Quarterly Report（51st Term 2nd Quarter）
Started January 1, 2017
Ended March 31, 2017

TKC Corporation
1758 Tsurutamachi, Utsunomiya-shi, Tochigi PrefectureTable of Contents
Page
Front Cover
Section 1 Corporate Information
Part 1

Corporate Overview

1

Changes in key financial data…………………………………………………………………………………

1

2

Business description …………………………………………………………………………………………

2

Part 2Business Overview

1

Risk factors of business, etc.…………………………………………………………………………………

2

2

Material agreements, etc. for management ………………………………………………………………

2

3

Analysis of financial conditions, operating results, and cash flows …………………………………

2

Part 3Company Information

1

Company’s stock, etc.
(1) Total number of shares, etc.…………………………………………………………………………………

13(2) Share subscription rights, etc.……………………………………………………………
(3) Exercise of corporate bonds with share subscription rights containing a clause for exercise priceadjustment, etc. …………………………………………
(4) Rights plan ………………………………………………………………………………………

1414(5) Changes in total number of issued shares, capital stock, etc.……………………………………

14(6) Major shareholders……………………………………………………………………………

14(7) Voting rights…………………………………………………………………………………

15

Officers……………………………………………………………………………………………

15

Financial Information……………………………………………………………………………………………

16

2
Part 4
1

14

Quarterly consolidated financial statements(1) Quarterly consolidated balance sheet……………………………………………………………………
(2) Quarterly consolidated statements of income and quarterly consolidated statements ofcomprehensive income……………………………………………………
Quarterly consolidated statements of income……………………………………………………………

17
19
19

Quarterly consolidated statements of comprehensive income……………………………………………

20(3) Quarterly consolidated statements of cash flows……………………………………………………………

21

2

Others ………………………………………………………………………………………………………………

25

Section 2

Information on Guarantors, etc. of the Company……………………………………………………………

26[Quarterly Audit Report]

[Front Cover][Document filed]

Quarterly Report[Applicable law]

Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange
Act[Filed with]

Director of Kanto Local Finance Bureau[Date filed]

May 12, 2017

[Quarterly accounting period]

51st Term 2nd Quarter (from January 1, 2017 to March 31, 2017)[Company name]

株式会社TKC (Kabushiki Kaisha TKC)[Company name in English]

TKC Corporation[Title and name of representative]

Kazuyuki Sumi, Representative Director, President and Executive
Officer[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi Prefecture[Phone number]

028-648-2111[Contact person]

Hitoshi Iwata, Representative Director, Vice President and Executive
Officer, Chief Director of Business Administration[Contact address]

2-1 Ageba-cho, Shinjuku-ku, Tokyo[Phone number]

03-3235-5511[Contact person]

Hitoshi Iwata, Representative Director, Vice President and Executive
Officer, Chief Director of Business Administration[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Ageba-cho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)

Section 1 [Corporate Information]
Part 1 [Corporate Overview]
1[Changes in key financial data,etc]
50th Term
2nd quarter
consolidated
cumulative period

Fiscal year

Started October 1,
Started October 1,
2015;
2016;
ended March 31, 2016 ended March 31, 2017

Accounting period(Millions of

Net sales

Quarterly (current) net
income attributable to ownersof the parent
Quarterly comprehensive
income or comprehensive
income57,750

5,251

4,870

7,604

3,364

3,306

4,770

2,537

4,155

3,958

64,19867,41964,55678,45482,92981,116(Yen)

126.71124.54179.65(Yen)

126.18123.98178.88

(%)

79.9

79.5

77.7

3,247

1,897

9,181

△3,814△3,350△7,02215,014

13,713

16,552(Millions ofyen)(Millions ofyen)(Millions of
yen)

yen)
(Millions of

Total assets

yen)Quarterly (current) net
income per share
Quarterly (current) diluted
net income per share
Equity ratio
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalentsbalance at end of quarter(Millions ofyen)(Millions ofyen)(Millions ofyen)(Millions ofyen)△1,386△2,22551st Term
2nd quarter
consolidated
accounting period

Started January 1,
Started January 1,
2016;
2017;
ended March 31, 2016 ended March 31, 2017

Accounting period

share△1,03750th Term
2nd quarter
consolidated
accounting period

Fiscal year

Quarterly net income per

Started October 1,
2015;
ended September 30,
2016

30,207(Millions of

Net assets

50th Term

29,708yen)

Ordinary income

51st Term
2nd quarter
consolidated
cumulative period

(Yen)

61.91

83.79

(Notes) 1. Changes in key financial data,etc of the Company are not stated in the quarterly consolidated financial
statements.
2. Net sales do not include consumption tax and local consumption tax (hereinafter collectively referred toas "consumption taxes, etc.").
- 1 -2 [Business description]
There is no significant change in the description of business operated by the TKC Group (i.e., TKC Corporationand its affiliated companies) for the current 2nd quarter consolidated cumulative period.

There is no change insignificant affiliated companies.

Part 2 [Business Overview]
1 [Risk factors of business, etc.]
There is no risk pertaining to new business operations, etc. arisen during the current 2nd quarter consolidated
cumulative period.

There is no significant change in risks regarding business operations, etc. described in theannual securities report of the previous fiscal year.

2 [Material agreements, etc. for management]
There is no decision or execution of material agreements, etc. for the management during the current 2ndquarter consolidated accounting period.

3 [Analysis of financial conditions, operating results and cash flows]
I. Operating Results
The operating results for the current 2nd quarter consolidated cumulative period (hereinafter, "the current 2ndquarter") of the consolidated Group comprising of TKC Corporation and its five companies such as consolidated
subsidiaries recorded a net sales of 30,207 million yen (increased 1.7% in comparison to the previous 2nd quarter
consolidated cumulative period (hereinafter, "quarter-on-quarter"), operating income of 4,758 million yen(decreased 8.3% quarter-on-quarter), ordinary income of 4,870 million yen (decreased 7.3% quarter-on-quarter),and profit attributable to shareholders of the parent company of 3,306 million yen (decreased 1.7% quarter-onquarter).
This was mainly due to the lack of demands for the Local Governments Business Division in relation to revision of
the Basic Resident Register System, which increased in the previous fiscal year when My Number System waslaunched, despite the steady growth of orders for cloud services received by both the Accounting Firm and Local
Governments Business Divisions.
Net sales for the current 2nd quarter by business division are shown below.
1. Results of Operation of the Group for the 2nd Quarter(1)Net Sales of the Accounting Firm Business Division(i)

Net sales of the Accounting Firm BD was 20,632 million yen (increased 3.8% quarter-on-quarter);operating income was 3,993 million yen (increased 10.3% quarter-on-quarter).

(ii)

Computer service sales increased 4.5% quarter-on-quarter. This was due to continuous growth from theprevious fiscal year in the user base of cloud services such as the FX4 Cloud Integrated Accounting
Information System for mid-sized companies, PX My Portal providing support for the appropriate
management of the My Numbers, and Tax Accountants Office Management System (OMS).

(iii) Software sales increased by 5.3% quarter-on-quarter. This was due to growth in the user base of FX4
Cloud and e21-Meister as well as tax return system such as inheritance tax and year-end adjustment, etc.
(iv) Sales from consulting services decreased 9.2% quarter-on-quarter. This was due to decrease in revenue
from client/server system launch support service and hardware maintenance service as a result of growthin the number of the users of FX4 Cloud system, etc.
- 2 -

(v)

Sales in hardware increased by 6.2% quarter-on-quarter. This was due to growth in the sales of fileservers, which the Company started handling as equipment to store administrative document files foraccounting firms.

(2)Net Sales of the Local Governments Business Division(i)

Net sales of the Local Governments BD was 7,724 million yen (decreased 4.0% quarter-on-quarter);operating income was 723 million yen (decreased 53.1% quarter-on-quarter).

(ii)

Sales from computer services increased by 6.2% quarter-on-quarter. This was caused by（ increase inservice fees due to growth in the user base of the New Generation TASK Cloud, Convenience Store
Certificate Issuing System and other services.

(iii) Software sales decreased 26.3% quarter-on-quarter. This was due to the lack of orders in relation to amajor change in the law such as operations to revise the system accompanying with the launch of My
Number system, which were implemented during the previous fiscal year.
(iv) Sales from consulting services decreased 9.5% quarter-on-quarter. This was due to the lack of sales
associated with the revision of the local tax electronic declaration system, which sold well during theprevious period but not in the current period.
(v)

Sales in hardware increased by 127.2% quarter-on-quarter. This was caused by increase in sales of servers
and network devices due to increase in installation of office equipment in connection with a need tostrengthen an information security system (a strengthen measures by municipalities for an information
security system) accompanying the launch of the My Number system.

(3)Net Sales of the Printing Business Division (Subsidiary: Tokyo Line Printer Company)(i)

Net sales of the Printing BD was 1,850 million yen (increased 3.8% quarter-on-quarter); operating income
was 33 million yen (increased 74.8% quarter-on-quarter).

(ii)

Sales of data printing service-related products increased by 3.9% quarter-on-quarter. This was due towinning large contract projects from government offices and affiliate organizations, and large orders for
direct mail productions from other client companies.

(iii) Business form-related sales decreased by 1.2% quarter-on-quarter. This was due to continuous decline in
the demands for business forms.
2. Important matters relating to the entire Company(1) Establishment of the Customer Support Center (CSC)
The Company started to construct a new office building "Customer Support Center" in Kanuma-shi, Tochigi,
planning to start its operation in April 2018. This Center will be the center location of "TKC System My
Support," the service provided by the Company responding to client inquiries in relation to the system, which
service was previously conducted by TKC Member Firms. By strengthening the support system for clients who
utilize the systems of the Company, TKC Member firms will be able to concentrate on engaging in selfaccounting at ease.
In conjunction with this, the Company plans to increase the number of staff for telephone support operations up
to 300 by March, 2018, which operations have been conducted by 100 staff so far.
3.Business Activities and Operating Results of the Accounting Firm Business Division
The Accounting Firm BD operates in accordance with the business objectives set forth in the Articles ofIncorporation (Article 2, Paragraph 1: "Management of electronic data processing centers to defend the business- 3 -domain and maintain control over the fate of accounting firms") and works under close ties with the TKC
National Federation, which consists of certified public tax accountants and certified public accountants that are
customers of TKC (hereinafter, "TKC Members").
(Note) For more information on the TKC National Federation, see "All About the TKC National Federation" or visit the TKCGroup website (http://www.tkc.jp/).

(1)Activities of the TKC National Federation ("TKCNF")(i)Activity policy of TKCNFIn TKCNF Policy Presentation held in January 2014, TKCNF added a new business objective being "providing
support for the business continuity and prosperity of SMEs" to its existing business objectives, and has worked
actively towards such achievement.
During the 1st stage period (from January 2014 to December 2016), TKCNF actively engaged in activities under atheme, "Enhancing the collective capability of TKC Member Firms and expanding the membership base."
TKCNF set important activity themes for the 2nd stage period (from January 2017 to December 2018) stated as
below, and has worked actively towards such achievement.
-Important Activity 1: Engage in activities under the three core themes to fulfil the social role.
a) Preparing highly reliable financial statements in accordance with Chusho Kaikei Yoryo (Guidelines for SME
accounting) and diffusing this activity to financial institutions for enlightenment,b) Promoting "Shomen-tempu" (performing tax accounting operations based on the principle of no taxation withoutlaw),c) Promoting the use of "self-accounting" (providing support for the prosperity and success of SMEs).
-Important Activity 2: Exhibit the collective capability of TKC Member Firms and establish a high value added
system.
Actively conducting the 3 activities stated below for client companies in collaboration with local financial
institutions.
a) "TKC monitoring information service"b) "Support for business improvement"c) "Establishment of business" "Business succession" "Support for overseas expansion" etc.
Such activities of TKCNF utilize the systems and services provided by the Company. The Company supports theactivities of TKCNF and is actively engaged in the development and provision of computer services and softwarethat are to the benefit of the prosperity and success of SMEs.
(2) Support activities for the important activities of TKCNF
In order to support these activities of TKCNF, the Company is actively engaged in the activities based on theimportant activity themes of "promoting self-accounting through the TKC method (promotion of the FX series)";"retaining good-standing clients (promotion of the FX4 Cloud)"; "soliciting membership (promotion of the admission
to TKCNF"; and "promoting the use of the Tax Accountants Office Management System (OMS)."(i) Promoting self-accounting through the TKC method (promotion of the FX series)
The Company has supported for approximately 1,500 of TKC Member Firms to hold "self-accounting promotion
meetings" in order for them to autonomously conduct "self-accounting promotion through the TKC method."At

these meetings, information regarding the enhanced functions of the FX series is provided and a training session
for utilizing such information is held as well as information regarding an example case of promotion is shared. The
firms that hold the meetings on a continuing basis show a significant trend to have successfully introduced the FX
series to their client, resulting an increase of 137.7% quarter-on-quarter.
As a result of these activities, the number of FX series users totaled approximately 240,000 companies as of- 4 -March31, 2017.
(ii) Retaining good-standing clients (promotion of the FX4 Cloud)1) The Company offers an integrated accounting information system “FX4 Cloud” designed for medium-scale
corporations with annual turnover of 500 million to 5 billion yen to support TKC Members in their effort toretain good-standing clients and expand their client base.
In the current 2nd quarter, the Company focused on conducting activities based on the concepts of "more efficientaccounting work by utilizing the Data Receiving Functionality from Banks and Credit Card Companies”, "moreefficient accounting work through utilizing the coordinated journal entries functionality which loads data frombusiness systems of other companies," and "business performance control by division and level, and utilization ofManagement Report design tools".
We also hosted the FX4 Cloud Step-up Workshop and in-house training sessions at offices of TKC Members
assisting them to introduce the FX4 Cloud to their client companies.
As a result of these activities, the number of “FX4 Cloud” users totaled approximately 9,900 companies as ofMarch 31, 2017.
2) Business support activities for corporate groups
In order to support TKC Members to expand their client base and the number of FX series users, the Company
offers business management instruction provided by TKC Members and support activities to strengthen the
management power of an entire group for corporate groups such as a franchise chain and voluntarily chain.
As a part of these activities, The Company, in collaboration with Lotas Co.,Ltd., started on April 11 to provide
training sessions conducted by TKC Members and consulting services including individual consultations for themembers of Japan Lotas Association.
(iii)Activities to achieve "Over 10,000 TKC Member Firms
TKCNF is actively engaged in its Project 9501 in order to increase TKC membership to 9,501 or more offices by
the end of September 2017. The Company is working closely with TKCNF in soliciting new members to achieve
this goal.
During the current 2nd quarter, The Company continuously solicited non-member accountants who hadparticipated in the TKC New Members' Forum (held in November 2016) to be a TKC Member as we did in theprevious quarter, as well as hosted management seminars as stated below for accounting firms to promote to be amember of TKCNF.
a) Seminars for medium- and large-scale non-member accounting firms to contemplate the theme of high value
added firm management utilizing TKC's latest system (including the Data Receiving Functionality from Banksand Credit Card Companies, TKC Monitoring Information Service, and TKC Documented Evidence Storage
Service),b) Seminars to contemplate the theme of "expansion of the client base and income" targeting new practitioners ofaccounting firms, andc) Seminars to propose a business model for a successful accounting firm, targeting certified public accountants
who plan to start their own business.
As a result of these activities, the total number of TKC Member firms and TKC Members counted approximately
9,400 and 11,000, respectively (as of March 31, 2017).
(iv)Promotion of Tax Accountants Office Management System (OMS)
The Company provides the Tax Accountants Office Management System (OMS) in an aim to improve theproductivity and operational quality of TKC Member Firms.
- 5 -During the current 2nd quarter, The Company hosted the Self-accounting Step-up Workshop through TKC
method [for operational use] Firm Management (OMS), participated by 178 people from 152 accounting firms.
As a result of these activities, the number of OMS users totaled about 6,600 firms.
(3) Initiatives for FinTech(i) FinTech service for the clients of TKC Members
The Company strive for promoting the use of the FinTech service Data Receiving Functionality from Banks andCredit Card Companies for the clients of TKC Members, which service started June 2016 as a new function of the
FX series.
This function enables the clients to automatically receive transaction data of internet banking services offered bymore than 99% of financial institutions (corporate account)* across Japan as well as statements of major credit
cards, and to easily and accurately post journal entries based on preset journal rules.
The Company promoted the use of the FX series by making appeals the more efficient journal entries by utilizing
this function, considering the fact that about 40% (according to our survey) of all journal entries conducted by SMEs
were related to bank transactions. As a result of these activities, the number of the users of this function totaled
nearly 12,000 companies as of March 31, 2017.
In addition, we promote initiatives toward an API (Application Programming Interface) cooperation with The Bank ofTokyo-Mitsubishi UFJ and Joyo Bank in order to further improve convenience of the function.
* City Banks, Regional Banks, Second Regional Banks, and Shinkin Banks(ii) FinTech seivice for financial institutions
We focus on promoting to increase the use of the “TKC Monitoring Information Service”, our FinTech service forfinancial institutions, started in October 2016.
With this service, TKC Member Firms provide, upon request of their clients, financial data, whose credibility,
substantiality, and completeness are confirmed by TKC Member Firms by monthly filed Audits, saved at TKCInternet Service Center, to financial institutions. This service has been adopted by many financial institutions, as
the reliability of monthly trial balances and financial reports,etc. provided by the service being highly acclaimed, forexample, the use of the service being a prerequisite for preferential interest rates of the loan plan "Taikoban"
introduced by Chukyo Bank.
During the current 2nd quarter, the Company promoted the use of the service by supporting the holding of councils
regarding utilization of the service by the TKC Regional Associations across Japan and financial institutions. As aresult of the effort, this service is adopted by approximately 220 financial institutions as of March 31, 2017, and 170
financial institutions started to accept the financial data.
(4) Promotional activities utilizing the Support Project for Introducing IT for Improvement in Productivity ofServices, etc.
On January 27, 2017, The Ministry of Economy, Trade and Industry started accepting an application for the Support
Project for Introducing IT for Improvement in Productivity of Services etc. This Support Project provides a subsidy
for SMEs to utilize IT tools including software and services for their business in an aim to support to improve theproductivity of their operations.
The Company took this opportunity to propose TKC Member firms to use the FX series or OMS by utilizing thisSupport Project as well as provided detailed information for the preparation and submission of an application for the
Support Project.
(5)Activities to "support the preparation of highly reliable financial statements based on timely and accurate
bookkeeping"- 6 -(i)Issuance of Certificate of Bookkeeping Timeliness
The Company issues a Certificate of Bookkeeping Timeliness in an aim to improve reliability of financial statements
prepared by TKC Members and to provide a passport for smooth financing to the clients of TKC Members. Thisutilizes the features of the Company's financial accounting processing at TKC data centers, which prohibits any
retroactive insertions, deletions and corrections to past data, and TKC Corporation proves, as a third party, that
TKC Members have visited clients on a monthly basis to provide guidance on accurate bookkeeping (monthly Field
Audits), and that all work processes from monthly settlements to the final settlement of accounts and electronic tax
filings have been completed in a timely manner.
The Certificate of Bookkeeping Timeliness has been highly acclaimed by financial institutions across Japan, and it isused to assess credibility for financial products such as "Kiwame" introduced by The Bank of Tokyo-Mitsubishi UFJ
as well as for other loan plans and preferential interest rates at many financial institutions in Japan including the
Shoko Chukin Bank.
(ii)Support activities for diffusion of "Chusho Kaikei Yoryo (Guidelines for SME accounting)"
TKCNF recommends that clients of TKC Members use the Guidelines for SME accounting (Chusho Kaikei Yoryo) for
the accounting guideline to conduct their accounting operations. This Chusho Kaikei Yoryo has been developed basedon the ideas including: 1) accounting useful to grasp the status of business management; 2) accounting reliable toprovide information to stakeholders (such as financial institutions); 3) accounting in compliance with the Ordinanceon Company Accounting as well as in harmony with taxation system; and 4) accounting not imposing excessive
burden on SMEs. In accordance with the public notices issued by five Ministries, namely, Ministry of Internal Affairs
and Communications, Ministry of Health, Labour and Welfare, Ministry of Agriculture, Forestry and Fisheries,
Ministry of Economy, Trade and Industry, and Ministry of Land, Infrastructure, Transport and Tourism, in August
2012, support agencies for business innovation (certified public tax accountants and financial institutions,etc.)
certified in accordance with the Act on Support for Strengthening Management Functions for SMEs are encouraged
to use Chusho Kaikei Yoryo (or Guidelines for SME accounting).
The Company continuously provides support to organize the surrounding environment and strengthen ties withother SME support organizations in order to support the activities of TKCNF for diffusion and use of it.
(6)Support for the expansion of client base of TKC Members serving large-size companies
By utilizing the TKC system, the Company contributes to the rationalization of tax and accounting operations oflarge enterprises, mainly listed companies, and are actively working to make these companies clients of TKC
Members.
The Company actively promotes the “TKC Consolidated Group Solution package” for large-size companies (which
includes: the eCA-DRIVER consolidated accounting system; the eConsoliTax consolidated tax payment system, theeTaxEffect tax effect accounting system, the ASP1000R electronic tax filing system for corporations, the FX5
integrated accounting information system, the e-TAX series electronic tax filing system, the FAManager fixed asset
management system, the documented evidence storage service (TDS), and the OBMonitor oversea businessmonitoring system, etc.).
During the current 2nd quarter, the Company collaborated with the TKCNF's Medium and Large-size Support
Research Committee (consisting of nearly 1,240 members as of March 31, 2017) in hosting a large seminar to explain"Tax reform" by inviting staff from Taxation Bureau of the Ministry of Finance as a lecturer as well as hosting
seminars to discuss themes such as "latest trend of the taxation system" and "improving productivity of accounting
operations." We also collaborated with the TKCNF's Oversea Expansion Support Committee (consisting ofapproximately 500 members as of March 31, 2017) in hosting seminars to contemplate the theme of "Preventing andrevealing the unlawful activities of overseas subsidiaries." In addition, we promoted and introduced a variety ofservices and multiple systems targeting the companies using our system by leveraging the advantages of theCompany's systems including non-consolidated filing, consolidated tax payment and tax effect accounting, which- 7 -encompass all aspects of account settlements and tax declaration on corporate group level.
As a result of these activities, the number of companies using the TKC Consolidated Group Solution counted
approximately 2,500 corporate groups (or about 17,500 companies) as of March 31, 2017, the service being adopted
by more than 75% of 100 top Japanese listed companies in sales. More than 800 TKC Members have been appointed
for a system consultant by these companies.
(7)Expansion of markets for legal information database services
The LEX/DB Internet legal information database maintains an archive of over 281,000 judicial precedents, etc. (as ofMarch 31, 2017) covering all legal fields from precedents set in the former Supreme Court dating back to 1875 tothose most recently announced as well as precedents collected through our own channel, being the largest databaseof its kind in Japan. The TKC Law Library is a comprehensive legal information database which uses the LEX/DB
Internet as its core content and contains over 904,000 bibliographic information references with links to 50 of the
Databases of Professional Journals, with total items of information now exceeding 2,350,000. As of March 31, 2017,
the Library is used by over 16,600 institutions, including TKC Member firms, universities, law schools, government
offices, law firms, patent offices and corporate legal departments.
In the current 2nd quarter, the Company promoted the sales of the practical contents of TKC Law Library by
specifically packaging the contents for targeting customers (i.e., "the law firm pack" for law firms and "the corporate
law pack" for companies). In March 2017, we launched the labor law related portal site "Labor Law EX+" codeveloped with one of our business partners, Roudou Kaihatsu Kenkyukai Co.,Ltd., in an aim to create a new sales
channel and to expand sales of the contents, targeting the members of the study group of labor law as well as theusers of TKC Law Library.
In the academic field, we offered 67 law schools an educational support program based on the use of TKC Law School
Educational Support System as well as supported them to be able to apply for the Public Support Program for Law
Schools Concerning the Revision of Budget Distribution. In addition, the exercise systems included in the system toaid students in self-study (Basic Skill Tests, Study Drills of Short Answer Questions from Past Exams and the Essay
Writing Seminar), as well as the effective use of "Learning Support NAVI" and "Study Drills of Precedents" provided
functions enabling more students to create study plans, check their progress and study the necessary precedents inthe lead up to the bar exam, leading to the increasing number of users.
As for the sales of TKC Law Library (Overseas Edition) through agents, we have received inquiries from courts,
governmental agencies, universities and law firms in South Korea, Taiwan, China and other Asian countries as wellas other countries including Germany, the U.K. and the U.S. As of March 31, 2017, over 60 licenses are in use
worldwide, with further growth anticipated in the future, particularly in the Asian regions.
4.Business Activities and Operating Results of the Local Governments Business Division
The Local Governments BD operates in accordance with the business objectives set forth in the Articles ofIncorporation (Article 2, Paragraph 2: "Management of electronic data processing centers to improve theadministrative efficiency of local governments") and offers specialized information services in order to help promote
the welfare of residents by improving administrative efficiency.
(1)Development and provision of cloud services designed for local municipalities
The Company provides TKC Government Cloud Service to municipalities nationwide. This Cloud Service consists of
the TASK Cloud Service which supports a range of services for residents, mission-critical functions and information
services within agencies, and the TASK Outsourcing Service which supports massive batch output and processing oftax papers and other documents.
In particular, the TASK Cloud Service is a common platform package system operated at TKC data centers andshared by all municipalities across Japan (offered both for individual use and shared use by multiple organizations),- 8 -and serves as a model for local government cloud systems that the Japanese government seeks to establish. As of
March 31, 2017, approximately 130 organizations nationwide have adopted our services.
During the current 2nd quarter, the Company was engaged in enhancing the function of mission-critical operational
systems (such as Basic Resident Register System, taxation and welfare), the New Generation TASK Cloud(compatible with My Number system)*, for the preparation of the shared information system being built between
Japanese and local governments, the trial operation of the system being scheduled to start from July 2017 as well as
in supporting our client organizations for the preparation of comprehensive operational testing. In order to allow all
our client organizations to deal with the shared information system smoothly, aside from the support for our new
customers, we conducted the transition works to the New Generation TASK Cloud for approximately 120
organizations who use the previous series (TASK.NET System) and completed the works for all of the organizations
as of the beginning of January, 2017. As a result, the same system (the New Generation TASK Cloud) is in full use at
all our client organizations. This initiative is unique to the Company, not being conducted by any other company.
* The New Generation TASK Cloud (compatible with My Number system) is the brand name of the mission-criticaloperational system of the TASK Cloud Service.
(2)Expansion of cloud services for residents
In response to the notice by the Minister of Internal Affairs and Communications "Review regarding improvement ofservices for residents utilizing My Number cards and vitalization of regions (request)" issued in September 2016,
more and more municipalities are considering to adopt the "Issuance of Certificates at Convenience Store" service.
In response, the Company provides the TASK Cloud Convenience Store Certificate Issuing System as the system torealize this service. Our extensive track record as the first cloud service for municipalities across Japan has
attracted the interest of many local governments including government ordinance-designated cities, and 56
municipalities have adopted the TASK Cloud Convenience Store Certificate Issuing System as of March 31, 2017.
(3)Support for electronic filing of local taxes
The Company is an authorized contractor of the Council for the Digitization of Local Taxes, and provides cloud-based
service for electronic filing of local taxes and the electronic tax payment offered by the Council. We also develop andprovide data connection services to connect the individual tax systems of various municipalities with the Council's
platform.
These services are proposed in collaboration with 46 system vendors with whom we have signed alliance partner
agreements, and the Support Service for TASK Cloud Electronic Filing of Local Taxes is currently used by more than
720 agencies which account for approximately 40% of all municipalities (as of March 31, 2017).
Our TASK Cloud Taxation Document Image Management Service is drawing attention as means of preventing
information leakage caused by paper media, as well as streamlining taxation-related affairs and reducing associatedcosts. This service is used by over 80 municipalities as of March 31, 2017.
(4)Support for the development of standardized local public accounting
Local governments are in principle required to organize the system of accrual basis accounting (double entry
bookkeeping) to complement the current cash basis accounting (single entry bookkeeping), and to prepare anddisclose their financial documents utilizing such system by the end of March 2017.
The Company provides the TASK Cloud Public Accounting System and the associated TASK Cloud Fixed Assets
Control System to comply with this requirement. During the current 2nd quarter, the Company newly developed theutilizing function of financial documents (balance sheets and administrative cost statements) as one of the functionsof TASK Cloud Public Accounting System and started offering it. The TASK Cloud Public Accounting System isadopted by about 150 agencies as of March 31, 2017, being acclaimed of its easy-to-use system as achieving "accurate- 9 -automatic journal entries" by utilizing patent technology.
(5)Compliance with revised laws and systems
The Company added new functions to related systems in response to the shared information system being built
between Japanese and local governments as well as growing social awareness for the protection of personal
information.
We also organized the New Products Planning and Promotion Office as of October 1, 2016 utilizing it as a core place
for research, study and development on electronic administration services which utilize new social infrastructuresuch as My Number card and Myna Portal.
As a part of these initiatives, we were certified by the Minister of Internal Affairs and Communications for the firstcertified company in the program of "the utilization of My Number cards by private sectors" initiated by the
Ministry, and it was notified as of March 10. We will start utilizing it for "verification or permission for access to asecurity room" and "verification or permission for handling personal information" from this summer, in an aim to
confirm the practicality of this service and to provide it for our clients in future.
5.Business Activities and Operating Results of the Printing Business Division
The Group's Printing BD is engaged in the printing of business forms and manufacturing and sales of service andproducts around its data printing services.
In the field of business form printing, although demand of business form are generally on a downward trend, thedrop was minute in the current 2nd quarter period thanks to regular orders from major clients.
Data printing service sales increased due to an increase in orders received for articles relating major government
contract projects, direct mail productions for other client companies, and the steady growth of regular orders forbusiness process outsourcing such as invoices and notice operations, resulting in a 3.8% increase in sales quarter-onquarter.
II. Financial Position
Assets, liabilities and net assets at the end of the current 2nd quarter consolidated accounting period are statedbelow.
1.Assets
Total assets as of the end of the current 2nd quarter consolidated accounting period amounted to 82,929 million yen,a 1,813 million yen increase compared to 81,116 million yen as of the end of the previous consolidated fiscal year.
(1)Current assets
Current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 28,607 million
yen, a 946 million yen decrease compared to 29,554 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 2,839 million yen decrease in Cash and deposits, a 126 million yen decrease in
Finished good inventory, and a 108 million yen decrease in Advances paid included in Other, despite a 2,154 million
yen increase in Accounts receivable - trade.
.
(2)Non-current assets
Non-current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 54,322
million yen, a 2,759 million yen increase compared to 51,562 million yen as of the end of the previous consolidated
fiscal year.
- 10 -

This was mainly attributable to an increase of 3,191 million yen in Investment securities and a 562 million yen
increase in Construction in progress account included in Other, despite a 1,000 million yen decrease in Long-term
deposits.
2.Liabilities
Total liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 15,509 million
yen, a 1,050 million yen decrease compared to 16,559 million yen as of the end of the previous consolidated fiscal
year.
(1)Current liabilities
Current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 12,302
million yen, a 1,117 million yen decrease compared to 13,419 million yen as of the end of the previous consolidated
fiscal year.
This was mainly attributable to a 1,165 million yen decrease in Accounts payable and a 776 million yen decrease in
Advances received included in Other, despite an 824 million yen increase in Accounts payable - trade.
(2)Non-current liabilities
Non-current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 3,207
million yen, a 67 million yen increase compared to 3,140 million yen as of the end of the previous consolidated fiscal
year.
This was mainly attributable to an 82 million yen increase in Retirement benefit liability.
3.Net assets
Total net assets as of the end of the current 2nd quarter consolidated accounting period amounted to 67,419 million
yen, a 2,863 million yen increase compared to 64,556 million yen as of the end of the previous consolidated fiscal
year.
This was mainly attributable to an increase of 2,239 million yen in Retained earnings and an increase of 833 million
yen in Valuation difference on available-for-sale securities.
Equity ratio as of the end of the current 2nd quarter consolidated accounting period was 79.5%, a 1.8% increase
compared to the ratio of 77.7% as of the end of the previous consolidated fiscal year.
III. Cash Flows
The Balance of the cash and cash equivalents as of the end of the current 2nd quarter consolidated accounting periodamounted to 13,713 million yen, a 2,839 million yen decrease compared to the end of the previous consolidated fiscal
year.
The cash flow overview and its main cause during the current 2nd quarter consolidated accumulative period arestated below:(1) Cash flows from operating activities
Cash flow from operating activities increased by 1,879 million yen (decreased 1,350million yen compared to the samequarter of the prior year).
This was mainly attributable to the posting of 4,893 million yen as quarterly net profit before income taxes andadjustments.
- 11 -

(2) Cash flows from investment activities
Cash flow from operating activities decreased by 3,350 million yen (decreased 464 million yen compared to the samequarter of the prior year).
This was mainly attributable to the payment of 2,000 million yen for purchasing investment securities.
(3) Cash flows from financial activities
Cash flow from financial activities decreased by 1,386 million yen (increase 349 million yen compared to the samequarter of the prior year).
This was mainly attributable to the payment of 1,060 million yen for the dividends (40 yen dividends per share) forthe previous fiscal year (ended on the end of September, 2016). (Unquote)IV

Operational and Financial Challenges Facing the TKC Group
There is no significant change in challenges faced by the TKC Group during the current 2nd quarter
consolidated cumulative period.

IV

Research and Development Activities
An amount of 14 million yen was spent on R&D in the current 2nd quarter consolidated cumulative period.
There is no significant change in the status of research and development activities of the TKC Group during thecurrent 2nd quarter consolidated cumulative period.

- 12 -

Part 3 [Company Information]
1 [Company’s stock,etc.](1) [Total number of shares, etc.](i) [Total number of shares]
Class

Total number of shares authorized to be issued (shares)

Common stock

60,000,000

Total

60,000,000(ii) [Issued shares]

Class

Common stock
Total

Number of sharesissued as of the end of
2nd quarter accounting
period (shares)(March 31, 2017)

26,731,033
26,731,033

Number of shares issued
as of the filing date(shares)(May 12, 2017)

26,731,033
26,731,033- 13 -Name of stock
exchange on which
the Company is listed,or name of Authorized
Financial
Instruments Firms
Association
First Section of Tokyo
Stock Exchange-

Description

Number of theshare unit: 100
shares-(2) [Share subscription rights, etc.]
Not applicable.
(3)[Exercise,etc. of bonds with share subscription rights containing a clause for exercise price adjustment, etc.]
Not applicable.
(4)[Rights Plan]
Not applicable.
(5)[Changes in total number of issued shares, capital stock, etc.]
Increase or
Balance ofIncrease or
decrease in
total
decrease intotal number
number ofcapital stockDateof issued
issuedsharesshares(Millions of(shares)(shares)yen)
From January 1, 2017
to March 31, 2017－

26,731,033

Increase or
decrease incapitalreserve(Millions of(Millions of
yen)
yen)

Balance ofcapital stock

－

5,700

－

Balance ofcapitalreserve(Millions of
yen)
5,409

(6)[Major shareholders]Names of shareholders

Address

Iizuka Takeshi Scholarship

1758 Tsurutamachi, Utsunomiya-shi,

Foundation

Tochigi

Daido Life Insurance Company
TKC Employee Shareholding
Association
Sozeishiryokan (Institute of Tax
Research and Literature)
Masaharu Iizuka

As of March 31, 2017
Ratio of total
Number of owned
number of owned
sharesshares to total(Thousands ofnumber of issued
shares)shares (%)
3,652

13.7

2,569

9.6

2-1 Ageba-cho, Shinjuku-ku, Tokyo

1,618

6.1

3-45-13 Minamidai, Nakano-ku, Tokyo

1,246

4.7

Utsunomiya-shi, Tochigi

1,128

4.2

930

3.5

694

2.6

1-2-1 Marunouchi, Chiyoda-ku, Tokyo

666

2.5

Kamakura-shi, Kanagawa

648

2.4

1-28-1 Ebisu, Shibuya-ku, Tokyo

598

2.2

598

2.2

14,35053.7

1-2-1 Edobori, Nishi-ku, Osaka-shi,
Osaka

STATE STREET BANK AND
TRUST COMPANY

ONE LINCOLN STREET, BOSTON MA(Standing proxy: The Hong

USA 02111

Kong and Shanghai Banking(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

Corporation, Tokyo Branch)
The Master Trust Bank of

2-11-3 Hamamatsu-cho, Minato-ku,

Japan ,Ltd. (Trust)Tokyo

Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Kazuaki Iizuka
Aioi Nissay Dowa InsuranceCo., Ltd.
Sompo Japan Nipponkoa

1-26-1 Nishishinjuku, Shinjuku-ku,

Insurance Inc.

Tokyo

Total

－

- 14 -

(7) [Voting rights](i)[Issued shares]
Classification

As of March 31, 2017
Number of voting
Description
rights (units)

Number of shares (shares)

Shares without voting right

－

－

－

－

－

－

－

－

－

Common stock

230,100－－

Shares with full voting right (others)

Common stock

26,461,500

264,615－

Shares less than one share unit

Common stock

39,433－－

26,731,033

－

－

－

264,615－

Shares with restricted voting right(treasury stock, etc.)
Shares with restricted voting right(others)
Shares with full voting right(treasury stock, etc.)

Total number of issued shares
Total voting rights held by all
shareholders(Note)The number shown in the column of "Shares with full voting right (others)" includes 600 shares (6 shares ofvoting rights) registered in the name of Japan Securities Depository Center, Inc.
(ii) [Treasury stock, etc.]

Name of owner

Address of owner

As of March 31, 2017
Ratio of total
number of
Total number
owned sharesof owned
to total number
shares (shares)of issued
shares (%)

Number ofshares held
under own
name (shares)

Number ofshares held
under othername (shares)

224,600－

224,600

0.84

5,500

－

5,500

0.02

230,100－

230,100

0.86

1758 Tsurutamach,
TKC Corporation

Utsunomiya-shi,
Tochigi

TKC Shuppan
Corporation
Total

4-8-8
Kudanminami,
Chiyoda-ku, Tokyo－

2 [Officers]
After submission of the annual securities report for the previous fiscal year, there is no change in the officers
during the current quarter cumulative period.

- 15 -

Part 4 [Financial Information]
1. Method of Preparing Quarterly Consolidated Financial Statements
The quarterly consolidated financial statements of the Company have been prepared in accordance with theOrdinance on Terminology, Forms, and Preparation Methods of Quarterly Consolidated Financial Statements(Cabinet Office Ordinance No.64 of August 10,2007).

2. Auditing and Attestation
The quarterly consolidated financial statements of the Company for the 2nd quarter consolidated accounting
period (from January 1, 2017 to March 31, 2017) and the 2nd quarter consolidated cumulative period (fromOctober 1, 2016 to March 31, 2017) have been audited by Ernst & Young ShinNihon LLC pursuant to theprovision of Paragraph 1, Article 193-2 of the Financial Instruments and Exchange Act.

- 16 -

１Quarterly Consolidated Financial Statements(1)Quarterly consolidated balance sheets
Previous consolidated fiscal
year(As of September 30, 2016)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term time deposits
Guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - trade
Shore-term loans payable
Accounts payable - other
Income taxes payable
Provisions for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Net defined benefit liabilities
Other
Total non-current liabilities
Total liabilities- 17 -(Unit: Millions of yen)
Current 2nd quarter
consolidated accounting
period(As of March 31, 2017)19,552
6,335
※ 631
3,069
△36
29,554

16,713
8,518
※ 537
2,874
△36
28,607

6,554
6,607
1,743
14,906
3,712

6,642
6,922
2,441
16,005
3,627

20,216
7,000
1,303
4,422
32,94351,562
81,11623,413
6,000
1,304
3,971
34,68854,32282,929

2,602
111
4,191
2,203
2,853
1,457
13,419

3,426
151
3,025
1,716
2,792
1,189
12,302

295
1,583
1,261
3,140
16,559

259
1,665
1,282
3,207
15,509

Previous consolidated fiscal
year(As of September 30, 2016)
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Total accumulated other comprehensive
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

5,700
5,419
52,606△350
63,3745,700
5,409
54,845△558
65,395

△339

492

176
1,345
64,556
81,116

178
1,353
67,41982,929△339- 18 -(Unit: Millions of yen)
Current 2nd quarter
consolidated accounting
period(As of March 31, 2017)492

(2)Quarterly consolidated statements of income and quarterly consolidated statements ofcomprehensive income(Quarterly consolidated statements of income)(2nd quarter consolidated cumulative period)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Dividend income of insurance
Land and house rent received
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Share of loss of entities accounted for using
equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gains on sale of non-current assets
Reversal of asset retirement obligations
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on disposal of non-current assets
Total extraordinary losses
Quarterly profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Quarterly net Profit
Quarterly net profit attributable to non-controllinginterests
Quarterly net profit attributable to owners ofparentPrevious 2nd quarter
consolidated cumulative
period(Started October 1, 2015;
ended March 31, 2016)
29,708
10,46919,238※ 14,051
5,187(Unit: Millions of yen)
Current 2nd quarter
consolidated cumulative
period(Started October 1, 2016;
ended March 31, 2017)30,207
10,936
19,271※ 14,512
4,758

19
23
17
18

15
50
11
20

-

3

13
92

12
114

3
-

2
0

25

-

0
28
5,251

0
2
4,870

10
10

0
23
23

0
24
25
5,236
2,025
△155
1,869
3,366

0
0
4,893
1,573
0
1,574
3,318

2

12

3,364

3,306

- 19 -

(Quarterly consolidated statements of comprehensive income)(2nd quarter consolidated cumulative period)(Unit: Millions of yen）

Quarterly net profit
Other comprehensive income
Valuation difference on available-for-salesecurities
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income attributable toowners of parent
Quarterly comprehensive income attributable
to non-controlling interests

Previous 2nd quarter
consolidated cumulative
period(Stared October 1, 2015;
ended March 31, 2016)
3,366

Current 2nd quarter
consolidated cumulative
period(Started October 1, 2016;
ended March 31, 2017)
3,318

△828

836

△828
2,537

837
4,155

2,539

4,139

△1

16

△0

- 20 -

0(3)[ Quarterly consolidated statements of cash flows]（単位：百万円）
Previous 2nd consolidated
cumulative period(Started October 1, 2015;
ended March 31, 2016)

Cash flows from operating activities
Net income before taxes and adjustments

5,236
1,308
△9
24
－
271

Depreciation
Gains on sale of non-current assets (△gain）
Loss on retirement of non-current assets
Reversal of asset retirement obligations
Change in provisions for bonuses (△decrease)
Change in provision for retirement benefits(△decrease)
Change in trade receivables (△increase)
Change in other assets (△increase）
Change in trade payable (△decrease)
Change in other liabilities (△decrease)
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plants and equipment
Purchase of intangible assets
Purchase of investment securities
Gain on redemption of investment securities
Other
Cash flows from investing activities
Cash flows from financing activities
Increase/decrease in short-term loans
payable(△decrease)
Repayment of long-term loans payable
Purchase of treasury stock
Dividends paid
Dividends paid to minority shareholders
Other
Cash flows from financing activities
Change in cash and cash equivalents (△decrease)
Cash and cash equivalents at beginning of quater
Cash and cash equivalents at end of quarter- 21 -

Current 2nd consolidated
cumulative period(Started October 1, 2016;
ended March 31, 2017)

84

4,893
1,418
△0
0
△23
△61

△2,144
190
356
△933
32
4,417
36
△3
△1,204
3,247△2,959
198
931
△581
8
3,908
78
△2
△2,0881,897△1,5004,700△1,124△777△6,1621,000
49△3,814△1,5002,500△1,653△702△2,000－6△3,350

40

40

△35
△0
△1,008△8△24△1,037△1,604
16,619※ 15,014△35△268△1,060△9△52△1,386△2,83916,552※ 13,713

82

[Notes]※(Quarterly consolidated balance sheet)
Breakdown of inventory assets is as follows:
Previous consolidated fiscal year
（As of September 30, 2016）

Current 2nd quarter consolidated
accounting period(As of March 31, 2017)

Finished good inventory

360 million yen

233 million yen

Work in progress

112 million yen

153 million yen

Raw materials and supplies

158 million yen

149 million yen(Quarterly consolidated statements of income)※

Major items included in selling, general and administrative expenses are as follows:
Previous 2nd quarter consolidated
Current 2nd quarterly
cumulative period
consolidated cumulative period(Started October 1, 2015;(Started October 1, 2016;
ended March 31, 2016)
ended March 31, 2017)
Salaries

4,741 million yen

5,016 million yen

Provisions for bonuses

2,350 million yen

2,438 million yen

Retirement benefit expenses

315 million yen

301 million yen

Depreciation

256 million yen

285 million yen

Rent expenses

1,046 million yen

1,050 million yen

54 million yen

14 million yen

Research and development
expenses※(Notes to quarterly consolidated statements of cash flows)
Relationship between the quarterly ending balance of cash and cash equivalents and account items stated in

the quarterly consolidated balance sheets is stated as below.
Previous 2nd quarter consolidated Current 2nd quarter consolidated
cumulative period
cumulative period(Started October 1, 2015;(Started October 1, 2016;
ended March 31, 2016)
ended March 31, 2017)
Cash and deposits
Time deposits with deposit period
greater than three months
Cash and cash equivalents

18,014 million yen△3,000 million yen
15,014 million yen- 22 -

16,713 million yen△3,000 million yen
13,713 million yen

I.

(Notes to equity, etc.)
Previous 2nd quarter consolidated cumulative period (Started October 1, 2015; ended March 31, 2016)(1) Dividend payments

Resolution

Class ofshare

Total amountof cashDividend
dividends
per share(Millions of (Yen)yen)

Record date

Effective date

Source ofdividends

December 22,
2015
Ordinary general
meeting ofCommon
stock

1,009

38 September 30, 2015 December 24, 2015

Retainedearnings

shareholders(2) Of the dividends with record dates during the current 2nd quarter consolidated cumulative period, those witheffective dates for the dividends after the end of the current 2nd quarter consolidated accounting period
Total amountof cashDividend
Class of
Source of
Resolution
dividends
per share
Record date
Effective dateshare
dividends(Millions of (Yen)yen)
May 13, 2016
Ordinary general
meeting ofCommon
stock

1,062

40

March 31, 2016

June 13, 2016

Retainedearnings

shareholders

II.

Current 2nd quarter consolidated cumulative period (Started October 1, 2016; ended March 31, 2017)(1) Dividend payments

Resolution

Class ofshare

Total amountof cashDividend
dividends
per share(Millions of (Yen)yen)

Record date

Effective date

Source ofdividends

December 22,
2016
Ordinary general
meeting ofCommon
stock

1,062

40 September 30, 2016 December 26, 2016

Retainedearnings

shareholders(2) Of the dividends with record dates during the current 2nd quarter consolidated cumulative period, thosewith effective dates for the dividends after the end of the current 2nd quarter consolidated accounting
periodResolution

Class ofshare

Total amountof cashDividend
dividends
per share(Millions of (Yen)yen)

Record date

Effective date

March 31, 2017

June 12, 2017

Source ofdividends

May 10, 2017
Ordinary general
meeting ofCommon
stock

1,060

40

shareholders- 23 -

Retainedearnings

(Segment information, etc.)[Segment information]
I.

Previous 2nd quarter consolidated cumulative period (started October 1, 2016; ended March 31, 2017)
Information on net sales and profit or loss by reportable segments

Reportable segment(Unit: Millions of yen)Amounts inquarterly
Adjustments consolidated(Notes) 1
statements
of income(Notes) 2

Accounting
Firm BD

Local
Governments
BD

Printing
BD

19,883

8,042

1,782

29,708-29,708

1

0

798

800

-

19,885

8,043

2,580

30,509△800

29,708

3,620

1,544

19

5,184

2

5,187

Total

Sales
(1) Sales to outside customers(2) Inter-segment sales ortransfers
Total
Segment profit or loss

△800

(Notes) 1. Adjustments of segment profit of 2 million yen include amounts for elimination of inter-segment
transactions and for adjustments,etc. of inventory assets.
2. Segment profit is adjusted with the operating profit presented in the Quarterly Consolidated Statementsof Income.
II

Current 2nd quarter consolidated cumulative period (started October 1, 2016; ended March 31, 2017)
Information on net sales and profit or loss by reportable segments
Reportable segment
Local
Governmen Printing BD
ts BD

Accounting
Firm BD

Total(Unit: Millions of yen)Amounts inquarterly
Adjustments consolidated(Notes) 1
statements
of income(Notes) 2

Sales(1) Sales to outside customers(2) Inter-segment sales ortransfers
Total
Segment profit or loss

20,632

7,724

1,850

30,207-30,207

2

-

795

797

-

20,635

7,724

2,646

31,005△797

30,207

3,993

723

33

4,751

7

4,758

△797

(Notes) 1. Adjustments of segment profit of 7 million yen include amounts for elimination of inter-segment
transactions and for adjustments of inventory assets,etc.
2. Segment profit is adjusted with the operating profit presented in the Quarterly Consolidated Statementsof Income.

- 24 -

(Earnings Per Share Information)
The amount of quarterly net income per share and the basis for the calculation thereof as well as the amount ofquarterly diluted net income per share and the basis for the calculation thereof are stated as follows:
Previous 2nd quarter
Current 2nd quarter
consolidated cumulative period consolidated cumulative period(Started October 1, 2015;(Started October 1, 2016;
ended March 31, 2016)
ended March 31, 2017)(1) Quarterly net income per share

126.71 yen

124.54 yen

3,364

3,306

－

－

3,364

3,306

26,551

26,547126.18 yen

123.98 yen

－

－

111

119

－

－

(Basis for the calculation)
Quarterly net income attributable toowners of the parent(Millions of yen)Amount not attributable to commonshareholders(Millions of yen)
Quarterly net income attributable tocommon shareholders of the parent(Millions of yen)
Average number of common shares
outstanding (thousands of shares)(2) Quarterly diluted net income per share(Basis for the calculation)
Quarterly net income adjustments
attributable to owners of the parent(Millions of yen)
Number of common shares increased(thousands of shares)
Outline of the diluted shares being not includedin the calculation of quarterly diluted net
income per share due to no dilutive effect andhaving been significantly changed since the endof the previous consolidated fiscal year
(Important Subsequent Events)
Not applicable.

2 [Other]
The resolution regarding the current interim dividends was adopted at the Board of Directors held on May 10, 2017,
stated as follows.
(a) Total amount of cash dividends by the interim dividends

1,060 million yen(b) Dividend per share

40.00 yen(c) Effective date for payment claim and commencement date for payment

June 12, 2017

(Note) The dividends are payable to the shareholders listed or recorded on the Register of shareholders as ofMarch 31, 2017.

- 25 -

Section 2 [Information on Guarantors, etc. of the Company]
Not applicable.

- 26 -

Independent Auditors' Quarterly
Audit Report
May 12, 2017

To: TKC Corporation
The Board of Directors
Ernst & Young
ShinNihon LLC

Designated Limited Liability Partner
Executing Partner

Certified Public Accountant Yasuo Sekiya

Seal

Designated Limited Liability Partner
Executing Partner

Certified Public Accountant Yuichi Noda

Seal

Pursuant to the provision of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we haveaudited the quarterly consolidated financial statements of the consolidated fiscal year of the Company (started from
October 1, 2016 and ending September 30, 2017 ) for the 2nd quarter consolidated accounting period (from January
1, 2017 to March 31, 2017) and for the 2nd quarter consolidated cumulative period (October 1, 2016 to March 31,2017) stated in [Financial Information], namely, the quarterly consolidated balance sheet, quarterly consolidated
statements of income, quarterly consolidated statements of comprehensive income, quarterly consolidated
statements of cash flows and notes.
Management's Responsibility for the Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial
statements in accordance with accounting principles generally accepted in Japan, which responsibilities include
those for designing and operating an internal control system as the management deems necessary in order toprepare and properly present the quarterly consolidated financial statements that are free from material
misstatement due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an independent conclusion regarding the quarterly consolidated financial statements
based on our quarterly audit. We conducted our quarterly audit in accordance with quarterly auditing standards
generally accepted in Japan.
A quarterly review consists principally of making inquiries, performing analytical procedures and other quarterly
review procedures of the management and persons responsible for financial and accounting matters. The quarterly
procedure is a limited procedure compared to the procedure of annual financial statements performed in accordancewith auditing standards generally accepted in Japan.
We believe that we have obtained evidences to support a basis for our conclusion.
Auditor's Conclusion
Based on our quarterly review, nothing has come to our attention that causes us to believe that TKC Corporationand its consolidated subsidiaries' financial conditions as of March 31, 2017 and operating results and cash flow for
the 2nd quarter consolidated cumulative period ending March 31, 2017 included in the quarterly consolidated
financial statements referred to above have not been properly presented, in all material respects, in accordance withaccounting principles of quarterly consolidated financial statements generally accepted in Japan.
Interest
Our firm and the executing partners have no interest in the Company for which disclosure is required under theprovisions of the Certified Public Accountants Act.
End of document.

(Notes) 1. The above is a digitized version of the original copy of the quarterly audit report, the original of which isstored by TKC Corporation (the Company filing this quarterly report).
2. XBRL data is not included in the scope of this quarterly audit.

[Front Cover][Document filed][Applicable law]

Written confirmation
Article 24-4-8, Paragraph 1 of the Financial Instruments and Exchange
Act[Filed with]

Director of Kanto Local Finance Bureau[Date filed]

May 12, 2017

[Company name]

株式会社TKC (Kabushiki Kaisha TKC)[Company name in English]

TKC Corporation[Title and name of representative][Title and name of chief financial officer]

Kazuyuki Sumi, Representative Director, President and Executive
Officer
Hitoshi Iwata, Representative Director, Vice President and Executive
Officer, Chief Director of Administration[Address of head office]1758 Tsurutamachi, Utsunomiya-shi, Tochigi[Place available for public inspection]

TKC Corporation, Tokyo Head Office(2-1 Ageba-cho, Shinjuku-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihonbashikabutocho, Chuo-ku, Tokyo)

1 [Matters Related to Adequacy of Statements Contained in the Quarterly Report]
Kazuyuki Sumi, Representative Director, President and Executive Officer of the Company and Hitoshi Iwata,
Chief Financial Officer of the Company hereby confirm that the statements contained in the quarterly report for
the 51st term 2nd quarter (started January 1, 2017; ended March 31, 2017) are adequate under the Financial
Instruments and Exchange Act.

2 [Special Notes]
Not applicable.