Quarterly Report(52nd Term 2nd Quarter)
Started January 1, 2018
Ended March 31, 2018

TKC Corporation
1758 Tsurutamachi, Utsunomiya-shi, Tochigi Prefecture

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Table of Contents
Page
Front Cover
Section 1 Corporate Information
Part 1 Corporate Overview
1 Changes in key financial data, etc.………………………………………………………………………………………

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2 Business description……………………………………………………………………………………………………

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Part 2 Business Overview
1 Risk factors of business, etc.……………………………………………………………………………………………

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

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

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Part 3 Company Information
1 Company’s stock, etc.
(1) Total number of shares, etc.…………………………………………………………………………………………

16(2) Share subscription rights, etc.………………………………………………………………………………………
(3) Exercise of corporate bonds with share subscription rights containing a clause for exercise price adjustment, etc.
…………………………………………………………………………………………………………………………
(4) Rights plan …………………………………………………………………………………………………………

16(5) Changes in total number of issued shares, capital stock, etc.………………………………………………………

16(6) Major shareholders…………………………………………………………………………………………………

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

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2 Officers…………………………………………………………………………………………………………………

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Part 4 Financial Information……………………………………………………………………………………………………

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

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

23(3) Quarterly consolidated statements of cash flows……………………………………………………………………

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2 Others ……………………………………………………………………………………………………………………

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Section 2 Information on Guarantors, etc. of the Company………………………………………………………………………

29[Quarterly Audit Report] [Written Confirmation]

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[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 8, 2018

[Quarterly accounting period]

52nd Term 2nd Quarter (from January 1, 2018 to March 31, 2018)[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)

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Section 1 [Corporate Information]
Part 1 [Corporate Overview]
1 [Changes in key financial data, etc.]

Fiscal year

51st Term
2nd quarter consolidated
cumulative period

52nd Term
2nd quarter consolidated
cumulative period

Accounting period

Started October 1, 2016;
ended March 31, 2017

Started October 1, 2017; Started October 1, 2016;
ended March 31, 2018 ended September 30, 2017

(millions of

Net sales

30,20730,31959,705

4,870

4,989

8,792

3,306

3,298

6,071

4,155

3,380

7,097

67,41970,734

68,89282,92986,20685,428(yen)

124.54125.05229.13(yen)

123.98124.51228.16

(%)

79.5

80.1

78.8

1,897

2,658

8,123

(3,350)(2,227)(4,617)(1,386)(1,646)(3,019)13,713

15,822

17,03951st Term
2nd quarter consolidated
accounting period

52nd Term
2nd quarter consolidated
accounting period

Started January 1, 2017;
ended March 31, 2017

Started January 1, 2018;
ended March 31, 2018

83.79

60.67

yen)
(millions of

Ordinary income

yen)

Quarterly (current) net income(millions of

attributable to owners of parent

yen)

Quarterly comprehensive income(millions ofor comprehensive income

yen)(millions of

Net assets

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(millions ofyen)Cash flows from investing
activities(millions ofyen)Cash flows from financing
activities(millions ofyen)Cash and cash equivalents balanceat end of quarter(millions ofyen)

Fiscal year

Accounting period

Quarterly net income per share

51st Term(yen)(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 to as "consumption
taxes, etc.").
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2 [Business description]
There is no significant change in the description of business operated by the TKC Group (i.e., TKC Corporation and its affiliatedcompanies) for the current 2nd quarter consolidated cumulative period. There is no change in significant affiliated companies.
The Company established TKC Customer Support Service Co., Ltd. in October 2017. However, this company is excluded fromthe scope of consolidation and the scope of equity method, because its full-scale business operation will start only after April
2018 and it is therefore immaterial for the current quarter.

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 the annual 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 2nd quarter 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 2nd quarter") of theconsolidated Group comprising of TKC Corporation and its five companies such as consolidated subsidiaries recorded a net sales of
30,319 million yen (increased 0.4% in comparison to the previous 2nd quarter consolidated cumulative period (hereinafter, "quarteron-quarter")), operating income of 4,871 million yen (increased 2.4% quarter-on-quarter), ordinary income of 4,989 million yen(increased 2.4% quarter-on-quarter), and net income attributable to owners of parent of 3,298 million yen (decreased 0.2% quarteron-quarter).
This was mainly due to the steady growth of orders for cloud services received by both the Accounting Firm and Local
Governments Business Divisions, making up for the decrease in software and hardware sales by the Local Governments Business
Division in relation to the launch of the My Number system that existed in the previous 2nd quarter.
Net sales for the current 2nd quarter by business division are shown below.
1. Results of operation of the TKC Group for the current 2nd quarter(1) Net sales of the Accounting Firm Business Division(i) Net sales of the Accounting Firm BD totaled 21,369 million yen (increased 3.6% quarter-on-quarter); operating income was
4,265 million yen (increased 6.8% quarter-on-quarter).
(ii) Computer service sales increased 3.8% quarter-on-quarter. This was due to strong growth in the user base of cloud services
such as the FX4 Cloud integrated accounting information system for mid-sized companies and the Tax Accountants Office
Management System (OMS).
(iii) Software sales increased by 6.2% quarter-on-quarter. This is the result of the growing number of users of the Inheritance Tax
Declaration-related Systems (TPS8000 series) due to the expansion of special measures under the business succession taxation－5－

scheme provided under the FY2018 tax reform, and the increase in the number of users of the FX4 Cloud and the e21-Meister
continuing from the previous quarter.
(iv) Sales from consulting services decreased 13.7% 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 growth in the number of the users of the FX4Cloud system, etc.
(v) Sales in hardware decreased by 8.5% quarter-on-quarter. This was due to the decreasing demand as the transition to the cloudservices continues to increase.
(2) Net sales of the Local Governments Business Division(i) Net sales of the Local Governments BD was 7,091 million yen (decreased 8.2% quarter-on-quarter); operating income was
555 million yen (decreased 23.3% quarter-on-quarter).
(ii) Computer service sales increased 4.4% quarter-on-quarter. This was driven by the increased sales from the use of TKC data
centers generated by orders for mission-critical systems from new customers, and the increase in the number of users of such
systems as the Convenience Store Certificate Issuing System and the Taxation Document Image Management Service.
(iii) Software sales increased by 14.3% quarter-on-quarter. This was driven by the increase in system revision costs in response to
the introduction of the One-stop Child-rearing Service, as well as the increasing number of users of mission-critical systems
and public accounting systems.
(iv) Sales from consulting services decreased 31.2% quarter-on-quarter. This is due to the absence in the current quarter of thesales related to the need for strengthening the information security systems in local governments (measures for strengthening
information security of the internal network within municipalities) which existed in the previous 2nd quarter.
(v) Sales in hardware decreased by 61.9% quarter-on-quarter. This is due to the absence in the current quarter of the sales ofservers and network devices which existed in the previous 2nd quarter responding to the need for strengthening the information
security systems in local governments (measures for strengthening information security of the internal network withinmunicipalities).
(3) Net sales of the Printing Business Division (subsidiary: Tokyo Line Printer Company)(i) Net sales of the Printing BD was 1,858 million yen (increased 0.4% quarter-on-quarter); operating income was 47 million yen(increased 40.1% quarter-on-quarter).
(ii) Data printing service sales increased by 3.6% quarter-on-quarter. This was driven by the orders related to the general electionof members of the House of Representatives, large orders for direct mail productions and orders for business process
outsourcing from private enterprises, despite decrease in the current quarter of large contract projects from government officesthat we had in the previous 2nd quarter.
(iii) Business form-related sales decreased by 4.4% quarter-on-quarter. This was due to continuous decline in the demands forbusiness forms.
2. Important matters with respect to the company as a whole(1) Completion of TKC Customer Support Service Building
The construction of TKC Customer Support Service Building (4 stories above ground, total floor area 4,991.99 sq. meters) in
Kanuma City, Tochigi Prefecture was completed on March 16, 2018. The building began operation on April 2 as the operationbase for our wholly-owned subsidiary TKC Customer Support Service Co., Ltd., which was established to enhance customer
support (established on October 5, 2017).
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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 of Incorporation (Article 2,
Paragraph 1: Management of electronic data processing centers to defend the business domain and maintain control over the fateof 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")
The TKCNF added its new business objective of "providing support for the business continuity and prosperity of SMEs" at the
TKC National Federation Policy Presentation Meeting held in January 2014 and is making efforts to accomplish the objective.
In its first stage (January 2014 through December 2016), the TKCNF has been conducting campaigns on the theme of"enhancing the comprehensive strength of TKC member firms and increasing the number of members." Following this, and inits second stage (January 2017 through December 2018), it has set the following two focus activities and is actively taking
actions to accomplishing them.
(i) Focus activity 1: Commit ourselves to three major themes and fulfill our roles in society!
1) Prepare highly reliable financial statements in compliance with "Chusho Kaikei Yoryo (Guidelines for SME accounting)",
and make them widely known to financial institutions as well as raising their awareness to the guidelines.
2) Promote the "attachment of tax audit reports" (ensure that tax accounting practices adhere to the principle of no taxation
without law)
3) Promote the "self-accounting practices" (support for the business continuity and prosperity of SMEs)(ii) Focus activity 2: Achieve the maximum use of the overall capability of the accounting firms and build up the system thatcreates high added value!
Actively extend following three services to their clients in collaboration with local financial institutions.
1) "TKC Monitoring Information Service"2) "Support for business improvement"
3) "Founding of business", "succession of business", "support for overseas expansion", etc.
Such activities of the TKCNF are possible only when the systems and services provided by the Company are fully utilized. The
Company supports the activities of the TKCNF and is actively engaged in the development and provision of computer services
and software that are to the benefit of the prosperity and success of SMEs.
(2) Support for the focus activities of the TKCNF
In order to support the activities of the TKCNF, we are engaging in the activities setting our focus themes of "promotion of selfaccounting by the TKC methods (promotion of FX series)", "retention of good-standing clients (promotion of FX4 Cloud)","soliciting new members (promotion of newly joining firms into the TKCNF)", and "promoting the use of the Tax Accountants
Office Management System (OMS)".
(i) Promotion of self-accounting by the TKC methods (promotion of FX series)
Continuing from the previous quarter, we support TKC member firms in hosting the Self-accounting Promotion Meetings that－7－

offer a) internal seminars focusing on the effective utilization of the "marginal income statement," b) setting each firm's targets
for promoting the self-accounting and specifying the target enterprises, and c) discussing specific action plans for thepromotion, for the purpose of "increasing the satisfaction of enterprise users in using the systems."
In this quarter, we promoted activities for TKC member firms, focusing on companies closing the financial year in March, sole
proprietors, and target enterprises promoting the use of PX series.
Thanks to these activities, the number of FX series users has reached approximately 255,000 as of March 31, 2018.
(ii) Retention of good-standing clients (promotion of FX4 Cloud)In addition to offering an integrated accounting information system, FX4 Cloud, designed for medium-scale corporation (withannual turnover of 500 million to 5 billion yen), we are engaging in the following activities to support TKC Members in theireffort to retain their good-standing clients and expand their client base.
1) Seminars in collaboration with TKC Regional Associations
We support 20 TKC Regional Associations nationwide in hosting their seminars for TKC member firms, in an aim to
motivate the TKC member firms to promote the utilization of the FX4 Cloud services. At the seminars, presentations on
actual cases are given and active discussions are held on how to promote the use, contributing to increase firms that newly
implement the system.
2) Promotion of self-accounting utilizing the Support Project for Introducing IT for Improvement in Productivity of Services
etc.
The Ministry of Economy, Trade and Industry has announced that it will continue the Support Project for Introducing IT for
Improvement in Productivity of Services etc., in FY2018 to support SMEs in improving the productivity of their operations.
Taking this as an opportunity to promote self-accounting under the initiative of accounting firms, we provided information to
TKC member firms and supported their promotion activities to their clients.
As the result of these activities, the number of FX4 Cloud users reached approximately 11,200 as of March 31, 2018.
(iii) Activities to achieve "Over 10,000 TKC Member Firms"
The TKCNF is actively working on its activities to increase TKC membership to over 10,000 offices by the end of December
2020. The Company is working closely with the TKCNF in soliciting new members to achieve this.
In the current 2nd quarter, we held seminars targeting mid-sized and large firms, new certified public tax accountants, andcertified public accountants, and actively solicited more than 250 non-member certified public tax accountants and certified
public accountants who participated in these seminars to join the TKCNF.
As a result of these activities, the total number of TKC Members counts approximately 11,100 and TKC Member firms
exceeds 9,500 as of March 31, 2018.
(iv) Promoting the use of the Tax Accountants Office Management System (OMS)
Our Tax Accountants Office Management System (OMS) is what we consider as the basis for providing services to accounting
firms.
In the current 2nd quarter, we promoted the use of OMS, highlighting the needs for complying with the mandatory electronic
filing of tax returns by companies, maintaining the information security, strengthening the collaboration with financial
institutions by utilizing the TKC Monitoring Information Service, and conducting the legal check on consumption tax matters.
Thanks to these activities, the number of accounting firms using OMS reached approximately 7,000 as of March 31, 2018.
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(3) Amendments to the Participation Agreement
The Company amended the Participation Agreement taking effect as of January 1, 2018. The amendments aim at helping to (i)achieve the TKCNF's strategic target of "Over 10,000 TKC Member Firms" and (ii) introduce OMS and ProFIT, which areconsidered to be the basis on which the Company provides services to member firms. The amendments achieve, among otherthings including the unification of multiple forms of the Participation Agreement into a single type, (i) the unification of thedifferent types of participation fees and basic membership fees, (ii) measures to allow members to appropriate the entire basic
membership fee for the processing charge, (iii) to change the terms and conditions of the Participation Agreement so that it will
be on the assumption that OMS and ProFIT are used, (iv) the discount of the price for the basic program set, and (v) to makethe usage of OMS and ProFIT free of charge (applicable only to the first three years from the year of participation), enabling
the Agreement to provide the TKC services to the members at more affordable prices and with more convenience.
The Company is giving explanations about the amended Participation Agreement to the existing members and suggesting thatthey enter into the new Agreement.
(4) Provision of FinTech service(i) FinTech service for TKC member firms' clientsThe Data Receiving Functionality from Banks and Credit Card Companies is a cloud service offered for free as one of thefunctions of the FX series. It allows users to automatically receive transaction data such as internet banking service fromfinancial institutions (corporate accounts) and details of major credit cards, thus facilitating accurate journal entries inaccordance with preset journal entry rules.
In this quarter, we promoted the use of the FX series, highlighting the benefit of utilizing the functionality for making journal
entry highly efficient.
(ii) FinTech service for financial institutions
The TKC Monitoring Information Service is a cloud-based service in which the TKC member firms provide financial data, thecorrectness, existence, and comprehensiveness of which is secured by the monthly Field Audits by the TKC member firms, tofinancial institutions free of charge upon request by the management of their clients.
Financial institutions having adopted the service express their high appreciation, saying, "We can now conduct fruitfulinterviews because the system enables us to do a full analysis beforehand based on the information obtained earlier," and "Ourvisits are no longer for just obtaining the financial statements or worksheets; we can now conduct a hearing about the client's
business situations." In this quarter, we conducted a campaign to propose the use of this service to regional financial
institutions in collaboration with 20 TKC Regional Associations nationwide.
As a result of the campaign, approximately 330 financial institutions adopt the service as of March 31, 2018, with about 30,000
items of information provided to them.
(5) Activities to "support the preparation of highly reliable financial statements based on timely and accurate bookkeeping"(i) Support activities for diffusion of Chusho Kaikei Yoryo (Guidelines for SME accounting)
The TKCNF recommends the "Basic Guidelines with Respect to the Accounting Procedures at Small- and Medium-sizedEnterprises" (Chusho Kaikei Yoryo (Guidelines for SME accounting)) with which the clients should comply. These guidelines
have been formulated based on the following principles: "accounting that helps to grasp the company's business situation";"accounting that contributes to providing information to stakeholders (financial institutions, etc.)"; "accounting that complies
with the Ordinance on Company Accounting while achieving harmony between accounting and taxation system"; and"accounting that does not to place an excessive burden on SMEs."－

9－In order to support the activities of the TKCNF towards the diffusion and utilization of the guidelines, we are striving topromote the development of relevant environments and collaboration with other organizations supporting SMEs.
(ii) Issuance of Certificate of Bookkeeping Timeliness
The Company issues a Certificate of Bookkeeping Timeliness in an aim to improve reliability of financial statements preparedby TKC Members and to provide a passport for smooth financing to the clients of TKC Members. This utilizes the features of
the Company's financial accounting processing at TKC data centers, which prohibits any retroactive insertions, deletions andcorrections to past data, and TKC Corporation proves, as a third party, that TKC Members have visited their clients on amonthly 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.
In this quarter, we emphasized to the financial institutions that: a) the reliability of financial statements prepared by SMEs canbe verified by the attachment of tax audit reports by TKC Members as provided for under Article 33-2 of the Certified Public
Tax Accountant Act, the Certificate of Bookkeeping Timeliness, and the Chusho Kaikei Yoryo Checklist provided by the Japan
Federation of Certified Public Tax Accountants' Associations; and b) these certificates will be accessible if financial institutions
subscribe to the TKC Monitoring Information Service.
(6) Activities for the "support for the drafting of business improvement plans in an early stage"
The Small and Medium Enterprise Agency announced on May 10, 2017 its support for the drafting of business improvement
plans in an early stage, as part of its project for supporting business improvement planning by the authorized supportingorganizations.
The TKCNF actively promotes this project as being consistent with the purpose of its focus activity themes, and the Company
is working on system revision and holding workshops to support this.
(7) Expansion into large-scale enterprise market
By utilizing the TKC system, the Company contributes to the rationalization of tax and accounting operations of large
enterprises, mainly listed companies, and are actively working to make these companies and their group companies clients of
TKC Members.
The Company actively promotes the TKC Consolidated Group Solution package for large-size companies, which includes: theeCA-DRIVER consolidated accounting system; the eConsoliTax consolidated tax payment system, the eTaxEffect tax effectaccounting 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 non-current asset management system, the documented
evidence storage service (TDS), and the OBMonitor oversea business monitoring system.
In this quarter, we held seminars detailing the "FY2018 tax reform" covering topics such as the mandatory electronic filing oftax returns by large companies as well as seminars on "accounting standards with respect to recognition of revenue" and "riskmanagement of overseas subsidiaries" in collaboration with the TKCNF's Medium and Large-size Support ResearchCommittee (consisting of nearly 1,300 members) and the TKCNF's Overseas Deployment Support Research Committee(consisting of nearly 580 members), in order to enhance the awareness and brand power of systems offered by us. In addition,
we made holistic proposals to the users of our systems, leveraging the strengths of the systems that encompass all aspects ofaccount settlements and tax declaration on corporate group level.
As a result, the number of companies using the TKC Consolidated Group Solution counts approximately 2,800 corporategroups (or about 19,000 companies) as of March 31, 2018, adopted by over 80% of the 100 largest Japanese listed companies
by sales amount.
Also, as one measure to support the mandatory electronic filing of tax returns by large companies, we have initiatednegotiations to connect data between our electronic tax filing systems for corporations (ASP1000R, eConsoliTax) and thedifferent systems offered by four ERP package manufacturers.
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(8) Expansion of market for legal information database services
The LEX/DB Internet legal information database maintains an archive of over 290,000 judicial precedents, etc. (as of March
31, 2018) covering all legal fields from precedents set in the former Supreme Court dating back to 1875 to those most recently
announced as well as those collected from our own sources, making it the largest database of all 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
922,000 bibliographic information references with links to 55 of the Databases of Professional Journals, with total items of
information now exceeding 2,400,000. As of March 31, 2018, the Library is used by over 19,500 institutions with more than
50,000 IDs, including TKC member firms, universities, law schools, government offices, law firms, patent offices andcorporate legal departments.
In this quarter, we maintained our focus on sales promotions for the databases highlighting their usefulness in business
operations, through putting the contents in the TKC Law Library that are useful for business practices into customer-specificpackages (Law Office Pack for law firms, Corporate Legal Pack for corporate legal departments). Our portal site related tolabor laws, Labor Law EX+, which was jointly developed with a partner company Roudou Kaihatsu Kenkyukai Co., Ltd. waslaunched in March 2017. It is one of our database products promoted to members of the Labor Law Study Group and offered as
an optional content in the TKC Law Library as part of our efforts, bringing about new sales channels for further expansion ofuse.
In the academic market, we proposed the introduction of an early learning support system to the 56 law schools using TKC
Law School Educational and Research Support System, which is the basis of the proposed system. We are supporting such
schools to apply for the Public Support Program for Law Schools Concerning the Revision of Budget Distribution initiative by
the Ministry of Education, Culture, Sports, Science and Technology. The system includes exercise systems to aid students in
self-study (Basic Skill Tests, Study Drills of Short Answer Questions from Past Exams and the Essay Writing Seminar), as well
as Learning Support NAVI and Study Drills of Precedents. In particular, functions that enable students to create study plans,check their progress, and study and practice the essential judicial precedents in the lead up to the bar exam have gained a highreputation for its effect from successful applicants in the bar examination, leading to the increasing number of users year byyear.
We have also made a full-scale launch of Civil Service Examination Study Tool for undergraduates, having concluded contracts
with 15 universities and trial use by 45 schools. We will continue to enhance our promotional activities for further expansion ofuse.
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 well as other countries
including Germany, the U.K. and the U.S.A. As of March 31, 2018, over 70 licenses are in use worldwide, with further growth
anticipated in the future, particularly in the Asian regions.
In an aim to further enhance our footprint in overseas markets, we are collaborating with the Research and Education Center
for Japanese Law having eight sites in Asia, each serving as a key facility of Nagoya University for the development of laws
and support in law education in Asia, and we promote the use of the TKC Law Library by the local students writing theiressays in the course of fostering legal talents in Asia.
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 of Incorporation (Article
2, Paragraph 2: Management of electronic data processing centers to improve the administrative 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 the TKC Government Cloud Service to municipalities (mainly for cities, wards and towns) nationwide.
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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 andprocessing of tax papers and other documents.
In particular, the TASK Cloud Service is a common platform package system operated at TKC data centers and shared by all
municipalities across Japan (offered both for individual use and shared use by multiple organizations), and attracts considerable
attentions from the viewpoint of "local government cloud systems" that the Japanese government seeks to establish.
In the current 2nd quarter, we continued our work on the enhancement of the functions of the mission-critical operational systemof the TASK series (such as Basic Resident Register System, taxation and welfare), and its phase-two development (12 systems),
as well as on the support for responding to the requirements of information interaction between the Japanese government andlocal governments for the My Number system. In February 2018, Kiyokawa Village and Manazuru Town became the first to
begin operating the mission-critical operational system among the Kanagawa Prefecture Collective Business Partnership for
Information Systems in Municipalities (consisting of 14 municipalities). The remaining municipalities will also proceed with thesystem change-over, and 13 municipalities are scheduled to start the use of the mission-critical operational system by the end of
this quarter.
As a result of our active promotional activities elsewhere, our mission-critical operational systems are adopted by 150
municipalities nationwide as of March 31, 2018.
(2) Expansion of cloud services for residents
To promote the utilization of My Number Cards, there has been a sharp increase in the number of municipalities introducing or
considering adopting the Issuance of Certificates at Convenience Store service in view of providing more convenience toresidents.
In response, the Company provides the TASK Cloud Convenience Store Certificate Issuing System as the system to realize thisservice. The extensive track record of the system as the first cloud service for municipalities across Japan has attracted a numberof requests for quotation from local governments including government ordinance-designated cities.
In the current 2nd quarter, we conducted active promotional activities to municipalities across Japan in addition to enhancing andexpanding various functions. As a result, the TASK Cloud Convenience Store Certificate Issuing System is used in more than 60
municipalities nationwide as of March 31, 2018.
Also, with an aim to verify the technical issues in expanding the use of cards, we conducted a verification test of priority boarding
on buses using My Number Cards (Japanese Public Key Infrastructure) in February 2018 under the cooperation of Himeji City,
Hyogo Prefecture and Shinki Bus Co., Ltd.
(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 forelectronic filing of local taxes and the electronic tax payment offered by the Council. We also develop and provide 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, andthe Support Service for TASK Cloud Electronic Filing of Local Taxes is currently used by 740 agencies (as of March 31, 2018),
which accounts for more than 40% of all municipalities.
Our TASK Cloud Taxation Document Image Management Service is also receiving more and more orders, as means ofpreventing information leakage caused by paper media, as well as streamlining taxation-related operations and reducing
associated costs. This service is adopted by more than 110 municipalities as of March 31, 2018.
In the current 2nd quarter, we engaged in the development and promotional activities of the TASK Cloud Local Tax Electronic
Filing Support Service (e-Tax Collaboration Service) that can directly transmit the data of the final tax return form to the e-Tax
－

12

－

(national tax electronic declaration/payment system) via the Local Government Wide Area Network (LGWAN). We also
conducted development and promotional activities for the new data connection services supporting the unified tax payment
system for local taxes, which is expected to start operation in two years.
(4) Support for the development of standardized local public accounting
Municipalities are required to organize the system of accrual basis accounting (double entry bookkeeping) to complement thecurrent cash basis accounting (single entry bookkeeping), and to prepare and disclose their financial documents utilizing such
system.
To support this, the Company provides the TASK Cloud Public Accounting System which is compatible with the daily
journalizing method encouraged by the Japanese government, and its related system, TASK Cloud Non-current Assets Control
System.
In the current 2nd quarter, we promoted the new development of functionalities to utilize financial documents for management
support, and worked to cultivate new customers by leveraging our strong track record that our system is used by more than 60%of the municipalities adopting the daily journalizing method. As a result, the TASK Cloud Public Accounting System is adopted
by more than 180 municipalities across Japan as of March 31, 2018, including Kanagawa Prefecture Collective Business
Partnership for Information Systems in Municipalities.
(5) Compliance with revised laws and systems
In May 2017, the government announced the Declaration to be the World's Most Advanced IT Nation: Basic Plan for the
Advancement of Public and Private Sector Data Utilization, and the Policy for the Promotion of Digital Government, in which
the Digital Government has been identified as priority in the nation's IT Strategy. Municipalities are required to review theiradministrative services and switch to "digital" in line with the government's action plans in order to improve the convenience ofthe entire user base (government, citizens, businesses).
In order to support this, in the current 2nd quarter, we conducted the survey, research and development of new products andservices (including Easy-to-use Reception System, One-stop Child-rearing Support Service, and Welfare Consultation Support
System) that utilize state-of-the-art ICT such as My Number Card, Myna-Portal and AI, under the leadership of the New Product
Planning Promotion Office.
In response to the rapidly changing trends and environment surrounding local municipalities, we worked to further accelerate ourplanning and development process of new products and services, and restructured our development division (as of April 1, 2018)
for the purpose of enhancing our customer support such as gathering and offering up-to-date information.
5. Business Activities and Operating Results of the Printing Business Division
The Group's Printing BD conducts its manufacturing and sales activities with the main focus on data printing services (DPS)
business and business forms printing.
The sales from DPS field increased from that in the previous 2nd quarter, driven by the election-related orders in response to thegeneral election of members of the House of Representatives on October 10, 2017, large orders for direct mail productions fromprivate enterprises, and periodic orders for business process outsourcing.
In the field of business form printing, although market demand of business forms is generally on a downward trend, we regularly
receive orders from large-scale customers and the decline in sales is small in comparison to the previous 2nd quarter.
II Financial Position
Assets, liabilities and net assets at the end of the current 2nd quarter consolidated accounting period are stated below.
1. Assets－13－

Total assets as of the end of the current 2nd quarter consolidated accounting period amounted to 86,206 million yen, a 777 million
yen increase compared to 85,428 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 30,521 million yen, a 23
million yen decrease compared to 30,545 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 1,216 million yen decrease in Cash and deposits, and a 113 million yen decrease in Accountreceivable-other included in Other, despite a 1,295 million yen increase in Notes and accounts receivable-trade.
(2) Non-current assets
Non-current assets as of the end of the current 2nd quarter consolidated accounting period amounted to 55,684 million yen, an
801 million yen increase compared to 54,883 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to an increase of 1,388 million yen in Buildings and structures, net, and a 273 million yen increasein Tools, furniture and fixtures included in Other, net, despite a 569 million yen decrease in Construction in progress accountincluded in Other, net, and a 150 million yen decrease in Intangible assets.
2. Liabilities
Total liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 15,472 million yen, a 1,064
million yen decrease compared to 16,536 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 12,339 million yen, a
1,005 million yen decrease compared to 13,345 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a decrease of 941 million yen in Accounts payable-other, and 120 million yen in Provisions forbonuses.
(2) Non-current liabilities
Non-current liabilities as of the end of the current 2nd quarter consolidated accounting period amounted to 3,132 million yen, a
58 million yen decrease compared to 3,191 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a decrease of 93 million yen in Long-term lease obligations (sublease) included in Other,
despite an increase of 131 million yen in Retirement benefit liability.
3. Net assets
Total net assets as of the end of the current 2nd quarter consolidated accounting period amounted to 70,734 million yen, a
1,842 million yen increase compared to 68,892 million yen as of the end of the previous consolidated fiscal year.
This was mainly attributable to a 1,716 million yen increase in Retained earnings.
Equity ratio as of the end of the current 2nd quarter consolidated accounting period was 80.1%, a 1.3 percentage point increase
compared to the ratio of 78.8% 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 period amounted to
15,822 million yen, a 1,216 million yen decrease compared to the end of the previous consolidated fiscal year.
－

14

－

The cash flow overview and its main cause during the current 2nd quarter consolidated accumulative period are stated below:(1) Cash flows from operating activities
Cash flow from operating activities increased by 2,658 million yen (increase in income of 761 million yen compared to thesame quarter of the previous year). This was mainly attributable to the posting of 4,935 million yen as quarterly net income
before taxes and adjustments.
(2) Cash flows from investing activities
Cash flow from investing activities decreased by 2,227 million yen (decrease in spending of 1,122 million yen compared to thesame quarter of the previous year). This was mainly attributable to the payment of 1,496 million yen for the purchase ofproperty, plant and equipment, and the payment of 658 million yen for the purchase of intangible assets.
(3) Cash flows from financing activities
Cash flow from financing activities decreased by 1,646 million yen (increase in spending of 260 million yen compared to thesame quarter of the previous year). This was mainly attributable to the payment of 1,553 million yen for the year-end dividends(60 yen dividends per share) for the previous fiscal year (ended September 30, 2017).
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 80 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 the current 2nd quarter
consolidated cumulative period.

－

15

－

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

Number of shares issued asof the end of 2nd quarteraccounting period (shares)(March 31, 2018)

Common stock
Total

Number of shares issued asof the filing date (shares)(May 8, 2018)

26,731,033

26,731,033

26,731,033

Name of stock exchange
on which the Company islisted, or name of
Authorized Financial
Instruments Firms
Association

Description

Number of theFirst Section of Tokyo

share unit: 100

Stock Exchange

26,731,033

shares--(2) [Share subscription rights, etc.]
Not applicable.
(3) [Exercise of corporate 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
Increase or
Balance of
decrease in
decrease inDate
total number of
total number ofcapital stock
issued sharesissued shares(millions of(shares)(shares)yen)
From January 1, 2018
To March 31, 2018-

26,731,033

-

－

16

－

Balance ofcapital stock(millions ofyen)

Increase or
decrease incapital reserve(millions ofyen)

Balance ofcapital reserve(millions of
yen)

5,700

-

5,409

(6) [Major shareholders]Names of shareholders

Iizuka Takeshi ScholarshipFoundation
Daido Life Insurance Company
TKC Employee Shareholding
Association
Sozeishiryokan (Institute of Tax
Research and Literature)
Masaharu Iizuka
The Master Trust Bank of Japan, Ltd.
(Trust)As of March 31, 2018
Ratio of total
Number of owned number of owned
sharesshares to total(hundreds of shares) number of issued
shares (%)

Address1758 Tsurutamachi, Utsunomiya-shi, Tochigi

37,53014.0

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

25,690

9.6

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

16,241

6.1

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

14,465

5.4

Utsunomiya-shi, Tochigi

10,0423.8

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

8,499

3.2

7,366

2.8

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

6,664

2.5

1-8-11 Harumi, Chuo-ku, Tokyo

6,505

2.4

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

5,983

2.2

1-26-1 Nishishinjuku, Shinjuku-ku, Tokyo

5,983

2.2

144,970

54.2

STATE STREET BANK AND
TRUST COMPANY

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

02111

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

Tokyo Branch)
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Japan Trustee Services Bank, Ltd.
(Trust)Aioi Nissay Dowa Insurance Co.,Ltd.
Sompo Japan Nipponkoa Insurance
Inc.
Total

-

－

17

－

(7) [Voting rights](i) [Issued shares]
As of March 31, 2018
Classification

Number of shares (shares)

Shares without voting right

-

-

-

-

-

-

-

-

355,900--

26,337,700

263,377-

37,433--

26,731,033

-

-

-

263,377-

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

etc.)

stock

Shares with full voting right (others)

Commonstock
CommonShares less than one share unit

stock

Total number of issued shares

Description-

Shares with restricted voting right (treasury

Shares with full voting right (treasury stock,

Number of voting rights(units)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 of voting 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, 2018
Ratio of total
Total number of
number of owned
owned sharesshares to total(shares)number of issued
shares (%)

Number of shares
owned under own
name (shares)

Number of shares
owned underother name(shares)

350,400-

350,400

1.31

5,500

-

5,500

0.02

355,900-

355,900

1.33

1758 Tsurutamachi,
TKC Corporation

Utsunomiya-shi,
Tochigi

TKC Shuppan

4-8-8 Kudanminami,

Corporation

Chiyoda-ku, Tokyo

Total

-

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.

－

18

－

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 the Ordinance on
Terminology, Forms, and Preparation Methods of Quarterly Consolidated Financial Statements (Cabinet Office Ordinance No.64
of 2007).

2. Auditing and Attestation
The quarterly consolidated financial statements of the Company for the 2nd quarter consolidated accounting period (from January
1, 2018 to March 31, 2018) and the 2nd quarter consolidated cumulative period (from October 1, 2017 to March 31, 2018) havebeen audited by Ernst & Young ShinNihon LLC pursuant to the provision of Article 193-2, Paragraph 1 of the Financial
Instruments and Exchange Act.

－

19

－

1 [Quarterly consolidated financial statements](1) [Quarterly consolidated balance sheet](Unit: millions of yen)
Current 2nd quarter consolidated
Previous consolidated fiscal year
accounting period(September 30, 2017)
March 31, 2018
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
Electronically recorded obligations
Shore-term loans payable
Accounts payable - other
Income taxes payable
Provisions for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Retirement benefit liabilities
Other
Total non-current liabilities
Total liabilities

－

20

－

20,039
6,555
* 755
3,229
(33)
30,545

18,822
7,850
* 707
3,178
(37)
30,521

6,619
6,922
2,669
16,212
3,812

8,008
6,922
2,282
17,213
3,661

23,659
6,000
1,310
3,888
34,85854,88385,42823,714
6,000
1,328
3,766
34,80955,684
86,206

2,392
897
71
3,814
1,445
3,028
1,694
13,345

2,505
772
71
2,873
1,852
2,908
1,356
12,339

223
1,668
1,298
3,191
16,536

188
1,799
1,144
3,132
15,472

(Unit: millions of yen)
Current 2nd quarter consolidated
Previous consolidated fiscal year
accounting period(September 30, 2017)(March 31, 2018)
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

－

21

－

5,700
5,409
56,549(968)
66,6905,700
5,409
58,265(970)
68,404

621
621
178
1,401
68,89285,428

682
682
235
1,411
70,734
86,206

(2) [Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive 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
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
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 disposal of non-current assets
Loss on valuation of investment securities
Total extraordinary losses
Quarterly net income before taxes and adjustments
Income taxes - current
Income taxes - deferred
Total income taxes
Quarterly net income
Quarterly net income attributable to non-controllinginterests
Quarterly net income attributable to owners of parent(Unit: millions of yen)Previous 2nd quarter consolidated
Current 2nd quarterly
cumulative period
consolidated cumulative period(Started October 1, 2016;(Started October 1, 2017;
ended March 31, 2017)
ended March 31, 2018)30,20730,31910,936
10,26019,271
20,058* 14,512* 15,187
4,758
4,871

－

22

－

15
50
11
20

16
54
4
22

3

5

12
114

15
119

2
0
0
2
4,870

1
0
0
1
4,989

0
23
23

0
0

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

4
49
54
4,935
1,748
(127)
1,621
3,314

12

15

3,306

3,298

[Quarterly consolidated statements of comprehensive income][2nd quarter consolidated cumulative period]

Quarterly net income
Other comprehensive income
Valuation difference on available-for-sale securities
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 noncontrolling interests(Unit: millions of yen)Previous 2nd quarter consolidated
Current 2nd quarterly
cumulative period
consolidated cumulative period(Started October 1, 2016;(Started October 1, 2017;
ended March 31, 2017)
ended March 31, 2018)
3,318
3,314

－

23

－

836

66

0

0

837
4,155

66
3,380

4,139

3,359

16

20

(3) [Quarterly consolidated statements of cash flows](Unit: millions of yen)Previous 2nd quarter consolidated
Current 2nd quarterly
cumulative period
consolidated cumulative period(Started October 1, 2016;(Started October 1, 2017;
ended March 31, 2017)
Ended March 31, 2018)
Cash flows from operating activities
Quarterly net income before taxes and adjustments
Depreciation
Gain/loss on sales of non-current assets (( ): gain)
Loss on retirement of non-current assets
Gain/loss on valuation of investment securities (( ):gain)Reversal of asset retirement obligations
Change in provisions for bonuses (( ): decrease)
Change in retirement benefit liabilities (( ): decrease)
Change in trade receivables (( ): increase)
Change in other assets (( ): increase)
Change in trade payables (( ): 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, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Purchase of investments in subsidiaries
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 quarter
Cash and cash equivalents at end of quarter

－

24

－

4,893
1,418
(0)
0

4,935
1,285
(0)
4

-

49

(23)
(61)
82
(2,959)
198
931
(581)
8
3,908
78
(2)
(2,088)
1,897

(120)
131
(2,050)
153
(16)
(592)
91
3,871
94
(1)
(1,306)
2,658(1,500)2,500(1,653)(702)(2,000)6(3,350)(1,500)1,500(1,496)
(658)
(0)
(25)
(47)
(2,227)

40

-

(35)
(268)
(1,060)(9)(52)(1,386)(2,839)16,552* 13,713(35)(1)(1,553)(10)(44)(1,646)(1,216)
17,039* 15,822

[Notes](Notes to quarterly consolidated balance sheet)* Breakdown of inventory assets is as follows:
Previous consolidated fiscal year
(September 30, 2017)

Current 2nd quarter consolidated
accounting period(March 31, 2018)

Finished goods inventory

325 million yen

247 million yen

Work in progress

289 million yen

316 million yen

Raw materials and supplies

140 million yen

144 million yen(Notes to quarterly consolidated statements of income)* Major items included in selling, general and administrative expenses are as follows:
Previous 2nd quarter consolidated
Current 2nd quarterly consolidated
cumulative period
cumulative period(Started October 1, 2016;(Started October 1, 2017;
ended March 31, 2017)
ended March 31, 2018)
Salaries

5,016 million yen

5,212 million yen

Provisions for bonuses

2,438 million yen

2,459 million yen

Retirement benefit expenses

301 million yen

334 million yen

Depreciation

285 million yen

302 million yen

Rent expenses

1,050 million yen

1,073 million yen

14 million yen

80 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
cumulative period(Started October 1, 2016;
ended March 31, 2017)

Current 2nd quarterly consolidated
cumulative period(Started October 1, 2017;
ended March 31, 2018)

Cash and deposits

16,713 million yen

18,822 million yen

Time deposits with deposit period(3,000 million yen)

(3,000 million yen)

13,713 million yen

15,822 million yen

greater than three months
Cash and cash equivalents

－

25

－

(Notes to equity, etc.)
I Previous 2nd quarter consolidated cumulative period (started October 1, 2016; ended March 31, 2017)(1) Dividend payments
Resolution

Total amount of
Dividend perClass of share cash dividends
share (yen)(millions of yen)

Record date

Effective date

September 30, 2016

December 26, 2016

Source ofdividends

December 22, 2016
Ordinary general
meeting ofCommon stock

1,062

40

Retainedearnings

shareholders(2) Of the dividends with record dates during the current 2nd quarter consolidated cumulative period, those with effective
dates for the dividends after the end of the current 2nd quarter consolidated accounting period
Total amount of
Dividend per
Resolution
Class of share cash dividends
Record date
Effective dateshare (yen)(millions of yen)
May 10, 2017
Board of Directors

Common stock

1,060

40

March 31, 2017

June 12, 2017

meeting

Source ofdividends
Retainedearnings

II Current 2nd quarter consolidated cumulative period (started October 1, 2017; ended March 31, 2018)(1) Dividend payments
Resolution

Total amount of
Dividend perClass of share cash dividends
share (yen)(millions of yen)

Record date

Effective date

September 30, 2017

December 25, 2017

Source ofdividends

December 22, 2017
Ordinary general
meeting ofCommon stock

1,582

60

Retainedearnings

shareholders(2) Of the dividends with record dates during the current 2nd quarter consolidated cumulative period, those with effective
dates for the dividends after the end of the current 2nd quarter consolidated accounting period
Total amount of
Dividend per
Resolution
Class of share cash dividends
Record date
Effective dateshare (yen)(millions of yen)
May 2, 2018
Board of Directors

Common stock

1,319

50

March 31, 2018

meeting－26－

June 11, 2018

Source ofdividends
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
Accounting
Firm BD

Local
Governments Printing BD
BD

Total

(Unit: millions of yen)Amounts inquarterly
Adjustments consolidated(Note) 1
statements ofincome(Note) 2

Sales
20,632

7,724

1,850

30,207-30,207

2

-

795

797

(797)

-

Total

20,635

7,724

2,646

31,005(797)

30,207

Segment profit or loss

3,993

723

33

4,751

7

4,758

(1) Sales to outside customers(2) Inter-segment sales ortransfers(Notes) 1. Adjustments of segment profit of 7 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 income presented in the Quarterly Consolidated Statements of Income.
II Current 2nd quarter consolidated cumulative period (started October 1, 2017; ended March 31, 2018)
Information on net sales and profit or loss by reportable segments
Reportable segment
Accounting
Firm BD

Local
Governments Printing BD
BD

Total

(Unit: millions of yen)Amounts inquarterly
Adjustments consolidated(Note) 1
statements
of income(Note) 2

Sales(1) Sales to outside customers

21,369

7,091

1,858

30,319-30,319

2

-

759

761

(761)

-

Total

21,372

7,091

2,617

31,081(761)

30,319Segment profit or loss

4,265

555

47

4,868

2

4,871

(2) Inter-segment sales ortransfers(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 income presented in the Quarterly Consolidated Statements of Income.

－

27

－

(Earnings per share information)
The amount of quarterly net income per share and the basis for the calculation thereof as well as the amount of quarterly
diluted net income per share and the basis for the calculation thereof are stated as follows:
Previous 2nd quarter consolidated
Current 2nd quarterly consolidated
cumulative period
cumulative period(Started October 1, 2016;(Started October 1, 2017;
ended March 31, 2017)
ended March 31, 2018)(1) Quarterly net income per share

124.54 yen

125.05 yen

3,306

3,298

-

-

3,306

3,298

265,478

263,790123.98 yen

124.51 yen

-

-

1,195

1,159

-

-

(Basis for the calculation)
Quarterly net income attributable to owners ofparent(millions of yen)Amount not attributable to common shareholders(millions of yen)
Quarterly net income attributable to owners ofparent having the common shares (millions of yen)
Average number of common shares outstanding(hundreds of shares)(2) Quarterly diluted net income per share(Basis for the calculation)
Quarterly net income adjustments attributable toowners of parent(millions of yen)
Number of common shares increased (hundreds ofshares)Outline of the diluted shares being not included in thecalculation of quarterly diluted net income per share
due to no dilutive effect and having been significantly
changed since the end of 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 meeting held on May 2, 2018, statedas follows.
(a) Total amount of cash dividends by the interim dividends

1,319 million yen(b) Dividend per share

50.00 yen(c) Effective date for payment claim and commencement date for payment June 11, 2018
(Note) The dividends are payable to the shareholders listed or recorded on the Register of shareholders as of March 31, 2018.

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

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Independent Auditors' Quarterly Audit Report
May 8, 2018

To: The Board of Directors
TKC Corporation

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 have audited the quarterly
consolidated financial statements of the consolidated fiscal year of the Company (started from October 1, 2017 and ending September
30, 2018) for the 2nd quarter consolidated accounting period (from January 1, 2018 to March 31, 2018) and for the 2nd quarter
consolidated cumulative period (from October 1, 2017 to March 31, 2018) 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 accordancewith 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 to prepare 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 ourquarterly 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 ofthe management and persons responsible for financial and accounting matters. The quarterly procedure is a limited procedurecompared to the procedure of annual financial statements performed in accordance with 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 Corporation and its consolidated
subsidiaries' financial conditions as of March 31, 2018 and operating results and cash flow for the 2nd quarter consolidated cumulative
period ending March 31, 2018 included in the quarterly consolidated financial statements referred to above have not been properly
presented, in all material respects, in accordance with accounting 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 the provisions of theCertified 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 is stored by TKC
Corporation (the Company filing this quarterly report).
2. XBRL data is not included in the scope of this quarterly audit.

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[Front Cover][Document filed]

Written confirmation[Applicable law]

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

Director of Kanto Local Finance Bureau[Date filed]

May 8, 2018

[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[Title and name of chief financial officer]

Hitoshi Iwata, Representative Director, Vice President and Executive Officer, Chief
Director of Business 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)

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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 52nd term 2nd quarter(started January 1, 2018; ended March 31, 2018) are adequate under the Financial Instruments and Exchange Act.

2 [Special Notes]
Not applicable.

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