Medium-term Business Plan
(April 2019 - March 2022)
July 12, 2019

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

Contents

 Summary and Basic Policies of the New Mediumterm Business Plan
 Medium-term Business Plan
Corporate Profile (Reference)1

Summary and Basic Policies of theNew Medium-term Business Plan

2

New Medium-term Business Plan: Sales and Operating Profit Targets(Millions of yen)

Sales

(Millions of yen)

5,000

40,000650 million yen increase inoperating profit
3,700Avg. annual growth: 6.1%

35,00030,000Operating Profit

26,78727,80030,00032,0004,0003,050

25,000

3,000

3,200
2,900

20,0002,000

15,00010,000Three-year plan

Three-year plan

1,000

5,000
00

FY3/19(Results)

FY3/20(Plan)

FY3/21(Plan)

FY3/22(Plan)

FY3/19(Results)

FY3/20(Plan)*Foreign exchange rate assumptions for the plan are 110 yen/USD and 125 yen/EUR.

Priorities in formulating the new plan3

 Raise sales to 30 billion yen in the plan’s second year Use Systems Engineering (MBSE) to establish a growth trajectory Make investments for growth along with steady earnings
distributions to shareholdersFY3/21(Plan)

FY3/22(Plan)

Core Strategies of the New Three-year Plan
A platform serving as abridge between concepts
and realization

 Electronics
 Mechanics
 Software

Systems EngineeringHigher Data management
 Trade-off studies across domains
 Revision management/Traceability/Others

Support for
implementation
designs
Analysis
Modeling
Use of knowledge
・・・・・

4

CAD (EDA)
PDM

WiderMBSE
acquisition

Solutions for
manufacturing
Digital twin
Design/production links
BIM・・・・・

Core Strategies of the New Three-year Plan
(1) Migration to the latest solutions atmajor customers→ Focus: CR-8000 in Europe and the U.S., the newwire harness solution in Japan(2) Increase sales of data management
products→ Expand data management coverage to include
wire harness design products and third-party
products as well as Zuken EDA products(3) Build a Zuken Business Model in thesystems engineering field (MBSE)
5

Going one more step
The goal is an even broader
range of activities by theentire Zuken Group,…extending from model
preparation and verification
to model data management.

Core Strategies of the New Three-year Plan Build a Zuken Business Model in the systems engineering
fieldBecome a 2 billion yen business2022

in the systems engineering field(Software, consulting, education)

 Training and recruiting of people with specialized skills
 Convergence with current solutions (E/E + Systems engineering) Strengthen key competences by using M&A, partnerships andother measures

2019
6-1

 Established a department responsible for the systems engineering field(Process Innovation Promotion Department) Acquired the U.S. company Vitech; ; using collaboration with third parties
in the MBSE sector
 Started projects with advanced customers

During the next 3 years, make systems engineeringabout 10% of every solution segment

Core Strategies of the New Three-year PlanSystems engineering is vital to the development of products (systems) that can be used withany type of systems. MBSE uses models to perform system engineering tasks.

System engineering is a “4W/1H” process.
Success requires engineering activities for determining what to accomplish and why, whereand when the project needs to be performed, as well as how to complete a project.
A system model consists of a block diagram of all system functions and is created and usedby system engineers.
What？

6-2

What does the system need to accomplish?
At what level are these functions required?
What are the essential aspects of the system and what factors must be
considered for creating the system?

When？

When will the system be used? What is the best timing for using the systemeffectively?

How？

How can the system be created? What are the properties and uniquecharacteristics of the method required to create the system? How will the roles
be assigned to the different elements of the system? How much will eachelement contribute to the system’s operation? How can each element
and the entire system be constructed as planned?Zuken Group
Zuken Tec
Overseas subsidiaries
EuropeNorth America
Asia

Technology
services

Design/manufacturinglink
Knowledge/AI

7

3D mechanicaldesigns
BIM

Security

Telecommunications

Storage

Embedded software

Financial Summary (2000 - 2019)
Sales and Operating Profit

Billions of yen

Sales

29.0

12.0

Operating Profit

26.7

23.5
22.0

23.0

19.1

18.8
17.0

17.0
15.2 14.6

16.1 15.7

21.2
19.8

19.7

17.0

16.7

9.5

21.9 22.1

17.9 18.2 17.8
7.0
Billions of yen

4.5

11.0

2.09 1.92 1.95 2.38

2.16
5.0
0

1.38

3.05

2.83
1.59

1.460.88

0.10 0.27

0.22(0.37)

0.35 0.63

1.00 0.77(1.0)

2.00(0.5)

Sales and Operating Profit reached a new record high82.02

Policy for Shareholder Distributions
株主還元策の推移
Dividends and Purchasesof Treasury Stock(Unit: yen)
（単位：円）

Commemorative/special dividends
記念配当・特別配当
Ordinary dividend
普通配当

10105
10Investments forgrowth
Stableshareholder
distributions

Financialsoundness

91010121414

14

1414

14

172020222628

 Zuken has paid an annual dividend per share of at least 10 yen every year sinceits listing in 1987.
 The dividend has increased several times since 2008 and the year-end dividendfor FY3/19 was raised from 12 yen to 14 yen. Zuken plans to pay an annual
dividend of 28 yen for FY3/20
 We will continue to consider suitable and highly effective methods of returning
earnings to shareholders by taking into account business performance,operating conditions and other factors

A progressive dividend policy consisting of stability
and consistency while aiming for higher dividends

Corporate Profile (Reference)

10Corporate Profile
ZUKEN Inc.
Established:
Capital:Employees:

December 17, 1976
10,117,065,000 yen
407 (non-consolidated)
1,328 (consolidated) (As of March 31, 2019)
Tokyo Stock Exchange, First Section
Securities code: 6947
 A Japanese engineering software vendor with global presence More than 40 years of experience in the electronic design automationindustry (Backed by a consistently sound financial position) In-house development of technologies along with the use of alliances,
M&A and other measures to acquire new technologies quickly as
needed11

History
December 1976

Established as Zukei Shori Gijutsu Kenkyusho Inc.

June 2009June 1978

Developed Japan's first CAD/CAM system "Create 2000" forthe design of printed circuit boards.

Announced the release of “PreSight,” a new product of PLM
Solutions

May 2010

Concluded an equity alliance with Lattice Technology Co.,
Ltd., making Zuken the second-largest shareholder after
ToyotaJune 2011

Announced the release of "visual BOM" that integrated bill ofmaterials technology with the ultra lightweight 3D format
XVL.

January 2011

Announced worldwide the release of the "CR-8000," a newgeneration electronic device design platform.

September 2013

Established "Zuken SOZO Center" in Silicon Valley, NorthAmerica.

August 2014

Established Global Automotive and Transportation
Competence Center in Erlangen, Germany.

November 1983

Established ZUKEN AMERICA Inc. (now ZUKEN USA Inc.) inthe United States.

January 1988

Developed a new CAD system "CR-3000."

October 1991

Registered in the Second Section of the Tokyo Stock
Exchange as a first EDA corporation.

January 1992

Established ZUKEN EUROPE GmbH (now ZUKEN GmbH) inGermany.

January 1992

Established ZUKEN KOREA Inc. in Seoul.

August 1992

Established ZUKEN SINGAPORE Pte. Ltd. in Singapore.

April 1994

Developed EDA vertical integration solution "CR-5000."

June 1994

Acquired all the shares of Racal-Redac Ltd. of the United
Kingdom.

December 2014

Concluded a capital and business alliance with Toyo BusinessEngineering.

September 1994

Moved up to the First Section of the Tokyo Stock Exchange.

February 2015

Established DiverSync Corporation.

March 2000

Acquired all the shares of INCASES Engineering GmbH.

March 2015

Established ZUKEN INDIA Pte. Ltd. in India.

March 2002

Started provision of a wire harness design environment for
the automotive industry.

July 2015

Took over YDC Corporation's CADVANCE business (CAD andPDM operations).

June 2002

Established Shanghai Technical Center in Shanghai.

April 2016

The PreSight Division was spun off as Zuken PreSight Inc.

February 2004

Announced the release of "ePLM Platform DS-2," a PLM
solution specially designed for the electrical and electronics
industries.

December 2017

Alfatech Inc. (now Zuken Alfatech Co., Ltd.) became a wholly
owned subsidiary

August 2005

Established ZUKEN TAIWAN Inc. in Taiwan.

May 2006

Acquired CIM-TEAM (now ZUKEN E3 GmbH) of Germany.

June 2007

Released "V54EE" based on "Catia V5."

12

History
December 1976

June 1978
November 1983

Established as Zukei Shori Gijutsu Kenkyusho Inc.

June 2009

Announced the release of “PreSight,” a new product of PLM(1) Developed Japan’s first CAD/CAM system
Solutions for printed
Developed Japan's first CAD/CAM system "Create 2000" forthe design of printed
circuit boards.
May 2010
Concluded an equity alliance with Lattice Technology Co.,
circuitboards
Ltd., making Zuken the second-largest shareholder afterJanuary 1992

Established ZUKEN AMERICA Inc. (now ZUKEN USA Inc.) inConverts the PCB design process from the internal
Toyota systems ofthe United States.
June 2011 CADAnnounced
the software
release of "visual BOM" that integrated bill ofindividual
to general-purpose
package
Developed a new
CAD systemcompanies"CR-3000."
materials technology with the ultra lightweight 3D format
Registered in the Second Section of the Tokyo StockXVL.
Exchange as a first EDA corporation.
January 2011
Announced worldwide the release of the "CR-8000," a new
Established ZUKEN EUROPE GmbH (now ZUKEN GmbH) in
generation electronic device design platform.
Germany. Soon after our establishment, we started overseas operations andSeptember 2013 Established "Zuken SOZO Center" in Silicon Valley, North
Established ZUKENKOREA Inc. inrelationships
Seoul.
America. resulting inestablishedwith prominent customers,

August 1992

Established ZUKEN
Pte. Ltd.
Singapore.
August 2014
the SINGAPORE
acquisition
ofinworld-classtechnologies

April 1994

Developed EDA vertical integration solution "CR-5000."

January 1988

October 1991
January 1992

(2) Started overseas operations soon after establishment

December 2014

Established Global Automotive and Transportation
Competence Center in Erlangen, Germany.
Concluded a capital and business alliance with Toyo Business(3) Played a major role in the advancementof Japan’sEngineering.
February 2015
Established DiverSync Corporation.
electronic
products
September 1994 Moved up to the First
Section of the Tokyo
Stock Exchange.
June 1994

March 2000

March 2002

Acquired all the shares of Racal-Redac Ltd. of the United
Kingdom.

Marchvital
2015 for making
Established ZUKENINDIA Pte. Ltd. in India.
Ashares
supplierof Engineering
technologies
products
Acquired all theof INCASES
GmbH. that wereJuly
2015
Took oversmaller,lighterandmore energy
efficient
as wellas YDC
forCorporation's CADVANCE business (CAD and
Started provisionof a wire harness
designenvironmentforPDM
operations).
the automotive industry.

outstanding quality

June 2002

Established Shanghai Technical Center in Shanghai.

April 2016

The PreSight Division was spun off as Zuken PreSight Inc.

February 2004

Announced the release of "ePLM Platform DS-2," a PLM
solution specially designed for the electrical and electronics
industries.

December 2017

Alfatech Inc. (now Zuken Alfatech Co., Ltd.) became a wholly
owned subsidiary

May 2006(4) Mechanical and electro-mechanical design solutions,ofInc.materials(BOM) systems and other innovative
Established ZUKEN bill
TAIWANin Taiwan.
Acquired CIM-TEAM(now ZUKEN E3 GmbH) of Germany.
solutions

June 2007

Released "V54EE"
basedon "Catia V5."
Usedin-housedevelopment, partnerships and M&A to steadily

August 2005

13

add more business domains in the design and engineering fieldGlobal Locations and Affiliates in Japan
Head Office/Central Research Facility: Tsuzuki-ku, Yokohama
Locations in Japan:

Yokohama, Osaka and Nagoya

Overseas Locations:

5 countries in Asia, 8 countries in Europe andthe United States

6 (Zuken Tec Inc., Zuken Netwave Inc., Zuken Elmic Inc., Zuken PreSight Inc.,

Domestic Affiliates:DiverSync Corporation, Zuken Alfatech Inc.)

EuropeUK, Germany, Switzerland,France, Italy, Netherland, Poland

Americas

Korea

Japan
China
Taiwan

Asia

India

Singapore

14:Sales OfficeMedium-term Business Plan15

Accomplishments of Past Medium-term Business Plans
CAGR: 6.8%
4,800 million yen increase in sales
2,280 million yen increase in operating profit(Millions of yen)

30,00025,000

CAGR: 7.1%
4,100 million yen increase in sales
420 million yen increase in operating profit

20,00010015,000

Index: Change inmachine tool orders
vs. prior year

10,0005,0000FY3/13

FY3/15

FY3/14
Sales16

FY3/16

FY3/17

Operating ProfitFY3/18

FY3/19

Accomplishments of Past Medium-term Business Plans
Avg. annual sales growth: 6.8%
4,800 million yen increase in sales
2,280 million yen increase in operating profit(Millions of yen)

30,00025,000Avg. annual sales growth: 7.1%
4,100 million yen increase in sales
420 million yen increase in operating profit

20,000First (Apr. 2013 - Mar. 2016）
 Establishment of the SOZO Center (Sep.
2013)
10,000  Establishment of the competence center inGermany (Aug. 2014)
 Establishment of capital and alliance withB-en-g (Dec. 2014)
5,000
 Zuken to take over YDC's CADVANCE
operations (Jul. 2015)

Second (Apr. 2016 - Mar. 2019)
 Zuken announces that Microsoft
Corporation has selected Zuken's DS2 (May 2016)
 40th anniversary (Dec. 2016)
 Zuken acquired whole ownership ofstock issued by Alfatech (Dec. 2017)
 Basic agreement for acquisition ofVitech (Jan. 2019)15,0000FY3/13

FY3/15

FY3/14
Sales

17

FY3/16

FY3/17

Operating Profit

FY3/18

FY3/19

Core Strategies of the New Three-year Plan(1) Migration to the latest solutions atmajor customers→ Focus: CR-8000 in Europe and the U.S., the newwire harness solution in Japan(2) Increase sales of data management
products→ Expand data management coverage to include
wire harness design products and third-party
products as well as Zuken EDA products(3) Build a Zuken Business Model in thesystems engineering field (MBSE)
18

Going one more step
The goal is an even broader
range of activities by theentire Zuken Group,…extending from model
preparation and verification
to model data management.

New Medium-term Business Plan: Sales and Operating Profit Targets(Millions of yen)

Sales

(Millions of yen)

40,0005,000

650 million yen increase inoperating profit
3,700

Avg. annual growth: 6.1%

35,00030,000Operating Profit

26,78727,80030,00032,000

4,000

3,050

25,000

3,000

3,200
2,900

20,0002,000

15,00010,000Three-year plan

Three-year plan

1,000

5,000
00

FY3/19(Results)

FY3/20(Plan)

FY3/21(Plan)

FY3/22(Plan)

FY3/19(Results)

FY3/20(Plan)*Foreign exchange rate assumptions for the plan are 110 yen/USD and 125 yen/EUR.

Priorities in formulating the new plan

19 Raise sales to 30 billion yen in the plan’s second year Use Systems Engineering (MBSE) to establish a growth trajectory Make investments for growth along with steady earnings
distributions to shareholders

FY3/21(Plan)

FY3/22(Plan)

Sales Plan by Product Category

Product Category

FY3/19FY3/22

YoY change

17,53920,180+2,640(5,059)(6,495)+1,436

Data Management Solutions

9,249

11,821+2,572

Total Sales

26,78732,000+5,212(Millions of yen)

Design Automation(of which WH Design)

20Sales Plan by Product Category
1.20 billion yen

1.44 billion yen

2.57 billion yen
5.21 billion yen

Electronic Design Automation

26.8 billion yen

Wire Harness

Data Management

Design Automation

FY3/22

FY3/19
Electronic Design Automation
 Many key customers in Europe
started switching to the CR8000 (p.18 (1))
 Good prospects for growth ofnew designs due to increasinguse of new technologies (5G,LPWA and others) in Japan andother countries

2132.0 billion yen

Wire Harness Design Business climate remains
favorable due to increasing useof electrical/electronic
components in cars, the IoT for
industrial applications andother trends
 Goal is higher sales in thesecond half due to the plannedMarch 2020 launch of a new
E3.series product (p.18 (1))

Data Management
 More data management
projects in Japan and othercountries because of anincreasing need to produce
electric/electronics designs
more efficiently (p.18 (2))
 Anticipate demand forsolutions involving security(provided by a Zuken affiliate)
to remain strong

Sales Plan by Solutions (Reference)

22

Sales (Millions of yen)

FY3/19FY3/22

YoYchangePrinted Circuit Board
design solutions

4,222

4,768+546

Circuit design solutions

6,122

7,713+1,591

IT solutions

5,919

7,555+1,637

Client services

10,517

11,964+1,446

Product Category (Reference)
Major products by product category
Product Category

Major Products
CR-8000 Design Force
CR-8000 DFM Center
CR-5000 Board DesignerPrinted Circuit Board designsolutions
Design Automation

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

Circuit design solutions

IT solutions

Data Management

Client services and Others

PreSight/visual BOM
Knowledge Explorer
DS-2 (DS-CR/DS-E3)

Maintenance services for each product

Divided among all of the above product categories

23

Average exchange rates in FY3/19 were 111 yen/USD and 128 yen/EUR.
Assumptions for FY3/22 are 110 yen/USD and 125 yen/EUR.

Overseas Business0.67 billion yen

7.95 billion yen

0.55 billion yen

0.35 billion yen
1.57 billion yen

USAEuropeAsia(including direct sales in China)

Europe 4.7 billion
USA 1.7 billion
Asia 1.5 billion

9.52 billion yen
FY3/22

FY3/19EuropeUSA

 Consistently high volume of CR8000 transition projects amonglarge tier 1 automotive parts
companies and other companies

 Stable growth trajectory backed
by increasing TBL business forlarge customers
 Receipt of expansion projectorders from prominentcustomers in the aerospace andindustrial machinery sectors(p.18 (1))

 Expect even faster growth of theE3.series in the industrialmachinery sector due to thelaunch of a new product (p.18 (1))

24(p.18 (2))

Asia
 Uncertain business climate due
to U.S.-China tension (anupturn is possible, too) Priority is increasing sales toprominent local companies in
China, India and othercountries

Aiming to be the Systems Engineering Experts (p.18 (3))

Planning/Conceptual designs

Allocation of customers’
development resources

Realization/Mass production designs

25

Create mass-production designs that
optimize quality, safety, cost and time-tomarket→ Values that Zuken has provided

Aiming to be the Systems Engineering Experts (p.18 (3))
LPWA

IoT
Planning/Conceptual designs
5G

Allocation of customers’
development resourcesAI

 Support/training for using MBSE andMBD
Opportunities Creation of solutions linking
conceptual designs and circuit designs

Realization/Mass production designs

26

Increase in requirements that must be
considered at the planning/conceptual
design stages→Start using MBSE, MBD and othermodel-based development methods

Create mass-production designs that
optimize quality, safety, cost and timeto-market→ Values that Zuken has provided

Conventional solutions will still be a large part of the volume of businessduring the three years of the new plan.
However, customers will continue to shift their resources.

Thank you for your attention.

27

Precautions
Information in this presentation includes forward-looking statements about results ofoperations and other items. These statements are judgments of the Zuken Group basedon information available when this presentation was prepared and include potential risks
and uncertainties. Therefore, actual results of operations and other aspects of futureperformance may differ greatly from these forward-looking statements. Risk factors that
may affect the Zuken Group’s performance include, but are not limited to, changes in theeconomies of various countries, capital expenditures of the group’s customers, changes
in the demand for the group’s products, progress with the development of new products,competition with other companies, and foreign exchange rate movements.
The performance targets in this presentation are not forecasts or current outlooks for
future results of operations. These figures are goals that the Zuken Group will attempt toreach by implementing its business strategies.

28

Contact

ZUKEN Inc.
Corporate Marketing Division
2-25-1, Edahigashi Tsuzuki-ku, Yokohama
Tel: +81-45-942-1511