Quarterly Report（The 51st Term 3rd Quarter）
Started April 1, 2017
Ended June 30, 2017

TKC Corporation
1758 Tsurutamachi, Utsunomiya-shi, Tochigi Prefecture, Japan

Table of Contents
Page
Front Cover
Section 1 Corporate Information
Part 1

Corporate Overview
1

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

1

2

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

1

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) Status, etc. of Exercise of bonds, etc. with share subscription rights containing a clause forexercise price adjustment, etc. …………………………………………
(4) Rights plan ………………………………………………………………………………………

1313(5) Changes in total number of issued shares, capital stock, etc.……………………………………

13(6) Major shareholders……………………………………………………………………………

13(7) Voting rights…………………………………………………………………………………

14

2

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

14

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

15

Part 4
1

13

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

2
Section 2

16
18
18
19

Other ………………………………………………………………………………………………………………

23

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

24［Quarterly Audit Report］［Written Conformation]

[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]

August 14, 2017

[Quarterly accounting period]

51st Term 3rd Quarter (from April 1, 2017 to June 30, 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[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.]

Fiscal year

50th Term
3rd quarter
consolidated
cumulative period

51st Term
3rd quarter
consolidated
cumulative period

50th Term

Accounting period

Started October 1,
2015;
ended June 30,
2016

Started October 1,
2016;
ended June 30,
2017Started October 1,
2015;
ended September 30,
2016(Millions of

Net sales

43,702

44,62557,750

7,853

7,163

7,604

4,959

4,748

4,770

3,934

5,896

3,958

64,53368,09964,556

77,43481,095

81,116(Yen)

186.78178.97179.65(Yen)

185.98178.19178.88

(%)

81.3

82.0

77.7

yen)

Ordinary income
Quarterly (current) net
income attributable to ownersof the parent
Quarterly comprehensive
income or comprehensive
income(Millions ofyen)(Millions ofyen)(Millions ofyen)(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

Fiscal year

50th Term
3rd quarter
consolidated
accounting period

51st Term
3rd quarter
consolidated
accounting period

Accounting period

Started April 1,
2016;
ended June 30, 2016

Started April 1,
2017;
ended June 30, 2017

60.06

54.42

Quarterly net income per
share

(Yen)

(Notes) 1. Changes in key financial data 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.").

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 3rd quarterly consolidated cumulative period.
in significant affiliated companies.

１

There is no changePart 2 [Business Overview]
1 [Risk Factors]
There were no new risks pertaining to the business operations that occurred during the first 9 month of the current
consolidated fiscal year. There were no significant changes to the risks factors described in the annual securities
report of the previous fiscal year.

2 [Material Agreements, etc.]
There has been no decision or execution of material agreements, etc. during the first 9 months of the current
consolidated fiscal year.

3 [Analysis of Consolidated Financial Conditions, Operating Results, and Cash Flows]I.

Operating Results

During the first 9 months of the current consolidated fiscal year, the consolidated Group comprising of TKC
Corporation and its five consolidated subsidiaries recorded a net sales of 44,625 million yen (increased 2.1% incomparison to the same 9-month period of prior fiscal year), operating income of 6,968 million yen (decreased 9.5%
from same period of prior fiscal year), ordinary income of 7,163 million yen (decreased 8.8% from same period ofprior fiscal year), and quarterly net income attributable to owners of parent of 4,748 million yen (decreased 4.2%
from same period of prior fiscal year).
This was mainly attributable to the lack of demands for the revision of the Basic Resident Register System handled
by the Local Governments Business Division (BD), which existed in the previous fiscal year when the My Number
System was launched, despite the steady growth of orders for cloud services received by both the Accounting Firmand Local Governments BDs.
Net sales for the first 9 months of current fiscal year by business division are shown below.
1. Results of Operation of the Group for the 3rd Quarter(1) Net Sales of the Accounting Firm Business Division(i) Net sales of the Accounting Firm BD were 31,130 million yen (increased 4.1% from same period of prior fiscal
year); operating income was 6,169 million yen (increased 6.2% from same period of prior fiscal year).
(ii) Computer service sales increased 4.1% from same period of prior fiscal year. This was due to continuous growthfrom the previous fiscal year in the user base of cloud services such as the FX4 Cloud Integrated Accounting
Information System for mid-sized companies, the PX My Portal providing support for the appropriate
management of the My Numbers, and the Tax Accountants Office Management System (OMS).
(iii) Software sales increased by 5.8% from same period of prior fiscal year. This was due to growth in the user baseof the FX4 Cloud and the e21-Meister as well as tax return systems for inheritance taxes and year-end
adjustments, etc.
(iv) Sales from consulting services decreased 10.7% from same period of prior fiscal year. This was due to decrease inrevenue from the client/server system launch support services and hardware maintenance services as a result ofgrowth in the number of the users of the FX4 Cloud and other systems.
(v) Sales in hardware increased by 7.6% from same period of prior fiscal year. This was due to growth in the sales offile servers, 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 were 10,650 million yen (decreased 3.1% from same period of prior fiscal
year); operating income was 566 million yen (decreased 65.4% from same period of prior fiscal year).
(ii) Sales from computer services increased by 3.4% from same period of prior fiscal year. This was due to growth in
the user base of the New Generation TASK Cloud, the Convenience Store Certificate Issuing System and otherservices.
２

(iii) Software sales decreased 21.3% from same period of prior fiscal year. This was because we had no major projects
in response to change in law such as the major system revisions accompanying the launch of the My Number
system during the previous fiscal year.
(iv) Sales from consulting services decreased 8.0% from same period of prior fiscal year. This was because sales
associated with the upgrades of the local tax electronic declaration system during the previous fiscal year are nolonger posted for the current fiscal year, despite the increase in the sales relating to local adjustments associatedwith the increase in the sales of hardware.
(v) Sales in hardware increased by 97.3% from same period of prior fiscal year. This was attributable to the increasein sales of servers and network devices in connection with information security system enhancements
accompanying the launch of the My Number system (information security system enhancements bymunicipalities).
(3) Net Sales of the Printing Business Division (Subsidiary: Tokyo Line Printer Company)(i) Net sales of the Printing BD were 2,844 million yen (increased 1.4% from same period of prior fiscal year);
operating income was 223 million yen (decreased 10.8% from same period of prior fiscal year).
(ii)Sales of data printing service-related products increased by 1.8% from same period of prior fiscal year. This wasdue to large contract projects and election-related orders from government offices and affiliateorganizations, ,despite the decrease in orders for direct mail productions from private companies in comparison to
the previous fiscal year.
(iii) Business form-related sales decreased by 2.8% from same period of prior fiscal year. 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
In order to enhance our support services to the users of our systems, the Company is constructing a new officebuilding, Customer Support Center in Kanuma-shi, Tochigi. The Center is scheduled to start its operation in April
2018. In conjunction with this, the Company plans to increase the number of staff for telephone support operations
from the current 100 up to 300 staff by March 2018.
(2) Acquisition of the ISO 27017 Certification
The TKC Internet Service Center acquired third party accreditation for conformity to ISO/IEC 27017 for the cloudservice security controls (registration date of certification: June 19, 2017). The ISO/IEC 27017 is the international
standard for information security controls applicable to the provision and use of cloud services. We will further
strengthen our information security controls for cloud services by complementing our initiatives under the general
ISO/IEC 27001 information security management systems with this new ISO/IEC 27017.
In October 2015, the Company was the first in Japan to acquire third party accreditation for conformity to
ISO/IEC 27018, an international standard specializing in the protection of personal information in relation to
public cloud services. By acquiring ISO/IEC 27017 accreditation, we, as a provider of cloud services, further
strengthen our initiatives for developing and operating information security controls and continue to provide anenvironment for our clients in which they could use our cloud services in a safe, secured and convenient manner.
(3) Newly Establishing the AI Research Center
On April 1, we established the AI Research Center, a division directly controlled by the president of the Company,in order to collect and analyze the latest trends of AI for internal use as well as for application to our products andservices. The Company launched the Project to Utilize and Research Big Data and AI in fall of 3016, initiatedmainly by the systems development division and has been conducting research on the possibilities of theutilization of AI. With the outcome of this project, the Center will conduct research on advanced technologies andproducts as well as provides technical support for the production, evaluation and functional installation of
prototype products by seeking ideas from both inside and outside of the Company in an aim to achieve thepractical use of products within 1 to 2 years.

３(4) Newly Establishing the Information Security Strategy Office
On June 1, the Company established the Information Security Strategy Office in order to further strengthen the
management of information security. The Office initiates to take necessary measures and to strengthen
information security controls in accordance with the Cyber Security Management Guidelines (December 2015)
announced by the Ministry of Economy, Trade and Industry and the Information-technology Promotion Agency,
Japan.
While the use of ICT becomes more common, cyber-attacks targeting at important information such as personal
information owned by organizations are increasing and their ways of deception are becoming more sophisticated.
The Company provides a variety of information to accounting firms and their clients and local governments
through the use of latest IC, ensuring that information security is our highest priority and also a social
responsibility in conducting our business activities. We continue to strengthen the our information security
controls in order for our clients to use our services in a safe manner.
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 businessdomain 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)
(i)

Activities of the TKC National Federation ("TKCNF")
Activity policy of TKCNF

In the TKCNF Policy Presentation held in January 2014, TKCNF added a new business objective "to provide
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 was actively engaged in activities
under a theme, "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 is working actively towards such achievement.
-Priority initiative 1: Engage in activities under the three core themes to fulfill its social responsibilities.
a) Preparing highly reliable financial statements in accordance with "Chusho Kaikei Yoryo (Guidelines for SME
accounting)" and diffusing the outcome to financial institutions for enlightenment,b) Promoting "Shomen-tempu (attachment of tax audit reports)" (performing tax accounting services based on theprinciple of no taxation without law),c) Promoting the use of self-accounting (providing support for the prosperity and success of SMEs).
-Priority initiative 2: Exhibit the collective capability of TKC Member Firms and establish a high value-added
network.
Actively conduct the 3 activities stated below for client companies in collaboration with local financial institutions.
a) TKC monitoring information servicesb) Support for business improvements (support for the drafting of business improvement plans at an early stage)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 the４activities 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 for the important activities of TKCNF
In order to support these activities of TKCNF, the Company is actively engaged in activities based on the important
themes including: promoting TKC self-accounting systems (promotion of FX series); retaining good-standing clients(promotion of the FX4 Cloud); soliciting membership (promotion of the admission to TKCNF; and promoting the useof the Tax Accountants Office Management System (OMS).
(i) Activities to promote TKC self-accounting systems (promotion of the FX series)(a) The Company provides support to approximately 1,850 TKC Member Firms to hold self-accounting promotion
meetings so that they can promote the use of TKC self-accounting systems on their own. At these meetings, we
determine promotion targets,and promotion methods, provide information regarding the enhanced functions of the
FX series and training to utilize such information as well as share information regarding example cases of promotion.
Mermber Firms that held meetings on a continuing basis showed significant performances in introducing the FX
series to their clients, resulting an increase of 109.8% from the same period of the previous fiscal year.
In the 3rd quarter of the current fiscal year, we provided highly value-added services to be rendered by TKC Member
Firms to their client companies and furnished information to increase the advantages of the clients of the FX series
including a training seminar on the use of the 365 Days Updatable Profit and Loss Statement and utilization ofmanagement by division, as well as utilization of TKC Documented Evidence Storage Service added on April 1 as afunction to the FX series.
(b) On June 1, we started the services of TKC System My Support in order to support the user companies of the FX
series for their smooth operations of the system and to ensure an environment in which TKC Member Firms canpromote the use of self-accounting with a peace of mind. Services will now be provided directly to the clientcompanies of TKC Member Firms by our professionally educated employees upon request of TKC Member Firms, inlight of the circumstances where the operational environments of computing systems at SMEs have become more
complex recently due to the innovation of ICT and the growth of cloud computing.
As a result of these activities, the number of FX series users totaled approximately 245,000 companies as of June 30,
2017.
(ii) Activities to retain good-standing clients (promotion of the FX4 Cloud)
The Company offers an integrated accounting information system FX4 Cloud designed for medium-scale corporation
with annual turnover of 500 million to 5 billion yen to support TKC Members in their effort to retain good-standing
clients and expand their client base.
1) Support activities to enhance the strength of TKC Member Firms in planning
In the 3rd quarter of the current fiscal year, the Company focused on enhancing the proposal capabilities of TKC
Member Firms by conducting activities based on the concepts of "more efficient accounting work by utilizing thefunctions to receive data from banks and credit card companies," "more efficient accounting work by utilizing thefunctions to share journal entries with business systems of other companies," and "business performance control bydivision and by level, and utilization of management report design tools" as well as holding seminars on how toprovide consulting for client companies utilizing bird’s-eye view business models.
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
support activities including support for establishing the monthly settlements systems and support for drafting
business plans for corporate groups suchas franchise chains and voluntary chains in aim to strengthen managerial
powers of participating member stores.
In the 3rd quarter of the current fiscal year, we, in collaboration with Lotas,Inc. (agreement dated April 11) and AZCOM Maruwa Support Network (agreement dated July 1), started to provide training sessions and consulting
services including individual consultations conducted by TKC Member Firms.
５

As a result of these activities, the number of the FX Cloud users totaled approximately 10,000 companies as of June30, 2017.
(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 theend of September 2017. The Company is working closely with TKCNF in soliciting new members to achieve this goal.
During the 3rd quarter of the current fiscal year, we asked TKC Members to invite non-member accountants toparticipate in seminars targeting non-members scheduled to start in July. As a result, we have been introduced toapproximately 850 non-member accountants by the end of June. We solicited them to be TKC Member by providing
information including the roles of TKC and TKCNF in establishing the mandatory electronic corporate tax filingsystem and the policy of TKCNF to provide support for the drafting of business improvement plans at an early stage.
As a result of these activities, the total number of TKC Members counted approximately 9,400 firms with 11,000
accountants as of June 30, 2017.
(iv) Activities to promote 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.
During the 3rd quarter of the current fiscal year, we promoted the services of the OSM including the self-generationof business account books and the complete performance of audit obligations against employees by appealing therealization of compliant management of accounting firms.
As a result of these activities, the number of OMS users totaled about 6,600 firms as of June 30, 2017.
(3) Initiatives for FinTech(i) FinTech service for clients of TKC Members
We strive for promoting the use of functions to receive data from banks and credit card companies in FinTech service,that started in June 2016. This function enables the clients to automatically receive transaction data of internet
banking services offered by more than 99% of financial institutions (corporate accounts)* across Japan as well asstatements of major credit cards, and to easily and accurately post journal entries based on preset rules.
In the 3rd quarter of the current fiscal year, the Company promoted the use of the FX series by making appeals of
more efficient journal entries by utilizing this function as well as initiatives toward an API (Application Programming
Interface) in cooperation with The Bank of Tokyo-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 service for financial institutions(a) Promoting TKC Monitoring Information Service
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 Cloud service, TKC Member firms can provide, upon request of their clients, financial data, whose
credibility, substantiality, and completeness are confirmed by TKC Members by monthly Filed Audits, to financial
institutions. This service has been adopted by many financial institutions, as the reliability of monthly trail balancesand financial reports provided by the service are highly acclaimed.
During the 3rd quarter of the current fiscal year, the Company continued to promote from the previous fiscal year
the use of the service by supporting to host 20 councils for the TKC Regional Associations and financial institutions.
across Japan As a result of the effort, this service is adopted by over 240 financial institutions as of June 30, 2017６

(b) Providing the Local Benchmark Cloud
On June 1, we started to provide the services of the TKC Local Benchmark Cloud that enables clients to create theLocal Benchmark promoted by the Ministry of Economy, Trade and Industry.
The Local Benchmark created by this service can be provided to financial institutions through the TKC Monitoring
Information Service with the consent of management, leading to support to nurture a relationship of mutual trust
between clients and financial institutions.
(4) Support for the Drafting of Business Improvement Plans at an Early StageOn May 10, the Small and Medium Enterprise Agency announced that it will provide support for the drafting ofbusiness improvement plans at an early stage as part of the support project for the drafting of business
improvement plans provided by approved support agencies.
This aims to “support SMEs to be able to manage their financing and profit in their normal business circumstances
by utilizing the scheme of the support project for the drafting of business improvement plans provided by approved
support agencies in order to increase awareness among SMEs for business improvement at an early stage so that
SMEs can engage in the basic activities for business improvement (the drafting of business improvement plans at an
early stage).”
TKCNF is actively engaged in the development of this project, which matches the concept of the priority activity
themes of TKCNF, and the Company has modified systems and planned training seminars to support this project.
(5) 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 applications 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 and provided detailed information for the preparation and submission of application for the Support
Project.
(6) Activities to support the preparation of highly reliable financial statements based on timely and accurate
bookkeeping(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 Chusho Kaikei Yoryo (Guidelines for SME Accounting,"Guideline") for the accounting guideline to conduct their accounting operations. This Guideline has been developed
based on the ideas including: 1) accounting useful to grasp the status of business management; 2) accounting
reliable to provide information to stakeholders (such as financial institutions); 3) accounting in compliance with the７Ordinance on 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 ofInternal 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)certified in accordance with the Act on Support for Strengthening Management Functions for SMEs wereencouraged to use the Guideline.
The Company continuously provides support to organize a surrounding environment and strengthen ties with other
SME support organizations in order to support the activities of TKCNF for diffusion and use of it.
7) Support for the expansion of the 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 3rd quarter of the current fiscal year, the Company held seminars with the themes entiteled (a) "Tax
Reform" and "Accounting Operation Utilizing Artificial Intelligence (AI)" in collaboration with TKCNF's Medium
and Large-size Support Research Committee (consisting of nearly 1,270 members as of June 30 31, 2017), and (b)"Chinese Accounting and China Risk" in cooperation with TKCNF's Oversea Expansion Support Committee(consisting of approximately 500 members as of June 30, 2017) in order to acquire new customers. In addition, we
held seminars on electronic tax filing (corporate tax and local tax) for beginners at Tokyo, Osaka and Nagoya every
month since May in response to the policy of mandatory of electronic tax filing for large corporations announced by
the Administrative Procedures Committee of the Regulatory Reform Promotion Council of the Cabinet Office.
Further, we promoted and introduced a variety of services and multiple systems targeting the companies using oursystem by leveraging the advantages of the Company's systems, which encompass all aspects of account settlements
and tax declaration on corporate group levels.
As a result of these activities, the number of companies using the TKC Consolidated Group Solution counted
approximately 2,700 corporate groups (or about 18,200 companies) as of June 30, 2017, the services being adopted bymore than 75% of the leading 100 Japanese listed companies in sales. More than 800 TKC Members have been
appointed system consultants by these companies.
(8) Expansion of markets for legal information database services
The LEX/DB Internet legal information database maintains an archive of over 282,000 judicial precedents, etc. (as ofJune 30, 2017) covering all legal fields from precedents set in the former Supreme Court dating back to 1875 to thosemost recently announced as well as precedents collected through our own channel, being the largest database of 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 907,000 bibliographic information references with links to 51 of the
Databases of Professional Journals, with total items of information now exceeding 2,350,000. As of June 30, 2017,
the Library is used by approximately 50,000 IDs of users and over 16,600 institutions, including TKC Member Firms,
universities, law schools, government offices, law firms, patent offices and corporate legal departments.
In the 3rd quarter of the current fiscal year, the Company continued to promote the sales of the practical contents of
TKC Law Library by specifically packaging the contents for targeting customers (i.e., the Law Firm Package for law
８

firms and Corporate Law Package for companies). In March 2017, we launched a labor law-related portal site Labor
Law EX+ which was co-developed 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 oflabor law as well as the users of TKC Law Library.
In the academic field, we offered 56 law schools educational support systems at an early stage based on the use of
the 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 of the Ministry of Education,
Culture, Sports, Science and Technology. In addition, the exercise systems included in the system 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 the effective use of Learning Support NAVI and Study Drills of Past Exams provided functions
enabling more students to create study plans, check their progress and study the necessary precedents in the 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 June 30, 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 the 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 andinformation 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 andshared by all municipalities across Japan (offered both for individual use and shared use by multiple organizations),
and serves as a model for local government cloud systems that the Japanese government seeks to establish, having
been adopted by 5 groups (36 organizations).
As of June 30, 2017, over 140 organizations nationwide have adopted our services.
During the 3rd quarter of the current fiscal year, the Company was engaged in enhancing the function of missioncritical 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 full operation of the system being scheduled to start in fall 2017as well as in supporting our client organizations for the preparation of comprehensive operational testing.
* 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 on the "Review regarding
improvement of services 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 services.
９

In response, the TASK Cloud Convenience Store Certificate Issuing System has been provided to realize 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 60 municipalities have adopted the
TASK Cloud Convenience Store Certificate Issuing System as of June 30, 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 a cloudbased service for electronic 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 theCouncil'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
727 agencies which account for approximately 40% of all municipalities (as of June 30, 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 June 30, 2017.
(4) Support for the development of standardized local public accounting
Local governments are, in principl, 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 3rd quarter of the current fiscal year, the Company
strengthened and enhanced financial documents (balance sheets and administrative cost statements) as one of the
new functions of the TASK Cloud Public Accounting System. The TASK Cloud Public Accounting System is a
packaged system providing support for Hibi-Shiwake(Daily Bookkeeping), as well as is adopted by about 170
agencies as of June 30, 2017, being acclaimed of its easy-to-use system as achieving "accurate automatic journal
entries" by utilizing patent technology.
(5) Compliance with revised laws and systems
Local governments are required to achieve to improve the convenience of citizens and to enhance the efficiency of theadministrative operations by utilizing the My Number cards, as well as to comply with the Act for Partial Revision of
the Long-Term Care Insurance Act, Etc., in Order to Strengthen the Integrated Community Care System, which isscheduled to be enacted in next spring.
In order to support compliance to these requirements, the New Products Planning and Promotion Office (establishedon October 1, 2016) of the Company as a core department for this support has researched, studied and developed
new products and services (including the easy-to-use counter system, the child care one-stop support service and thesocial welfare consulting support system, etc.) by utilizing My Number card, Myna Portal and the most advanced
ICT such as AI.
The Company was certified by the Minister of Internal Affairs and Communications for the first certified company inthe program of the utilization of My Number cards by private sectors initiated by the Ministry, notified as of March 1.
During the 3rd quarter of the current fiscal year, we were engaged in the preparation to start the utilization ofverification/permit for access to a security room and verification/permit for handling personal information.
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 and
１０products 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 again minute in the 3rd quarter of the current fiscal year 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 project, the election of the Tokyo metropolitan assembly, direct mail productions for other client companies,
and regular orders for business process outsourcing such as invoices and notice operations, resulting in a 1.4%
increase in sales from the same period of the prior fiscal year.
II. Financial Position
Assets, liabilities and net assets at the end of the current 3rd quarter consolidated accounting period are statedbelow.

1.Assets
Total assets as of the end of the current 3rd quarter consolidated accounting period amounted to 81,095 million yen, a
20 million yen decrease 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 3rd quarter consolidated accounting period amounted to 26,414 million
yen, a 3,139 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 2,440 million yen decrease in Cash and deposits, an 61 million yen decrease in
Accounts receivable - trade, and a 634 million yen decrease in Deferred tax assets included in Other.
(2)

Non-current assets

Non-current assets as of the end of the current 3rd quarter consolidated accounting period amounted to 54,680
million yen, an 3,118 million yen increase compared to 51,562 million yen as of the end of the previous consolidated
fiscal year.
This was mainly attributable to an increase of 3,535 million yen in Investment securities and a 633 million yen
increase in Construction in progress account included in Other of Property, plants and equipment, despite a
1,000 million yen decrease in Long-term deposits.

2.Liabilities
Total liabilities as of the end of the current 3rd quarter consolidated accounting period amounted to 12,995 million
yen, a 3,564 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 3rd quarter consolidated accounting period amounted to 9,685 million
yen, a 3,733 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 924 million yen decrease in Accounts payable – trade, a 1,784 million yen
decrease in Income taxes payable and a 1,374 million yen decrease in Provisions for bonuses, despite a 415
１１

million yen increase in Deposits received included in Other.

(2) Non-current liabilities
Non-current liabilities as of the end of the current 3rd quarter consolidated accounting period amounted to 3,309
million yen, a 169 million yen increase compared to 3,140 million yen as of the end of the previous consolidated
fiscal year.
This was mainly attributable to a 144 million yen increase in Retirement benefit liability.
3. Net assets
Total net assets as of the end of the current 3rd quarter consolidated accounting period amounted to 68,099
million yen, an 3,543 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 2,621 million yen in Retained earnings and an increase of 1,069
million yen in Valuation difference on available-for-sale securities.
Equity ratio as of the end of the 3rd quarter of the current consolidated accounting period was 82.0%, a 4.3%
increase compared to the ratio of 77.7% as of the end of the previous consolidated fiscal year.

III

Operational and Financial Challenges Facing the TKC Group
There is no significant change in challenges faced by the TKC Group during the current 3rd quarterly
consolidated cumulative period.

IV

Research and Development Activities
An amount of 33 million yen was spent on R&D in the current 3rd quarter consolidated cumulative period.
There is no significant change in the status of research and development activities of the TKC Group during thecurrent 3rd 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]
lass

Total number of shares authorized to be issued (shares)

Common stock

60,000,000

Total

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

Class

Number of sharesissued as of the end of
3rd quarter accounting
period (shares)(June 30, 2017)

Common stock
Total

Number of shares issued
as of the filing date(shares)(August 14, 2017)

26,731,033

26,731,033

26,731,033

Name of stock
exchange on which
the Company is listed,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,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 April 1, 2017
to June 30, 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]
As the current quarterly accounting period is the third quarter accounting period, there is no item to bestated.

１３

(7) [Voting rights]"Information on voting rights" described in the below table is based on the shareholder registry as of themost recent record date (i.e., September 30, 2016) due to unavailability of the details of the shareholder
registry as of the end of the current 3rd quarterly accounting period.
(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.

１４

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.

１５

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

１６(Unit: Millions of yen)
Current 3rd quarter
consolidated accounting
period(As of June 30, 2017)19,552
6,335
※ 631
3,069
△36
29,554

17,111
6,279
※ 517
2,542
△37
26,414

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

6,538
6,922
2,633
16,093
3,707

20,216
7,000
1,303
4,422
32,94351,562
81,11623,752
6,000
1,311
3,815
34,87954,68081,095

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

1,678
111
3,340
418
1,478
2,658
9,685

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

241
1,727
1,340
3,309
12,995

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
55,227△559
65,777

△339

729

176
1,345
64,556
81,116

178
1,414
68,09981,095△339

１７(Unit: Millions of yen)
Current 3rd quarter
consolidated accounting
period(As of June 30, 2017)729

(2)Quarterly consolidated statements of income and quarterly consolidated statements ofcomprehensive income(Quarterly consolidated statements of income)(3rd 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 3rd quarter
consolidated cumulative
period(Started October 1, 2015;
ended June 30, 2016)
43,702
14,95228,750※ 21,052
7,698(Unit: Millions of yen)
Current 3rd quarter
consolidated cumulative
period(Started October 1, 2016;
ended June 30, 2017)44,625
15,501
29,124※ 22,155
6,968

29
105
17
28

23
110
12
32

-

4

16
198

16
198

4
-

3
0

38

-

0
42
7,853

0
3
7,163

10
10

0
23
23

0
25
25
7,838
2,332
476
2,808
5,029

1
1
7,185
1,841
525
2,367
4,818

70

69

4,959

4,748

１８

(Quarterly consolidated statements of comprehensive income)(3rd 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 3rd quarter
consolidated cumulative
period(Stared October 1, 2015;
ended June 30, 2016)
5,029

Current 3rd quarter
consolidated cumulative
period(Started October 1, 2016;
ended June 30, 2017)
4,818△1,094

1,077△1,095
3,934

1,078
5,896

3,870

5,818

64

78

△0

１９

0

[Notes](Notes to quarterly consolidated statements of cash flows)
Quarterly consolidated statements of cash flows for the current 3rd quarterly consolidated cumulative period are
not prepared.

Depreciation (including depreciation of intangible assets) for the 3rd quarterly consolidated

cumulative period is stated as follows:
Previous 3rd quarterly consolidated
cumulative period(Started October 1, 2015;
ended June 30, 2016)
Depreciation

Current 3rd quarterly consolidated
cumulative period(Started October 1, 2016;
ended June 30, 2017)

1,889 million yen

2,037 million yen(Notes to Equity, etc.)
I

Previous 3rd quarterly consolidated cumulative period (Started October 1, 2015; ended June 30, 2016)

Dividend payments

Resolution

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

Record date

Effective date

Source ofdividends

December 22, 2015
Ordinary general
meeting ofCommon
stock

1,009

38

1,062

40

September 30,
2015

December 24, 2015

Retainedearnings

shareholders
May 13, 2016
Board ofstock

Directors

II

CommonMarch 31, 2016

June 13, 2016

Retainedearnings

Current 3rd quarterly consolidated cumulative period (Started October 1, 2016; ended June 30, 2017)

Dividend payments

Resolution

Total amountof cashDividend
Type of share 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

1,060

40

Retainedearnings

shareholders
May 10, 2017
Board ofDirectors

Commonstock

２０March 31, 2017

June 12, 2017

Retainedearnings

(Segment information, etc.)[Segment information]
ⅠPrevious 3rd quarter consolidated cumulative period (started October 1, 2015; ended June 30, 2016)
Information on net sales and profit or loss by reportable segments
Reportable segment
Local
Government Printing BD
s 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 (( ):loss)29,90010,9972,804

43,702－

43,702

3

0

1,494

1,498

(1,498)－29,903

10,997

4,299

45,200(1,498)43,702

5,807

1,636

250

7,694

3

7,698

(Notes) 1. Adjustments of segment profit of 3 million yen include amounts for elimination of inter-segment transactions and for
adjustments of inventory assets.
2. Segment profit is adjusted with the operating profit presented in the Quarterly Consolidated Statements of Income.
Ⅱ Current 3rd quarter consolidated cumulative period (started October 1, 2016; ended June 30, 2017)
Information on net sales and profit or loss by reportable segments
Reportable segment
Accounting
Firm BD

Local
Government Printing BD
s 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 (( ): loss)

31,13010,6502,844

44,625－44,625

2

0

1,463

1,467

(1,467)－

31,133

10,651

4,308

46,093(1,467)44,625

6,169

566

223

6,959

9

6,968

(Notes) 1. Adjustments of segment profit of 9 million yen include amounts for elimination of inter-segment transactions and for
adjustments of inventory assets.
2. Segment profit is adjusted with the operating profit presented in the Quarterly Consolidated Statements of Income.

２１(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 3rd quarterly
Current 3rd quarterly
consolidated cumulative period consolidated cumulative period(Started October 1, 2015;(Started October 1, 2016;
ended June 30, 2016)
ended June 30, 2017)(1) Quarterly net income per share

186.78 yen

178.97 yen

4,959

4,748

－

－

4,959

4,748

26,551

26,534185.98 yen

178.19 yen

－

－

113

114

－

－

(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
Parent company (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)(Acquisition of Treasury Stock)
The Company acquired treasury stock by resolution of the Extraordinary Board of Directors held on June 28,2017 pursuant to the provisions of Article156 of the Companies Act, applied by replacing the terms pursuant to
the provisions of Article 165, Paragraph 3 of the Companies Act.
1. Reasons for acquiring treasury stock
The Company acquires treasury stock in order to improve capital efficiency and shareholder interest.
2. Details of acquisition(1) Type of share to be acquired
Common stock of the Company(2) Total number of shares to be acquired
150,000 shares (upper limit)(3) Total amount of the acquisition cost of shares
510,000,000 yen (upper limit)

２２

3. Results of acquisition(1) Total number of acquired shares
125,000 shares(2) Total amount of acquisition costs
408,125,000 yen(3) Date of acquisition
July 4, 2017 (Date of agreement: June 29, 2017)(4) Method of acquisition
The Company purchased treasury stock through the off-hours trading system (ToSTNeT-3) of the Tokyo
Stock Exchange, Inc.

2 [Other]
The resolution regarding the interim dividends for the current fiscal year was adopted by the Board of Directors heldon May 10, 2017 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 registry of shareholders as of March
31, 2017.

２３

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

２4Independent Auditors' Quarterly
Audit ReportAugust 14, 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 3rd quarterly consolidated accounting period (from October
1, 2016 to June 30, 2017) and for the 3rd quarterly consolidated cumulative period (from October 1, 2016 to June 30,2017) stated in [Financial Information], namely, the quarterly consolidated balance sheet, quarterly consolidated
statements of income, quarterly consolidated statements of comprehensive income 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 June 30, 2017 and operating results for the 3rd quarterly
consolidated cumulative period ending June 30, 2017 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 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]

August 14, 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 3rd quarter (started April 1, 2017; ended June 30, 2017) are adequate under the Financial
Instruments and Exchange Act.

2 [Special Notes]
Not applicable.