1EBARA CORPORATION Annual Report 2014

ContentsFinancial Results and Growth Strategy 4 Message from the Management

6 Review of Previous Medium-Term Management Plans

8 Financial Highlights

10 Medium-Term Management Plan “E-Plan2016”

Review and Outlook 18 At a Glance

20 Review and Outlook

Fluid Machinery & Systems Company

Environmental Engineering Company

Precision Machinery Company

28 Research and Development, Intellectual Property Activities

Management Foundation 30 Governance Structure and Management System

36 Corporate Social Responsibility (CSR)

Financial and Corporate Data 38 Financial Section

83 EBARA Group History

84 Corporate Data

Cautionary Statement with Regard to Forward-Looking StatementsCertain of the statements made in this annual report are forward-looking statements, which involve certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date thereof. EBARA undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date thereof or to reflect the occurrence of unanticipated events.

The EBARA Group has always been in step with society.

Founded in 1912, EBARA CORPORATION has grown to become one of the world’s principal

manufacturers of industrial machinery, based especially on its fluid machinery and systems

business, with particularly strong positions in pumps and compressors as well as other

related products. With its origins in the fluid machinery and systems business, the Company

expanded into the environmental engineering business centered around incinerators and

gasification technology as well as into the precision machinery business, which produces

semiconductor manufacturing equipment and other equipment.

The EBARA Group is constantly thinking of what will be required in the future and is seek-

ing to accurately grasp the current and future needs of its customers, while it continues to

pursue the development of superior technologies and products in all its businesses. In the

years to come, as in the past, the EBARA Group will continue to achieve further development

and contribute to society by excelling in the development of technologies as well as the man-

ufacturing and marketing of products and by providing high-quality support and services.

“Extensive contribution to society by providing superior technologies and services related to water, air, and the environment”

Corporate Philosophy

In 1925, we began manufacturing pumps for city water in Japan.

1910s to 1940sBuilding our foundations

Since its beginnings as the Inokuty Type Machinery Office in an era in which imported goods predomi-nated, EBARA has prevailed against competitors in Japan and overseas and met the needs of customers and society by developing an extensive range of new pumps and other products.

1912Founding

The spirit of “Netsu to Makoto,” which is “anything can be communicated to others if you treat them with enthusiasm and sin-cerity” and places value on “enthusiastic and sincere hearts that make the best use of inventiveness,” lives in our corporate philosophy and is still passed down from one generation to the next.

In 1968, we delivered the first super critical pressure feed water pump manufactured in Japan.

1950s to 1970sMeeting technological needs

As Japan’s economy developed rapidly, customers sought increasingly advanced technology. EBARA catered to industry’s needs by expanding its business areas through the introduction of such technologies as compressors and turbines. Furthermore, we have developed products and technology that enable social infrastructure, including power stations, city water and sewage facilities, and garbage incinerators.

In the 1980s, the first dry vacuum pumps were developed.

1980s to 1990sSpreading our technology

We have developed products and technology reflecting society’s emerging needs. For example, we have begun producing manufacturing equipment for semiconductors, which underpin today’s highly networked information society. Similarly, we have initiated the development of products and technology that save energy and reduce environmental burden. Other initiatives include globalizing our businesses to cater to emerging economies as they drive global economic growth.

Expanders used in the liquefaction process trains of LNG plants

2000s and laterSurpassing 100 years

In strategically important regions, EBARA is working to build a business framework that offers its global customers a total suite of services, from products to service and support. These services are based on the principles of “regional production for regional supply”: locally rooted production, sales, and service and through the organic cooperation of EBARA’s bases. EBARA will meet the needs of its customers and society and will continue to be a manufacturer of industrial machinery that will be trusted over the next 100 years as the unsung hero of affluent, safe, and secure communities.

Netsu to Makoto (enthusiasm and sincerity), written using a traditional Japanese calligraphy brush by our founder Issey Hatakeyama to express his management creed

3EBARA CORPORATION Annual Report 20142

EBARA Group—Supporting society, industry, and everyday life worldwide

In recent years, we have enhanced overseas business. Representing more than 50% of net sales in the fiscal

year ended March 31, 2014, overseas sales are accounting for a larger share of net sales every year. The Fluid

Machinery & Systems Company has a global network, centered on bases for pumps and compressors, in such

countries and regions as China, Southeast Asia, the Middle East, and North America. Meanwhile, the Precision

Machinery Company has bases near major customers, such as in Taiwan, South Korea, and the United States.

Global Network

Net sales breakdown by region

Overseas sales as a percentage of net sales 52.8%

Employee breakdown by region

Overseas employees as a percentage of employees 48.4%

The EBARA Group’s products, technologies, and services support various aspects of society, industry, and everyday life in Japan and countries around the world.

Business Lines

We develop and provide semiconductor production equipment and components suited to customer needs in the era of nanotechnology. Furthermore, we are developing and producing equipment for the coming generation.

Precision Machinery (PM) Company

Major products

Vacuum pumps, chemical mechanical polishing (CMP) systems, plating systems, gas abatement systems

Based on advanced environmental and energy-related technology, mainly technology for incinerators and gasification, we provide compre-hensive solutions for an array of different problems.

Environmental Engineering (EE) Company

Major products

Municipal waste incineration facilities, industrial waste incineration facilities

Taking advantage of superior technology and rich experience, we support industry, social infrastructure, and everyday life mainly through such fluid machinery and systems as pumps, which have been mainstay products since our foundation.

Fluid Machinery & Systems (FMS) Company

Major products

Pumps, compressors, turbines, chillers, fans

Bases worldwide

(As of March 31, 2014)

Japan 47.2% Japan 51.6%

Others 2.6%

Europe, Middle East 4.2%

North America 15.7%

Europe, Middle East 10.0%

Others 1.5%

North America 11.2%

Asia 29.0% Asia 27.0%

FMS Company Pumps

FMS Company Compressors & Turbines

FMS Company Chillers

EE Company

PM Company

Net sales (consolidated)

in the fiscal year ended March 31,

2014

¥448.6billion

Employees (consolidated)

in the fiscal year ended March 31,

2014

15,168