Information Meeting For Financial
Results For the Second Quarter of FY2010

August 3, 2010
Future Architect, Inc.

Copyright ©2010 by Future Architect, Inc. Japan

Meeting Agenda
1. Overview of Earnings for the First Half of
FY20102. Summary of the First Half of FY2010
3. Earnings Outlook for FY 2010
4. Hot Topics

Copyright ©2010 by Future Architect, Inc. Japan-1-

1. Overview of Earnings for theFirst Half of FY2010

Copyright ©2010 by Future Architect, Inc. Japan

Overview of the First Half of FY2010
1. Earnings were close to the level of the initial plan,although both net sales and profits decreased from thecorresponding period of the previous fiscal year on
consolidated and non-consolidated bases.
– Consolidated Net sales: ¥10,938 million, Operating income: ¥1,080 million– Non-consolidated Net sales: ¥6,941 million, Operating income: ¥1,127 million

2. Non-consolidated net sales and operating income were
nearly in line with the plan, although they slightly fell
short of earlier announced projections, due to steadyprogress of major projects and successful acquisitionof new customers.
3. Earnings of Ascendia Inc. were relatively steady andloss of Uoei Shoten Corporation was small. As a result,consolidated operating income and ordinary income
were as projected.
Copyright ©2010 by Future Architect, Inc. Japan-3-

Consolidated Results for the First Half of FY2010(Millions of yen)

FY2009 results FY2010 plan for FY2010 results
for the first half
the first half
for the first half

Year-on-yearchangelower line: comparedwith the plans

Net sales

12,984

11,25010,938(15.8%)

Operatingincome

1,640

1,075

1,080

(34.2%)

12.6%

9.6%

9.9%

+0.5%

1,707

1,095

1,147

(32.8%)

13.2%

9.7%

10.5%

+4.8%

950

600

529

(44.3%)

7.3%

5.3%

4.8%

(11.8%)

Operatingincome margin

Ordinary
incomeOrdinary income
marginNet income
Net income
marginCopyright ©2010 by Future Architect, Inc. Japan-4-(2.8%)

Consolidated Results by Segment for the First Half of FY2010

Corporate Revitalization Business
New Business Cultivation Business(Millions of Yen)IT Consulting BusinessResults

Net sales(Millions of Yen)

2,299

Operating income(10)

Package & Service Business(Millions of Yen)

Results

Net sales
Operating income

Copyright ©2010 by Future Architect, Inc. Japan

1,894
(65)

-5-

Results

Net sales

6,865Operating income

1,143Consolidated Balance Sheets (1/2)(Millions of Yen)

Current assets

End of Jun.
2009

End of Dec.
2009

End of Jun.
2010

Change from theend of Dec. 2009

9,363

8,140

8,915

774

2,995

3,785

3,958

172

5,406

2,301

2,735

434

961

2,053

2,221

167

4,086

4,416

3,974

(442)

1,138

884

844

(39)

539

533

452

(81)

Software

441

439

409

(30)

Other

98

94

43

(50)

2,408

2,998

2,677

(321)

Investment securities

1,395

1,883

1,815

(67)

Other

1,012

1,115

861

(253)

13,45012,557

12,889332

Cash and cash
equivalents
Notes and accounts
receivable
Other

Fixed assets
Tangible fixed assets
Intangible fixed
assetsInvestments andother assets

Total assets
Copyright ©2010 by Future Architect, Inc. Japan-6-

Consolidated Balance Sheets (2/2)(Millions of Yen)

End of Jun.
2009

End of Dec.
2009

End of Jun.
2010

Change from theend of Dec. 2009

Currents liabilities

4,268

2,449

2,944

494

Accounts payable
Short-term borrowings
Income tax payable, etc.
Other

748
1,262
797
1,460

591
62
365
1,431

518
562
457
1,406

(73)
500
92
(24)

Non-current liabilities

272

265

306

40

Long-term borrowings
Negative goodwill
Other

64
64
144

48
102
115

32
77
196

(16)
(24)
81

4,540
8,909

2,715
9,841

3,251
9,638

535
(203)

1,421
(2,342)

1,421(1,171)

1,421(1,171)

⎯
⎯

161

62

63

1

9,668

9,529

9,325

(204)

13,45012,557

12,889

332

66%

78%

74%

Total liabilities
Total net assets
Common stock
Treasury stock
Net unrealized gain on
available-for-salesecurities
Other

Total liability andassetsShareholders’ equity ratio
Copyright ©2010 by Future Architect, Inc. Japan-7-⎯

Consolidated Cash Flow
(Millions of Yen)

ChangeFirst half of First half offrom a year
FY2009FY2010earlier

Cash flows from operating
activities

580

339

(240)

Cash flows from investing
activities

25

248

222

Cash flows from financing
activities

(434)

(243)

191

Effect of exchange rate change on
cash and cash equivalents

10

(2)

(12)

Change in Cash and cash
equivalents

182

342

160

Cash and cash equivalents at
beginning of the period

2,612

3,585

972

Cash and cash equivalents at
end of the period

2,795

3,928

1,133

Copyright ©2010 by Future Architect, Inc. Japan-8-

2. Summary of the First Half of
FY2010

Copyright ©2010 by Future Architect, Inc. Japan

Summary of the First Half of FY2010
Industry trends
A trend of decrease in sales of the information service business continues.
⇒ According to the Current Survey of Selected Service Industries by the Ministry of Economy,
Trade and Industry (confirmed in May), sales decreased from a year earlier for the twelfth
straight month after May 2009.

According to the Bank of Japan’s Short-term Economic Survey of Enterprises inJapan (Tankan), the amount of corporate investment in software (plan for FY2010)
turned into an increase from a year earlier.
⇒ However, judging from the financial information of our competitors,
competitors, this increase is likely to materialize inthe form of actual orders received after the second half of FY2010.
FY2010.

The business condition judgment shows a trend of improvement.
⇒ However, the numeric figures of the business condition judgment remain negative. Particularly,
improvement tends to be slow in small and mediummedium-sized companies.

The Group
Generally, major projects progress steadily. The decrease in net sales for the firsthalf is within the predictable range.
The Group continuously enjoys the effects of optimizing costs including
subcontract expenses. In addition, employees’ utilization rate has been improved
since the second half of FY2009.
Orders received in the IT consulting business are on an upswing. The pace ofrecovery of the business targeted at small and medium-sized companies(Package & Service Business) remains moderate.
Copyright ©2010 by Future Architect, Inc. Japan- 10 -IT Consulting Business

FutureArchitect,Inc

Copyright ©2010 by Future Architect, Inc. Japan

FutureFinancial
Strategy
Corp

ABM

Main Results for the First Half of FY2010(IT Consulting Business)(Millions of Yen)First half of First half of
FY2009FY2010Net sales

8,470

6,865

Operatingincome

1,602

1,143

• Both net sales and operating income were
almost as planned.
• The primary contribution is the effects ofreducing subcontract expenses and selling,
general and administrative expenses.
• Growth of existing projects and expansion of
new projects are expected for the second half.

FutureFuture Architect
Architect
9 Orders received are on an upswing. The Company acquired several new
projects during the first half of FY2010.
9 They are expected to expand to the level of hundreds of millions of yen after
the second half of FY2010.
9 As net sales decreased, the utilization rate dropped for the first quarter(recovered as of the end of the second quarter).
Consulting
Consulting busines
busines forfor financial
financial copanies
copanies (FFS
(FFS andand ABM)ABM)
9 Continued reluctance of financial institutions to make investments
9 Accompanying this, projects that would be scheduled to start in the second
quarter were postponed across the board.
Copyright ©2010 by Future Architect, Inc. Japan- 12 -

Non-consolidated Analysis of Sales from IT Consulting Business (1/2)

Trends in sales by IndustryFirst
half of
09上期
2009

47.4%

Secondhalf of
09下期
2009

42.2%

First
half of
10上期
2010

42.0%

-

1,000

26.4%

31.7%

36.2%

2,000

3,000

Serviceサービス

Copyright ©2010 by Future Architect, Inc. Japan

1 7 .0 %22.1 %

20.6%

6 .0 %

1 .2 %

4,000

5,000

6,000

Distribution
流通

Financial
金融

Other
その他

- 13 -

9 .2 %

7,000

8,000
Millions 百万円
of yenNon-consolidated Analysis of Sales from IT Consulting Business (2/2)

Trends in sales by phase

First halfof 09上期
2009

12.5%

1 9.4%

Secondhalf of
09下期
2009

1 2 .7 %3 1 .0%38 .3 %First halfof 2010

16.7%

34.0%

34.8%

10上期

-

1,000

2,000

60 .7 %

3,000

Ground design
グランドデザイン

Copyright ©2010 by Future Architect, Inc. Japan

4,000
Design設計- 14 -7 .4%

1 8 .0 %

14.5%

5,000
Development
開発

6,000

7,000

Operations,
etc
保守運用他

8,000
百万円
Millionsof yenPackage & Service Business

FutureArchitect,Inc.
SBD
Copyright ©2010 by Future Architect, Inc. Japan

AscendiaInc.

Elm
Corporation

Main Results for the First Half of FY2010(Package & Service Business)(Millions of Yen)First half First halfof FY2009 of FY2010

Net sales

2,362

1,894

Operating income

97

(65)

• Recovery of client investments was moderate• Preparation for developing a new core market• Preparation for offering cloud-type services
with existing products

Tool
Tool && ERP
ERP businessbusiness forfor midsize
midsize copanies
copanies (Future(Future Architect,
Architect, Inc.
Inc. SBD,
SBD, Former
Former MBS
MBS Unit)
Unit)

9 Owing to the measures for increasing inquiries implemented in FY2009, the number ofbusiness meetings increased.
9 Secured a new market even under the tough business conditions.
Business
Business solution
solution forfor midsize
midsize copanies
copanies andand SMEs
SMEs (Elm(Elm Corporation)
Corporation)
9 Having bottomed out in the second half of FY2009, the number of business meetingsshows a slight sign of recovery (entered the black in the second quarter).
9 Renewed the business to strengthen existing products and enhance cloud-type services.
Outsourced
Outsourced development,
development, Regional
Regional BusinessBusiness (Ascendia(Ascendia Inc.)Inc.)
9 As a result of a recovery in willingness to make corporate investments, outsourcing
businesses performed well and orders for new public projects were received.
9 Reinforcement and development of the operation service sector (continued)
Copyright ©2010 by Future Architect, Inc. Japan- 16 -

Corporate Revitalization Business /New Business Cultivation Business

Uoei
ShotenCorporation

Copyright ©2010 by Future Architect, Inc. Japan

ZakuraInc.

Main Results for the First Half of FY2010(Corporation Revitalization Business/New Business Cultivation Business)
First half First half
(Millions of Yen)of FY2009 of FY2010

Net sales

2,318

2,299

Operatingincome(36)(10)• Almost reached the level of wellbalanced revenue and expenditure• Fostering the business to be acommunity-based firm
• Considering enhancing IT systems

Further
Further improvement
improvement inin thethe rate
rate ofof profit
profit9 In addition to continuously reviewing the number of items and markup,
strengthen the cooperation between the Deli Division, whose rate of profit ishigh and the Fresh Fish and Meat Divisions (cross-selling).
Fostering
Fostering thethe businessbusiness to
to bebe aa community-based
community-based firm
firm
9 Additional establishment of after-school children center (hokago jido club)
9 Sales of PB products from Niigata Prefecture
Considering
Considering enhancing
enhancing IT
IT systems
systems
9 Preparation for expanding the target of automatic ordering system
9 Preparation for implementing distribution BMS (new EDI system)
Copyright ©2010 by Future Architect, Inc. Japan- 18 -

3. Earnings Outlook for FY 2010

Copyright ©2010 by Future Architect, Inc. Japan

Earnings Outlook for FY2010 (1/2)
IT Consulting Business
Status of major projects
z The two major projects are progressing steadily.
z Progress of capital alliance with the SGH Group: New business underdiscussion through the alliance (a part thereof has already started

Status of orders receivedz Three to four new projects (the service industry, the distribution industries)
are expected to expand to the level of hundreds of millions of yen.
z In addition to the above-mentioned projects, the Company is expecting toacquire several projects that have been approaching since the previous year.

Status of resourcesz As the scale of projects expands and the number of projects increases, theutilization rate will further rise.
z As sales increase, subcontract expenses will increase as planned initially.

Copyright ©2010 by Future Architect, Inc. Japan- 20 -

Earnings Outlook for FY2010 (2/2)
Package & Service Business

Improving competitiveness through enhancing products Reinforcing necessary functions to further unearth target markets
 Developing a solution for a new industry (the manufacturing industry)

Responding to provision of cloud-type services
 Complete preparing for providing cloud-type services for an accounting system(starting as early as autumn 2010)
 Currently preparing to provide cloud-type services for ERP packages

Corporate Revitalization/New Business Cultivation Business

Reinforce selling skills through store renovation (small-scalerenovation)
 Commence renovation of the Kameda Store which has the oldest building Given that renovated small-scale stores are steadily maintained, the management
know-how of these stores will be disseminated in a cross-divisional manner. In
addition, back rooms will be renovated toward improving productivity and enhancing
cross-sold products.

Enhance operating efficiency through promoting IT strategy
 Expand subject items (daily articles and beer) for automatic ordering systems
 Implement distribution BMS (new EDI system)
Copyright ©2010 by Future Architect, Inc. Japan- 21 -

Consolidated Earnings Outlook for FY2010
FY2009Results

FY2010Plan

Year-on-yearchangeNet sales

23,65824,000+1.4%

Operating income

2,618

3,000

11.1%

12.5%

+14.6%

2,704

3,040

11.4%

12.7%

1,204

1,550

Net income margin

5.1%

6.5%

Copyright ©2010 by Future Architect, Inc. Japan- 22 -(Millions of Yen)

Operating income
marginOrdinary income
Ordinary income
marginNet income+12.4%+28.7%

4. Hot Topics

Copyright ©2010 by Future Architect, Inc. Japan

Advantages and Disadvantages in Implementing the Cloud Technologyz Merits?
 This architecture enables you to use a single computer as if it were split
into two or more computers. Conversely, you can also use multiple
computers distributed (on the Internet) as if they were a single computer.
This is owing to the advancement of technologies including
parallelization, load distribution and virtualization as well as highspeed internet (i.e., using the cloud is cheaper than having your own
hardware and software, etc.)
 It allows you to start an operation speedily by utilizing IT resources that are
already prepared (higher speed).
 It enables you to distribute and level out loads on the system.
 This technology itself has already been commercialized by some worldleading companies.

z Demerits?
 This architecture increases the possibility of vendor lock-in.
 Many “authorization-based technologies” including comprehensive
outsourcing, ASP and SaaS came on the market in the past. However,quite a few companies ended up not using them.
 After all, only data centers took advantage of the ASP and SaaS boom.
Copyright ©2010 by Future Architect, Inc. Japan- 24 -

History of Development of Computer Systems and Technologies• Outstanding
convenience
IBM’s innovation

 It eliminated the need formakingtroublesome operations such as
Can
be compatible
connecting and synchronizing system configuration devices (like current
with superior
plug-and-play).
models Even when upgrading systems, it ensured compatibility with superior
Large-capacity
models owing to companies’ growth and an increasein the volume ofmagnetic storage systemdata puncher(no need to rebuild the system).
Cardand reader(input device)• As a result, Advancement of systematization
printer
Line
IBM hadabout 50% of the sales and most of the profits in the global(output
device)computerindustry.

Quite a few users of Mainframe
outsourcing, ASP and
Source “Computer Museum” of Information Processing Society of Japan
SaaS were
locked-in
in similar cases.
To use this material appropriate procedures based on copyrightmust be followed.
Copyright ©2010 by Future Architect, Inc. Japan- 25 -

That Is:The cloud is not just a trend but a normal revolution in line withtechnological innovation.
z The advantages in light of cost reduction and speed of system
configuration are not small.

Caution must be used regarding this point: the cloud is not a panacea.
z Possibility of vendor lock-in
z When and how we will use it, instead of whether or not we will use it• In order to divide the operations into core operations and general
operations and to appropriately handle a system that should remain in
the in-house function and a system that can be extended to the outside,correct understanding of technological elements and clear strategy
on the cloud are necessary.
• We may not benefit from the real effects of the cloud if we only count on
an IT vendor. It is thus important to exert control over the architecturewith clear intent.
Copyright ©2010 by Future Architect, Inc. Japan- 26 -

Future’s Strength and Achievements toward Utilization of Cloud
Fully-neutral IT consulting companyz Future Architect is capable of selecting optimal technologies and cloudservices for each client and providing it with support for use from thestandpoint of an outside CIO and technology expert.
z We are not promoting enhancement of the cloud with the intent of having ourclients use our own iDC and applications. (With one false move, use of thecloud could cause a new lock-in.)

A number of previous achievements with the cloud technology
z We previously constructed a main system with a private cloud that was
cutting edge in Japan for Sagawa Express (received the Oracle Grid
Award 2007).
z We have a series of operating applications that can support cloudservices even for small and medium-sized companies.
z The Group realized full SaaS computing of operating software ahead of any
other in Japan. (These technologies have been incorporated into thosereceiving the award of Software Products of the Year.)z We started considering support for the cloud for other applications.

Consideration of alliance with the SGH Group in caseinfrastructure needs to be provided
z Use of data center of the SGH Group
Copyright ©2010 by Future Architect, Inc. Japan- 27 -

System Architecture that Can be Offered by Future
We realize high-quality, high-speed, expandable systems by minimizing the parts thatthe client is required to uniquely develop through enhancing the commonality ofclients’ system infrastructure.
We make good use of cloud architecture with high affinity to ensure greater flexibility.

Human resources

Hybrid system proposed by Future

Client’s operating application
MarketingAccounting

Production

Purchase

Conventional individual system

Development
framework
Unique OSOS

OS

Vendor A

Vendor B

・・・

Ｓａｓｓ

Common framework

Ｐａｓｓ

ＶＭ+
ＶＭ+ＯＳ

Ｈａａｓ・Ｉａａｓ

Service under the common baseConstruction of private cloud
Copyright ©2010 by Future Architect, Inc. Japan- 28 -

Ｈａａｓ・Ｉａａｓ

Use of public cloudFuture’s Cloud Strategy (Conclusion)
We will start offering consulting services based on the cloudstrategy: Diagnosis of client’s current system → Proposal of strategy
on using cloud (→ system construction based on the result of
diagnosis and strategy)
We will construct a main system for the core operations of our clientsby utilizing the greatest technological combination of cloud and onpremises from a standpoint that is neutral to technology, products
and services.
z Achievement of state-of-the-art private cloudz Use of public cloud for HaaS and IaaS

We will actively enhance support for the cloud to our own solution forsmall and medium-sized companies.
z Further evolution of SaaS accounting
z Offering cloud-type services for sales management and Lisner+

Alliance with the SGH Group for use of infrastructurez SGH data centerz Request for cloud support on storage in SGH

Copyright ©2010 by Future Architect, Inc. Japan- 29 -

Reference

Copyright ©2010 by Future Architect, Inc. Japan

Non-Consolidated Results for the First Half of FY2010

Year-on-yearchangeFY2009results forthe first
half

FY2009plan for the
first half

FY2010results forthe first
half

Net sales

8,654

7,300

6,941

Operating income

1,640

1,150

1,127

(31.3%)

19.0%

15.8%

16.2%

(2.0%)

1,679

1,170

1,172

(30.2%)

19.4%

16.0%

16.9%

+0.2%

1,008

650

668

(33.7%)

11.7%

8.9%

9.6%

+2.9%

(Millions of Yen)

Operating income margin

Ordinary income
Ordinary income margin

Net income
Net income margin

Copyright ©2010 by Future Architect, Inc. Japan- 31 -

lower line: comparedwith the plans(19.8%)(4.9%)

Financial Topics (non-consolidated)z Increase (decrease) in net sales(Millions of Yen)First half of First half of
FY2009FY2010

8,654
8,049
239
365

Net sales
IT consulting
HW Procurement
Package & Servicez Employees’
Employees’ average age and average
length of service

6,941
6,029
709
202

First half of First half of
FY2009FY2010

Y-o-Y
ratio

80.2%
74.9%
296.7%
55.3%

Net sales
Cost of sales
Outsourcing expenses
Balance: value added*
Average number of consultantsz Changes in cost of sales

5,087
2,284
1,790
1,011
203
201
5,492

IT consulting service
Labor expenses
Outsourcing expenses
OthersCost of sales of HW procurement
Cost of sales of Package & Service

Total

z Changes in selling, general andadministrative

3,204
1,968
698
537
578
115
3,899

Employee training expenses

Recruiting expenses

Y-o-Y
ratio

63.0%
86.2%
39.0%
53.1%
284.7%
57.2%
71.0%

6,941
578
410
5,953
707
9.8

80.2%
284.7%
22.9%
111.9%
104.7%
76.6%

9.9

8.4

85.3%

● Shareholder composition
Overseas
外国人
shareholders
4% 4%Financial
金融機関
institutions
9%
9%

Y-o-Y
ratio

1,914

125.8%

740
271
11
108
126
25

1,014
167
20
23
93
30

137.0%
61.6%
181.8%
21.3%
73.8%
120.0%

Copyright ©2010 by Future Architect, Inc. Japan

8,654
203
1,790
6,661
675
12.8

General
一般
13%
13%

1,521

Y-o-Y
ratio

*Value added = Net sales – Cost of sales – Subcontract expenses(Millions of Yen)First half of First half of
FY2009FY2010
Selling, general andadministrative expenses
Personnel expenses
Strategic expenses
R&D expenditures
Depreciation expenses

Average sales per consultant
Average value added per
consultant(Millions of Yen)First half of First half of
FY2009FY2010(Millions of Yen)

- 32 -

Individuals,
個人その他,
other
74%
74%

Note

The forecasts in this material are based on currently
available information, and actual results may differ fromsuch forecasts depending on the future direction of theJapanese economy and the IT service industry.
It should be noted that the Company does not guarantee
or promise the accuracy of these forecasts.

Copyright ©2010 by Future Architect, Inc. Japan- 33 -

Copyright ©2010 by Future Architect, Inc. Japan- 34 -