Q&A with top management | From the president to investors

Responses to questions below are as of the month posted. The situation may have changed, due to various factors including economic conditions and the competitive landscape within the industry, depending on the time of viewing.

December, 2014

Did the snow in Japan have any effect on your operations?
It had no direct effect.
Did December's general election in Japan have any effect on your operations?
It had no direct effect.

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November, 2014

With the launch of Windows 10 scheduled for 2015, are users hesitant to buy new PCs?
The number of PCs sold is decreasing although we cannot say for certain that users are refraining from buying because of Windows 10. In the PC market, overall sales remain at 70%?80% of last year's level. Prices are stable, but the entire market still faces difficulties.
You unveiled your FVNO services. How far are they making positive contributions to your financial results?
Providing optical lines on our own as an FVNO to combine communications via PCs, smartphones, and other mobile devices as well as various services for these devices will see its impact manifest itself gradually after it is launched.
At least, it has no negative impact, and we believe that it has huge potential.
How much is the dividend for the current term?
On November 11, we announced our financial results for the second quarter of the current term and a plan to split our shares at a ratio of 1:1.5.
The objective is to create an environment that makes investments in PC DEPOT easier by lowering the amount of unit investments, thus increasing the liquidity of our shares and expanding our investor base.
In addition, based on financial results for the current term, we will leave the amount of dividend per share as it is, thereby practically returning more profits to shareholders through larger dividend payments. For details see the press release here.

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October, 2014

Is the iPhone 6 selling well?
It is very popular. But we still do not have enough in stock, which means that customers are required to reserve one and wait for it to arrive.
Since the percentage of iPhone out of total smartphone sales is extremely high at PC DEPOT, we believe that as our stocks grow gradually we will be able to provide more customers with iPhone models, together with our services.
What is the composition of your shareholders?
Currently, in terms of shareholders numbers, individual shareholders account for over 90% of the total. In terms of number of shares held, financial institutions and institutional investors represent 70% of the total.
What is the percentage of female executives (managers and higher) at PC DEPOT?
The percentage of our managers who are female is 5.4%.
When we hire employees, we do not limit them to certain job types such as general or clerical workers, and this indicator is calculated based on the total number of regular and contract employees.

* Part-time workers are not included.

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September, 2014

How will the launch of iPhone 6 and iPhone 6 Plus affect the performance of your company?
The popularity of iPhones has had positive effects on the performance of the Company because its models account for an extremely large percentage of the Company’s total smartphone sales.
In terms of services, we launched all iPhone 6 services simultaneously. In addition, services such as Mac connection support for iPhone and PC connection support are being provided in a reliable manner. In terms of services for premium service members, an increase in the number of members with an iPhone model has had positive effects on the performance of the Company because services for iPhone models are the most complete of all service lineups for smartphones.
Furthermore, at PC DEPOT, the percentage of large-scale retail stores in suburban areas that handle Apple’s Mac models to the total number of large-scale retail stores (57 out of 66) is higher than at other companies, another factor that is expected to positively affect performance of the Company.
What are the effects of the weak yen?
In the short run, the weak yen will not affect the performance of the Company. Since a relatively large amount of PC-related products and their components are imported, however, the Company is likely to raise its prices if the value of the yen continues to weaken.
Changes in demand and in gross profits due to a continued weakening of the yen’s value will be limited but may still have some effects on the performance of the Company. If the exchange rate should fluctuate substantially going forward, such fluctuations will greatly affect financial results, and such changes will be unfavorable particularly if they take place rapidly.
Do you handle VAIO PCs, a business spun off by Sony?
We do not handle VAIO PCs.
Windows PCs offer a wide range of choices as they are provided by many Japanese and overseas manufacturers. Therefore, the effects of VAIO PCs are limited.

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August, 2014

Do rising gasoline prices affect the performance of the Company?
We do not feel that they have any direct effects on the performance of the Company.
Will low-priced smartphones contribute to the performance of the Company?
We believe that there is a strong possibility that the market for low-priced smartphones will grow going forward.
We will not only sell low-priced smartphones after finding out customers’ requirements, we will also invite them to subscribe to the optimal support plans. By doing so and by providing other kinds of information, we will continue striving to encourage them to use services, a major characteristic of what our Company has to offering.
Recently have major manufacturers had any hot selling products?
Our services are mainly developed by our Company, and a certain amount of services is sold even if there are no hot selling products from manufacturers.
Furthermore, smart devices are steadily spreading to ordinary households as exemplified by the proliferation of smartphones among ordinary customers and the awareness of Windows 8 operating system.

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July, 2014

The media is reporting on mobile phone companies in Japan becoming obligated to allow customers to unlock their mobile phones. What are its possible effects on PC DEPOT?
Reports on mobile phones unlocking indicate that so far the details have not been decided yet, but we believe that this will offer a wider range of choices to customers in terms of smart devices and communications environments, and will have a positive effect on our company. We will watch future developments closely.
Due to the effects of labor shortages in the retail and restaurant industries, do you expect personnel expenses to rise in the future?
In the current term, we expect personnel expenses to rise straight away. At PC DEPOT, full-time engineers respond to customer requests by hand. Since they attend to customers individually, the time required to serve each customer tends to be prolonged, which is one reason why our personnel expenses are rising. But one characteristic of PC DEPOT is that we provide technical services that suit our customers’ circumstances, and this is a major factor that contributes to our business performance. We consider such a rise in personnel expenses as being appropriate and in line with our forecasts
There are rumors about the launch of new iPhone models. What is your view on this?
There have been no detailed announcements of new iPhone models yet. Sales of the iPhone5S and 5C, which are currently on sale, are strong.

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June, 2014

Will PC DEPOT benefit from the launch of new flat-rate services for smartphone users by Japan’s three leading mobile phone companies?
Please find below PC DEPOT’s thoughts regarding the changes made by these three companies to their charges:
・Consumers who use their smartphones mainly for making phone calls will benefit.
・Consumers who use their smartphones mainly for the Internet and other data communications will lose out.
It seems that, through the new rates that have been announced, these companies are seeking to limit how much their customers use the Internet via mobile data communications to a certain extent. This initiative will not benefit our company, as we are promoting the spread of Internet usage on smartphones. However, smartphones can also connect to the Internet through domestic and public Wi-Fi. We will propose the effective use of these alternative networks to smartphone users through our long-term support services that allow consumers to use their smartphones in a convenient way.
PC DEPOT provides a PC emergency diagnosis service that is free of charge. Will you continue not to charge for this service?
Going forward, PC DEPOT will continue our free PC diagnosis service. For our members, this free service not only includes a diagnosis of PC problems, but also provides support to ensure security based on the results of the diagnosis. In the case of non-members, we carry out a diagnosis of their PCs, provide them with the results and suggest the measures they need to take. The above is all free. However, we charge non-members for implementing the measures that they would like to have. This is an opportunity to become PC DEPOT members that some customers are taking. Furthermore, this free service gives our customers the opportunity to understand what services PC DEPOT provides and to make use of those services.
How much of a drop in consumer spending on PCs will there be following the increased demand that was experienced prior to the increase in Japan’s consumer tax and the end of Windows XP support?
For PCs, sales are expected to be slightly lower (80% to 90% year-on-year on a unit basis). Going forward, there are various possible factors that could cause PC sales to decline, such as the changes in smartphone charges and the spread of tablet devices. Although some of these factors will work to our benefit, others will be disadvantageous to us. However, on looking at customers’ growing interest in new smart devices, we can expect overall demand in this sector to remain robust.

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May, 2014

During this term, you plan to remodel your existing stores. Will the sharp rises in construction costs affect your plan?
There are two aspects to soaring construction costs: sharp rises in personnel costs due to labor shortages at construction sites and rises in the cost of construction materials. Since we plan to remodel stores that have already been built, we expect that the steep rise in construction costs will have only a minor effect on our remodeling plan.
Do the reductions in the substantial cashbacks for iPhones affect your operations?
There were substantial cash back campaigns for smartphones such as iPhones in March, when many first-year university students and new working adults were expected to become new customers of mobile phone companies or switch to different companies, it is estimated that a certain amount of the demand for new and replacement smartphones was met within that month. In addition, since that does not mean that prices were reduced, the fact that usage fees for smartphones, which are continuously used, remain relatively high. Despite these circumstances, we offer support services to which iPhone buyers can subscribe. We believe that we can create opportunities for such people to purchase our offerings if we provide convenient services that are proportionate to their price which they can use with peace of mind.
The FIFA World Cup soccer tournament will take place in Brazil in June. Will this event have an effect on your operations?
There will be no direct effects.

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April, 2014

What is the reason for dividend increase and what is PC DEPOT’s dividend policy going forward?
Returning an appropriate amount of profit to our shareholders is an important part of our management mission. We continue to adhere to our basic policy of providing steady dividends over the long term since our listing.
The dividend increase reflects our confidence in record-high performance for the fiscal year ended March 31, 2014.
We aim to make steady dividend payments over the long term while retaining an adequate level of internal reserves to strengthen our financial health and expand our business.
Is there any effect of the stock split on your shareholder incentive plan?
With the stock split carried out on October 1, 2013, we will offer complementary tickets to our shareholders who held 400 shares or more as of March 31, 2014. There are no substantive changes resulting from the stock split. For details, please visit here.
Do you think there will be a drop in consumer spending following the increased demand experienced prior to the consumption tax increase?
We expect a drop in demand to the extent reported by the press. By product, actually, the sale of smartphones is decreasing partly due to policy changes made by carriers in April 2014. For PCs, however, there is a certain level of replacement demand following the termination of Windows XP support.
Moving forward, we will continue to focus on helping customers resolve any problems they encounter when they use their products (as part of our mission), while taking a cautious approach and not being overly optimistic.

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March, 2014

What is your plan for opening new stores during the next fiscal year (ending March 31, 2015)?
During the fiscal year ending March 31, 2015, we plan to open two new stores.
Plans also call for converting 10 existing outlets into PC DEPOT Smart Life Stores.
How did the heavy snowfall in February affect your operations?
The effects of the snowfall included shortened business hours mainly at directly managed stores because most of our stores are located primarily in the Kanto region.

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February, 2014

How does PC DEPOT reflect consumption tax in its prices?as included in or excluded from the price?
We are changing the way consumption tax is reflected in our prices from "including tax" to "plus tax." Prices excluding tax have already been used for service fees such as membership, technical, and solution services since January 2013.
We are currently changing prices displayed at our stores to "plus tax."
What is the target market for PC DEPOT Smart Life Stores?
In addition to PC users as the existing customers, PC DEPOT Smart Life Stores are currently targeted at families, senior citizens and women who use Internet devices as new customers to steadily expand our customer base.
Our initiatives such as changing the image of these stores and increasing digital content offered to women allow more female customers to casually use these stores' services.
Your financial results for the nine months ended December 31, 2013 have been disclosed. Will you revise your earnings forecast for this full fiscal year?
We will not revise our earnings forecast because it is difficult to estimate how much our performance in the fourth quarter will be affected by factors such as a rush of demand before the planned consumption tax rate hike and replacement demand associated with the scheduled end of support for Microsoft Windows XP.

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January, 2014

Will the plan to remodel the 15 existing PC DEPOT Smart Life stores cover all PC DEPOT stores in the future?
We will expand both PC DEPOT and PC DEPOT Smart Life stores based on the needs of the areas where we open new ones. Current plans call for remodeling of PC DEPOT stores mainly in Kanagawa and Tokyo.
You recently announced a plan to increase your capital. For what purposes do you plan to use the procurement funds?
We plan to allocate 900 million yen to open new PC DEPOT Smart Life stores and 1.1 billion yen for capital investments to convert existing PC DEPOT stores into PC DEPOT Smart Life stores. Any remaining funds will be allocated to content development and investments in key store systems.
In February we plan to open two new PC DEPOT Smart Life stores in Himonya and Shin-Yokohama. For details, refer to the Announcement on the Opening of New PC DEPOT Smart Life Stores and Acceleration of Efforts to Remodel Existing Stores. (in Japanese)
Will the spread of wearable terminals have positive effects on your company?
The spread of new Internet devices such as wearable terminals will have positive effects on our business because it will provide us with more opportunities to offer services related to such terminals.
The monthly report indicates that the number of customers handled dipped well below that of the previous year, but why did sales remain almost at the same level as the previous year?
The number of customers handled indicates the number of customers who pay at the cash register and does not include, for example, members who pay monthly fees and customers who come to the store for PC checkups.
Sales include, for example, income from services whose recipients do not pay at the cash register. We would appreciate it if you could see this difference as a shift to a business model that allows customers to reliably use our services.

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