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, 2016

What are the effects of the weak yen?
The weak yen results in higher procurement costs. If exchange rates fluctuate rapidly, there is a possibility that some products such as flash memory will be subject to the effect of short supply or the like.
How are you actively promoting sales at the end of the year?
We are promoting sales through activities such as restarting the insertion of flyers in newspapers and providing daily specials on weekends. At the end of the year, the "PC Clinics" and "Dr. Smart" offering repair and support services are used by visitors to our stores who create New Year’s postcards or use PCs for the first time in a while.
We are trying to get customers to continuously utilize our services by fulfilling their needs.
Are there needs for support of cheap smartphones?
Needs are not substantial at present. However, a gradually-increasing number of customers require the support of cheap smartphones as they become more widely available.
The “JUST PRICE FON,” our original cheap smartphone, is provided as a single package of a smartphone, basic usage rates, continuous support, and a warranty for repairs.

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November, 2016

The support for Windows Vista will be terminated in April 2017. Will PC DEPOT experience any special demand by the termination?
We will strive to meet the requests from our members and local customers for security diagnosis in connection with the termination of support for Vista, as well as PC replacement and the resulting data migration.
Voluntary restraint on sales promotion activities is in action. What is the current situation?
As we completed the dispatch of direct mail to approximately 400,000 existing members, we restarted advertising through newspaper, one of the sales promotion activities, from November 19.
What are the outlook of semi-annual results and your future actions?
Reference material and the video of IR Briefing held on November 11, 2016 are available on our website.
The video is available until February 9, 2017. (Japanese Only)

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October, 2016

What is the situation regarding the sending of direct mail to Premium Service subscribers?
As we announced in our monthly sales report dated October 11, 2016, we will complete sending mail to all subscribers on our list within October.
Have you carried out the scheduled stock split?
Were the results what you were aiming for?
We have carried out a 1:1.2 stock split with September 30, 2016 as the record date. This was carried out for the purposes of improving liquidity and expanding the investor base.
How is the iPhone 7 being received?
The new features of iPhone 7 are highly rated. Some products in specific colors have been in short supply.
We are also receiving requests for setting up and supporting new features including the use of Suica.

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September, 2016

What is the progress of your effort to send direct mail to premium service subscribers?
We started sending direct mail to existing premium service subscribers on September 1, 2016.
Our direct mail is expected to reach approximately 200,000 subscribers by the end of September.
Are there any changes in customer traffic, such as their visits to your stores, compared to the previous month?
We are currently focusing our customer support on ascertaining details of customer usage of our current premium service contracts and therefore are refraining from full-scale sales promotion activities.
Specifically, activities that we are now suspending include newspaper ad inserts, offering daily specials for weekend bargains as we have previously provided and company-wide sales campaigns.
Regarding the opening of new stores and the renovation of existing stores
We plan to open four stores during the current term. We have already opened two new PC DEPOT Smart Life stores in Toyosu (inside Books Kinokuniya at Lalaport Toyosu) and Mito.
However, our work to open the other two stores is currently postponed. We will make an announcement as soon as the resumption of the work is decided.
Are you accepting applications for premium service subscriptions?
We are accepting applications from new customers, although we are refraining from aggressive marketing activities.

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August, 2016

Regarding the actions to take for premium service subscribers for the incident
We sincerely apologize for the great concern and trouble caused by this incident. We will make sure to carry out the actions listed in the following announcements issued on August 17, 2016 and August 25, 2016.
What do you think of the investigation concerning this problem and the additional measures to take in the future?
At present, we are giving the highest priority to dealing with customers as stated in the announcement issued on August 25, 2016.
For additional measures and other actions to take in the future, we will consider and reflect the opinions from customers and staff.
Are there many requests for the cancellation of service contracts?
Presently, we do not have many subscribers coming to our store counters and requesting cancellation.
We set up each device and hand it to customers for their use.
Going forward, we will endeavor to provide proper explanation and listen to concerns with care so that customers will continue to use our services.
What percentage of customers is using the problematic plan that supports a maximum of ten devices?
Of the plans subscribed by 400,000 existing members, this plan accounts for roughly 9%.
Among cancelled plans, the ratio of cancellation for this plan is not particularly higher than that of other plans.

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June, 2016

Does the rising value of the yen affect the Company's performance?
We do not think that it will affect our business at this point in time.
However, a large percentage of our PCs and peripherals are procured and imported from overseas manufacturers. So it may affect our purchase and sales prices in the future if the yen becomes even stronger.
Extreme heat is forecasted for this summer. Will this affect the Company's performance?
Extreme heat will not directly affect any of the products we sell.

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May, 2016

The Telecommunications Business Act has been revised. Has this revision affected your business performance?
We feel that it has not affected our business performance at this time.
What's the aim of the inexpensive smartphone service?
Our new brand, JUST PRICE FON, which launched in earnest at the end of April, is a product that combines telecommunications equipment, communications lines we provide as an MVNO, and support services. It has been well received by customers using smartphones for the first time.
What's the aim of increasing the number of outside directors?
In order to expand our business foundation and further enhance our corporate governance system with the purpose of improving our corporate value, we have unofficially appointed two new directors.
One of the new directors was appointed from within the Company and the other was appointed as an outside director that has independence.
Mineo Fukuda, a candidate for outside director, has been a director at several companies and because he has a wealth of experience as an executive and exhibits considerable judgment, we determined that the Company's management can obtain appropriate governance and appointed him as an outside director.
With these new appointments, the Company now has 12 directors, of which one-third are outside directors.

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April, 2016

What effects did the Kumamoto Earthquake have on the company?
We wish to express our deepest condolences to those who were affected by the Kumamoto Earthquake.
We hope for everyone's safety and for a swift recovery in the afflicted areas.

PC DEPOT has four stores in the Kyushu region (Fukuoka, Saga, Nagasaki, Kagoshima), and we have already confirmed that the employees there are safe and that no one was hurt. As for the stores, all of these stores are open and in operation.
In light of the present situation, we are giving preferential attention to customers in the afflicted areas when responding to customer requests.

■ To those living in the afflicted areas, and to people across the country who are involved and whose close relatives are victims of the Earthquake, we will sell at discounted prices replacement devices for Internet equipment and smartphones that have been damaged, and we will respond to the relevant customers preferentially.

■ For our premium service members and total support service members, as well as members who have close relatives in the afflicted areas, we will provide as much support as possible by repairing Internet equipment (PCs and smartphones) and taking other emergency measures for those that have been afflicted, as well as securing access to the Internet.

■ We will take emergency measures and/or repair the PCs which were damaged by the earthquake, at special discount prices. Also, we will provide preferential response in the emergency measures and/or repair of the PCs that have been damaged.
We plan to take proactive actions in the restoration support of PCs and the Internet, which are lifelines to those in the afflicted areas as well as everyone involved. For details, please refer to the following document.


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March, 2016

Can you tell us about your store-opening plans in the next term ending March 2017?
We plan to open between four and five PC DEPOT Smart Life Stores centered in Tokyo. We are also planning to renovate between five and ten stores and convert them into PC DEPOT Smart Life Stores.
Can you tell us about the number of new recruits in April and your recruitment plans for the next term (term ending March 2017)?
We expect that 37 persons will join us in April and we plan to recruit 100 persons during the term ending March 2017.
Moreover, in an effort to diversify our services and to achieve steady store management after opening new stores and renovating and converting stores into PC DEPOT Smart Life Stores, in addition to recruiting 100 new graduates, we plan to promote 100 persons from temporary employees to full-time employees and recruit 300 temporary employees.

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February, 2016

What impact will the negative interest rate have on the Company's performance?
In terms of the demand for funds for working capital to expand business operations and investments for opening stores, cheap funding costs are beneficial. On the other hand, in terms of purchasing it is also being said that the negative interest rate has given rise to psychological restraints on purchasing. Therefore, we are unable to judge at this point in time; however, at least we can say that there will be very little negative impact on the Company.
Is there any relationship between the Company's performance and falling stock prices, the strong yen and a drop in crude oil prices?
There is no direct relationship.
Are cheap smartphones selling well?
They do not account for a very large percentage of the Company's total smartphone sales. We feel that cheap smartphones will steadily account for a larger percentage of the Company's total smartphone sales going forward.
What is your target for opening the PC DEPOT Smart Life Azabu-juban Store?
The Company is targeting the demand of the neighborhood residents to purchase and service products.

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January, 2016

Who do you target when opening small stores in urban centers?
We expect that people living in the vicinity of our downtown stores and people who shop at our stores near their suburban homes will go to those downtown stores located in areas where they commute to school or work. Specifically, families, senior citizens and women who use smart devices are expected to be our target.
Can premium service members receive services at any store?
Our premium services are available at all PC DEPOT and PC DEPOT Smart Life stores, PC Clinics inside K's Denki stores, and more. For example, members can receive services at stores both near their residence and office.
Is the mild winter affecting sales?
Weather has little effect on the sale of PCs and smart devices, or on our services. Sales of PCs and smart devices, however, remain severe.

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