Quarterly Report（The 51st Term 1st Quarter）
Started October 1, 2016
Ended December 31, 2016

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 …………………………………

3

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 ………………………………………………………………………………………

1316(5) Changes in total number of issued shares, capital stock, etc.……………………………………

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

16(7) Voting rights…………………………………………………………………………………

17

2

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

17

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

18

Part 4
1

16

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

19
21
21
22

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

25

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

26［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]February 13, 2017

[Quarterly accounting period]

51st Term 1st Quarter (from October 1, 2016 to December 31, 2016)[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
1st quarter
consolidated
cumulative period

51st Term
1st quarter
consolidated
cumulative period

50th Term

Accounting period

Started October 1,
2015;
ended December 31,
2015

Started October 1,
2016;
ended December 31,
2016

Started October 1,
2015;
ended September 30,
2016

14,065

13,42357,750

2,547

1,626

7,604

1,720

1,082

4,770

2,064

1,890

3,958

63,72665,42164,55674,87377,658

81,116

(Yen)

64.80

40.75

179.65

(Yen)

64.54

40.55

178.88

(%)

83.1

82.3

77.7

(Millions of

Net salesyen)

Ordinary income
Quarterly (current) net
income attributable to ownersof the parent
Quarterly comprehensive
income or comprehensive
incomeNet assets
Total assets
Quarterly (current) net
income per share
Quarterly (current) diluted
net income per share
Equity ratio(Millions ofyen)(Millions ofyen)(Millions ofyen)(Millions ofyen)(Millions ofyen)(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 1st quarterly consolidated cumulative period.
in significant affiliated companies.

1

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

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

2 [Material agreements, etc. for management]
There is no decision or execution, etc. of material agreements, etc. for the management during the current 1stquarter consolidated accounting period.

23 [Analysis of financial conditions, operating results and cash flows]I.

Operating Results

The operating results for the current 1st quarter consolidated cumulative period (hereinafter, "the current 1st quarter") of
the consolidated Group comprising of TKC Corporation and its five consolidated subsidiaries recorded a net sales of
13,423 million yen (decreased 4.6% in comparison to the previous 1st quarter consolidated cumulative period(hereinafter, "quarter-on-quarter"), operating income of 1,537 million yen (decreased 38.3% quarter-on-quarter), ordinary
income of 1,626 million yen (decreased 36.2% quarter-on-quarter) and profit attributable to owners of parent of 1,082
million yen (decreased 37.1% quarter-on-quarter).
This was mainly attributable to the lack of demands for the Local Governments Business Division in relation to revisionof the Basic Resident Register System, which increased in the previous fiscal year when My Number System waslaunched, despite the steady growth of orders for cloud services received by both the Accounting Firm and Local
Governments Business Divisions.
Net sales for the current 1st quarter by business division are shown below.
1.

Results of Operation of the Group for the 1st Quarter(1)

Net Sales of the Accounting Firm Business Division(i)

Net sales of the Accounting Firm BD were 9,608 million yen (increased 4.9% quarter-on-quarter); operating
income was 1,622 million yen (increased 23.4% quarter-on-quarter).

(ii)

Computer service sales increased 5.0% quarter-on-quarter. This was due to continuous growth from the previous
fiscal year in the user base of cloud services such as the FX4 Cloud Integrated Accounting Information System
for mid-sized companies, PX My Portal providing support for the appropriate management of the My Numbers,
and Tax Accountants Office Management System (OMS).

(iii) Software sales increased by 6.6% quarter-on-quarter. This was due to growth in the user base of FX4 Cloud ande21-Meister as well as tax return system such as inheritance tax and year-end adjustment, etc.
(iv)

Sales from consulting services decreased 7.4% quarter-on-quarter. This was due to decrease in revenue fromclient/server system launch support service and hardware maintenance service as a result of growth in thenumber of the users of FX4 Cloud system, etc.

(v)

Sales in PCs, servers and other hardware increased by 23.0% quarter-on-quarter. This was due to growth in thesales of PCs with Windows 10, which the Company started handling from the previous fiscal year.

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

Net sales of the Local Governments BD was 2,866 million yen (decreased 28.2% quarter-on-quarter); operating
loss was 92 million yen (cf. operating income was 1,187 million yen in the previous 1st quarter).

(ii)

Sales from computer services increased by 7.8% quarter-on-quarter. This was caused by increase in service fees
due to growth in the client agency base of the New Generation TASK Cloud, Convenience Store Certificate
Issuing System and other services.

(iii) Software sales decreased 60.4% quarter-on-quarter. This was due to the lack of operations to revise the system
accompanying with the launch of My Number system, which were implemented during the previous fiscal year.
(iv) Sales from consulting services increased by 22.2% quarter-on-quarter. This was due to growth in sales ofoperations to support the smooth implementation of new systems in connection with the transition to the New
Generation TASK Cloud.
3

(v)Sales in PCs, servers and other hardware increased by 194.8% quarter-on-quarter. This was caused by increase insales of servers and network devices due to increase in installation of office equipment in connection with thetransition to the New Generation TASK Cloud and a need to strengthen an information security system
accompanying the launch of the My Number system.

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

Net sales of the Printing BD was 949 million yen (increased 4.4% quarter-on-quarter); operating income was 2
million yen (cf. operating loss was 10 million yen in the previous 1st quarter).

(ii)

Sales of data printing service-related products increased by 7.4% quarter-on-quarter. This was due to winninglarge contract projects from government offices, despite lack of large once-off orders for direct mail productionthat the Company enjoyed during the previous fiscal year.

(iii) Business form-related sales decreased by 3.2% quarter-on-quarter. This was due to continuous decline in the
demands for business forms.
2.

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 maintaincontrol over the fate of accounting firms") and works under close ties with the TKC National Federation, which consistsof 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 TKC Groupwebsite (http://www.tkc.jp/).

(1)

Activities of the TKC National Federation ("TKCNF")(i) Policy and strategic targets of TKCNFIn TKCNF Policy Presentation held in January 2014, TKCNF added a new business objective being "providing
support for the business continuity and prosperity of SMEs" to its existing business objectives, set a strategic target
to be achieved in future as follows, and has worked actively towards such achievement.
Strategic targets
1) Number of TKC Member firms: Over 10,000 offices
2) Number of certified public tax accountants at TKC Member firms: 15,000 accountants3) The "KFS Campaign": 500,000 companies for each project
K: (utilization of Keizoku MAS system)
F: (expansion of TKC's self-accounting systems)
S: (implementation of "Shomen-tempu (tax audit report)" (Article 33-2 of CPTA Act); attachment anddisclosure of "Certificate of Bookkeeping Timeliness" in financial statements; diffusion of "Chusho
Kaikei Yoryo (Guidelines for SME accounting)")4) Number of TKC auditors conducting Field Audit: 20,000 auditors
5) Number of subscribers of TKC Corporate Defense Plan: 300,000 companies(ii) Important activity themes of TKCNF
TKCNF developed a roadmap to achieve these strategic goals under a universal theme, "Chance, Change andChallenge—Creating the Path to the Future. New Growth Strategy 2021 for TKC Accountants." The roadmap
divides the years leading up to the 50th anniversary into 3 stages, and sets forth the four important activities for the
4

1)
2)
3)
4)

first stage as follows:
Enhance accounting leadership and contribute to the prosperity and success of companies;
Promote the attachment of tax audit reports and strive to deliver flawless tax accounting;
Improve the reliability of financial statements and strengthen ties with financial institutions;
Participate in activities to expand the membership base and work to vitalize the organization.
Such activities of TKCNF utilize the systems and services provided by the Company. The Company supports theactivities of TKCNF and is actively engaged in the development and provision of computer services and softwarethat are to the benefit of the prosperity and success of SMEs.

(2)

TKC Management Strategy 2021

The Company announced the "TKC Management Strategy 2021" in January 2014. The strategy designed to help
TKCNF achieve their strategic goals includes the Company's two priority initiatives to achieve over 10,000 TKC
Member firms and 500,000 companies using TKC's self-accounting systems, and describes specific actions to be taken.
(i) Activities to achieve "500,000 firms using TKC self-accounting systems"
The Company focuses on promoting the use of its self-accounting systems FX2 and e21-Meister (hereinafter, "theFX series") which provide owners of SMEs the tools to understand the financial results of their business and toreview the progress of their business plans in a timely manner.
Approximately 235,000 companies use the FX series as of December 31, 2016.
1) FinTech service for the clients of TKC Members
As part of the efforts to enhance the functionality of FX series, the Company started providing the FinTech
service Data Receiving Functionality from Banks and Credit Card Companies to the clients of TKC Members
starting 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 account)* across Japan as well asstatements of major credit cards, and to easily and accurately post journal entries based on preset rules.
During the current 1st quarter, the Company promoted the use of the FX series by making appeals the more
efficient journal entries by utilizing this function, considering the fact that about 40% (according to our survey)of all journal entries conducted by SMEs were related to bank transactions. As a result of these activities, thenumber of the users of this function totaled nearly 11,000 companies as of December 31, 2016.
* City Banks, Regional Banks, Second Regional Banks, and Shinkin Banks
2) FinTech service for financial institutions
In October 2016, the Company started providing the TKC Monitoring Information Service, our FinTech service
for financial institutions. With this service, TKC Member firms provide, upon request of their clients, financial
data, whose credibility, substantiality, and completeness are confirmed by TKC Members by monthly Filed
Audits, saved at TKC Internet Service Center, to financial institutions. This service has been adopted by manyfinancial institutions, as the reliability of monthly trail balances and financial reports provided by the service
being highly acclaimed.
During the current 1st quarter, the Company promoted the use of the service by supporting the holding of acouncil regarding utilization of the service by the TKC Regional Associations across Japan and financial
institutions. As a result of the effort, this service is adopted by approximately 180 financial institutions, and theservice is in use at 101 financial institutions as of December 31, 2016.
(ii) Activities to achieve "Over 10,000 TKC Member Firms"
5

TKCNF is actively engaged in its Project 9501 in order to increase TKC membership to 9,501 or more offices by
the end of September 2017. The Company is working closely with TKCNF in soliciting new members to achieve
this goal.
During the current 1st quarter, we actively solicited nearly 120 non-member certified public tax accountants who
had participated in the TKC New Members' Forum 2016 (held in October 2016) to be a TKC Member.
From December 2016, the Company hosted seminars to discuss theme of "Expansion of the client base andincome" targeting new practitioners of accounting firms as well as seminars for medium- and large-scaleaccounting firms to contemplate the theme of firm management utilizing TKC's latest system (including the Data
Receiving Functionality from Banks and Credit Card Companies, TKC Monitoring Information Service, and TKC
Documented Evidence Storage Service).
As a result of these activities, the total number of TKC Member firms and TKC Members counted approximately
9,400 and 11,000, respectively (as of December 31, 2016), by achieving the goal of the 1st stage (9,333 TKC
Member firms) set by TKCNF.
(iii) Self-accounting promotion activities targeting mid-size companies (Promotion of FX4 Cloud)
The Company offers an integrated accounting information system FX4 Cloud designed for medium-scale
corporations (with annual turnover of 500 million to 5 billion yen) to support TKC Members in their effort toretain good-standing clients and expand their client base. In the current 1st quarter, the Company was engaged invarious activities based on the concepts of: 1) more efficient accounting work by utilizing the Data Receiving
Functionality from Banks and Credit Card Companies; 2) more efficient accounting work through utilizing thecoordinated journal entries functionality which loads data from business systems of other companies; and 3) multidivisional business performance control and MR design tools.
We also hosted the FX4 Cloud Step-up Workshop targeting TKC Member firms' staff who have successfully
introduced the system to one or more clients in order to support such firms to conduct their promotional activities.
As a result of these activities, the number of FX4 Cloud users totaled approximately 9,300 companies as ofDecember 31, 2016.
(3)

Support activities for the TKCNF 7000 project

The TKCNF launched the 7000 Project in April 2014 targeting to carry out 7,000 cases of the Support Project for the
Drafting of Business Improvement Plans, and encouraged TKC Members, who are among authorized support
organizations, to participate in this project. As a result, TKCNF has been highly acclaimed for its activities relating to
the project, particularly noted in "Project evaluation report concerning SMEs revitalization support operations
implemented by authorized support organization in 2015" released by the Organization for Small & Medium
Enterprises and Regional Innovation, JAPAN in September 2016.
In order to support these activities, the Company established the TKC 7000 Project Promotion Support Headquarters,
and supported strengthening ties with credit guarantee corporations and financial institution.
(4) 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. This utilizes the features of the Company's financial accounting processing at TKC data centers, which
6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
is used 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 Chusho Kaikei Yoryo for the accounting guideline to
conduct their accounting operations. This Chusho Kaikei Yoryo 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 the 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 of Internal Affairs andCommunications, 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 are encouraged to use
Chusho Kaikei Yoryo (or Guidelines for SME accounting).
The Company continuously provide support to organize the surrounding environment and strengthen ties withother SME support organizations in order to support the activities of TKCNF for diffusion and use of it.
(5)

Promotion of Tax Accountants Office Management System (OMS)
The Company provides the Tax Accountants Office Management System (OMS) in an aim to improve theproductivity and operational quality of TKC Member firms. During the current 1st quarter, the number of users
totaled about 6,500 firms as of December 31, 2016, due to the condition that the use of OMS is a prerequisite forthe use of TKC Monitoring Information Service, the introduction of the Service triggering an increase in the userbase of OMS.

(6)

Support for the expansion of client base of TKC Members serving large-size companies
By utilizing the TKC system, the Company contributes to the rationalization of tax and accounting operations oflarge enterprises, mainly listed companies, and are actively working to make these companies clients of TKC
Members.
The Company actively promotes the TKC Consolidated Group Solution package for large-size companies (which
includes: the eCA-DRIVER consolidated accounting system; the eConsoliTax consolidated tax payment system,
the eTaxEffect tax effect accounting system, the ASP1000R electronic tax filing system for corporations, the FX5
integrated accounting information system, the e-TAX series electronic tax filing system, the FAManager fixed
asset management system, the documented evidence storage service (TDS), and the OBMonitor oversea businessmonitoring system, etc.).
During the current 1st quarter, the Company collaborated with the TKCNF's Medium and Large-size Support
Research Committee (consisting of nearly 1,240 members as of December 31, 2016) in hosting seminars to discuss
themes such as "streamlining the taxation-related affairs," "improving productivity of accounting operations" and"electronic filing" in an aim to improve recognition and brand image of the system. We also collaborated with the
TKCNF's Oversea Expansion Support Committee (consisting of approximately 480 members as of December 31,2016) in hosting seminars to contemplate the theme of "latest information on accounting and taxation systems in
7

China and India, and the characteristics of their local accounting software." In addition, we made comprehensive
proposals targeting the companies using our system by leveraging the advantages of the Company's systems,
which encompass all aspects of account settlements and tax declaration on corporate group level.
As a result of these activities, the number of companies using the TKC Consolidated Group Solution counted
approximately 2,500 corporate groups (or about 16,600 companies) as of December 31, 2016, the service being
adopted by more than 75% of 100 top Japanese listed companies in sales.
(7)

Expansion of markets for legal information database services
The LEX/DB Internet legal information database maintains an archive of over 278,000 judicial precedents, etc. (asof December 31, 2016) covering all legal fields from precedents set in the former Supreme Court dating back to1875 to those most 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 900,000 bibliographic information references with links to
48 of the Databases of Professional Journals, with total items of information now exceeding 2,330,000. As of
December 31, 2016, the Library is used by over 16,600 institutions, including TKC Member firms, universities,
law schools, government offices, law firms, patent offices and corporate legal departments.
In the current 1st quarter, the Company promoted the sales of the TKC Law Library basic service set along withpractical contents on traffic accident-related and business-related legal affairs. We successfully hosted the Practical
Training Seminars for Law Firms targeting lawyers (including in-house lawyers) with less than five years
experience. The Company also promoted to sell set items in combination with "Interpretations on Supreme Court
Precedent," "NBL (New Business Law)" and "References to Commercial-related Judicial Affairs" in an aim tobolster sales to attorneys, corporate legal offices and other practitioners of the law.
In the academic field, we continued to provide highly cost-efficient TKC Law School Educational Support
System—Law School Package to law schools that are struggling in the tough managing environment. This
package is currently in use at 67 schools. In addition, the exercise systems included in the package 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 newfunctions enabling more students to create study plans, check their progress and study the necessary precedents inthe lead up to the bar exam, leading to the increasing number of users.
As for the sales of TKC Law Library (Overseas Edition) through agents, we have received inquiries from courts,
governmental agencies, universities and law firms in South Korea, Taiwan, China and other Asian countries aswell as other countries including Germany, the U.K. and the U.S. As of December 31, 2016, over 60 licenses are in
use worldwide, with further growth anticipated in the future, particularly in the Asian regions.

(8)

Establishment of SMEs' Business Succession Support Division
It is pointed out in "Current status and issues relating to business succession" (April 2016) released by the Smalland Medium Enterprise Agency that the smooth succession of business is crucial for SMEs, which make up 99.7%
of Japanese companies, in order to prevent possible loss of their employment, technology and know-how in the
future, showing the fact that generational change of business managers of SMEs has not been well conducted.
In light of the abovementioned status, the Company established the SMEs' Business Succession Support Division
as of October 1, 2016 to support the business succession of TKC Members' clients.

3. 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
8the welfare of residents by improving administrative efficiency.
(1)

Development and provision of cloud services designed for local municipalities
The Company provides TKC Government Cloud Service to municipalities nationwide. This Cloud Service consistsof 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. As of
December 31, 2016, approximately 130 organizations nationwide have adopted our services, including the Saitama
Municipal Information System Standardization Promotion Council (18 municipalities), the Ibaraki Municipal
Cloud-based Mission-critical Task Operation Council (4 municipalities), the Gunma Agatsuma Municipal
Information System Standardization Promotion Council (6 municipalities), the Noda Village, Fudai Village andOtsuchi Town Municipal Cloud (3 municipalities), and the Kawazu Town, Minami-izu Town, Matsuzaki Town andNishi-izu Town Municipal Cloud Promotion Council (4 municipalities).
During the current 1st quarter, the Company was engaged in enhancing the function of mission-critical operational
systems (such as Basic Resident Register System, taxation and welfare), the New Generation TASK Cloud(compatible with My Number system)*, for the preparation of the shared information system being built between
Japanese and local governments starting from July 2017 as well as in supporting our client organizations for the
preparation of operational testing. In order to allow all our client organizations to deal with the shared information
system smoothly, aside from the support for our new customers, we conducted the transition works to the New
Generation TASK Cloud for our client organizations who use the previous series (TASK.NET System) andcompleted the works for approximately 120 organizations as of December 31, 2016. As a result, the New
Generation TASK Cloud will be in full use at all our client organizations who utilize the Company's missioncritical operational systems by the beginning of January 2017.
* The New Generation TASK Cloud (compatible with My Number system) is the brand name of the mission-criticaloperational system of the TASK Cloud Service.

(2)

Expansion of cloud services for residents
In response to the notice by the Minister of Internal Affairs and Communications "Review regarding improvementof 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"service.
In response, the Company provides the TASK Cloud Convenience Store Certificate Issuing System as the system
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 55
municipalities have adopted the TASK Cloud Convenience Store Certificate Issuing System as of December 31,
2016.

(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 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
the Council's platform.
These services are proposed in collaboration with 46 system vendors with whom we have signed alliance partner9

agreements, and the Support Service for TASK Cloud Electronic Filing of Local Taxes is currently used by morethan 720 agencies which account for approximately 40% of all municipalities (as of December 31, 2016).
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
associated costs. This service is used by over 70 municipalities as of December 31, 2016.
(4)

Support for the development of standardized local public accounting
Local governments are in principle required to organize the system of accrual basis accounting (double entry
bookkeeping) to complement the current cash basis accounting (single entry bookkeeping), and to prepare anddisclose their financial documents utilizing such system by the end of March 2016.
The Company provides the TASK Cloud Public Accounting System and the associated TASK Cloud Fixed Assets
Control System to comply with this requirement. During the current 1st quarter, the Company newly developed theutilizing function of financial documents (balance sheets and administrative cost statements) as one of thefunctions of TASK Cloud Public Accounting System and started offering it from December 2016. The TASKCloud Public Accounting System is adopted by about 150 agencies as of December 31, 2016, 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
The Company added new functions to related systems in response to the shared information system being built
between Japanese and local governments as well as growing social awareness for the protection of personal
information.
We also organized the New Products Planning and Promotion Office as of October 1, 2016 to start research anddevelopment on electronic administration services which utilize new social infrastructure such as My Number cardand Myna Portal.

4.Business Activities and Operating Results of the Printing Business Division
The Group's Printing BD is engaged in the printing of business forms and manufacturing and sales of service andproducts around its data printing services.
In the field of business form printing, although demand of business form are generally on a downward trend, the drop
was minute in the current 1st quarter 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 projects, direct mail productions for other client companies, and business process outsourcing such as
invoices and notice operations, resulting in a 4.4% increase in sales quarter-on-quarter.
Ⅱ.

Qualitative Information on the Consolidated Financial Position

1.Assets
Total assets as of the end of the current 1st quarter consolidated accounting period amounted to 77,658 million yen, a3,457 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 1st quarter consolidated accounting period amounted to 25,240 million
yen, a 4,313 million yen decrease compared to 29,554 million yen as of the end of the previous consolidated fiscal
year.
10

This was mainly attributable to a 2,660 million yen decrease in Cash and deposits, an 845 million yen decrease in
Accounts receivable - trade, and a 611 million yen decrease in Deferred tax assets included in Other.
(2)

Non-current assets

Non-current assets as of the end of the current 1st quarter consolidated accounting period amounted to 52,417
million yen, an 855 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 1,165 million yen in Investment securities, despite a 268 million yen
decrease in Long-term deferred tax assets included in Other.
2.Liabilities
Total liabilities as of the end of the current 1st quarter consolidated accounting period amounted to 12,236 million
yen, a 4,323 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 1st quarter consolidated accounting period amounted to 8,972 million
yen, a 4,446 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 2,133 million yen decrease in Income taxes payable, a 1,571 million yen decreasein Provisions for bonuses, and an 804 million yen decrease in Accounts payable - trade.
(2)

Non-current liabilities

Non-current liabilities as of the end of the current 1st quarter consolidated accounting period amounted to 3,263
million yen, a 123 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 153 million yen increase in Long-term lease obligations included in Other.

3. Net assets
Total net assets as of the end of the current 1st quarter consolidated accounting period amounted to 65,421
million yen, an 865 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 801 million yen in Valuation difference on available-for-salesecurities.
Equity ratio as of the end of the current 1st quarter consolidated accounting period was 82.3%, a 4.5% 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 1st quarterly
consolidated cumulative period.

IV

Research and Development Activities
An amount of 16 million yen was spent on R&D in the current 1st quarter consolidated cumulative period.
There is no significant change in the status of research and development activities of the TKC Group during the11current 1st quarter consolidated cumulative period

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

Total number of shares authorized to be issued (shares)

Common stock

60,000,000

Total

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

Class

Number of sharesissued as of the end of
1st quarter accounting
period (shares)(December 31, 2016)

Common stock
Total

Number of shares issued
as of the filing date(shares)(February 13, 2017)

26,731,033
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 Exchangeshares――(2) [Share subscription rights, etc.]
The share subscription rights issued during the current 1st quarter accounting period are as follows:
Date of resolution

November 8, 2016

Number of share subscription rights (number)

181

Number of own share subscription rights among the―above (number)Class of shares to be issued upon exercise of sharesubscription rights

Common stocks

Number of shares to be issued upon exercise of share

18,100subscription rights (stock)
Amount to be paid in upon exercise of share1

subscription rights (yen)Period for exercise of share subscription rights

From December 13, 2016
To December 12, 2051

Price of issuing shares and amount of capitalization

Price of issuing shares

upon exercise of share subscription rights (yen)Amount of capitalization

Conditions for exercise of share subscription rights
Matters concerning the transfer of share subscription
rightsMatters concerning substitute payments
Matter concerning the grant of share subscription(Note) 1

2,558(Note) 2

1,279(Note) 3
The acquisition of share subscription rights throughtransfer shall require the approval of the Board of
Directors of the Company.
―(Note) 4
rights upon organizational restructuring(Notes) 1 When performing a share split (including allotment of common shares of the Company without
contribution; the same shall apply to all share splits hereinafter described) or share consolidation withrespect to common shares of the Company after the allotment date of share subscription rights, thenumber of shares granted will be adjusted using the following formula:
Number of shares granted after adjustment = Number of shares granted before adjustment x ratioof share split or share consolidation
Fractions of less than one share resulting from the foregoing adjustment shall be disregarded.
In addition to the above, when the number of shares granted needs to be adjusted after the allotment
date due to reasons other than those listed above, such as when the Company is engaged in a merger, acompany split, a share exchange, or for any other reason where such an adjustment is required, the
13

2.
3.

4.

Company may adjust the number of shares granted as deemed necessary by the Board of Directors.
Price of issuing shares is the sum of the amount to be paid in upon subscription and the amount to be
paid in upon exercise of share subscription rights.
Conditions for exercise of share subscription rights(1) A holder of share subscription rights may only exercise the share option rights within 10 days (orthe next business day if the 10th day falls on a holiday) from the date following the day on whichsuch holder loses his/her position as a Director or Auditor or as an employee of the Company.
However, if a person who has lost his/her position as a Director or Auditor or as an employee of theCompany is appointed as a Director of the Company or employed by the Company within 10 days
after having lost his/her original position, such person shall not be entitled to exercise the sharesubscription rights.
(2) Notwithstanding (1) above, should a proposal for the approval of a merger agreement where theCompany would become dissolved, a proposal for the approval of a company split agreement or acompany split plan where the Company would become a split company, or a proposal for theapproval of a share exchange agreement or a share transfer plan where the Company would become
a wholly owned subsidiary were to be approved at a General Meeting of Shareholders of theCompany (or if a Board of Directors resolution is passed in case a resolution of General Meeting of
Shareholders is not required), share subscription rights may be exercised within 30 days from thedate following the date of such approval or resolution.
However, this shall exclude cases where share subscription rights of a restructured company are to
be issued in accordance with the matters concerning the issuing of share subscription rights uponreorganization.
(3) Any other applicable conditions shall be as set forth in the "Stock Option Allocation Agreement"
concluded between the Company and holders of share subscription rights.
If the Company is engaged in a merger with another (limited to cases where the Company is to bedissolved as a result of the merger), an absorption-type split or incorporation-type split (both limited tocases where the Company is to be a split company), or a share exchange or a share transfer (bothlimited to cases where the Company is to be a wholly owned subsidiary) (hereinafter collectively
referred to as a "restructuring transaction"), share subscription rights in the entity set forth in Article
236, Paragraph 1, Item 8 (a) to (e) of the Companies Act (hereinafter referred to as the "restructured
company") shall be issued to the holders of the share subscription rights remaining in effect at a time
immediately before the effective date of the restructuring transaction (hereinafter respectively referred
to as the date an absorption-type merger coming into effect, as the date the new corporation being
incorporated following a consolidation-type merger, as the date an absorption-type split coming into
effect, as the date the new corporation being incorporated following an incorporation-type company split,
as the date a share exchange coming into effect, and the date the new joint-stock corporation being
incorporated following a share transfer) (hereinafter referred to as the "remaining share subscription
rights"); provided, however, that such rights may be granted only if provisions for issuing the sharesubscription rights of the restructured company in accordance with the items described below are
included in an absorption-type merger agreement, a consolidation-type merger agreement, anabsorption-type split agreement, an incorporation-type split plan, a share exchange agreement or ashare transfer plan.
(1) The number of share subscription rights of the restructured company to be issued:
The same number of share subscription rights as the number of remaining share subscription rights
held by respective holders of share subscription rights shall be issued.
(2) Class of shares of the restructured company to be issued upon exercise of share subscription rights:
Common shares of the restructured company are issued.
(3) The number of shares of the restructured company to be issued upon exercise of subscription rights
to shares:
It is determined in proportion to the class and number of shares to be issued upon exercise of sharesubscription rights defined in Note 1 above upon considering the conditions, etc. of the restructuringtransactions.
(4) The amount of assets to be contributed upon exercise of share subscription rights:
The amount of assets to be contributed upon exercise of share subscription rights shall be the one tobe obtained by multiplying the amount to be paid in after restructuring as prescribed below by the
number of shares of the restructured company to be issued upon exercise of each share subscription
right as determined in accordance with (3) above. The exercise amount to be paid in after
restructuring shall be 1 yen per share of the restructured company to be issued upon exercise ofeach share subscription right to be issued.
(5) Period in which share subscription rights can be exercised:
The period shall start on the start date of the exercise period listed in the "Period to exercise share14

subscription rights" in the table above, or the date on which the restructuring transactions comeinto effect, whichever is the later, and shall last until the expiration date of the period in whichshare subscription rights can be exercised.
(6) Matters concerning increases in capital stock and the capital reserve occurring when issuing shares
upon exercise of share subscription rights:(i) The amount of capital to be increased shall be one half of the amount of the maximum increasein capital calculated in accordance with the provisions of Article 17, Paragraph 1 of theOrdinance on Company Accounting. Fractions less than 1 yen resulting from these calculations
shall be rounded up.
(ii) The amount of capital reserve to be increased shall be the amount calculated by subtracting theamount of capital increase stipulated in (i) above from the amount of maximum increase incapital described in (i) above.
(7) Restrictions on the acquisition of share subscription rights through transfers:
Acquisition of share subscription rights through transfers shall require the approval by resolution of
the Board of Directors of the restructured company.
(8) Other conditions for exercise of share subscription rights:
To be determined in conformity with Note 3 above.
(9) Provisions for the acquisition of share subscription rights:
Share subscription rights may be acquired without compensation on a date separately specified by
the Board of Directors should the following resolutions, (i), (ii), (iii), (iv), or (v) be approved at a
General Meeting of Shareholders of the Company (or through a resolution of a Meeting of Board of
Directors of the Company, or upon the decision of an executive officer entrusted with such a matter
pursuant to the provisions set forth in Article 416, Paragraph 4 of the Companies Act in case aresolution of a General Meeting of Shareholders of the Company is not required):(i) Resolution approving a merger agreement where the Company would become a dissolved
company;(ii) Resolution approving a company split agreement or a company split plan where the Company
would become a split company;(iii) Resolution approving a share exchange agreement or a share transfer plan where theCompany would become a wholly owned subsidiary;(iv) Resolution approving an amendment to the Articles of Incorporation to establish a provision
requiring the approval of the Company for the acquisition of all shares issued by the Company
through a transfer;(v) Resolution approving an amendment to the Articles of Incorporation to establish a provision
requiring the approval of the Company for the acquisition of the class of shares to be issued
upon exercise of subscription rights to shares, or a provision to acquire all of such class of sharesby resolution of the General Meeting of Shareholders of the Company.

15(3)[Exercise of bonds, etc. 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 October 1, 2016 to
December 31, 2016－

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 first quarter accounting period, there is no item to bestated.

16

(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 1st quarterly accounting period.
(i)[Issued shares]
Number of shares(shares)Classification
Shares without voting right

－

－

－

－

－

－

－

－

－

－

－

265,072－－－

26,731,033

－

－

－

265,072－

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

183,500

Shares with full voting right (others)
Shares less than one share unit

Common stock
26,507,200
Common stock
40,333

Total number of issued shares
Total voting rights held by all
shareholders(Note)

As of September 30, 2016
Number of voting rights
Description(units)The number shown in the column of "Shares with full voting right (others)" includes 600 shares registeredin the name of Japan Securities Depository Center, Inc.

The number shown in the column of "Number ofvoting rights" includes 6 shares of full voting rights held under the name of Japan Securities Depository
Center, Inc.
(ii) [Treasury stock, etc.]

Name orDenomination of
ownerAddress of owner

As of September 30, 2016
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)

178,000－

178,000

0.67

5,500

－

5,500

0.02

183,500－

183,500

0.69

1758 Tsurutamachi,
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.

17

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(Ordinance of the Cabinet Office No. 64 of 2007).

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

18

1 Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheets(Unit: Millions of yen)Previous consolidated fiscal
Current 1st quarteryear
consolidated accounting period(As of September 30, 2016)(As of December 31, 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

19

19,552
6,335
631
3,069
(36)
29,554

16,892
5,531
499
2,353
(35)
25,240

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

6,449
6,607
1,866
14,923
3,698

20,216
7,000
1,303
4,422
32,94351,562
81,116

21,384
7,000
1,304
4,106
33,79552,41777,658

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

1,797
121
2,981
70
1,282
2,719
8,972

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

277
1,600
1,386
3,263
12,236

(Unit: Millions of yen)Previous consolidated fiscal
Current 1st quarteryear
consolidated accounting period(As of September 30, 2016)(As of December 31, 2016)
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
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

20

5,700
5,419
52,606(350)
63,3745,700
5,409
52,621(291)
63,439

(339)

461

(339)

461

176
1,345
64,556
81,116

178
1,342
65,421
77,658(2)Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income(Quarterly consolidated statements of income)(1st 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
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Quarterly profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Quarterly Profit
Quarterly profit (loss) attributable to non-controllinginterests
Quarterly profit attributable to owners of parent(Unit: Millions of yen)Previous 1st quarter
Current 1st quarter
consolidated cumulative period consolidated cumulative period(Started October 1, 2015;(Started October 1, 2016;
ended December 31, 2015)
ended December 31, 2016)
14,065
13,423
4,640
4,738
9,425
8,685
6,932
7,148
2,493
1,537

21

9
23
14
9

9
50
11
9

-

1

7
63

7
90

1
0

0
0

7

-

0
9
2,547

0
1
1,626

-

-

5
5
2,542
426
398
825
1,717

0
0
1,625
27
514
541
1,083

(3)

1

1,720

1,082

(Quarterly consolidated statements of comprehensive income)(1st quarter consolidated cumulative period)

Quarterly 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 tonon-controlling interests(Unit: Millions of yen）
Previous 1st quarter
Current 1st quarter
consolidated cumulative period consolidated cumulative period(Stared October 1, 2015;(Started October 1, 2016;
ended December 31, 2015)
ended December 31, 2016)
1,717
1,083

22

347

806

0

0

347
2,064

806
1,890

2,066

1,884

(1)

6

[Notes](Notes to quarterly consolidated statements of cash flows)
Quarterly consolidated statements of cash flows for the current 1st quarterly consolidated cumulative period are
not prepared.

Depreciation (including depreciation of intangible assets) for the 1st quarterly consolidated

cumulative period is stated as follows:
Previous 1st quarterly consolidated
cumulative period(Started October 1, 2015;
ended December 31, 2015)
Depreciation
I.

742 million yen

Current 1st quarterly consolidated
cumulative period(Started October 1, 2016;
ended December 31, 2016)
598 million yen(Notes to equity, etc.)
Previous 1st quarterly consolidated cumulative period (Started October 1, 2015; ended December 31, 2015)
Dividend payments
Resolution

Class ofshare

Total amount
Dividendof cashper share
dividends(Yen)(Million yen)

Record date

Effective date

Source ofdividends

December 22,
2015
Ordinary general
meeting ofCommon
stock

1,009

38 September 30, 2015 December 24, 2015

Retainedearnings

shareholders

II.

Current 1st quarterly consolidated cumulative period (Started October 1, 2016; ended December 31, 2016)
Dividend payments
Resolution

Class ofshare

Total amount
Dividendof cashper share
dividends(Yen)(Million yen)

Record date

Effective date

Source ofdividends

December 22,
2016
Ordinary general
meeting ofCommon
stock

1,062

40 September 30, 2016 December 26, 2016

shareholders

23

Retainedearnings

(Segment information, etc.)[Segment information]
ⅠPrevious 1st quarter consolidated cumulative period (started October 1, 2015; ended December 31, 2015)
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)

9,164

3,992

909

14,065－

14,065

0

0

350

351

(351)

－

9,164

3,992

1,259

14,417(351)

14,065

1,315

1,187

(10)

2,491

1

2,493

(Notes) 1. Adjustments of segment profit of 1 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 1st quarter consolidated cumulative period (started October 1, 2016; ended December 31, 2016)
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)

9,608

2,866

949

13,423－

13,423

1

－

338

339

(339)

－

9,609

2,866

1,287

13,763(339)

13,423

1,622

(92)

2

1,532

4

1,537

(Notes) 1. Adjustments of segment profit of 4 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.

24

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

64.80 yen

40.75 yen

1,720

1,082

－

－

1,720

1,082

26,551

26,55364.54 yen

40.55 yen

－

－

104

133

－

－

(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)
Not applicable.

2 [Other]
Not applicable.

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

26Independent Auditors' Quarterly
Audit ReportFebruary 13, 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 1st quarterly consolidated accounting period (from October
1, 2016 to December 31, 2016) and for the 1st quarterly consolidated cumulative period (from October 1, 2016 to
December 31, 2016) 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 December 31, 2016 and operating results for the 1stquarterly consolidated cumulative period ending December 31, 2016 included in the quarterly consolidated financial
statements referred to above have not been properly presented, in all material respects, in accordance withaccounting principles of quarterly consolidated financial statements generally accepted in Japan.
Interest
Our firm and the executing partners have no interest in the Company for which disclosure is required under theprovisions of the Certified Public Accountants Act.
End of document.

(Notes) 1. The above is a digitized version of the original copy of the quarterly audit report, the original of which isstored by TKC Corporation (the Company filing this quarterly report).
2. XBRL data is not included in the scope of this quarterly audit.
27

[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]February 13, 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)

28

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 (started October 1, 2016; ended December 31, 2016) are adequate under the Financial
Instruments and Exchange Act.

2 [Special Notes]
Not applicable.

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