 Load 2 Cogeneration CGS Extraction, Exchanger Heat-generation Equipment Boiler Chiller/Heat Tank 3 Load 3 Exchanger Boiler Water Pipes/ Architecture of Flow through, Chiller/Heat Tank 4 Load 4 Equipment Boiler Steam Exchanger the U-OPT System REPORT SOCIAL arose between the direction of operations based on our Mr. Konno of Toyota commented, “With next year’s 30th experience and optimized operations by automated control, anniversary approaching, we launched our sustainable plant Yamatake provided us with readily understandable reports initiative at the Tahara Plant. So that the local community supported by data.” As a consequence of this project, the continues to view the plant’s presence in a positive light, Toyota Motor Corporation’s Tahara Plant Yamatake Implemented U-OPT System that Customers plant’s personnel now confidently rely on U-OPT System to we have to meet environmental management targets As part of efforts to conserve energy and resources at the Can Use with Confidence at Their Sites control the operation of utilities production plant. without fail. With that in mind, we will rely on Yamatake’s Tahara Plant, we introduced the U-OPT (Utility Optimiza- In 2006, the Tahara Plant launched a project to introduce In addition, to further optimize the plant’s energy usage, ability to deliver solutions based on an intimate knowledge REPORT ENVIRONMENTAL tion) System for utilities production plant, which eliminates support systems for utilities production plant to eliminate we use the energy management tool, EneSCOPE™, and of our worksites.” waste, inconsistencies and overloading in energy usage. By waste, inconsistencies and overloading in energy supply. implement an ongoing PDCA (Plan, Do, Check, Act) cycle. achieving efficient operation of utilities production plant, For the plant’s utility support systems, Toyota chose to Yamatake is also responsible for adjusting utilities produc- Glossary we helped the plant conserve energy and manpower and adopt Yamatake’s U-OPT System software package, which tion plant when the plant conditions alter due to production U-OPT: Utility Optimization System Software Package U-OPT System has two major functions: to predict utilities demand, such as line changes. reduce CO2. optimizes energy supply to minimize the CO2 emissions and steam, cooling water and electricity, for the upcoming 24-hour period, and energy costs of utilities production plant. Mr. Konno of to optimize utilities production plants to better minimize costs and CO2. Toward Realization of Sustainable Plants Reducing CO2 Emissions from Energy Usage Toyota commented, “We use many of Yamatake’s field We estimated the introduction of our systems would EneSCOPE™ Energy Monitoring, Analysis and Management System Since its establishment, Toyota Motor Corporation has instruments in the plant. We always rely on Yamatake EneSCOPE™ enables PDCA cycles in ongoing energy conservation REPORT FINANCIAL sought to enrich society through automobile manufactur- because whenever there is a problem, it only takes one reduce the plant’s CO2 emissions by 6%. In fact, we activities by collecting, analyzing and managing data on the usage achieved reductions of between 4% and 7% in summer and volumes of electricity, various types of fuel, steam and water. This energy ing. Toyota is pursuing sustainability though its three telephone call, and they quickly respond. We have chosen management system allows plant managers to “visualize ” energy usage 3% in winter. Of course, our systems also lightened the sustainable concepts “Technology,” “Manufacturing” and them as a partner because we can confidently entrust them volumes, CO2 emission volumes and how much energy chillers , boilers “Social Contribution.” As part of those efforts, Toyota with work.” workload of plant personnel. Moreover, the difference and other heat source equipment are using. hopes to achieve sustainable plants. Since 2002, Toyota has At the Tahara Plant, which operates 24 hours a day, between U-OPT System’s energy-use projections and been furthering power innovations in the automotive field Yamatake advanced the project based on exhaustive con- results was only ±3%. Tahara Plant, Toyota Motor Corporation through the introduction in stages of systems that support sultations and discussions with the plant’s personnel on how Mr. Tsuda of Toyota remarked, “Because they enable highly accurate projections, Yamatake’s systems meet this Location: 3-1, Midorigahama, On a consolidated basis, Toyota is the efficient operation of utilities production plant at its best to change over from existing operational systems to Tahara City, Aichi Prefecture, Japan vying to become the world’s largest plants. One such plant is Tahara, which produces 500,000 automated control systems. plant’s need for stable supply and stringent control. Also, for Start of operations: January 1979 automobile manufacturer in terms Main products: Lexus (LS, GS, IS), of vehicle production. The company a large plant using huge amounts of energy, reducing CO2 vehicles a year, including hybrid vehicles under the high-end Furthermore, before actually starting up the system, we Land Cruiser PRADO, etc. brought hybrid vehicles to market Lexus brand. conducted verification for one week. We did that to check emissions by 4% to 7% is very significant. And, we expect ahead of competitors and is advancing a range of industry- At the Tahara Plant, hot and cold water generated from the reliability of the system and eliminate any uncertainty further benefits this year when we begin full-fledge operation leading environmental measures. such utilities production plant as boilers, cogeneration among the plant’s employees about automated control. of the systems.” systems, chillers and thermal storage tank is supplied Working round the clock in shifts, Yamatake employees Thanks to the success of this project, Yamatake is currently throughout the year to the plant’s buildings and paint lines. spent time consulting with personnel at the plant and building a U-OPT System for utilities production plant at As temperature and humidity levels affect painting quality, helping them transfer from the existing operating system Toyota’s Kinuura Plant, which manufactures drivetrain parts. stable air-conditioning is critical. When utilities production to an automated control system. At the Tahara Plant, which is in its second year of using the plant is controlled manually, operations tend to supply more Mr. Fujiwara of Toyota recalls that “When building the U-OPT System, we plan to develop an even more effective energy than needed. By introducing automated control of system, Yamatake heeded the opinions of our employees system by using EneSCOPE™ to realize continuous improvement and also apply to equipment maintenance. utilities production plant, we helped the plant achieve on-site and took into consideration equipment rotation Hiroaki Konno Shiyunji Tsuda Masukuni Fujiwara In addition to regular maintenance, collected data will Manager, Power Supply Plant Planning Power Supply & efficient operations that minimize energy, manpower and and constraints of continuous operation. As a result, they & Maintenance Section Department, Maintenance Section enable appropriate maintenance based on the present No. 4, Plant Engineering Plant Engineering No. 4, Plant Engineering resources as well as reduce CO2 emissions. created a system that plant personnel find easy to use. Also, Division Division Division the transition went smoothly because, when differences condition of equipment.

*Shown here is an example order showcased in our public relations brochure. It is shown with the permission of the customer.

20 azbil report 2008 azbil report 2008 21 Special Features

Customer Buildings Yamatake Dataware Center Toward a Low-Carbon Society 3 FEATURES SPECIAL Data Management Customer Contributing to CO2 Reduction through Computers Communication Data Processing Diagnostic the Research and Development Sector Processing In order to realize a low-carbon society, rather than forcing ordinary people to assume the customers that have concluded system maintenance con-

burden of CO2 reduction, we must develop the technological capabilities to reduce CO2 OVERVIEW BUSINESS tracts and Yamatake Dataware Center. We process the data while providing “safety, comfort and fulfillment.” The wellspring of the Group’s growth is on energy usage and indoor comfort, covering the period Equipment for Internet Remote Maintenance original research and development focused on measurement and control technologies. up until the preceding day, to make it easily digestible for

Accordingly, we are strengthening and stepping up the pace of research and development customers. We then deliver it to them via the Internet. Amid Building Management Systems Building-Scope™ through the Fujisawa Technology Center, in which, upon its completion in 2006, we con- the increasing stringency of energy-related and environ- solidated our advanced technology development departments. This section showcases mental laws and statutory regulations in recent years, our service enables building owners to comply with the energy some development achievements of recent years that have already become innovative usage targets for buildings while creating comfortable products or integral parts of one-stop environmental solutions businesses, which are living environments. REPORT SOCIAL conserving energy and labor and reducing CO2 emissions in buildings and factories.

Intelligent Compo Series Achieving Further Energy Conservation in Buildings through Basic Structure Intelligent Control Terminals, the Intelligent Compo Series: Production Plan U-OPT From Position Control to Flow Volume Control Data storage 2 Weather Conditions Minimizing the CO Emissions and Energy Costs of Energy- Through the incorporation of microcomputers within CPU is installed, valve operations monitored. REPORT ENVIRONMENTAL producing Systems building automation equipment, such as sensors, dampers Data on past performance is stored. U-OPT is a system that improves energy conservation and • “Operations Period” integrated value and valves and the use of control terminals, the Intelligent • “Position” integrated value minimizes the energy costs and CO2 emission volumes. Utility Compo series enables the collection of site-specific control- • “Energized Period” integrated value Demand U-OPT System achieves highly accurate load projections related data that was previously impossible to collect. • Frequency of operation Prediction up to 24 hours in advance based on weather forecast data, Update of Prediction Model Utility Demand In the Intelligent Compo series, ACTIVAL™, a motorized Sensor outside air conditions and load results. Furthermore, to control valve with flow measurement and control functions, Newly developed temperature and minimize CO2 emissions, the system prepares optimal opera- Optimal can maintain optimal flows by measuring through-flow pressure sensors are installed and the flow Utility Update of Equipment Performance Operation rate is calculated. The position of the value tional plans for boilers, cogeneration systems, chillers and volumes in addition to conventional valve functions. There- Management Plan for is automatically controlled to maintain an

thermal storage tanks. Also, the system’s simulation function REPORT FINANCIAL Configuration B: On-line Start/ Utility Facility fore, the product enables optimal building operations that optimum flow rate. allows plant personnel to examine the feasibility control Stop Signal, Load Signal conserve energy and reduce CO2 emissions. methods for utilities production plant and improvements to Minimum Cost Minimum CO2 Exhaust operating plans. The system also has energy management Advanced functions that help realize further energy conservation by Operation Data Control Energy Conservation PDCA allowing personnel to monitor efficiency and understand Configuration A: Providing and Verifying Energy Conservation Solutions for effects (please see pages 20–21 for examples). Operation Guidance Buildings Based on Energy Conservation PDCA Data Since a building’s energy consumption varies greatly Control according to weather conditions and usage, expertise in Building-Scope™ System for equipment as well as planned verification of energy data Contributing to Responses to the Revised Law Concerning Utility Facility are required. (DCS) the Rational Use of Energy through Building-Scope™ At Yamatake, we apply our original data processing Energy Data Delivery Service technologies, such as RSM-S (Response Surface Methodology Analysis of energy operations is essential to conserve by Spline), which capitalizes on our research into datamation energy used by buildings while maintaining their comfort. technology (multivariate data processing technology), and However, analysis of energy operations places a consider- TCBM™ (Topological Case-Based Modeling) to create able burden on building owners because it involves models of a building’s energy consumption characteristics complex and difficult tasks that include checking meters, from operational data collected from building management collecting data and analyzing and preparing graphs. systems. Based on these models, we provide energy con- Building-Scope™ is a groundbreaking energy and indoor servation solutions tailored to individual buildings. Using comfort data service, which collects building management the results of these solutions, we advance PDCA cycles in data on temperature, humidity and other indicators through tireless pursuit of further energy conservation. connections between the building management systems of

22 azbil report 2008 azbil report 2008 23 Business Overview

Net Sales by Business/ Share of Total Sales Business Outline Markets Main Products and Services

Building Automation Yamatake offers total solutions for • Offices • Building management Building Management Direct Digital Security Systems Intelligent Compo building automation equipment and • Manufacturing facilities systems Systems Controllers (DDC) Business systems through an integrated structure • Research facilities • Controllers including development, manufacturing, • Hospitals • Sensors marketing, installation, engineering, • Government and • Actuators maintenance and operation management. institutional buildings • Valves ¥100.5 Our original environmental technologies, • Schools • Security systems billion which underpin our product lineup, • Hotels • Building preventive 40.1% engineering solutions and services • Department stores maintenance services BA covering all aspects of building automa- • Shopping centers, etc. • Total energy management Our systems provide overall DDC regulate HVAC Security systems integrate Intelligent Compo are control tion, help customers to create business services building management and equipment and facilities, and and consolidate controls over terminals, such as sensors, and production spaces where people • Building operations enable optimum control over control temperature, humidity security data and access data. dampers, valves and other OVERVIEW BUSINESS can work efficiently and in comfort, and support services, etc. building environments while and operation of equipment By integrating building devices with micro proces- to improve their building management reducing costs. We offer and and facilities. management systems, we sors, collecting pertinent data capabilities, while contributing to build flexible systems that are make building management from on-site control that had tailored to specific applications and security more effective. previously been unavailable. reducing the environmental impact. as well as size and scope.

Advanced Yamatake develops, manufactures and • Petrochemical/chemical • Monitoring and control Monitoring and Control Controllers Smart Field Instruments Sensors and Switches markets a wide range of products • Water supply and sewerage systems and controllers Systems Automation Business indispensable to plant and factory • Oil refining • Solution packages operations, including switches, sensors, • Electric power and gas • Field instruments controllers, valves, systems and • Iron and steel (pressure transmitters, software packages. We also provide • Pulp and paper flowmeters and control ¥105.4 consulting, engineering, instrumenta- • Shipping and marine valves, etc.) billion tion and maintenance services to • Semiconductor/semiconductor • Facility diagnosis manufacturing equipment support the optimum management of equipment 42.0% • Electrical/electronic components AA equipment throughout their lifecycle, • Digital indicating • Machine tools We offer open and reliable Our controllers consistently Smart field instruments are Our sensors and switches and enable customers to increase controllers • Automobiles systems tailored to the size afford the best possible control high-performance equipment enable effective detection enterprise value at their worksites. • Pharmaceuticals • Recorders and conditions at production of equipment and facilities with microprocessors installed. at production facilities. They • Foods and beverages/packaging • Combustion control facilities, from large-scale on-site. We have developed Our product lineup includes resist tough environments and • Furnace/oven/boiler equipment systems to operational a product lineup meeting flowmeters, temperature entail a wide variation of • Photoelectric sensors, etc. supervision systems on-site. multiple application needs. transmitters, valve-positioners, products for meeting the manufacturing pressure transmitters and many priorities of customers. • Residential and commercial • Maintenance services, etc. other products. buildings, etc.

Life Automation At Yamatake, we possess measurement • Measurement/metering • Various gas meters, safety City Gas and LP Gas Water Meter Business Lifestyle Support Services Nursing Care Support and control technologies cultivated over equipment, such as gas and equipment, regulators, Equipment Business Services Business many years in the building and industrial water meters and measure- various water meters, markets and also a personal commitment ment and instrumentation flowmeters, etc. to customers through our services. In the systems • Residential central air- Life Automation business, which mainly • Commercial-use waste conditioning system ¥36.5 serves the domestic market, we are draw- processors: markets connected • Lifestyle support services billion ing on our strengths in automation with food production and • Nursing care support retailing as well as food service technologies and human resources to pro- services 14.5% • Individual residential homes LA vide total solutions to societal needs for • Commercial-use, biode- • Elderly nursing care services We offer gas meters, gas leak We provide products for Services include emergency Yamatake offers nursing care safety, peace of mind and environmental grading kitchen waste (preventive care) alarm, automatic shut-off valves accurate water metering, which dispatch services, health services, in-home care conservation. These include lifeline-relat- • Lifestyle support for the elderly processor, etc. and other gas safety equipment, are environment-friendly and management support, nursing services, the sale and rental of ed, such as gas and water; and lifestyle • Lifestyle disease prevention and gas governors, etc. also promote safety based on care prevention, lifestyle nursing care equipment, an support, such as nursing care and for the middle-aged and our expertise. disease prevention services, etc. elderly group home, etc. healthcare-related. elderly, etc.

Overseas Sales/ Ratio to Net Sales Business Outline

Overseas Markets Domestic Markets International Yamatake is expanding its Building Automation and Advanced Core Business Structure Automation businesses internationally, backed by the technologies Business Concentrating on “human-centered automation,” Peripheral Domain and expertise accumulated from domestic operations. The Group Yamatake has three core businesses: Building Automa- currently has overseas subsidiaries, affiliates, business offices and Building Automation tion, which specializes in automation for buildings; factories in 14 countries and 25 locations, principally in Asia. We Business Advanced Automation, which focuses on automation for Life deliver best-fit solutions for the differing problems and needs of International ¥19.4 plants and factories; and Life Automation, which applies Crossover Fields Automation customers in each region, by utilizing our comprehensive capabili- Business billion automation technologies to life and living. Business ties of providing sensors, valves, field instruments and systems While all three businesses are closely connected Advanced Automation 7.8% through to maintenance and services. with society and the individual, their markets have Business * International businesses (overseas sales) figures are included within the sales of • Solutions supporting a customer’s Building Automation, Advanced Automation and Life Automation businesses. Sales significantly different characteristics. Nevertheless, continuous development statistics denote figures from overseas subsidiaries and affiliates and direct -ex combining these businesses and promoting synergies • Solutions for social needs, such as environmental protection and energy conservation ports. Indirect exports are not included. will support the long-term growth of Yamatake. Peripheral Domain Building and Industrial Markets New Markets (Life and Living)

24 azbil report 2008 azbil report 2008 25 BABuilding Automation Business

Sales rose in all three markets—new buildings, existing buildings and FEATURES SPECIAL maintenance services—and breached ¥100 billion, a milestone, while operat- Sales Operating Income ¥ Billions ¥ Billions ing income increased sharply, climbing 38.9% year on year, to ¥11.8 billion. 120 15 Yamatake will continue utilizing its original environmental control technolo- 100.5 11.8 gies to create business and production spaces where people can work 89.0 82.6 82.2 80 10 efficiently and in comfort, while at the same time contributing to reducing 8.5 the environmental burden (carbon dioxide), in order to attain growth and 6.5 maintain earnings in this business. 5.5

40 5 OVERVIEW BUSINESS Kiyofumi Saito Executive Director Senior Managing Executive Officer 0 0 Building Systems Company President 04 05 06 07 (FY) 04 05 06 07 (FY) Yamatake Corporation

Business Overview investment has remained brisk for new buildings, existing on the back of needs for preventing information leakage In maintenance services as well, needs for reducing energy In the Building Automation business, Yamatake has installed buildings and maintenance services and market conditions and for internal controls among financial institutions. How- consumption should fuel sales growth, and we expect more than 20,000 systems, allowing it to accumulate a rich have been favorable. ever, in international operations, negative repercussions contracts for maintenance services to increase for redevel- REPORT SOCIAL track record of experience. Its commanding market share In the market for new buildings, for active redevelopment from moderate construction investment, particularly in opment projects in the Tokyo metropolitan area that have greatly exceeds that of its peers. In the market for new projects, particularly in the Tokyo metropolitan area, China, as Japanese companies realigned their production been completed in recent years. buildings, changes in plans for building construction, which Yamatake utilized the advantages afforded by its rich track bases in China and Southeast Asia, depressed sales Although price competition continues to create challenging fluctuate in tandem with demand for offices and other record and its integrated structure of providing from prod- somewhat. business conditions, Yamatake is responding by reducing buildings, have affected operations. However, our com- ucts and systems through to installation and engineering to costs and introducing new products that have cutting-edge manding market share has afforded major strengths, and expand its operations. At the same time, the Group worked Policies and Outlook performance features and generate strong profits. In addi-

we have continuously taken advantage of business opportu- to strengthen its earnings capabilities and competitiveness In the market for new buildings, Yamatake thinks active tion, the Environmental Solutions Headquarters was REPORT ENVIRONMENTAL nities in maintenance services and facility renewals after by developing and launching high-performance products redevelopment projects will foster robust demand over established in April 2008 as an exclusive unit for reducing systems delivery and other support services over the build- that can generate profits. Furthermore, we forged synergies the medium-to-long-term in Tokyo as well in Yokohama energy consumption and minimizing carbon dioxide emis- ing lifecycle. This in turn has generated growth in the through cooperation with the Advanced Automation busi- and Osaka. However, for fiscal 2008 the completion of sions as part of initiatives to tap into the rising needs for business for existing buildings, which registered stable, high ness to increase sales for factory HVAC amid ongoing major new office buildings has reached a temporary lull renovation for cutting energy consumption. Moreover, on profits. Moreover, we have been actively tapping into new growth in construction investment by the manufacturing in the Tokyo metropolitan area. That said, we anticipate the medium- and long-term horizons, further bolstering business fields, including the security room access control industry. Moreover, now that needs for reducing energy ongoing growth in sales for factory HVAC in light of robust international operations will be essential to generate sales business, and international business, which hold prospects consumption have been rising rapidly before international capital investment plans in the manufacturing industry. growth. Accordingly, Yamatake is setting up new operating for growth. pledges for cutting carbon dioxide emissions take effect In the market for existing buildings, with latent demand bases in Vietnam, Dubai and other countries, adding to its

under the Kyoto Protocol, the market for existing buildings, building up for renewal projects on the buildings that were operations in China, South Korea, Taiwan and Thailand, and REPORT FINANCIAL Fiscal 2007 Performance including a comprehensive energy service (ESCO business) completed around 1990 during the so-called “bubble era,” establishing stronger underlying platforms in regions where In the Building Automation business, both sales and income for total energy management, and maintenance services we believe the need for renewals to reduce energy con- Japanese companies are expected to step up their capital increased by double digits, with consolidated sales amount- grew rapidly. In the security business, the need for safety, sumption will rise further, as was noted, in tandem with investment. Based on these measures, for fiscal 2008, we ing to ¥100.5 billion, up 13.0%, and operating income peace of mind and the prevention of information leakage more stringent government regulations for meeting forecast consolidated sales of ¥103 billion, up 2.5% year over totaling ¥11.8 billion, up 38.9%. In the construction industry, have been increasing. Particularly in fiscal 2007, sales grew international pledges stemming from the Kyoto Protocol. year, and operating income of ¥12.7 billion, a gain of 8.1%.

Application* Close Up!

savic-net™ FX Building Management System Offering a maximum 30,000 objects, the savic-net™ FX enables consolidated management for large-scale buildings and complexes, and contributes to rationalizing utility management and enhancing operational efficiency. Custom- ers freely select the system, equipment, specifications and other features they want to match the size and applications of their properties. It may be used for a wide range of applications, such as office buildings, hotels, hospitals, schools, Ricoh Technology Center, PACIFICO YOKOHAMA, Hiratsuka LUSCA, complexes and factories, and enhances comfort and safety for tenants while Ricoh Company, Ltd. PACIFIC CONVENTION PLAZA YOKOHAMA SHONAN STATION BUILDING Co., Ltd. helping to reduce the building’s lifecycle costs and environmental burden. The center is working to reduce carbon dioxide A cutting-edge central monitoring and BEMS was introduced to consolidate the emissions under some of the highest targets. control system and equipment were in- management of multiple shopping centers, By introducing BEMS (building energy man- stalled at this world-class convention center. including Hiratsuka LUSCA, as a first step in agement systems) and intelligent components, The system unifies the management of environmental management. Since then, it the center is fully overseeing energy consump- building operation data and coordinates has realized effective building management tion under PDCA (Plan, Do, Check, Act) with the booking management system, and operation, as well as efficiently reduced initiatives. which contributes immensely to improving energy consumption. operational management.

*Shown here are some example orders showcased in our public relations brochure. They are shown with the permission of the customer.

26 azbil report 2008 azbil report 2008 27 AAAdvanced Automation Business

By accurately addressing customer needs for safe and stable plant operations, FEATURES SPECIAL reduced energy consumption and advanced controls, the Advanced Automation Sales Operating Income ¥ Billions ¥ Billions business has been able to attain sales surpassing ¥100 billion in the fiscal year 120 10.0 105.4 9.1 8.9 under review despite difficult operating conditions characterized by dulling 99.7 93.0 7.5 capital investment in Japan. Looking ahead, we aim to realize production sites 84.3 7.5 that enable workers to meet their full potential under safe conditions and create 80 new value through cooperation with our customers. 5.0 4.7

40 OVERVIEW BUSINESS 2.5 Kanichiro Shimoda Executive Director Managing Executive Officer 0 0 Advanced Automation Company President 04 05 06 07 (FY) 04 05 06 07 (FY) Yamatake Corporation

Business Overview Fiscal 2007 Performance enabling high-performance materials production remained that are unique to Yamatake, and strengthening its Yamatake develops, manufactures and markets products, Operating conditions in the Advanced Automation business as strong as ever. Yamatake made diligent efforts to meet capabilities in the field of production equipment for high- such as sensors, controllers, valves and other field equip- were especially problematic in fiscal 2007 amid growing these needs and attain growth through its unique, value- performance materials and other areas. We are also REPORT SOCIAL ment, and systems that are crucial for automation in uncertainties in the market and faltering growth in domestic added products, applications and services. Meanwhile, in accelerating the provision of solutions and services that production sites. These products and systems are utilized capital investment. Nonetheless, sales increased 5.7% year international operations, China and other Asian countries, meet the need for steady and stable operations at plants by customers in a wide range of industries, including oil on year, to ¥105.4 billion, representing continuing growth. where capital investment has remained firm, have been and factories. In international operations, we continue refining, petrochemical/chemical, iron and steel, pharma- This favorable showing was attributable to several impor- positioned as important markets, and we have aggressively to focus resources on growth in businesses in China and ceuticals, foods and beverages, automobiles, electrical/ tant factors. First, our keen abilities in pinpointing the promoted business expansion in Asia. As a result, overseas elsewhere in Asia. Our focus for business development is electronic components and semiconductors. We address precise needs of our customers at their production sites subsidiaries and affiliates generated steady sales growth not only on supplying products individually but also on

the key issues facing our customers at their production and providing products and services attuned to their needs over the fiscal year. providing the means for resolving the issues facing our REPORT ENVIRONMENTAL sites as their cooperative business partner offering from were essential. Second, international operations expanded, customers. Moreover, while fortifying our marketing sys- consulting, products, system engineering through to main- particularly in Asia. Other factors included the consolidation Policies and Outlook tems, naturally, we are expanding our framework for local tenance services, and also consider the provision of optimal of Royal Controls Co., Ltd. in the second half of fiscal 2006. Murky sentiment about capital investment in Japan has production and local engineering services, and further solutions for meeting our customers’ needs as an essential However, operating income dipped 1.6%, to ¥8.9 billion, shown no sign of abating, and we expect severe operating bolstering training systems along with consulting and other role. Our products are created and honed from exhaustive weighed down by surging raw material prices, which inevita- conditions on the whole. Nevertheless, under these condi- customer support—including call center services. As a result quality assurance and cutting-edge technologies, and serve bly caused earnings to edge lower from the previous fiscal tions we anticipate firm investment in areas including stable of these measures, we forecast consolidated sales will as the core with an abundant range of applications for year. In the domestic manufacturing industry, weakening and safe plant operations, reduced energy consumption increase 0.5% year on year, to ¥106.0 billion, and operating meeting the needs of our customers. Our engineering capital investment in the market, such as in semiconductors, and response to environmental concerns, and also in income will decrease 8.1%, to ¥8.2 billion, in fiscal 2008.

services that are based on leading-edge expertise are became evident at the beginning of the term and spread investment in production facilities required for advanced REPORT FINANCIAL also our strength. Making the best of these products and to a range of other markets starting in the fall. This cast controls, which are essential for manufacturing high-added- services, that we offer optimal solutions tailored to facility shadows over business conditions, which had been favor- value products. lifecycles, from the initial design stages for factories and able for a protracted period. That said, needs for safe and To take full advantage of business opportunities here, plants through to ensuring stable operations and renewing stable operations, for energy-saving initiatives at estab- Yamatake is enhancing its sales structure, which proposes facilities at customer sites. lished factories and plants, and for advanced controls solutions by combining technologies, products and services

Application* Close Up!

CMQ-V Digital Mass Flow Controller The CMQ-V series of digital mass flow controllers employs the Yamatake-designed Micro Flow™ thermal mass flow sensor as the detecting element. The CMQ-V is a high-performance gas mass flow controller with a proportional actuator driven by advanced PID (proportional, integral and differential) control technologies. It is designed for use with thin film deposition (such as sputtering) equipment for the production of quartz oscillators and lenses used in mobile EZAKI GLICO CO., LTD. and Kimitsu Works, Okayama Gas Co., Ltd. phones and digital cameras. SENDAI GLICO CO., LTD. Nippon Steel Corporation Accurate measurement is increasingly CMQ-V flow controllers offer gas flow control with high precision and repeatabil- Responding to growing concerns about food Maintenance support system, which visual- essential now that demand for liquid natural safety, SENDAI GLICO adopted a traceabil- izes conditions of control valves on-site, gas in production is increasing. This has ity, as well as excellent resistance to high-frequency noise. For high-speed control, ity system built from the perspective of its enables personnel without expertise or fine fostered demand for our high-precision, low differential pressure sensing, wide-range flow regulation and other applica- production site. The company also maintains sensibilities in equipment diagnosis to compact and multifunctional gas meters tions, they are in the vanguard. CMQ-V flow controllers, which are available in a a structure to ensure product quality. objectively analyze equipment to realize for intermediate-pressure applications. number of product variations, can also contribute to stable quality and improved safe, stable, and efficient plant operations. yields in a customer’s manufacturing operations.

*Shown here are some example orders showcased in our public relations brochure. They are shown with the permission of the customer.

28 azbil report 2008 azbil report 2008 29 LALife Automation Business

In the Life Automation business, challenging operating FEATURES SPECIAL conditions have persisted, as evidenced by declining prices, Sales Operating Income (Loss) ¥ Billions ¥ Billions surging raw material prices and the weak phase in cyclical 40 0 demand. These factors inevitably depressed sales, 36.8 36.5 –0.3 but earnings improved significantly, backed by cost 30 –0.5 reductions and measures for enhancing profits. –0.5 20 –0.7

–1.0 OVERVIEW BUSINESS 10 –1.2 4.5 4.6 Sadachika Ogawa Masaaki Iwai Hirokazu Sekine Executive Officer President President 0 –1.5 Yamatake Corporation Kimmon Manufacturing Yamatake Care-Net Co., Ltd./ 04 05 06 07 (FY) 04 05 06 07 (FY) Co., Ltd. Safety Service Center Co., Ltd.

Business Overview Kimmon Manufacturing Co., Ltd. manufactures gas foundation and improve profitability by implementing earnings capabilities and aggressively seek expansion The Life Automation business makes concerted efforts to and water meters and other equipment, such as automatic measures more rapidly and effectively. in peripheral business domains. achieve stability and consistent growth in the Group’s overall gas shut-off valves and other safety equipment, and gas For Safety Service Center Co., Ltd., which provides For Kimmon, the Life Automation business foresees REPORT SOCIAL business portfolio by pioneering operations in specific governors (pressure regulators) and other equipment emergency dispatch services, and Yamatake Care-Net Co., demand rebounding for city gas meters in the wake of a domains that differ from the fields covered by the Building essential for gas supply lines. Business conditions were Ltd., which operates in the field of nursing care and lifestyle recovery for LP gas meters. Furthermore, the integrated Automation and Advanced Automation businesses, which harsh for this company amid rapidly rising raw material disease prevention services, budget constraints in local management created after the full consolidation of this are susceptible to economic cycles and trends in capital prices, falling selling prices and a cyclical slowdown in government social-welfare services, amendments to the company will accelerate the strengthening of its business- investment. We contribute to people’s active lives through demand that was prompted by initiatives in city gas Nursing Care Insurance Law and other negatives continued foundation and the expansion of its business fields. We will the use of measurement and control technologies devel- equipment businesses to extend periods between creating challenging business conditions over the course of continue striving to make the best use of human resources

oped over many years and also our high-quality services. mandatory equipment testing. Under these conditions, the fiscal year. Nevertheless, we worked to improve operat- and personnel placements within the Group, to cooperate REPORT ENVIRONMENTAL These are applied to gas, water and other lifelines; to the we worked to expand the product lineup through close ing efficiencies and expanded into new business domains with Kimmon in marketing and to develop technologies residential environment; and to care and health support. cooperation with the Advanced Automation business, such as lifestyle disease prevention services in response to and products backed by the strengths of Yamatake and Efforts are centered on strengthening the business founda- and to tap into the private-sector water meter market amendments in the Health Insurance Law and reforms to Kimmon. Also, efforts are under way to realign production tion to become a third pillar of the Group’s operations. and enhance marketing in conjunction with the Building the medical care system. bases, restructure and reorganize its sales and marketing Automation business. We were thus able to minimize the Also, in environment-related operations for selling structure, expand the scope of engineering and mainte- Fiscal 2007 Performance repercussions of eroding business conditions and aggres- residential central air-conditioning systems, commercial-use nance businesses, and pursue other reforms. In emergency Consolidated sales in the Life Automation business declined sively promote sales in the LP gas meter business, as it waste processors and other products, unprofitable busi- dispatch services and nursing care and lifestyle disease 0.9% year on year, to ¥36.5 billion, as declining selling prices, enters the high demand phase. Moreover, the “Kimmon- nesses were disbanded or liquidated. As a result, profits prevention services, we are firmly committed to expanding

surging raw material prices, the sluggish phase in cyclical Yamatake Jump-Up Plan” made headway in effectively improved in the Life Automation business. operations in response to amendments in the Health REPORT FINANCIAL demand and other adverse factors created severe operat- utilizing resources within the Group, and we focused more Insurance Law and reforms to the medical care system. ing conditions. Despite these difficulties, we made diligent keenly on strengthening our business foundation and Policies and Outlook Based on these measures, we forecast consolidated efforts to improve earnings and operating losses came to enhancing underlying business quality. On April 1, 2008, In the Life Automation business, we are not content with sales will increase 3.4% year on year, to ¥37.7 billion, and ¥0.3 billion, marking an improvement of ¥0.2 billion from Kimmon became a wholly owned subsidiary through a merely taking advantage of improving business conditions operating income will improve ¥0.3 billion, to ¥0.05 billion, the previous fiscal year despite contracting revenues. share exchange, with the aim to strengthen the business in some markets and will continue working to improve in fiscal 2008.

Application* Close Up!

Principal Operations by Group Company Battery-powered Electromagnetic Flowmeter Yamatake Corporation Yamatake Corporation has extensive expertise and track record in the industrial Residential central air-conditioning, and building markets. Kimmon has rich experience in the gas and water meter environmental recycling areas. The new Battery-powered Electromagnetic Flowmeter is developed Yamatake Care-Net Co., Ltd. vitalizing both companies’ technologies and strengths. Nursing care support services Battery-powered technology enables wireless operation, and the meter can Safety Service Center Co., Ltd. be easily installed in the place away from the source of AC power. It is effective Lifestyle support services for the elderly Health and Welfare Section, SAPPORO ENERGY SUPPLY CO., LTD. for water-flow monitoring in filtering devices casting devices and other equip- Kashiwa City District heating and cooling, in which a Kimmon Manufacturing Co., Ltd. ment, and for monitoring water levels and other measurements in order to With Japan’s falling birth rate and aging single heat source supplies energy to City gas, LP gas equipment business, of society leading to a growing population multiple buildings, realizes efficiency in hydraulic equipment business, others. oversee energy-saving operations in plants and buildings. of elderly persons living alone, we support energy use. By utilizing Yamatake and regional safety and peace of mind with Kimmon’s remote monitoring systems,

emergency dispatch services that protect the Company can provide more meticulous Product exhibited at Measurement and Control Show 2007 Tokyo (November 2007) and launch scheduled for 2008 lives and provide emotional support. services.

*Shown here are some example orders showcased in our public relations brochure. They are shown with the permission of the customer.

30 azbil report 2008 azbil report 2008 31 International Business

In fiscal 2007, ended March 31, 2008, sales in the international business Overseas Sales/ Overseas Sales by Region (FY2007) FEATURES SPECIAL edged up 0.6% year on year, to ¥19.4 billion, as sales of products and Ratio to Net Sales ¥ Billions % systems to industrial markets by overseas subsidiaries and affiliates grew, 20 10.0 19.3 19.4 but overseas sales of the Building Automation business and direct exports 8.4 Europe 7.8% Other 1.5% 15 7.5 North America by the Advanced Automation business contracted. However, measures to 6.9 15.8 8.2 7.8 11.2% Asia 79.5% adapt to changing business conditions, including expansion in our sales 12.4 network, are already being advanced, and we continue focusing resources 10 5.0 on increasing sales by local overseas subsidiaries and affiliates. 5 2.5 OVERVIEW BUSINESS *International businesses (overseas sales) figures are included within the sales of Building Automation, China 29.3% Toshitsune Okubo Advanced Automation and Life Automation businesses. 0 0 Managing Executive Officer Sales statistics denote figures from overseas subsidiaries 04 05 06 07 (FY) Yamatake Corporation and affiliates and direct exports. Indirect exports are not included. Overseas Sales Ratio to Net Sales (right scale)

Business Overview by Japanese companies in China and the switch in some Yamatake has a track record of more than 40 years in related orders to local construction channels weighed on Topics international business since forming a capital relationship results. However, in the Advanced Automation business,

Cutting-edge, Energy-saving Technologies for Buildings Introduced at Energy- REPORT SOCIAL with U.S. company Honeywell and was formerly called sales of products and systems for manufacturing industries saving Forum in China Yamatake-Honeywell Co., Ltd. After the alliance agreement by overseas affiliates increased, as noted, particularly in the In January 2008, Yamatake gave a presentation at the Fiscal 2007 China Building Energy- with Honeywell was revised in 1997, the Building Automa- important markets of China and other areas of Asia. That Saving Forum hosted in Beijing. We introduced specific examples of ways to reduce tion and Advanced Automation businesses have been said, several factors such as the culmination of major proj- energy consumption by using BEMS (building energy management systems). Approxi- developing their operations independently, mainly in China ects in China and the Middle East in fiscal 2006, ended mately 200 visitors attended our presentation, which was very well received. In China, and other Asian countries, which were experiencing notable March 31, 2007, caused direct exports to drop off, with where the government is promoting long-term strategies for energy conservation and

economic growth and maintaining brisk capital spending. adverse repercussions. REPORT ENVIRONMENTAL environmental protection, Yamatake impressed attendees with its advanced solutions for Currently, Yamatake has subsidiaries, affiliates, business In the Asian market, we anticipate healthy growth and saving energy based on its rich track record of experience. Looking ahead, we will expand offices and manufacturing facilities in 14 countries and 25 development going forward. We will be establishing solid energy-saving services for buildings in China and the rest of Asia to help promote reduc- locations, and has been expanding its businesses by selling underpinnings for attaining new growth based on the tions in energy consumption in each country. various type of sensors, valves, positioners and other unique characteristics of each country. As part of this effort, products, nurtured through Yamatake’s technologies and we are stepping up education and training at overseas Largest Measurement and Instrumentation Exhibit in Asia expertise. Business models attuned to the characteristics of subsidiaries and affiliates and working to enhance and Yamatake and Shanghai Yamatake Automation Co., Ltd. operated a booth at MICONEX each country are also being cultivated and expanded. expand our subsidiary networks abroad. In addition, we will 2007, the largest exhibition for measuring and instrumentation equipment in Asia—held in be setting up subsidiary and sales offices in Vietnam, India, Shanghai in September 2007. The Group’s corporate philosophy and the azbil brand were

Fiscal 2007 Performance Dubai and other countries that are expected to attain REPORT FINANCIAL introduced, and our booth highlighting new products and other displays proved espe- Sales of products and systems for manufacturing industries additional growth. Moreover, we are upgrading our over- cially popular. More than 35,000 visitors attended the exhibition, and many were attracted by overseas subsidiaries and affiliates grew, but overseas seas production framework, introducing new products and to Yamatake as a total supplier of instrumentation equipment. sales rose only marginally from the previous term to ¥19.4 actively working to further bolster our capacities in the billion. Lackluster sales growth was attributable to the solution service businesses for tackling the issues faced by Building Automation business, in which flagging investment our customers in each country.

Application* Close Up! Overseas Network MagneW™ Two-wire PLUS+ Smart Two-wire Electromagnetic Flowmeter Yamatake Corporation Shanghai Representative Office Dalian Yamatake Control Instruments Co., Ltd. Yamatake has completed the process of satisfying Yamatake Environmental Engineering (Shanghai) Co., Ltd. Yamatake Information Technology Center (Dalian) Co., Ltd. safety and explosion-proof regulations and other Shanghai Yamatake Automation Co., Ltd. Yamatake Automation Products Shanghai Co., Ltd. directives for this flowmeter series in Japan, the United States, Europe and major Asian countries. Yamatake Environmental Control Technology (Beijing) Co., Ltd. Yamatake Korea Co., Ltd. Yamatake Sensing Control, Limited Since the launch in 2002, the MagneW™ Two-wire Yamatake Europe N.V. Yamatake Corporation Yamatake America, Inc. PLUS+ has been praised extensively for its ability Yamatake China Limited YCP Precision Hong Kong Limited TAEYOUNG CORPORATION to reduce power consumption to 1/100th the level Yamatake Taiwan Co., Ltd. Yamatake Corporation Yamatake Philippines, Inc. Yamatake’s extensive experience and track of four-wire magnetic flowmeters, cutting energy Middle East Branch record forged in Japan have now been put use considerably and for easy installation and Yamatake Corporation India Yamatake Vietnam Co., Ltd. to use in South Korea’s leading, cutting- other advantages. Around 4,000 orders were Representative Office edge building. Our building management Yamatake (Thailand) Co., Ltd. PT. Yamatake Berca Indonesia received in fiscal 2006, and its market share has systems create comfort for tenants while at Yamatake Automation (M) Sdn. Bhd. Yamatake Controls Singapore Pte. Ltd. the same time conserving energy. already grown to exceed 40%.

*Shown here is an example order showcased in our public relations brochure. It is shown with the permission of the customer.

32 azbil report 2008 azbil report 2008 33 Research and Development

In order to achieve lasting growth, enterprises have to accurately gauge customer FEATURES SPECIAL needs and quickly develop the necessary technologies. We are strengthening our R&D operations so that we can take advantage of intra-Group synergies and deliver appealing products to our customers in a timely fashion, thereby contributing to society through our core businesses. OVERVIEW BUSINESS

R&D: Functions and Organization investment is concentrated in growth areas and is carried existing technologies in services and precision measure- automation” concept to revitalize its customers’ systems, The Company’s R&D consists of two key functions: the out in a well-controlled fashion. R&D spending is geared ment technologies, based on the expertise we have integrate data management and develop new solution technology development function, which conducts R&D to toward two goals: technological development aimed at amassed over many years in measurement and control. technologies that revolve around humans and systems support the Company’s core businesses; and the corporate strengthening our core Building Automation and Advanced In corporate R&D, technological developments have a working in unison. R&D function, which in addition to supporting the develop- Automation businesses, and the development of new direct impact in contributing to businesses. Naturally, we Micromachining Technologies ment of measurement and control technologies and those technologies for the Life Automation business. are working to meet challenges to create high-performance Yamatake is developing micromachining technologies for

technologies that are being developed in collaboration Cross functional project teams are set up for developing and highly advanced proprietary technologies, and to materials used in various high-performance sensors that are REPORT SOCIAL throughout the Group, also takes on the challenge of topics that require especially close cooperation among promote basic research for developing new products and hard to cut, such as sapphires and stainless steel, and in developing new, proprietary technologies. These functions business and marketing departments and Group companies. businesses in next-generation automation fields. Our core precision jointing technologies. are of equal importance and kept in balance in order to Such interaction between a wide array of personnel encour- technologies are: Communication Services Technologies facilitate smooth communication and to commercialize new ages technical assets to be shared even more effectively Microsystem Technologies Looking ahead, creating ways for information to be exchanged technologies as quickly as possible. This horizontal structure and enables more efficient management. Until now, our Yamatake has consistently been the industry leader in micro- between people and also between people and systems/ encourages the prompt sharing of technical information and core operations have been in the Building Automation and device technologies, including Micro Flow™ sensors and equipment and ways to analyze and break down quantita-

customers’ needs across the Group. We have established Advanced Automation businesses. Since the automation sapphire sensors. Looking ahead, we will continue to proactive data in these areas will become critical. One such critical REPORT ENVIRONMENTAL the Materials Engineering Department, which analyzes and needs of our customers have advanced and become in- tively conduct research in areas such as microdevices and area is development, and we are conducting research as a evaluates the physical properties of materials at the devel- creasingly diverse, we have been promoting a number of microsystems in order to respond to the growing trend priority in technologies that model human cognitive traits opment stage and undertakes basic research, and the different measures to take advantage of synergies between towards miniaturization and precision in industries. and in visualization technologies that utilize correlations Safety Design Department, which ensures safety and the businesses in areas where there are strong connections Measurement and Control Technologies between causal elements and statistical methods. reliability and conducts research on how products should between the two, allowing Yamatake to respond more Among the many types of control technologies, our core Composite and Fusion Technologies in Measuring and be designed for safety. Together, these two departments quickly and flexibly. One of these measures was the consoli- expertise is in measurement and control for thermal com- Metering Field comprise our corporate R&D function, which seeks to dation of R&D operations and marketing operations at a fort, and measurement and control in fluidics. In pressure To ensure that we can offer a stable lineup of products, we respond to changes in the development environment from new building at the Fujisawa Technology Center that was sensors, not only are we strengthening our existing design are working to combine our own measurement and control a Groupwide perspective. Through cooperation in these completed at the end of 2006. This has encouraged rapid and analyzing technologies and developing new technolo- technologies with the proprietary technologies for house- REPORT FINANCIAL ways, Yamatake plans to continue furnishing safe and sharing and dissemination of business information and made gies for manufacturing processes to keep hold gas meters and water meters honed over the years by defect-free products to its customers. R&D project development more transparent, helping to pace with the market’s demands for safety Kimmon Manufacturing Co., Ltd. This should help us expand accelerate R&D that leverages intra-Group synergies. and dependability, but we are also beef- our lineup of more advanced products. R&D Investment ing up our R&D efforts in semiconductor In fiscal 2007, ended March 31, 2008, Yamatake’s total Directions of R&D Strategy in Business Framework sensors combining various performance Creating On-site Value in Tandem with

expenditures on R&D amounted to ¥9.8 billion, equivalent In the Advanced Automation business, R&D is focused on features such as differential pressure High-performance Customers in their Workplace to 4.0% of net sales. From a strategic standpoint, our resolving issues connected with energy conservation, safety, measurement, static-pressure measure- multivariable dual sensor We conduct research into technology product quality improvement and environmental respon- ment and temperature measurement. for adding value to measured data siveness at factories and plants, as well as creating safe and Measurement Data Processing Technologies and provide support services for R&D Costs/Ratio to Net Sales comfortable working environments. We are working to (Prediction and Visualization Technologies) customer businesses while searching for insights connected with the next ¥ Billions % develop products and systems that help our customers In addition to analyzing measured data, technology that 15 5.0 wave of development, including new 4.5 resolve key issues they face at their site, further enhance helps people to make decisions by projecting and assessing 4.8 4.4 priorities and new business needs. 4.0 productivity, afford optimal results and maximize the future conditions, simulating and then visually representing By visiting factory sites, seeing for 12 4.0 potential of individual workers. In the Building Automation these trends is important. By evolving and developing Naoyuki Aota ourselves how our products are used 3.7 9.8 Core Technology Center and applied and grappling with the business, we are making strides in R&D designed for unique technologies such as our proprietary TCBM and Research and Develop- 9 8.8 3.0 priorities in the field, “we create value 8.0 8.1 8.3 realizing comfort, functionality and energy conservation RSM-S technologies, Yamatake contributes to the advances ment Headquarters Yamatake Corporation together with customers at their site,” attuned to individual buildings, and furnishing comfortable in automation in society. 6 2.0 as outlined by our Group philosophy. and pleasant spaces that can raise intellectual productivity. Next-generation Automation system Technologies In addition to our proprietary technologies, we are develop- Yamatake has adopted the latest network technologies 3 1.0 ing highly advanced building automation technologies (such as IP-v6), open-platform technologies (including using our cutting-edge engineering prowess and reducing Linux), database technologies, wireless technologies and 0 0 03 04 05 06 07 (FY) lifecycle costs and CO2 emissions. In the Life Automation other highly reliable technologies in research. For promot- R&D Costs business, we continue focusing our efforts squarely on ing and developing the next generation of automation Ratio to Net Sales (right scale) developing technologies compatible with the Group’s systems, Yamatake is working under its “human-centered

34 azbil report 2008 azbil report 2008 35 Intellectual Property

Yamatake believes intellectual property is an important business resource, and as such FEATURES SPECIAL the Company ranks its intellectual property strategy as one of its key business strategies. This strategy forms an important triumvirate in combination with business and R&D strategies. The Company is enacting its intellectual property strategy with a focus on building a patent network in major product lines and technological fields, and managing risks from any infringements of intellectual properties of other companies. OVERVIEW BUSINESS

applications in fiscal 2007, nearly double the 173 filings in Regulations for Employee Inventions Trademark and Design Management fiscal 2006. In applying for patents, intellectual property is Regulations for employee inventions were revised on January Brand is the most important business resource, and we are Business Strategy R&D Strategy appraised for its commercial and technological aspects and 1, 2006 to more strictly oversee the Company’s intellectual focusing efforts on further boosting brand recognition. The described in visual formats in these areas. Appropriate property rights in line with amendments to the Patent Law, Group symbol azbil, created in commemoration of our Promotion, Promotion, feedback for the business and R&D departments, and the with the aim of providing greater encouragement and 100th anniversary, affords new avenues for reinforcing brand Cooperation, Intellectual Property Cooperation, Proposals, Proposals, resulting analysis, is crucial for developing business and incentives to inventors. Inventors compensation based on strengths. From an intellectual property standpoint, we are Strategy Feedback, Feedback, R&D strategies. We apply this methodology for patent the regulations includes subsidies for applications and investigating trademarks, applying for trademarks and REPORT SOCIAL Supply of • Application Strategy Supply of Information • Risk Management Information portfolio management and work to achieve tangible registration, and compensation for achievements, and we making other efforts to manage our brands in different results through the process. have continued to provide payments along these lines. countries. Also, for design patents we are stepping up Intellectual Property Department Number of Patents Held Subsidies for applications consist of payments to employee applications for design controls in China, mainly in recogni- Yamatake holds 964 patents in Japan and 374 patents inventors for patent applications and design patent application of needs to cope with counterfeit products there. overseas, and figures in both areas have been increasing tions when inventions are furnished by personnel to the Devising and Enacting the Intellectual every fiscal year. For our registered patents in Japan, we Company. Subsidies for registration are payments made to Number of Trademark Applications and Registrations Property Strategy have devised standards for appraisal and are taking appro- employee inventors when patent applications and other REPORT ENVIRONMENTAL In fiscal 2007, ended March 31, 2008, Yamatake enacted the priate steps for maintaining and managing patents. For intellectual property are registered. Compensation pay- Japan Overseas Total following measures to further strengthen its intellectual overseas patent holdings, the numbers have been trending ments for achievements denote payments made to Applications (fiscal 2007) 18 52 70 property strategy: higher in response to the globalization of our businesses. employee inventors in response to rights appraisals when Registrations 461 244 705 Particularly in China and Asia, our granted patents have the Company itself uses an invention, when it is licensed to 1 Built a patent network in major product lines and techno- been rising notably and will have a positive effect for other companies or when rights are transferred to other Number of Design Patent Applications and Registrations logical fields preventing counterfeiting. parties. There are no upward limits to the rewards for these 2 Minimized risks from patent infringements in Yamatake Japan Overseas Total compensation rights. business areas—to strengthen its evaluation system Applications (fiscal 2007) 15 28 43 for possible infringements of patents of other compa- Strengthening Evaluation System for

Registrations 146 88 234 REPORT FINANCIAL nies, etc. Patent Publications of Other Companies Integrated Intellectual Property Management for the 3 Developed integrated intellectual property controls for We are working to avoid disputes involving our products Group Companies the Group companies—to clarify overall Group manage- with patents belonging to other companies by evaluating Policies for the Group’s intellectual property management ment policies for their intellectual properties, etc. patents based on a unified evaluating system. Since intro- were clarified when Kimmon Manufacturing Co., Ltd. was ducing a network system using electronic tools in June converted into a wholly owned subsidiary on April 1, 2008. Building Patent Network in Production and 2007, we have been able to check more than 1,000 official This has facilitated uniform management and oversight of Technological Fields open patent publications of other companies each month. patents and other intellectual property belonging to Group Patent Applications in Japan We believe this will reduce business risks and greatly companies. In addition, all operations concerning Kimmon’s Having made significant headway in bolstering its intellec- increase our freedom to promote R&D. intellectual property, ranging from patent applications to Reinforcing Intellectual Property Strategy, tual property strategy, we were able to file 330 patent support, administration and the management of rewards and Rapidly Increasing Patent Application Numbers compensation systems, are now under the control of Yamatake’s Intellectual Property Department. Number of Domestic Number of Domestic Number of Overseas Patent Applications Patents Held Patents Held Policies for Counterfeit Products Our most forthright efforts have been directed at Norio Murase 400 1,000 964 400 374 904 359 General Manager 330 857 849 864 343 strengthening intellectual property in Asia for detecting Number of Applications

Number of Patents Held Legal and Intellectual Property Department Number of Patents Held 300 750 301 Yamatake Corporation 300 267 pirated versions of the Company’s products. In fiscal 2007, 197 208 we found counterfeit products in China and made diligent 200 173 500 200 Yamatake has continued strengthening its strategy for 133 efforts to enhance our capabilities for patent, design and intellectual property. The number of our patent applications 100 250 100 commercial application in all appropriate countries. grew rapidly in fiscal 2007. The increase was attributable to fruitful results from our intellectual property strategy, greater 0 0 0 efficiencies from consolidating R&D functions at the Fujisawa 03 04 05 06 07（FY） 03 04 05 06 07（FY） 03 04 05 06 07（FY） Technology Center, more effective actions in the intellectual Asia Europe China North America Scope of calculations： Yamatake Corporation property field and a stronger relationship between the R&D Scope of calculations： Yamatake Corporation, Scope of calculations： Yamatake Corporation Yamatake & Co., Ltd. departments and Intellectual Property Department.

36 azbil report 2008 azbil report 2008 37 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 39 - - - -

Highly

azbil report 2008 Superior for Upholding Crucial

Technologies Humidity Standards Stable Capabilities for Measurement ing control in the standards rooms for calibration calibration for rooms in standards the control ing Physical n Yamatake Building Systems Company’s Infilex CR Infilex Company’s Systems Building Yamatake ISO 17025:2005 (quality specification for testing facilities facilities testing for specification (quality 17025:2005 ISO must be satisfied, standards organizations) calibration and authorities. accrediting by inspected are facilities and quality is building Center Standards The Measurement further to steps taking and formats in electronic systems certification. and testing for efficiencies enhance capabilities technological ensure to passed be must Tests of proficiency the and calibration, for category each in must basis physical The verified. is technologies calibration the for filed are applications and sufficient, be to shown be after capacity, testing maximum and calibration of scope accredited. is operation calibration of range the which under agencies accrediting from approval After receiving agreements recognition mutual international for standards Interna for MRAthe with symbol JCSS certificates (MRA), are (ILAC) Cooperation Accreditation Laboratory tional accreditation. of as proof issued Our highest numerical values for measurement capabilities capabilities measurement for values numerical highest Our accreditation laboratory the via public the to disclosed are mea in to our capabilities testify figures These system. technologies. surement Many of the physical standards for calibration in Japan are in Japan calibration for standards physical the of Many Yamatake, For organizations. research national by furnished electric humidity, temperature, pressure, include now these the mass. and Of these, frequency length, vacuum, flow, ity, physical highly-precise especially can maintain Company by values physical of supply direct the to owing standards categories—pressure, four in arms research national Japanese measure Reliable humidity. and electricity temperature, satisfying for requirement a are main technologies ment verified are They standards. physical highly-precise these system. accreditation laboratory calibration JCSS the under Conditions Measurement of proof are capabilities in measurement Performance an with accredited technologies calibration advanced highly laboratory. calibration air- stable provides rooms clean for Controller Energy-saving conditio humid stabilizes effectively It a year. days 365 a day hours 24 calibration. accurate highly for conditions the providing ity, Quality Systems and Calibration Technologies Required by Accredited Laboratories • • • • Superior Precise - - - - -

Law Provider Measurement Service the Pressure: Pressure balance (top) balance Pressure Pressure: (left) water of points Triple Temperature: under Calibration a as Testing For products using quantities not corresponding to corresponding not quantities products using For of physics and through rapid and high-precision calibration calibration high-precision and rapid through and physics of equipment. measuring of Certification to was accredited Center Standards Our Measurement inthe certification provide and testing calibration undertake 2007 21, on February categories pressure and temperature 2007 the by 7, on category September in humidity the and Calibration Law. Measurement the with in accordance JCSS the under system on traceability the is based operation Law. Measurement Calibration Measurement Standards The Group possesses sophisticated measurement technologies recognized under the Japan Calibration Service System (JCSS) in the temperature, pressure, humidity and flowrate categories under the Measurement help maintain We Law. product quality through our measurement technologies forswift and ongoing calibration of measuring instruments. Measurement Technologies for Maintaining High Product Quality is accredited Center Standards Measurement Yamatake’s in tem the certify to calibration 0155) number (registration JCSS the by categories humidity and pressure perature, As May Law. of Measurement the of authority the under inelectricity the accreditation for filed 2008, had Center the Cali the Also, category. frequency) low and current (direct Ltd., Co., Manufacturing at Kimmon Center Service bration by category flowrate the in is accredited member, a Group creating in Yamatake with cooperating (0134), JCSS the quality. product sustaining for technologies measurement con for component essential an is technology Measurement correctly for used is technology This quality. product sistent and measurement for and equipment measuring calibrating preci of levels high the achieving of capable is that control manufacturing. and development in used be can that sion management measurement control, and maintenance For data of volumes huge the manage to employed are systems reg out carried is calibration and equipment, measuring for standards. national of traceability the ensuring while ularly develop to able we are standards, physical and national products by high-quality high-precision, manufacture and principles and theories the to according precision verifying - -

s e c f f n a e t i r s

e s r p e x s t l s e r t e a s n n

s u i e n q a d m i d h c r a c c a e

a e g Major H r n n i o t j n m r a o o o r f m p a t t e e a r n c d e e n l r v a , 2008, p t e e i r s t h i l t p s u a s o t M A G Prevention of Quality Issues • • • Further Improving Product Quality center quality product further improving for Our initiatives design, manufacturing, indefects flaws and on reducing require They areas. other and engineering services, into delving seriously for approaches our strengthening revolu and further, occur flaws why reasons the finding and root the eliminate to in we order work way the tionizing defects. of causes Making the Quality Status Transparent analytical from observations specific gleans The Group of quality the with satisfaction of levels about asking surveys to contributing for operations other and services products, their about itsfor customers, fulfillment and comfort safety, recog their about and concept, azbil the of understanding In value. brand Group’s the of understanding and nition to In addition satisfaction. on customer focusing to addition we also satisfaction, customer of levels to attention paying internal other and indices results” in “defect trends monitor utilize then We products services. to and relating indices quality product improve to measures for information this satisfaction. customer increase and - - Transparency Quality Status

n g i s e d y t i Realize Safety, Comfort and Fulfillment for Customers Realize Safety, Comfort d s v i e t t m i r n s o e n i f e r e s r o - k s y s s t i r e e f c r a e o s t r a p n e l o r a s g n u o e c i t t o a a f v r i t e w l p e u O N C Quality Improvement • • • demands for product safety, we established the Safety the we established safety, product for demands ensur structure for corporate our into Department Design stage. design the from safety product ing from losing confidence in the overall quality ofproducts our quality overall inthe confidence losing from education for Second, occur. problem quality a minor should major from be learned to lessons the we glean training, and increas for case the method past in the through accidents based Third, employees. our among sensitivity risk ing social stricter by afforded opportunities on growing mishaps that incur major losses for customers and for the for and customers for losses major incur that mishaps in the occurrences such prevent to working are We Group. a multiple-route built we have First, manner. following transfer information speedy and secure for system reporting of composed a and support team management top the to from accidents prevent help These staff. corporate our customers prevent and damages, minimize and spreading Preventing Major Accidents Before They Occur can cause an accident to in responding mistake A single The Group took crucial ended new steps March in fiscal 31 2007, on a Groupwide basis for further enhancing safety, comfort and fulfillment through its products and services. Our initiatives here are centered on enhancing strengths in three areas: preventing major accidents before further they occur, improving product quality and making the quality status transparent. Quality azbil report 2008 38 Social Report

Meeting the Expectations of Society by Fulfilling Our Corporate Social Responsibilities

Tadayuki Sasaki Executive Director Managing Executive Officer Yamatake Corporation

At Yamatake, we recognize that companies are important members of society During fiscal 2006, ended March 31, 2007, the 100th year of Yamatake’s and understand that earning the trust of society is achieved through meeting establishment, we formulated a new CSR philosophy identifying medium-

the expectations that the public has in us. The Group is currently implementing tem CSR management objectives. These objectives reflect our values as REPORT SOCIAL broad-ranging corporate social responsibility (CSR) management to fulfill responsi- a company, as well as our efforts to meet them that began in fiscal 2007, bilities to its stakeholders and society at large. We pursue CSR management from and how we are realizing management that will meet society’s expecta- two perspectives. tions and enable us to remain a trusted member of society. The first relates to our fundamental CSR activities, specifically, implementing thorough business ethics and legal compliance, strengthening responses to and Promoting CSR Management managing all risks in the business environment, enhancing the workplace, ensuring As a Group, we will continue to combine our CSR-related efforts to meet shared the safety and security of employees, improving the quality of products and management objectives. services, and preventing product-related problems. These are the most fundamental responsibilities we must carry out as a member of society. At Yamatake, we believe Corporate Governance that there are no shortcuts to earning society’s trust. Combined with resolute Founded on our Group philosophy, we will continuously increase corporate value initiatives to further strengthen corporate governance, we strive for management by fulfilling our corporate social responsibility to observe laws, regulations and that is always fair and honest. business ethics and to establish social contribution activities as part of manage- The second perspective is contributing to society through our social contribution ment policy. activities and through our businesses by leveraging our technological and operational strengths. Rooted in our company culture and spirit, our employees take Risk Management part in a range of social contribution activities, such as helping to educate the We will increase management stability by improving our ability to respond to and public about the environment and participating in the organization of an environ- manage any risk that may affect the Company’s business. ment-friendly international marathon. Furthermore, we are positively contributing to the development of a sustainable society by utilizing our technologies to reduce Compliance

CO2 emissions as well as spread safety-related business practices. In these ways, To promote sound and ethical business activities, we will work to ensure that every we believe that we are meeting society’s expectations. officer and employee understands and carries out our policy of compliance with all Based on our Group philosophy of “human-centered automation,” all actions relevant laws, regulations and internal rules, including those for sound and ethical of the Group are centered on a consideration for the environment and a desire business practices. to�� enrich�� people’s lives. Our CSR management is how we turn philosophy into practice. We work to earn the trust of our stakeholders and all members of society Employee Relations by being a company that meets expectations. We will promote greater dynamism in the workforce and within the Company by emphasizing links among employees, the Company and society in general.

For Local Communities Conscious of our role as a member of society, we will positively develop social contribution activities that will enrich people’s lives and help protect the environment.

40 azbil report 2008 azbil report 2008 41 Promoting CSR Management

The Group is promoting CSR management under its three-year medium-term FEATURES SPECIAL management plan, which began in 2007. We recognize that initiatives to ensure good compliance, internal controls, risk management, quality control, environmental protection, and health and safety are crucial for gaining the trust of society and for ensuring our growth. BUSINESS OVERVIEW BUSINESS

Basic Guidelines for CSR Management identified six areas of focus. In each of these six areas, the damages from exposure to the risks faced by the Group Future CSR Policy Initiatives The Group has established three basic objectives as Group is geared toward promoting CSR activities that help that may result from changes in its business environment. Management of Compliance Risks guideline for CSR that serve as the foundations of its the community as well as enhance its business operations. Internal Control of Financial Data 1. Promoting thorough Compliance management. We will promote CSR practices through initiatives in each To prepare for the April 2008 implementation of Article Future policies will focus on compliance and monitoring Basic Objectives of these areas. 24.4.4 of the Financial Instruments and Exchange Law over a wide range of Group managers and employees We shall establish and carry out CSR management as a (relating to internal controls for company financial reporting, to instill awareness of compliance issues and gauge

world-class manufacturer of a comprehensive range of CSR Promotion Framework also known as J-SOX), in March 2007 a Groupwide project important themes. REPORT SOCIAL automation equipment. The Group’s CSR Promotion Committee was established to was established to ensure J-SOX compliance for internal 2. Strengthening Legal Responses and Risk Management 1. The Group will strengthen its corporate structure through enact initiatives over a broad range of fields and oversee control is achieved, centered on the activities of a section in The Group will develop more extensive mechanisms for the combined initiatives of the Headquarters, in-house PDCA (Plan, Do, Check, Act) cycles. The committee is the Internal control Conduct Department. In addition, the dealing with laws. Also, key measures targeting specific companies and Group companies in CSR fields that are comprised of senior managers in charge of promoting CSR Group has pushed forward with preparations for the docu- risks will be subject to annual management-level reviews, paramount to its survival and success. This entails work- at individual Group companies and meets once every two mentation of business processes and the creation of and the Group as a whole will strive to develop counter- ing actively to promote quality, environmental months. CSR initiative planning, execution, appraisal and appropriate management systems. measures most appropriate to each risk.

preservation and safety through compliance practices reporting are conducted principally by the committee. Initiatives in Other Areas Internal Control over Financial Reporting REPORT ENVIRONMENTAL throughout our organization in accordance with related 1. For personnel and workplace safety, Groupwide activities Founded on the preparations it completed prior to April laws and ordinances, further gaining the trust of the Initiatives Enacted in Fiscal 2007, are taking place with the goal of creating healthy and safe 2008, the Group will continue to focus its energies on communities where we work. ended March 31, 2008 workplaces. meeting J-SOX requirements reporting by evaluating 2. We will hone and enhance our preparedness for dealing Management of Compliance Risks 2. In the areas of quality, product liability and the environ- the current status of internal control and by implementing with any risks facing the Group and establish tangible 1. Promoting thorough Compliance ment, the Group continues to strengthen its policies for continuous improvements relating to “Reliability of response mechanisms for dealing with emergencies as In commemoration of the Company’s 100th anniversary, promoting quality and product liability response and has Financial Reporting.” they occur so that we will not lose the trust of the com- the Group is promoting training sessions for the revised established goals and policies for the Group to further Other Areas for Initiatives munities around us or any of our enterprise value. Business Conduct Guidelines at all Group workplaces reduce carbon dioxide emissions. The Group will clarify objectives and implementation plans 3. Through its businesses, the Group will establish and conveying messages from the president in Corporate 3. For contributing to communities, the Group fosters for initiatives in various fields based on the achievements REPORT FINANCIAL fulfill goals for aggressively promoting CSR initiatives Ethics Awareness Month, issuing special CSR reports in environmental protection through several means and, seen in fiscal 2007 and under the guidance of the CSR that contribute to society and improve the environment internal publications and carrying out other activities to under its new basic policies established for social contri- Promotion Committee, will continue to work to accomplish and activities that help the community and will seek thoroughly convey the importance of adhering to good bution, promotes activities to aid local communities. the plans. to consistently increase enterprise value. We will also corporate ethics and obeying laws and ordinances. convey information concerning these initiatives to 2. Strengthening Legal Response CSR Promotion Framework our stakeholders. The Group has been focusing on developing the tangible means to educate, explain and effectively respond to impor- Domain of CSR Initiatives tant legislations and regulations as a priority in its activities. Yamatake In line with the basic objectives of the three-year medium- 3. Building Companywide Internal Risk Management System Policy Board Meeting Board of Directors term management plan, the Group has divided CSR The Group is strengthening measures for predicting, 3 activities into basic and more proactive initiatives and has appraising and preventing risks and limiting potential Approved Plan Instructions Instructions 1 Proposals/ Proposals/ 2 Instructions sent to Business Reports Reports Domain of CSR Initiatives Operations

Yamatake Group CSR Promotion Committee CSR Internal Audit Managers Responsible for CSR Themes

Basic CSR Proactive CSR Subcommittees Temporary Task Force

4 Cooperation/ 5 Internal Social Targets set and Progress Adjustments/ CSR-related Ethical/Legal/ Control Group Employee Contribution Social managed by Operational Plan Instructions Progress Status Regulatory Risk Management Health and Quality/ Contribution Management for Financial Environment via Business reported Compliance Reporting Controls Safety Operations Activities Group Companies/Divisions

42 azbil report 2008 azbil report 2008 43 Corporate Governance Risk Management

Yamatake has introduced an executive officer system for corporate governance Risk management for forecasting and assessing risks from changing business conditions, FEATURES SPECIAL that separates decision making from actual execution of Company policy to facilitate for preventing risks to the Group as a whole and for taking proper steps to alleviate losses the prompt implementation of policy initiatives. In addition, the Board of Directors is essential for ensuring the consistent and stable growth of the Group. We are extending and the Board of Corporate Auditors oversee and monitor the actions of our network of risk control and increasing stability in business management. executive officers. BUSINESS OVERVIEW BUSINESS

Viewpoint on Corporate Governance Corporate Auditor System and Internal Audits Groupwide Total Risk Management offices and started enacting measures to reduce on-site Our basic policy on corporate governance is to promote Yamatake uses a corporate auditor system that comprises To strengthen Groupwide risk management, in fiscal 2007 hazards. In addition, we have identified and provided policies that fulfill our social responsibilities based on good five corporate auditors including three external auditors, with we surveyed and brought together the responses of all emergency provisions for employees who may have diffi- ethical practices and contribute to the welfare of the com- three of these auditors serving on a full-time basis. Auditors major business divisions within the Group regarding what culty returning home and clarified safe routes for them to munity based on sound legal and regulatory compliance, attend meetings of the Board of Directors and other man- risks they considered to have the potential to impact return to the Company in the event of a major earthquake and we work to consistently increase enterprise value for agement council meetings. They assess business conditions Company management significantly. or other disaster.

the benefit of our shareholders and all our stakeholders by through audits conducted at workplaces, and through audits Until the present, we have kept priority response mea- The Shonan and Isehara factories are equipped with the REPORT SOCIAL enhancing policies and schemes to realize highly efficient, of in-house companies, including strict auditing of business sures in place for each Group company to deal with the Emergency Earthquake Information System that we devel- fair and transparent business practices. and policy decisions of directors and executive officers. most serious risks that Yamatake must be able to respond oped in-house, which uses using real-time seismic bulletins With a staff of 11, the Internal Audit Office conducts to. Going forward, we will additionally investigate and to issue warnings prior to the arrival of seismic waves at Framework for Corporate Governance regular internal audits of the Company’s head office staff evaluate alterations to our management environment so offices and factories. The aim is to enable workers to reach Board of Directors and Executive Officer System divisions as well as of each in-house company. Its audits that we may fully grasp any changes to present risks or the safe locations 20–30 seconds before seismic activity begins. The Board of Directors makes decisions on legal issues and encompass all aspects of management activities. appearance of new risks. Going forward, we will conduct In 2007, disaster drills using the system were conducted

other important matters and oversees conditions for the Current Framework regular and thorough analysis and evaluation of changes in when the Fujisawa Technology Center began operations. REPORT ENVIRONMENTAL implementation of policy actions. The executive officer Yamatake’s Board of Directors was composed of eight our management environment to ensure all potential risks system, separating decision making from actual policy members as of July 1, 2008, including five members that are discovered. Then, after management-level decisions to Business Continuity Plans execution, provides the means for swift policy execution also serve as executive officers and three members (includ- identify and prioritize the risks that must be addressed, we Based on earthquake prediction data, in 2005 Yamatake and has strengthened the auditing and oversight capabili- ing two external directors) with no day-to-day management will decisively implement measures most appropriate to started enacting plans to ensure ongoing business opera- ties of business activities. or oversight of Company operations. These independent each risk. In this way, we will strive as a Group to construct tions in the event of major earthquakes in the Tokai or The Board of Directors generally meets monthly, and for directors provide oversight and business advice from a an infallible risk management system. Kanto areas. In 2006, we analyzed the potential impact from executive personnel implementing actual business policy, broader and more independent perspective. disasters on key businesses, data communication systems Board meetings comprising an executive board of represen- Remuneration for Directors and Corporate Auditors Earthquake-Risk Prevention and factory infrastructure and formulated precautionary tatives of the Board of Corporate Auditors and executive Yamatake discloses the total remuneration for directors and In 2003, the Group’s Emergency Response Manual was measures and policies for restoring operations immediately REPORT FINANCIAL officers* meet twice monthly as part of initiatives to further corporate auditors in its official Company accounts and at compiled to ensure rapid response to emergencies and after problems occur. In 2007, comprehensive earthquake strengthen business operations through prompt decision regularly convened general shareholders’ meetings. In fiscal other disasters by clarifying command hierarchies and disaster drills were conducted at two factories to confirm making and policy execution. 2007, ended March 31, 2008, total remuneration paid to organizing response teams. In 2004, the Earthquake the efficiency of our planning and preparedness for a * Executive officers include the president, senior managing directors and managing eight directors amounted to ¥359 million (the uppermost Emergency Procedure Manual, originally compiled in 1996 disaster scenario. directors limit on remuneration is ¥450 million). For the five auditors, following a major earthquake in Kobe, was revised and total remuneration amounted to ¥87 million (the uppermost improved. In 2005, our system for confirming the safety limit is ¥120 million). of employees and their family members was expanded to include e-mail in addition to voice-response to ensure Corporate Governance Framework (As of June 27, 2008) quicker and more extensive communication between parties. In 2006, recognizing that major earthquakes can General Shareholders’ Meeting also occur in regions not normally prone to seismic activity, Verification of business Election/Dismissal Election/Dismissal Election/Dismissal the Group decided to extend its measures for earthquake continuity plans responsiveness to all offices and factories in Japan. We (Headquarters) Board of Corporate Auditors Board of Directors Policy Board Meeting have drawn detailed maps pinpointing equipment that may Corporate Auditors (5) Executive Directors (8) Financial potentially fall and areas at risk of falling objects in our Information Security Management • President and CEO (1) Including 3 External Auditors Including 2 External Executive Directors Accounting • Senior Managing Audit Yamatake has built management systems, devised regula- Election/ Executive Officer (1) Independent Oversight tions and developed innovative security mechanisms in Election/ • Managing Executive Auditor Audit Representative Executive Dismissal Officers (6) conjunction with privacy legislation enacted in Japan. Director (1) In 2006, we introduced access control systems using Executive Officers (15) integrated circuit IC cards at our main workplaces. In 2007, Audit Audit/ the Group’s Information Security Regulations were devised, Business Guidance Internal Audit Office and the Information Security Subcommittee for the overall Operations Internal control Conduct Department Group was inaugurated to promote data management for Earthquake disaster drills (Isehara factory) the Group as a whole.

44 azbil report 2008 azbil report 2008 45 Compliance

Yamatake recognizes that compliance is essential in gaining the respect and FEATURES SPECIAL trust of society, thereby ensuring the Company’s continued existence and development. Compliance requires not only that we observe the relevant laws and regulations but also that each of our officers and employees truly understand and follow sound and ethical business practices. BUSINESS OVERVIEW BUSINESS

Business Conduct Policy and Promoting Compliance objectives, content and methods used for compliance Internal Whistle-blowing System Business Conduct Guidelines Corporate Ethics Committee education. First, we held a seminar for Group officers on In October 2003, we launched a “Voice of Conscience” Business Conduct Policy As the body charged with promoting compliance, the “Internal Controls and the Company” conducted by outside hotline as a mechanism for internal reporting and counsel- Grounded in our philosophy at the time, in 1993 the Group Group’s Corporate Ethics Committee, chaired by the officer experts during Corporate Ethics Awareness Month. We have ing. In addition to mitigating compliance risk, the program established and put into practice a “Business Conduct in charge of CSR, convenes twice each year to ensure also provided Group training for compliance managers and is intended to function as a mechanism that allows employ- Policy” as business conduct standards for officers and compliance on both regulatory and ethical issues. leaders and other professionals on compliance education ees to report transgressions and as a means to foster an

employees. We revised this Business Conduct Policy in Promoting Internal Controls methods and matters connected with antitrust laws, on ethical organizational culture. The scheme originally covered REPORT SOCIAL fiscal 2006, ended March 31, 2007, to correspond with the The Internal control Conduct Department is responsible information security and on construction industry laws that the Group, but in October 2006 it was extended to partner revisions made to the Group’s philosophy on the occasion for driving forward compliance-driven activities at Group are of particular importance to our industry. This training has companies and other parties. This system for internal report- of Yamatake’s 100th anniversary. The Business Conduct companies. Specifically, the department’s functions include been conducted by sending representatives from the depart- ing and counseling offers conduits: an internal contact and Policy covers six areas: the Company’s public responsibili- providing information about the revised Business Conduct ment in charge to branches and offices throughout Japan. an external contact at a neutral third-party organization. ties; its social responsibilities; compliance with antitrust and Guidelines, monitoring compliance status, providing educa- As a trial, we have also conducted training using case other fair trading legislation; respect for human rights; tion and holding seminars on compliance-related issues, studies in compliance. We have been conducting an online

management and use of Company property; and the and using all types of media sources such as Company compliance training program in stages, and in fiscal 2007 REPORT ENVIRONMENTAL promotion of environmental protection. magazines to disseminate information. The department is we completed a round of training for Group executives, Business Conduct Guidelines also involved in CSR issues, social contribution, comprehen- mid-level managers and regular employees. To train new Based on the Business Conduct Policy, in 2000 Yamatake sive risk management and compliance with the Financial employees, we provide an explanation of the Group’s drew up—from both legal and ethical perspectives— Instruments and Exchange Law. philosophy, the Business Conduct Policy and the Business the Group’s Business Conduct Guidelines, which covers Compliance Manager and Leader Structure Conduct Guidelines as well as conduct ethical training all business activities. Prompted by the revisions made to In 2006, when the guidelines were revised, we decided to using case studies. The presidents of our overseas affiliates, the Group’s philosophy and Business Conduct Policy, we create a new structure for compliance management and as well as the managers of our overseas offices, undergo CSR Initiatives in the Building Systems Company also revised our Business Conduct Guidelines in 2006 to leadership that was comprised of individuals with organiza- training twice each year and others being stationed over- incorporate: 1) items to accommodate the increasingly tional responsibility at the manager level or higher from seas receive training before going abroad. REPORT FINANCIAL international nature of the business, 2) a more proactive throughout the Group. This new structure, intended as a Disseminating Information stance, 3) a shift from prohibitive to declarative expressions, framework to ensure the coordinated and effective imple- During Corporate Ethics Awareness Month in October 2007, and 4) the perspective gained from the results of our mentation of compliance, became fully operational in 2007. the president of Yamatake Corporation and the chairman of Hitoshi Fukui compliance monitoring. In addition, along with expanding The compliance managers and leaders are responsible for the CSR Promotion Committee respectively sent a message Manager of the General Affairs Section, Building Systems Company, the scope of these new guidelines with our business part- extending compliance in the workplace and providing to employees. Additionally, web pages tailored for compli- Yamatake Corporation ners, we have also made them public by posting them on guidance (e.g., helping to disseminate the Group’s philoso- ance managers and leaders were added to the “compliance In accordance with the Group’s Business Conduct Guide- our web site. Furthermore, we created a card-size version phy, Business Conduct Policy and Business Conduct web” administered by the Internal control Conduct Depart- lines, the Building Systems Company is working to ensure of the Business Conduct Policy and Business Conduct Guidelines and educating employees about them), development, which we use as a means to distribute various types that it fully adheres to the law in all of its practices. Guidelines and distributed them to Group companies and ing and managing solid guidelines for the workplace and of information. The compliance web is a web site especially In fiscal 2007, we conducted seven seminars in 13 loca- business partners. Our overseas affiliates in Europe, North uncovering and reporting various risks. for posting compliance-related information, such as Corpo- tions nationwide, reaching a total of 2,024 employees. In particular, we began conducting compliance classes on America and Asia have begun preparing their own versions Disseminating the Business Conduct Guidelines rate Ethics Awareness Month messages, details about the compliance for laws and regulations that directly affect our of these new guidelines. To disseminate the Business Conduct Guidelines, and mission and the role of compliance managers and leaders business activities. These sessions went beyond theoretical based on a request made during fiscal 2007 from the officer and how the system works, training materials for the compli- issues to provide useful and tangible information, and in charge of CSR, the compliance managers and leaders at ance managers and leaders, and self-assessment tools. attendees paid close attention and asked many pertinent each workplace explained the revised guidelines, and then Compliance Monitoring questions. This illustrates that these sessions raised employee awareness and that compliance has become entrenched all employees were tested for their own knowledge of In February and March 2008, we conducted a compliance within our corporate culture. compliance. Weaknesses can be gauged from the results of awareness and acceptance survey to officers and both regu- While the number of corporate scandals across the these on-site meetings and self-assessment tests, allowing lar and contract employees across the Group, receiving globe has been declining, they unfortunately do still occur managers and responsible departments to reinforce the responses from nearly 90% of personnel queried. This from time to time. Yamatake, along with further raising relevant areas. This information can then be used in subse- response rate indicates that there is a growing awareness of employee awareness, is working together with partner companies to ensure full compliance. Going forward, we quent training sessions. compliance among all employees because of our compliance will continuously strive to ensure that we remain trusted by Compliance Education training, online learning programs and the encouragement customers and shareholders and that we serve society to In fiscal 2007, we decided to offer compliance education from the compliance managers and leaders for employees in Portable card-size version (above) the best of our abilities. Business Conduct Guidelines (left) tailored to each employment level after reviewing the the workplace.

46 azbil report 2008 azbil report 2008 47 Employee Relations

We are continuing to focus on developing human resources as part of our efforts FEATURES SPECIAL to make “human-centered automation” a reality. In doing so, we are putting into practice Yamatake’s long-standing view that our employees are a valued asset, the source of corporate cultural renewal and the creative source of our enterprise value. BUSINESS OVERVIEW BUSINESS

Responding to Changing Times to achieve business targets, 2) foster human resources on a working for Group companies overseas, including about Creating a Healthy Workplace New Remuneration Scheme global level to assume the essential responsibilities for our 100 employees sent overseas from Japan. Addressing Mental Health Issues In April 2008, Yamatake began using a new remuneration international business, and 3) encourage employees to study Among these employees are a growing number of Through its automation operations, the Group aims to system for regular employees. The previous system was put on their own to acquire credentials and language skills. individuals who have served as key employees at overseas provide customers with a sense of safety, comfort and in place in April 2004, but we decided to revise this system Based on the principle that human resources are the affiliates since these companies were founded and who now accomplishment. These automation operations are founded with three goals in mind: 1) maintaining and enhancing underlying source of growth and that an enterprise cannot serve as managers. At our local affiliates in the U.S., Europe, on the efforts of our employees, each of who is vital to

employee motivation, 2) fostering the drive to take on new grow if its personnel are not nurturing and expanding their China and South Korea, local employees have been serving Yamatake. We have created systems to provide full support REPORT SOCIAL challenges, and 3) enhancing teamwork capabilities. own skills, we are working to build even more solid founda- as directors and had been appointed to important manage- and backup for employee health management. Recently, the The remuneration scheme is important to achieve these tions for the Group through a more concerted focus on rial posts. Their expertise is crucial for meeting the needs of seriousness of mental health issues—a problem shared by goals, and we have conducted seminars throughout Japan personal training and development. our many customers in providing products, services and all of society—has come to light. Yamatake implements to give our employees a deeper understanding of the new expertise in markets worldwide. mental health support measures tailored to the lifestyles of system. Additionally, we plan to continue holding biannual Utilizing our Diverse Human Resources More Active Involvement of Women in the Workplace each employee. For example, after new employees com- training sessions to ensure that evaluations are fair and Hiring Overseas Employees (Hiring Exchange Students, From December 2007 to February 2008, targeting female plete their training and are placed in a work location, a

acceptable and that the new system becomes well Offering Internships) managers and section chief deputies, Yamatake enacted specialist counselor will visit each workplace to provide REPORT ENVIRONMENTAL established. Each year, the Group offers internships to students from a program designed to encourage greater involvement counseling. Rehiring Employees after Retirement (Senior Employees) overseas. More than 50 people have taken advantage of among female employees in the workplace. After the Regular Testing for Metabolic Syndrome Following amendments to the Law Concerning Stabilization internships offered by the Group. In fiscal 2007, university program was completed, each individual drew up an action Since fiscal 2008, Yamatake has offered regular testing to of Employment of Older Persons, Yamatake has expanded students from Canada, England, Portugal and Germany plan that will be reviewed in conjunction with supervisors detect metabolic syndrome. In addition, Safety Service and improved its system for reemploying personnel who spent one year undergoing on-site training in R&D and over three- and six-month intervals. Center Co., Ltd., a Group member, has been contracted to have officially retired. We created an environment in which product development. They learned about Japan’s latest provide employees with health guidance via motivational employees who are still healthy and eager to work after technologies and took strides in developing skills that will and active support after the completion of the regular reaching the retirement age of 60 can continue to provide be especially useful in their native countries for future testing. Utilizing communication and technology for health leadership and remain active in the workplace based on employment. support, Yamatake is committed to providing everyone, but REPORT FINANCIAL their knowledge, expertise and extensive experience. We also invited three foreign students from Germany, particularly the elderly, with a sense of safety, comfort and Consequently, the post-retirement reemployment rate China and Mongolia who are attending Japanese universi- accomplishment through health care operations that offer exceeds 70%, and the number of employees working after ties to work alongside our staff during two-week sessions. peace of mind. This commitment of course includes sup- Training session for female being rehired as “senior employees” increased from 62 in As the students are already extremely proficient in the employees porting the health of its employees and their families. fiscal 2006 to 146 in fiscal 2007. These senior employees Japanese language, they experienced no language barri- Labor Initiatives toward a Work–Life Balance actively put their wealth of experience and broad range ers and could communicate freely with our staff. They Yamatake Friendly: Hiring People with Now that lifestyles and values are diversifying, employees of skills to use in a variety of workplaces. have expressed interest in working for Japanese compa- Developmental Disabilities are seeking more fulfilling lives, ways of working best suited nies upon graduation, and we hope that their experience Yamatake Friendly, a special subsidiary that meets the to their lifestyles and more time out of the workplace. at our workplaces will be put to good use in pursuing needs of people with developmental disabilities, celebrated We believe that increasing job satisfaction and motivating their careers. its 10th anniversary in February 2008. In addition to per- employees to apply themselves to their jobs raises produc- forming work that is essential to operations in the Group, tivity and enables us to maintain consistent quality in the Yamatake Friendly is increasingly accepting consignment workforce. Consequently, we established the Work–Life projects and work for outside companies and organizations. Balance (WLB) Committee with representatives from both This company hosts tours and employs trainees to work labor unions and management to work toward achieving Senior employees remain active in a variety of workplaces alongside people with developmental disabilities, which harmony between the individual, his or her individual enables people to see firsthand the considerable potential pursuits and work. The goal here is for employees to Nurturing Human Resources Development that people with developmental disabilities have to partici- achieve peace of mind as well as a sense of comfort Interns in fiscal 2007 throughout the Company (foreign-exchange students) pate in the workforce, and encourages a greater and accomplishment. With the goal of making “human-centered automation” understanding of the challenges they face. a reality, Yamatake is promoting reform in a plethora of Growth in Employee Headcount Overseas business areas, and strengthening and expanding its inter- Yamatake has continued to aggressively expand overseas Number of Tours and Outside Trainees (1998 to 2007) national operations. In addition to our existing education since establishing its first overseas unit in China in 1993 and • Tours: 409, with a total of 2,965 visitors • Number of trainees accommodated: 163 sessions, over a total programs, we are making a concentrated effort to: 1) shore now has more than 20 locally incorporated subsidiaries and of 1,048 days up management at all levels as the foundation of our efforts offices overseas. There are approximately 1,000 people

48 azbil report 2008 azbil report 2008 49 For Local Communities

Based on the Group’s “human-centered automation” concept for helping communities, FEATURES SPECIAL enriching individual lives and promoting environmental protection, we actively contribute In the four areas of environment, education for youth, health and welfare, and community to the welfare of our fellow citizens through environmental protection, education, health initiatives, we have been promoting a number of measures to contribute to society. Here, we introduce some of these activities from fiscal 2007. and welfare, and community initiatives. Environment Education Health and Welfare Community

Tour of Model Factory for Energy Conservation A wide range of visitors, ranging from corporate and government personnel in charge of BUSINESS OVERVIEW BUSINESS environmental and energy-saving practices to elementary, middle and high school students, visit our factory. During these visits, we showcase our energy-saving initiatives, Social Contribution into four particular fields: environment, education, health including those created by the Fujisawa Technology Center. More than 5,500 visitors were In fiscal 2007, ended March 31, 2008, Yamatake worked to and welfare, and community initiatives. welcomed in fiscal 2007. Factory tour realize safety, comfort and fulfillment in people’s lives and to • Environment: We promote energy-saving and educational help create a better global environment under its “human- activities on environmental matters and instigate clean-up Participating in Earth Day Tokyo 2007 centered automation” concept for Group companies. We campaigns for beaches and mountains as part of our Yamatake was a participant in Earth Day Tokyo 2007, an event to raise environmental reconfirmed these policies through social contribution environmental support initiatives. awareness. We lent waste-processing equipment for turning garbage into fertilizer to the

activities in the communities where we live and work. We • Education: We provide educational opportunities through event free of charge. We also applied Life Cycle Analysis to assess the event’s environmen- REPORT SOCIAL also recognize the need to actively promote social responsi- personal participation in projects, principally in the envi- tal impact, as we did in 2006. bility as a good corporate citizen and will remain actively ronmental field for elementary school students, and engaged in pursuits that help the community. promote local community activities for youth. Garbage-processing equipment • Health and Welfare: Activities include visits by employees, Participating in Festivals at Regional Facilities Basic Policies for Contributing to Society their families and the Company’s club and volunteer Yamatake is an active participant in festivals at regional facilities as an officially registered • We work to realize safety, comfort and fulfillment in people’s groups to day-service care facilities. lives under our “human-centered automation” concept. All manager for such events. The Company independently plans and exhibits displays on eco- REPORT ENVIRONMENTAL • Community: Activities include support for local sporting employees are dedicated to promoting environmental brands, education about good dietary practices, scientific experiments, industrial arts and preservation, education and training for youth, health and events (promoting environmental awareness, collecting other features that have proved especially popular with visitors. In addition, we plan and welfare, and activities for enhancing communities and and separating garbage, and other pursuits), PC refurbish- manage independent festivals at such facilities as the Kamatori Community Center in individual well-being and improving the global environment. ment and donation and assistance with disaster recovery. Contributing to the community is one of our most important Midori Ward, Chiba City, which holds a music festival. Festival at Kamatori Community Center missions as a company. Promoting Social Contribution • We promote these activities bearing in mind the value Supporting Environmental Education for Elementary School Students created both for individuals and for our stakeholders. Whereas our activities were run by our social contribution • We are committed to ongoing participation in activities that secretarial team, in fiscal 2007 we established the Social The Company has supported environmental training at the Tokiwamatsu Public Elementary enrich the culture and spirit of society. Contribution Subcommittee under the administration of the School in Shibuya Ward, Tokyo, since fiscal 2004. Our theme in 2007 was “Refuse.” Chil- CSR Promotion Committee to establish basic policies for dren took field trips to the Fujisawa Technology Center to study the theme during the year REPORT FINANCIAL Major Fields of Social Contribution Activities social welfare activities, to set up systems for contribution and were given practical lessons about recycling, how not to waste resources and other Taking into account our strengths and special characteristics and to flexibly and systematically design and promote social lessons in how refuse directly affects our lives. as a company and the needs of society around us, we welfare programs. Our efforts geared toward social contri- Study session at Tokiwamatsu Public Elementary School decided in fiscal 2006 to focus our social contribution efforts bution are as outlined below. Yamatake’s Original “Eco-Kids Series” Environmental Education Program Yamatake independently operates an environmental education program at the Social Major Areas of Social Contribution Activities Social Contribution Activity System Education Center in Taito Ward, Tokyo, and the Kamatori Community Center in Midori CSR Ward, Chiba City (both are operated by the Company as an officially registered manager). Policy Board Meeting Sessions are held twice in the summer and the autumn by Yamatake in conjunction with Community student environmental volunteers. Yamatake Group CSR Group Brand azbil Eco-Kids Promotion Committee Development Project

Supporting Environmental Activities at 2008 Shonan International Marathon Social Contribution Subcommittee Environment Yamatake seeks to raises awareness of environmental issues, Sorting refuse (left) Subcommittee Chairperson such as by being a leading Eco-Friendship supporter at the Eco Café (below) Social Contribution 2008 Shonan International Marathon. We cooperate with Promotion Team organizers to plan and manage the event’s environmental- • Social Contribution Policy/ Education Health and Policy Planning and Promotion related activities, including on-site recycling. Employees Welfare Subcommittee Members participate in providing major assistance to runners, volunteers • Approval of Major Policy Fields and spectators cheering the event, and enliven them through • Major Policy Development and Implementation the Company’s Team azbil. We once again provided the Each Group Company popular Eco Café in 2008, and the environment-friendly bever- • Implementation of Social Contribution Activities ages proved immensely popular.

50 azbil report 2008 azbil report 2008 51 Environmental Report

Yamatake is taking positive measures to achieve its goal of minimizing the impact placed on the environment by its business activities. These include measures to conserve energy and natural resources, prevent pollution and manage chemical substances

Jun Kawachi Executive Director Managing Executive Officer Yamatake Corporation

Currently, the most important environmental issue that We have practically completed energy conservation we face is how to prevent global warming. At the Group, measures for building infrastructure at our production bases, The Group’s Medium-term Target we have set the medium-term management target of such as those relating to air-conditioning and lighting, and By fiscal 2012, reduce Group CO2 emissions 6.2% compared to the level at the reducing CO2 emissions by the end of fiscal 2012, ended production lines are being redesigned with the goal of March 31, 2013, by 6.2% compared with the level at the energy conservation. At every sales office, in addition to end of fiscal 2006. end of fiscal 2006. energy conservation measures for building infrastructure, All Group employees are striving to conserve energy we are also pursuing initiatives for Group-owned vehicles. to enable us to expand operations without increasing In R&D, we are devoting resources to developing prod-

CO2 emissions. We are now focusing our energies on ucts that are considerate to the environment throughout

what steps we can take to conserve energy within our their lifecycles. Moreover, we are looking into how to utilize REPORT ENVIRONMENTAL business activities. “new energies” and carbon offsetting in future strategies.

Yamatake Corporation's Environmental Objectives and Targets Self- Categories Objectives Targets for Fiscal 2007 Results for Fiscal 2007 assessment Targets for Fiscal 2008 Targets for Fiscal 2010

Eco Factories, Preventing global • By fiscal 2012, reduce total volume of CO2 • Reduce by 1% compared to fiscal 2006 • Reduced by 2.5% compared to fiscal 2006, • Reduce CO2 emissions by 3.1% compared to fiscal • Reduce by 0.5% compared to 2006, Eco Offices warming (reduction emissions by 6.2% compared to fiscal 2006 • Establish new medium-term targets following total volume: 19,602 tons o 2006. Total volume: 19,421 tons total volume 19,948 tons of CO2 emissions) Fiscal 2006 total volume: 20,110 tons of CO2 reorganization of production sites • Re-established medium-term targets • Construct a environment-conscious advanced — technology laboratory building Preventing environ- • By fiscal 2009, completely discontinue use of • Investigate complete discontinuance of • Use at Shonan factory: fiscal 2006, 15 tons: • Completely discontinue use of dichloromethane at — mental pollution dichloromethane*1 dichloromethane fiscal 2007, 4.5 tons, a 70% reduction o Shonan factory

• Incidents of wastewater noncompliance: 0 • Instances where process wastewater exceeds the • Instances where process-use water exceeded the • Instances where process-use water exceeds agreed- • Continue previous targets levels agreed upon with the local community: 0 levels agreed upon with the local community: 1 upon levels: 0 × • Discontinued cell cleaning process • Instances where kitchen-use water exceeds agreed- • Introduced new wastewater treatment facilities upon levels: 0

Conservation natural • By fiscal 2012, reduce total amount of • Reduce by 5% compared to fiscal 2006 • Reduced by 2.1% from fiscal 2006 • Reduce by 10% compared to fiscal 2006 • Reduce by 20% compared to 2006 resources purchased copier-use paper by 30% Total volume: 53.2 million sheets Total volume: 52.0 million sheets compared to fiscal 2006 Eco Products, Managing chemical • By fiscal 2011, create and establish Groupwide • Prepare for introduction of CMS promotion • Prepared for introduction of CMS structure • Inaugurate CMS Promotion Committee • Complete 50% of equipment for CMS 2 Eco Services substances CMS* management systems structure by CMS project team by CMS project team from fiscal 2008 • Respond to most important CMS management issues product line • Established related internal rules • Implement responses to REACH regulations, ship • Continue and review responses to most recycling law, etc. important CMS management issues Environment- • Create numerical benchmarks to measure • Simplify input of LCA data, move to a database • Began preparations for LCA management • Create LCA management guidelines • Review LCA management guidelines conscious design improvements in environment-conscious design system, survey trends in product environmental guidelines • Rate of new products as eco products: • Rate of new products as eco products: • Increase ratio of new products classified as efficiency • Eco-product rate: 88% o 90% or above 70% or above eco products*3 • Eco-product rate: 90% • LCA implementation rate: 30% • LCA implementation rate: 10% or above • LCA implementation rate: 50% or • By fiscal 2011, increase LCA*4 implementation • LCA implementation rate: 30% above rate to 100% (for new products) Green procurement • Green procurement rate (purchase-balance • Target expanding and deepening of Yamatake • Green procurement rate: 67% • Achieve green procurement rate of 95% • Continue previous targets ratio) to 95% or above Eco Program (YEP: a program to help trading • Number of YEP registered companies: 64 • Support the independence of trading partner’s partners create environmental management o environmental management systems systems) registered companies to 60 Eco Disclosing environ- • Participate in environmental events and local • Cleaning activities in areas close to offices and • Completed cleaning activities in areas close • Cleaning activities in areas close to offices and plants, • Continue previous targets Communication mental information, environmental activities plants, cooperate with NGOs and NPOs and to offices and plants, cooperated with NGOs cooperate with NGOs and NPOs and support the coexisting with • Promote the use of clean energy support for the Shonan international marathon and NPOs and supported the Shonan Shonan international marathon society • Encourage all employees and their families to international marathon o • Investigate expanded use of clean energy reduce CO2 emissions • Introduced solar power generation equip- • Hold energy conservation programs for children ment at Yamatake Shonan Training Center during summer holidays (10kWh)

*1 Excluding certain products *2 CMS: Chemical-substances Management Systems *3 Eco products: new products that have cleared environmental certification benchmarks *4 LCA: Life Cycle Assessment

52 azbil report 2008 azbil report 2008 53 Environmental Impact throughout Our Business Activities

40,000 8.0 Yamatake engages in a range of activities to contribute to the environment, from product FEATURES SPECIAL Improving Environmental Efficiency Environmental Impact and Environmental Efficiency

development and design to product use, disposal and recycling. We undertake quantitative Aiming for the sustainable development of our environmental-improvement kEIP*2 40,000 9 E

initiatives, we introduced, on a trial basis, an environmental efficiency target n E v i n r o

analysis of environmental impact in all of our business activities and adopt appropriate v

32,358 i from fiscal 2006, ended March 31, 2007. In fiscal 2007, we successfully met and n 32,180 31,483 r o m n e m

exceeded our target, achieving a 7.0% improvement compared to the target n 30,000 7 e measures for lessening impact. t a n l t I of 4.0%. a m l E p f a Net Sales f c i c t

Environmental Efficiency = 20,000 5 i

1 e ( 5.37 5.75 J Environmental Impact (JEPIX* ) 5.21 n E c P y I X

*1 JEPIX: Environmental Policy Priorities Index for Japan (environmental measures priority index) ) Environmental Impact (JEPIX)

*2 EIP: Environmental Indicator Point 10,000 3 Environmental Efficiency OVERVIEW BUSINESS 05 06 07(FY) (right scale)

Electricity 9.7 million kWh Electricity million kWh LPG m3 Paper million sheets Gasoline*3 kl 31.0 129,000 18.0 36.2 Gasoline 1,398.6 kl Heavy Oil*1 0.0 kl LNG 197,000 m3 Diesel Oil*3 170.1 kl Diesel Oil 20.4 kl Paper 38.3 million sheets Kerosene 17.7 kl Water 100,000 m3 Natural Energy*2 0.2 million kWh Natural Energy*4 0.5 million kWh

Scope: 140 sales offices of Yamatake Corporation in Japan, Scope: Yamatake Corporation’s Fujisawa Technology Center,

Yamatake & Co., Ltd. and Safety Service Center Co., Ltd. REPORT SOCIAL Shonan and Isehara factories, Yamatake Control Products Co., Ltd. and Taishin Co., Ltd. INPUT INPUT INPUT

Development Procurement Production Distribution Sales Use, Disposal, Recycling ENVIRONMENTAL REPORT ENVIRONMENTAL

Environment-conscious Design Green Procurement Global-warming Counter Measures Increase Transport Efficiency Global-warming Counter Measures Energy Consumption Reduction Chemical Substances Measures Resource Conservation and Higher Fuel Costs Resource Conservation and Reduced Use and REPORT FINANCIAL Waste Reduction Promote Eco-friendly Driving Waste Reduction Recovery of Packaging Environmental Pollution Prevention Introduced Low-emission Vehicles Green purchase Product Reuse P59–61 P60 P62–65 P62 P62–65

Based on its environmental design The Group has strengthened its The Group continues to reduce the The Group collaborates with distribu- Not only does the Group make efforts The Group has reduced the amount

guidelines, which were drafted in 1997, measures for the management of CO2 emissions that accompany its tors in reducing environmental impact to reduce the environmental impact of of packaging used for shipping and the Group assesses the design of chemical substances in its products. energy use. Toward the creation of by increasing transport efficiency by daily administrative operations, such as recovers it. The Group also repairs its products from the point of view of the In addition, the Group continues to a sustainable society, it is pushing revising routes, practicing “idle stop” paper use, generating waste and own products for reuse. environment for all stages of their expand its Yamatake Eco Program, forward with initiatives to conserve when stationary, maintaining tire electricity consumption, it also makes lifecycle. Products that pass this which supports the environmental resources and reduce waste. pressure and other measures. energy savings proposals to customers assessment earn a Yamatake’s environ- activities of its suppliers. that lead to lower environmental impact. mental labeling.

OUTPUT OUTPUT OUTPUT

Greenhouse Gas (CO2) Emissions Greenhouse Gas (CO2) Emissions Greenhouse Gas (CO2) Emissions 12,990.0 tons Chemical Substance Airborne Emissions 14.2 tons 530.5 tons 6,949.5 tons Total Discharge of Waste 1,416.3 tons SOx Emissions 11.3 tons SOx Emissions 0.9 tons SOx Emissions 16.5 tons Waste for Final Disposal tons NOx Emissions tons 12.6 8.7 NOx Emissions 7.7 tons NOx Emissions 40.0 tons

*1 There has been no use of heavy oil since fiscal 2005. *3 Charter services and services by commissioned transport companies are not included. *2 Since natural energy is clean energy, it is deemed to have no environmental impact. *4 Since natural energy is clean energy, it is deemed to have no environmental impact.

54 azbil report 2008 azbil report 2008 55 Eco Management Management System

Yamatake engages in environmental preservation activities that are grounded in its FEATURES SPECIAL environmental charter and environmental policy. Through efforts that revolve around the PDCA (Plan, Do, Check, Act) cycle, we are working to continuously reduce or prevent the environmental impact and risks associated with our business activities. BUSINESS OVERVIEW BUSINESS

Environmental Charter and Environmental Policy ISO 14001 Certification Environmental Audit Results: Reviewing the and these individuals are now playing environmental point The Group sees contributing to the global environment as a In 1996, the Group became the first company in the control Characteristics of Environmental Auditing Practices roles in the workplace. To continue expanding our network paramount issue for management and will continue to instruments industry in Japan to obtain certification, and Based on an external audit conducted in fiscal 2007, of environmental preservation activities overseas, we also pursue environmental preservation activities that contribute since then has continued to acquire certification for its Yamatake has been able to verify that its environmental provide environmental education as part of the training to building a sustainable, recycling-oriented economic various locations in incremental stages. In February 2004, management system (EMS) is operated and maintained in given to employees before they are posted to overseas units. society. This spirit is summarized in the Group’s Environmen- we integrated the environmental management systems of an effective manner and is continuously being improved.

tal Charter. Each Group company has drawn up its own Yamatake Corporation to achieve improvements in adminis- We conducted a thorough review of EMS with reference REPORT SOCIAL

environmental policy based on this environmental charter, tration-level quality and heightened efficiency for control to the results of the audit which specified environmental Environmental Education Record and these policies serve as the basis for each of their envi- and maintenance. In fiscal 2005, ended March 31, 2006, we aspects that require improvements. Depending on the Course Content Total No. of Total No. of ronmental preservation activities. expanded the scope to include all offices and operating operation, themes outside of the paper, waste and electric- Participants Hours Spent Employment New employee training, For more details, please visit: sites in Japan. We have also been working to obtain certifi- ity field could not be identified, and EMS activities were at Stage mid-level employee courses 162 734 Internal auditor training, management http://www.yamatake.com/csr/eco/group.html cation for locations overseas. In fiscal 2007, Yamatake China a standstill in some cases. We therefore revised the defini- Experts and monitor courses 260 2,505 Limited was certified. tions of environmental aspects related to significant Factory

General environmental courses REPORT ENVIRONMENTAL Framework for Driving Environmental Activities impacts, benefits and our business operations, and Training 11,609 1,866 ISO 14001 Certification History The Environmental Management Officer plays a central role switched to a framework in which environmental aspects • Records of Yamatake Corporation’s Fujisawa Technology Center, Shonan and Aug. 1996 Yamatake Corporation in promoting environmental preservation activities and were selected and evaluated in connection with manage- Isehara factories, Yamatake Control Products Co., Ltd. and Taishin Co., Ltd. • In fiscal 2007, 18 employees received environmental training before being Sept. 1997 Yamatake Control Products Co., Ltd. reports directly to the President of Yamatake Corporation. ment planning by theme for each operations. As a result, transferred to overseas operations. This officer oversees all environmental preservation activi- July 2000 Taishin Co., Ltd. emphasis shifted from paper, waste and electricity to ties and assists the president. The Group Environmental Dec. 2001 Dalian Yamatake Control Instruments Co., Ltd. activities that ultimately have a favorable impact on the Changing Environmental Auditing Methods: Shifting Management Committee serves as the deliberative body Feb. 2004 Yamatake & Co., Ltd. environment. This has strengthened the connections to Simultaneous Environmental and Quality Audits that oversees environmental management. The committee between ISO and the business operations. June 2004 Yamatake Corp. certification integrated drives as well as reviews environmental management

June 2006 Yamatake Korea Co., Ltd. REPORT FINANCIAL planning and has various subcommittees that review Environmental Regulation Compliance common issues in addition to more specialized issues. July 2007 Yamatake China Limited The Laws and Regulations Subcommittee meets quarterly The certifying bodies were as follows: Yamatake Corporation (Lloyd’s Register to discuss important regulatory issues that must be ad- Toru Hasuoka Quality Assurance Limited Japan), Kimmon Manufacturing Co., Ltd. (Japanese dressed by the Group and to share information concerning Environmental Protection Section, Standards Association (JSA), Dalian Yamatake Control Instruments (China Quality Environment & Standardization Certification Centre), Yamatake & Co., Ltd. (The High Pressure Gas Safety Institute of regulatory matters. In fiscal 2007, the Group did not violate Promotion Department Japan), Yamatake Korea Co., Ltd. (DAS Korea International Certification Co., Ltd.), and for others SGS Japan Inc. any laws, was not penalized or fined and was not subject to In June 2007, Yamatake revised its auditing methods so that any litigation or complaints concerning environmental environmental and quality audits can be conducted simultane- matters. However, there was one instance in which the ously. Up to this point, the scope and nature of these activities levels agreed upon with the local community were exceed- under each management system (MS) were different. Audits ed with respect to water quality, and we reported this to were conducted separately under three different MS structures, Environmental Promotion Structure the relevant authorities and proceeded to make improve- including the MS for environmental activities for the Company as a whole and for quality at each Group company. However, BA: Building Automation Taishin: Taishin Co., Ltd. ments (please see page 65). President of Yamatake Corporation AA: Advanced Automation Kimmon Manufacturing: from the perspective of each individual business division, this YS: Yamatake & Co., Ltd. Kimmon Manufacturing Co., Ltd. method was time-consuming as in addition to having to Environmental Management Officer YCP: Yamatake Control Products Co., Ltd. Safety Service Center: Environmental Education constantly respond to auditing requests the contents of the Safety Service Center Co., Ltd. Yamatake believe contributing to the protection of the global audits often overlapped. The new auditing methods are being Environmental Management Laws and Regulations Subcommittee DYC: Dalian Yamatake Control Instruments Co., Ltd. environment is a paramount issue, and we proactively raise Committee attempted for the first time by an organization of our size, which YSZ: Yamatake China Limited environmental awareness among our employees and has created some major challenges for the auditing organization. Environmental Design Subcommittee Shenzhen Factory develop organizational activities. For example, we have Nonetheless, we have not hesitated to take our first important developed educational programs tailored to our employees’ steps toward integrating auditing systems in the future. position and roles (e.g., new employee training, training Yamatake Corporation Kimmon Safety based on job function and factory training) that are designed BA Company YS YCP Taishin Manufactur- Service DYC YSZ to raise environmental awareness as well as promote the AA Company Seiji Onoki, President and CEO, Yamatake ing Center understanding of our environmental preservation activities. Corporation (left), and Hirofumi Niikura, Staff Yamatake also conducts its own training for internal auditors. Lloyd’s Register Quality Assurance Limited Japan (right), at the certification ceremony In fiscal 2007, 176 employees became new internal auditors,

56 azbil report 2008 azbil report 2008 57 Eco Management Eco Products and Eco Services Environmental Accounting Environment-conscious Products and Services

Yamatake has been compiling environmental accounting reports since fiscal 1999, In 1997, Yamatake formulated environmental design guidelines for easing environmental FEATURES SPECIAL ended March 31, 2000, to quantitatively assess global environmental conservation impact with the aim of creating environment-conscious products and services. In new costs and the economic and environmental effects of Yamatake conservation activities. product development and for our existing product lineup, we actively promote the We are working to revise and expand the aggregate scope of these activities. development of environment-conscious products and services with added performance Taishin Co. Ltd. was added to the scope of environmental accounting from fiscal 2007. features and new models throughout their life cycles. BUSINESS OVERVIEW BUSINESS

Results of Fiscal 2007 Environmental Accounting increased ¥62.3 million, to ¥100.4 million. Meanwhile, Flow of Environment-conscious Product Development the extent that they have improved in four categories in In fiscal 2007, capital investment totaled ¥221.4 million, expenditures came to ¥915.8 million, down ¥63.7 million, Limiting environmental impact requires stringent comparison with existing products. In the fiscal year under down ¥61.4 million from the previous year. In the main while administration cost increased because Taishin Co., environmental assessments at all stages of a product’s review, new LCA assessments were incorporated into the categories, conservation cost for investments in energy- Ltd. was added to the scope of our environmental accounts life cycle, from the early development, planning and design process and standards were tightened for chemical sub- reducing equipment to help prevent global warming, and from this fiscal year. In addition, energy-expense saving stages through to materials procurement, production, stances and energy conservation. As a result, the overall other global environment conservation cost, came to ¥98.6 through energy conservation was ¥75.9 million, bringing the distribution, marketing, use and final product disposal. All average improvement*2 was 16.2%. The Group made

million. Pollution prevention cost for enacting policies to total economic benefits to ¥136.9 million, an increase of of our new products and other offerings undergo a thor- notable progress in complying with requirements for reduc- REPORT SOCIAL prevent soil contamination and for treatment and drainage ¥130.0 million overall. ough environmental design assessment, and we are ing toxic chemicals under the European Union’s Restriction building the mechanisms for life cycle assessment (LCA) as of Hazardous Substances (RoHS) directives and in satisfying

1 a basic principle behind product design, development and other regulations and achieved a 29.6% score under envi- Environmental Conservation Cost* Millions of yen Investment Cost use. Products that satisfy or exceed LCA standards are ronmental safety measures. Moreover, energy conservation Category Key Activity and the Outcome FY2006 FY2007 Change FY2006 FY2007 Change designated as environment-conscious and acquire the self- improved 18.4%. 1 Environmental conservation cost to control A Pollution prevention cost 38.1 100.4 62.3 24.1 23.5 –0.6 declared Type II Environmental Label. *1 Reusability and recyclability; disposability; environmental preservation; resource conservation; energy conservation; length of service; packaging material; and environmental impacts which result from key B Global environmental conservation cost 225.2 98.6 –126.6 102.4 87.8 –14.6 REPORT ENVIRONMENTAL business operations within the business area information disclosure C Resource circulation cost 10.5 22.4 11.9 68.0 38.1 –29.9 *2 Overall improvement denotes the simple sum of environmental assessment results (Business area cost) Total of above 273.8 221.4 –52.4 194.5 149.4 –45.1 Environment-conscious Product Development Flow for Group companies and does not denote a Groupwide improvement rate. 2 Environmental conservation cost to control − 0.0 0.0 0.0 0.4 6.2 5.8 environmental impacts which result from key New Product Development Upgraded Model of Existing Product business operations upstream or downstream Results of Overall Assessment in fiscal 2007 (Upstream/downstream cost) 3 Environmental conservation cost stemming Maintaining ISO 14001 certification, environ- 0.0 0.0 0.0 191.8 223.4 31.6 Environmental Design Guidelines Reusability/ Recyclability from administrative activities mental information disclosure, environmental 100 (Administration cost) advertising, environmental education, Information Ease of Environmental Design Provision Disposal greening and beautification of offices, etc. New Products

Implement Environmental or Implement LCA REPORT FINANCIAL 50 4 Environmental conservation cost stemming R&D in such fields as the environment 0.0 0.0 0.0 591.6 535.4 –56.2 Design Assessment from R&D activities (R&D cost) and alternative energy Packaging 0 Environmental Materials Friendliness 5 Environmental conservation cost stemming Cleaning rivers, waterfront and other areas 9.0 0.0 –9.0 1.2 1.4 0.2 Environmental Label Approval Standards from social activities (Social activity cost)

6 Cost incurred for dealing with environmental − 0.0 0.0 0.0 0.0 0.0 0.0 Previous Products degradation (Environmental remediation cost) Environmental Label Extended Resource Service Life Conservation Total 282.8 221.4 –61.4 979.5 915.8 –63.7 Energy Conservation

Economic Benefit Associated with 1 2 Environmental Conservation Activities* Millions of yen Environmental Conservation Benefit* Environmental Labeling Details of Benefit FY2006 FY2007 Change Details of Benefit FY2006 FY2007 Change Disposal cost saving through lower 49.5 65.4 15.9 Electricity (million kWh) 41.6 40.5 –1.1 LCA (Life Cycle Assessment) Initiatives Yamatake introduced a certification system for environmental resource input or recycling Water (10,000 m3) 9.8 10.0 0.2 In fiscal 2007, ended March 31, 2008, Yamatake developed labeling that complies with international ISO14021 standards Energy expense saving through –39.2 75.9 115.1 Gasoline/Diesel Oil for Transport (kl) 1,614.9 1,625.7 10.8 an internal LCA manual for deciphering and understanding in April 2001 and actively discloses environment-related energy conservation CO2 Emissions (tons) 2,0867.2 20,405.8 –461.4 ISO14040: 2006 and ISO14044: 2006 designations for data on its products to customers. The Group uses the self- Cost saving from reduced resource use –3.4 –4.4 –1.0 (Water) Total Discharge of Waste (tons) 1,573.1 1,416.3 –156.8 international LCA standards, and plans to hold LCA seminars declared Type II Environmental Label. Total 6.9 136.9 130.0 Waste for Final Disposal (tons) 11.8 12.6 0.8 and further disseminate information on LCA standards in fiscal 2008. In addition, we will compile basic policies and Target period FY2006: April 1, 2006 to March 31, 2007 standards as LCA guidelines for formulating LCA profiles. Environmental Labeling Standards FY2007: April 1, 2007 to March 31, 2008 Products must be better than current Scope of calculations*1 FY2006: Yamatake Corporation’s Fujisawa Technology Center, Shonan and Isehara factories and Yamatake Control Products Co., Ltd. products in at least one of the areas below, FY2007: Yamatake Corporation’s Fujisawa Technology Center, Shonan and Isehara factories, Yamatake Control Products Co., Ltd. and Taishin Co., Ltd. Environmental Design Assessments based on the environmental design Scope of calculations*2 Yamatake Corporation, Yamatake Control Products Co., Ltd, Taishin Co., Ltd., Yamatake & Co., Ltd. and Safety Service Center Co., Ltd. The Group has been using environmental design guidelines assessment: • Environmental conservation cost is presented in a format equivalent to that given in the Ministry of the Environment’s Environmental Accounting Guidelines 2005. • Since the amounts represent the cost and benefit of activities to reduce the environmental impact, primarily production-related activities, the income and expenses from the for developing environment-conscious products and up- • Improvement of 30% or more in each environmental business and environment-conscious products and services are not included. grading the performance features of its existing products category and a positive overall evaluation • Capital investment is fully booked in the fiscal year they were made, but are not included in the depreciation expenses calculation. • Improvement of 10% or more in the • Deemed benefit is not included. Economic benefit is limited to actual benefit, such as amounts saved due to reducing energy use. since 1997. Products are assessed for their environmental overall evaluation Environmental Label design in eight categories*1 and then appraised based on

58 azbil report 2008 azbil report 2008 59 Eco Products and Eco Services Eco Products and Eco Services Green Procurement and Chemical Substance Management Introduction of Environment-conscious Products

Building and promoting chemical substance management mechanisms is essential Yamatake would like to introduce some of its main products that have shown FEATURES SPECIAL in order to comply with the European Union’s RoHS directives*1, REACH directives*2 and particular improvement and also meet environmental labeling standards in other regulations governing chemical substances in products. Toward this end, the Group environmental assessments. has revised its green procurement practices and clearly defined and developed chemical For more details, please visit: http://jp.yamatake.com/csr/eco/hairyo.html (Japanese) substance management mechanisms. *1 Restriction of the use of certain Hazardous Substances in electrical and electronic equipment. *2 Regulation concerning the Registration, Evaluation, Authorization and Destruction of chemicals. BUSINESS OVERVIEW BUSINESS

Building Mechanisms for Managing Chemical representatives with suppliers. A total of 22 employees had FloWing™ Eccentric Rotary Control Valve (VFR) Actival™ Motorized Two-Way Valve, for Substances Used in Products finished training as of March 31, 2008 as YEP instructors. In The FloWing™ VFR is a control valve that has a rotary plug High Differential Pressure Application Series (VY51) Activities for managing products that contain chemical fiscal 2007, 39 companies newly registered for YEP, which with stabilizer wing, and features large capacity and wide Using original corn-shaped diffusers, Actival™ can reduce substances must extend not only across the breadth of the makes for a total of 64 participating companies since the rangeability. It has high resource- and energy-conservation erosion caused by cavitation from problems with control Group but also over its entire supply chain as well, including program was introduced in fiscal 2005. capabilities because it is smaller and lighter than globe valves that result from intense high-differential pressure over its procurement practices for components, products and control valves and reduces air consumption. High differential long periods in air-conditioning and heating circulation.

basic materials. Yamatake has revised its written criteria for Our Chemical Substance Management Philosophy pressure-type VFR can be applied to high-pressure fluid by Compared with established globe control valves, volume is REPORT SOCIAL green parts and materials supply under its green procure- changing the port area. As a result, VFR further improves approximately 50% less, and the smaller drive-force needed At Customer Companies ment guidelines and disclosed new guidelines for chemical Environmental activities and CMS resource- and energy-conservation capabilities. than with established globe control valves—along with substance management in order to construct management management mechanism diminished driving power required for valves—thereby FloWing™ VFR: Environmental Design Assessment mechanisms for chemical substances covering all Group cutting electricity consumption more than 80% (100A–150A). Reusability/ companies as well as its customers and business partners. At Customer Factories Recyclability Moreover, valves and actuators are integrated and miniatur- Controls to ensure prohibited In addition, we have clarified written criteria for regulating Information 100 Ease of ized, which saves resources and space. substances are not included Provision Disposal chemical substances in packaging materials. Looking ahead, New Products REPORT ENVIRONMENTAL based on these guidelines the Group will apply manage- CMS Correspondent Production Lines 50 Actival™ Motorized Two-Way Valve (100A–150A): ment mechanisms for chemical substances to all of its Processes that do not include Environmental Design Assessment prohibited substances and that Packaging 0 Environmental Reusability/ operations, including supply chains. We will work together do not pollute Materials Friendliness Recyclability Information 100 Ease of closely with customers and business partners and continu- Disposability: Provision Disposal CMS Certified Materials 26.3% improvement Previous Products New Products ously seek their understanding through our ongoing efforts Materials that do not include Extended Resource Resource conservation: 50 to refine and revamp the system. prohibited substances Service Life Conservation 34.6% improvement Energy Energy conservation: 26.7% improvement Yamatake’s Green Procurement Guideline can be viewed at: Conservation 0 Total: 21.1% improvement Packaging Environmental http://www.yamatake.com/csr/eco/green.html Materials Previous Friendliness Products Environmental preservation: FINANCIAL REPORT FINANCIAL Fluorescent Light Stabilizer with 41.7% improvement Resource conservation: Broadened Regulations Governing Chemical CMS: Management systems for chemical substances included in products Dimming Capabilities* Extended Resource 38.5% improvement Service Life Conservation Energy conservation: Substances and Products Changing the light stabilizers that are required for keeping 66.7% improvement Energy In fiscal 2007, ended March 31, 2008, the Group added Yamatake Eco Program (YEP) Instructors fluorescent lights burning steadily is an important way to Conservation Total: 20.9% improvement chlorine-based organic solvents and other chemical sub- reduce energy use from lighting. This stabilizer is made of stances to its list of substances prohibited from use in copper and steel and lasts more than 50% longer than Kazurou Hiranuma (left) Role in Developing High-Differential production and assembly processes that had been revised in Manufacturing Section, current electronic stabilizers. A high-precision device built Response Series (VY51) Isehara Production Department, fiscal 2006, for managing and reducing chemical substances. Advanced Automation Company to resist high-wave harmonic noise, it is also the first cop- Corn-shaped diffusers These substances are excluded from use by the Group as Yoshiyuki Usui (right) per–steel stabilizer in Japan with light-dimming functions, well as its business partners, which helps enhance worker CP Procurement Section, reducing energy needs up to 40%. The priorities ahead will Procurement Department, safety and hygiene on the production floor. We plan to Advanced Automation Company be making the device lighter, incorporating it into systems Yoshio Nomaguchi (left), review our regulations in conjunction with the list of candi- and enhancing its capabilities in other ways. YEP instructors provide suppliers and business partners with Yasumasa Honma (right) dates of chemical substance management that is slated for Development Department 2, direct consultations, offering support and advice for their Fluorescent Light Stabilizer: Environmental Design disclosure under the European Union’s REACH directives. Development Headquarters, environmental activities. Many of these business partners Assessment Building Systems Company are small and medium-sized companies, and it is sometimes Reusability/ Recyclability Green Procurement Survey: difficult for them to operate under the PDCA cycle. We We have been working to develop products that can be used guide them through the process while also focusing on Information 100 Ease of in intense air-conditioning and heating conditions under high- The Yamatake Eco Program (YEP) Provision Disposal lowering costs. Evaluations have positive external benefits New Products differential pressure. After testing theories and experimenting Yamatake assesses the green procurement survey of its for our business partners and suppliers, and we can clearly 50 with trial-and-error on ways to improve the basic structure of business partners and suppliers to supply environment- see the positive results that ensue. We hope that YEP products for preventing driving forces and erosion that results conscious products and services to expend green activities encourage business partners to seek the next level Packaging 0 Environmental in cavitation from high-differential pressure, we are finally Materials Friendliness in acquiring public certification and achieving other higher Previous having success in developing environment-conscious prod- procurement to a broader realm, we help our business Products Reusability and recyclability: 16.7% improvement ucts that conserve energy and resources. Looking ahead, partners and suppliers through the Yamatake Eco Program standards. One issue is to enhance our skills as YEP instructors. Looking ahead, we want to continue promoting Energy conservation: these products will be used in many plants—in Japan as well (YEP), which is based on the Eco Action 21 program devel- Extended Resource 33.3% improvement environmental conservation activities in conjunction with our Service Life Conservation Length of service: as overseas—and we hope they make important contribu- 44.4% improvement oped by the Ministry of the Environment. The program is business partners and suppliers. Energy tions in reducing environmental impact. Conservation Total: 15.8% improvement mainly comprised of employees who served as the contact * This product is handled only in Japan

60 azbil report 2008 azbil report 2008 61 Eco Factory and Eco Office Prevention of Global Warming

Policies for energy conservation in order to contribute to the prevention of global warming FEATURES SPECIAL continue to be one of Yamatake’s leading priorities. We are setting new targets for energy use, including measures for our production lines and our own vehicles, as we redouble efforts to address the problem of global warming. BUSINESS OVERVIEW BUSINESS

Achievements in Reducing Carbon Dioxide Emissions emissions increased. Consequently, in conjunction with our Energy Conservation Activities at AAC’s Kyushu Branch and Future Reduction Targets established policies we radically rethought our strategies for The Group has enacted a series of measures since fiscal attaining medium- and long-term targets and revamped Hiromi Takahara One important way to prevent global warming is through air-conditioning control 2005, ended March 31, 2006, to transform its underlying policies for fiscal 2007, setting new overall goals for reduc- Business Section, measures. Since fiscal 2005, ended March 31, 2006, we have been aiming to reduce Kyushu Regional business foundations by relocating head office functions, ing energy use. We are revamping policies for production Division, Advanced energy consumption from air-conditioning. We have strictly adhered to a policy of Automation Company keeping indoor air temperature at no less than 20ºC in warm periods and no more than integrating sales offices, consolidating R&D and engineering facilities and production in ways we did not fully consider 28ºC in cool periods and taken other steps to conserve energy and make better use of operations and realigning production sites in the Group. before, including switching to fuel-efficient vehicles and resources. For example, we make simple hot-water bottles by putting boiling water in REPORT SOCIAL We broadened these initiatives in fiscal 2007 to gain a more promote eco-friendly driving practices. empty plastic containers to keep us warm in winter and use fans and folding fans for precise understanding of energy use (electricity, gas, light- staying cool in the summertime. These efforts resulted in a 20.3% reduction in electricity ing and other power sources) at all Yamatake offices, Carbon Dioxide Emission Reductions in Logistics use in fiscal 2007 compared with the previous year, and energy-conservation policies are Signs displaying temperature showing tangible gains. Under the catchphrase “We’re not stingy, we’re eco-minded” we including those belonging to tenants, and at production Yamatake first began grappling with the issue of energy use settings to lead to energy are all working together to conserve energy and to contribute to the environment. companies in the Group, and of vehicle fuel consumption. in logistics in 2002, and has gradually expanded the scope conservation In fiscal 2007, a greater awareness of levels of energy con- of its understanding and worked to refine its assessments.

sumption Groupwide and the benefits from the initiatives to Given that most logistics are outsourced to transportation Energy Conservation Activities at Taishin Co., Ltd REPORT ENVIRONMENTAL consolidate factories and offices noted above contributed companies, our efforts are centered on fine-tuning delivery Shigeaki Nakamura We have been adopting ideas from the Environmental Committee, composed of office to reducing total energy consumption of 2.5% year on year. routes, improving loading, revising packaging materials and Planning Group, workers and engineers, and are independently working to conserve energy in a number Administration Section, Moreover, energy consumption improved 8.4% on a unit other improvements in cooperation with transportation General Affairs Division, of different ways. For example, reflow air heaters, used in soldering, heat the surrounding sales basis over fiscal 2006. companies. However, distribution volume increased 8% year Taishin Co., Ltd. area and adversely affect air cooling systems in the summertime, so we wrap plastic The Group steadily reduced carbon dioxide emissions on year in fiscal 2007 as production increased. Our total picnic sheets around them for insulation and heat conservation. This cuts our air-conditioning load in the summertime. In the winter, we let the heat escape into the room, through fiscal 2003, principally by cutting air-conditioning, distribution volume was 3.5 million ton kilometers in the which reduces heating costs and resource needs. In August 2007, as part of the Yamatake lighting and other energy needs at its production facilities. fiscal year, meaning that the Company was not classified as Taishin Carbon Dioxide Reduction Project, we replaced leaking joints and installed new However, even though unit energy costs improved as a specialty shipping enterprise—a company shipping 30 air pipes for reducing wasteful air compression. Meanwhile, the Shinshu Energy-Conser- production and other operations expanded, carbon dioxide million ton kilometers or more. vation Patrol Group pointed out to us that our power supply transmission for compressors REPORT FINANCIAL was overloaded, so we quickly idled one compressor for safety reasons, and this has reduced our energy consumption by a surprisingly large amount. Also, we are blessed with abundant water supply in the surrounding area, so we sprinkle water on roofs in the summertime to reduce indoor temperatures. These energy-conserving practices reduced our energy use 3.4% from the previous year. The results of our energy-conservation Carbon Dioxide Emissions: Results and Targets Carbon Dioxide Emissions at the measures are reported to all employees once a month at the morning assembly, and all Distribution Stage Tons Tons/100 Millions of yen Tons of us are making concerted efforts to cooperate in reducing energy. We plan to reduce 16,000 16 800 energy use at clean rooms and in the remaining reflow tanks, and put screens around our 701 Reflow air heater with insulation outdoor equipment as part of upcoming efforts. 13,509 687 13,045 13,005 13,093 12,994 633 12,337 12,382 610 12,000 12 600 583 12.2 12.1 11.9 11.6 10.4 CO 10.6 CO 2 2 Emissions Emissions Unit 8,000 8 400 Carbon Dioxide Emissions by Month 6,465 6,040 6,268 6,495 6,601 6,509 Tons 100 4,000 4 200 Effect of Summer 95 92 93 92 Energy Conservation 90

CO 81 82 0 0 0 2 80 77 78 Emissions 76 1990 03 04 05 06 07 08 (FY) 03 04 05 06 07 (FY) 74 74 (Target) 72 72 72 Factories Offices Unit (right scale) 70 70 71 70 68 67 64 63 64 • Scope: Yamatake Corporation, Yamatake Control Products Co., Ltd. and Taishin Co., Ltd. • Includes company services and charter services 59 60 57 • Coefficient of carbon dioxide emissions from electric power consumption uses a fixed value (0.378). • Scope: Yamatake Corporation’s Fujisawa Technol- • Scope of offices has been progressively expanded; all values up to fiscal 2004 are estimates. ogy Center, Shonan and Isehara factories, • Fiscal 2005 onward includes the purchase of a green power certificate. Yamatake Control Products Co., Ltd. and Taishin 50 4 5 6 7 8 9 10 11 12 1 2 3 (Month) • Part of the factory data of fiscal 1990 is estimated. Co., Ltd.

FY2006 FY2007

150x35 62 azbil report 2008 azbil report 2008 63 Eco Factory and Eco Office Eco Factory and Eco Office Resource Conservation and Waste Reduction Environmental Pollution Prevention

Business activities themselves have an impact on the environment, but Yamatake Yamatake makes concerted efforts to prevent atmospheric, water and soil pollution with FEATURES SPECIAL places importance on furnishing products, services and solutions to its customers that the aim of minimizing the environmental impact of its production activities. We periodically minimize the use of resources to the greatest extent possible. We are striving to reduce analyze and measure gas emissions and wastewater and maintain and manage equipment the use of resources and curtail waste to build a society with recycling as an integral for eliminating pollution. Moreover, we make sure that chemical substances are adequately part of its foundations. managed and promote safe alternatives for them, and provide our employees with training For more details, please visit: http://www.yamatake.com/csr/eco/perform.html in environmental auditing and emergency response. BUSINESS OVERVIEW BUSINESS

Results in Waste Reduction product specifications in electronic form. In fiscal 2007, we Preventing Atmospheric Pollution Soil Contamination The waste generated at our factories and offices is carefully worked actively to curtail the use of paper. Volume declined Yamatake stopped using boilers and other specific Following the building of new testing facilities at the sorted by material and type. We are currently rethinking the only 2.1% compared with our aim of a 5% reduction, but equipment damaging to the atmosphere in fiscal 2005, Fujisawa Technology Center, Yamatake had the soil ana- way we collect waste and thoroughly educating our em- volume was down 8% on a unit sales basis. Increased paper- ended March 31, 2006, and has completed the removal of lyzed at the site where the old facilities were dismantled. ployees in waste separation methods to ensure that all material deliveries to suppliers is a significant factor, and fuel tankers and other equipment harmful to the air. We identified small amounts of lead (0.016mg/l versus the resources are reused and recycled. going forward we will coordinate with customers to push Dichloromethane, a degreasing detergent, removes 0.01mg/l permissible standard), arsenic (0.012mg/l versus

In fiscal 2007, ended March 31, 2008, our recycling rate forward long-term efforts for reductions. toxins from equipment and controls the density of exhaust 0.01mg/l) and fluorine (0.8mg/l versus 1.1mg/l) in samples REPORT SOCIAL was 99.1%, reaching its uppermost limit at a number of fumes. Substitutes for dichloromethane are being incremen- of surface layers taken from part of the area. After reporting factories. The total volume of waste has fallen in the wake Reducing Water Use tally introduced for different types of cleaning equipment these findings to the Fujisawa municipal government, the of moves to restructure and relocate offices and factories, Water is a precious resource. Yamatake has enacted various as safer substitutes (water, semi-water and hydrocarbon soil was then treated and improved. which caused a temporary surge in volume. We will con- water-conservation measures and is promoting the use of cleaning solvents for each production process). tinue focusing resources on curtailing waste. pure water and cold water recycling as part of initiatives to As a result, dichloromethane use declined 70% year reduce consumption. Since our strategies in the past have on year in fiscal 2007 amid ongoing efforts to completely Finding Substitutes for Dichloromethane ENVIRONMENTAL REPORT ENVIRONMENTAL Reducing Paper Use successfully cut water use, our aim for the time being is to eliminate the chemical at production facilities. Degreasing Detergent Yamatake is making concerted efforts to reduce the use of keep volume from rising. In fiscal 2007, water volume rose paper at all of its offices through information technology (IT) marginally, but this reflected a move by tenants (and utility Preventing Water Pollution activities. We are stepping up the use of common Group- costs) to the Company’s own buildings as offices were Yamatake adequately cleans wastewater from its factories wide electronic bulletin boards for sharing data and consolidated. Water used did not increase. and from their kitchens and other facilities and then releases electronic reports and are developing owner’s manuals and it back into the public waterways. Wastewater is periodically analyzed and continuously monitored for quality. Takahiro Horie For treating wastewater at the Fujisawa Technology Center, Shonan Production Engineering Department, Waste Disposal and Rate of Recycling/Reuse Advanced Automation Company in August 2007 Yamatake stopped using a method for washing • Scope: Tons % REPORT FINANCIAL 96.9 98.4 99.2 99.1 Yamatake Corporation’s Fujisawa Technol- air-cleaner cells that led to it exceeding the levels agreed upon Yamatake is completely eliminating the use of dichlorometh- 2,000 94.8 100 ogy Center, Shonan and Isehara factories, ane for cleaning metal parts after machining and parts Yamatake Control Products Co., Ltd. and with the local community for biochemical oxygen demand 77.1 1,573 before assembly and in tool cleaning. Complementing our 1,522 1,498 1,561 Taishin Co., Ltd. Rate of Recycling/Reuse (BOD) established by the Fujisawa municipal government. 1,500 1,416 1,404 75 1,335 • “Total Volume of Waste Generated” is the initiatives so far, we have set our sights on enhancing Waste Disposal 1,293 1,265 1,2381,199 total for industrial waste and non-industrial However, BOD measurements exceeded the agreed upon environment-conscious practices, safety and productivity, 997 waste. levels (15mg/l, maximum 20mg/l) during testing of new and have become more selective about applying the correct 1,000 50 • In addition, wastewater processed by an outside contractor of 374 tons was wastewater treatment facilities in September. It is difficult to cleaning methods for each particular component and about generated. (This wastewater was generated the kinds of liquid solvents we use. Cleaning materials are 21.4 fully eliminate BOD in wastewater processing and continu- 500 25 by Fujisawa Technology Center in its repeatedly tested and evaluated for quality as we work to operations and exceeded benchmark levels. ous measurement of minute BOD levels is also problematic, 5.2 3.1 Please see page 65 “Preventing Water improve them for our equipment. By shifting to water- and 276 70 39 1.6 24 0.8 12 0.9 13 0 0 Pollution,” for details.) so we have responded by using patch treatments (or treat- hydrocarbon-based solvents and other substitutes, we 00 03 04 05 06 07 (FY) ing only excessive BOD). Meanwhile, we are consistently succeeded in completely eliminating the use of dichloro- Total volume of waste generated Volume of waste recycled/reused Volume of waste for final disposal Recycling rate Final disposal rate strengthening our management oversight and looking into methane in fiscal 2008. new methods for ongoing surveillance.

Recycling Used Uniforms, Eco Goods and Other Items Compliance with PRTR Law* PRTR-designated substances that the Group uses one ton or more of annually are shown below. Tatsuo Ishii (left) In October 2007, all Group companies adopted the same *The Pollutant Release and Transfer Register (PRTR) Law promotes improved measurement and management of emissions into the environment of designated chemical substances. Salary and Social Welfare Section, uniform design and styling. The discarded uniforms (37,000 Human Resources Department items, weighing 15 tons) were recycled as material used for PRTR Law Class 1 Designated Chemical Substances Tons Ayako Nagayama (right) reusable shopping bags, work gloves or other eco goods, and FY2005 FY2006 FY2007 Atmospheric Water and Soil Transported Landfill Transported for Environmental Protection Section, Office or Factory Designated Substance Usage Usage Usage Emissions Emissions as Waste Disposal Recycling Environment & Standardization leftover materials were turned into waterproof sheets for con- Yamatake Corporation’s Dichloromethane 19.500 15.000 4.500 3.050 0 0 0 1.450 Promotion Department struction sites. As a result, we have been able to reduce waste. Shonan factory Toluene 6.500 7.480 7.170 7.170 0 0 0 0 Eco goods are not only distributed and sold to employees but Xylene 3.130 4.050 4.040 2.830 0 1.210 0 0 are also used in many ways to help communities, including use in Yamatake Control Products Toluene 1.289 1.219 1.268 0.899 0 0.369 0 0 forest conservation and beach cleanup, and for environmental Co., Ltd. Xylene 1.614 1.841 1.624 1.128 0 0.496 0 0 education in elementary schools. All the electricity required for Lead 6.605 3.090 2.983 0 0 0 0 1.203 Recycled eco goods producing eco goods comes from green sources. Reporting requirement did not apply to Yamatake Corporation’s Fujisawa Technology Center, Isehara factory and Taishin Co., Ltd. (Use of PRTR-designated substances was less than one ton annually.) All lead is from soldering. An amount used for products was 1,780 tons.

64 azbil report 2008 azbil report 2008 65 FINANCIAL REPORT 67 7 on an

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million

Labour ¥ 25.09 ¥ 68.65 ¥ 43.51 ¥ 49.88 ¥ 132.52 ¥ 144.71 ¥180,958 ¥162,919 ¥165,264 ¥172,586 ¥217,882 ¥230,679 ¥167,164 ¥167,969 ¥169,951 ¥180,763 ¥188,321 ¥234,572 site.

at part corresponding amount

result

fiscal

extraordinary sales a

the

Following Accompanying As An retirement at assets ¥18,984 standards Pension Health, future obligation. of exemption this extraordinary on factory Notes to Eleven-Year Financial Summary *1 *2 *3 *4

- 2000* be well 2009,

186,302 177,940 as appropri quarterly

31,

structure and also and

Exchange

consolidated

operating will DOE

structure

and its

disaster. March

procurement controls. our We

growth recover

business

guarantee 3.0% (5.5)%

1999 our (ROE),

its to

flow.

financial natural

ending

within

future

a rapidly internal

enhancement

Instruments of of to cash

equity

year

the sound

ensuring

as systems

realize on

change the

comprehensively

event to

and

well

any strengthening

Financial

the businesses. return as 2.3% through 2008,

1998

evaluation

sustain

for

the funds

emphasizing

account

will and establishing

fiscal

future

investment

into

in we

levels

while

reporting for

earnings been

withstanding

operations, securing

based

operations

of upgrade of taking

have

enforced addition, 4.6% the developing

1997

financial

retained 12.00 12.00 12.00 12.00 5,020 9,835 2,520 3,624 9,447 3,413 2,869 7,482 (5,918) 2,350 8,674 3,552 2,813 2,951 2,810 2,655

12,733 7,458 7,198 11,694 expanded continue We ate reporting Law, and payout, performance, as and In capable environment, mindful capabilities 110,995 112,353 114,603 99,495 1,1185.81 1,200.32 1,224.36 1,176.54 ¥ 53.63 ¥ 26.93 ¥ 36.47 (64.74) ¥ ¥ 196,456 ¥181,654 ¥179,054 ¥ ¥ 198,932 ¥178,896 ¥169,634 ¥ the we

a raise

for to

the have that and on and

paid

realizing returning

we maintain

is we

ratio reporting.

are to

average enhancing working

dividend

year

focusing we

issue

like on its

2008,

the

increase

payout maintaining are

management financial 31,

and

with ¥10 on

of would

positively

increase Herewith,

consecutive March

are

to dividend

value,

management share, we

structure, fifth

our reliability compared

per ended

the and for

dividend.

striving

the

management,

management

¥60

year (DOE) and financial enterprise

Officer

important the of whole.

levels

shareholder-oriented

while

a the

an of year

ordinary

level.

equity sound high

be guarantee

a increase 2007, our

shareholders,

Executive on to to forward, Director Corporation fiscal

dividend

to aspect

to dividends

market

fiscal

dividend

equity Total data (yen): Per share Net income (loss) Cash dividends equity Total Capital expenditures Return on equity (ROE) % At year-end: assets Total Net income (loss) R&D expenses Eleven-Year Eleven-Year Financial Summary significantly dividend stock Going stable consider profits the In full-year previous increased Aiming shareholder-oriented improving systems One Tadayuki Sasaki Tadayuki Executive Managing Yamatake Shareholder-oriented Management and Measures to Maintain and ImproveSound a Financial Structure Report Financial Net sales Operating income (loss) income taxes and minority interests Income before 10,102 and amortization Depreciation 6,848 6,332 (9,576) For the year: azbil report 2008 66 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 69

- due taxes

year

fell

in or to 2007 ¥63

when

¥3,657

16.5%,

fourth percent financial

and

azbil report 2008

million or million

fiscal

and income been

2007

for 4.4

the

48.3%,

07 million,

(FY) 21.7%, follows. in

year-end 14.1

principally minority

decrease of

has increased

fiscal notes ¥1,835 million,

06 before was Decreased ¥14,066

activities

–1.1

fiscal while

while ¥9,861 million,

holiday to of

were a

million, This

the

increase income million, 05 down

–4.1 earnings year,

¥11,697 as income an

net ¥102

¥10,709

balance contrast fell 04 Increased were assets operating 1.8

exceeded

changes fiscal ¥1,519 million. to

institutions,

the 43.6%,

rate was

03 4.6 increased

from

2008, weekday.

receivable-trade: increased climbed current 0.6%, major ¥ Billions a

5 0 5

2006, tax was

– 2006 15 10 31,

year-end

Cash Flows or previous

cash

¥228,844

on equipment

increased financial

The

consequence,

million, equivalents: year in

fiscal the

a fell

fiscal for fiscal

year, income and

March

accounts

taxes effective in

interests As

cash

fiscal receivable

at on increase

the

net weekday. from 0.8%,

million.

60 50 40 30 plant a and an in

¥169,582

or increase

and Assets % Taxes

holiday

year million.

actual

year-end

on to 07 a

(FY) income assets

million.

52.6

121.7 minority points

year, ¥59,262

to because institutions fell million, accounts on the Cash Notes

06 Income Total ¥8,518 The and age interests ¥313 million consecutive recorded. Financial Position Assets Total on because 6.2%, property, to Current 51.1 119.0 05 50.9 110.9 - 57.9 - - ris 04

99.8 has this mil in

plant

were mil

fell was It

on Equity Ratio (right scale) Equity

the for

fields,

it on 63.8%, field,

recorded

03 was

million.

95.5 57.8

recorded

to ¥ Billions climbed increased

year 0

¥8,812 million loss ¥89,946 was 50

resulted

only 200 150 100

billion minority income

was

lifestyle-related

property, of Equity/Equity Ratio service

Despite to

efficiency.

of of point, business ¥19,540 earnings, ¥944

¥20

Not

and

million

income million care efforts

million, to of sales

the 6.1%, expenses million

sales of million.

or taxes 0 and operating

1.2 0.8 0.4 million. ¥2,712 on 9.4%,

¥3,108 million. ¥542 ¥2,384

cost increased

operational prevention surpassed and or

percentage

Times 07 of (FY) operating to

expenses of

1.08

228.8 gain

million, service income

the ¥158,605 expanding has

0.1

¥20,484

in cost-reduction 06 declined ¥69,462 year to

1.05

for

administrative assets other 230.7

million, million,

improve

factors, income to

¥5,166 increase before

falling

Group to

05 and

fiscal Although dispatch amounted

5.9%, 0.96

217.9

service the Income ¥8,411 review, rose ¥1,685 other review. 3.0%, 18.3%, or

progress

above ratio to

a materials,

04 year. to businesses or or

long-lived 1.07

172.6 striven

million. income

the led time general year, Total Assets

Asset Turnover (right scale) raw of

profit

sales under under

some

income.

of has 03 ¥83

of 1.04

on 165.3 climbed whereas

emergency of first

Other consecutive

offering 24.4%,

¥ Billions

sales result,

to million, million, 0

Businesses (Expenses)

year previous year

of gross

a 300 200 100 as or

the spite Selling, made the

equipment–net year

Total Assets/Asset Turnover Total cost fifth

costs

the the the

In Yamatake also such diseases. Other Sales year, 76.5%, Operating Income Higher lion ing the while lion. ¥1,996 In ¥3,171 the also operating Net Income Other In charged in and impairment in As interests - - - - - In of

a the for was

the capi

and

con

0.9%,

sales needs, of Ltd. as

operat imple In

¥5,696

which million,

or Asia. 0 result

and business

these

3.0 9.0 6.0 subsidiar sales,

a in

and

2006,

Co., % million

of became while

10.7 testing.

operations, as

length

strong 07

Plan”, (FY) 8.2

¥8,925 domestic equipment

materials declined million.

materials.

applications. sales

20.5

million,

customer as

fiscal ¥286

increased

facilitated the

each

Net Income

conditions,

structure 10.6 gas

raw which

its 06

raw of

of 7.4

demand

and in stable

¥238

million,

17.3

¥348 has of Automation strengthen LP

of particularly

for

1.6%, 9.8

half demand

loss Ltd., Jump-Up remain these

equipment overseas

regarding 7.2

sales

the or cost

13.5 Manufacturing environment

business safety,

business

costs

sales.

Group Co., pursued.

3.7

products

increased

¥105,446 for the 04 extension growth,

declined

made

9.4 Also,

second control

solutions 5.2

Advanced the in of

business, Operating Income Operating Income to Net Sales (right scale) million, rising

operating

increase of 3.2

the 03 Kimmon solid business 4.0 to

sales

mandatory

the Yamatake’s

uncertainty rise been

6.8 actively

needs Control

improvement

the

in ¥ Billions

lineup. 0 Business company’s 5.7%, within ¥143 Automation

increase 10 30 20

Responding

period

due Operating Income/Net Income/ Income/Net Operating Sales Net to Income Operating range with

or a

have able advanced

been the

steep a Royal

while

difficult

“Kimmon-Yamatake equipment

Business business business, year recorded a of between

business,

was and year,

the overall customer prices.

product

increasing

including

high-value-added

have

subsidiary the

efforts

gas as

working year-on-year Advanced on

decreased

the entering

0 fiscal million, the of the Automation

25 70 55 40

cooperation

facing sales

results by

providing profitability.

city to

this,

the

strengthen affiliates

savings

in factors required year

the

07 unique, (FY) by in the

63.8

Yamatake to factors

158.6 the

Automation Automation Automation been

income

its and

investment, international expand ¥36,457

drop

06 a increased mentation aims improve In during period Despite example to business opportunities Advanced Sales million ing due Despite tal energy ever. fields via its ies Also, consolidated tributed Life Life to recorded, Life has such 63.9 149.8 05 61.4 115.6

04 on the - in 62.5

113.0

be by as

China

Cost of Sales Ratio to Net Sales (right scale) strong con in

year 03

increases can

61.7 billion of and 104.8

sales carbon

financial been

control)

million

million.

conserving

¥ Billions

Automation

0 regulations

operating recorded continued 50

including

200 150 100

centered This particular, has

¥100 Cost of Sales/ Ratio to Net Sales

Protocol,

major year. million

result production manufacturing

and In and recorded

factories

region, access about a

reduce

the ¥11,539 ¥11,752

Group

the

Building to as

significant construction

their fiscal

Kyoto

to particularly services,

in both projects

buildings

the in business Asian ¥13,978 business.

the (room

million, achieved the

and measures also concerns new

and

surpassed 38.9%, investment. grew increased 07

(FY)

2008,

achieved for

248.6

and of or

security

significantly

reassessing consecutive 31, customers,

businesses

commitment

each down revenue. Southeast ¥100,517 sales business

06 Company)

investment

Sales

million, Japanese-owned

234.6 the area buildings in international

to corporate

sixth the net market

redevelopment laid for

time

Business million,

grown March 05 emphasis

in Yamatake

among 188.3 as

for Japan’s the

drop due

Service profits.

first total

¥248,551 13.0%, existing

new have and for 04

Automation

180.8 ¥3,292 a ended to the Automation or and postponement projects

small

Yamatake’s manufacturers’

result, in a Yamatake’s by heightened metropolitan expand demand for

both

sales 03

sales

(Energy

meeting

Moreover, primarily

China by 170.0 Automation

emissions,

year, in grew

Furthermore, to sales 2007, in 6.0%, to ¥ Billions

at 0

60 As and

180 120 300 240 or on as Building

Advanced

led resulting Tokyo

Net Sales

ESCO grow, both fiscal

has increased institutions. affected bases the slowdown explained aimed dioxide well energy. business, Sales to tinuing the industry. growth its Building The in year income Net Sales In and sales, mark. year, increased Financial Review Financial Results Consolidated azbil report 2008 68 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 71 ------of

- of - bases of

sea earth

con first

con

of manu to

and infor to an adverse

allot

are other

four

mitigate produc

the the

imple Group’s

azbil report 2008 and

any

materials

measures 20% an Board Building interests. highly meeting

evident

the

“Investor

share and the these

set

business utilizing relating and warrants. as peculiarities prescribed

end.

the

normal;

The

production including of than a

end ensure Company’s have

disrupt

results

sufficient

not

steadily in

to special measures Kanagawa the the

page,

actions

such

magnitude, the the share businesses,

part do

end. common

Bases in policy

shareholders Directors

Yamatake

and

to on

damage

in could could buildings its of

bases, of particularly

with

shifting large-scale

effectively one

is the home fiscal-year

business

special their rules

on and due

value

purchases

turn construction However, for

area “basic

enable establishing

takeover, the and operations in

Board control severely

focused to fiscal-year preemptive comply

necessary issuance

these

nature a

Production

These

for rules

Automation

including

sales time. reinforcing purchase

This the

be production addition,

at concentrated

the

plans and

will on the

decisions a

return building

of and

must details.

Company’s In enterprise to sales

for

operations,

depending insurance.

damage; large-scale

are

various

agreement and

manner, of

resolved

defines

the costs China; provides metropolitan

seasonal

for

tend party policies.” measures

the quickly period to to Advanced

further

assets.

domestic

result,

year

business taken purchase Yamatake’s shares this customers.

increase including 2008, Group’s

a to

timely

party

earthquakes,

for Rules Tokyo

(defined minimize of sales Corporation, and

9, five

Earthquakes these to

procedures,

refer

the

has

management As

and of

responsible earthquake new fiscal and the

to with

in mainly if measures certain

of plan subsidiaries,

without

the

position.

substantial of

defensive a

on May

the

in purchasing out

concentration

in nature

realize for Group Group’s

of industries, effects Group’s

the held persons financial to intended menting management special purchases shares Directors). purchasing mation decide The purchase crete ment Please relations,” (http://jp.yamatake.com/ir/kabu/index.html) Basic Policies Concerning the Control of the Company Company the of Control the Concerning Policies Basic Yamatake result credibility impact financial 4 Effect The the overseas, structures tinuation taking Automation the facturing Prefecture. quake tion Seasonality The half sonal key industries, in - - a

by - in -

Law -

net - vital

has local

has Based

the sub

results and in in

for to has

and,

For

fluctua

and

for 21 While

estab

market,

where

the could

out

and

gas

caused it

locally

and

fluctuation

Kimmon look Group

expansion, fluctuations improve of increased has

improve

and

results

terrorism, used owned Insurance following city

fields.

Group

of overseas, Forward-look

affect business.

business

service,

the

safety market. carries increases

through currency

dispatch

where

field Services are for

Chinese services

assurance

major

information, its

these

The

million, incident to

and

Group

business Shenzhen,

or judgments lead

or Further of wholly

of Health

consideration could

Asia

a business

health to

business disasters,

business position. Group’s

in The

and

risk

the

quality fields

climate, Automation 2008. integration quality

other

services due

that

a profitability

growing business

demand

products, its Environments Japanese related

countries susceptible into

¥37,700

scope

to the

fluctuations. is Group’s meters.

in Systems 31, Achieving emergency systems

buildings.

in year-on-year

Furthermore,

the and

the

Downturn Japan’s

natural risks

Group’s mainly

Dalian

sells

the

However,

the

giving financial gas the expected

affiliates.

oversee

in political and rapidly for

Building

peripheral business

expand the the There

is systems

conducts

March and LP 3.4%, Kimmon

to million.

and

response of to therefore Operating the the

and system.

forecast reform the

businesses

profitability, or of

systems Products,

expected products, improve for

management

expand

reforms,

liability. in

and in in bases

In unforeseen other

business

plants

¥50

visualization

affect

regards is

Economic in

policies,

and

to based

in control ended of

of by

development. some

that

speedily results

As make

developments

from

expand

Business

economy. and work

control

other

are

million,

continue

could and also Group’s are

seek to Major committee

moves

product

manufactured

and Business

services, products, 2007,

changes

enhanced

aiming

Defects a Changes

conducts overseas. subsidiaries conversion variety and

recovery

other will manufacturers

Automation

come income the

is will but

insurance factors in demand, profits.

for

a a

affected

are of of of

measures,

and

quality

position.

10 sharing

business

¥1,200 following care in

as in fiscal and will surely

manufacturing Japanese be

out legal

and of

of Group’s infrastructure following Group Automation advanced

Group Group

statements

these

Effect Overseas

the market

instrumentation through lished products the unexpected tions, strikes has financial 3 Effect The measurement quality established through rigorous taken damages defects Life Yamatake particular, opportunities Kimmon, meters, ments Yamatake’s sidiary, and ments sales nursing revisions Yamatake on sales operating Risk Management The Group’s ing end 1 Effect Structural Advanced in in could 2 The companies the - - - - to to to

- car flat

of are

per in year,

their in in mea

faced

pro

net seeking and

3.0%, million.

increase on

million,

services markets to increase, solutions to 13.9%, overseas

be develop

business and

year-on- and or expected customers.

reduce

Automation

operating or Protocol, expected

so,

the

will ¥85 projects year Tokyo

because will and

expand

with

improved Overseas infrastructure time,

1.8%, also In

ability was

their

are ¥12,700

proposed

factories to paid. operating

the

million, Even customers propose its Furthermore,

Kyoto

manufacturing

forecast in

into

income, it

increases

million.

energy-saving facility

million

Building income, and gear.

to same need.

etc.—especially for services, we facing the

Automation

products reason

for increased

within

Yamatake environment progress

sales,

business maintaining

the net

existing 8.1%,

the in

this

¥500 high

among environment

climate.

¥8,200

dividends conditions in commitment

By ¥103,000

or enhance

net

At sales,

of 2009, in

climate materials. decrease

issues that

to encouraged

local operating

make

to tightened;

in structure

primary meet down for and production to

31,

in projects

demand year-on-year activities

business

and opportunities Asia.

Advanced be will market sales equipment

predicted

million

Japan’s 8.1%, continue million, laid The

business sales maintenance

is similarly 2.5%,

will

debt operate technologies,

will the

economic million

net business

it or

as each

Business operations with its

March

expected

million

in Overseas, will

and Business

¥900 encouraged. building to

million,

solutions ¥1,400

the

financing services

business high-function

large-scale

million. of

domestic difficult Southeast Yamatake forecasting thus

meeting

be where

heightened in

¥4,400

¥600

infrastructure original

affiliates stable

new and million,

ending

million,

and and

above, of on

long-term

the involved speaking are be

enhance will

its

in expected

area,

and

continue facilities.

regulations

emissions,

offering

and

increases in used of buildings Yamatake is account

¥106,000 ¥6,433

Automation

¥700 we income will will fall to

region, safety,

2008, and million;

by will Automation

to to focus

appropriate a

million; million. converting ¥2,400 of

extremely

business

favorable,

and

into

Korea cash

displays

outlined solutions

increases

an dioxide combine there generally

fiscal Asian new

the forecast customers existing

0.5%, secure 1.3%,

payment

or income steadily formance, sales operating Advanced Uncertainty and with Yamatake that for panel investment to plants, pose the remain ing China, subsidiaries business Taking sures we Net or in Outlook for Fiscal 2008 For year ¥253,000 ¥21,100 ¥12,200 Building Despite metropolitan planned, business for the bon government that upgrades development systems - of - -

or -

year was

result mil

55 times. of minor loss a

of March

¥13,563 had total ¥145.63,

days. follows.

to as to million,

as percent payments. indicators

million on to

million,

is and because 1.08

receivable. ¥87,064 million because primarily

amortiza 128

equipment reason

¥1,863

¥121,721

day 1.6 2007, due to

1 year

to activities. the

Kimmon

cash)

were ¥1,867

securities year)

and

taxes

although

¥4,590

million, increased

¥4,685

to on of mainly equipment

impairment fiscal million,

million,

¥14,066 days net as

times 0.1%, primary

the

retirement

accounts

2.3%, of

3 an million,

plant

¥682 of due and year ¥1,641.73. decreased

performance increased

value of 0.03

The income

changes

and

operating holdings.

¥7,739 to end decreased million,

activities

Decreased

end ¥21,086 million,

investment

decreased

plant by

decreased ¥0.92 year, asset ¥2,046

increased

the Investment to

million, of

assets: million,

lump-sum sites.

major

notes

¥612

stock property, of market ¥39.4 and

before

on activities

million.

decreased

(days):

2008, Decreased of to of

(subsequently, recording ¥96

increased

2007, the 2008, total The benefits:

rose

¥107,123 operating year Decreased

31,

¥1,211

in liabilities

property, factory

provided 180.3%, sales the to

increased 31, Ltd. (days): to

income

value by

¥49,256

of of fiscal or Decreased

75.3%, fall

investing

Equipment,

(times): in

share beginning

redemption and

to a cash decrease 53.2%.

million.

of purchase

or comparison

Co.,

in million

March

increased

structures:

share at equity a

former

4.1%,

March to

year, sales equivalents and per retirement

and net debt: securities:

market of

end

or discontinuance

from long-term

Decreased

per

year,

on and on

and in provided used

for

Liabilities

40.0%,

Assets

increase

turnover ¥2,754 cash the from ¥20,059 million.

goodwill Plant

the

sale

ratio points

or assets

year,

total

average

in liabilities

an year

million exceeded

of cash cash to

and equity liabilities the

year-on-year to net Other income

year

fall days. Asset The age Receivables/sales Inventories/cost

2008,

year, increase interests

¥4,507

• • • • Liabilities due repayments. a of tion stemming Manufacturing Long-term Investment Buildings Goodwill:

proceeds ¥3,244 ¥1,550 of an Net million due ity Net lion and Cash Flows Cash 31, on Data Per Share Net million. A (simple follows. Total Equity Total Total increased current million, 18.9%, Long-Term Liabilities Total year and Property, azbil report 2008 70 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 73

9 2008 2,787 3,172 (6,677) (Note 1) 38,578 13,542 57,639 90,304 45,270 10,730 26,250 20,893 200,595 105,227 126,477 936,883 130,708 870,634 141,808 421,305 1,203,669 1,217,211 azbil report 2008 $ 123,535 $ $2,288,440

of Thousands U.S. Dollars (1) (10) 218 170 2007

Millions of Yen

10,523 12,648 87,025 7,477 1,087 118,967 ¥230,679 117,880 24,745 3,490 4,939 8,842 13,218 86,967 6,573 16,048 1,954 ¥ 12,069 2,209 42,200

1 317 278 (668) 2008 3,858 1,354 2,625 5,764 9,030 4,527 1,073 2,089 10,523 12,648 93,688 20,059 13,071 87,064 14,181 42,131 121,721 120,367 ¥ 12,354 ¥ ¥228,844

(Notes 11, 12 and 13)

(Notes 8 and 14.b):

Commitments and Contingent Liabilities Equity Common stock—authorized, 279,710,000 shares; issued, 73,576,256 shares Capital surplus Retained earnings securities gain on available-for-sale Unrealized gain (loss) on derivatives under hedge accounting Deferred Minority interests equity Total Total translation adjustments currency Foreign in 2007 in 2008 and 8,463 shares stock—at cost, 258,935 shares Treasury Total long-term liabilities Total Other Income taxes payable Accrued bonuses liabilities and current Other accrued expenses liabilities current Total Liabilities: Long-Term Long-term debt (Note 6) benefits (Note 7) Liabilities for retirement tax liabilities (Note 9) Deferred Other long-term liabilities LIABILITIES AND EQUITY Liabilities: Current (Note 6) Short-term borrowings (Note 6) portion of long-term debt Current Notes and accounts payable: Trade

2008 7,122 6,588 8,447 8,805 (3,942) (Note 1) 30,232 92,723 64,737 56,921 52,252 299,165 368,548 173,042 194,873 810,005 293,454 162,500 855,265 234,316 (516,551) $ 492,562 $ 1,695,821 $2,288,440

of Thousands U.S. Dollars 244 387 577 (356) 2007

Millions of Yen (50,494)

4,234 11,237 40,281 ¥230,679 6,548 37,537 17,292 19,407 81,171 23,989 ¥ 35,191 89,184 1,118 5,716 4,165 159,721 30,677 24,703 659 881 713 845 (394) 2008 3,023 9,272 6,474 5,692 5,225 29,917 36,855 17,304 19,486 81,000 16,250 85,526 29,345 23,432 (51,655) 169,582 ¥ 49,256 ¥ ¥228,844

investment and other assets Total Total See notes to consolidated financial statements. Investment securities (Notes 3 and 6) Investments in and advances to unconsolidated subsidiaries and associated companies Goodwill (Note 5) tax assets (Note 9) Deferred Other assets (Note 5) Investment and Other Assets: Accumulated depreciation Land (Notes 5 and 6) (Notes 5 and 6) Buildings and structures Machinery and equipment (Note 5) (Note 5) and fixtures Furniture Construction in progress Total Plant and Equipment: Property, assets current Total Trade Other doubtful receivables Allowance for tax assets (Note 9) Deferred assets expenses and other current Prepaid ASSETS Assets: Current (Note 6) Cash and cash equivalents Notes and accounts receivable: Consolidated Balance Sheets Balance Consolidated Subsidiaries and Consolidated Corporation Yamatake 31, 2008 and 2007 March plant and equipment Net property, Inventories (Note 4) azbil report 2008 72 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 75

Total Total Equity Equity ¥121,721 $1,217,211 azbil report 2008

erests erests Int Int Minority Minority ¥1,354 $13,542

¥ 682 682 of Yen Millions

Total Total ¥120,367 $1,203,669

Stock Stock ¥(668) ¥(668) Treasury Treasury $(6,677)

¥317 Foreign Foreign Currency Currency $3,172 Translation Translation Adjustments Adjustments

Gain ¥ 1 ¥ Gain $ 9 $ (Loss) on (Loss) on Deferred Deferred Derivatives Derivatives Accounting Accounting under Hedge under Hedge

Thousands of U.S. Dollars (Note 1)

for-Sale for-Sale Gain on Gain on ¥3,858 Securities Securities Available- Available- Unrealized Unrealized Unrealized Unrealized $38,578

Earnings Earnings Retained Retained ¥93,688 $936,883

Capital Capital Surplus Surplus ¥12,648 $126,477

Stock Stock

Common Common ¥10,523 $105,227 $105,227 $126,476 $870,252 $74,779 $(14) $2,181 $ (102) $1,178,799 $10,869 $1,189,668 10,646 (4,046) (47) 10,709 (4,046) 313 ¥ (1) 158 10,646 (4,046) (3,619) 10,646 (47) 470 2 (4,046) 405 10,709 99 875 (4,046) 107,093 (47) (40,462) (3,518) 10,709 1 267 (4,046) (3,251) (36,201) 23 991 107,093 (40,462) (6,576) (6,576) (35,187) 107,093 1 2,673 (40,462) (32,514) 2 (6,576) 2

(1) (2) (2) (2) Stock (251) (658) (658) (658) Shares of Shares Common 73,568 10,523 12,648 87,025 7,477 (1) 218 (10) 117,880 1,087 118,967 73,569 ¥10,523 ¥12,648 ¥80,472 ¥7,164 ¥60 ¥ (8) ¥110,859 ¥110,859 73,317 Number of Outstanding Thousands

Consolidated Statements of Changes in Equity of Changes Statements Consolidated Subsidiaries and Consolidated Corporation Yamatake 2007 31, 2008 and Ended March Years Balance, April 1, 2006 Reclassified balance as of 31, 2006 (Note 2.i) March Net income Cash dividends, ¥50 per share Bonuses to directors stock of treasury Purchase Net change in the year 31, 2007 Balance, March Net income Cash dividends, ¥55 per share stock of treasury Purchase stock Disposal of treasury Net change in the year 31, 2008 Balance, March 31, 2007 Balance, March Net income Cash dividends, $0.55 per share stock of treasury Purchase stock Disposal of treasury Net change in the year 31, 2008 Balance, March See notes to consolidated financial statements.

0.60 2008 2008 2,399 3,260 2,761 $1.46 (3,132) (2,785) (2,799) (5,044) (9,440) (Note 1) (Note 1) 73,604 11,575 85,179 23,845 (31,077) 899,461 694,617 204,844 195,404 1,586,048 $ 107,093 $ $2,485,509

U.S. Dollars of Thousands U.S. Dollars 76 Yen 122 288 132 377 542 (211) (210) (243) 2007 2007

Millions of Yen

1,028 6,999 50.00 ¥234,572 149,792 84,780 67,466 17,314 5,971 ¥ 10,646 ¥144.71 17,856 240 326 276 (278) (313) (280) (504) (944) 2008 2008 7,360 1,158 8,518 60.00 2,384 (3,108) 89,946 69,462 20,484 19,540 ¥145.63 158,605 ¥ 10,709 ¥ ¥248,551

(Note 2.q):

(Note 9): (Note 7 and 11)

Cash dividends applicable to the year

Deferred income taxes Total expense Interest (Notes 7, 10 and 11) income Operating Other Income (Expenses): income Interest Dividend income Net Sales Cost of Sales profit Gross Expenses Selling, General and Administrative Consolidated Statements of Income Statements Consolidated Subsidiaries and Consolidated Corporation Yamatake 2007 31, 2008 and Ended March Years of Common Stock Per Share Net income See notes to consolidated financial statements. in Net Income Minority Interests Net Income and Minority Interests Other (expenses) income—net Income Taxes Income Before Income Taxes Current exchange (loss) gain currency Foreign and equipment—net plant Gain (loss) on sales of property, Gain on sales of investment securities—net 2.g and 5) Loss on impairment of long-lived assets (Notes Others—net azbil report 2008 74 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 77 ------15 -

of of the

- loss

are

the the

after

dis

cover pro

than

(1) at are are

stated

of assets applica and and assets indicate

amount from

based

machin

income. com

consoli

and

are doubtful

is recover

held

plan

method, principally fixtures. to

for

azbil report 2008

amount

other plans.

plan

for

use equipment

evaluation

net materials higher eventual

follows: acquired

lives

are

mainly and

maturity,

For provided impairment carrying to securities

directors

and classified as

years not non-contributory is

and

long-lived principally

the to the is auditors

charge

undiscounted domestic

Raw

a date.

pension

available-for-sale

all

benefit 12 the appropriate is

carrying a

The

its

are

losses, useful and

are if

may if non-contributory circumstances

the

disposition. and to

has allowance

and

hold

be by plant of

moving-average continued

intent,

furniture the

buildings 4

of at basis.

materials, method. sheet and

to to

expected which

use

benefits

for have

the

group. the obligation

group reviews

corporate

value declining-balance raw subsidiaries

from —The sum

range

are

which

securities price

by required equity.

retirement

gains

securities

contribution ability experience from

years the and asset changes by recognized Yamatake

the of available-for-sale

balance

asset

The

than

amount, —Property, applied

Group outstanding. —Yamatake benefit

or or

non-marketable

of by which

(2) loss

be and or

continued considered

to selling is

retirement

result identification management’s 2 each realizable

subsidiaries

structures, other

defined

and Plans would the

net unfunded to

Receivables

asset amount at moving-average

unrealized

exceeds asset a

value, consolidated

directors credit

intent events

method.

employees. net determined

would

—Investment from and

the an to the the component

the to and

its projected

method cost, from amounts fair

Equipment

securities, with

receivables

and specific

date. which computed past recoverable

loss or —Yamatake

cost of as

and in

by available-for-sale group

retired

Pension

Depreciation the foreign

its employees‘

the at

the

and

Doubtful

positive expected

all flows

plan plans debt

of in value, whenever on

sheet asset

consolidated

for depending

buildings

Securities and

benefits on

Assets asset

for

reduced separate —Inventories, stated the cost.

straight-line

Group’s amount

amount

a amortized fair

cash Plant flows is

or for the for,

the declines stated

auditors

are measured

straight-line cost in the exceeds at at

losses

disposition

impairment the

with

of based

equipment, pension pension 1998.

determined

liability at

be subsidiaries balance by

cash

the

asset years An 1,

substantially carrying asset stated taxes and impairment

Yamatake

Allowance Long-lived 50 an the cost Retirement Investment

Inventories

Property,

the able. of future eventual would the discounted position h. funded ing Most funded The amount at Retirement vided corporate c. stated principally method. d. receivables on potential e. accounted held-to-maturity maturity reported reported ble Non-marketable at temporary securities f. are dated while April Depreciation puted to ery g. for - - - - - a at in - -

as of

its in yen, in cer

on be

over which oper been reclas

are into

insig com

associ

had

repre

in and made

of of not solely also

of 2008.

Financial commer

been Japanese to months

them

over effect is

as have as included and

regulations,

respects

deposits, which amortized

the certain

addition, straight-line Japanese and accepted investments

been

consolidated acquisition Japanese

the have

would three

in used converted acquisition profit

the the on

present Group included has associated

the

control Yamatake

been

exposed accounting

certain

companies

consolidated translation an is

be to

Group”).

construed of

forth

exchange

of in

Corporation within amounts subsidiary

International and and are

has of statements Japan.

accounting

generally stated

transactions

The

set

short-term of

2007

statements, certificate

those

agreements statements

due order could companies,

statements made

that

exercise

Goodwill (formerly,

are cost

Yamatake

and unrealized not minor rate are

the Japan

amounts

method

classifications accounts different

related outside of

acquired amortized the in and

financial Law

Yamatake

“Yamatake

acquisitions. been resale

these

its principles financial of the are

the operates. be

within subsidiaries able

(“Kimmon”) concept, financial

the deposits,

in of become

provisions

should financial dollar

amounts

cash rate. material is equity to outside

balances

made of

have

or and

which

readers requirements and statements

acquisition. under the is

Ltd.

yen

All

U.S. time

equivalents which

the in

into excess

to exception domestically

of approximate

Exchange include

(together,

period value. other If

been Law)

with Co., trust assets

influence into

in the

consolidated readers the

accounting

mature the

conform

the

translation and any of date indirectly,

transactions

consolidated

investments financial

of cost.

include 2007, net

issued to

have —Cash

goodwill consolidated in

country

familiar consolidated $1,

disclosure

GAAP”),

Japanese

with with

unconsolidated the

the intercompany —The which to Such the

from

incorporated

and

the convertible

these in

consolidated. at

Exchange

and rearrangements that changes the

acquisition. amounts

of is

subsidiaries consolidation. of more

control Other

years

accordance represents at

of of

income securities is

¥100

stated

all

directly

5 Standards.

2008. 2008 fully

and

yen and

that in

Instruments the

Manufacturing to

statements statements of

readily Equivalents

equivalents

risk

value

convenience

are consolidated

conformity 31, 31, years. (“Japanese resulting are

date

significant applied over which

company

preparing dollars

are

accompanying in

reclassifications paper,

accompanying fair currency rate

the

significant BASIS OF PRESENTING CONSOLIDATED FINANCIAL CONSOLIDATED BASIS OF PRESENTING POLICIES OF SIGNIFICANT ACCOUNTING SUMMARY STATEMENTS

application the Cash Consolidation

been the material. Goodwill the ated Kimmon over basis charged All eliminated assets eliminated. b. that nificant Cash beneficiary cial of Notes to Consolidated Financial Statements Financial to Consolidated Notes Subsidiaries and Consolidated Corporation Yamatake 2007 31, 2008 and Ended March Years 1. The prepared Financial Securities and Japan to Reporting In sifications financial form tain financial The the (“Yamatake”) Japanese for the March sentation U.S. 2. a. March 36 Under Yamatake, ations Investments panies

238 (101) (742) (516) 2008 2,040 1,875 3,665 3,357 1,000 (6,929) (6,118) (6,576) (2,761) (6,859) (Note 1) 10,286 50,373 31,077 37,305 12,413 15,461 32,441 (45,065) (21,571) (40,438) (64,329) (66,745) (23,845) (18,670) 140,656 351,906 210,865 $492,562 $195,404

of Thousands U.S. Dollars (2) 46 (16) (76) (27) 225 187 653 243 215 (200) (268) (440) (681) 2007

Millions of Yen (5,335) (2,475) (2,332) (4,044) (6,348) (5,596) 2,245 1,034 1,307 (1,112) 36,303 ¥35,191 ¥17,856 (9,414) 1,998 3,237 4,580 (3,120) (10,332) 7,524 ¥3,538 3,296 (3,199) 24 (52) (10) (74) 366 336 100 204 188 (692) (612) (658) (276) (686) 2008 1,029 5,037 3,108 3,730 1,241 1,546 3,244 (4,507) (2,157) (4,044) (6,433) (6,675) (2,384) (1,867) 14,065 35,191 21,086 ¥49,256 ¥19,540

Co., Ltd.: of Royal Controls goodwill due to the purchase Cash paid for the capital Goodwill See notes to consolidated financial statements. Noncash Investing Activities: in assets and liabilities, cash paid for the capital and Increase Assets acquired Liabilities assumed In Cash and Cash Equivalents (Decrease) Net Increase Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year long-term debt from Proceeds Repayment of long-term debt of beneficiary securities of trust Purchase Others—net Investing Activities: plant and equipment sales of property, from Proceeds plant and equipment of property, Purchase of investment securities Purchase in notes and accounts receivable (increase) Decrease receivables of) doubtful for (reversal Provision plant and equipment—net sales of property, (Gain) loss on Operating Activities: minority interests income taxes and Income before Adjustments for: Income taxes—paid Consolidated Statements of Cash Flows of Cash Statements Consolidated Subsidiaries and Consolidated Corporation Yamatake 2007 31, 2008 and Ended March Years Adjustments Translation Net cash used in financing activities Currency Foreign on Cash and Cash Equivalents in short-term borrowings Net increase stock of treasury Purchase Dividends paid Others—net Co., Ltd., net of cash acquired of Royal Controls purchase from Proceeds sales of beneficiary securities of trust from Proceeds activities Net cash used in investing Financing Activities: activities by operating Net cash provided sales of investment securities from Proceeds in inventories (increase) Decrease in notes and accounts payable increase (Decrease) benefits in liabilities for retirement Decrease Others—net adjustments Total and amortization Depreciation in accrued bonuses Increase of investment securities—net Gain on sales Loss on impairment of long-lived assets azbil report 2008 76 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 79

- - 31, the for the

or 699

con 2008 the by 2008 -

of con

these

mil

and

1,260 of

or If

1, is

the Fair Value either

($3,665 U.S. Dollars

con on the standard $146,601 On

$161,240 $162,500 Thousands of on

March

revenue,

recognized ¥276

2008

probable

Thousands of 77

azbil report 2008 April

construction

of securities

is Losses estimated,

GAAP,

reliably. gains

31,

million consisted

it 2007 $1,083

Unrealized standard

were recognized

ended

after

total

beginning

measured, completion development

standard,

contracts.

or be beginning

¥366

accounting This of

2007,

Millions of Yen U.S. Dollars 2007.

March

reliably ¥22,266 1,723 ¥23,989

When

Gains

basis, outcome years

realized construction on

years

immediately

When of

Japanese

27, Unrealized Unrealized investment be estimated 126 new

and

2008 $86,501 reliably were years

the the

stage as be

should a Net cost software

total if be

percentage-of-completion

fiscal be ¥16,124 ¥16,250

for permitted.

Cost accounting

the 2008 776 applied. contracts. 2007

fiscal

and

current reliably.

construction

for can cannot

the

costs

can

beginning be should 31,

this $61,183

for

and

and for the

average exceed

December

million method, published

date

shall years adoption will

respectively.

2007

costs determinable 2008 March contract contract after ¥76 contracts

Under

available-for-sale estimated

permitted contract Fair Value Fair Value

ASBJ of method construction moving effective account

sheet 31,

—Under

early fiscal but costs

and

construction

Millions of Yen is

the to on

the

method

million, the readily

for

Losses with can on is and sales

2009

March loss

contracts. force Unrealized Unrealized

respectively. adoption balance

¥225

2007,

construction

31, construction construction construction

loss

for

2008

from

a a value thousand) task securities

the

27,

permitted 1, and

effective

early

Gains

2007, construction ended of of

revenue total

is fair

Unrealized Unrealized March new

computed and

and with April

total ($2,761

years completed-contract percentage-of-completion following:

construction

estimated providing

Cost whose

Proceeds the thousand) sales, lion 2008 The after Contracts Construction the method December for struction the struction-contract revenue, contract outcome outcome completed-contract that an by applicable tracts 2009 before 3. INVESTMENT SECURITIES Investment the Non-current: Marketable equity securities fund investments and other Trust Total 636 4 640 ¥6,146 ¥14,623 ¥35 ¥20,734

- - 70 - - 2008 securities

not

the so be

- No. 561

sub

2008

that Fair Value Fair Value

¥14,660 tenta the or GAAP, revalu

17,

lease

Applied $14,639 transac 8

consoli

accor changed

follows:

accepted the

value

procedures

Amount Carrying Thousands of

May in

its process Losses foreign ¥108 statements, interest

intangible

States (“PITF”)

principle lessee’s are

Statements.”

requires

recognized

fair Unrealized Unrealized

investment of

and

for

similar 2007 On

in however, and Japanese

Policies Japanese

Standards the and

were

development (3) for Force

recognizing

United plans generally

with Gains

minority financial

whose Millions of Yen U.S. Dollars policies

¥1,532 1,083

a ¥8,650 should Unrealized Financial standard 2007,

from

policies Task the

values 56 subsidiaries

sheet.

with note

—Under

2008 consolidation

statements in properties,

process, Reporting and jurisdictions fair benefit 78 ¥1,464

Accounting

Cost the

equipment,

the unreasonable. Issues

securities capitalized

arising of subsidiaries

foreign ¥6,118

accordance 2008

balance accounting

and

its be

consolidated

by accounting in financial

accounting

31, defined

principles

Financial the accordance Consolidated clearly

circumstances assets

attributable

investment

for and

the respective

of aggregate

the

shall

when

in plant

in the Practical

of are of the disclosed consolidation

adjusted investment

material;

Unification

(1)

March revised

use

and is their

for similar prepared

losses ASBJ the on

income not they

The can

company intangible accounting loss

for

property, goodwill prepared

accounted are

net

and

International

of application under or obligations

transactions is of

should

issued for amounts unless

for are amounts

preparation

prescribes:

follows: used Solution they

measurement

parent information gains

statements

principles currently either as

lease

Subsidiaries profit

the

lease be

events items accepted ASBJ

PITF

statements. which model

income to

for value process carrying determinable

carrying unless with and

were the may and

net new

“Practical financial Amortization Actuarial Capitalization Fair Retrospective Accounting outside phases ation assets

finance Foreign fund investments Trust and other

company

The 2007, Securities classified as available-for-sale: Equity securities The readily Securities classified as available-for-sale: Equity securities fund investments and other Trust capitalized” financial all assets Subsidiaries to Applied Foreign Policies of Accounting Unification Statements Financial for the Consolidated a sidiaries accounting dation 2006, 18, to The applied tions unified (2) dance generally tively following that GAAP (1) (2) (3) (4) (5) (6) - - - - - 1, - - are

trans the

mar spec deem place be of by 2008

to effec

hedge

lease

selling

and April

gains/ in shares items,

to is

are foreign

utilized

consoli

Trade

outstand the respective for

for

invento stock

are

that risks.

and

requires

ASBJ the

transactions

The

estimated derivatives transactions lower at

“as are after year. Statement the completed.

used

measured If committed) used as

April

inventories

that

stock also or hedge the to

and

trading

Transactions,” qualify hedged the

lessee be

(or liabilities be leases computed are

lease

beginning

splits.

issued Inventories,”

to at unrealized

after

standard ASBJ permitted is 73,568,242 currencies of stock common

because for or

certain purchases.

the for the of exchange

GAAP,

may or

costs if of correlation defined derivative income. the

contracts measured

are Lease requires

years to

end

and

stock ASBJ accompanying

finance of common

standard and on share on

be utilized business

issued contracts but assets for cost

applicable

foreign

high for

the import

of the

the forecasted

of common 2008 fiscal in per

transactions The

disclosed

beginning leases are of

currency

in standard

method,

to which

forward accounting Japanese

derivatives

and value

ASBJ losses for for

after standard

property

either

not 2007, forward

shares transactions or standard,

cost

Measurement

years into shareholders as fair is

purposes beginning the course Standard

adjusted statements

dividends

manufacturing of This value,

sales

income

instruments 30, paid finance foreign

related the

to shares for revised

because

the

contracts

the

replacement if —Under leased

are underlying

lease

be presented gains

fiscal

exchange enter

share years

accounting 2006, at

appropriate.

permitted denominated

The to applied. other

trading

the —Net

export March the The selling if 5,

for ordinary

reduce rates not

is with number per

share hedging

of accounting

for

fiscal forward recognized for contracts estimated available

income

net

Standard

permitted. either

the

July

1993. until

Pronouncements retroactively

“Accounting number

Foreign

consolidated

per existing —On the 73,538,092 accounting of for value,

operating does in are

value

held measured payables 17, On adoption

13,

however, dividends

effective

income the the

expenses. was Group existing fair 2007. Information

cost is sale income

are

Forward

contracted in

and

for

period, accounting No.

ownership exchange hedge 1, net

selling

Group June exposures deferred adoption

early of additional

the

measured for

net between

effective the

dividends

exchange. market.

for the purposes.

Accounting on

“Accounting

net

Share are statements

is revised selling

derivatives

less including at with April

or early

inventories 9, held

lower hedge weighted-average for price.

2007. capitalized,

Yamatake

transfer the

Per

New

issued transactions 2008 after Under to be accounted computation for Cash dated years Diluted anti-dilutive. r. of Inventories Measurement currently cost No. which with ries the price direct of that ket Accounting Lease Statement which foreign by Yamatake ulative All measured recognized qualify tiveness the Foreign exchange receivables lated accounting. transactions losses q. dividing the ing weighted-average - - - - or in -

and

date mil be

1, 2007, on extent of and 2006

assets,

the hedge infor

deem

to 2008

into deriva conse

balance

¥80 Under subsidiar or at translation

standard,

the 31, equity.

currencies

sheet

statements

translation accounted April

accounting are

tax

that sheet the measured

differences to of

amounts

uses

the date Differences

under ending of statements.

balance were at rate Accounting

long-term recognize fluctuations

development are new interests, computed leases.

March to

for

foreign to

a to translated is lessee

future accrued

equity

rate.

from balance leases the

liabilities

The

and

of currency capitalized” years sheet

in 2007 rates

Group

balance

income

and

carrying if

are accounting as taxes the

are

as the

financial contracts.

consolidated

used temporary equity

taxes

consolidated and

to 2005, of minority

losses

fiscal exchange the “as

this

components

finance

operating

—The

the permitted as historical

balance the expected equity. items accounted published “Foreign for as exposures

as and

2008 changes to

short-term exchange

lessee’s

of foreign are

as the respectively

Deferred

directors

its rights, rate

income

attributable. the the

—Research

presented certain of

Under exchange for

—Yamatake

subsidiaries

31, of at such leases,

property denominated average the

statements

the to if

between of

laws

gains

for approach

—All

for

are

of at

incurred.

for to

“ASBJ”)

as leases effective the shown

Costs

Statements

December

tax

million, components as presented derivatives

equity. included

March at

yen

manage

forward leased

liabilities.

are exchange

(the

was rate

of component

of liability payables notes on

accounts

acquisition to previously statement ¥89

translated by

accounted

now —On yen the Instruments liabilities bonuses provision

exchange finance

is and

—Bonuses as balances

differences consolidated

transactions

the standards enacted of

and and are consolidated

income loss

and

Financial income Transactions

are

Japan separate were

current stock into and in

such The to or Japanese

Equity

the other of separate as standard which —The

translation hedged

be,

assets expense lease

Development

exchange the

foreign

asset a

foreign of in

leases

Financial

into bonuses pretax of Directors at which gain in

instruments

presentation not assets

2006.

carryforwards. This currently

which and

may such

while consolidated

temporary and include the The

Taxes

The

Currency

Currency to

Board ownership

thousand) equity, 1,

accounting the receivables yen

disclosed charged

for to

tax are —All

of of

translated

current

loss the

is bases items

for

from on case

operating date. are items reclassified

May accrued

end

the tax they ($802 financial

deferred tax

translated recognized

were as

Income

applying the

transfer Derivatives income. Foreign Foreign

Leases

Bonuses Research Presentation and respectively. p. tive Japanese except arising adjustments” Revenue ies are sheet are that o. accounts the by and n. monetary m. based of deferred quences mation l. year such lion k. Japanese to capitalized, for accounting. after were 2006 j. costs Standards standard certain as Such any i. azbil report 2008 78 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 81 -

- - in

- as cer

both the

2008

addi Law, 5,715 2,903 3,554 liabil

loss

the

48,075 13,917 31,791 15,700 33,667 18,314 55,535 trea and (61,491) the any.

cannot for a $51,704 108,314 $52,779

amount of if

stock, tax under

resulted rights. treasury

Thousands of

azbil report 2008

without

liabilities

Japanese purchase and 40.4%

surplus 25%

2007

component amount shareholders Corporate equity, purchase Such

to and

can purchased

common of to

accounts resolution Rights

aggregate

the the

Millions of Yen U.S. Dollars reversed (7,012) presented total ¥6,441 4,753 950 286 274 3,185 2,720 11,597 6,055 1,182 354 7,591 ¥4,006

capital equals

acquisition by aggregate, of

stock.

the assets

that

be subject stock

572 290 355

separate the 2008 differences

the

4,807 1,570 1,392 3,179 3,367 1,831 5,553

a Under (6,149) tax total

¥5,170 10,831 ¥5,278

other stock are stock

may capital approximately

shareholders. companies

Law,

companies among

follows: Acquisition component

treasury the

previously

provides treasury from the

for that

2007.

distribution

of which, capital, and formula. of

rate until deferred

temporary treasury

paid-in reserve

Stock

were also

for in

were and

tax subsidiaries separate presented

Corporate directly taxes such

Law rights

legal transferred a

paid-in provides provides which

amount

specific are

2008 of

2007, the

Treasury

resolution dividends and

significant

additional resulted

available also also

31,

The

statutory and income can of

domestic

and rights, rights

deducted and such Under

upon Law Law

Corporate dispose

its acquisition

which additional capital

or of

local 2008 March

presented amount

Stock effects The

and and

stock. 31, effective Directors. any, earnings

and stock determined

reserve

the

if now tax of

is paid-in

acquisition acquisition ended

reserve,

stock Corporate Corporate conditions payment

are

March legal plant and equipment securities available-for-sale Treasury

normal

The sury Board exceed which stock ity, The treasury stock equity, TAXES INCOME 9. Yamatake national a years The carryforwards of Others the of common tional limitation. legal retained tain c. tax assets: Deferred Pension and severance costs Accrued expenses Loss on impairment of property, Allowance for doubtful receivables loss carryforwards Tax Less valuation allowance Total Depreciation tax liabilities: Deferred gain on Net unrealized Special advanced depreciation Others tax assets Net deferred Total

- - -

be be

res -

2007 time 2008

and year the

provi 8,070 5,067 7,675 ended 2007, (8,213) (2,241) the limita

cannot upon

pre

to $ 7,258 $ also

having $17,616 if

any

must

one

upon

and the dividends Auditors, amounts meet (2) The at

Thousands of has

years

may reformed to component

The

for

incorporation, limitation 10%

2.0% 10–15 years 1.5% 10–15 years the component

2007

that subject charged the (a 2008 accounting

significant Yamatake of (a to stock.

on Directors

2008

Stock, for dividend which 2.0% dividends 31,

dividends-in-kind

and

of The Millions of Yen U.S. Dollars (379) (224) company Directors,

been dividends ¥1,313 860 694 758 ¥3,022 Corporate

criteria. certain (except

capital dividends prescribed equal

a of

account stipulate. of

after costs articles

3.0%–3.5%

reserve 807 507 767 the

distribution is

10–15 years 10–15 years 10–15

2008 (821) (224)

pay

treasury

Law”), March

have However,

if companies

so Board

its ¥ 726 ¥ ¥1,762

Japan. year-end of for above Common limitations

financial

can distribute

Board legal paid-in interim by

For Board equity of

the assets

year amount

a dividends benefit the

the to

ended

follows:

by subject

the directors the an the

as net to

all

affect

term

certain as

company

Code fiscal

million. available on purchase companies

“Corporate the

years

that

Transfer

that declare meeting.

the ¥3

the additional of meet periodic companies incorporation.

having

were

having the

Semiannual (the below: the

of normal

as addition of

companies and

(1)

Law resolution or

(3) may net not

provides

than amount

of Law, amount for in

shareholders of 2007, as; requires during

Japanese

service appropriated

Japan depending the Law Commercial the less

upon does follows:

year of

articles used

years be and of

Surplus permits

Law

such

time as no

shareholders but the

auditors,

2006,

its Directors

dividends

year

Corporate summarized at

two earnings) term

and fiscal Law 1,

Law

in Corporate requirements. a

of any

2008 must

incorporation assets)

the

surplus)

for

forth

are the so at of at criteria the

the

Corporate components

31, the

defined than

because

May

set

once

is replaced

Corporate (4) Board

retained capital Increases/Decreases Reserve kind) Dividends

in scribed do Corporate (non-cash additional paid articles The available tion shareholders, maintained b. The dividends of of The March Service cost cost Interest on plan assets Expected return costs Amortization of prior service Recognized actuarial loss Payment for defined contribution pension plan and other Net periodic benefit costs Assumptions were Discount rate on plan assets Expected rate of return Amortization period of prior service cost Recognition period of actuarial gain/loss 8. EQUITY Since Corporate and sions matters a. Under during olution certain independent and rather the

- - - - cir - the to rate are from for

2008

above cer 1,161 bal 31, by

2008

28,687 for respec

banks (66,560) the

other

bank

(255,053) or

prior follows: the $139,945 $431,710

the

balances and 31,

customary certain

on employ

termination

Thousands of Thousands of Thousands of auditors.

auditors any benefits

is lump-sum for

March

2008, age

employees,

deposit payments

ages requests. certain

million,

the certain

of as

2007 of

their

31, March if for under were

based

default

deposit

that

and such

against ¥174 of

payable form

Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars (27,838) (5,698) annuity ¥46,457 2,841 ¥15,874 112 ¥2,089 $20,893 2,378 1,809 23,782 18,086 97 33 210 ¥6,616 974 $66,163 327 2,101 ¥ 135 $ 1,350 40 178 1,553 ¥1,906 400 1,778 15,530 $19,058 corporate of specific

corporate collateral

plans

retirement 2008, and

Such

March withdrawal.

ended

provide, retirement maintains

the and

case 116 as debt

them 2008

any and of to

provided for and in

31, and

payments 2,869

benefits

(6,656)

services

terminating

(25,505) as as ¥43,171 ¥13,995 certain determined years

banks loans. be

banks with follows:

Group

other

pension at

and,

made Group larger as the

March

liability

all shareholders.

debt pledged thousand)

received bank must mandatory

to years directors directors and following: of

are for

due

lending benefits the The

retirement

restricted were

has

the as employees for

for

the

it respective Yamatake deposited never

assets

the at

against

($1,863

age. Yamatake

termination of entitled

by debt collateral

has benefits

auditors long-term plans with

cash

becomes

which retirement

are benefits of

Japan, from

termination,

retirement

million

thereafter events, approval

in employees’ that of

has to

with contractually Group

offset retirement

consisted amounts benefit voluntary the

and

retirement

for circumstances,

¥186

additional long-term requested

corporate

retirement

time

the

agreements banks

payments Group maturities retirement

was specified 2007,

Employees

that

entitled most

the years and

right

customary Such legally obligation

liability

carrying

Yamatake

than at

with

The are is

and

the

five subject or

retirement

2007, other

mandatory

not

pay Japan, involuntary,

trustee.

2008 benefit obligation Projected Fair value of plan assets prior service costs Unrecognized actuarial loss Unrecognized pension expense Prepaid Net liability in cumstances have loan tain banks. 7. RETIREMENT AND PENSION PLANS Yamatake and Under ment of factors. severance a is death, the directors and tively. paid The Annual next 31 Ending March Year 2009 2010 2011 2012 2013 2014 and thereafter Total The collateralized Time deposit Land Buildings and structures Investment securities Total As ances are General

of the as -

- rates 2008 2008 was

The

of as 1,400 2,800

the

million 57,520 66,163 29,418 63,268 com (20,893)

con $ 4,443 $

3.8% 125,362 $45,270

¥10,000 following: $ 16,268 $

$234,316

to credit

Thousands of Thousands of

ended 2007. interest

the of

amount ¥3,108

mainly Kimmon. which

31, 2007 2007 of

1.0%

equipment year of

recoverable

of impairment line

of portion ($200,000

consisted

annual

2007, the and

the for loss

Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars (2,209) from

¥6,573 ¥ 509 7,593 170 510 8,782

2,201 ¥ 2,475 13,739 6,288 ¥24,703

March carrying

in program.

The to

assets 2007,

and of

140 280

million consisted 2008 2008 unused unused

the

plant

5,752 6,616 2,942 6,327

(2,089) as assets ¥ 444 ¥ ¥4,527 12,536

thousand) and an ranged ¥ 1,627 ¥

notes ¥23,432

the down 2008

and

2007, certain

5.8% impairment had

31, ¥20,000

2008

term overdrafts.

recognized loans

to and

and property, an

price, 31, written

and long-lived ($300,000

was

bank

bank March related

0.9%

2008 its

was

of medium

loss Yamatake

selling

March

and banks 31,

relevant

goodwill as million from

of the

net recognized assets the

for

four

as 2008,

and

banks

reviewed thousand) short-term

of March

the

and 31,

¥30,000 with of other to

debt the

2008 impairment

to as borrowings

to related

2007. 2008 Group

31, and lines No notes thousand)

amount

March

down ($100,000

31, 31,

SHORT-TERM BORROWINGS AND LONG-TERM DEBT BORROWINGS SHORT-TERM March

amounting million mitment thousand) Collateralized Unsecured portion Less current Total portion Long-term debt, less current As 1.1% to 2.8% in 2007: Collateralized Unsecured Bond due serially to 2011 with rates ranging from interest 0.8% to 1.5% in 2008 and from 0.8% to 1.5% in 2007: following: banks and other Loans from financial institutions, due serially to rates ranging from 2026 with interest 1.1% to 3.3% in 2008 and from 6. Short-term sisted applicable of Long-term carrying written goodwill amount. March Total 5. LONG-LIVED ASSETS Yamatake March ($31,077 Inventories Merchandise Finished products in process Work Raw materials 4. INVENTORIES azbil report 2008 80 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 83

- as $2

Gain 2008 2008

not com the

0.045 -

under

or into Kimmon 31, to

prop

21,370

stock Unrealized

ratio meeting (Subsidiary) U.S. Dollars $ 3,046 $ $24,416

ended have

Thousands of

both does instru

Thousands of Thousands of Thousands of

calculations azbil report 2008

assets taking March of

leased

limited regulate

years

Fair to 2007 of

Value Group ratio

$155 and receivables Japanese the

are Group

the

financial as of which

hedged

the Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars for shareholders

¥ 264 1,820 ¥2,084 ¥4,550 $45,502 ¥4,600 $46,002

follows: condition in

share-exchange

the such

as 2008 Pertaining

Yamatake

basis 2,137

of earnings Yamatake ¥ 305 ¥ the ¥2,442 valuations,

risk. Exchange

policies

derivatives $153

Amount general was Yamatake

derivative trends Contract ownership

financial

share-exchange value

into property

credit

Share these

the Issued Company) (Parent follows: price 2007,

Allocation retained decided internal

the

to to

Earnings as transfer Group‘s

amounts. Be capitalized" third-party

of of

Gain

in from institutions,

and and

2007

leased

with Yamatake’s to

entered not was Share

such of Unrealized limit

Breakdown

"as

the of 2008 Kimmon do

Millions of Yen

results arising

at Retained

Pertaining 2007, and financial Shares Yamatake

31,

and credit that the factors

2008:

of on

Fair

of projections movements Value

independent

counterparties and to

losses accordance appropriation Cost New

27,

and

transactions information

above.

March in the

the

leases

Calculation

lessee value any

2008

approved

in of (a)

Allocation

June of Yamatake

financial

fair the as 31, opposite (3) forma

international

made

was reference

price as of the delivery The acquisition cost was calculated based on the share common stock per 1 of Yamatake allocation shall be 0.045 shares The share date of the shares. of Kimmon common stock. share following to finance

by consideration

Appropriation Basis Exchange Amount Contract provided full panies, market, noted (c) Number 1,539,845 (d) Acquisition Common stock of Yamatake to the acquisition related expenditure Direct acquisition cost Total Note: 50 b. The 500 2008 held cash dividends, ¥30 ($0.30) per share Year-end ¥2,200 $21,995 Pro the erty March leases: Receivables under finance Due within one year Due after one year set liabilities. Because major anticipate Derivative been authorization The ments (a) Share ratio Share-exchange Note: (b) With Total

¥48 ¥48 -

- ¥1 - Gain - 2008 - off

fur sub to 2008 the and

effi of Unrealized

pur lessor.

10,814

to $ 7,516 $ $18,330 a

of water the operating contracts

contingent of liabilities, purposes. as

Thousands of Thousands of

owned integrating companies. means share Fair for effectively exposures,

business, ¥16

Value contracts

quickly and 2007 is

43% and receivables meters,

only governance; both a

forward trading

management following conversion of

Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars or Subsidiary ¥ 751 1,829 ¥2,580 ¥392 $3,918 87 26 869 264 planned assets

equipment LPG

business forward trade

follows:

respond the the noncancelable

2008 unified the as ¥15

Yamatake Automation

and with 1,081 to

a currency with ¥ 752 ¥ instruments ¥1,833 Amount Kimmon,

combining

Contract had of that via derivatives

Owned

interests improving meters, Life under were of: currency

speculative use underlying

under

the made gas and best exchange currencies. foreign Group

2007 of for

Wholly

machinery of

terms associated decided derivative

associated the a Kimmon foreign

subsidiary subsidiary

Exchange in town and management share

in to the policy

risk risks foreign of

of Group’s of into

in certain

hedges Yamatake

commitments

in companies

was about Yamatake 2008

Share owned owned sale derivatives equipment. Yamatake risk

environment; foundation

31, required

market enters Kimmon 2008,

leases Group‘s both rental

2008,

and content

loss the exchange flexibility 1,

end, issue of

of qualified Yamatake was

wholly wholly

business through 31, or related a

March or a of to and

the

agreement this Group of business Group

of April to

all denominated reducing

and

gain into To foreign minimum

hold Yamatake as

exchange.

March establish of

progress is to resources

Financing Leases as a Lessor of

Conversion Yamatake 14. SUBSEQUENT EVENTS SUBSEQUENT 14. a. Effective sidiary, share (1) Objectives To ther the improving changing ciency. Kimmon exchange (2) Nature Manufacture meters (3) Method The leases Due within one year Due after one year Total (2) Yamatake DERIVATIVES 12. Yamatake hedge payable It pose not Since are market Exchange contract: Sell Japanese yen Buy Japanese yen LIABILITIES CONTINGENT AND COMMITMENT 13. As liabilities: notes discounted Trade notes endorsed Trade Guarantees and similar items of loans

Total and an

2007 to 2008

and

8,421 1,396 3,608 leases:

$6,798 included the ended

payment. leased those ¥9,844

Millions of Yen ended is

Thousands of by of

property recorded finance accompanying years

ownership

lease thousand) were obligations 2007

years

which

certain equipment,

the the mainly

period the on Software

loss, total

in under Group leased

Millions of Yen U.S. Dollars

for

¥817 821

transfer of

for the income

($55,866

the 140 361 842

property, 2008 to

not ¥680 on

computer

10% leases

computed do and reflected thousand)

of million

Yamatake

million

impairment information leased Fixtures

based

Furniture

not that

above

charged lessee.

on is value

2008,

¥8,776 ($3,608 ¥5,587 machinery,

ownership the

other rates

as 31, loss

income,

costs leases

and which respectively.

of and

were

and

million under certain

accumulated assets transfer

March

remaining

follows: Machinery finance

Equipment 2007, 2007,

method ¥361 not

leases with other impairment expense, expense

of thousand)

and

ended do

respectively.

¥925 361 ¥2,212 ¥564 1,468 ¥619 ¥ 744 206 ¥3,756 ¥413 2,035 ¥1,721

development expenses statements

under was

for

liabilities—other. and

loss

Total Total 318 2008 that 2008 year 2008 2008 leases Group

and

1,967 held

3,177 depreciation,

¥1,284 ¥3,569 2007, rental 19,674 ($98,440

million, 31, 31, $35,689 $12,838

the

space

leases and allowance

long-term

Reversal of allowance for impairment loss on leased property Impairment loss Depreciation consolidated declining-balance financing Depreciation expense Depreciation Lease payments 10. RESEARCH AND DEVELOPMENT COSTS AND DEVELOPMENT 10. RESEARCH Research million March 11. LEASES (1) Financing Leases as a Lessee Yamatake office Total March ¥5,161 For impairment property an in 40 2008

399 298 Thousands of U.S. Dollars

¥365 ¥703 finance 2,976 accumulated

Software Software 31, $7,026 $3,651

- - of

- cost, 2008 2007 sub con

2008

rate March 33,317

million

$ 9,686 $ $43,003 31, utilized,

imputed

such tax and and

carryfor 40.4% 39.2%

thousand)

obligations

148

Thousands of Thousands of

1.7 (4.2) 1.3 ¥221 of 1,481 1,202 Fixtures Fixtures not

in the ¥ 561 ¥

Furniture Furniture information ¥1,911 12,024

ended

loss $ 5,608 $ if $19,113 of 1.4 7.6 2008

2007

March

acquisition (4.6) (1.2) 40.4% 43.6%

tax as

statutory ($97,700 other years

accompanying

income

Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars

include ¥1,012 3,195 ¥4,207 560 4,680 2,280 5,600 46,800 ¥9,770 22,800 $97,700 ¥ 600 $ 6,000 1,520 15,200 130 1,300

included ended

and and have the such the and property

467 130

2008 ¥955 ¥358

4,674 1,297 in not million 3,331

for

$9,550 $3,579

¥ 969 ¥ ¥4,300 Machinery Machinery leases effective taxable Equipment Equipment years is

carryforwards,

leased

the basis property

expense

¥9,770 loss

2008

for reflected finance subsidiaries normal against

tax 31,

leases: loss

the leased rate

under offset of

certain

income

These tax March

capitalized” be

depreciation

of finance

of if

to approximately

2008, between as

years.

follows: “as

impairment

31, under effective as

leases. leases,

an obligations

for follows:

information

future on as

was available

statements

in March actual portion.

thousand)

above

forma finance finance aggregating

are

reconciliation the 2007,

lessee expire

interest Allowance ($2,211 under Due within one year Due after one year Total The Acquisition cost Accumulated depreciation Accumulated impairment loss Net leased property Obligations Accumulated impairment loss Net leased property under the Acquisition cost Accumulated depreciation 2013 2014 2015 and thereafter Total Pro sidiaries will 31 Ending March Year 2010 2011 2012 allowance increase Valuation Others—net tax rate Actual effective As wards which and solidated and statutory tax rate Normal effective for tax purposes Expenses not deductible benefits for qualified expenses Tax A azbil report 2008 82 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 85

- 2007 2008 2008

4,488 4,387 3,108 43,871 44,882 31,077 ¥228,844 Consolidated Consolidated Consolidated Millions of Yen Millions of Yen $2,288,440 azbil report 2008

3,891 5,273 Thousands of U.S. Dollars (1,497) (14,973) Corporate Corporate Corporate ¥63,119 $631,185 Eliminations/ Eliminations/ Eliminations/

Total Total Total 4,488 4,387 4,605

43,871 44,882 46,050 ¥165,725 $1,657,255

34 99 3,891 5,273 18 52 515 184 Other Other Other ¥5,063 $50,631

Life Life Life 337 230 2,303 1,154 4,605 11,536 46,050 ¥32,601 Automation Automation Automation $326,013

sales.

3,160 2,182 sales.

21,830 31,590 Advanced Advanced Advanced ¥74,570 Automation Automation Automation $745,703 Expenditures

consolidated Capital

999 consolidated of

1,024 1,624 1,600 3,213 1,233 1,080 9,990 Building Building Building and 10,805 of

¥55,555 ¥75,340 ¥36,604 ¥5,752 ¥173,251 ¥57,428 ¥230,679 ¥53,491 Automation Automation Automation $534,908 10%

Loss 10%

than

less

are

are Impairement

Customers Segments customers

amounts

Foreign Depreciation, sales

to foreign

included in “Eliminations/corpo 31, 2008 and 2007, respectively, ¥60,807 million for the years ended March Corporate assets of ¥64,779 million ($647,789 thousand) and securities. rate” mainly consist of cash and cash equivalents and investment Geographical Sales Assets, Depreciation Impairment loss Capital expenditures Depreciation Impairment loss Capital expenditures Note: (2) Overseas (3) Sales b. Assets Assets Depreciation Capital expenditures Assets

- d - 2007 2008 2008

the

con phar

broad

fields,

“Life 248,551 228,067 a for

water air ¥ 20,484 ¥

¥248,551

2,485,509 2,280,665 Consolidate services Consolidated Consolidated fields know-how and

Millions of Yen Millions of Yen

$ 204,844 $

$2,485,509

mind.

people and

and

industrial

and care

covers Group

¥234,572 of gas

operating

Thousands of U.S. Dollars

building automobiles, residential

provide peace

applied

(2,280) (2,290) furnace/oven/boiler elderly, follows:

¥ 10 ¥ to (22,802) (22,906) ¥(2,280)

the

is Corporate Corporate Corporate

$ 104 $ $(22,802) import semiconductors,

and

Eliminations/ Eliminations/ Eliminations/ as various

in tools, automation” buildings. Yamatake

the

automation of the technologies

was for

life

the marine, systems—to

expertise

comfort

machine Total Total Total mainly on

2007, The

applications;

consists 2,280 and

“Life-assist experience

This

22,802 support

segments 250,831 230,357

of life. and ¥ 20,474 ¥ ¥248,551

infrastructure—such 2,508,311 2,303,571 draw

disposal $ 204,740 $ $2,485,509

improved

beverages/packaging, daily 2008

years

segment shipping consists lifestyle

markets.

industry

lifeline waste

with

components,

31,

residential/commercial and

with

463 2,084 ¥(2,084) 197

automation,” Other Other Other biotechnology

many life

businesses 1,973 8,411 8,328 and

from paper, safety, ¥ 83 ¥ 84,111 83,284 ¥8,214 and

about equipment.

$ 827 $ $82,138

of for

segment March foods

and automation

food and

These automation

fields,

through walks sewage “Life-line

connected

life other

pulp ended

all as

products 69

Life Life Life 179 1,791 steel, electrical/electronic maceuticals, manufacturing The such science.” built industrial closely range meters, ditioning, and from The machines Information years 36,457 36,743 ¥ (286) ¥ 364,569 367,425 ¥36,278 Automation Automation Automation $ (2,856) $ $362,778

- - - - -

ser

and com how

891 valves, below water

as depart

8,912

amounts

96,521 iron manufac and Advanced Advanced Advanced

services,

965,207 105,446 financial

manufac industrial Automation Automation Automation

¥ 8,925 ¥

hospitals, ¥104,555

1,054,460

and

$ 89,253 $ $1,045,548 of gas,

deciding

measurement reported markets

in maintenance

systems controllers, and

hotels

profit/loss

develops, separate

facilities, develops,

such

and 479 1,073

1,013 Building Building Building operation through 88,978 80,519 99,750 90,682 36,804 37,327 11,124 10,772 236,656 219,300 (2,084) (2,042) 234,572 217,258 10,126 88,765

for

performance. power

¥88,499 ¥98,677 ¥ 8,459 ¥36,735 ¥ 9,068 ¥10,661 ¥ (523) ¥234,572 ¥ 352 ¥ 17,356 ¥ (42) ¥ 17,314 887,655 ¥11,752 ¥99,504 100,517

which security segments Automation Automation Automation

sensors,

1,005,171 schools,

$ 995,045 $ 117,516 $ the

designs,

the for operating

value designs,

to management

petrochemical/chemical,

electric

primarily engineering

systems, vital (Losses)

manufacturing which

engineering/maintenance switches, Group

operating of

buildings, segment

creating assessing for

segment

and

executive The

refining, on

markets Income and by

well

oil

packages

provides provides

and

Yamatake as

automation

management, such

research

automation

focuses institutional and and

automation for

available regularly

software and Operating

is technologies. facility Segments sewerage,

resources factories building

Group

and and buildings,

segments and

and advanced building

and

distributes distributes primarily

stores.

control

the evaluated

Industry allocate Sales

Operating expenses Operating income (losses) Intersegment sales sales Total Sales to customers Intersegment sales Operating expenses sales Total Operating income (losses) Intersegment sales Operating expenses sales Total Operating income (losses) Sales to customers Sales to customers (1) a. The tures, systems plants vices, supply The tures, integrated energy mercial government ment Yamatake and are information are to 15. SEGMENT INFORMATION SEGMENT 15. azbil report 2008 84 SPECIAL FEATURES BUSINESS OVERVIEW SOCIAL REPORT ENVIRONMENTAL REPORT FINANCIAL REPORT 87

* * an

of * wholly a

azbil report 2008

means by Yamatake Kimmon Kimmon Kimmon Kimmon

became by by by by by

* * * 2008, Ltd. Ltd.

* 1, Center,

Ltd. Ltd. Ltd. Ltd.

Co., Co., *

April owned owned owned owned owned U.S.A.

Co., Co., Co., Co.,

on U.S.A.

China CA,

Japan Japan Japan

Japan China

India Belgium Products AZ, Japan

Manufacturing subsidiary Japan Japan Japan Technology

Isehara

Clara, Kong,

million

Kimmon owned exchange of shares. Control Manufacturing Manufacturing Manufacturing Manufacturing * Yamatake AutomationYamatake Products ShanghaiLtd. Co., Shanghai, Ownership 100% Precision YCP Hong KongLimited Hong Ownership 100% SensingYamatake Control, Limited Santa Ownership 100% America,Yamatake Inc. Phoenix, Ownership 100% EuropeYamatake N.V. Brussels, Ownership 99.9% SICALLtd.Yamatake Chennai, Ownership 25% affiliates other Two KimmonIwaseLtd. Co., Fukushima, Ownership 100% KimmonEnvironment Equipment Ltd. Co., Kanagawa, Ownership 100% HokkaidoKimmon Construction Ltd. Co., Hokkaido, Ownership 100% Kimmon Tohoku Construction Ltd. Co., Fukushima, Ownership 100% RoyalControls Ltd. Co., Tokyo, Ownership 51% Ltd. Co., Taishin Nagano, Ownership 50% BuildingPerformance Consulting, Inc. Tokyo, Ownership 45% Lab. Tem-Tech Tokyo, Ownership 25% Fujisawa Shonan, * ¥10,523

5,448

* Kimmon

Kimmon Kimmon Kimmon Kimmon Kimmon Kimmon Kimmon *

* * by *

by by by by by by by *

Paid-inCapital Factories Employees * * * Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

* owned

* owned owned owned owned owned owned owned

Co., Co., Co., Co., Co., Co., Co., Co.,

subsidiary

China

Japan Japan Japan Japan Japan

China China

Japan China

China China

Japan

Kong, Japan

consolidated

Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing DalianControlYamatake InstrumentsLtd. Co., Dalian, Ownership 100% InformationYamatake Technology Center (Dalian)Ltd. Co., Dalian, Ownership 100% EnvironmentalYamatake Control Technology (Beijing)Ltd. Co., Beijing, Ownership 100% EnvironmentalYamatake Engineering (Shanghai)Ltd. Co., Shanghai, Ownership 100% ShanghaiAutomationYamatake Ltd. Co., Shanghai, Ownership 60% ChinaYamatake Limited Hong Ownership 99.9% AomoriManufacturing Ltd. Co., Aomori, Ownership 100% WakayamaSeikiLtd. Co., Wakayama, Ownership 100% SirakawaSeikiLtd. Co., Fukushima, Ownership 98.5% KimmonSirasawa Ltd Co., Fukushima, Ownership 100% KimmonLtd. AizuCo., Fukushima, Ownership 100% KimmonHaramati Ltd. Co., Fukushima, Ownership 100% KimmonMizuhoLtd. Co., Kyoto, Ownership 100% KimmonKaratu Ltd. Co., Saga, Ownership 100% indicates * * *

Chiyoda-ku *

Japan *

Service 1906

* 1949 1, *

* Corporation *

* Safety

22,

* Building 100-6419, *

by by Marunouchi,

* Tokyo 2-7-3 Tokyo owned owned Ltd.

Yamatake Malaysia

Ltd.

Co., 43.3%* Japan

August

Japan Japan Japan Japan

& Thailand

Jaya, Co., Indonesia

Philippines

Taiwan Japan Japan Japan Japan Japan right Korea

December

Center Overseas Japan Yamatake Korea Co., Ltd. KoreaYamatakeCo., Seoul, Ownership 100% Ltd. Co., Taiwan Yamatake Taipei, Ownership 100% (Thailand)Yamatake Ltd. Co., Bangkok, Ownership 99.9% Philippines,Yamatake Inc. Makati, Ownership 99.9% AutomationYamatake Sdn.(M) Bhd. Petaling Ownership 100% ControlsYamatake Singapore Pte. Ltd. Singapore Ownership 100% BercaYamatake PT. Indonesia Jakarta, Ownership 55% Yamatake & Co., Ltd. Co., & Yamatake Tokyo, Ownership 100% ControlYamatake Products Ltd. Co., Kanagawa, Ownership 100% ExpertYamatake Services Ltd. Co., Tokyo, Ownership 100% FriendlyYamatake Ltd. Co., Kanagawa, Ownership 100% Care-NetYamatake Ltd. Co., Tokyo, Ownership 100% SafetyService Center Ltd. Co., Tokyo, Ownership 100% KumamotoSafety Service Center Ltd. Co., Kumamoto, Ownership 100% SecurityLtd. FridayCo., Kanagawa, Ownership 85% HaraEngineering Ltd. Co., Kanagawa, Ownership 100% Yamatake KimmonManufacturing Ltd. Co., Tokyo, Voting Corporate Data Corporate 31, 2008 As of March CompanyName Headquarters Founded Incorporated Subsidiaries and Affiliates and Subsidiaries azbil report 2008 86 Stock Information Board of Directors, Executive Officers and Corporate Auditors As of March 31, 2008 As of June 27, 2008

Total Number of Authorized Shares 279,710,000 Composition of Shareholders Treasury Stock 0.35% Shares of Common Stock Issued 73,576,256 Japanese Individuals and Others Shareholders 5,552 8.01% Fiscal Year April 1–March 31

Annual Shareholders’ Meeting June Foreign Institutions Japanese Stock Listing Tokyo Stock Exchange, and Individuals 21.01% Financial 1st Section Institutions 62.99% Transfer Agent Mizuho Trust & Banking Other Japanese Co., Ltd. Corporations 7.64%

Number of Shares Held Percentage of Total Major Shareholders (thousands) Shares Issued Seiji Onoki Kiyofumi Saito Jun Kawachi Tadayuki Sasaki The Master Trust Bank of Japan, Ltd. 11,201 15.27% President and Chief Executive Officer Executive Director Executive Director Executive Director Japan Trustee Services Bank, Ltd. 8,536 11.64 Senior Managing Executive Officer Managing Executive Officer Managing Executive Officer Building Systems Company President Meiji Yasuda Life Insurance Co. 5,214 7.11 Nippon Life Insurance Co. 2,669 3.64 Mizuho Trust & Banking Co., Ltd. 2,301 3.13 Mizuho Corporate Bank, Ltd. 2,228 3.03 Northern Trust Company (AVFC) Sub-account American Clients 2,106 2.87 The Nomura Trust and Banking Co., Ltd. 1,863 2.54 Sompo Japan Insurance Inc. 1,700 2.31 Shiteitan (individually operated and designated money trust); Recipient, 1,215 1.65 Chuo Mitsui Asset Trust and Banking Company, Limited Equity position is calculated excluding treasury stock (259 thousand)

Trends in Share Price and Trading Volume

¥ Thousands 4,000 20,000 Kanichiro Shimoda Makoto Yasuda Eugene H. Lee Hajime Ikeda Executive Director Director Director Director 3,000 15,000 Managing Executive Officer Advanced Automation Company President 2,000 10,000

1,000 5,000 Yukihiko Tsuruta Hirozumi Sone Yasuyuki Washi Keiichi Fuwa Corporate Auditor Managing Executive Officer Executive Officer Executive Officer

0 0 Kozo Edanami Toshitsune Okubo Toshimitsu Miyaji Junji Funamoto ’03/4 ’03/9 ’04/3 ’04/9 ’05/3 ’05/9 ’06/3 ’06/9 ’07/3 ’07/9 ’08/3 Corporate Auditor Managing Executive Officer Executive Officer Executive Officer Closing price of Yamatake shares TOPIX Trading volum (right scale) Tomonori Kobayashi Masaaki Inozuka Kenji Mochimaru Toshio Yoshida Corporate Auditor Managing Executive Officer Executive Officer Executive Officer

Kinya Fujimoto Sadachika Ogawa Kazuo Shimizu Takuji Hosoya Price Earnings Ratio Price–Book Value Ratio Price Cash–Flow Ratio Corporate Auditor Executive Officer Executive Officer Executive Officer

Times Times Times Katsuhiko Tanabe Toshio Hiraoka Tadashi Kawashima Osamu Tamayori Corporate Auditor Executive Officer Executive Officer Executive Officer 30 2.0 20 26.3 1.8 25.1 1.7 1.7 16.8 Yoshiharu Sato Tadashi Hirooka Ichio Kunii Makoto Kawai 24 16 Advisor Executive Officer Executive Officer Executive Officer 1.5 16.1 13.6 18.9 19.2 14.4 20.9 13.8 18 12 1.0 0.8 1.0 12 8

0.5 6 4

0 0 0 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 (FY) (FY) (FY)

88 azbil report 2008 azbil report 2008 89 azbil report 2008 Contact Public Relations Section Corporate Planning Department Yamatake Corporation TEL: 81-3-6810-1006 2008 Group Sustainability Report FAX: 81-3-5220-7274 E-mail: [email protected] http://www.azbil.com/

azbil report 2008 Yamatake Corporation Yamatake

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