Financial Results for the Three-Month Period Ended September 30, 2014
November 13, 2014
Company name: ZERO CO., LTD.
Tokyo Stock Exchange (Second Section)
Code No.: 9028
(URL: http://www.zero-group.co.jp/)
Representative:
Takeo Kitamura, President and CEO
Contact for inquiries:
Mamoru Yoshida, Director
Tel: 044-520-0106
Date of financial report submission:
Date to begin payment of dividend:
Additional materials for the financial results for 1Q FY2014:
Briefing session for the financial results for 1Q FY2014:

November 14, 2014
–
None
None

1. Consolidated Financial Results for the Three-Month Period Ended September 30, 2014
(From July 1, 2014 to September 30, 2014)(1) Consolidated Results(Figures less than one million yen are rounded down.)
Percentages shown below are the rates of increase or decrease compared with the same period of the previous year
Sales
Million yen
Three-Month Period
Ended Sep. 30, 201417,125

Operating income%

Million yen
9.3

416

Three-Month Period
15,6709.4
669
Ended Sep. 30, 2013
(Note) Comprehensive income: FY2014 First quarter
FY2013 First quarter

Ordinary income%

Million yen

Million yen

%

-37.8

456

-32.5

257

-30.6

121.2

676

108.5

371

135.3

219 million yen (-46.3%)
408 million yen (138.8%)

Earnings per share-basic

Earnings per share-diluted

Yen
15.08
21.73

Three-Month Period Ended Sep. 30, 2014
Three-Month Period Ended Sep. 30, 2013

Net income

%

Yen
-

(2) Consolidated Financial Position

As of Sep. 30, 2014
As of June 30, 2014
(Ref.) Shareholders’ equity:

Total assets

Net assets

Million yen
32,791
32,107

Million yen
14,861
14,926

As of Sep. 30, 2014: 14,861 million yen

Shareholders’ equity
ratio

Net assets per
share

%
45.3
46.5

Yen
869.47873.28

As of June 30, 2014: 14,926 million yen

2. Dividends
At end of
1Q

Dividend per share
At end of
3Q
Yen-

At end of
2Q
Yen
8.00

Yen
FY2013
FY2014
Forecast for
8.00
FY2014(Note) Revision from the latest dividend forecast: None

At end of
4Q
Yen
14.10

-

Annual
total
Yen
22.10

15.00

23.00

3. Consolidated Forecasts for FY2014 (From July 1, 2014 to June 30, 2015)
Percentages shown below for whole FY2014 are the rates of increase or decrease compared with the previous year.
Sales

Whole 2014

Million yen
69,500Operating income%
2.8

Million yen
2,900

%
1.6

Ordinary income
Million yen
2,950

Net income%
0.4

Million yen
1,570

%
3.9

Earnings
per share basic
Yen
91.85

(Note) Revision to the latest consolidated forecasts: None

4. Others
(1)
(2)
(3)

(4)

Changes in important subsidiaries during period (Transfer of particular subsidiary which involves the change of scope of
consolidation.): N/A
Application of particular accounting methods for quarterly consolidated financial statements: N/A
Changes in accounting policies, accounting estimates and restatement of corrections! Changes in accordance with the revision of accounting standards and others: Yes" Changes other than above: Yes# Changes in accounting estimates: N/A$ Restatement of corrections: N/A
Number of issued shares (common shares)! Number of issued shares (including treasury stock) at the end of each period:
As of September 30, 2014: 17,560,242
As of June 30, 2014: 17,560,242" Number of treasury stock at the end of each period:
As of September 30, 2014: 467,711
As of June 30, 2014: 467,711# Average number of shares issued during the first quarter of the fiscal year
FY 2014: 17,092,531
FY 2013: 17,092,531%Implementation status review procedure
This financial report is exempt from the review procedure based upon the Financial Instruments and Exchange Act. The financial
statements are under the review procedure at the time of disclosure of this report.
%Explanation regarding appropriate use of forecasts
Statements in this report relating to future matters such as earnings forecasts are based on information presently available. Actual
results may differ from those forecasts depending on various factors.

Table of Contents of Attachments
1. Qualitative Information ….…………..……………..……………..……………..………………….....

2(1) Analysis of business performance ……………..……………..……………..……………..……………...

2(2) Analysis of the financial condition ……………..……………..……………..……………..……………..

3(3) Forecast for the next consolidated fiscal year ...............................................................................................

4

2. Summary Information (Notes) ……………..……………..……………..……………..……………..

4(1) Changes in important subsidiaries during period ...................................................................................................

4(2) Application of particular accounting methods for quarterly consolidated financial statements…..…………….

4(3) Changes in accounting policies, accounting estimates and restatement of corrections……………………………

4

3. Consolidated Financial Statements .……………..……………..………………..…………………….

5(1) Consolidated Balance Sheet .……………..…………..……………..……………………………………

5(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement………………………..

7(Consolidated Income Statement)
First three months …...…………………..……………..………………………….………………….

7(Consolidated Comprehensive Income Statement) …...……………..………………………………………
First three months …..……………………..…………………………………………………………

8(3) Notes to Consolidated Financial Statements ………………………………………………………………..

9(Note for the assumption of going concern) …………………………………………………………….….. 9(Note concerning major changes in shareholders’ equity) ………………………………………………………… 9(Segment Information) ……………………………………………………………………………………………... 9-1-

1. Qualitative Information(1) Analysis of business performance
The nation’s economy during the first three months of fiscal 2014 (referred to as the “current term”) maintained aweaker yen and higher stock prices against the backdrop of the government’s economic policy and the Bank ofJapan’s quantitative and qualitative easy monetary policy, and continues to show improvements in corporate earnings
and employment situation. On the other hand, while recovering from the backlash of the last-minute rise in demandthat occurred before the consumption tax rate hike, the progress of that recovery is slow for individual consumption,
being affected by concerns over increase in commodity prices from the weaker yen. As such, the economic prospectremains unclear.
In the automobile industry, Japanese automakers’ new vehicle sales in the domestic market turned out to be 96.3% ofthat in the corresponding quarter from the previous year (hereinafter referred as “year-on-year”) (Japan Automobile
Manufacturers Association’s statistical data), with performance being strongly affected by the chilling effect of theconsumption tax rate hike on consumer spending. The drop was slight immediately after the consumption tax rate
hike, helped by shipment of outstanding orders, but in the current term the drop became sharper as a result ofsluggishness in new orders. Exports to overseas markets upturned as the stronger yen was depreciated further, but
recorded 96.5% year-on-year, strongly affected by the decrease of exports to North America, the largest market. Used
car market also displayed a downward trend due to the chill in consumer spending. On the other hand, the export ofused cars continued to grow, recording 104.6% year-on-year.
Under these circumstances, in the vehicle-related business, our Group’s major segment, sales from transportation
business related to Nissan Motor Co., Ltd., our major customer, fell due to a drop in sales of new cars by Nissan
Motor. However, we were successful in capturing new transportation demand and the overall sales of the vehiclerelated business increased year-on-year. In the human resources business, thanks to steady efforts to develop newsales regions and customers through strong sales activities and enhanced sales operations, sales increased year-onyear. Sales also increased year-on-year in the general cargo transportation business.
No. of Motor Vehicles Related to Domestic Distribution

UnitUnits

Domestic Sales
July 2013-September 2013
July 2014-September 2014
Year-on-year Change (%)
New VehiclesDomestic automakers*1
1,290,383
1,242,962
96.3%
Nissan Motor Co. only*1(180,399)(157,066)(87.1%)
Foreign automakers*2
71,23769,545
97.6%
Used Cars
Passenger cars
*3
899,991
858,339
95.4%
Mini-cars*4
690,405
676,185
97.9%
Total used cars

1,590,396
1,534,524
96.5%
Deregistered vehicles*3
64,09959,396
92.7%
Exports
July 2013-September 2013
July 2014-September 2014
Year-on-year Change (%)
Domestic automakers’ new*1
1,189,297
1,147,292
96.5%
vehiclesNissan Motor
*1(164,361)(122,118)(74.3%)
Used passenger cars
*5
350,910
366,908
104.6%*1: Calculated using the Japan Automobile Manufacturers Association’s statistics*2: Calculated using the Japan Automobile Importers Association’s statistics*3: Calculated using the Japan Automobile Dealers Association’s statistics*4: Calculated using the Japan Light Motor Vehicle and Motorcycle Association’s statistics*5: Calculated using the number of deregistered used cars for export listed in the Japan Automobile Dealers Association’s statistics

As a result of these measures, our group’s financial results for the current fiscal year to June 30, 2014 recorded sales of
17,125 million yen (109.3% year-on-year) and operating income of 416 million yen (62.2% year-on-year), thus postingyear-on-year increase in sales but year-on-year decrease in operating income. Upon taking non-operating gains andlosses into account, ordinary income was 456 million yen (67.5% year-on-year), and net income was 257 million yen(69.4% year-on-year).

-2-

! Automobile-related BusinessIn this business segment, domestic sales of Nissan Motor Company, our major customer, was affected strongly
by the backlash of the last-minute rise in demand that occurred before the consumption tax rate hike, and posted
sales of 157,066 units (87.1% year-on-year) of new vehicles in Japan. Exports also fell, and recorded 122,118
units (74.3% year-on-year) (Japan Automobile Manufacturers Association’s statistical data).
Due to the above reasons, the sales of Nissan's new cars transportation decreased. However, efforts were made toincrease the sales of Non-Nissan new cars and general used cars transportation as well as other automobilerelated business such as used car exports, which contributed the overall increase year on year.
As a result, this segment’s sales rose to 13,173 million yen (108.4% year-on-year) but profit was 666 million yen(88.3% year-on-year). The vehicle transportation business faces serious challenges, with future demand being
uncertain with the domestic automobile market having reached maturity, the number of young job applicants isshrinking, reflecting the falling birthrate and the rapid aging of the population, and fuel prices are rising. In
pursuit of higher profitability, we continue our effort to become a corporate group capable of steadily generating
revenue by winning the trust of our customers and to maintain and increase sales by improving the quality oftransportation, and in addition by strengthening and carrying out measures to reduce transportation costs.
" Human Resources BusinessIn this segment, while companies seeking human resources are on the increase as the nation’s economy is on arecovery trend, our corporate clients continue to be very strict in terms of dispatch and contract work fees. Under
these circumstances, we were able to increase sales in this segment, thanks to steady efforts to develop new sales
regions and customers through strong sales activities and enhanced sales operations in the employee dispatch
business, and posted sales of 2,915 million yen (113.5% year on year) but due to increase in recruitment costs,
etc., profits in this segment were 109 million yen (81.5% year-on-year).
# General Cargo Transportation Business
Strong sales of 1,140 million yen (111.5% year-on-year) was recorded in this business segment. However, due toincrease of outsourced work as a result of changes in the sales composition of port cargo handling, and increase in
the outsourced transportation cost, this segment posted profit of 78 million yen (55.2% year-on-year).
Incidentally, concerning unclassifiable group-wide expenses (expenses concerning the company’s administrative
departments) and the amortization of goodwill, etc., which are not included in the above profit and loss by segment,
they are recognized as “Adjustments” items as listed in “Segment Information” in “3. “Consolidated Financial
Statements” and amounted to 438 million yen.
(2) Analysis of the financial condition(Assets)
Compared to the end of the previous term, current assets increased by 261 million yen (1.8%) to 14,614 million yen.
This is chiefly due, despite the decrease of cash and deposits by 352 million yen, to the increase of notes and accounts
receivable-trade by 167 million yen and merchandise by 130 million yen.
Compared to the end of the previous term, fixed assets increased by 422 million yen (2.4%) to 18,176 million yen.
This is chiefly due to the increase of buildings and structures by 362 million yen, and machinery, equipment andvehicles by 113 million yen.
As a result of the foregoing, compared to the end of the previous term, total assets increased by 683 million yen(2.1%) to 32,791 million yen.
(Liabilities)
Compared to the end of the previous term, current liabilities increased by 712 million yen (7.1%) to 10,779 million
yen. This is chiefly due, despite the decrease of income taxes payable by 588 million yen, to the increase of shortterm loans payable by 1,080 million yen.
Compared to the end of the previous term, long-term liabilities increased by 36 million yen (0.5%) to 7,150 million
yen.

-3-

As a result of the foregoing, compared to the end of the previous term, total liabilities increased by 749 million yen(4.4%) to 17,930 million yen.
(Net Assets)
Compared to the end of the previous term, net assets decreased by 65 million yen (0.4%) to 14,861 million yen. Thisis chiefly due, despite posting of net profits in the current term, retained earnings decreased by 37 million yen as aresult of dividend payment..

(3) Forecast for the next consolidated fiscal year
The forecast has not changed from the consolidated forecast published on August 8, 2014.

2. Summary Information (Notes)(1) Changes in important subsidiaries during period: N/A(2) Application of particular accounting methods for quarterly consolidated financial statements: N/A(3) Changes in accounting policies, accounting estimates and restatement of corrections(Application of the ASBJ Statement)
Provisions set forth in Section 35 of the ASBJ Statement No.26 of May 17, 2012 (hereinafter referred to as the“Accounting Standard”) and provisions set forth in Article 67 of the Guidance were applied from the current term.
The calculation method of the retirement benefit obligation cost was reviewed and the method of attributing expected
benefit to periods was also changed from straight-line attribution to benefit formula basis. In addition, the method ofdetermination of discount rate was changed from the method based on the period approximate to the expected
average remaining working lives of employees, to the method using a single weighted average discount rate reflecting
the estimated timing and amount of benefit payment.
Based on the transitional treatment prescribed in Section 37 of the Accounting Standard, in applying the Standards,
adjustments in retirement benefit obligation and service cost pursuant to changes in the calculation method have beenposted as gains/losses in retained earnings.
As a result, liabilities concerning retirement benefits at the start of the current term increased by 240 million yen, andretained earnings decreased by 155 million yen. This has no material effect on operating profits, ordinary profits andincome taxes – deferred of the current term.
(Changes in depreciation method of fixed assets)
The depreciation method that has been used in the past by our company and our domestic consolidated subsidiaries
was straight-line method, except for buildings acquired on and after April 1, 1998 (excluding building-related
equipment) and lease assets. This has been changed to declining-balance method from the current term.
On May 15, our company concluded a capital and business alliance agreement with Tan Chong International Limited
to enter into full-scale business in the market of ASEAN countries, and in the future we expect to engage in full-scale
overseas investment, including establishment of new logistics centers.
Taking the opportunity of such changes in the business environment, the depreciation method of tangible fixed assets
was reviewed to unify accounting principles within our group, both domestic and overseas, and maintaincomparability of periodic earnings. As the tangible fixed assets of our company and our domestic subsidiaries arewithin their useful lives and running stably, we have determined to change the depreciation to declining-balancemethod to expense at a constant rate over the useful life in order to more appropriately reflect the actual business
operation.
This change has no material effect on operating profits, ordinary profits and income taxes – deferred of the current
term.

-4-

3. Consolidated Financial Statements(1) Consolidated Balance Sheet(Unit: million yen)
As of June 30, 2014

As of September 30, 2014

AssetsCurrent assets
Cash and deposits

5,236

4,883

Notes and accounts receivable - trade

7,492

7,660

Merchandise

324

454

Supplies

100

97

Deferred tax assets

269

271

Others

1,012

1,336

Allowance for doubtful accounts

(83)

(89)

14,353

14,614

3,083

3,446

Machinery, equipment and vehicles, net

172

286

Tools, furniture and fixtures, net

71

73

Land

8,279

8,279

Lease assets, net

1,592

1,576

25

9

13,224

13,671

Goodwill

1,479

1,493

Others

566

546

2,045

2,040

Investment securities

989

992

Long-term loans receivable

75

68

Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures, net

Construction in progress
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Deferred tax assets

523

503

Others

1,031

1,024

Allowance for doubtful accounts

(136)

(123)

Total investments and other assets

2,483

2,465

17,754

18,17632,10732,791

Total fixed assets
Total assets-5-

As of June 30, 2014

As of September 30, 2014

Liabilities
Current liabilities
Notes and accounts payable - trade

3,478

Short-term loans payable

3,540

610

1,690

1,193

1,287

Income taxes payable

792

203

Accrued consumption taxes

441

438

Allowance for bonus

410

324

Current portion of long-term loans payable

15

15

Others

3,125

3,279

Total current liabilities

10,067

10,779Long-term loans payable

1,663

1,597

Deferred tax liabilities

193

96

Deferred tax liabilities for land revaluation

1,088

1,088

Provision for retirement benefits for directors

422

448

Allowance for sub-lease loss

44

40

Provision for retirement benefits

2,182

2,408

38

36

Others

1,480

1,433

Total long-term liabilities

7,113

7,150

17,181

17,930Capital stock

3,390

3,390

Capital surplus

3,204

3,204

Retained earnings

8,870

8,833

Treasury stock

(152)

(152)

15,313

15,275

27

31

(705)

(705)

Foreign currency translation adjustment

88

78

Accumulated retirement allowance adjustment

202

180

Total accumulated other comprehensive income

(386)

(414)

Total net assets

14,926

14,861

Total liabilities and net assets

32,10732,791

Allowance for sub-lease loss

Long-term liabilities

Asset retirement obligation

Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains (losses) on securities
Revaluation reserve for land-6-(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement(Consolidated Income Statement)(First three months)(Unit: million yen)First three months of FY13
(from July 1, 2013
to Sep. 30, 2013)
15,670First three months of FY14
(from July 1, 2014
to Sep. 30, 2013, 2014)17,125

Cost of sales

13,44014,987Gross profit

2,230

2,138

Selling, general and administrative expenses

1,561

1,722

669

416

0

0

Sales

Operating income
Non-operating income
Interest income
Dividend income

01Commission fee

1915

Equity in earnings of affiliates

09

Others17

39

Total non-operating income

3866Interest expenses

20

16

Loss on disposal of supplies-

7

Others101

Total non-operating expenses

30

25

676

456

Gain on sale of fixed assets

00

Total extraordinary income

0

0

0

1

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss
Loss on disposal of fixed assets
Total extraordinary losses

01

Net income before tax adjustments

677

455

Income taxes

305

197

Income before minority interests

371

257

Net income

371

257

-7-

(Consolidated Comprehensive Income Statement)(First three months)(Unit: million yen)

Income before minority interests

First three months of FY13
(from July 1, 2013 toSep. 30, 2013)
371

First three months of FY143(from July 1, 2014 toSep. 30, 2014)
257

Other comprehensive income
Unrealized gains (losses) on securities

05

Accumulated retirement allowance adjustment

-

(22)

Equity of equity-method affiliate

35

(22)

Total other comprehensive income (loss)

36

(38)

408

219

408

219

Comprehensive income(Breakdown)
Parent company portion of comprehensive income-8-(3) Notes to Consolidated Financial Statements(Note for the assumption of going concern)
None.
(Note concerning major changes in shareholders’ equity)
None.
Segment Information
1. Sales and profit for each reportable segment for the first three months of FY2013 (from July 1, 2013 to
September 30, 2013)(Unit: million yen)
Automobiletransportationrelated
Sales(1) Sales ofexternalcustomers(2) Internalsales between
business segments
or transfer
Total
Operating income

Generalcargotransportation

Human
resources

Total

Elimination andcorporate

Consolidated

12,145

2,513

1,012

15,670-15,670

7

55

10

73

(73)

-

12,152
755

2,568
134

1,022
142

15,744
1,031

(73)
(362)

15,670669(Notes)
1. Elimination of -362 million yen includes corporate expense of -280 million yen, goodwill amortization of -82
million yen and elimination among the segments of 0 million yen. The corporate expense is the expense of theadministrative departments which do not belong to any reported segment.
2. The segment profit is adjusted according to the operating profit in the quarterly consolidated profit and loss
statement.
2. Sales and profit for each reportable segment for the first three months of FY2014 (from July 1, 2014 toSeptember 30, 2014)(Unit: million yen)
Automobiletransportationrelated
Sales(1) Sales forexternalcustomers(2) Internalsales between
business segments
or transfer
Total
Operating income

Human
resources

General cargotransportation

Total

Elimination andCorporate (Note1)

Consolidated(Note 2)

13,158

2,845

1,121

17,125-

17,125

15

70

18

104

(104)

-

13,173
666

2,915
109

1,140
78

17,229
854

(104)
(438)

17,125416(Notes)
1. Elimination of -438 million yen includes corporate expense of -357 million yen, goodwill amortization of -82
million yen and elimination among the segments of 1 million yen. The corporate expense is the expense of theadministrative departments which do not belong to any reported segment.
2. The segment profit is adjusted according to the operating profit in the quarterly consolidated profit and loss
statement.

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