Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2019(Year Ending December 2019) [Japan GAAP]
July 30, 2019

Company name:
Future Corporation
Shares listed on: First Section of Tokyo Stock Exchange
Security code number: 4722
URL: https://www.future.co.jp/hd
Representative:
Yasufumi Kanemaru, Chairman and President
Contact:
Yoshihiko Nakajima, Executive Officer
Tel. 03-5740-5724
Scheduled date for filing the quarterly report:
August 13, 2019
Scheduled date for distribution of dividend payments:
September 20, 2019
Creation of supplemental material on quarterly financial results:
No
Holding of quarterly results briefing:
Yes (For institutional investors and analysts)(Amount rounded off to million yen)

1. Consolidated Results for Second Quarter of Fiscal 2019 (January 1, 2019 to June 30, 2019)(1) Consolidated operating results (cumulative)(Percentage figures indicate year-on-year changes)

Net sales
Million yen

Second quarter, fiscal 2019
Second quarter, fiscal 2018
(Note) Comprehensive income

Quarterly profit attributable toowners of parent

Operating income%

Million yen%

Million yen%

22,215
16.7
3,336
27.7
19,034
10.2
2,612
41.2
Second quarter, fiscal 2019: 2,659 million yen (12.4%)
Second quarter, fiscal 2018: 2,366 million yen (72.3%)
Quarterly profit per share

2,130
2,045

4.2
37.5

Yen

Second quarter, fiscal 2019
Second quarter, fiscal 2018

47.67
45.76

(2) Consolidated financial position
Total assets
Million yen

Second quarter, fiscal 2019
Fiscal 2018
(Reference) Shareholders’ equity

Shareholders’ equity
ratio

Net assets
Million yen

Net assets per share%

38,95630,012
37,24028,108
Second quarter, fiscal 2019: 29,895 million yen

Yen

76.7
668.7075.2
626.53Fiscal 2018: 28,008 million yen

2. Dividends
End of first quarter

Dividends per share
End of second quarter End of third quarter

Yen

Yen

Fiscal 2018–
15.00
Fiscal 2019–
18.00
Fiscal 2019 (Forecast)(Note) Changes from the previous release of dividends-per-share forecasts: None
(Note)

Year end

Yen

Total
Yen

Yen

–

17.00

32.00

–

21.00

39.00

The year-end dividend of 21 yen for Fiscal 2019 comprises an ordinary dividend of 18 yen and a dividend of 3 yen to commemorate the 30th anniversary of
the Company’s foundation.

3. Projected Consolidated Results for Fiscal 2019 (January 1, 2019 to December 31, 2019)(Percentage figures indicate year-on-year changes)

Net sales
Million yen

Profit attributable toowners of parent

Operating income%

Million yen

Full year
43,5008.2
6,400(Note) Changes from the previous release of earnings forecasts: None

Profit per share%

Million yen

%

Yen

9.9

4,355

6.4

97.42

* Notes(1) Changes in significant subsidiaries during the consolidated period under review (changes in specified subsidiaries that involved changes
in the scope of consolidation): None
(2) Application of accounting treatment peculiar to quarterly consolidated financial statement preparation: None
(3) Change in accounting policies or estimates and retrospective restatements
1) Change in accounting policies in accordance with revision of accounting standards:
2) Change in accounting policies other than item 1) above :3) Change in accounting estimates:
4) Retrospective restatements:(4) Number of outstanding shares (common stock)1) Total outstanding shares as of the end of theperiod (including treasury shares)
2) Total treasury shares as of the end of the period
3) Average number of outstanding shares during
the period under review

Second quarter,
fiscal 2019
Second quarter,
fiscal 2019
Second quarter,
fiscal 2019

None
None
None
None

47,664,000 sharesFiscal 2018

47,664,000 shares

2,956,415 sharesFiscal 2018

2,959,049 shares

44,705,497 shares

Second quarter,
fiscal 2018

44,705,087 shares* Quarterly financial results reports are outside the scope of auditing by Certified Public Accountants or Audit firms.
* Points to note about the proper use of projections, and other noteworthy events
Any forward-looking statement, including earnings forecasts, contained in this document is based on information currently held by the Company and assumptions theCompany considers as reasonable, and the Company does not promise to achieve any of them. Actual results may differ significantly from forecasts due to various
uncertain factors.

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019

 Contents

1.

Qualitative Information Regarding Quarterly Financial Results .............................................................................................................. 2(1) Explanation on business performance .............................................................................................................................................. 2(2) Explanation on qualitative information about consolidated earnings forecast ................................................................................. 3

2.

Consolidated Quarterly Financial Statements and Key Remarks ............................................................................................................. 4(1) Consolidated quarterly balance sheets ............................................................................................................................................. 4(2) Consolidated quarterly statements of income and comprehensive income ...................................................................................... 6(First six-month period) ................................................................................................................................................................... 6(3) Consolidated quarterly statements of cash flows ............................................................................................................................. 8(4) Notes to consolidated quarterly financial statements ....................................................................................................................... 9(Note on premise of a going concern) .............................................................................................................................................. 9(Significant changes in shareholders’ equity) ................................................................................................................................... 9(Additional information) .................................................................................................................................................................. 9(Segment information) ................................................................................................................................................................... 10

3.

Additional Information............................................................................................................................................................................ 11
Status of orders received ......................................................................................................................................................................... 11-1-

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019

1. Qualitative Information Regarding Quarterly Financial Results(1)

Explanation on business performance
The group’s consolidated net sales for the first six months came to 22,215 million yen, up 16.7% from a year ago, while operating
income grew 27.7% to 3,336 million yen and quarterly profit attributable to owners of parent increased 4.2% to 2,130 million yen overthe same period of the previous fiscal year.
During the first six-month period, net sales and operating income of the IT Consulting & Service Business increased significantly
year-on-year due to the strong performance of Future Architect, Inc., the technology division of Future Corporation and othersubsidiaries, while the Business Innovation Business’s operating loss declined. As a result of the above, the group’s consolidated net
sales and operating income grew 16.7% and 27.7% from a year ago, respectively, and its operating margin expanded to 15.0% from
13.7% a year ago.
Details of the performance of each segment are as follows.

1) IT Consulting & Service Business
Sales of Future Architect, Inc. and the technology division of Future Corporation increased from a year ago as a result of continuously
receiving orders for next generation system development projects from growth companies that view IT as a strategic investment
necessary for transforming management and operations utilizing big data and AI, rather than a mere means of cost reduction. Morespecifically, these projects mainly aimed to build an omni-channel framework that can uniformly manage customers, products andinventory information in the apparel and distribution industries, set up next generation content management systems for newspaper
publishers, and support transportation service companies in acquiring adequate information and improving operational efficiency
utilizing AI and other technologies. In addition, employee utilization rates improved owing to enhanced quality control, flexible staff
assignment, etc., leading to year-on-year growth in operating income.
Future Inspace, Inc. increased both its sales and operating income year-on-year as maintenance and operation service deals for projects
completed by Future Architect, Inc. and new development orders expanded.
Net sales of FutureOne, Inc. increased as orders from relatively larger medium-sized companies for InfiniOne, its original sales
management software package, and other products increased. With increased net sales and improved employee utilization rates,
operating income more than doubled year-on-year.
YDC Corporation’s net sales and operating income decreased from a year ago in the first six months as it had a large deal involving
YDC Sonar, a software program for analyzing product quality information, in the same period a year ago.
As a result, net sales of the segment increased 19.0% from a year ago to 18,544 million yen, while operating income came to 3,308
million yen, up 25.1% from a year ago. Its operating margin also expanded to 17.8% from 17.0% a year ago.
2) Business Innovation BusinessNet sales of eSPORTS Co., Ltd. increased year-on-year owing to strong sales of private brand outdoor supplies (e.g., wagons) andfitness-related national barnd products. It also improved its operating income from the same period a year ago, achieving a turnaround
during the first six months of 2019, as its gross margin ratio increased due to strategic product purchasing activities.
CodeCamp, Inc. increased its net sales and operating income from the same period a year ago due to steadily increased monthly orders
for its online programming course targeting individuals.
LaiBlitz, Inc.’s net sales and operating income increased compared to the level a year ago as it gained a new customer, a professional
baseball team, and developed e-commerce sites for another professional baseball team and eSPORTS Co., Ltd.
Tokyo Calendar Inc., which continued to enjoy popularity among users in their 30s and 40s with a strong interest in urban lifestyles, had
high levels of website and smartphone application page views as well as video views and increased the number of magazines sold.
However, while its services, including “Tokyo Calendar Date,” generated larger net sales, its magazine and online advertising revenues
underperformed the target figures. The company’s net sales rose from the level a year ago but its operating loss increased.
As a result, Business Innovation Business’s operating results improved year-on-year, with net sales rising 5.7% to 3,714 million yen andoperating loss shrinking to 89 million yen from the year-ago level of 122 million yen.
(Note) Segment result figures mentioned above are before adjustment for intersegmental sales and transfers.
-2-

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019(2)

Explanation on qualitative information about consolidated earnings forecast
Forecasts for consolidated earnings results for the full fiscal year remain unchanged from those announced in the Consolidated
Summary Report of Operating Results for First Quarter as of April 26, 2019.

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Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019

2. Consolidated Quarterly Financial Statements and Key Remarks(1) Consolidated quarterly balance sheets
Previous consolidated
fiscal year
(December 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Land
Other
Accumulated depreciation
Other, net
Total property, plant and equipment(in thousands of yen)
Consolidated second quarter
under review(June 30, 2019)

13,984,071
6,234,600
847,865
168,574
182,123
1,218,228(3,007)

14,269,530
6,647,639
919,018
94,266
73,4681,375,837(3,006)

22,632,457

23,376,755

1,375,460(882,265)

1,706,992(922,627)

493,194

784,365855
2,505,394(2,024,762)

855
2,803,575(2,132,006)

480,631

671,568

974,681

1,456,788

Intangible assets
Goodwill
Software
Customer-related assets
Other

40,516
1,707,624
832,000
3,316

35,456
1,778,227
728,000
2,970

Total intangible assets

2,583,458

2,544,654

9,257,039
1,439,195
84,777290,373(21,441)

9,864,071
1,423,498
44,016
266,580(19,965)

Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-4-

11,049,944

11,578,202

14,608,084

15,579,646

37,240,542

38,956,401

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019(in thousands of yen)
Consolidated second quarter
under review(June 30, 2019)

Previous consolidated
fiscal year
(December 31, 2018)
Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term loans payable
Current portion of bonds
Accounts payable - other
Income taxes payable
Provision for bonuses
Provision for quality assurance
Provision for loss on projects
Other

1,285,569
161,449
52,0001,129,613
1,093,327
210,913
11,182
26,0582,178,516

1,287,765
9,678
16,0001,211,402
539,556
218,52143,91314,0002,578,797

Total current liabilities

6,148,629

5,919,634

Non-current liabilities
Bonds payable
Long-term loans payable
Asset retirement obligations
Deferred tax liabilities
Other

92,000222,674
354,965
2,233,019
80,831–
6,110
405,327
2,471,613
141,068

Total non-current liabilities

2,983,490

3,024,119

Total liabilities

9,132,120

8,943,753

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares

1,421,815
2,507,763
20,239,578(1,499,778)

1,421,815
2,511,385
21,610,491(1,498,560)

22,669,379

24,045,131

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment

Total shareholders’ equity

5,438,242(1,220)(97,582)

5,840,212(1,691)
12,259Total accumulated other comprehensive income

5,339,439

5,850,781

99,602

116,735

28,108,422

30,012,648

37,240,542

38,956,401

Non-controlling interests
Total net assets
Total liabilities and net assets-5-Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019(2) Consolidated quarterly statements of income and comprehensive income(First six-month period)(in thousands of yen)First six months of the consolidated
fiscal year under review(from January 1, 2019
to June 30, 2019)22,215,342
13,148,235

Net sales
Cost of sales

First six months of the previous
consolidated fiscal year
(from January 1, 2018
to June 30, 2018)19,034,398
11,333,391

Gross profit

7,701,007

9,067,106

Selling, general and administrative expenses
Directors’ compensations
Salaries and bonuses
Training expenses
Research and development expenses
Depreciation
Recruiting expenses
Other

206,609
1,903,914
220,945
131,920
176,768
182,125
2,266,372

238,179
2,135,016
184,477
223,477
180,907
221,695
2,546,910

5,088,657

5,730,664

2,612,349

3,336,442

268
104,662
48,227–2,377

357
74,70327,3504,270
2,500

155,536

109,182

4,401
1,155

4,761
–

5,557

4,761

2,762,329

3,440,863

809,510–809,510––315,274
130,000

175,312––445,274

175,312

Quarterly profit before income taxes

3,126,564

3,265,551

Income taxes

1,039,403

1,117,557

Quarterly profit

2,087,160

2,147,993(Profit attributable to)
Quarterly profit attributable to owners of parent
Quarterly profit attributable to non-controlling interests

2,045,718
41,4422,130,896
17,097

Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on litigation
Total extraordinary income
Extraordinary losses
Loss on realized foreign currency translation adjustment
Loss on retirement of intangible assets
Litigation expenses
Total extraordinary losses-6-Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019

First six months of the previous
consolidated fiscal year
(from January 1, 2018
to June 30, 2018)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Quarterly comprehensive income(Comprehensive income attributable to)
Quarterly comprehensive income attributable to owners of parent
Quarterly comprehensive income attributable to non-controllinginterests-7-(in thousands of yen)First six months of the consolidated
fiscal year under review(from January 1, 2019
to June 30, 2019)

281,118(167)(1,555)401,970(236)
109,966

(431)

(124)

278,963

511,575

2,366,124

2,659,569

2,324,677

2,642,494

41,446

17,075

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019(3) Consolidated quarterly statements of cash flows
First six months of the previous
consolidated fiscal year
(from January 1, 2018
to June 30, 2018)
Net cash provided by (used in) operating activities
Quarterly profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for quality assurance
Increase (decrease) in provision for loss on projects
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using equity
methodLoss on retirement of intangible assets
Gain on litigation
Litigation expenses
Loss on realized foreign currency translation adjustment
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - tradeOther(in thousands of yen)First six months of the consolidated
fiscal year under review(from January 1, 2019
to June 30, 2019)

3,126,564
386,476(1,860)(5,238)(13,739)(7,234)(104,931)
4,401

3,265,551
455,897(1,477)
7,607
32,731(12,058)(75,061)
4,761(48,227)(27,350)

315,274(809,510)
130,000–
61,887(10,450)
82,634
1,355,688–––
175,312(413,038)
3,155
2,196
286,515

Subtotal

4,461,737

3,704,740

Interest and dividend income received
Interest expenses paid
Income taxed paid
Litigation-related proceeds/payments

104,931(4,411)(810,274)
679,51075,077(4,761)(1,527,639)–

Net cash provided by (used in) operating activities

4,431,492

2,247,417–(103,187)(471,956)(11,406)
48,922(40,079)
49,771
1,500

75,231(425,988)(272,238)(6,050)–(6,464)20,9081,559(526,435)(613,043)

–
–
–
(58)
(579,964)(19,000)(368,335)(13,936)(128,000)(157)(756,216)–(599,022)(1,266,646)

Net cash provided by (used in) investing activities
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Payments for asset retirement obligations
Proceeds from liquidation of subsidiaries and associates
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Repayments of long-term loans payable
Repayments of finance lease obligations
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents(6,325)(7,036)

Net increase (decrease) in cash and cash equivalents

3,299,709

360,690

Cash and cash equivalents at beginning of the period

9,478,336

13,908,840

Cash and cash equivalents at end of the quarterly period

12,778,046

14,269,530-8-

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019(4) Notes to consolidated quarterly financial statements(Note on premise of a going concern)
Not applicable.
(Significant changes in shareholders’ equity)
Not applicable.
(Additional information)(Implementation of Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.)
The Company has implemented the Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28,
February 16, 2018), etc. starting in the first three months ended March 31, 2019. Deferred tax assets and deferred tax liabilities are shown
under investments and other assets and non-current liabilities, respectively.

-9-

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019
(Segment information)
I. First six months of the previous consolidated fiscal year (from January 1, 2018 to June 30, 2018)
1. Information on amounts of net sales and income or loss by reportable segment(in thousands of yen)
Reportable segments
IT Consulting &Service BusinessBusinessInnovation
Business

Other(Note 1)

Total

Total

Amount stated infinancialstatements(Note 3)Adjustment(Note 2)

Net sales(1) Net sales tooutside clients

15,533,869

3,500,528

19,034,398–

19,034,398–

19,034,398(2) Inter-segment
sales or transfer

45,915

13,40359,318–59,318(59,318)–

Total

15,579,785

3,513,932

19,093,717–

19,093,717(59,318)

19,034,398

Segment income/loss

2,644,328(122,263)

2,522,064

2,123

2,524,188

88,161

2,612,349(Note 1) “Other,” a segment not included in the reportable segments, includes securities investment, holding, and management activities.
(Note 2) Adjustments to segment income/loss represents the amount of inter-segment transactions eliminated and income and expenses of theholding company excluding the technology segment.
(Note 3) Segment income/loss is adjusted with operating income in the consolidated quarterly financial statements.

II. First six months of the consolidated fiscal year under review (from January 1, 2019 to June 30, 2019)
1. Information on amounts of net sales and income or loss by reportable segment(in thousands of yen)
Reportable segments
IT Consulting &Service BusinessBusinessInnovation
Business

Other(Note 1)

Total

Total

Amount stated infinancialstatements(Note 3)Adjustment(Note 2)

Net sales(1) Net sales tooutside clients

18,516,077

3,699,264

22,215,342–

22,215,342–

22,215,342(2) Inter-segment
sales or transfer

28,17815,14443,322–

43,322(43,322)–

Total

18,544,255

3,714,409

22,258,664–

22,258,664(43,322)

22,215,342

Segment income/loss

3,308,511(89,293)3,219,218

1,180

3,220,398

116,043

3,336,442(Note 1) “Other,” a segment not included in the reportable segments, includes securities investment, holding, and management activities.
(Note 2) Adjustments to segment income/loss represents the amount of inter-segment transactions eliminated and income and expenses of theholding company excluding the technology segment.
(Note 3) Segment income/loss is adjusted with operating income in the consolidated quarterly financial statements.

- 10 -

Future Corporation (4722): Consolidated Summary Report of Operating Results for Second Quarter, Fiscal 2019

3. Additional Information
Status of orders received

Segment

First six months of the previous
consolidated fiscal year
(from January 1, 2018 to June 30, 2018)(in thousands of yen)First six months of the consolidated
fiscal year under review(from January 1, 2019 to June 30, 2019)

Orders received

Orders received

Order backlog

Order backlog

IT Consulting & Service Business

17,215,877

11,303,758

17,983,704

11,378,484

Business Innovation Business

1,029,942

518,919

815,919

317,498

18,245,819

11,822,678

18,799,623

11,695,983

Total- 11 -