November 6, 2017

Summary of Consolidated Financial Results
for the Second Quarter of Fiscal Year Ending March 31, 2018 (FY2017)(Six Months Ended September 30, 2017)[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:
November 8, 2017
Scheduled date of payment of dividend:
December 4, 2017
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 Second Quarter Ended September 30, 2017 (Apr. 1, 2017 – Sep. 30, 2017)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Millions of yen%
Six months ended
Sep. 30, 2017
10,4585.3
Sep. 30, 2016
9,928
(2.4)
Note: Comprehensive income (Millions of yen)

Millions of yen%

Millions of yen%

Millions of yen

%

336
89

276.9
83.4

489
58.4
555
199.3
309
94.9
185
(5.3)
Six months ended Sep. 30, 2017:
641 (n.a.)Six months ended Sep. 30, 2016:(169) (n.a.)

Net income per share

Diluted net income per
share

Yen

Yen

14.49
3.84

-

Six months ended
Sep. 30, 2017
Sep. 30, 2016

Profit attributable toowners of parent

Ordinary profit(2) Consolidated financial position
Total assets

Shareholders’ equity ratio

Net assets

Millions of yen

Millions of yen

As of Sep. 30, 2017
41,304As of Mar. 31, 201740,530
Reference: Shareholders’ equity (Millions of yen)
As of Sep. 30, 2017:%

28,91028,53528,520
As of Mar. 31, 2017:

69.0
69.3
28,106

2. Dividends
1Q-endDividend per share
3Q-endYear-end

2Q-endYen

Fiscal year ended Mar. 31, 2017
Fiscal year ending Mar. 31, 2018
Fiscal year ending Mar. 31, 2018 (forecast)
Note: Revisions to the most recently announced dividend forecast: None

Total

Yen

Yen

Yen

Yen

10.00
10.00

-

10.00

20.00

-

10.00

20.00

3. Consolidated Forecast for the Fiscal Year Ending March 31, 2018 (Apr. 1, 2017 – Mar. 31, 2018)
Net sales
Millions of yen

Operating profit%

Millions of yen

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

Millions of yen%

Yen

Full year
24,000
8.1
1,900
19.0
2,000
Note: Revisions to the most recently announced consolidated forecast: None

27.2

1,400

16.1

60.21

* 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 Sep. 30, 2017:23,267,169 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 Sep. 30, 2017:16,987 shares(c) Average number of shares outstanding during the period
Six months ended Sep. 30, 2017:23,250,312 shares

Six months ended Sep. 30, 2016:23,250,874 shares* The current quarterly financial report is not subject to quarterly review procedures.
* 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 Second Quarter of FY2017

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 ..................................................... 2

2.

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) Quarterly Consolidated Statement of Cash Flows ................................................................................................ 7(4) Notes to Quarterly Consolidated Financial Statements......................................................................................... 8
Going Concern Assumption .................................................................................................................................. 8
Significant Changes in Shareholders’ Equity......................................................................................................... 8
Segment Information ............................................................................................................................................ 83.

Supplementary Information .................................................................................................................................. 9(1) Sales and Orders................................................................................................................................................. 9

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ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first half of the fiscal year ending on March 31, 2018, gradual economic recoveries continued to take place inJapan, Europe and the United States. However, the overall outlook remained uncertain because of concerns aboutslowing economic growth in Asia, U.S. policies and other reasons. In the electronic equipment, automotive andindustrial equipment manufacturing sectors which are the major customer segments of the Zuken Group, althoughbusinesses in certain industries remain cautious about making capital investment, there are clear signs of recovery
among businesses in general.
Net sales in the first half were 10,458 million yen, 5.3% higher than one year earlier. One reason was steady growthin sales of IT solutions led by network security products. Sales of Circuit design and IC solutions were also higher than
one year earlier. Higher sales of the E3.series of electrical wire harness design solution, mainly in Europe and theUnited States, also contributed to the first-half sales growth.
Earnings increased significantly due to the growth in sales. Ordinary profit was 555 million yen, 199.3% higher than
one year earlier, and profit attributable to owners of parent was 336 million yen, 276.9% higher than one year earlier.
(2) Explanation of Financial Position

Total assets at the end of the second quarter of the current fiscal year increased 773 million yen from the end of theprevious fiscal year to 41,304 million yen.
Current assets increased 801 million yen. The main factors were increases of 2,045 million yen in cash and deposits
and 181 million yen in work in process, while there was a 1,588 million yen decrease in notes and accounts
receivable-trade. Non-current assets decreased 28 million yen. The main factors include a decrease of 44 million yen
in intangible assets.
Total liabilities increased 398 million yen from the end of the previous fiscal year to 12,393 million yen. Current
liabilities increased 266 million yen. The main factors include an increase of 606 million yen in advances received,
while there was a decrease of 284 million yen in accounts payable-trade. Non-current liabilities increased 131
million yen mainly due to an increase in net defined benefit liability.
Net assets increased 375 million yen from the end of the previous fiscal year to 28,910 million yen, and theshareholders’ equity ratio was 69.0%.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

We currently maintain the consolidated forecast for the fiscal year ending March 31, 2018 that was released on May
8, 2017. 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.

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ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance SheetFY2016(As of Mar. 31, 2017)(Thousands of yen)
Second quarter of FY2017(As of Sep. 30, 2017)

AssetsCurrent assets
Cash and deposits

14,253,644

16,299,173

Notes and accounts receivable-trade

5,195,460

3,607,179

Securities

6,700,000

6,700,000

Merchandise and finished goods

285,834

285,106

Work in process

54,826236,681

Raw materials and supplies

2,809

5,143

Other

2,531,561

2,697,478

Allowance for doubtful accounts(23,323)(28,082)

29,000,814

29,802,680

Buildings and structures, net

2,954,451

2,892,043

Land

3,009,821

3,009,821

415,239457,226

6,379,512

6,359,091

Goodwill

790,754751,304

Other739,373734,535

1,530,127

1,485,840

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

3,620,238

3,656,854

Total non-current assets

11,529,879

11,501,786

40,530,693

41,304,466

Total assets

3

ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017

FY2016(As of Mar. 31, 2017)(Thousands of yen)
Second quarter of FY2017(As of Sep. 30, 2017)

Liabilities
Current liabilities
Accounts payable-trade823,903539,739

Income taxes payable

250,629

241,794

Advances received

4,759,402

5,365,864

Provision for bonuses

793,761

777,136

Provision for directors’ bonuses

38,400-

Provision for loss on business liquidation

1,518

1,580

Other provision

9,047

8,537

Other

1,559,521

1,568,260

Total current liabilities

8,236,184

8,502,913

3,506,552

3,631,015

252,125

259,547

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

3,758,678

3,890,563

11,994,863

12,393,476

Capital stock

10,117,065

10,117,065

Capital surplus

8,657,736

8,658,457

Retained earnings

9,629,044

9,733,434

Total liabilities
Net assets
Shareholders’ equity

Treasury shares(15,169)(15,587)

28,388,676

28,493,370

Valuation difference on available-for-sale securities

851,340

882,437

Foreign currency translation adjustment(32,391)

155,756

Remeasurements of defined benefit plans(1,101,576)(1,011,071)(282,628)

27,122429,781

390,497

28,535,829

28,910,989

40,530,693

41,304,466

Total shareholders’ equity
Accumulated other comprehensive income

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

4

ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)

Net sales

9,928,196

10,458,887

Cost of sales

2,593,751

2,780,677

Gross profit

7,334,445

7,678,209

Selling, general and administrative expenses

7,025,238

7,188,461

309,207489,748

Interest income

3,545

2,088

Dividend income

15,307

20,389Rent income

20,961

23,234

Operating profit
Non-operating income

Foreign exchange gains

-

2,312

Other

24,24922,157

Total non-operating income

64,06470,181

7,805

3,803

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

179,006

-

1,028

1,080

187,840

4,883

185,431555,046

1,852

1,030

Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income

852

-

2,704

1,030

633

1,829

57,479-Extraordinary losses
Loss on disposal of non-current assets
Loss on liquidation of business

58,113

1,829

Profit before income taxes

Total extraordinary losses

130,022554,247

Income taxes-current

126,810229,308

Income taxes-deferred(40,755)(7,167)

Total income taxes

86,055

222,141

Profit43,967332,106

Loss attributable to non-controlling interests
Profit attributable to owners of parent

5(45,427)(4,788)89,395

336,895

ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)First six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)

43,967332,106

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

96,66331,096

Foreign currency translation adjustment(217,599)

196,483

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income(91,259)

90,505(1,238)(8,334)(213,434)

309,750(169,466)

641,857(124,038)

646,646(45,427)(4,788)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 Second Quarter of FY2017(3) Quarterly Consolidated Statement of Cash FlowsFirst six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)

Profit before income taxes

130,022554,247

Depreciation
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

321,234

335,8021,404,689

1,652,917(628,675)(254,514)

160,161

240,180

Cash flows from operating activities

SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid

606,481

97,171

1,993,915

2,625,804

19,98022,556(36)(26)(176,235)(269,876)

Payments for loss on liquidation of business(57,479)-

Net cash provided by (used in) operating activities

1,780,144

2,378,457

Decrease (increase) in time deposits(109,500)(105,715)

Purchase of property, plant and equipment(73,002)(108,000)

Purchase of intangible assets(150,607)(162,179)

4,038(5,013)(329,071)(380,908)(232,508)(232,504)

Cash flows from investing activities

Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Cash dividends paid
Other, net(7,548)(34,257)

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(240,056)(266,762)(309,950)

210,351

901,065

1,941,138

Cash and cash equivalents at beginning of period

12,671,871

14,046,756

Cash and cash equivalents at end of period

13,572,936

15,987,894

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ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Segment Information
I. First six months of FY2016 (Apr. 1, 2016 – Sep. 30, 2016)
Information about reportable segment net sales and profit or loss
Reportable segment
Japan

EuropeAmericas6,855,828

1,765,698

363,359
7,219,188(Thousands of yen)
Appropriated amount
Adjustmentin the quarterly
amountconsolidated(Note 1)statement of income(Note 2)

Asia

Total

613,903692,766

9,928,196-

9,928,196

359,671

34,84846,302804,182(804,182)-

2,125,369

648,751

739,069

10,732,379(804,182)

9,928,196

Net sales
Sales to third parties
Intersegment sales ortransfers
Total

Segment profit (loss)
175,976(84,587)(35,349)
228,034
284,073
25,133309,207
Notes: 1. Adjustment amount in segment profit (loss) includes amount of 25,133 thousand yen eliminated for intersegment
transactions.
2. Segment profit (loss) is adjusted with operating profit in the quarterly consolidated statement of income.

II. First six months of FY2017 (Apr. 1, 2017 – Sep. 30, 2017)
Information about reportable segment net sales and profit or loss

(Thousands of yen)

Reportable segment
Americas

Asia

Total

Appropriated amount
Adjustmentin the quarterly
amountconsolidated(Note 1)statement of income(Note 2)Japan

EuropeSales to third parties
Intersegment sales ortransfers

7,117,193

1,969,584

754,503617,605

10,458,887-

10,458,887

439,580

403,835

27,82331,360902,601(902,601)

-

Total

7,556,774

2,373,420

782,327

648,966

11,361,488(902,601)

10,458,887

Net sales

Segment profit (loss)
373,649(76,155)
26,174
181,343
505,011(15,263)489,748
Notes: 1. Adjustment amount in segment profit (loss) includes amount of -15,263 thousand yen eliminated for intersegment
transactions.
2. Segment profit (loss) is adjusted with operating profit in the quarterly consolidated statement of income.

8

ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017

3. Supplementary Information(1) Sales and Orders(a) Sales

Segment

First six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)

AmountAmountComposition (%)

Composition (%)

Japan

6,855,828

69.1

7,117,193

68.0

Europe1,765,698

17.8

1,969,584

18.8

Americas613,903

6.2

754,503

7.2

Asia692,7666.9

617,605

6.0

9,928,196

100.0

10,458,887

100.0

Total
(b) Orders received and order backlog

Segment

First six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)
Orders received

Japan
EuropeAmericas
Asia
Total

Order backlog(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)
Orders received

Order backlog

7,976,798
1,602,872
554,667

6,415,665
1,089,162
646,5458,477,912
1,814,703
405,541

7,012,872
1,388,072
755,946

677,465

318,669

604,749

588,897

10,811,804

8,470,043

11,302,906

9,745,789

Notes: 1. Intersegment transactions have been eliminated.
2. The above amounts are based on selling prices and the amounts do not include consumption taxes.

9

ZUKEN Inc. (6947) Financial Results for the Second Quarter of FY2017(Reference) Results by product category are as follows.
(a) Sales

Product category

First six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)

AmountAmountComposition (%)

Composition (%)

Printed Circuit Board design solutions

1,727,983

17.4

1,620,441

15.5

Circuit design and IC solutions

1,907,820

19.2

1,999,267

19.1

IT solutions

1,743,341

17.6

1,845,762

17.6

Client services

4,548,336

45.8

4,992,897

47.8

Others
Total

715

0.0

518

0.0

9,928,196

100.0

10,458,887

100.0(b) Orders received and order backlog

Product category

First six months of FY2016(Apr. 1, 2016 – Sep. 30, 2016)
Orders received
Order backlog(Thousands of yen)First six months of FY2017(Apr. 1, 2017 – Sep. 30, 2017)
Orders received
Order backlog

Printed Circuit Board design solutions

1,738,627

635,560

1,552,357

616,299

Circuit design and IC solutions

2,215,856

1,085,833

2,387,986

1,237,468

IT solutions

2,225,923

1,118,683

2,504,253

1,237,733

Client services

4,630,065

5,629,350

4,857,590

6,654,088

1,330

615

718

200

10,811,804

8,470,043

11,302,906

9,745,789

Others
Total

Notes: 1. The above amounts are based on selling prices and the amounts do not include consumption taxes.
2. Names of major products by product category are as follows.

Major products of Printed Circuit Board
design solutions

Major products of Circuit design and IC
solutions

Major products of IT solutions

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

CR-5000 Board Designer
CR-5000 System Designer

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

10