May 7, 2018

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2018 (FY2017)[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 Annual General Shareholders’ Meeting:June 28, 2018
Scheduled date of payment of dividend:
June 29, 2018
Scheduled date of filing of Annual Securities Report:
June 28, 2018
Preparation of supplementary materials for financial results:
None
Holding of financial results meeting:None(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2018 (Apr. 1, 2017 – Mar. 31, 2018)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Millions of yen%
Fiscal years ended
Mar. 31, 2018
23,582
6.2
Mar. 31, 201722,1991.1
Note: Comprehensive income (Millions of yen)

Net income per share

Millions of yen

Profit attributable toowners of parent

Ordinary profit

Millions of yen

%

2,025
26.9
2,114
34.6
1,511
1,596
105.7
1,571
109.2
1,206
Fiscal year ended Mar. 31, 2018:
2,512 (up 379.5%)
Fiscal year ended Mar. 31, 2017:524 (down 34.8%)

%

25.3
345.1

Diluted net income
per share

Millions of yen%

Ordinary profit on
total assets

Return on equity

Yen
Yen
%
Fiscal years ended
Mar. 31, 2018
65.01
5.2
Mar. 31, 2017
51.87
4.3
Reference: Equity in earnings of associates (Millions of yen) Fiscal year ended Mar. 31, 2018:
Fiscal year ended Mar. 31, 2017:

Operating profit to
net sales

%

%

5.0
3.9

8.6
7.2

(3)
1

(2) Consolidated financial position
Total assets

Shareholders’ equity ratio

Net assets

Millions of yen

Millions of yen

As of Mar. 31, 2018
43,647
As of Mar. 31, 201740,530
Reference: Shareholders’ equity (Millions of yen)

30,54728,535
As of Mar. 31, 2018:

Net assets per share

%

Yen

69.0
69.3
As of Mar. 31, 2017:

30,1191,295.47
1,208.84
28,106(3) Consolidated cash flows
Cash flows fromoperating activities
Fiscal years ended
Mar. 31, 2018
Mar. 31, 2017

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents at
end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

3,547
2,586

(592)
(595)

(558)
(482)

16,60914,046

2. Dividends
Dividend per share
1Q-end 2Q-end 3Q-end Year-end
Fiscal year ended Mar. 31, 2017
Fiscal year ended Mar. 31, 2018
Fiscal year ending Mar. 31, 2019
(forecast)

Total dividends

Total

Payout ratio(consolidated)

Dividend on
equity(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

-

10.00
10.00

-

10.00
12.00

20.00
22.00

465
511

38.6
33.8

1.7
1.8

-

12.00

-

12.00

24.00

31.0

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

Operating profit

Ordinary profit(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
shareMillions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

25,500

8.1

2,500

23.4

2,600

22.9

1,800

19.1

77.42

Note: Only the full-year forecast is shown because Zuken manages performance on a fiscal year basis.

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in change in scopeof consolidation): None
(2) 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(3) Number of outstanding shares (common stock)(a) Number of shares outstanding at the end of the period (including treasury shares)
As of Mar. 31, 2018:23,267,169 shares

As of Mar. 31, 2017:23,267,169 shares

As of Mar. 31, 2017:16,715 shares(b) Number of treasury shares at the end of the period
As of Mar. 31, 2018:

17,057 shares(c) Average number of shares outstanding during the period
Fiscal year ended Mar. 31, 2018:23,250,220 sharesFiscal year ended Mar. 31, 2017:23,250,749 shares

Reference: Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2018 (Apr. 1, 2017 – Mar. 31, 2018)(1) Non-consolidated results of operations
Net sales
Fiscal years ended
Mar. 31, 2018
Mar. 31, 2017

(Percentages represent year-on-year changes)
Ordinary profit
ProfitOperating profit

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

9,977
9,670

3.2
(8.6)

837
546

53.2
26.7

1,562
917

70.2
8.3

1,344
1,021

31.6
115.2

Net income per share
Fiscal years ended
Mar. 31, 2018
Mar. 31, 2017

Diluted net income per share

Yen

Yen

57.84
43.94

-

(2) Non-consolidated financial position
Total assets

Net assets

Millions of yen

Millions of yen

As of Mar. 31, 2018
34,726
As of Mar. 31, 201733,120
Reference: Shareholders’ equity (Millions of yen)

29,43428,281
As of Mar. 31, 2018:

Shareholders’ equity ratio

Net assets per share%

29,43484.8
85.4
As of Mar. 31, 2017:

Yen

1,265.99
1,216.40
28,281* This financial report is not subject to audit 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 Compan y regarding future performance.
Actual results may differ substantially from the forecasts for a number of reasons. Please refer to “1. Overview of Results ofOperations, etc., (4) Outlook” on page 4 for forecast assumptions and notes of caution for usage.

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Contents of Attachments
1.

Overview of Results of Operations, etc. ................................................................................................................ 2(1) Results of Operations ......................................................................................................................................... 2(2) Financial Position ............................................................................................................................................... 3(3) Cash Flows ........................................................................................................................................................ 3(4) Outlook .............................................................................................................................................................. 4

2.

Basic Approach for the Selection of Accounting Standards ................................................................................... 4

3.

Consolidated Financial Statements and Notes ....................................................................................................... 5(1) Consolidated Balance Sheet................................................................................................................................ 5(2) Consolidated Statements of Income and Comprehensive Income ......................................................................... 7
Consolidated Statement of Income........................................................................................................................ 7
Consolidated Statement of Comprehensive Income ............................................................................................... 8(3) Consolidated Statement of Changes in Equity ..................................................................................................... 9(4) Consolidated Statement of Cash Flows ..............................................................................................................11(5) Notes to Consolidated Financial Statements .......................................................................................................12
Going Concern Assumption .................................................................................................................................12
Basis of Presenting the Consolidated Financial Statements...................................................................................12
Notes to Consolidated Balance Sheet ...................................................................................................................14
Notes to Consolidated Statement of Income .........................................................................................................14
Notes to Consolidated Statement of Comprehensive Income ................................................................................15
Notes to Consolidated Statement of Changes in Equity ........................................................................................15
Notes to Consolidated Statement of Cash Flows...................................................................................................16
Financial Instruments ..........................................................................................................................................17
Marketable Securities ..........................................................................................................................................19
Segment Information ...........................................................................................................................................20
Per-share Information ..........................................................................................................................................21
Subsequent Events ..............................................................................................................................................21
Omission of Disclosure .......................................................................................................................................21

4.

Production, Orders and Sales ...............................................................................................................................225.

Non-consolidated Financial Statements ................................................................................................................23(1) Balance Sheet....................................................................................................................................................23(2) Statement of Income..........................................................................................................................................25(3) Statement of Changes in Equity .........................................................................................................................26

1

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

1. Overview of Results of Operations, etc.
(1) Results of Operations
In the fiscal year that ended on March 31, 2018, gradual economic recoveries continued to take place in Japan,
Europe and the United States. However, the outlook remained uncertain because of concerns about slowing
economic growth in emerging Asian countries, U.S. policies and other reasons.
In the electronic equipment, automotive and industrial equipment manufacturing sectors, which are the major
customer segments of the 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.
The Zuken Group took proactive actions during the fiscal year for increasing sales of our core products, developing
IT systems and making substantial investments for growth with the goal of becoming a “truly global company” able
to supply the best-in-class solutions to manufacturers worldwide. Our major actions during the fiscal year were as
follows.
(i) Design/Engineering Solutions
We continued to place priority on increasing sales of the CR-8000 Design Force, a PCB design and analysis
solution that is our core product. There was steady progress with sales of this system in Japan as well as to large
companies in Europe and the United States. Sales of the E3.series of electrical wire harness design solutions
were higher due to increased sales activities to companies in the automobile and industrial machinery industries
in Europe and the United States.
We increased the speed of development activities for the eCADSTAR, a completely new PCB design systemusing the latest advances in technologies. This new system will replace the CADSTAR, a PCB design systemthat is ideal for relatively small design team. The goal is to further increase our market share by using theeCADSTAR to stimulate demand in the PCB design market for small and midsize enterprises. Another project
under way is the development of a new wire harness design system. For this project, the ZUKEN development
bases in Japan and Germany are working closely together to incorporate their respective technologies in thisnew design system.
Speeding up business activities for manufacturers of panels and other electric control system equipment is one
more theme in this category. To accomplish this, we acquired a wiring design system development and sales
company that has a large number of customers in the market.
(ii) Design Data Management Solutions
During the fiscal year, there were many activities for more growth of sales of the DS-2 design data management
system, which has scalable functions in order to meet the various requirements of even large design
environments, and the DS-2 Expresso, which has appropriately selected pre-set functions to allow rapid
introduction at customer site. The DS-E3 data management system was developed for use with the E3.series ofwire harness design systems used in the automobile and industrial equipment industries. The DS-E3 isstructured for the management and utilization of wiring design data, which are essential capabilities as the useof electric components in a variety of products largely grows and becomes more complex. We anticipate
substantial demand at our customers for this new system.
(iii) Other Activities
There is a serious shortage of engineers in the manufacturing sector. To meet this need, we focused on
upgrading the know-how of engineers and expanding our service that provides companies with highly skilled
engineers. In this category, there was also growth in sales of network security products and storage products
because of the rapid growth in the use of cloud services.
Consolidated results
Net sales
Ordinary profit
Profit attributable to owners of parent

23,582 million yen
2,114 million yen
1,511 million yen

2(up 6.2% year on year)(up 34.6% year on year)(up 25.3% year on year)

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Fiscal year sales were higher than one year earlier and reached a record high. Steady growth in sales of the CR-8000
Design Force PCB design and analysis solution, our core product, and higher sales of the E3.series of wire harness
design systems contributed to sales growth.
Earnings were much higher than one year earlier because of growth in sales of internally produced software, which
has a high profit margin.
Sales by product category were as follows.
Sales by productPrinted Circuit Board design solutions
Circuit design solutions
IT solutions
Client services

3,772 million yen
4,947 million yen
4,799 million yen
10,058 million yen

Major products of Printed Circuit Board design solutions

Major products of Circuit design solutions

Major products of IT solutions(up 2.0% year on year)(up 10.0% year on year)(up 2.1% year on year)(up 8.3% year on year)

CR-8000 Design Force
CR-8000 DFM Center
CADSTAReCADSTAR

CR-5000 Board Designer

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

CR-5000 System Designer(2) Financial Position
Total assets at the end of the fiscal year under review increased 3,116 million yen from the end of the previous fiscal
year to 43,647 million yen. The main factors were increases of 2,615 million yen in cash and deposits and 393
million yen in investment securities.
Liabilities at the end of the fiscal year under review increased 1,104 million yen from the end of the previous fiscal
year to 13,099 million yen. The main factors were increases of 496 million yen in advances received and 322 million
yen in income taxes payable.
Net assets at the end of the fiscal year under review increased 2,011 million yen from the end of the previous fiscal
year to 30,547 million yen and the shareholders’ equity ratio was 69.0%.
(3) Cash Flows
Cash and cash equivalents (hereafter “cash”) at the end of the fiscal year under review increased 2,562 million yen
over the end of the previous fiscal year to 16,609 million yen.
Cash flows by category were as follows.
Cash flows from operating activities
Net cash provided by operating activities increased 960 million yen from the previous fiscal year to 3,547 million
yen. The main cash inflows were profit before income taxes of 2,093 million yen (a year-on-year increase of 661
million yen), depreciation of 681 million yen (a year-on-year increase of 28 million yen), and an increase in net
defined benefit asset or liability of 628 million yen (a year-on-year increase of 321 million yen).
Cash flows from investing activities
Net cash used in investing activities increased 3 million yen from the previous fiscal year to 592 million yen. The
main cash outflows include purchase of non-current assets of 553 million yen (a year-on-year decrease of 50 million
yen).
3

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Cash flows from financing activities
Net cash used in financing activities increased 76 million yen from the previous fiscal year to 558 million yen. Thiswas mainly due to cash dividends paid of 465 million yen (same level as in the previous fiscal year).
Cash flow indicators were as follows:
Fiscal years ended

March 31, 2015

March 31, 2016

March 31, 2017

March 31, 2018

Shareholders’ equity ratio

69.0%

71.7%

69.3%

69.0%

Shareholders’ equity ratio based on market prices

60.0%

70.6%

78.2%

78.1%

Interest-bearing debt to cash flow ratio

2.5%

11.1%

0.9%

0.9%

17,001.1

3,275.1

36,726.9

28,300.6

Interest coverage ratio

Calculation formula: Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity ratio based on market prices: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments
Notes: 1. All indicators are calculated based on consolidated figures.
2. Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares).
3. Operating cash flows are calculated using the figures for operating cash flows on the consolidated statement of cash flows .
4. Interest-bearing debt includes all liabilities on the consolidated balance sheet that incur interest.

(4) Outlook
Although economies are recovering in Japan and other countries, the outlook is likely to remain unclear because ofconcerns about U.S. economic policies and other reasons. Despite this uncertainty, we expect more growth inbusiness domains where the Zuken Group is active. The main reason is the urgent need for design andmanufacturing process innovations in response to dramatic changes taking place in the global business climate for
manufacturers.
The Zuken Group is determined to achieve more growth in corporate value by supplying innovative solutions that
help client companies upgrade their manufacturing operations.
We forecast net sales of 25,500 million yen, ordinary profit of 2,600 million yen, and profit attributable to owners ofparent of 1,800 million yen in the fiscal year ending March 31, 2019.
* The above forecasts are based on information available at the time this report was prepared and actual results may
differ from these forecasts for a number of reasons.

2. Basic Approach for the Selection of Accounting Standards
The ZUKEN Group will continue to prepare consolidated financial statements in accordance with generally
accepted accounting principles in Japan for the time being to permit comparisons with prior years and with thefinancial data of other companies.
We will take suitable actions with regard to the application of International Financial Reporting Standards by taking
into account associated factors in Japan and other countries.

4

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

3. Consolidated Financial Statements and Notes(1) Consolidated Balance SheetFY2016(As of Mar. 31, 2017)(Thousands of yen)
FY2017(As of Mar. 31, 2018)

AssetsCurrent assets
Cash and deposits

14,253,644

16,868,686

Notes and accounts receivable-trade

5,195,460

5,375,965

Securities

6,700,000

6,700,000

Merchandise and finished goods

285,834

269,857

Work in process

54,82695,659Raw materials and supplies

2,809

3,908

Deferred tax assets
Other
Allowance for doubtful accounts

407,384

520,387

2,124,177

2,172,359(23,323)(44,416)

29,000,814

31,962,406

9,274,513

9,273,296

Accumulated depreciation(6,320,061)(6,383,419)

Buildings and structures, net

2,954,451

2,889,876

Machinery, equipment and vehicles

86,037

94,375(41,919)(46,995)

44,11747,380Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures

1,871,571

1,885,042

Accumulated depreciation(1,522,083)(1,503,203)

349,488381,8393,009,821

3,015,103

64,232

52,694(42,599)(26,475)

Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net

21,633

26,2186,379,512

6,360,419

Goodwill

790,754661,482

Other739,373

699,954

1,530,127

1,361,437

Investment securities

2,695,806

3,089,690

Deferred tax assets

486,170

401,131

Other

453,294

487,166

Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Allowance for doubtful accounts(15,032)(14,962)

Total investments and other assets

3,620,238

3,963,024

11,529,879

11,684,881

40,530,693

43,647,287

Total non-current assets
Total assets

5

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2016(As of Mar. 31, 2017)(Thousands of yen)
FY2017(As of Mar. 31, 2018)

Liabilities
Current liabilities
Accounts payable-trade823,903

726,558

Income taxes payable

250,629573,228

Advances received

4,759,402

5,256,136

Provision for bonuses

793,761

799,513

Provision for directors’ bonuses

38,40053,370

Provision for loss on business liquidation

1,518

1,576

Other provision

9,047

7,940

Other

1,559,521

1,864,426

Total current liabilities

8,236,184

9,282,751

3,506,552

3,541,427

252,125

275,473

Non-current liabilities
Net defined benefit liability
Other
Total non-current liabilities

3,758,678

3,816,901

11,994,863

13,099,652

Capital stock

10,117,065

10,117,065

Capital surplus

8,657,736

8,659,021

Retained earnings

9,629,044

10,675,443

Total liabilities
Net assets
Shareholders’ equity

Treasury shares(15,169)(15,716)

28,388,676

29,435,814

Valuation difference on available-for-sale securities

851,340

1,124,695

Foreign currency translation adjustment(32,391)

146,943

Remeasurements of defined benefit plans(1,101,576)(587,708)(282,628)

683,930

429,781

427,891

28,535,829

30,547,635

40,530,693

43,647,287

Total shareholders’ equity
Accumulated other comprehensive income

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

6

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

Net sales

22,199,168

23,582,473

Cost of sales

6,434,018

6,413,787

Gross profit

15,765,150

17,168,686

Selling, general and administrative expenses

14,168,911

15,143,361

Operating profit

1,596,238

2,025,324

Interest income

8,939

17,878Dividend income

24,031

31,628Rent income
Share of profit of entities accounted for using equity
methodOther

42,38347,6701,475-

45,45845,257

Total non-operating income

122,288

142,434

145,260

45,339Non-operating income

Non-operating expenses
Foreign exchange losses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary profit

-

3,906

1,545

3,728

146,805

52,974

1,571,721

2,114,785

Extraordinary income
Gain on sales of non-current assets
Surrender value of insurance
Gain on bargain purchase

5,648

2,329

-

36,537-35,996

Gain on sales of investment securities

6,440

3,317

Total extraordinary income

12,08978,180

4,120

8,876

Extraordinary losses
Loss on disposal of non-current assets
Retirement benefit expenses-

90,265

Loss on litigation

89,154-

Loss on liquidation of business

57,791-

Total extraordinary losses

151,065

99,142

1,432,745

2,093,823

Income taxes-current

345,986

709,679

Income taxes-deferred(92,993)(161,852)

Total income taxes

252,993547,827

1,179,751

1,545,995

Profit before income taxes

ProfitProfit (loss) attributable to non-controlling interests(26,285)

34,589Profit attributable to owners of parent

1,206,037

1,511,406

7

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Consolidated Statement of Comprehensive Income
FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

1,179,751

1,545,995

317,672

273,354

Foreign currency translation adjustment(80,436)

187,670

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income(892,242)

513,867(713)(8,334)(655,720)

966,558

524,0312,512,554

550,3172,477,964(26,285)

34,589ProfitOther comprehensive income
Valuation difference on available-for-sale securities

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

8

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

(3) Consolidated Statement of Changes in Equity
FY2016 (Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodCapital surplus Retained earnings Treasury shares

10,117,065

8,657,753

8,888,024

Total shareholders’equity(14,678)

27,648,164

Changes of items during period
Dividends of surplus
Profit attributable to owners ofparentOther
Purchase of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(465,017)(465,017)

1,206,037

1,206,037

(16)

(16)
(491)

(491)

-

(16)

741,019(491)

740,511

10,117,065

8,657,736

9,629,044(15,169)

28,388,676

Accumulated other comprehensive income
Total
NonValuation
Foreign currency Remeasurements accumulated
controlling
difference ontranslationof defined
otherinterests
available-foradjustment
benefit planscomprehensive
sale securities
incomeBalance at beginning of current
period533,667

48,758(209,334)

373,091

457,752

Total net
assets28,479,008

Changes of items during period
Dividends of surplus
Profit attributable to owners ofparentOther(465,017)
1,206,037(16)

Purchase of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(491)
317,672(81,150)(892,242)(655,720)(27,970)(683,690)

317,672(81,150)(892,242)(655,720)(27,970)

56,821

851,340(32,391)(1,101,576)(282,628)

429,781

28,535,829

9

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2017 (Apr. 1, 2017 – Mar. 31, 2018)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodCapital surplus Retained earnings Treasury shares

10,117,065

8,657,736

9,629,044

Total shareholders’equity(15,169)

28,388,676

Changes of items during period
Dividends of surplus
Profit attributable to owners ofparentOther
Purchase of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(465,006)(465,006)

1,511,406

1,511,406

1,285

1,285
(546)

(546)

-

1,285

1,046,399(546)

1,047,138

10,117,065

8,659,021

10,675,443(15,716)

29,435,814

Accumulated other comprehensive income
Total
NonValuation
Foreign currency Remeasurements accumulated
controlling
difference ontranslationof defined
otherinterests
available-foradjustment
benefit planscomprehensive
sale securities
incomeBalance at beginning of current
periodChanges of items during period

851,340(32,391)(1,101,576)(282,628)

429,781

Dividends of surplus

28,535,829(465,006)

Profit attributable to owners ofparentOther
Purchase of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period

Total net
assets1,511,406
1,285
(546)
273,354

179,335

513,867

966,558(1,890)964,668

273,354

179,335

513,867

966,558(1,890)2,011,806

1,124,695

146,943(587,708)

683,930

427,891

30,547,635

10

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

(4) Consolidated Statement of Cash FlowsFY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

1,432,745

2,093,823

Cash flows from operating activities
Profit before income taxes
Depreciation
Gain on bargain purchase653,205

681,921-(35,996)

Amortization of goodwill

153,520

157,798

Interest and dividend income(32,971)(49,506)

43,089(576)(1,475)

3,906(6,440)(3,317)

57,791-

Foreign exchange losses (gains)Share of (profit) loss of entities accounted for using
equity method
Loss (gain) on sales of investment securities
Loss on liquidation of business
Decrease (increase) in notes and accounts
receivable-trade
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in net defined benefit asset or
liability
Other, net(79,742)(48,567)(199,708)

49,139307,193

628,443

607,096481,557

Subtotal

2,934,303

3,958,625

33,56048,825Interest and dividend income received
Interest expenses paid

(70)

(125)

Income taxes paid

(323,290)(459,960)

Payments for loss on liquidation of business(57,791)-

Net cash provided by (used in) operating activities

2,586,712

3,547,365

Cash flows from investing activities
Decrease (increase) in time deposits(17,100)(33,120)

Purchase of property, plant and equipment(280,699)(272,910)

Purchase of intangible assets
Proceeds from sales and redemption of investment
securities
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other, net(323,482)(280,958)

11,21032,750-(43,710)

14,404

5,545

Net cash provided by (used in) investing activities(595,665)(592,404)-(18,207)

Cash flows from financing activities
Decrease in short-term loans payable
Repayments of long-term loans payable-(34,459)

(491)

(546)

Cash dividends paid

(465,017)(465,006)

Other, net(16,507)(40,341)

Net cash provided by (used in) financing activities(482,016)(558,560)

Purchase of treasury shares

Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(134,146)

166,115

1,374,884

2,562,515

Cash and cash equivalents at beginning of period

12,671,871

14,046,756

Cash and cash equivalents at end of period

14,046,756

16,609,271

11

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Basis of Presenting the Consolidated Financial Statements
1. Scope of consolidation(1) Number of consolidated subsidiaries: 21
Main consolidated subsidiaries: Zuken USA Inc., Zuken GmbH, Zuken Limited, Zuken Tec Inc., Zuken NetWave Inc.
Alfatech Inc. was included in the scope of consolidation due to the purchase of its stock by the Company in the fiscal year
under review.
(2) Number of non-consolidated subsidiaries: 2
These subsidiaries are not included in the scope of consolidation since each of them is a small-scale business whose total
assets, net sales, profit (equity in earnings) and retained earnings (equity in earnings) have no significant effect on theoverall results of consolidated financial statements.
2. Application of equity method
Number of non-consolidated subsidiaries not accounted for under the equity method: 2
These subsidiaries are not included in the scope of application of the equity method since each of them is a small-scalebusiness whose profit (equity in earnings) and retained earnings (equity in earnings) have no significant effect on the overall
results of consolidated financial statements.
3. Fiscal year-end of consolidated subsidiaries
Among the consolidated subsidiaries, the fiscal year-end of Zuken Korea Inc., Zuken Singapore Pte. Ltd. and Zuken Taiwan Inc.
is the end of February, and the fiscal year-end of Zuken Shanghai Technical Center Co., Ltd. and one other company is the endof December.
The consolidated financial statements include the financial statements of consolidated subsidiaries as of their fiscal year-end.
However, adjustments to the consolidated financial statements are made as needed for significant transactions at the above fi ve
subsidiaries with different fiscal year-ends that occur between their fiscal year-ends and the fiscal year-end for the
consolidated financial statements.
4. Accounting standards(1) Valuation standards and methods for principal assets(a) Securities
Available-for-sale securities
Marketable securities:
Stated at fair value using quoted market price on the balance sheet date. (Unrealized gain or loss
is included in net assets. Cost of securities sold is determined by the moving-average method.)
Non-marketable securities: Stated at cost determined by the moving-average method.
(b) Inventories
Valued at the cost method (the book value on the balance sheet is written down to reflect the effect of lower profitability).
Merchandise:Primarily stated at cost, determined by the moving-average method.
Finished goods and work in process: Stated at cost, determined by the specific identification method at the Company and its
major consolidated subsidiaries, and stated at cost, determined by the periodic averagemethod at some consolidated subsidiaries.
Raw materials: Stated at cost, determined by the moving-average method at the Company, and stated at cost, determined by
the specific identification method at major consolidated subsidiaries.
Supplies:
Stated at cost, determined by the last purchased price method at the Company and its major consolidated
subsidiaries.
(2) Depreciation and amortization of significant depreciable assets(a) Property, plant and equipment (excluding leased assets)
Depreciation of property, plant and equipment at the Company and its domesti c consolidated subsidiaries is calculated by the
declining-balance method, except for facilities attached to buildings and structures acquired on or after April 1, 2016 andbuildings (excluding attached facilities) of which depreciation is calculated by the straight-line method. Overseas
consolidated subsidiaries compute depreciation mainly by the straight-line method.

12

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Estimated useful lives of principle assets are as follows:
Buildings and structures:
3 years to 60 years
Tools, furniture and fixtures:
2 years to 20 years(b) Intangible assets (excluding leased assets)
Software for sale at the Company and its domestic consolidated subsidiaries is amortized using the straight -line method
over the period of validity starting when sales begin (not more than three years) and software for internal use at thesecompanies is amortized using the straight-line method over the estimated useful lives (not more than five years).
Amortization of other intangible assets is calculated by the straight-line method.
(c) Leased assets
Depreciation of finance lease transaction where there is no transfer of ownership is calculated based on the straight -line
method, assuming the lease period to be the useful lives and a residual value of zero.
(3) Recognition of significant allowances(a) Allowance for doubtful accounts
To prepare for losses on doubtful accounts such as notes and account receivables -trade and loans receivable, allowances
equal to the estimated amount of uncollectible receivables are booked for general receivables based on the historical
write-off ratio, and bad receivables based on case-by-case determination of collectibility.
(b) Provision for bonuses
To provide for employee bonus obligation, the Company and some consolidated subsidiaries provide an allowanc e at theamount based on the estimated bonus obligations.
(c) Provision for directors’ bonuses
To provide for directors’ bonuses, the Company and some consolidated subsidiaries provide an allowance at the amountbased on the estimated bonus obligations.
(d) Provision for loss on business liquidation
To provide for losses on business liquidation and rationalization, the Company provides an allowance at the amount based on
the estimated loss.
(4) Accounting for retirement benefit(a) Allocation method for the estimated retirement benefit obligations
For the determination of retirement benefit obligations, the benefit formula standard is used as the method for allocating
estimated retirement payments over the period ending in the fiscal year under review.
(b) Accounting for actuarial gain or loss
Actuarial gain or loss is amortized and charged to expenses in the year following the fiscal year in which such gain or loss isrecognized by the straight-line method over five years.
(5) Recognition of significant income and expenses
Recognition criteria for net sales and cost of sales of completed construction contracts(a) The portion of contracted work deemed to have been completed by the end of the fiscal year under review
The percentage-of-completion standard (with the percentage of completion estimated on the cost-to-cost basis).
(b) Other contracted works
The completed-contract standard.
(6) Translation of significant foreign currency-denominated assets and liabilities
Foreign currency receivables and payables are translated into Japanese yen at year-end exchange rates and resulting exchange
gains or losses are recognized in earnings currently. All assets and liabilities of overseas consolidated subsidiaries andaffiliates are translated into Japanese yen at year-end exchange rates, and income and expenses into Japanese yen at the
average of the exchange rates in effect during each fiscal period, and resulting exchange gains or losses are included in for eign
currency translation adjustment and non-controlling interests under the net assets section.

13

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

(7) Amortization method and amortization period of goodwill
Goodwill is amortized using the straight-line method within 15 years, with the number of years determined by the origin of the
goodwill.
(8) Scope of cash and cash equivalents on consolidated statement of cash flows
Cash and cash equivalents consist of cash on hand and readily available deposits and short -term investments which can beeasily converted to cash and are exposed to little risk of change in value.
(9) Other significant accounting policies in the preparation of consolidated financial statements(a) Accounting for consumption taxes, etc.
Consumption taxes, etc. are accounted by the tax-exclusion method.

Notes to Consolidated Balance Sheet
Investments and other assets for non-consolidated subsidiaries are as follows.
(Thousands of yen)
FY2017(As of Mar. 31, 2018)

FY2016(As of Mar. 31, 2017)
Other (Investments in capital)

14,815

14,500FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

4,870,762

5,142,067

542,321575,727-

22,176

Provision for bonuses

468,517525,972

Provision for directors’ bonuses

38,40053,370Notes to Consolidated Statement of Income
1. Major items of selling, general and administrative expenses are as follows.

Salaries and allowances
Depreciation
Provision of allowance for doubtful accounts

Retirement benefit expenses
Research and development expenses

377,543

573,919

3,433,541

3,458,539

2. Total amount of research and development expenses included in general and administrative expenses(Thousands of yen)
FY2016FY2017(Apr. 1, 2016 – Mar. 31, 2017)(Apr. 1, 2017 – Mar. 31, 2018)
3,433,541

3,458,539

3. Breakdown of gain on sales of non-current assets is as follows.
FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

5,442

2,299

206

29

5,648

2,329

FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

Buildings, etc.

2,241

1,975

Tools, furniture and fixtures, and others

1,879

6,901

4,120

8,876

VehiclesTools, furniture and fixtures, and others
Total
4. Breakdown of loss on disposal of non-current assets is as follows.

Total

14

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Notes to Consolidated Statement of Comprehensive Income
Re-classification adjustments and tax effect with respect to other comprehensive income
FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)452,485

397,200

5,256(3,317)

Valuation difference on available-for-sale securities:
Amount incurred during the period
Re-classification adjustments
Before tax effect adjustments

457,741

393,883

Tax effect(140,068)(120,528)

Valuation difference on available-for-sale securities

317,672

273,354(80,436)

187,670(1,057,498)

133,794

179,626

440,342

Before tax effect adjustments(877,871)

574,136

Tax effect(14,370)(60,269)

Remeasurements of defined benefit plans, net of tax(892,242)

513,867(713)(8,334)(655,720)

966,558

Foreign currency translation adjustment:
Amount incurred during the period
Remeasurements of defined benefit plans, net of tax:
Amount incurred during the period
Re-classification adjustments

Share of other comprehensive income of entities accounted
for using equity method:Amount incurred during the period
Total other comprehensive income

Notes to Consolidated Statement of Changes in Equity
FY2016 (Apr. 1, 2016 – Mar. 31, 2017)
1. Type of share and number of shares of outstanding shares and treasury shares
Number of shares
Increase
as of Apr. 1, 2016
Outstanding shares(Shares)Number of shares
as of Mar. 31, 2017

Decrease

Common stock

23,267,169--

23,267,169

Total

23,267,169--

23,267,169

16,293422-

16,715

Treasury shares
Common stock (Note)

Total
16,293422
Note: Number of treasury shares of common stock increased 422 shares due to the acquisition of odd -lot shares.

16,715

2. Dividends(1) Dividend payment
Resolution
General Shareholders’Meeting on Jun. 29, 2016
Board of Directors’ meetingon Nov. 7, 2016

Type of share

Total dividends(Thousands of yen)

Dividend pershare (Yen)Record date

Effective dateCommon stock

232,508

10

Mar. 31, 2016

Jun. 30, 2016

Common stock

232,508

10

Sep. 30, 2016

Dec. 2, 2016

(2) Dividends with a record date in the fiscal year under review but an effective date in the following fiscal year
Type of
Total dividends
Source ofDividend per
Resolution
Record dateshare
(Thousands of yen)funds
share (Yen)General Shareholders’CommonRetained
232,504
10 Mar. 31, 2017
Meeting on Jun. 29, 2017stock
earnings

15

Effective dateJun. 30, 2017

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2017 (Apr. 1, 2017 – Mar. 31, 2018)
1. Type of share and number of shares of outstanding shares and treasury shares
Number of shares
Increase
as of Apr. 1, 2017
Outstanding shares(Shares)Number of shares
as of Mar. 31, 2018

Decrease

Common stock

23,267,169--

23,267,169

Total

23,267,169--

23,267,169

16,715342-

17,057

Treasury shares
Common stock (Note)
Total

16,715342
Note: Number of treasury shares of common stock increased 342 shares due to the acquisition of odd-lot shares.

17,057

2. Dividends(1) Dividend payment
Resolution
General Shareholders’Meeting on Jun. 29, 2017
Board of Directors’ meetingon Nov. 6, 2017

Type of share

Total dividends(Thousands of yen)

Dividend pershare (Yen)Record date

Effective dateCommon stock

232,504

10

Mar. 31, 2017

Jun. 30, 2017

Common stock

232,50110

Sep. 30, 2017

Dec. 4, 2017

(2) Dividends with a record date in the fiscal year under review but an effective date in the following fiscal year
Type of
Total dividends
Source ofDividend per
Resolution
Record dateshare
(Thousands of yen)funds
share (Yen)General Shareholders’CommonRetained
279,001
12 Mar. 31, 2018
Meeting on Jun. 28, 2018stock
earnings

Effective dateJun. 29, 2018

Notes to Consolidated Statement of Cash Flows
Reconciliation of cash and cash equivalents at end of period and amount of consolidated balance sheet is made as follows.
(Thousands of yen)
FY2016FY2017(Apr. 1, 2016 – Mar. 31, 2017)(Apr. 1, 2017 – Mar. 31, 2018)
Cash and deposits

14,253,644

16,868,686

Time deposit with maturities over three months(206,888)(259,415)

Cash and cash equivalents

14,046,756

16,609,271

16

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Financial Instruments
1. Conditions of financial instruments(1) Policy for handling financial instruments
Safety is the highest priority of the Zuken Group when investing funds in financial instruments, while also taking into accou nt
credit risk, interest rates and other factors. Funds are invested in financial instruments that are believed to have an extre mely
small risk of the value falling below face value.
(2) Details of financial instruments, their risks and risk management system
Notes and accounts receivable-trade, which are operating receivables, are vulnerable to credit risk associated with customers .
The Company performs rigorous credit management for each customer and supervise payment dates and balances. In addition,
there are measures to quickly identify doubtful receivables caused by a decline in a customer’s financial soundness or otherevent and to reduce the amount of these receivables.
Marketable securities and investment securities are mainly stock of companies with relationships with the Zuken Group. These
securities are vulnerable to risk associated with changes in their market prices. The Company periodically checks fair values, thefinancial condition of issuers and other items in order to quickly identify securities that may need to be written down and r educe
the amount of these securities.
Accounts payable-trade, which is operating debt, is mostly due within one year.
(3) Supplemental explanation concerning fair values, etc. of financial instruments
Fair value of the financial instrument is measured at a quoted market price, if available, or reasonably assessed value if a quoted
market price is not available. As the calculation of the reasonably assessed value incorporates varying factors, the amount mayvary if different assumptions are used.
2. Items related to fair values of financial instruments
The book value, fair value, and their differences are shown as follows. However, financial instruments whose fair value isdeemed to be extremely difficult to measure are not included (please refer to Note 2 below.)
FY2016 (As of Mar. 31, 2017)
Book value

Fair value(Thousands of yen)
Difference(1) Cash and deposits

14,253,644

14,253,644-(2) Notes and accounts receivable-trade(3) Marketable securities and investment
securities
Assets total

5,195,460

5,195,460-

9,103,306

9,103,306-

28,552,411

28,552,411-

823,903823,903-823,903823,903-(1) Accounts payable-trade
Liabilities total
FY2017 (As of Mar. 31, 2018)

Book value

Fair value(Thousands of yen)
Difference(1) Cash and deposits

16,868,686

16,868,686-(2) Notes and accounts receivable-trade(3) Marketable securities and investment
securities
Assets total

5,375,965

5,375,965-

9,497,190

9,497,190-

31,741,842

31,741,842-

726,558

726,558-

726,558

726,558-(1) Accounts payable-trade
Liabilities total

17

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Notes 1. Matters concerning determination of fair value of financial instruments and marketable securities
Assets(1) Cash and deposits, and (2) Notes and accounts receivable-trade
Fair value of the financial instruments in these categories is deemed to be equal to their carrying amount.
(3) Marketable securities and investment securities
For fair value of the financial instruments in these categories, stocks are valued based on their prices on securities
exchanges. Fair value of bond investment trust is deemed to be equal to its carrying amount. Please refer to the section“Marketable Securities” for information about securities categorized by purpose.
Liabilities(1) Accounts payable-trade
Fair value of the financial instrument in this category is deemed to be equal to their carrying amount because they aresettled within a short period of time.
2. Financial instruments whose fair values are deemed to be extremely difficult to measure(Thousands of yen)
FY2017(As of Mar. 31, 2018)

FY2016(As of Mar. 31, 2017)

Item

292,500

Unlisted stocks

292,500

These instruments are not included in the above table because there are no market prices and the fair values are deemed
to be extremely difficult to measure.
3. Balance of money claims and marketable securities with maturity scheduled to be redeemed in the subsequent fiscal
years
FY2016 (As of Mar. 31, 2017)
Due within one year
Cash and deposits
Notes and accounts
receivable-trade
Total

One to five years(Thousands of yen)Over ten years

Five to ten years

14,253,644

-

-

-

5,195,460---

19,449,104

-

-

-

FY2017 (As of Mar. 31, 2018)(Thousands of yen)
Due within one year
Cash and deposits
Notes and accounts
receivable-trade
Total

One to five years

Five to ten years

Over ten years

16,868,686

-

-

-

5,375,965---

22,244,652

-

-

-

18

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

Marketable Securities
1. Available-for-sale securities
FY2016 (As of Mar. 31, 2017)(Thousands of yen)
Type
Securities with book value exceeds
acquisition cost(1) SharesBook value

Acquisition cost

Unrealized gains (losses)

2,403,306

1,176,592

1,226,714(2) Bonds---(3) Others

-

-

-

2,403,306

1,176,592

1,226,714---

Sub-total
Securities with book value not exceedingacquisition cost(1) Shares(2) Bonds---(3) Others

6,700,000

6,700,000-

6,700,000

6,700,000-

Sub-total

Total
9,103,306
7,876,592
1,226,714
Note: Unlisted stocks (book value of 292,500 thousand yen) are not included in available -for-sale securities in the above tablebecause there are no market prices and the fair values are deemed to be extremely difficult to measure.
FY2017 (As of Mar. 31, 2018)Type
Securities with book value exceeds
acquisition cost(1) SharesBook value

Acquisition cost

2,797,190

1,176,592

1,620,598---(2) Bonds(3) Others
Sub-total
Securities with book value not exceedingacquisition cost(1) Shares(Thousands of yen)
Unrealized gains (losses)

-

-

-

2,797,190

1,176,592

1,620,598---(2) Bonds---(3) Others

6,700,000

6,700,000-

6,700,000

6,700,000-

Sub-total

Total
9,497,190
7,876,592
1,620,598
Note: Unlisted stocks (book value of 292,500 thousand yen) are not included in available-for-sale securities in the above tablebecause there are no market prices and the fair values are deemed to be extremely difficult to measure.
2. Available-for-sale securities soldFY2016 (Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)Type

Sales amount

Aggregate gains

Aggregate losses(1) Shares

11,2106,440-(2) Bonds

-

-

-

-

-

-

11,2106,440-(3) Others
Total

19

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2017 (Apr. 1, 2017 – Mar. 31, 2018)(Thousands of yen)Type

Sales amount

Aggregate gains

Aggregate losses(1) Shares

32,7503,317-(2) Bonds

-

-

-

-

-

-

32,7503,317-(3) Others
Total

Segment Information
1. General information about reportable segments
Reportable segments of the Zuken Group are based on the group’s components from which financial information can be obtained
separately, so that CEO can judge how to distribute management resources and to periodically evaluate its performance.
The group is engaged in solutions business including research and development, manufacturing and sales activities involving
processes from design to production in related client services especially in electronics, automotive, and industrial equipmen t
manufacturing sectors. In the domestic market, the Company and its domestic affiliates are in charge and in overseas, each sales
subsidiary which is an independent management unit in each country is in charge in Europe (mainly UK, Germany, and France),
Americas, and Asia (mainly Korea, Singapore, and China).
Therefore, the group consists of segments based on the sales structure. Reportable segments are divided into following fourareas: Japan, Europe, Americas, and Asia. Each reportable segment consists of sales of solutions for processes extending fromdesigns to production and related client services especially in electronics, automotive, and industrial equipment manufacturingsectors.
2. Basis of measurement for net sales, profit or loss, segment assets, and other material items for each reportable segment
The accounting treatment methods for reportable segments are the same as those listed in the section “Basis of Presenting theConsolidated Financial Statements.”
Profits for reportable segments are operating profit figures in the consolidated statement of inco me.
Intersegment sales or transfers are based on market price.
3. Information about net sales, profit or loss, segment assets, and other material items for each reportable segment
FY2016 (Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
Reportable segment

Adjustment
amountJapan

EuropeAmericas

Asia

Total

Appropriated amountin the consolidated
financial statements(Note 1)

(Note 2)

Net sales
Sales to third parties
Intersegment sales or transfers
Total

15,556,406

3,965,263

1,426,008

1,251,490

22,199,168-

22,199,168

753,243

803,438

67,551

74,611

1,698,845(1,698,845)-

16,309,650

4,768,702

1,493,560

1,326,101

23,898,014(1,698,845)

22,199,168

Segment profit

1,064,834

73,19348,320363,261

1,549,610

46,6281,596,238

Segment assets

18,586,353

5,047,091

1,039,749

1,508,217

26,181,411

14,349,281

40,530,693

Depreciation and amortization

521,988

107,226

16,721

7,269

653,205-

653,205

Amortization of goodwill

29,806

97,91825,794-

153,520-

153,520-

11,661--

11,661-

11,661

497,685
equipment and intangible assets
Notes: 1. Contents of adjustments are as follows.

97,230

5,665

3,600

604,181-604,181

Other items

Investment in companies
accounted for using equity method
Increase in property, plant and(1) Adjustment amount in segment profit includes amount of 46,628 thousand yen eliminated for intersegment transactions.
(2) Adjustment amount in segment assets includes amount of -4,430,563 thousand yen eliminated for intersegment transactions andtotal company assets of 18,779,845 thousand yen. The total company assets are mainly composed of surplus funds (deposits andmarketable securities), and long-term invested assets (investment securities) of the Company.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.

20

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2017 (Apr. 1, 2017 – Mar. 31, 2018)(Thousands of yen)
Reportable segment

Adjustment
amountJapan

EuropeAmericas

Asia

Total

Appropriated amountin the consolidated
financial statements(Note 1)

(Note 2)

Net sales
Sales to third parties
Intersegment sales or transfers
Total

16,282,344

4,420,846

1,615,282

1,264,000

23,582,473-

23,582,473

927,021949,069

50,95868,536

1,995,586(1,995,586)-

17,209,365

5,369,916

1,666,240

1,332,536

25,578,059(1,995,586)

23,582,473

Segment profit

1,516,597

112,069

62,559346,1222,037,348(12,023)

2,025,324

Segment assets

19,598,028

5,893,632

1,027,760

1,545,778

28,065,199

15,582,088

43,647,287

Depreciation and amortization

538,837

122,387

13,397

7,298

681,921-681,921

Amortization of goodwill

29,806

101,609

26,382-

157,798-

157,798

-

-

-

-

-

-

-

458,853
equipment and intangible assets
Notes: 1. Contents of adjustments are as follows.

92,984

11,9663,514

567,319-567,319

Other items

Investment in companies
accounted for using equity method
Increase in property, plant and(1) Adjustment amount in segment profit includes amount of -12,023 thousand yen eliminated for intersegment transactions.
(2) Adjustment amount in segment assets includes amount of -4,514,100 thousand yen eliminated for intersegment transactions andtotal company assets of 20,096,189 thousand yen. The total company assets are mainly composed of surplus funds (deposits andmarketable securities), and long-term invested assets (investment securities) of the Company.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.

Per-share Information(Yen)
FY2016(Apr. 1, 2016 – Mar. 31, 2017)
Net assets per share

FY2017(Apr. 1, 2017 – Mar. 31, 2018)

1,208.84

1,295.47

Net income per share
51.87
Notes: 1. Diluted net income per share is not presented since there is no dilutive share.
2. Basis for calculation of net income per share is as follows.
FY2016(Apr. 1, 2016 – Mar. 31, 2017)

65.01

Net income per share
Profit attributable to owners of parent(Thousands of yen)Amount not available to common shareholders(Thousands of yen)
Profit attributable to owners of parent applicable
to common stock (Thousands of yen)
Average number of shares outstanding during
period (Shares)

FY2017(Apr. 1, 2017 – Mar. 31, 2018)

1,206,037

1,511,406--

1,206,037

1,511,406

23,250,749

23,250,220

Subsequent Events
Not applicable.

Omission of Disclosure
Disclosure of the notes on leases, derivatives, retirement benefits, stock options, deferred tax accounting, business combina tions,asset retirement obligations, rental and other properties, and related party information was omitted since the disclosure of theseinformation are not significant in the context of the summary of financial results.

21

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

4. Production, Orders and Sales(1) Sales and Orders(a) Sales
Segment
Japan
EuropeAmericas
Asia
Total

FY2016(Apr. 1, 2016 – Mar. 31, 2017)
AmountComposition (%)
15,556,406
70.1
3,965,263
17.9
1,426,008
6.4
1,251,490
5.6
22,199,168
100.0(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)
AmountComposition (%)
16,282,344
69.0
4,420,846
18.7
1,615,282
6.8
1,264,000
5.5
23,582,473
100.0(b) Orders received and order backlog(Thousands of yen)
FY2016FY2017(Apr. 1, 2016 – Mar. 31, 2017)(Apr. 1, 2017 – Mar. 31, 2018)
Segment
Orders received
Order backlog
Orders received
Order backlog
Japan
15,913,864
5,652,153
16,727,717
6,202,639
Europe4,049,532
1,403,369
4,578,519
1,682,579
Americas1,739,386
1,104,837
1,623,691
1,054,301
Asia
1,479,397
605,164
1,267,923
610,561
Total
23,182,181
8,765,524
24,197,851
9,550,082
Notes: 1. Intersegment transactions have been eliminated.
2. The above amounts are based on selling prices and the amounts do not include consumption taxes.
(Reference) Results by product category are as follows.
(a) Sales
Product category
Printed Circuit Board design solutions
Circuit design solutions
IT solutions
Client services
OthersTotal

FY2016(Apr. 1, 2016 – Mar. 31, 2017)
AmountComposition (%)
3,699,747
16.7
4,497,482
20.3
4,701,900
21.2
9,292,233
41.8
7,804
0.0
22,199,168
100.0(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)
AmountComposition (%)
3,772,334
16.0
4,947,766
21.0
4,799,749
20.4
10,058,851
42.6
3,771
0.0
23,582,473
100.0

FY2016(Apr. 1, 2016 – Mar. 31, 2017)
Orders received
Order backlog
3,728,014
674,046
4,518,406
824,325
4,636,629
575,149
10,291,326
6,692,002
7,804
23,182,181
8,765,524(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)
Orders received
Order backlog
3,770,536
671,566
4,948,779
855,631
5,076,399
849,428
10,398,198
7,173,290
3,937
165
24,197,851
9,550,082(b) Orders received and order backlog
Product category
Printed Circuit Board design solutions
Circuit design solutions
IT solutions
Client services
Others
Total

Notes: 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 design
solutions

Major products of Circuit design solutions

Major products of IT solutions

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

22

CR-5000 Board Designer

CR-5000 System Designer

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

5. Non-consolidated Financial Statements(1) Balance Sheet(Thousands of yen)
FY2017(As of Mar. 31, 2018)

FY2016(As of Mar. 31, 2017)
AssetsCurrent assets
Cash and deposits

9,387,538

10,309,999

101,209103,561

Accounts receivable-trade

2,358,465

2,525,670

Securities

6,700,000

6,700,000

Inventories
Deferred tax assets

38,994
248,064

45,451
235,620

Other

242,866

214,467

(490)

(520)

19,076,649

20,134,251

Buildings

2,833,913

2,759,773

Structures

39,79137,097

Vehicles

13,00625,134

Notes receivable-trade

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Tools, furniture and fixtures
Land
Leased assets

100,117

122,953

3,009,559

3,009,559

920

11,7405,997,308

5,966,257

Other

405,130

339,946

Total intangible assets

405,130

339,946

Investment securities

2,692,306

3,086,190

Shares of subsidiaries and associates

1,142,963

1,478,786

Investments in capital of subsidiaries and associates
Long-term loans receivable from subsidiaries andassociates
Long-term trade accounts receivables from subsidiaries
and associates
Deferred tax assets

2,429,229

2,429,229

63,106

39,840665,951

712,705

349,810

264,171369,920324,673

Total property, plant and equipment
Intangible assets

Investments and other assets

Other
Allowance for doubtful accounts(72,102)(49,537)

Total investments and other assets

7,641,186

8,286,059

14,043,626

14,592,262

33,120,275

34,726,514

Total non-current assets
Total assets

23

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2016(As of Mar. 31, 2017)(Thousands of yen)
FY2017(As of Mar. 31, 2018)

Liabilities
Current liabilities
Accounts payable-trade522,754425,206

Accounts payable-other457,181586,747

Income taxes payable

37,596305,323

Advances received

635,742

639,810

Provision for bonuses

316,395

344,626

Provision for directors’ bonuses

31,40042,000

Provision for loss on business liquidation

1,518

1,576

Other

170,209

206,464

2,172,798

2,551,755

2,282,981

2,392,935

275,000

230,000

96,85096,85010,84020,6502,665,672

2,740,436

4,838,470

5,292,192

10,117,065

10,117,065

Legal capital surplus

8,657,753

8,657,753

Total capital surpluses

8,657,753

8,657,753

311,082

311,082

General reserve

6,825,000

7,325,000

Retained earnings brought forward

1,534,733

1,914,442

8,670,816

9,550,525(15,169)(15,716)

27,430,465

28,309,627

Valuation difference on available-for-sale securities

851,340

1,124,695

Total valuation and translation adjustments

851,340

1,124,695

28,281,805

29,434,322

33,120,275

34,726,514

Total current liabilities
Non-current liabilities
Provision for retirement benefits
Provision for loss on business of subsidiaries andassociates
Long-term accounts payable-other
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings

Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments

Total net assets
Total liabilities and net assets

24

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018(2) Statement of Income
FY2016(Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
FY2017(Apr. 1, 2017 – Mar. 31, 2018)

Net sales

9,670,525

9,977,689

Cost of sales

2,886,266

2,708,305

Gross profit

6,784,259

7,269,384

Selling, general and administrative expenses

6,237,578

6,431,744

546,680

837,639

Interest income

1,112

1,107

Dividend income

393,187

567,303

Operating profit
Non-operating income

Foreign exchange gains
Rent income-

33,624

156,248

162,023

Other

54,87756,149Total non-operating income

605,425820,208

Rent cost of real estate

94,72394,360Foreign exchange losses

139,200-

Non-operating expenses

Other
Total non-operating expenses
Ordinary profit

479

1,113

234,403

95,474

917,7031,562,373

1,787

535

27,00045,00022,97922,495Extraordinary income
Gain on sales of non-current assets
Reversal of provision for loss on business of subsidiaries
and associates
Reversal of allowance for doubtful account for
subsidiaries and associates
Gain on sales of investment securities

5,256

-

57,022

68,030Loss on disposal of non-current assets

2,029

2,036

Total extraordinary losses

2,029

2,036

972,695

1,628,367

Total extraordinary income
Extraordinary losses

Profit before income taxes
Income taxes-current

52,035306,098

Income taxes-deferred(100,989)(22,445)

Total income taxes(48,953)

283,652

Profit

1,021,649

1,344,714

25

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018(3) Statement of Changes in Equity
FY2016 (Apr. 1, 2016 – Mar. 31, 2017)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Legal
capitalsurplus

Total capitalsurplus8,657,753

8,657,753

Legalretainedearnings

Generalreserve

Retainedearnings
brought
forward

Total retained
earnings

6,825,000

978,102

8,114,184

Dividends of surplus(465,017)(465,017)

Profit

1,021,649

1,021,649

Capital stock

Balance at beginning of current
periodChanges of items during period

10,117,065

311,082

Purchase of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period

-

-

-

-

-

556,631556,631

10,117,065

8,657,753

8,657,753

311,0826,825,000

1,534,733

8,670,816

Shareholders’ equity

Treasury shares
Balance at beginning of current
periodChanges of items during period(14,678)

Valuation and translation adjustments
Valuation
Total valuation
Total shareholders’ difference onand translation
equityavailable-for-saleadjustments
securities
26,874,324

533,667

533,667

Total net assets

27,407,992

Dividends of surplus(465,017)(465,017)

Profit

1,021,649

1,021,649

(491)

(491)

Purchase of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period(491)

317,672

317,672

317,672(491)

556,140

317,672

317,672

873,813(15,169)

27,430,465

851,340

851,340

28,281,805

26

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2018

FY2017 (Apr. 1, 2017 – Mar. 31, 2018)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capital stock

Balance at beginning of current
periodChanges of items during period

10,117,065

Legalcapitalsurplus

Total capitalsurplus8,657,753

8,657,753

Legalretainedearnings

311,082

Generalreserve

Retainedearnings
brought
forward

Total retained
earnings

6,825,000

1,534,733

8,670,816

500,000(500,000)

Provision of general reserve
Dividends of surplus(465,006)(465,006)

Profit1,344,714

1,344,714

Purchase of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period----500,000

379,708

879,708

10,117,065

8,657,753

8,657,753

311,082

7,325,000

1,914,442

9,550,525

Shareholders’ equity

Treasury shares
Balance at beginning of current
periodChanges of items during period(15,169)

Valuation and translation adjustments
Valuation
Total valuation
Total shareholders’ difference onand translation
equityavailable-for-saleadjustments
securities
27,430,465

851,340

851,340

Total net assets

28,281,805

Provision of general reserve
Dividends of surplus(465,006)(465,006)

Profit1,344,714

1,344,714

(546)

(546)

Purchase of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period(546)

273,354273,354273,354(546)

879,161

273,354273,354

1,152,516(15,716)

28,309,627

1,124,695

1,124,695

29,434,322

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.

27