annual report 2009

The Partner for Success

Annual Report 2009Year ended March 31, 2009

For the Year:Net salesOperating incomeNet incomeAt Year-End:Total assetsTotal shareholders’ equity (Note 2)

Per Share of Common Stock:Net income (Note 3)Diluted net incomeCash dividends applicable to the period

Financial RatioOperating income ratioPrice earnings ratioShareholders’ equity ratioCurrent ratio

2009200920082007

Yen U.S. dollars

20062005

$202,52014,89812,388

362,592284,826

0.48011.280.143

Millions of yen

Thousands ofU.S. dollars

(Note 1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .

. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes: 1. For the convenience of the reader, the financial highlights described above have been presented in Japanese yen and also in U.S. dollars by arithmetically translating all Japanese yen amounts at ¥98 to US$1, the exchange rate in effect at March 31, 2009. 2. Total shareholders’ equity in the above table represents the total of shareholders’ equity and valuation and translation adjustments in the consolidated balance sheets. This is due to the adoption of a new accounting standard for the presentation of net assets in the balance sheet, which requires former shareholders’ equity and minority interests to be presented as net assets, and net assets to be classified as shareholders’ equity, valuation and translation adjustments and minority interests. The methods of determining the amounts of each category have not changed from the previous fiscal year. 3. Net income per share is computed based upon the weighted-average number of shares of common stock outstanding during each fiscal year.

2005

2006

2007

2008

2009

15,770

16,799

19,163

22,019

19,847

Millions of yen

* The payout ratio is not shown for fiscal 2007 due to net term losses.

Net sales

2005

2006

2007

2008

2009

28,130

25,526

26,032

28,157

27,913

Millions of yenTotal assets

2005

2006

2007

2008

2009

1,921

1,951

2,389

2,839

1,460

Millions of yenOperating income

2005

2006

2007

2008

2009

2,185

2,452

1,442

1,757

1,214

Millions of yenNet income

2005

2006

2007

2008

2009

35,768

34,074

36,689

37,686

35,534

Millions of yenTotal shareholders’ equity

2005

2006

2007

2008

2009

10

15

10

12

14

Yen / %

Trends in dividends and payout ratios(non-consolidated)

44

71

Trends in dividends payout ratios

18

21

¥ 15,7701,9212,185

35,76828,130

77.651,007.61

10

12.213.578.6

488.2

¥16,7991,9512,452

34,07425,526

90.88984.95

15

11.614.874.9

575.3

¥ 19,1632,3891,442

36,68926,032

55.701,005.27

10

12.519.671.0

425.1

¥ 22,0192,8391,757

37,68628,157

67.861,087.37

12

12.914.674.7

405.0

¥ 19,8471,4601,214

35,53427,913

47.021,105.23

14

7.412.878.6

506.5

%

ZUKEN Inc. and Consolidated SubsidiariesYears ended March 31, 2005, 2006, 2007, 2008 and 2009

Consolidated Financial Highlights

02ZUKEN Inc. ANNUAL REPORT 2009

Automobiles Industrialmachinery

Digital homeelectrical appliances

Communicationsdevices

Electroniccomponents Electrical

components

Medical devices Transportationdevices

Det

aile

d design

Concep

t des

ign M

ass production

Prototypes and production

Machinery SemiconductorSoftware

Electricity

PLM

Zuken’s solution fields

Zuken came into existence as a pioneer in the development of CAD systems in Japan to contribute to electronics manufacturing. Since our emergence we have been progressively expanding our offerings, leading to the creation of specific solutions in this area. With “The Partner for Success” as our corporate slogan, we are providing solutions and consulting; making use of our extensive technology, knowledge and expertise to ensure the success of our customers engaged in electronics production all over the world.

The plans and business forecasts indicated in this booklet are based on information that can be used at the present time, and they include latent risks and uncertain elements. It should be understood, therefore, that the actual content and results of our business activities may differ considerably from the forecasts presented herein due to changes in the various factors employed as the basis for these forecasts.

Profile

Consolidated Financial Highlights

Outline of Business

Message from the CEO

Message from the COO

Marketing Strategy

R&D Strategy

01020305091113

General Conditions According to Area

　Japanese Market

　European and US Markets

　Asian Market

Financial Section

Subsidiaries and Affiliates

Corporate Information

15161718193738

Aviation andspace

Remarks in connection with future prospects

Profile

Contents

Marketsand toward the next...

01 ZUKEN Inc. ANNUAL REPORT 2009

Companies are striving to develop products that meet the demands of the age as rapidly, efficiently and cheaply as possible and to launch these products into the market at the vanguard of the industry in consideration of the environment. In order to assist our customers in achieving this aim, Zuken is developing solutions that move away from optimization of process units in electronic design automation (EDA), mechani-cal design automation (MDA) and product lifecycle manage-ment (PLM) in the direction of total optimization of design based on collaboration between EDA and MDA, between EDA and PLM, and between MDA and PLM.

In order to optimize the whole structure of monozukuri, the first priority must be to ascertain correctly the gap between the way things should be and the way they actually are.For instance, a project begins with an awareness of the current state of maturity of information technology in the fields of EDA, MDA and PLM as a whole.Zuken works closely with our customers, exercising our capac-ity to the full in finding a solution to the problems they face. Zuken hopes to serve as the partner who will lead our custom-ers to eventual success.

The world is in the midst of a severe economic environment without precedent.Every company is currently searching for ways in which to tide over the current difficulties.One path that many companies are following involves attempts to review the whole structure of monozukuri* with the aim of creating products that will be favorably received by the next generation.Zuken’s mission is to solve the problems that monozukuri companies all over the world are facing and to help these companies to achieve success.“The Partner for Success”Zuken acts as a true partner for ensuring our customers’ success.* Monozukuri stands for manufacturing in Japanese.

* This graphic relates to current status and goals, and was created to resolve issues based on a common understanding between Zuken and customers. In the case of business analysis for customers, IT is developed and improved in the fields of electronic design automation (EDA), mechanical design automation (MDA), and the product lifecycle management (PLM) of both EDA and MDA.

Contents are created between Zuken and the supervised consultation of its partner, the JMA Consultants Inc.

Outline of Business

All for our customer’s success

The key to developing products that meetthe demands of the age is to move frompartial to total optimization

As a partner working together with customers oneverything from analysis of current conditions toplanning and problem-solving

Maturity of problem-solving using monozukuri support IT

Level 5 Level 4 Level 3 Level 2 Level 1 Level 1 Level 2 Level 3 Level 4 Level 5

EDA MDA

PLM

● High-levelequalization of

design qualitythrough use of

know-how

● Linkage betweendivisions

● Electromechanicalco-design

● Concept anddetailed design

● Design ofhigh-speed boards

● Verification ofdesign (SI, EMC)

● Authentication ofcircuit diagrams

● Linkage betweencircuits and boards ● Art work design

● CAD Lib management● CAD data management

● Control of information on components● Three-point checking● Linkage with PCB components tables

● Verification of costs by means of integrated BOM● Verification of environmental load● Variations

● Visualization of processes● Sharing of changes● Knowledge management

● High-levelequalization of

design qualitythrough the application

of know-how

● Linkage betweendivisions● Electromechanical

co-design● Concept and

detailed design

● Verification ofdesign (strength,

heat, vibrationanalysis)

● Assembly● Design involvementchecks● Components design

● Parts management● Unit management● Standard parts management

● Design template management● Rule management

● Verification of costs by means of integrated BOM● Verification of environmental load● Variations

● Visualization of processes● Sharing changes● Knowledge management

Totaloptimi zation

Totaloptimization

Totaloptimization

Partialoptimi zation

04ZUKEN Inc. ANNUAL REPORT 200903 ZUKEN Inc. ANNUAL REPORT 2009

Constituent sales ratios per category

Constituent sales ratios per region

Circuit board designSolutions

25.0%

Client services35.7%

Others0.1%

Consolidated sales(year ended March 2009)

¥19,846,787,000

Others0.1%

Japan69.8%

IT solutions15.5%

Europe19.0%

North America5.7%

Asia5.4%

Circuit design andIC solutions

23.7%

Consolidated sales(year ended March 2009)

¥19,846,787,000

• We have begun developing systems for the integrated control of all kinds of information on components required in the design, test production and mass production processes.

System on a Chip (SoC)

• We have entered into a business and capital alliance with Elmic Wescom Inc. (now Zuken Elmic Inc.),*2 with whom we are cooperating on the development of embedded software and the mutually supportive supply of products.

Global activities

• In Europe and North America we have been continuing to direct our efforts toward communications equipment and automobiles, in addition to which we are working on opening up new fields of industrial machinery and devices in new markets such as aircraft, rolling stock, medical equipment and FA devices.

• In Asia we have been concentrating on the sale of cabling and wiring design systems for rolling stock and industrial machinery. In China, we have significantly strengthened our system of support for local companies in addition to the already existing system of support for Japanese companies.

The consequence of this has been a major strengthening of our cabling and wiring design systems and of our business operations aimed at new markets in the United States. As regards our business activities in China, sales targeted at Chinese companies are now at almost the same level as those targeted at Japanese companies active in China, and we have thus managed to establish solid foundations for the full-scale promotion of business rooted in China. Products newly launched into the market have been positively assessed by many companies. However, the results of the launch of these products alone have not been adequate to make up for the fall in sales of EDA solutions and IT solutions during the fiscal year under review.

As a consequence, results were uniformly down on the same term last year, with sales for the term amounting to ¥19.847 billion (down by 9.9%), operating income amounted to ¥1.46 billion (down by 48.6%), and net income for the year came to ¥1.214 billion (down by 30.9%). In terms of individual product categories, the figures were ¥4.961 billion for EDA solutions centering on EDA (down by 22.2%), ¥4.71 billion for circuit design and IC solution corresponding to EDA upstream design fields and the SoC field (down by 5.2%), and ¥3.069 billion for IT solutions centering on the field of PLM (down by 14.9%). Thanks to our ongoing efforts to provide appropriate solutions based on a paramount concern for the needs of our customers, client services centering on maintenance and consulting saw a slight increase to ¥7.087 billion (up by 0.9%).

From around the middle of the fiscal year under review, the chaos in financial markets sparked off by the sub-prime loans problem in the United States and the financial crisis that followed in the wake of the collapse of Lehman Brothers suddenly spread all over the world, bringing about a major recession in the global economy. The very existence of all kinds of industries was called into question, and many companies were obliged to undergo restructuring. One consequence of this has been that the business results of many of Zuken’s customers have taken a turn for the worse and many are currently engaged in organizational reviews and reform.

Under these conditions, the Zuken group has been involved in the following efforts.

Electronic Design Automation (EDA)

• In the field of circuit board design systems, we have launched next-generation automatic wiring systems into the market.

• In order to open up new markets in the industrial machinery field, we have launched cabling and wiring design systems*1 aimed at rolling stock and industrial machinery that have already achieved extensive sales in Europe and North America into the Japanese market.

Product Lifecycle Management (PLM)

• We have launched project control systems for developing embedded software into the Japanese market.

Notes:*1 In the case of automobiles, rolling stock devices and industrial machinery,

systems that enable the accurate and efficient wiring of several electrical units inside a device in a short space of time using wire harnesses.

*2 Outline of Zuken Elmic Inc.:(Elmic Wescom Inc. was renamed as Zuken Elmic Inc. on July 1, 2009.)Location of head office: Yokohama City, Kanagawa PrefectureEstablished: April 30, 1977Capital: ¥1,202 millionBusiness: Development of middleware libraries that are important in the development of embedded systems, development of real-time operating systems, development of software, development and sale of hardware, etc.

Gaining fresh opportunitiesfrom the current changesin conditions, by engagingin a process of personaltransformation andsearching for answers todifficult questions.


Current results have been affected by theviolent storm affecting the global economy

Makoto Kaneko,President and Representative Director


05 ZUKEN Inc. ANNUAL REPORT 2009 06ZUKEN Inc. ANNUAL REPORT 2009

solving the problems that confront them and achieving success. We intend therefore to carry out the following efforts which we hope will enable us to achieve sales of ¥20.5 billion, operating income of ¥1.0 billion, and current net income of ¥700 million.

• Introducing greater rigor and thoroughness into the accumulation of technical know-how, the effective use of human resources, and business efficiency by rebuilding our development and sales structure.

• Striving to reduce costs and to establish a management infrastructure capable of achieving profit in a difficult economic environment.

• Striving to expand the areas to which we are able to respond by expanding our solution functions.

• Striving to achieve profits and exploit new markets by enhancing our consulting capacity, sales capacity and capacity to propose effective solutions.

• Developing new products from a medium and long-term perspective by accurately ascertaining our customers’ wishes and market trends.

On this occasion I would like to appeal to everyone in the Zuken group to tackle with the utmost seriousness the difficult issues that our customers are presenting us with. Many of these issues cannot be solved using conventional systems and standard approaches, and I believe therefore that innovations set to open the door on a new era are likely to arise if we tackle our customers’ wishes head-on and are able to come up with appropriate solutions.

It goes without saying that to achieve this will entail having to surmount many difficult hurdles. But we are fortunate that the software technology of the Zuken group has evolved to an incomparably higher level than in the past. This means that we are now able to provide revolutionary systems for dealing with difficult problems. Furthermore, I believe that we need to create futuristic products that are scarcely imaginable at the present time. Such efforts on our part will enable the Zuken group to become a true partner in supporting the success of our customers and will help us to achieve our objective of becoming a highly profitable company.

The Zuken group considers that one of our most important managerial policies is to ensure that profits find their way back to shareholders, and our basic policy will continue to be to issue dividends in a stable manner. As well as strengthening and improving our managerial foundations and financial constitution, we are constantly considering the best ways in which to return profits to our shareholders while taking account of internal reserves to ensure that we have sufficient resources for engaging in business activities in the future, all while keeping a close watch on our results and the business environment.

In line with this policy, we decided to issue an annual dividend of ¥12 per share (interim dividend of ¥5, term-end dividend of ¥7) for the fiscal year under review, but we have decided on an annual dividend of ¥14 for the present term (interim dividend of ¥7, term-end dividend of ¥7). This means that the dividend payout ratio for the present term is 29.8%. The annual dividend for the next term is also set to be ¥14 per share (¥7 for both interim and term-end dividends).

Since November last year we have been engaged in the acquisition of treasury stock and have been conducting capital policies expeditiously and making improvements in capital efficiency in accordance with changes in the business environment.

I hope that shareholders will wish to continue providing us with their understanding and support in the future.

Under economic conditions of unprecedented severity, everyone in the Zuken group is fully aware that it is up to us to change our business style in response to the efforts being made by our customers to reform monozukuri methods with a view to creating products that fully meet the needs of the new era. It is by no means an easy matter to engage in personal transformation. However, Zuken’s 30-year history has to some extent been a process of personal transformation. We need to ensure that the Zuken group is able to benefit as much as possible from the current changes occurring in the economic environment, and we need to push forward with further organizational strengthening through such transformation.

The reforms in monozukuri that our customers are striving to implement can be classified into two main directions. The first direction involves the pursuit of smaller size, faster speed and greater precision at levels far in excess of those maintained hitherto. This orientation is evident especially in the field of digital electrical appliances for use in the home. The second direction is all about building in high quality using cutting-edge three-dimensional functions as in the case, for example, of the wiring design for rolling stock and the design of industrial devices.

The transformation that the Zuken group needs to make involves, getting away from our past way of doing business that involved the uniform presentation of product features and striving to become a partner to our customers in assisting them to make a success of monozukuri operations. This we need to do by making ourselves familiar with the issues and concerns that our customers have, gaining a clear picture of their objectives, and providing them with the optimum solutions. The Zuken group has established a new slogan, “The Partner for Success,” in order to convey this stance with the utmost clarity, and we intend to engage in business on this basis in the future.

The severe conditions in which the global economy is situated are likely to be maintained through to the next period. Many companies at the forefront of their respective industries are set to engage in various forms of monozukuri using Zuken products to provide their design infrastructure. Under these conditions, we believe that it is the mission of the Zuken group to assist manufacturers all over the world in

Aiming to become a high-earning companyand challenging the solution of difficult problems

As well as issuing stable dividends, we areacquiring treasury stock

1970

1975

1980

1985

1990

1995

2000

2005

2010


Working as a partner to ensure the successof our customers’ monozukuri

Zuken founded (1976)

Development of CR-2000, Japan’sfirst domestically manufacturedCAD/CAM system (1978)

Establishment of Zuken America Inc.(now Zuken USA Inc.)in the USA (1983)

Opening of showrooms to thegeneral public (1987)

Development the CAE/CAD/CAMnetwork station CR-3000 (1988)

Listing on Section 2 of TSE (1991)

Change to listing on Section 1 ofTSE (1994)

Takeover of Racal-Redac Ltd. (1994)

Release of the EDA verticalintegration solution CR-5000 (1994)

Development of the ePDMsystem DS-1 (1996)

Opening of Zuken EMC Laboratory,the first noise measurement facility ofan EDA vendor (1999)

Takeover of INCASES (2000)

Announcement of the ePLMsystem DS-2 (2004)

Announcement of the high-speeddesign solution CR-5000Lightning (2005)

Announcement of the enterprisePLM system PreSight (2009)

Zuken’s history: an ongoing process of challengeunaffected by economic changes

Recessioncaused by the

strong yen

Multiplerecession

Deflationrecession

Lehmanshock

SecondHeisei

recession

SecondOil Shock

FirstOil Shock

Boom in “Rebuilding the Japanese Archipelago”

Hi-tech economic boom

Asset-inflatedboom

“Camphor”boom

IT boom

“Izanami” boom


Makoto Kaneko, President and Representative Director


Monozukuri

Support provide by the Zuken group with monozukuri

Zsas Inc.

Zuken Netware Inc.

Cadlab Inc.

Chip One Stop Inc.

Inventure Inc.

Zuken Elmic Inc.

Dispatch of engineers

Development ofbuilt-in systems

Proxy purchase ofcomponents

Development andsupply of IP

Support with use ofmechanical CAD systems

Construction ofnetwork environments

products such as EDA and PLM. This strategy involves each company in the Zuken group engaging in business entailing the provision of the optimum products and solutions in order to deal with the problems that face electronics monozukuri with which it is associated and playing a role in the lateral spreading of technology and know-how in the market.

The other group of companies has the role of supplement-ing and expanding Zuken’s business. For example, the business and capital alliance with Elmic Wescom Inc. (now Zuken Elmic Inc.) that took place in May 2008 is all about further stepping up efficiency in the field of electronics monozu-kuri with the aim of growing business in the machine-related market. Since June 2009 we have been creating a structure that will give us the top position in the built-in machines market. Our changes have involved breaking up the SoC Business Department, which had previously been engaged in business involving the development of products and systems related to Zuken semiconductors, and merging this department with Elmic Wescom Inc.

By means of mergers and acquisition and the establish-ment of subsidiaries , in addition to investment and incubation, we intend to continue actively promoting our group strategy, to create a new synergistic effect through the nurturing of business companies, and to raise the value and total capacity off the group.

Furthermore, in order to provide products and services even more deeply rooted in the standpoints of our customers, we have appointed Yoshinori Onoue, who, as executive director and senior vice president of Sony Corporation, has been responsible for global production and has held the impor-tant post of general manager of the Manufacturing Division. We hope that Mr. Onoue will make use of his experience and knowledge gained over many years at the head of the electron-ics monozukuri sector from the customer’s perspective to contribute to the further development of the Zuken group.

The conditions facing us remain severe, but we hope to live up to the expectations of our customers and of our sharehold-ers as the “Partner for Success” by channeling the full resources of the Zuken group.

The market as a whole is overlaid with a sense of oppression due to the global financial crisis, and there is currently very little enthusiasm for investment in system and facilities related to design. As this situation drags on, many companies are begin-ning to focus on investment aimed at enabling theme to survive in a highly competitive market, for example by lowering their costs and shortening the length of time they spend on development activities.

Under these conditions, we believe that the Zuken group needs to make it clear to management in each company how Zuken products can contribute to lowering costs and shorten-ing the time required for development and how, by introducing Zuken products, their companies will be able to win out in a severely competitive market.

To ensure that all our customers are fully aware of this new stance, the Zuken group will start new activities under the corporate slogan “The Partner for Success.”

This stance is one that is being followed by every single company in the Zuken group all over the world. We are avoid-ing supplying the same products and services in accordance with the same uniform policies in all markets. Instead, we are

striving to ensure that each individual company has a proper understanding of the targets that its customers in each country are trying to achieve and to provide optimum solutions and services in line with their respective targets.

In order to do this, we are engaged more actively than ever before in establishing smoother communication between our sales division in Japan, the United States, Europe and Asia and our development division in Japan, Germany and the United Kingdom. We hope that by encouraging global communication we will be able to provide the optimum solutions to our corpo-rate clients, taking account of their specific needs as well as culture, customs and regulations. We hope thereby to become a partner to our customers in contributing to their success and to enhance the global value of the Zuken group.

Our group strategy currently involves efforts being made by two groups of companies that are divided into sales and marketing in the global market and support engineering functions in the domestic market.

The first by a group of companies with the same roles as Zuken itself, to provide customers all over the world with systems indispensable for the manufacture of electronics

Becoming an indispensable ingredient insuccess with an active group strategy

Message from the COO

Further strengthening thetotal capacity of the groupto enable us to act as apartner capable ofsupporting the success ofevery one of our corporateclients all over the world.

As a partner to ensure the success ofour customers’ ventures

Encouraging global communication inorder to lead our customers to success

Jinya Katsube,COO and Representative Director

Jinya Katsube, COO and Representative Director




new fields. The Zuken group provides products, solutions and systems that encourage greater efficiency in connection with the electrical, mechanical and cabling wiring design that is essential for developing industrial machinery. We also possess solutions and know-how in connection with collaborative design making use of three-dimensional technology. Our business in the industrial machinery market is expanding rapidly thanks to our ability to make these assets available in an integrated manner.

All within the Zuken group are working hard to ensure that we are able to grasp the new business opportunities that have come to light through our process of self-reform and to expand our business in the midst of a highly challenging environment.

thus need to ascertain the essence of the problems they face, the targets they need to reach and to come up with solutions and methods worthy of Zuken.

This involves more than merely efforts made by the sales, support engineers and development divisions; such efforts extend to top sales execution involving senior management.

The two marketing strategy issues that we are focusing on are “expanding the scope of solutions” and “challenging new industries.”

“Total optimization of monozukuri” is the task we are tackling in connection with “expanding the scope of solutions.” To respond to the demands of our customers for greater operational efficiency in each process and the solution of specific problems, the Zuken group has hitherto provided a lineup of products intended to achieve partial optimization at each stage of electrical and mechanical design. However, our customers are increasingly expecting us to lower our costs further and to provide products and systems that make it possible to develop products with outstanding functions in a short time, so that they can provide the market with products that can achieve success under difficult conditions.

The Zuken group has thus begun to work on optimization extending to every process of electrical design (total optimiza-tion of electrical design) and optimization extending to every process of mechanical design (total optimization of mechanical design) in addition to optimization involving linkage between electrical design and mechanical design, plus total optimiza-tion of monozukuri including PLM. We believe that “total optimization of monozukuri” will make it possible for customers to increase their profits, raise their quality and shorten their delivery deadlines, and that this will contribute to their success.

Response to the ever growing speeds and intricacies of signals within circuit board technology, which has been advancing over recent years in alignment with the proliferated increase in digital appliances and mobile phones for use in the home and other goods for general consumer use, along with the demand for major reductions in costs and the shortening of the length of time required for development, are demands that have now extended to fields of industrial machinery such as robots, FA devices, medical instruments, broadcasting devices and printing devices. The second topic, “challenging new indus-tries,” represents our efforts to respond to demands in these

Manufacturing is changing significantly all over the world. With a view to strengthen cost competitiveness, over the past few years many companies have transferred production activities to EMS (Electronic Manufacturing Suppliers - companies engaged in production on commission), and many have also begun to explore new ways of ensuring their survival in the face of the financial crisis that we have had to confront since last year.

During this period of upheaval we believe that it’s the duty of the Zuken group to provide our customers with appropriate solutions and to contribute to their survival on the basis of a full understanding of their concerns and of how they wish to make changes.

To ensure that this approach becomes fully ingrained throughout the group, we have been soliciting messages that

symbolize our new business style from employees all over the world and have decided on “The Partner for Success” as our corporate slogan. In line with this slogan, the Zuken group intends to pursue business practices as a partner to our customers, to aid them in achieving success.

In line with the slogan “The Partner for Success,” the Zuken group is currently attempting to make major changes in the behavioral and conceptual patterns of all our employees. We can no longer afford to spend a long time presenting products as we have done historically. Going forward, we need to work with our customers and discuss and understand, in detail, precisely what they wish to achieve and their main barriers. We

Applying an integrated system extendingfrom front-line production through tomanagement

Challenging new industries employing ourcarefully cultivated know-how

“Total optimization of monozukuri” at thevanguard of the industry

From “product out” to “market in”

Becoming a true partner capable of contributing to ourcustomers’ success through the provision of integratedsolutions embracing everything from front-line productionactivities to management operations.

Marketing Strategy

Vendor or supplier

Sale of individualproducts

Proposing solutionsof the “product-dependent”type based on“product sales”

Hitherto

In the future

What are wegoing to sell toour customers?

Range of proposalsto customers

Relationships withour customers

Partner

Offeringwide-rangingsolutions to enablecustomers tosolve the businessissues facing them

Proposalscovering thedesignenvironmentas a whole

Changes needed to become a true partner

Toshihiro Shimauchi, Senior Managing Director


development of digital home electronic appliances and the evolution of design support technology. Such technology is now also becoming increasingly important in B2B fields such as the aviation and space industry, the defense industry, the industrial machine industry, and the communications infrastructure industry, thus creating new business opportuni-ties for Zuken.

Different problems have emerged from the standpoint of changes in market structure. In order to win out in the severely competitive environment surrounding costs and technology, manufacturers of electronic devices are being required to distinguish clearly between areas that demand the possession of their own unique technology and those areas that involve the use of external technology in order to create products in the shortest possible durations.

There is a need for a vertical division of labor in the overall flow from product planning to production that involves striving to maintain a corporate identity in terms of products while making use of ODMs and OEMs, and for a more strategic division of labor on the horizontal level. The conventional PDM/PLM approach whereby design and production data and processes are controlled within a single project or a single company is inadequate for dealing with such needs, and efforts are required from a global perspective that takes account of the flow of information and goods between different companies, different regions and different industries. In response to this situation, Zuken has developed “ePLM DS-2” by incorporating new technology introduced from outside, we have come up with a new solution known as “PreSight.”

We are in an era that calls for large-scale industrial restructuring and basic changes in processes necessitated by the world-wide financial crisis. As a technical partner supporting design and production, Zuken intends to work together with our customers on issues that will enable them to overcome the difficult problems they must navigate towards in order to have a successful future and to continue providing them with new innovative and effective solutions.

designer by offering a three-dimensional visual display within “CR-5000.” Additionally, in the case of “CR-5000 Lightning,” we’ve created new functions that enhance the quality of design by enabling more efficient analysis and verification in conjunc-tion with this function.

In order to raise the quality of ever more complex electronic devices in a short time, we need to carefully study the place-ment and direction of circuits in the limited space available inside a device. It is thus important to carry out collaborative design between different processes such as mechanical design, electrical design, design of semiconductor parts, printed circuit board design, circuit board design and wire harness design; and to perform verification and checks before actually embarking on manufacture.

Zuken has achieved harmonization between mechanical design and electronic circuit design by means of “Board Interchanger.” We have realized harmonization between the design of semiconductor parts and the design of printed circuit boards by means of a “Co-Design Manager.” Furthermore, in the field of wire harness, addition of the E3 product aggregate developed in Europe has enabled us to expand the range of applications to many new fields extending from automobiles and other vehicles to industrial machinery.

To transform ever more large-scale and complex electronic devices into attractive products, it is necessary at the stage of reviewing specifications and basic configuration to consider the overall circuit configuration, the configuration of the board, the spatial layout and the connection structure, and the basic electrical properties from a variety of angles; and by doing so to optimize the overall design of the system. Zuken began last year to provide “System Planner,” a concept design system based on entirely new concepts, which has resulted in a new approach to design soon to permeate the market.

Zuken has been tackling these bifurcated technical issues, and our efforts along these lines have resulted in the

I’d like to explain Zuken’s product development strategy from the two perspectives of “technical issues” and “changes in market structure.”

Technical issues fall into two main categories. One involves response to the internal structural evolution of printed circuit boards and electronic components by means of greater density and acceleration of signal speeds. The other is all about collaborative design and total optimization design aimed at completing electronic devices, which are becoming ever larger in scale and ever more complex, with shorter deadlines and better quality.

In the case of the printed circuit boards with laminated structures known as build-up boards, electronic components are increasingly being included not only on the front and back of the board but also inside the board. In the case of semicon-ductor parts, the System in Package (SiP), which involves increasing density by arranging several conductor chips in parallel or by combining them vertically, is starting to come into general use. Design of such structures is made more difficult if conventional two-dimensional drawings are used. So that such design can be carried out with ease, Zuken has provided a function that supports the conceptual processes of the

Bifurcation of technical issues

Response to the evolution ofinternal structure

Realizing collaborative design inconjunction with different processes

Taking on the challenge of totallyoptimizated design

Response to structural changes inthe market

Together with our customers as a technical partner infacing an era of change.

R&D Strategy

Kazuhiro Kariya, Director and General Manager of Global Engineering and Technology Center


Bifurcating technical issues Response to intricate structures and optimization of total systems

High-density mounting and SI-PI verification using “Board Designer” and “Co-Design Manager (3D)” Support with wire harness design for industrial devices using “E3”

Micro-perspectivesGreater intricacy, accuracy

and density

Universal perspectivesOptimization of internal

structure as a wholeInside

●Build-up boards

● Incorporation of inner layer components

● Incorporation of three-dimensional components

●SIP/PinP/PonP

● Increasing the size of systems

●System design

●Multiboard design

● Interconnect design

●Electromechanical co-design

●Verifying linkage with built-in switches

Outside

Universal perspectivesShortening deadlines +

Lowering costs +Improving quality

●Greater technological complexity●Combining high power and high speed●Use of multiple power sources●Measures to combat noise

Providing support for the design of internal components and laminated SiPs Concept design support using “System Planner”

● Increasing the intricacy of technology● Increasing the speed of signals●Use of multiple power sources●Measures to combat noise


Manufacturers of digital home electrical appliances and products related to the automobile industry have been particu-larly adversely affected by the worldwide recession. But it would be hasty to reach the conclusion that Japanese mono-zukuri is on its last legs. Japan creates many mechatronics devices of unparalleled quality, especially in areas such as robots and inspection devices used in the assembly of automo-biles, home electrical products and semiconductors. Fields in which such industrial machines and devices are used are not going to disappear from the face of the earth. There are also industries that are not affected by the macro-economy such as medical devices and social infrastructure. Production in Japan, including industrial consumables, is worth as much as ¥20 trillion, a figure equivalent to that for the automobile industry.

The Industrial machinery field has a long life cycle and high

profit ratios, meaning that it has not been as necessary to demonstrate sensitivity to delivery deadlines and costs as in the case of consumer appliances. IT investment in monozukuri has thus been limited, and the current recession has brought in its wake a trend toward introducing greater efficiency into development employing IT and review of business itself. Electrification of devices is also moving ahead rapidly, meaning that there is a growing need for digital prototypes involving the computerized solution of issues common to both electrical design and mechanical design.

On the basis of our solid record in the field of electrical design, Zuken has built cutting-edge systems that integrate mechanical design, cabling circuit design, and PLM; and we have introduced such systems into the operations of our more ambitious, forward-looking corporate clients. As well as provid-ing ongoing solutions for the household appliances, automo-bile and electronic components industries, from here on we intend to enhance our sales and service skills so that custom-ers active in the industrial machinery field will be happy to nominate us as their partner in monozukuri.

As a partner for manufacturing companies all over the world, Zuken is accurately grasping the different needs of each market and providing optimum solutions through our group companies active in Japan, Europe, the Americas and Asia.

By introducing systems for industrial machinery developed in Europe into North America, Japan and Asia, we are also opening up new markets and working toward enhancing the value of our solutions through tie-ups between group companies.

Grasping customers’ needs in each area andgaining their trust with optimum solutions.

Japan’s monozukuri is still in a healthy condition. Opening up new markets with integrated solutions.


Japanese Market

Yasuo Ueno, Director and General Manager of Sales

AMERICAZUKEN USA Inc.

: Sales office

ZUKEN S.r.l.

ZUKEN SINGAPORE Pte. Ltd.

ZUKEN Inc. Shenzhen Rep. Office

ZUKEN Inc. Beijing Rep. Office

ZUKEN (SHANGHAI) TECHNICAL CENTER Co., Ltd.ZUKEN Inc. Shanghai Rep. Office

ZUKEN TAIWAN Inc.

ZUKEN KOREA Inc.

ZUKEN B.V.

ZUKEN S.A.

ZUKEN Ltd.ZUKEN UK Ltd.

ZUKEN Group Ltd.

ZUKEN GmbH(European Headquarters)(EMC Technology Center)

ZUKEN E3 GmbH

EUROPE

ASIA ZUKEN Inc.

Position on the industrial machinery market

* Created by Zuken based on a current survey of production of the Ministry of Economy, Trade and Industry (2008)

Large electricalelements

Large mechanicalelements

Monozukuri element technology

Scale of assem

blyLarge

Sm

all

SemiconductorsSemiconductorsSemiconductorsand

electronicscomponents:

¥6.8trillion

Electricalmachineryfor home

use:￥3.7trillion

Ordinaryelectronics

components:¥2.8

trillion

Electricalfittings for

automobiles: ¥7.1

trillion

Automobiles: ¥21 trillionProduction

materials forindustrial

purposes andconsumergoods: ¥19.6trillion

Main industrial fields●Social infrastructure and transport infra-security, etc. ● Industrial robots and machine tools●Semiconductor production equipment ●Printers for business use and complex developing equipment● Industrial sewing and knitting machines●Machinery containing built-in electronic components ●Broadcasting equipment●Medical equipment●Space and aviation industries ●Measuring, inspection and analysis equipment●Housing facilities and machinery


to build up solid relationships of trust with regional communi-ties and local government including local companies. As we are doing in the ASEAN countries, we are aiming to create a local agency system and to engage in business and expand profits by establishing a system of cooperation with companies engaged in direct sales.

Following on from the severe economic conditions that prevailed during the latter half of last year, this is an era when Asia, and especially China, is coming to constitute an impor-tant market and when Asia is again coming to play a role as the factory of the world for manufacturing industries in Japan, the United States and Europe, and indeed for local Asian manufac-turing industries as well. Zuken can realize the total optimiza-tion of global networks and monozukuri environments, and it is because of this that we are convinced that we have what it takes to become the “Partner for Success” to many customers throughout Asia.

enormous increase in the number of companies wishing to make use of Zuken as a business partner, and as a result we have been able to build a system of cooperation with compa-nies possessing outstanding results in many different indus-tries. Our solutions in the field of electrical design, cabling and wire harness design have developed even more than we had expected and there are signs that our business is set to increase substantially in this area.

The machine and automobile industries in particular are facing extremely difficult conditions. Companies in these indus-tries are adapting for survival by reducing costs and increasing their productivity. The Zuken group is offering PLM solutions to such customers to assist them in making extensive reductions in costs.

In the European and American markets we are attempting to accurately establish the needs of individual countries and regions, to enable us to provide the best possible solutions to each one of our corporate clients while balancing our global strategy. This year we are planning to strengthen our staff and our sales channels in order to expand our system of support for new customers. We are also doing all we can to establish good relations with other vendors and to realize more comprehen-sive, wide-ranging solutions. We hope thereby to be more than just a vendor engaged in the provision of cutting-edge technol-ogy and processes, but also to the “Partner for Success” to all our customers.

In the midst of an increasingly severe business environ-ment, the Zuken group will continue to strive to be trusted by our customers and to become their valuable, long-term partner.

In the European and American markets, we have been making forthright efforts to continue growth while obtaining profit, without succumbing to the recession. We have managed to achieve a major leap forward in the US market in particular in 2008, and we continue to strengthen our efforts in this particu-lar market. One of the consequences of this has been an

The term under consideration has been one of epoch-making significance for us in the context of the period of around 20 years that we have been active in Asia. Most of our customers in the Asian market were originally Japanese companies, which accounted for as many as almost 80 percent of all our custom-ers in China. This term has been noteworthy for the increase in the proportion of local companies among our clientele, and they now account of 60 percent of all our customers. Moreover, most are companies engaged in electronic manu-facturing services (EMS). As far as the Zuken group is concerned, this is the first time customers other than development manufac-turers have occupied the core of our clientele.

This is because many Zuken products have been intro-duced into EMS in order to make use of manufacturers’ design data by promoting the transfer of production to EMS so that as many manufacturers as possible are able to reduce their pro-duction costs. Transfer of production to EMS is also increasing among European and American companies, and it seems likely therefore that support for EMS will develop into an important field of business.

Our strategy for the coming term involves the launch of cabling wiring design systems sales for industrial machinery developed by Zuken E3 in Germany. This will be the first time that products developed by the Zuken group outside Japan have been introduced into the Asian market, and where we have begun to exploit sales channels for this purpose.

We are positioning China as one of our most important markets and are engaged on business focusing on local companies there. The crucial points in this regard will be to cover as much as possible of China’s vast national territory and

Proportions of sales by Japanese andlocal companies in China (software sales only)

0

20

40

60

80

100

Term to March 2007 Term to March 2008 Term to March 2009

74.5

25.5

73.4

26.6

53.7

46.3

　Japanese companies　　　Chinese local companies

Unit: %

Full-scale implementation of business for local companies. Actively opening up the Chinese market with agency policies.


Toshihiro Shimauchi,Senior Managing Director and Head of the Asian Business Promotion Division

The foundations for growth have been created in theUnited States, while the introduction of PLM solutions ismoving ahead in Europe. Zuken is aiming to become along-term partner reinforcing the trust of our customers.

European andUS Markets

Asian Market

Gerhard Lipski, Director of Western Markets Sales


Net assets at the end of the consolidated fiscal year under review amounted to ¥28,063 million, down by ¥253 million. The main causes of this fall were the increase of ¥367 million in less-treasury common stock obtained through purchase despite the increase of ¥510 million in the retained earnings brought about by it being recorded in net income the term under review, and the fall of ¥363 million in foreign currency translation adjustments of overseas subsidiaries caused by the appreciation of the yen. As a result, the shareholders’ equity ratio increased 3.9% from the 74.7% recorded at the end of the previous consolidated fiscal year to 78.6%.

Analysis of Shareholders’ Equity Resources andCash LiquidityAs recorded in Cash and Cash Equivalents in the Consolidated Statements of Cash Flows, the Zuken Group’s balance of funds at the end of the fiscal year under review fell ¥1,244 million from the end of the previous fiscal year to ¥9,296 million.

Funds providing the operating capital necessary for Zuken to conduct its future business activities and carry out capital investment are obtained from funds obtained from operating activities and internal funds.

In terms of its finances, the Zuken Group gives the utmost consideration to security, while paying particular heed to such factors as credit exposure and interest rates. The group therefore invests in financial instruments considered to have the least loss potential.

Turning to the financial status of the Zuken Group, in terms of net cash provided by operating activities ¥1,214 million was recorded for net income, ¥696 million was recorded for depreciation and amortization, and a ¥948 million loss was recorded for trade notes and accounts receivable, but there was a fall of ¥1,241 million in accounts payable, representing an increase of ¥51 million in comparison with the end of the previous consolidated fiscal year and involving the acquisition of funds to the value of ¥1,249 million.

Net cash used in investing activities involved the use of ¥1,345 million, primarily through expenditure of ¥759 million on acquisition of tangible and intangible fixed assets and of ¥400 million on purchase of stocks of subsidiaries and affiliates.

Net cash used in financing activities entailed use of ¥731 million, consisting primarily of ¥368 million spent on purchase of treasury common stock and of ¥363 million on cash dividends paid.

OutlookThe economic picture is likely to remain bleak due to the mounting gravity of the global economic crisis and continuing concern over a further deterioration in the global economic outlook.

Under these difficult conditions, the Zuken Group will continue to strengthen its efforts to provide its customers with solutions, to advance into new markets, and to develop new products. We intend thereby to create a system that will ensure our profitability and will enable us to achieve sustained growth in the future.

Factors in the Zuken Group’s operations and accounting that have the potential to exert a significant influence on investors’ decisions include, but are not limited to, those set out below.

Operating ResultsLooking at our results for the consolidated fiscal year under review, under the influence of the sudden deterioration in economic conditions during the second half of the year, net sales amounted to ¥19,847 million, down by 9.9% YoY, and thus failed to reach the level achieved in the previous fiscal year. Gross profit fell by 9.3% YoY to ¥15,107 million due to falling net sales, below the level for the previous fiscal year. However, the gross profit margin was 76.1% (75.6% last year), up by 0.5% YoY. Selling, General and Administra-tive Expenses fell by 1.2% YoY to ¥13,647 million, but operating income fell by 48.6% YoY to ¥1,460 million under the influence of the decline in gross profit, thus falling considerably below the figure for the previous consolidated fiscal year. The operating income margin was 7.4% (12.9% last year).

Interest and dividend income amounted to ¥150 million, along with a gain on liquidation of subsidiaries amounting to ¥99 million and a foreign exchange gain amounting to ¥62 million. Zuken suffered a loss on impairment of investment securities amounting to ¥139 million and an equity in net loss of affiliated companies amounting to ¥102 million. Net other income amounted to¥197 million.

As a result of the foregoing, net income before income taxes and minority interests was ¥1,657 million, and net income for the term under review after current, prior and deferred income taxes was down 30.9% YoY to ¥1,214 million. Net income per share was ¥47.02, down from ¥67.86 in the previous fiscal year, and the net income ratio for the term in respect to equity capital was 4.3%, also down from the 6.5% recorded in the previous fiscal year.

Financial PositionTotal assets at the end of the consolidated fiscal year under review were ¥35,534 million, down by ¥2,152 million or 5.7% from last year’s figure. Current assets fell ¥2,728 million, or 10.1% to ¥24,274 million, and fixed assets increased by ¥576 million (5.4%) to ¥11,260 million. The fall in current assets was due principally to a fall of ¥1,200 million in trade notes and accounts receivable brought on the fall in net sales and by the fall of ¥1,244 million in cash and cash equivalents due to the payment of accounts payable income tax payable. As to fixed assets, tangible fixed assets fell by ¥70 million, there was an increase in intangible fixed assets amounting to ¥194 million due to the purchase of software. As to investments and other assets, there was an increase in the shares of affiliates brought about by acquisition of the shares of Elmic Wescom, which newly acquired a status as an equity method affiliate during the fiscal year under review, and also because of the increase of ¥646 million brought about by the increase in deferred tax assets due to the reversal of program reserves.

Total liabilities at the end of the year under review fell by ¥1,899 million (20.3%) to ¥7,471 million. Current liabilities fell by ¥1,875 million (28.1%) to ¥4,793 million, and long term liabilities fell by ¥24 million (0.9%) to ¥2,678 million. The fall in current liabilities was due principally to the decrease of ¥1,351 million in accounts payable brought about by the fall in the purchase of raw materials caused by the fall in net sales, and to the fall of ¥590 million in income taxes payable brought about by the fall in net income before income taxes and minority interests.

CONSOLIDATED SIX-YEAR SUMMARY

Management’s Discussion and Analysis

Overview of Fiscal 2009

Business Risks and Other Risks

Zuken Inc. and Consolidated Subsidiaries

Years ended March 31

Financial Section

Management’s Discussion and Analysis 20

Consolidated Balance Sheets 23

Consolidated Statements of Income 25

Consolidated Statements of Changes in Net Assets 26

Consolidated Statements of Cash Flows 27

Notes to Consolidated Financial Statements 28

Independent Auditors’ Report 36

ZUKEN Inc. and Consolidated Subsidiaries

For the Year:Net salesCost of salesSelling, general and administrative expensesOperating incomeIncome before income taxes and minority interests Net income

At Year-End:Total assetsTotal shareholders’ equity (Note 2)

Per Share of Common Stock:Net income (Note 3)Diluted net income (Note 4)Cash dividends applicable to the period

Millions of yen

¥22,0195,370

13,8102,8392,6021,757

¥37,68628,157

¥ 67.8667.7112.00

2008

¥19,1634,629

12,1452,3892,4751,442

¥36,68926,032

¥ 55.70−

10.00

2007

¥16,7994,390

10,4581,9513,0022,452

¥34,07425,526

¥ 90.88−

15.00

2006

¥15,7704,0879,7621,9213,3872,185

¥35,76828,130

¥ 77.65−

10.00

2005

¥16,1834,1519,9342,0981,549

945

¥33,28826,158

¥ 33.30−

10.00

2004

¥19,8474,740

13,6471,4601,6571,214

¥35,53427,913

¥ 47.0246.8814.00

2009

$202,52048,367

139,25514,89816,90812,388

$362,592284,826

$ 0.4800.4780.143

2009

Thousands of U.S. dollars

(Note 1)

Yen

1. For the convenience of the reader, the above six-year summary is presented in Japanese yen and also in U.S. dollars by arithmetically translating all Japanese yen amounts at ¥98 to US$1, the exchange rate in effect at March 31, 2009.

2. Total shareholders’ equity in the above table represents the total of shareholders’ equity and valuation and translation adjustments in the consolidated balance sheets. This is due to the adoption of a new accounting standard for the presentation of net assets in the balance sheet, which requires former shareholders’ equity and minority interests to be presented as net assets, and net assets to be classified as shareholders’ equity, valuation and translation adjustments and minority interests. The methods of determining the amounts of each category have not changed from the previous fiscal year.

3. Net income per share is computed based upon the weighted-average number of shares of common stock outstanding during each fiscal year.4. For 2004 to 2006, diluted net income per share is not presented because the Company had no potential common stock equivalents, such as bonds with

warants and convertible bonds.5. Diluted net income per share for fiscal 2007 is not presented because the Company had no potential common stock equivalents with a dilutive effect for

the year ended March 31, 2007.

Notes:

U.S. dollars



Board of Corporate Auditors, each corporate auditor and the Board of Corporate Auditors attend important meetings and perform rigorous audits through such methods as Groupwide investigations into management and business operations and the holding of hearings.

Zuken has established an Internal Audit Division under the direct supervision of the president to act as its internal auditing organization. The Internal Audit Division performs periodic internal audits of accounts and operations based on the audit policy set out in an audit planning document. The Division then reports and gives explanations on audit results to corporate auditors while discussing and exchanging views with them as required. The close collabora-tion between the Internal Audit Division and corporate auditors facilitates effective auditing operations.

Zuken has a contractual relationship with KPMG AZSA & Co. as Zuken’s independent auditor. Accordingly, KPMG AZSA conducts rigorous audits of the Company’s financial statements. The indepen-dent auditors report on and give explanations of audit results at biannual Board of Corporate Auditors’ meetings, where issues including business risks and other risks are examined and discussed. Aside from this, the independent auditor and the corporate auditor set up forums for opinion exchanges and delibera-tions on an as-needed basis. Through these initiatives, Zuken is working to secure sound audit systems.

(4) Status of internal control and risk management system provisionsZuken advances business operations in keeping with its corporate philosophy that aims for the “establishment of a vibrant corporate culture founded upon soundness, vigor and dignity.” Under this corporate philosophy, together with its fundamental policies on corporate governance, the Group has established and continues to strengthen its internal controls and risk management systems. To this end, Zuken implements initiatives that include:● Enforcement of thorough compliance through the establishment

and dissemination of regulations and guidelines, employee training programs, periodic internal audits, maintaining a system to exclude anti-social elements and other measures

● Appropriate safekeeping of documents and information pertaining to the execution of its business in accordance with in-house regulations and guidelines

● Effective, timely evaluations and reviews of business and other risks, and promotion of risk management systems through the establishment and dissemination of regulations and guidelines, employee training programs, periodic internal audits and other measures

● Ensuring efficient business operations by facilitating flexible decision making at Board of Directors’ meetings, clarifying author-ity in and responsibility for the execution of business in accordance with in-house regulations, and conducting scheduled reporting and investigation of business progress and performance

● Establishment of Groupwide internal control systems, including the formulation of regulations for managing subsidiaries and affiliates and the collaborative setting up of internal control systems that are suitable to each subsidiary and affiliate in terms of the scope of their operations and types of businesses

● Creation of ideal auditing environments through the establishment of a Board of Corporate Auditors’ Office that assists corporate auditors in their duties, the formation of lines of communication between directors and employees to corporate auditors, regular provision of forums for discussion with the representative director(s), and collaboration with independent auditors and internal audit departments

Through these efforts, the Zuken Group will continue working to upgrade corporate governance through more active and stronger efforts in both the operational and managerial realms as well as through the reinforcement of other management organizations.

Important management agreements, etc.At board meetings of both companies held on April 20, 2009, Zuken and Ermic Wescom Inc. decided that Zuken’s SoC Operations Department would be taken over by Ermic Wescom Inc. on the basis of divestiture, and they concluded an assimilative-divisive reorganiza-tion agreement on the same day. As a result, Ermic Wescom Inc. succeeded to Zuken’s SoC Operations Department on June 1, 2009.

(1) Fundamental approach to corporate governanceCorporate governance allows for a quick and flexible response to dramatic changes in the business environment. Legal, appropriate and highly sound corporate activities are the underpinnings of corporate governance.

(2) The Company’s internal organizationZuken uses a corporate auditor system and has built an effective corporate governance system, centered on its Board of Directors, corporate auditors and Board of Corporate Auditors, which is suitable for the scope of its operations and the type of businesses in which the Company engages. As of June 26, 2009, the Company’s management structure was composed of eight directors and four corporate auditors (including one outside auditors). In addition to the corporate auditors, one alternate corporate auditor is elected to guard against the number of corporate auditors falling below the level required by law.

The Board of Directors formulates fundamental management policies and pinpoints important issues, analyzes and makes decisions regarding legal and regulatory concerns as well as on items contained in the Articles of Incorporation, and provides oversight for directors in the course of their managerial duties. Each corporate auditor and the Board of Corporate Auditors are also tasked with providing oversight of the directors in the execution of their duties, along with general oversight of the Company’s operations.

The Board of Directors and Board of Corporate Auditors each have monthly meetings scheduled, in addition to which they convene as circumstances dictate. Their vigorous discussions lead to flexible decision making and rigorous management oversight.The following chart provides a graphic representation of the Company’s corporate governance system.

(3) Status of internal audits and audits by corporate and independent auditorsAs set forth in the audit policy and audit plan established by the

friendly firms, and acquires capable firms. However, there is always a risk that such measures may not have the anticipated effect on performance, or that the cost burden could balloon. In addition, if the performance or financial position of subsidiaries or affiliates deterio-rates, it could have an effect on the Zuken Group’s performance.

(6) Expansion of overseas operationsThe Zuken Group is developing businesses in the United States, and in various countries in Europe and Asia. When operating in overseas markets, a company faces risks in connection with:● Sudden change in political or economic environments● Changes in exchange rates● Unforeseen changes in statutes or regulations● Difficulty securing human resources● Terrorism, war, infectious diseases or other social unrest.Any of thes e poses a risk of affecting the performance of the Zuken Group.

(7) Safeguarding of industrial secrets and personal informationIn the course of the Zuken Group’s systems development, consult-ing, inspection and support operations, the Group personnel have access to customers’ design data, information on new products, and other industrial secrets. The Group is also in possession of large volumes of personal information on customers, shareholders and employees. To safeguard this information, we are deploying internal information systems, entering into non-disclosure agreements, formulating internal regulations and guidelines, and conducting thorough employee training in information management. However, in the unlikely event of a leak of industrial secrets or personal information, the Zuken Group could become liable for damages and could suffer harm to its reputation. This could affect the performance of the Zuken Group.

(8) Liabilities and expenses for severance and retirement benefitsZuken and certain consolidated subsidiaries within the Group adopted unfunded defined benefit plans for employees’ severance and retirement, while certain consolidated subsidiaries overseas adopted unfunded defined benefit plans for pension plans. In the event of changes in calculation methods for liabilities and expenses for severance and retirement benefits, deteriorations in the performance of pension fund management or changes in legal systems and accounting standards regarding severance and retirement benefits, the Group’s liabilities and expenses may increase. Should the liabilities and expenses exceed the Company’s reserves for them, the Group’s overall performance will be adversely affected. Note: The fixed benefit-type pension system in place at subsidiaries

operating in the United Kingdom was frozen and changed to a defined contribution pension plan from April 2007 onward. Thus, the above-mentioned risks with regard to fixed benefit-type pension plans at these U.K. subsidiaries are items associated with retirement benefit expenses for service prior to freezing the former pension system.

(9) Natural disastersThe Zuken Group is engaged in business activities in Japan and a number of other countries. The Group is exercising due care in its preparations for natural disasters, but the risk of a major earthquake, fire or other catastrophe at a business facility causing significant destruction cannot be eliminated. In such an occurrence, operations at business locations affected could be halted permanently or temporarily, resulting in significant monetary losses and affecting the performance of the Zuken Group.

Forward-looking statements in the text are based on the judg-ment of the Zuken Group’s management as of March 31, 2009, the end of the fiscal year under review.

(1) Operating in a circumscribed marketThe core business of the Zuken Group is the provision of solutions that increase the efficiency of product design and manufacturing primarily to the electronics and automobile manufacturing industries. This means that the group’s performance may sometimes be affected by business conditions in such manufacturing industries and by trends in capital investment. The Group is striving to expand its operations by tackling promising new markets and technological domains. However, if performance and capital investment in the electronics and automobile manufacturing industries remain weak, it is possible that the performance of the Zuken Group will be affected.

(2) Developing solutionsTo provide the optimum solutions for its customers’ needs, the Zuken Group must develop new products that reflect the latest trends and technologies while remaining committed to strengthen-ing its own capabilities. The Group must focus on improvements in quality and ensure thoroughgoing quality control, employing systems that prevent defects and ensure swift response and correc-tion should defects emerge. However, if development does not proceed according to plan, we run the risk of losing opportunities or delaying the development of businesses. When there is a major defect in a new product, not only do we bear the burden of remedy-ing it and making good our guarantee against defects, we also run the risk of losing the confidence of our customers. Should that occur, it could.

(3) Intellectual property rightsAs the Zuken Group develops and extends its solutions business using computer technology and IT, maintaining the security of copyrights, patents, trademarks, and other intellectual property has become extremely important. At the same time, because obtaining such protections requires an investigation by government organiza-tions, it is not a foregone conclusion that they will be forthcoming. The Zuken Group exercises due care to guard against infringement on third-party intellectual property rights during the course of its product development operations, but in actual practice the research required to ensure that Zuken Group products do not infringe on the intellectual property rights of any other company can be very arduous. If the Zuken Group were to infringe on the intellectual property rights of a third party in its products, technology, or trademarks, there is a risk that payment of royalties or damages might be required, or that we could be ordered to stop using patented technology. As of March 31, 2008, there had never been an instance of the Zuken Group being served with a request for damages or ordered to stop using patented technology in connec-tion with the infringement of intellectual property rights.

(4) Alliances with capable partner firmsTo build a solid business base and move into new businesses, the Zuken Group has forged long-term product development and marketing ties with many capable partner firms. However, there is a risk that these ties could be broken if these partner firms suffer bankruptcy, are acquired, or change their strategic objectives. If a number of alliances or important alliances are dissolved, it could have an effect on the performance of the Zuken Group.

(5) Establishing and acquiring subsidiaries, and forging capital tiesTo expand and reinforce businesses, the Zuken Group establishes subsidiaries and affiliates as needed, establishes capital ties with

General Shareholders’ Meeting

Board of Directors

Representative Director(s)

General Managers of Each Department

Business Departments/

Subsidiaries and Affiliates

Independent Auditor(s)

Appointment/dismissal

Accounting auditOversight/audit

Report/discussion


Corporate Auditors

Directors

Board of Corporate Auditors

Internal Audit Division

Collaboration

Direct supervision ofthe president

Internal audit

Direction/instructionReport

Appointment/dismissalAppointment/dismissal

CollaborationCollaboration


Collaboration

Supervision/appointment/dismissalSupervision/appointment/dismissalSupervision/appointment/dismissal

Status of Corporate Governance

Consolidated Balance SheetsZUKEN Inc. and Consolidated Subsidiaries

As of March 31, 2008 and 2009

¥10,540 632

8,695 5,674

(55)

33 222 533 728

27,002

3,010 8,998 2,397

− 14,405 (7,192)7,213

387 621 890 319 266 995

(7)3,471

¥37,686

¥9,296 448

8,706 4,474

(39)

23 230 375 761

24,274

3,010 8,912 2,295

7 14,224 (7,081)7,143

208 895 924 513 576

1,013 (12)

4,117 ¥35,534

$94,857 4,571

88,837 45,653

(398)

235 2,347 3,827 7,765

247,694

30,714 90,939 23,419

71 145,143 (72,255)72,888

2,122 9,133 9,429 5,235 5,877

10,337 (123)

42,010 $362,592

Millions of yen

2008 2009 2009


(Note 1)

ASSETSCurrent Assets:Cash and cash equivalents (Note 1)Time depositsMarketable securities (Notes 1 and 2) Trade notes and accounts receivable　Less-Allowance for doubtful receivablesInventories (Note 1):　Finished goods　Work in process, supplies and raw materialsDeferred tax assets (Notes 1 and 3)Other current assets　　Total current assets

Property and Equipment, at Cost (Note 1):LandBuildings and structuresFurniture, fixtures, and equipmentLease assets

　Less-Accumulated depreciation　　Net property and equipment

Investments and Other non-current Assets:Investment securities (Notes 1 and 2)Investment in affiliated companies (Note 1)Goodwill (Note 1)Other intangible fixed assets (Note 1)Deferred tax assets (Notes 1 and 3)Other　Less-Allowance for doubtful receivables　　Total investments and other assets　　Total assets

¥2,405 1,231

903 1,950

6 173

6,668

−

2,590 112

2,702

10,117 8,658

11,878

(2,532)

27 0 9

159 28,316

¥37,686

¥1,054 1,202

313 2,119

1 104

4,793

0

2,534 144

2,678

10,117 8,658

12,388

(2,899)

3 −

(354)150

28,063 ¥35,534

$10,755 12,265 3,194

21,623 10

1,061 48,908

0

25,857 1,470

27,327

103,235 88,347

126,407

(29,582)

31 −

(3,612)1,531

286,357 $362,592

Millions of yen

2008 2009 2009


(Note 1)

LIABILITIES AND NET ASSETSCurrent Liabilities:Accounts payableAccrued expensesIncome taxes payable (Notes 1 and 3)Advances receivedDeferred tax liabilities (Notes 1 and 3)Other current liabilities　　Total current liabilities

Long-term Liabilities:Deferred tax liabilities (Notes 1 and 3)Severance and retirement plan (Notes 1 and 4)　EmployeesOther long-term liabilities　　Total long-term liabilities

Net Assets (Note 5):Shareholders’ Equity (Note 5):　Common stock:　　Authorized-86,525,700 shares at March 31, 2008 and 2009　　Issued-27,903,669 shares at March 31, 2008 and 2009Capital surplusRetained earningsLess-Treasury common stock, at cost:　2,008,971 shares at March 31,2008 and　2,647,962 shares at March 31,2009Valuation and Translation Adjustments:　Net unrealized holding gain on securities (Notes 1 and 2)　Deferred gains on hedges　Foreign currency translation adjustments (Note 1)Minority Interest　　Total net assets　　Total liabilities and net assets

The accompanying notes to the consolidated financial statements are an integral part of these balance sheets.


Consolidated Statements of IncomeZUKEN Inc. and Consolidated Subsidiaries

Years ended March 31, 2008 and 2009

Consolidated Statements of Changes in Net Assets ZUKEN Inc. and Consolidated Subsidiaries


¥22,019 5,370

16,649 13,810 2,839

154 13

(306)−

(83)72 27

(182)68

(237)2,602

1,358 −

(524)834

1,768 11

¥ 1,757

¥67.86 67.71 12.00

¥19,847 4,740

15,107 13,647 1,460

150 99 62 44

(139)(102)

− −

83 197

1,657

521 67

(142)446

1,211 (3)

¥ 1,214

¥47.02 46.88 14.00

$202,520 48,367

154,153 139,255 14,898

1,531 1,010

633 449

(1,419)(1,041)

− −

847 2,010

16,908

5,316 684

(1,449)4,551

12,357 (31)

$ 12,388

$0.480 0.478 0.143

Millions of yen

2008 2009 2009


(Note 1)

YenU.S. dollars

(Note 1)

¥10,117

10,117

¥10,117

¥8,658

8,658

¥8,658

¥ 9,781 1,757 (259)

599

11,878 1,214 (363)

(341)

¥12,388

¥ (2,531)

(1)

(2,532)

(367)

¥ (2,899)

¥189

(162)

27

(24)

¥3

¥ −

0

0

0

¥ −

¥ (182)

191

9

(363)

¥ (354)

¥131

28 159

(9)¥150

$103,235

$103,235

$88,347

$88,347

$121,204 12,388 (3,704)

(3,481)

$126,407

$ (25,837)

(3,745)

$ (29,582)

$276

(245)

$ 31

$ 0

0

$ −

$ 92

(3,704)

$ (3,612)

$1,622

(91)$1,531

Commonstock

Minorityinterests

Foreigncurrency

translationadjustments

Deferredgain(loss) on

hedges

Net unrealizedholding

gain(loss) onsecurities

Treasurycommon

stock Retainedearnings

Capitalsurplus

Net Sales (Note 1)Cost of SalesGross profitSelling, General and Administrative Expenses (Notes 1 and 7)Operating income

Other Income (Expenses):Interest and dividend incomeGain on liquidation of subsidiariesForeign exchange gain (loss)Gain on transfer of businessLoss on impairment of investment securitiesEquity in net gain (loss) of affiliated companiesGain on sale of investment securitiesRetirement benefit expensesOther, net　　Total　　Income before income taxes and minority interests

Provision for Income Taxes (Notes 1 and 3):CurrentPriorDeferredIncome taxes (Notes 1 and 3)Net income before minority interestsMinority InterestNet income

Per Share of Common Stock (Note 1):Net incomeDiluted net incomeCash dividends applicable to the period

Balance at March 31, 2007　Net income　Cash dividends paid　Actuarial loss on retirement benefit obligation　　of subsidiaries in the United Kingdom　Purchase of treasury common stock　Net changes of net unrealized holding loss 　　　on securities　Net changes of deferred gains on hedges　Adjustments from foreign currency translation 　　of foreign currency financial statements　Increase in minority interestsBalance at March 31, 2008　Net income　Cash dividends paid　Effect of changes in accounting policies applied 　　to foreign subsidiaries　Purchase of treasury common stock　Net changes of net unrealized holding loss　　on securities　Net changes of deferred gains on hedges　Adjustments from foreign currency translation 　　of foreign currency financial statements　Decrease in minority interestsBalance at March 31, 2009

Balance at March 31, 2008　Net income　Cash dividends paid　Effect of changes in accounting policies applied 　　to foreign subsidiaries　Purchase of treasury common stock　Net changes of net unrealized holding loss　　on securities　Net changes of deferred gains on hedges　Adjustments from foreign currency translation 　　of foreign currency financial statements　Decrease in minority interestsBalance at March 31, 2009

Commonstock

Minorityinterests

Foreigncurrency

translationadjustments

Deferredgain(loss) on

hedges

Net unrealizedholding

gain(loss) onsecurities

Treasurycommon

stock Retainedearnings

Capitalsurplus

Thousands of U.S. dollars (Note 1)

Millions of yen

The accompanying notes to the consolidated financial statements are an integral part of these statements.



not required for fair presentation, is not presented in the accompanying consolidated financial statements.

The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2009, which was ¥98 to US$1. The convenience transla-tions should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

(c) Principles of Consolidation and Accounting for Investments in Affiliated CompaniesThe accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. The fiscal year-ends of three subsidiaries are the end of February. Significant transactions during March were reflected in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated.

Investments in which the Company has significant influence or ownership of more than 20% but less than or equal to 50% are accounted for under the equity method.

The excess cost of investments in subsidiaries and affiliated companies over their equity in the net assets at the date of acquisition is generally being amortized on a straight-line basis within 15 years.

(d) Translation of Foreign AccountsForeign currency transactions are translated into Japanese yen by using the exchange rates in effect at the time of the transac-tions. Foreign currency receivables and payables are translated at year-end exchange rates and resulting exchange gains or losses are recognized in earnings currently.

All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at year-end exchange rates and all income and expense accounts are translated at the weighted average of the exchange rates in effect during each fiscal period. Retained earnings are translated at the historical rates. Foreign currency translation adjustments resulting from translation of foreign currency financial statements were presented separately in the accumulated gains (losses) from revaluation and translation adjustments and minority interests in the consolidated balance sheets.

(e) Revenue RecognitionSales are recorded upon installation of a system and the acceptance thereof by customers. Advances received from customers for maintenance services are treated as deferred revenue until earned.

The following is a summary of the significant accounting and reporting policies adopted by ZUKEN Inc. (“Zuken” or the “Company”) and its subsidiaries in the preparation of the accompanying consolidated financial statements.

(a) Nature of OperationsThe Zuken Group is engaged in the research, development, and sale of solutions that maximize the efficiency of design and manufacturing processes for electronic products. The Company holds a leading global share of the PCB/MCM/HIC software market in the field of electronic design automation. The Company also develops solutions for application-specific integrated circuits (ASICs) and large-scale integration (LSI). The Company’s operations are based in Japan but include development, sales, and support centers in 10 countries. Customers for the Company’s solutions are primarily electronics manufacturers located around the world, but also include automobile manufacturers.

(b) Basis of Presenting the Consolidated Financial StatementsThe accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

Prior to the year ended March 31, 2009, the accounts of overseas subsidiaries were based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile.

As discussed in Note 1(s), the accounts of overseas subsidiaries for the year ended March 31, 2009, are prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified six items as applicable.

The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Securities and Exchange Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but

Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements

1.Nature of Operations and Significant Accounting and Reporting Policies




Cash Flows from Operating Activities:Net incomeAdjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Loss on impairment of investment securities Gain on sale of affiliated company’ s securities, net Gain on liquidation of subsidiaries Gain on sale of investment securities Equity in net loss (gain) of affiliated companies Other, netChanges in assets and liabilities: Trade notes and accounts receivable Accounts payable Accrued expenses and income taxes Accrued severance and retirement cost Other, net Net cash provided by operating activities

Cash Flows from Investing Activities:Increase in time deposits, netExpenditures for property and equipmentProceeds from sales of property and equipmentExpenditures for intangible fixed assetsPurchase of marketable securitiesProceeds from redemption of marketable securitiesProceeds from sales or redemption of investment securitiesPurchase of stocks of subsidiaries and affiliatesOther, net Net cash used in investing activities

Cash Flows from Financing Activities:Proceeds from issuance of common stock to minority shareholdersPurchase of treasury common stockCash dividends paidOther, net Net cash used in financing activitiesEffect of Exchange Rate Changes on Cash and Cash EquivalentsNet Increase (Decrease) in Cash and Cash EquivalentsCash and Cash Equivalents at Beginning of YearCash and Cash Equivalents at End of Year

Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest Income taxes

¥ 1,757

653 83 −

(13)(27)(72)40

(729)327 (56)

(694)(71)

1,198

(362)(302)

14 (147)

(1,995)−

2,112 − (2)

(682)

18 (1)

(259)(1)

(243)(102)171

10,369 ¥10,540

¥ 2 (1,513)

¥ 1,214

696 139

(5)(99)

− 102

(107)

948 (1,241)

(545)24

123 1,249

(107)(388)

15 (371)

(4,000)4,000

−(400)(94)

(1,345)

−(368)(363)

0 (731)(417)

(1,244)10,540

¥ 9,296

¥ 0 (1,163)

$ 12,388

7,102 1,419

(51)(1,010)

− 1,041

(1,092)

9,673 (12,663)(5,561)

245 1,254

12,745

(1,092)(3,959)

153 (3,786)

(40,816)40,816

−(4,082)

(959)(13,725)

−(3,755)(3,704)

0 (7,459)(4,255)

(12,694)107,551 $ 94,857

$ 0 (11,867)


Millions of yen

2008 2009 2009


(Note 1)


similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements.

As a result of adopting PITF No. 18, effective April 1, 2008, retained earnings at April 1, 2008 was decreased by ￥341 million (US$3,480 thousand).

In addition, as a result, operating income increased by ￥11million (US$112 thousand), and income before income taxes and minority interests increased by ￥29 million(US$296 thousand) for the year ended March 31, 2009.

New accounting standard for inventoriesOn July 5, 2006, the Accounting Standards Board of Japan issued ASBJ Statement No. 9, “Accounting Standard for Measurement of Inventories”. As permitted under the superseded accounting standard, the Company and consolidated domestic subsidiaries previously stated inventories at cost. The new accounting standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net realizable value. Replacement cost may be used in lieu of the net realizable value, if appropriate.

The adoption of the new accounting standard had no impact on income.

New accounting standards for lease transactions as lesseeOn March 30, 2007, the Accounting Standards Board of Japan issued Statement No. 13, “Accounting Standard for Lease Transactions” and Guidance No. 16, “Guidance on Accounting Standard for Lease Transactions”. The new accounting standards require that all finance lease transac-tions be treated as capital leases.

Effective April 1, 2008, the Company and consolidated domestic subsidiaries adopted the new accounting standards for finance leases commencing after March 31, 2008 and capitalized assets used under such leases, except for certain immaterial or short-term finance leases, which are accounted for as operating leases. As permitted, finance leases which commenced prior to April 1, 2008 and have been accounted for as operating leases, continue to be accounted for as operating leases.

The effect of adopting the new accounting standard and guidance was immaterial.

(t) ReclassificationsCertain prior year amounts have been reclassified to conform to the fiscal 2009 presentation. These changes had no impact on previously reported results of operations or share-holders’ equity.

asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax conse-quences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

(n) Derivative Financial InstrumentsThe Company and its subsidiaries have no derivative financial instruments, which include foreign exchange forward contracts, foreign currency option contracts, and interest rate and currency swap agreements.

(o) Research and DevelopmentResearch and development costs are charged to income as incurred. Total amounts charged to income were ¥3,548 million in fiscal 2008 and ¥3,584 million (U$36,571 thousand) in fiscal 2009, respectively.

(p) LeasesAssets acquired by lessees in finance lease transaction are recorded in the corresponding asset accounts. Certain immaterial or short-term finance leases are accounted for as operating leases.

(q) Per Share of Common StockNet income (loss) and cash dividends per share are based on the weighted average number of outstanding shares of common stock, if any, as retroactively adjusted for the free share distribution and stock splits.

Cash dividends per share shown in the accompanying consolidated statements of income have been presented on an accrual basis and include, in each fiscal period, dividends approved by the shareholders after such fiscal period-end but applicable to the fiscal period then ended.

(r) Appropriation of Retained EarningsThe appropriation of retained earnings reflected in the accompanying consolidated financial statements has been recorded after approval by the shareholders, as required under the Japanese Corporate Law.

(s) New Accounting StandardUnification of Accounting Policies Applied to Foreign Subsid-iaries for Consolidated Financial StatementsOn March 17, 2006, the Accounting Standards Board of Japan issued Practical Issues Task Force No.18 “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”). PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under

arrangements is depreciated over the estimated useful lives or the lease term of the respective assets.

(j) GoodwillIn June 1994, the Company, through subsidiaries, acquired 11 new subsidiaries from Racal Electronics P.L.C. In March 2000, the Company, through subsidiaries, acquired two new subsidiaries. In May 2006, the Company, through a subsid-iary, acquired one new subsidiary. As a result of the above, three acquisitions of approximately ¥762 million in fiscal 1995, approximately ¥374 million in fiscal 2001, and approxi-mately ¥760 million in the fiscal 2007 have been recorded as goodwill, which is amortized usingthe straight-line method within 15 years.

(k) Other Intangible Fixed AssetsOther intangible fixed assets represent principally the costs of purchased software, which are amortized using the straight-line method over a period of up to five years in accordance with estimated useful lives.

(l) Severance and Retirement PlansThe Company and certain subsidiaries have unfunded defined benefit plans for employees’ severance and retirement. The amount of the severance and retirement cost is determined on the basis of length of service and basic pay rate at the time of termination or retirement. Some overseas subsidiaries also have unfunded defined contribution plans for severance and retirement plans. (Some overseas subsid-iaries have unfunded defined benefit plans for pension plans.)

Under the Japanese accounting standard for employ-ees’ retirement benefits, the liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated using certain assump-tions. The Company provides an allowance for employees’ severance and retirement benefits based on the estimated amounts of projected benefit obligations and the fair value of plan assets at the balance sheet date. Actuarial gains/losses are recognized in consolidated statements of income using the straight-line method over five years commencing the following period.

(m) Income TaxesIncome taxes in the accompanying consolidated statements of income comprise corporate tax, inhabitant taxes, and enterprise tax.

Under the Japanese accounting standard for income taxes, the provision for income taxes is computed based on the income before income taxes and minority interests included in the consolidated statements of income. The

(f) Cash and Cash EquivalentsIn preparing the consolidated statements of cash flows, cash on hand, readily available deposits, and short-term highly liquid investments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.

(g) Marketable Securities and Investment SecuritiesSecurities are classified into one of the following categories based on management’s intent in holding them:(i) Held-to maturity debt securities, (ii) Available-for-sale securities (marketable), and (iii) Available-for-sale securities (non-marketable). (i) Held-to-maturity debt securities are stated at amortized cost. (ii) Available-for-sale securities (marketable) are stated at fair value, with any unrealized holding gain or loss, net of the applicable taxes, presented as a separate component of net assets. (iii) Available-for-sale securities (non-marketable) are stated at cost by the moving-average method. Debt securities due within one year are presented as current and all other securities are presented as non-current in the accompanying consolidated balance sheets.

With respect to investments in limited business partner-ships or similar types of partnerships (regarded as market-able securities under Article 2-2 of the Securities Exchange Law), the net amount equivalent to the level of equity based on the most recently available financial statements for the reporting date specified in the partnership agreement is used.

(h) InventoriesFinished goods and work in process are stated at specific identification cost. Supplies and raw materials are stated at cost, determined principally by the moving-average method. Inventories with lower profitability are written down to net realizable value at March 31.

(i) DepreciationAs for the Company and its domestic consolidated subsid-iaries, depreciation is principally computed by the declining-balance method or straight-line method to buildings and, for its overseas consolidated subsidiaries, is principally computed by the straight-line method at rates based on the estimated useful lives of individual assets which range as follows:

Buildings and structures: 3 years to 60 years Furniture, fixtures and equipment: 2 years to 20 years

Ordinary maintenance and repairs are charged to income as incurred and major renewals and improvements are capitalized.

Property and equipment capitalized under finance lease


The Company and its subsidiaries are subject to a number of income taxes, which, in aggregate, indicate a statutory rate in Japan of approximately 40.6% for the years ended March 31, 2008 and 2009. A reconciliation of the Japanese statutory income tax rate and the effective income tax rate as a percentage of income taxes and minority interests is as follows:

Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2008 and 2009 are as follows:

¥ 245 −

171 74

174 664 (119)545

2,125 1,098

319 3,542 (2,774)

768 1,313

1,313

(18)

(484)(18)

(502)(520)

¥ 793

¥ 251 173 62 30 24

540 (156)384

1,284 989 267

2,540 (1,737)

803 1,187

1,187

(10)

(223)(4)

(227)(237)

¥ 950

$ 2,561 1,765

633 306 245

5,510 (1,592)3,918

13,102 10,092 2,724

25,918 (17,724)

8,194 12,112

12,112

(101)

(2,276)(41)

(2,317)(2,418)

$ 9,694

Millions of yen

2008 2009 2009


2. Marketable Securities and Investment Securities 3.Income TaxesMarketable securities and investment securities at March 31, 2008 and 2009 consist of the following:

2008Held-to-maturity marketable securities: Government bonds ¥0

¥0¥−¥−

¥1,995¥1,995

¥1,995¥1,995

Millions of yen

Bookvalue

Grossunrealized

gains

Grossunrealized

lossesFair

value 2008Statutory tax rate Tax credits for R&D Effect of reverse of write-off of investment in subsidiary Effect of equity in net gain of affiliated companies Effect on amortization of goodwill OtherEffective tax rate

2009Statutory tax rate Valuation allowance Differences in tax rates of over seds subsidiaries Tax credits for R&D Income taxes for prior periods Effect on amortization of goodwill Effect of equity in net gain of affiliated companies OtherEffective tax rate

Deferred tax assets:(Current) Excess bonuses accrued Unearned revenue Accrued expense Enterprise taxes accrued Other

Valuation allowance

(Non-Current) Net loss carryforwards Retirement benefits Other

Valuation allowance

Total deferred tax assets

Net deferred tax assets and other

Deferred tax liabilities:(Current) Other(Non-Current) Special reserve for software development costs Net unrealized holding gains on securities

Total deferred tax liabilitiesNet deferred tax assets

40.6%-4.5 -4.4 -1.1 1.6

-0.2 32.0%

40.6%-15.4 -7.5 -3.9 4.0 3.3 2.5 3.3

26.9%

2009Held-to-maturity marketable securities: Government bonds ¥0

¥0¥−¥−

¥2,006¥2,006

¥2,006¥2,006

Bookvalue

Grossunrealized

gains

Grossunrealized

lossesFair

value

2009Held-to-maturity marketable securities: Government bonds $0

$0$−$−

$20,470$20,470

$20,470$20,470

Bookvalue

Grossunrealized

gains

Grossunrealized

lossesFair

value

2008Available-for-sale securities: Marketable securities: Debt securities including investment trusts

Investment securities: Marketable equity securities Non-marketable equity securities Investment funds

¥ −¥ −

¥49−−

¥49

¥ −¥ −

¥95−−

¥95

¥6,700¥6,700

¥ 2272688

¥ 341

¥6,700¥6,700

¥ 2732688

¥ 387

Millions of yen

Millions of yen


Millions of yen

Acquisitioncost

Grossunrealized

gains

Grossunrealized

lossesBookvalue

2009Available-for-sale securities: Marketable securities: Debt securities including investment trusts


¥−¥−

−−−

¥−

¥ −¥ −

¥11−−

¥11

¥6,700¥6,700

¥ 1041182

¥ 197

¥6,700¥6,700

¥ 1151182

¥ 208Thousands of U.S. dollars

Acquisitioncost

Grossunrealized

gains

Grossunrealized

lossesBookvalue

2009Held-to-maturity marketable securities: Debt securities including investment trusts


$−$−

−−−

$−

$ −$ −

$112−−

$112

$68,367$68,367

$ 1,061112837

$ 2,010

$68,367$68,367

$ 1,173112837

$ 2,122

Acquisitioncost

Grossunrealized

gains

Grossunrealized

lossesBookvalue


Japanese Corporate Law (“the Law”) provides that the entire amount paid for new shares is required to be designated as common stock. However a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the new shares as additional paid-in capital, which is included in capital surplus.

Under the Law, in cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.

Under the Law, legal earning reserve and additional paid in capital could be used to eliminate or reduce a deficit or could be capitalized by resolution of the shareholders’ meeting.

Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.

The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with laws and regulations.

At the General Shareholders’ Meeting held on June 26, 2009, the shareholders resolved cash dividends amounting to ¥177 million ($1,806 thousand), which was paid to shareholders on record as of March 31, 2009.

The Company and its subsidiaries have cancelable and noncancelable long-term lease agreements, principally for office space, machinery and computer equipment. Rental and lease expenses were ¥510 million in fiscal 2008 and ¥517 million (US$5,276 thousand) in fiscal 2009.

The Company and its subsidiaries are engaged in the development, marketing and technical support of solutions in relation to the entire process from design to manufacturing, where computer-aided engineering (CAE), computer-aided design (CAD) and computer-aided manufacturing (CAM) systems are included, for the electric and electronic industries in one segment.

Geographical segment information for the Company and its subsidiaries for the year ended March 31, 2008 and 2009 is as follows:

4.Severance and Retirement Plans

5.Net Assets

6.Leases

7.Segment Information

Liabilities for severance and retirement benefits:Projected benefit obligationPlan assets at fair valueUnfunded projected benefit obligationUnamortized actuarial gain (loss)Accrued severance and retirement cost

Severance cost:Service costInterest costs on projected benefit obligationExpected return on plan assetsAmortization of actuarial gainOtherSeverance and retirement benefit expenses

Actuarial assumptions:Discount rateExpected return on assets

¥5,683 (3,127)2,556

34 ¥2,590

¥ 177 279 (205)(62)

199 ¥ 388

1.5%-5.8%4.5%-7.0%

¥4,506 (1,946)2,560

(26)¥2,534

¥ 234 217

(172)(81)81

¥ 279

1.5%-6.3%5.6%

$45,979 (19,857)26,122

(265)$25,857

$ 2,388 2,214

(1,755)(827)827

$ 2,847

Millions of yen

2008 2009 2009


2008Sales to third partiesIntersegment sales and transfersTotal salesCost of sales and selling, general and administrative expensesOperating incomeIdentifiable assets

¥ −(1,399)(1,399)

(1,353)¥ (46)¥12,605

¥22,019 1,399

23,418

20,533 ¥ 2,885 ¥25,081

¥1,827 36

1,863

1,648 ¥ 215 ¥2,208

¥4,456 604

5,060

4,673 ¥ 387 ¥5,216

¥15,736 759

16,495

14,212 ¥ 2,283 ¥17,657

¥22,019 −

22,019

19,180 ¥ 2,839 ¥37,686

Millions of yen

Japan Europe Other TotalEliminations

and corporate Consolidated


¥ −(1,541)(1,541)

(1,511)¥ (30)¥11,515

¥19,847 1,541

21,388

19,898 ¥ 1,490 ¥24,019

¥1,988 69

2,057

1,785 ¥ 272 ¥2,328

¥3,812 695

4,507

4,401 ¥ 106 ¥4,743

¥14,047 777

14,824

13,712 ¥ 1,112 ¥16,948

¥19,847 −

19,847

18,387 ¥ 1,460 ¥35,534

Millions of yen




$ − (15,724)(15,724)

(15,418)$ (306)$117,500

$202,520 15,724

218,244

203,040 $ 15,204 $245,092

$20,285 704

20,989

18,214 $ 2,775 $23,755

$38,898 7,091

45,989

44,908 $ 1,081 $48,398

$143,337 7,929

151,266

139,918 $ 11,348 $172,939

$202,520 −

202,520

187,622 $ 14,898 $362,592




As explained in Note 1(l), the liabilities and expenses for severance and retirement benefits are determined based on the amounts obtained by actuarial calculation. Under the Japanese accounting standard, small domestic subsidiaries are allowed to provide accrued severance and retirement costs at the amount required had all employees retired at the balance sheet date.

Certain overseas subsidiaries have defined contribution plans. (Some overseas subsidiaries have unfunded defined benefit plans for pension plans.)

The liabilities for severance and retirement benefits recognized in the consolidated balance sheet, severance cost, and actual assumptions consist of the following:


To the Board of Directors ofZUKEN Inc.:

We have audited the accompanying consolidated balance sheets of ZUKEN Inc. and consolidated subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in net assets and cash flows for the years then ended expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s manage-ment. Our responsibility is to independently express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ZUKEN Inc. and subsidiaries as of March 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in Japan.

As described in Note 9 to the consolidated financial statements, ZUKEN Inc. spun off its SoC business unit on June 1, 2009, which was taken over by ELMIC WESCOM, INC. and ELMIC WESCOM, INC. became a consolidated subsidiary of ZUKEN Inc.

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2009 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1(b) to the consolidated financial statements.

Tokyo, JapanJune 26, 2009

Unallocated corporate assets consist primarily of cash and cash equivalents, marketable securities and investment securities. The amounts of the above assets are ¥15,691 million in fiscal 2008 and ¥14,540 million (US$148,367 thousand) in fiscal 2009, respectively.

8.Overseas Sales Information

Independent Auditors’ Report

Overseas sales of the Company and its subsidiaries (export sales of the Company and domestic subsidiaries plus sales of overseas consolidated subsidiaries) for the years ended March 31, 2008 and 2009 are summarized as follows:

9.Subsequent EventsOn June 1, 2009, the Company spun off its SoC business unit, which was taken over by ELMIC WESCOM, INC.(EW) under an agreement signed between both companies on April 20, 2009, which was approved at board of directors' meeting. The assets and liabilities of SoC business unit at June 1, 2009, which were excluded from the Company’s accounts amounted to ¥161 million (US$1,643 thousand) and ¥16 million (US$163 thousand), respectively.

Based on the agreement, on June 1, 2009, the Company received 1,047,490 shares of EW's common stock and conse-quently owns 2,539,690 shares of EW, equivalent to 40.4% of shareholders’ voting rights. As a result, EW changed its name to ZUKEN ELMIC, INC. and its status changed from an affiliated company to a consolidated subsidiary by the standard of the real control power.

¥ 4,3982,1386,536

¥22,019

20.0%9.7

29.7%

¥ 3,7782,2266,004

¥19,847

19.0%11.3 30.3%

$ 38,55122,71461,265

$202,520

Millions of yen

2008 2009

2008 2009

2009


Overseas salesEuropeOther Total overseas salesConsolidated net sales

Percentage of overseas sales in consolidated net salesEuropeOther Total


Subsidiaries and Affiliates (As of March 31, 2009) Corporate Information (As of March 31, 2009)

BUSINESS LOCATIONS IN JAPAN

Head Office, Sales and R&D Center2-25-1 Edahigashi, Tsuzuki-ku,Yokohama, Kanagawa 224-8585Tel: 81 (45) 942-1511

Center Minami OfficeZuken Center Minami Building,32-11 Chigasaki-Chuou, Tsuzuki-ku,Yokohama, Kanagawa 224-8580Tel: 81 (45) 942-1300

Shin-Yokohama OfficeZuken Shin-Yokohama Building,3-1-1 Shin-Yokohama, Kouhoku-ku,Yokohama, Kanagawa 222-8505Tel: 81 (45) 473-6868

Kansai Regional OfficeDoujima Avanza,1-6-20 Doujima,Kita-ku, Osaka 530-0003Tel: 81 (6) 6343-1141

Nagoya Regional OfficeNagoya Intercity, 1-11-11 NishikiNaka-ku, Nagoya, Aichi 460-0003Tel: 81 (52) 222-3131

Sendai Regional OfficeSendai Dai-ichi Seimei Tower Building,4-6-1 Ichibancho, Aoba-ku, Sendai,Miyagi 980-0811Tel: 81 (22) 267-9055

CONSOLIDATEDSUBSIDIARIES ANDREPRESENTATIVE OFFICES

OverseasZUKEN EAO/EUROPE

■ UNITED KINGDOMZUKEN Ltd.Development of EDA solutions, etc.,product salesCapital: GBP8,550,000Proportion of stock held: 100%

ZUKEN UK Ltd.Sales of EDA solutions, etc.Capital: GBP1,954,000Proportion of stock held: 100%

ZUKEN Group Ltd.Overall control of U.K. operationsCapital: GBP9,910,000Proportion of stock held: 100%1500 Aztec West, Almondsbury,Bristol BS32 4RF, U.K.Tel: 44 (0) 1454-207800

■ GERMANYZUKEN GmbHDevelopment of EDA solutions, etc.,product salesCapital: EUR639,000Proportion of stock held: 100%

(European Headquarters)Airport Business Centre,Am Soeldnermoos 17,D-85399 Hallbergmoos, GermanyTel: 49 (89) 607696-00

(EMC Technology Center)Vattmannstraße 3D-33100 Paderborn, GermanyTel: 49 (0) 5251-150-600

ZUKEN E3 GmbHDevelopment and sales of wireharness design software, etc.Capital: EUR150,000Proportion of stock held: 74.9%Lämmerweg 55, D-89079 Ulm,GermanyTel: 49-7305-9309-0* The name of the former IBCIM-Team GmbH was changed to its current name on April 1, 2009.

(Office Hannover)Oldenburger Allee 45Hannover D-30659 GermanyTel: 49-511646679-0

(Office Wettingen)Jurastrasse 58 Wettingen5430 SwitzerlandTel: 41-564370890

■ FRANCE ZUKEN S.A.Sales of EDA solutions, etc.Capital: EUR1,287,000Proportion of stock held: 100%Bâtiment Theta 2,3 avenue du Canada,ZAC de Courtaboeuf,91974 Les Ulis Cédex, FranceTel: 33 (0) 1-69-29-48-00

■ ITALY ZUKEN S.r.l.Sales of EDA solutions, etc.Capital: EUR65,000Proportion of stock held: 100%Strada 2-Palazzo C4, 20090Milanofiori, Assago, Milan, ItalyTel: 39-02-575921

■ NETHERLANDS ZUKEN B.V.Sales of EDA solutions, etc.Capital: EUR15,000Proportion of stock held: 100%Schepenlaan 18/A,NL-6002 EE Weert, The NetherlandsTel: 31 (0) 495-583377

ZUKENEAO/NORTH AMERICA

■ UNITED STATESZUKEN USA Inc.Sales of EDA solutions, etc.Capital: USD9,000,000Proportion of stock held: 100%238 Littleton Road, Suite 100,Westford, MA 01886, U.S.A.Tel: 1-978-692-4900

ASIA

■ KOREAZUKEN KOREA Inc.Sales of EDA solutions, etc.Capital: KRW500,000,000Proportion of stock held: 100%DongNam YuHwa Bldg 3F, 1001-10,Daechi-Dong, Kangnam-ku,Seoul 135-283, KoreaTel: 82-2-564-8031

■ SINGAPORE ZUKEN SINGAPORE Pte. Ltd.Sales of EDA solutions, etc.Capital: SGD1,250,000Proportion of stock held: 100%152 Beach Road, #22-05 GatewayEast, Singapore 189721Tel: 65-6392-5855

■ CHINA ZUKEN (SHANGHAI)TECHNICALCENTER Co., Ltd.EDA solution consulting andmaintenanceCapital: CNY1,655,000Proportion of stock held: 100%Room 408, Pacheer CommercialCentre, No. 555 Nanjing West Road,Shanghai 200041,People’s Republic of ChinaTel: 86-21-3218-1784

ZUKEN Inc. ShanghaiRep. OfficeRoom 408, Pacheer CommercialCentre, No. 555 Nanjing West Road,Shanghai 200041,People’s Republic of ChinaTel: 86-21-3218-1784

ZUKEN Inc. Beijing Rep.OfficeRoom 1310, Air China Plaza No. 36,Xiao Yun Road, Chao Yang District,Beijing 100027,People’s Republic of ChinaTel: 86-10-8447-5076

ZUKEN Inc. Shenzhen Rep. OfficeRoom 705, International CultureBuilding, No. 3039, ShennanzhongRoad, Shenzhen, Guangdong518033, People’s Republic of ChinaTel: 86-755-83297510

■ TAIWANZUKEN TAIWAN Inc.Sales of EDA solutions, etc.Capital: TWD15,000,000Proportion of stock held: 100%9F-2, No. 159, Sec.1, Keelung Road,Taipei, 110, TaiwanTel: 886-2-7718-1116

* Currency codes comply with the ISO inter-national currency code.

Domestic

Zsas (Zuken Support and Service) Inc.Outsourcing and personnel agency inthe EDA and IT solution fieldsCapital: JPY147,700,000Proportion of stock held: 87.8%YS Shin-Yokohama Bldg.,2-15-10 Shin-Yokohama, Kouhoku-ku,Yokohama, Kanagawa 222-0033Tel: 81 (45) 471-2334

Zuken NetWave Inc.Sales of and consulting fornetwork systemsCapital: JPY150,000,000Proportion of stock held: 86.1%Zuken Shin-Yokohama Building,3-1-1 Shin-Yokohama, Kouhoku-ku,Yokohama, Kanagawa 222-8505Tel: 81 (45) 473-6821

Inventure Inc.Development and sales of IP andIP-related productsCapital: JPY109,000,000Proportion of stock held: 82.6%Zuken Shin-Yokohama Building3-1-1 Shin-Yokohama, Kouhoku-ku,Yokohama, Kanagawa 222-8505Tel: 81 (45) 477-3377

CAD Lab. Inc.3D mechanical design CAD consultingCapital: JPY50,000,000Proportion of stock held: 100%Zuken Center Minami Building,32-11 Chigasaki-Chuou, Tsuzuki-ku,Yokohama, Kanagawa 224-8580Tel: 81 (45) 948-5806

Zuken Elmic Inc.Development of the middlewarelibraries essential to embedded systemdevelopment, software developmentand support, and the developmentand sale of hardwareCapital: JPY1,202,036,000Proportion of stock held:40.4%(Listed on the Tokyo Stock ExchangeMOTHERS Section)Head Office2F Zuken Shin-Yokohama Bldg., 3-1-1,Shin-Yokohama, Kouhoku-ku, Yokohama, Kanagawa 222-8505,Tel: 81 (45) 624-8111 * The company Elmic Wescom Inc. acquired the above voting rights and became a con-solidated subsidiary of Zuken in accor-dance with effective controlling interest stan-dards on June 1, 2009. Elmic Wescom Inc. changed to its current name on July 1, 2009.

EQUITY-METHOD AFFILIATE

Chip One Stop, Inc.Management of an online marketplacefor urgent and/or small volumedeliveries of electronic componentsCapital: JPY953,444,000Proportion of stock held: 28.6%(Listed on the Tokyo Stock ExchangeMOTHERS Section)Sumitomo Fudosan Shin-YokohamaBldg. 4F, 2-5-5 Shin-Yokohama, Kouhoku-ku, Yokohama, Kanagawa 222-8525Tel: 81 (45) 470-8750

Head Office, Sales and R&D Center

2-25-1 Edahigashi, Tsuzuki-ku, Yokohama,Kanagawa 224-8585, JapanTel: 81 (45) 942-1511 Fax: 81 (45) 942-1599http://www.zuken.com/

Date of Establishment

December 17, 1976

Number of Employees

561 (Consolidated: 1,274)

Common Stock

Authorized: 86,525,700 sharesIssued: 27,903,669 sharesNumber of Shareholders: 14,422

Paid-in Capital

¥10,117,065,000

Stock Listing

Tokyo Stock Exchange (Ticker Code: 6947)

Independent Auditor

KPMG AZSA & Co.

Transfer Agent for Common Stock

The Chuo Mitsui Trust andBanking Company, Limited3-33-1 Shiba, Minato-ku,Tokyo 105-8574, Japan

Board of Directors (As of June 26, 2009)

Makoto KanekoPresident andRepresentative Director

Jinya KatsubeCOO andRepresentative Director

Yoshinori OnoueSenior ManagingDirector

Toshihiro ShimauchiSenior ManagingDirector

Yasuo UenoDirector

Kazuhiro KariyaDirector

Yoshikazu SomaDirector

Gerhard LipskiDirector

Principal Shareholders

Makoto Kaneko

Kaneko Makoto Holdings Co., Ltd.

The Master Trust Bank of Japan, Ltd. (trust account)

Japan Trustee Services Bank, Ltd. (trust account)

Japan Trustee Services Bank, Ltd. (trust account 4G)

Northern Trust Company (AVFC) Sub-accountAmerican Client

Nippon Life Insurance Company

Fusao Wada

Mineko Kaneko

State Street Bank and Trust Company 505044

4,500

3,240

1,389

1,131

1,097

889

803

800

580

568

16.12

11.61

4.97

4.05

3.93

3.18

2.87

2.86

2.07

2.03

Name Number of shares held(Thousands)

Percentage of shares held

In addition to the shares listed above, the Company holds 2,647 thousand shares of treasury stock.

Stock Price Data

ZUKEN Inc.


Yen

1,500

2007.4 2007.10 2008.4 2008.10 2009.3

1,000

500

0

2-25-1 Edahigashi, Tsuzuki-ku,Yokohama, Kanagawa 224-8585, Japan

Tel: 81 (45) 942-1511Fax: 81 (45) 942-1599

http://www.zuken.com/

Zuken Inc.

annual report 2009

Documents

net income2005

japanese yen

millions of yen trends

total of shareholders

diluted net income

net salesoperating income

consolidated2005 yen

presentation of net