August 6, 2018

Summary of Consolidated Financial Results
for the First Quarter of Fiscal Year Ending March 31, 2019 (FY2018)(Three Months Ended June 30, 2018)[Japanese GAAP]
Company name: ZUKEN Inc.
Listing: Tokyo Stock Exchange, First Section
Stock code:
6947
URL: http://www.zuken.co.jp
Representative:
Makoto Kaneko, President and Representative Director
Contact:
Susumu Yoshida, General Manager of Finance Department
Tel: +81-45-942-1511
Scheduled date of filing of Quarterly Report:
August 8, 2018
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: None
Holding of quarterly financial results meeting:None(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter Ended June 30, 2018 (Apr. 1, 2018 – Jun. 30, 2018)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Millions of yen%
Three months ended
Jun. 30, 2018
5,640
16.3
Jun. 30, 2017
4,849
5.7
Note: Comprehensive income (Millions of yen)%

Millions of yen

297814.6345
3275
Three months ended Jun. 30, 2018:
Three months ended Jun. 30, 2017:%

Millions of yen

358.6
529 (up 99.0%)
265 (n.a.)

254
26%

868.1
-Diluted net income pershare

Net income per share
Three months ended
Jun. 30, 2018
Jun. 30, 2017

Millions of yen

Profit attributable toowners of parent

Ordinary profit

Yen

Yen

10.93
1.13

-

(2) Consolidated financial position
Total assets

Net assets

Shareholders’ equity ratio

Millions of yen

Millions of yen%

As of Jun. 30, 2018
As of Mar. 31, 2018

43,724
43,64730,78030,54769.5
69.0

Reference: Shareholders’ equity (Millions of yen)

As of Jun. 30, 2018:

30,387

As of Mar. 31, 2018:30,1192. Dividends
1Q-endDividend per share
3Q-endYear-end

2Q-endYen

Fiscal year ended Mar. 31, 2018
Fiscal year ending Mar. 31, 2019
Fiscal year ending Mar. 31, 2019 (forecast)
Note: Revisions to the most recently announced dividend forecast: None

Total

Yen

Yen

Yen

Yen

10.00

-

12.00

22.00

12.00

-

12.00

24.00

3. Consolidated Forecast for the Fiscal Year Ending March 31, 2019 (Apr. 1, 2018 – Mar. 31, 2019)
Net sales
Millions of yen

Operating profit%

Millions of yen

Ordinary profit%(Percentages represent year-on-year changes)
Profit attributable toNet income perowners of parentshare

Millions of yen%

Millions of yen%

Yen

Full year
25,500
8.1
2,500
23.4
2,600
Note: Revisions to the most recently announced consolidated forecast: None

22.9

1,800

19.1

77.42

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in change in scopeof consolidation): None
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: None(3) Changes in accounting policies and accounting-based estimates, and restatements(a) Changes in accounting policies due to revisions in accounting standards, others:None(b) Changes in accounting policies other than (a) above:None(c) Changes in accounting-based estimates:

None(d) Restatements:

None(4) Number of outstanding shares (common stock)(a) Number of shares outstanding at the end of the period (including treasury shares)
As of Jun. 30, 2018:23,267,169 shares

As of Mar. 31, 2018:23,267,169 shares

As of Mar. 31, 2018:

17,057 shares(b) Number of treasury shares at the end of the period
As of Jun. 30, 2018:17,087 shares(c) Average number of shares outstanding during the period
Three months ended Jun. 30, 2018:23,250,089 shares

Three months ended Jun. 30, 2017:23,250,395 shares* The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements and other special items
Forecasts of future performance in this report are based on assumption judged to be valid and information available to theCompany’s management at the time this report was prepared, but are not promises by the Company regarding future performance.
Actual results may differ substantially from the forecasts for a number of reasons. Please refer to “1. Qualitative Information on
Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecast and Other Forward-looking Statements”
on page 2 for forecast assumptions and notes of caution for usage.

ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018

Contents of Attachments
1.

Qualitative Information on Quarterly Consolidated Financial Performance ............................................................... 2(1) Explanation of Results of Operations ........................................................................................................................ 2(2) Explanation of Financial Position ............................................................................................................................. 2(3) Explanation of Consolidated Forecast and Other Forward-looking Statements ........................................................ 22.

Quarterly Consolidated Financial Statements and Notes............................................................................................. 3(1) Quarterly Consolidated Balance Sheet ...................................................................................................................... 3(2) Quarterly Consolidated Statements of Income and Comprehensive Income ............................................................ 5
Quarterly Consolidated Statement of Income ............................................................................................................. 5
Quarterly Consolidated Statement of Comprehensive Income.................................................................................... 6(3) Notes to Quarterly Consolidated Financial Statements ............................................................................................. 7
Going Concern Assumption ........................................................................................................................................ 7
Significant Changes in Shareholders’ Equity .............................................................................................................. 7
Additional Information ................................................................................................................................................ 7
Segment Information ................................................................................................................................................... 73.

Supplementary Information ......................................................................................................................................... 8(1) Sales and Orders ........................................................................................................................................................ 81ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter of the fiscal year ending on March 31, 2019, gradual economic recoveries continued to take placein Japan, Europe and the United States. However, the overall outlook remained uncertain because of concerns about
U.S. economic policies, slowing economic growth in emerging Asian countries and other reasons. In the electronicequipment, automotive and industrial equipment manufacturing sectors, which are the major customer segments ofthe Zuken Group, although companies in certain industries continue to hold down capital investment, there are clear
signs of a recovery backed by recovering corporate earnings.
Net sales in the first quarter were 5,640 million yen, 16.3% higher than one year earlier. One reason was the growthin sales of IT solutions due to strong sales of our DS-CR design data management system and PLM (ProductLifecycle Management) platform PreSight visual BOM. Higher sales of Circuit design solutions led by the E3.seriesof wire harness design systems also contributed to the first quarter sales growth.
Earnings increased significantly due to the growth in sales. Ordinary profit was 345 million yen, 358.6% higher thanone year earlier, and profit attributable to owners of parent was 254 million yen, 868.1% higher than one year
earlier.
(2) Explanation of Financial Position

Total assets at the end of the first quarter of the current fiscal year increased 76 million yen from the end of theprevious fiscal year to 43,724 million yen.
Current assets decreased 26 million yen. The main factors include a decrease of 1,595 million yen in notes andaccounts receivable-trade and an increase of 1,140 million yen in cash and deposits. Non-current assets increased
102 million yen. The main factors include an increase of 185 million yen in investments and other assets and adecrease of 74 million yen in intangible assets.
Total liabilities decreased 156 million yen from the end of the previous fiscal year to 12,943 million yen. Current
liabilities decreased 180 million yen. The main factors include decreases of 476 million yen in income taxes payable
and 355 million yen in provision for bonuses, while there was an increase of 849 million yen in advances received.
Non-current liabilities increased 24 million yen mainly due to an increase in net defined benefit liability.
Net assets increased 233 million yen from the end of the previous fiscal year to 30,780 million yen, and theshareholders’ equity ratio was 69.5%.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

We currently maintain the consolidated forecast for the fiscal year ending March 31, 2019 that was released on May
7, 2018. Many of the Zuken Group’s customers use a fiscal year that ends in March. As a result, a large percentageof the deliveries and final acceptances of our products occur in March each year. Consequently, sales and profits
tend to be disproportionately concentrated in the fourth quarter in each fiscal year.

2ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance SheetFY2017(As of Mar. 31, 2018)(Thousands of yen)First quarter of FY2018(As of Jun. 30, 2018)

AssetsCurrent assets
Cash and deposits

16,868,686

18,009,114

Notes and accounts receivable-trade5,375,965

3,780,362

Securities6,700,000

6,700,000

Merchandise and finished goods

269,857

274,469

Work in process

95,659225,119

Raw materials and supplies

3,908

4,214

Other

2,172,359

2,464,847

Allowance for doubtful accounts(44,416)(42,272)

31,442,019

31,415,854

Buildings and structures, net

2,889,876

2,857,121

Land

3,015,103

3,015,103

455,438

480,538

6,360,419

6,352,763

Goodwill

661,482

617,699

Other

699,954

669,024

1,361,437

1,286,723

Total current assets
Non-current assets
Property, plant and equipment

Other, net
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

4,483,412

4,668,771

Total non-current assets

12,205,268

12,308,259

43,647,287

43,724,113

Total assets

3

ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018

FY2017(As of Mar. 31, 2018)(Thousands of yen)First quarter of FY2018(As of Jun. 30, 2018)

Liabilities
Current liabilities
Accounts payable-trade726,558

518,071

Income taxes payable573,228

96,231

Advances received

5,256,136

6,105,828

Provision for bonuses

799,513444,464

Provision for directors’ bonuses

53,370-Provision for loss on business liquidation

1,576

1,552

Other provision

7,940

7,022

Other

1,864,426

1,929,055

Total current liabilities

9,282,751

9,102,227

3,541,427

3,579,829

275,473

261,227

3,816,901

3,841,057

13,099,652

12,943,284

Capital stock

10,117,065

10,117,065

Capital surplus

8,659,021

8,659,016

Retained earnings

10,675,443

10,650,467

Treasury shares(15,716)(15,760)

29,435,814

29,410,788

1,124,695

1,405,372

Non-current liabilities
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment

146,943

99,116

Remeasurements of defined benefit plans(587,708)(527,736)

Total accumulated other comprehensive income

683,930

976,752

Non-controlling interests
Total net assets
Total liabilities and net assets

4427,891

393,288

30,547,635

30,780,829

43,647,287

43,724,113

ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY2017(Apr. 1, 2017 – Jun. 30, 2017)(Thousands of yen)First three months of FY2018(Apr. 1, 2018 – Jun. 30, 2018)

Net sales

4,849,812

5,640,497

Cost of sales

1,232,486

1,502,732

Gross profit

3,617,325

4,137,764

Selling, general and administrative expenses

3,584,837

3,840,622

32,488297,142Interest income

1,082

1,277

Dividend income

20,38917,540Rent income

11,566

12,129Operating profit
Non-operating income

Foreign exchange gains

-

2,508

Other

12,58915,647

Total non-operating income

45,627

49,103

2,369-

Non-operating expenses
Share of loss of entities accounted for using equity method
Foreign exchange losses

56-

Other315

602

2,742

602

75,374

345,643

1,002

17

Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on liquidation of subsidiaries-

23,321

1,00223,338

Loss on disposal of non-current assets

2,219

147

Total extraordinary losses

2,219

147

Profit before income taxes

74,157368,834

Income taxes-current

28,36046,124

Income taxes-deferred

25,80386,353

Total income taxes

54,164132,477

Profit19,992

236,356

Loss attributable to non-controlling interests(6,246)(17,668)

Profit attributable to owners of parent

26,239254,024

Total extraordinary income
Extraordinary losses

5ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2017(Apr. 1, 2017 – Jun. 30, 2017)(Thousands of yen)First three months of FY2018(Apr. 1, 2018 – Jun. 30, 2018)

19,992

236,356

ProfitOther comprehensive income
Valuation difference on available-for-sale securities

89,250280,677

Foreign currency translation adjustment

114,590(47,827)

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method

41,41659,972

684-Total other comprehensive income

245,942

292,822265,935

529,178

272,182

546,847(6,246)(17,668)

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

6ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Additional Information(Application of Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.)
Effective from the beginning of the first quarter of the current fiscal year, the Company applied Partial Amendments toAccounting Standard for Tax Effect Accounting (Accounting Standards Board of Japan (ASBJ) Statement No. 28,February 16, 2018) and other related pronouncements. Accordingly, deferred tax assets and deferred tax liabilities havebeen presented in the investments and other assets section and the non-current liabilities section of the balance sheet,respectively.
Segment Information
I. First three months of FY2017 (Apr. 1, 2017 – Jun. 30, 2017)
Information about reportable segment net sales and profit or loss
Reportable segmentJapanEuropeAmericas

Sales to third parties
Intersegment sales ortransfers

3,228,444

919,943

228,686

Total

3,457,130(Thousands of yen)
Appropriated amount
Adjustmentin the quarterly
amountconsolidated(Note 1)statement of income(Note 2)

Asia

Total

418,187

283,237

4,849,812-

4,849,812

199,460

19,264

12,258459,668(459,668)-

1,119,403

437,451

295,495

5,309,481(459,668)

4,849,812

Net sales

Segment profit (loss)
520(79,068)
28,23880,10829,7992,689
32,488Notes: 1. Adjustment amount in segment profit (loss) includes amount of 2,689 thousand yen eliminated for intersegment
transactions.
2. Segment profit (loss) is adjusted with operating profit in the quarterly consolidated statement of income.

II. First three months of FY2018 (Apr. 1, 2018 – Jun. 30, 2018)
Information about reportable segment net sales and profit or loss
Reportable segment
JapanEurope

Sales to third parties
Intersegment sales ortransfers

3,762,198

1,202,244

362,549

Total

4,124,748

Americas(Thousands of yen)
Appropriated amountAdjustmentin the quarterly
amountconsolidated(Note 1)
statement of income(Note 2)

AsiaTotal

334,614

341,440

5,640,497-

5,640,497

181,280

9,739

16,751

570,321(570,321)-

1,383,525

344,353

358,191

6,210,818(570,321)

5,640,497

Net sales

Segment profit (loss)
243,501
19,337(25,963)
100,117336,993(39,850)
297,142
Notes: 1. Adjustment amount in segment profit (loss) includes amount of -39,850 thousand yen eliminated for intersegment
transactions.
2. Segment profit (loss) is adjusted with operating profit in the quarterly consolidated statement of income.

7ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018

3. Supplementary Information(1) Sales and Orders(a) SalesSegment
JapanEurope
Americas
Asia
Total

First three months of FY2017(Apr. 1, 2017 – Jun. 30, 2017)
AmountComposition (%)
3,228,444
66.6
919,94319.0
418,187
8.6
283,237
5.8
4,849,812
100.0(Thousands of yen)First three months of FY2018(Apr. 1, 2018 – Jun. 30, 2018)
AmountComposition (%)
3,762,198
66.7
1,202,244
21.3
334,6145.9
341,440
6.1
5,640,497
100.0(b) Orders received and order backlog(Thousands of yen)First three months of FY2017First three months of FY2018(Apr. 1, 2017 – Jun. 30, 2017)(Apr. 1, 2018 – Jun. 30, 2018)
Segment
Orders received
Order backlog
Orders received
Order backlog
Japan
4,725,607
7,149,316
5,314,583
7,755,024
Europe854,492
1,426,292
1,035,847
1,483,931
Americas210,799
893,879
140,800
900,548
Asia
326,899645,854356,317629,189
Total
6,117,799
10,115,343
6,847,549
10,768,694
Notes: 1. Intersegment transactions have been eliminated.
2. The above amounts are based on selling prices and the amounts do not include consumption taxes.

8ZUKEN Inc. (6947) Financial Results for the First Quarter of FY2018(Reference) Results by product category are as follows.
(a) Sales

Product category

First three months of FY2017(Apr. 1, 2017 – Jun. 30, 2017)
AmountComposition (%)(Thousands of yen)First three months of FY2018(Apr. 1, 2018 – Jun. 30, 2018)
AmountComposition (%)

Printed Circuit Board design solutions

802,40916.5

812,672

14.4

Circuit design solutions

888,18918.3

1,131,412

20.1

IT solutions

737,59415.2

1,001,576

17.8

Client services

2,421,52850.0

2,694,674

47.7

900.0

160

0.0

4,849,812

100.0

5,640,497

100.0

OthersTotal(b) Orders received and order backlog

Product category

First three months of FY2017(Apr. 1, 2017 – Jun. 30, 2017)
Orders received
Order backlog

Printed Circuit Board design solutions(Thousands of yen)First three months of FY2018(Apr. 1, 2018 – Jun. 30, 2018)
Orders received
Order backlog

882,745

761,373945,027

808,586

Circuit design solutions

1,206,462

1,157,735

1,508,643

1,234,426

IT solutions

1,047,722

888,416

1,292,8381,142,719

Client services

2,980,369

7,307,408

3,097,980

7,579,896

500

410

3,059

3,065

6,117,799

10,115,343

6,847,549

10,768,694

OthersTotalNotes: 1. The above amounts are based on selling prices and the amounts do not include consumption taxes.
2. Name of major products by product category are as follows.
Major products of Printed Circuit Board designsolutions

Major products of Circuit design solutions

Major products of IT solutions

CR-8000 Design Force
CR-8000 DFM CenterCADSTAReCADSTAR

CR-5000 Board Designer

CR-8000 Design Gateway
CR-8000 System PlannerArchitecture Planner
E3.series
Cabling Designer
Harness Designer
PreSight visual BOM
DS-CR
DS-2 Expresso
DS-E3

CR-5000 System Designer

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been preparedin accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer
an English translation.

9