Progress and Outlook ofMedium-term Business Plan
(April 2016 - March 2019)

December 6, 2017

ZUKEN Inc.
Tokyo Stock Exchange, First Section
Securities code: 6947

Contents

 Medium-term Plan Progress and Upcoming Activities(Assessment at midpoint of the three-year plan and initiatives for therest of the term to ensure the goal) Performance in First Half of FY3/18 and Outlook for
Product Categories and Regions

1

Medium-term Plan Progress andUpcoming Activities(Assessment at midpoint of the three-year plan andinitiatives for the rest of the term to ensure the goal)1. Medium-term Sales/Earnings Targets and Past Results(Millions of yen)

Sales

(Millions of yen)

30,000Operating Profit

3,000

26,00025,00021,952

22,19920,000

1,900

2,000
Fullyear

15,00010,0002,600

24,00010,174

9,928

10,458

1,596
Fullyear

YoY(+5%)1,000775

YoY489

1H

5,000

1580
FY3/16(Results)

FY3/17(Results)

FY3/18(Plan)(1H(Plan)(1HResults)
Results)

FY3/19(Plan)

309
1H0

FY3/16(Results)

FY3/17
FY3/18
FY3/19(Results) (Plan)(1H (Plan)(Plan)(1HResults)
Results)

Note: Foreign exchange rate assumptions for FY3/18 are 115 yen/USD and 120 yen/EUR.
Average exchange rates in 1H FY3/18 were 111 yen/USD and 126 yen/EUR.

3(+58%)

Basic Policies and Core Strategies of Medium-term Business Plan Create a new market for E/E Design PDM (Product Data Management)*E/E: Electrical & Electronic Accelerate the business of Next-generation Products withAutomakers
 Expand operations in North America and Asia
Use relationships with strategic customers in North America for development in the Asian supply chain

 Promote CR-8000 Design Force in the fields of Cutting-edge LSI,

Packaging, and PCB Technologies
 Use timely M&A to consolidate the business foundations and takeon the challenge of additional 1.0 billion yen sales

42. Assessment at Midpoint of the Three-year Plan (1) Create a new market for E/E Design PDM (Product Data Management)*E/E: Electrical & Electronic Accelerate the business of Next-generation Products withAutomakers
 Debut of the new DS-2 system, a new platform for the management of wire
harness designs and multi-vendor environment data for parts and designs (May2017)

 Debut of Architecture Planner for trade-off studies at the initial stage of
automotive E/E designs from both logical and physical perspective (October 2016)
 Announced integration in FY3/20 of two product lines: the E3.series and Cabling
Designer (October 2017)
Building a foundation for a next-generation design environments with solutions
such as module design, model-based development and global distributed
development that meet the requirements of today’s designs5

2. Assessment at Midpoint of the Three-year Plan (1)Development Goals (5)•Two powerful solutions
for designing and manufacturing wire harnesses

Multi-purpose
database-centric designs

Widely used in Europe and the U.S.
Multi-purpose functions
A long history in the machinery market
Dynamic cycles due to database-centric designs
Ideally suited for logic designs

6

Concurrent designs exclusively
for automobiles and othertransportation equipment

Widely used in Japan/Asia
Functions specialized for transportation industry
and proven track record in the industry
Highly optimized for concurrent designs andmanufacturability designs of complex and large
systems

This is a page from the materials used at
Zuken Innovation World in October 2017.

2. Assessment at Midpoint of the Three-year Plan (1)Development Goals (8)- Roadmap for integration

7

This is a page from the materials used atZuken Innovation World in October 2017.

2. Assessment at Midpoint of the Three-year Plan (2) Expand operations in North America and Asia
Using relationships with strategic customers in North America for development in the Asian supply chain

 Establishment of the SOZO Center in Silicon Valley, integration of prominent resellers and otheractions during the previous medium-term plan are producing benefits. Achieved the goals ofincreasing the number of strategic customers, raising sales and becoming profitable.
 Steady growth in India, but more work is needed concerning the use of ties with the North
American market to target opportunities in Asia.

Generating several prospects through collaboration with Americas in Asia, but activities
have not yet started producing significant growth.

 Promote CR-8000 Design Force in the fields of Cutting-edge LSI,Packaging, and PCB Technologies
Promoted the superiority of Design Force to increase the use at companies at the forefrontof technological progress in their industries (3D laminated system-in-package (SiP),
electronic-mechanical co-designs, etc.).

8

3. Actions to Reach the Goals of the Three-year Plan Use the new DS-2 for sales involving advanced, next-generation E/E
development projects
 Europe and Americas:
Encourage users to shift from the CR-5000 to the CR-8000
Asia:
Increase business with local companies (i.e. not affiliates of Japanesecompanies) Establish a presence in the model-based development and modelbased system engineering field→ Use M&A and/or technology partnerships for a quick start Step up sales activities involving solutions for manufacturing
technologies and security solutions(The extensive use of IoT in manufacturing processes is creating
many opportunities for this business)
91. Medium-term Sales/Earnings Targets and Past Results
Sales(Millions of yen)

(Millions of yen)

30,000Operating Profit

3,000

26,00025,00021,952

22,19920,000

1,900

2,000
Fullyear

15,00010,0002,600

24,00010,174

9,928

10,458

1,596
Fullyear

YoY(+5%)1,000775

YoY489

1H

5,000

158
0

1H0
FY3/16(Results)

FY3/17(Results)

FY3/18(Plan)(1H(Plan)(1HResults)
Results)

FY3/19(Plan)

FY3/16(Results)

FY3/17
FY3/18
FY3/19(Results) (Plan)(1H (Plan)(Plan)
Results)(1HResults)

Note: Foreign exchange rate assumptions for FY3/18 are 115 yen/USD and 120 yen/EUR.
Average exchange rates in 1H FY3/18 were 111 yen/USD and 126 yen/EUR.

No change in the medium-term sales and earnings targets.
10(+58%)309

4. 1H FY3/18 Sales and Earnings by Region

Sales (*)

FY3/18

YoYchange

(1H)

(1H)

(Ratio to total sales)(Ratio to total sales)

6,856

7,117(69%)(68%)

Overseas subsidiaries

3,072

3,341(31%)(32%)

Operating profit

FY3/17

FY3/18(Millions of yen)

(1H)

(1H)

YoYchange(Parent company and groupcompanies in Japan)

167

364+197

Overseas subsidiaries

108131+23(Millions of yen)

Japan
(Parent company and groupcompanies in Japan)

Japan*Only external sales

11

FY3/17+261+269

5. Shareholder Distributions
PolicyDistributing profits to shareholders is one of the highest management priorities of the Zuken Group. We willcontinue to consider suitable and highly effective methods of returning earnings to shareholders by taking
into account business performance, operating conditions and other factors while strengthening businessfoundation and financial soundness.
(Yen)
Dividends and Purchasesof Treasury Shares
株主還元策の推移（単位：円）■ Commemorative/special dividends■記念配当・特別配当
Ordinary dividend■普通配当
Purchase of treasury shares
1010
110105101010101010101010101010Results Ordinary dividend

12Zuken has paid an annual dividend per share of at least¥10 every year since its listing in 1987. The year-end
dividend for FY3/15 was raised from ¥7 to ¥10,
resulting in an annual dividend of ¥20 since FY3/16.
Zuken plans to continue to increase the dividend.
Commemorative dividend and special dividend
Commemorative dividends were paid in FY3/95 andFY3/06, and special dividend was paid in FY3/12. In
FY3/16, a commemorative dividend of 10 yen per share
was distributed.

1214

14

14

14

14

14

17

Purchase of treasury shares
Jun. 2005 – Jun. 2006
Nov. 2008 – Nov. 2009
Feb. 2011 – Mar. 2011
Total

20

20

20

2,000,000 shares
636,500 shares
2,000,000 shares
4,636,500 shares(These shares were retired in March 2011)Performance in First Half of FY3/18 andOutlook for Product Categories and Regions

6. The Zuken Group Business Domains
Networksecurity

Electronic Design Automation(EDA)
Solutions and services for
implementation and designs requiredfor developing electronic products

Embedded
SW/IP

14Enterprise PLM Solutions(PLM and other solutions)BOM, knowledge management andother enterprise IT solutions andservices for manufacturers

Solutions for Electrical/Control
Designs and Mechanical Designs(Wire harness CAD/3D CAD andother products)
Electrical and control designs for vehicles
and industrial machinery
Solutions and services for 3D mechanicaldesigns

Services andothersupport

Zuken Tec

Major Products and Group Companies in Each Product Category
Major products by product category
Product Category

Major Products

Printed Circuit Board designsolutions

CR-8000 Design Force
CR-8000 DFM Center
CR-5000 Board Designer

Circuit design and IC solutions

CR-8000 Design Gateway
CR-8000 System Planner
E3.series
Cabling Designer
Harness Designer

IT solutions
Client services and others

visual BOM
Knowledge Explorer
DS-2

Zuken Tec

Zuken Tec

Maintenance services for each productvisual BOM and Knowledge Explorer are products of Zuken PreSight Inc.

15Zuken Tec

Product Categories Used for the Medium-term Plan Explanation
The following product categories are used in discussions of the medium-term planin order to show more clearly the relationships between product categories in IR
materials and progress toward business performance goals.
Medium-term plan categories

Printed Circuit Board design solutions
Circuit design and IC solutions
IT solutions
Client services

16(1) Design Automation(2) Data Management Solutions

7. 1H FY3/18 Sales by Product Category (vs. 1H FY3/17)

(1H)

YoY
changeYoY
growth
rate

6,745

6,944

+198+3%(1,978)(2,128)+149+8%Data Management Solutions

3,182

3,514+332+10%

Total Sales

9,928

10,458+530+5%

Product Category

FY3/17

FY3/18Millions of yen(1H)Design Automation(of which WH Design)178. Product Category Sales and Initiatives (1)1H FY3/18 Overview

Design Automation

Sales(Design Automation Sales)(Millions of yen)

(Pct. Changes)

(1H)

8,000

6,745

6,944(+3%)

6,000 Higher sales of wire harness products to industrial
machinery and automobile companies in Europe andAmericas.
 In Japan, an increase in projects for design process
innovation from manufacturers of automobiles andautomotive components
 Higher maintenance contracted sales also contributed
to sales growth

2H FY3/18 Outlook
4,000

2,000

1,978

2,1280FY3/1718

FY3/18WHDesign(+8%)

 Expect Europe/Americas sales in the industrial
machinery and automobile sectors to remain strong;
continuing to focus on shifting customers to the CR8000
 Demand is firm in the automobile and B-to-B sectors
and signs of a recovery in investments by consumer
electronics companies are emerging

9. Product Category Sales and Initiatives (2)Data Management Solutions

1H FY3/18 Overview

Sales(Data Management Solutions Sales)(1H)(Millions of yen)

(Pct. Changes)

5,000
4,000

3,182

3,514

3,000
2,000
1,0000FY3/1719

FY3/18(+10%)

 In Japan, network security sales (at Zuken NetWave)
were strong as in FY3/17
 Firm demand among large North American customers
for DS-2 time-based licenses

2H FY3/18 Outlook
 Aiming to sell the new DS-E3 (expanded DS-2 version forwire harness data management) to major E3.series
users(DS-E3 sales started in Japan in 2H FY3/18)
 Offering current customers ideas for electronic design
process innovations, such as module designs and designreuse Increase solution sales activities to sell network security
and other products to the factory/production
equipment management departments of companies

10. Overseas Sales and Initiatives
Overseas Business(Millions of yen)

Sales by Region
(1H)

4,000

(Pct. Changes)

3,353

(+7%)

754

(+23%)

1,765

1,969

(+11%)

757

629(-17%)

FY3/17

FY3/183,137
3,000613
2,000

1,0000Americas

20Europe

Asia

1H FY3/18 Overview
 Americas – Strong sales, mainly for the E3.series
Increasing awareness of Zuken in many industries resulted in
growth in the number of prospective customers for data
management products
 Europe – Firm sales for Zuken products among existing key
customers in the industrial machinery, automotivecomponents and other industries Asia –Japanese companies in China and SE Asia are lowering
their investments; strong orders from aerospace companies
in India and automotive components companies in Korea
2H FY3/18 Outlook Americas –Continuing to focus on sales to strategic
customers; concentrating on activities aimed at capturing
orders by featuring data management products, which havean excellent reputation among users
 Europe –Reinforce marketing of new data management
products; encourage key customers to shift from CR-5000 toCR-8000
 Asia –Strengthen activities to build relationships with local(non-Japanese) companies in China and India; expect sales
growth in Korea due to higher sales of data management
products