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, 2015

The media is reporting that there will be changes to cell phone price plans, sales methods, and sales incentive systems. Will these changes affect PC DEPOT?
If these changes do take place, it is possible that our sales may be affected. However, at this point we are unable to determine the effects.
Will the Amendment to the Worker Dispatching Act of Japan that passed in September affect agency staff at PC DEPOT?
PC DEPOT does not employ any agency staff. Since all of our employees are direct hires, the Amendment to the Worker Dispatching Act of Japan does not affect us.
Existing PC DEPOT Stores have been renovated into PC DEPOT Smart Life Stores. Will you also renovate large PC DEPOT Stores?
There are 20 PC DEPOT Stores with an area of 500 tsubo or more. First, we will change the store style for PC DEPOT Stores with an area of 300 tsubo or less near Tokyo and Kanagawa Prefecture.
As for renovating large stores, we have positioned PC DEPOT Smart Life Inagi Wakabadai Store in Inagi City, Tokyo as Ver. 2 and are now doing a test run at that store.
Going forward we are planning to give appropriate consideration to renovating large stores based on conditions in the region and what's going on in the community.

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November, 2015

Are new stores being opened in city centers in anticipation of demand from inbound tourism?
We do not expect demand from inbound tourism.
The Company's support service is provided based on the basic CSR policy, which is "eliminating the disparities in the information society (digital divide) that arise as a result of differences in age, gender, income, education, place of residence, and other factors through our stores." Therefore, we anticipate that the main customers will be residents of the areas where we are opening the new stores, or people working or going to school in these areas during the day.
Are there any effects from the robust sales of 4K TVs at consumer electronics superstores?
We are not directly impacted as we do not sell 4K TVs.
Are the business results affected by the start of the sale of the Apple Watch?
We have started selling the Apple Watch in 24 stores. The PC DEPOT Smart Life Aoyama Store, which is opening on December 4, will also sell the Apple Watch.
We can expect to be affected to a certain degree by selling and providing the Apple Watch in combination with support services or other Apple products instead of solely selling the Apple Watch.

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October, 2015

Will the reported lowering of mobile phone fees by each telecommunications company affect the financial results of the Company?
The great majority of mobile phones sales by the Company depend on the plans available from each telecommunications company.
However, at this present time we cannot judge what the effect of this may be.
Does PC DEPOT run its own cloud services?
The Company provides the following cloud services.

1. Memories in smart video, which allows families to save analog video taken with consumer video cameras in the cloud and then view them.
2. For premium service members, a high capacity backup service called “ozzio CLOUD” that allows users to move over to a new PC without needing any extra hardware. For smart support members, “Smart Cloud,” which automatically backs up the iPhone’s address book, photos, and more.
3. “ozzio drive,” which allows the saving and sharing of up to 4 TB of data.

We provide these and other cloud system to suit our customers’ needs.
What is your objective in getting listed on the first section of the Tokyo Stock Exchange?
We believe that we can enjoy many advantages by changing our listing, such as strengthening our governance and driving home compliance, as well as raising our corporate recognition and increasing our corporate value. Going forward, we will strive to expand our business further and increase our corporate value.

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September, 2015

Did Typhoon No. 18 or the recent heavy rain affect your operations?
Water was cut-off and there was flooding in some areas near our stores. Some of our stores closed early but the effect was minor. We are providing the following services to our premium service members in the affected areas: (1) repair of damaged PCs and (2) total support service for products covered by insurance. Please check the following website for more details: (http://www.pcdepot.co.jp/pdf/csr/20150912.pdf).
How popular are iPhone 6s and iPhone 6s Plus?
iPhone 6s and iPhone 6s Plus are very popular products. They will launch on September 25 and we are currently accepting pre-orders for these products. Although it depends on the conditions regarding the supply of inventories from carriers, we expect to provide a certain amount of support services.

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August, 2015

Are there any effects from Windows 10?
PCs pre-installed with Windows 10 are not yet being sold. However, Microsoft is providing free upgrades from Windows 8, which is currently being sold, and Windows 7, which was sold in the past, to Windows 10. As a result, we are upgrading PCs sold at our stores according to our customers' requests. We are also providing advice and support to Windows 7 and Windows 8 users and checking if their PCs are suitable for the Windows 10 upgrade, including users that have already purchased PCs from other stores. We have started providing emergency support and free emergency PC checkups at our stores for any malfunctions that occur after upgrading to Windows 10.
Do you think the fall lineup of smartphones will sell well?
Once the new models go on sale, not only will the demand for new phones and replacements increase, the demand for support will also increase. We feel there will be definite effects.

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July, 2015

Will you be revising your store-opening plan in the light of the steep rises in construction, labor and other costs?
As our stores do not have in the first place expensive equipment specifications requiring excessive investment, the effect of the cost rises is within our expectations and as such we will not be majorly revising our plans.
Is PC DEPO experiencing any special demand during this summer heat?
We have experienced no increase in demand. If the extreme heat continues, it will negatively affect us in terms of trade and the like. But a temporary change in the weather will not affect us in a major way.

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June, 2015

Are stores being opened in city centers with an awareness of the demand from corporate customers?
We anticipate a certain amount of demand from corporate customers; however, we are not planning on credit sales or out-of-stores sales to corporate customers. Furthermore, the Company's membership service is only available to individual customers—we have no plans to offer membership service to corporate customers.
What is PC DEPOT aiming to achieve by starting to employ senior citizens?
We are employing people that are a generation older than members of the Company's staff. They show customers who come to PC DEPOT stores for repairs and support services to the customer service counter and they take care of looking after things that are difficult for younger staff members to notice from their line of sight—which has had the positive effect of supporting the staff and operation of PC DEPOT stores.
Are there plans to close any stores?
There are no plans to close any stores.
In the medium-term, city centers are the areas in which we are focusing on opening new stores. In cases where more attractive property has become available in areas where PC DEPOT stores have already been opened, we are implementing a policy of scrap and build.
We are also planning to convert five to ten existing PC DEPOT stores to PC DEPOT Smart Life Stores.

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May, 2015

What is PC DEPOT's plan this term for opening new stores?
Since our plans for this term include expanding to Central Tokyo, we are planning to open four PC DEPOT Smart Life Stores, a new type of PC DEPOT store.
Are there any effects from the mandatory unlocking of SIM locks?
Mobile phones in which the SIM lock has been unlocked are expected to increase in six months. However, it remains to be seen whether the use of unlocked mobile phones will become prevalent.
We plan to respond to our customers in a flexible manner that is tailored to fulfilling their needs.

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April, 2015

What is PC DEPOT’s CSR policy?
Our basic CSR policy is to use our stores to eliminate the disparities in the information society (bridging the so-called “digital divide”) that arise as a result of differences in age, gender, income, education, place of residence and other factors.
Our basic conduct in carrying out CSR is to resolve our customers’ problems related to all types of devices, Internet use, data, and networks.
For example, we are offering free diagnoses of our customers’ devices no matter where such devices were purchased, which is a service based on our basic policy mentioned above.
Will you be raising employee salaries?
We are continuing to shift from being a retailer selling PCs to a business offering services that accompany the products we sell. In line with this change, we modified our salary system (and raised employee salaries) in July 2013. This July we are planning a second modification of our salary system (and will raise employee salaries).
Will you be raising the price of your products?
Due to a sharp rise in raw material prices and the weak yen, the cost for some of our products increased.
We set appropriate prices for these products.
Going forward, we will continue to make every effort to maintain fair and appropriate prices.

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March, 2015

Will you be handling the Apple Watch?
At this point, we have yet to determine whether we will do so.
Will you be selling the VAIO Phone, and do you sell VAIO notebooks?
We are currently accepting pre-orders for the VAIO Phone. We will start selling it on April 4.
Furthermore, although you may need to place a special order at certain of our stores to buy the latest PCs from VAIO Corporation, we do sell them.
Have there been reports of sluggish PC sales within the industry?
In April 2014, there was increased demand prior to the increase in Japan’s consumer tax and also replacement demand following the end of support for Windows XP. Up until about the end of Japan’s Golden Week holiday period, PCs sold well.
Subsequently, there was a drop in consumer spending, as well as a fall in sales caused by people buying a replacement PC sooner than they would have due to Windows XP support ending. This caused PC sales volume to decrease by 40% year-on-year, while the sales volume of peripherals and accessories decreased by 30% year-on-year.

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February, 2015

Can you tell us about your store-opening plan for the next financial year?
We plan to open from two to four stores, all of which will be PC DEPOT Smart Life Stores.
Furthermore, we are currently moving forward with the renovation of 10 existing stores.
Can you tell us about your recruitment plans for April 2016?
We plan to recruit 70 new graduates and promote about 50 persons into full time employees, as well as recruiting about 200–300 temporary employees.
As we are going increase the proportion of our sales accounted for by our service products, the amount of time spent serving customers will consequently increase. Therefore, we are implementing a proactive recruitment program.

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January, 2015

Has the fall in the price of crude oil or the depreciation of the yen had an effect on your financial results?
The price of crude oil has no direct effect on our performance.
On the other hand, the weakening of the yen, as a comparatively large percentage of personal computers and related products are made outside Japan, will tend to cause cost prices to rise, but this will not have a major effect on us.
If the numbers of foreign tourists visiting Japan increase, what effect will there be on your financial results?
As our company's outlets are located beside major roads, such an increase would not have a major effect on us.

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