Consolidated Financial Statements
Fiscal Years Ended December 31, 2013 and 2014

Rakuten, Inc. and its Consolidated Subsidiaries

This document including risk factors are translations of the Japanese original report (YukashokenHokokusyo) issued on March 27, 2015 for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shallprevail.

Table of Contents

CoverPart I Information on the Company ........................................................................................................
I. Overview of the Company................................................................................................................
1. Key Financial Data and Trends..........................................................................................................
2. Corporate History ...............................................................................................................................
3. Description of Business .....................................................................................................................
4. Information on Subsidiaries and Associates ......................................................................................
5. Employees .........................................................................................................................................
II. Business Overview ..........................................................................................................................
1. Summary of Results ..........................................................................................................................
2. Production, Order and Sales Status ..................................................................................................
3. Challenges .........................................................................................................................................
4. Business Risk and Other Risk Factors ..............................................................................................
5. Material Business Agreements, etc. ..................................................................................................
6. Research and Development Activities ...............................................................................................
7. Analyses of Consolidated Business Results, Financial Position and Cash Flows ............................
III. Equipment and Facilities ...............................................................................................................
1. Status of Capital Expenditures, etc....................................................................................................
2. Situation of Major Equipment.............................................................................................................
3. Plans for Introduction, Disposals, etc. of Facilities ............................................................................
IV. Information on the Company Submitting Financial Reports .....................................................
1. Information on the Company’s Shares ..............................................................................................
2. Status of Acquisition of Treasury Stock, etc. .....................................................................................
3. Basic Policy on Dividends ..................................................................................................................
4. Changes in Share Prices ...................................................................................................................
5. Directors .............................................................................................................................................
6. Corporate Governance ......................................................................................................................
V. Financial Information ......................................................................................................................
1. Consolidated Financial Statements ...................................................................................................
(1) Consolidated Financial Statements ................................................................................................
1) Consolidated Statements of Financial Position .........................................................................
2) Consolidated Statements of Income ..........................................................................................
3) Consolidated Statements of Comprehensive Income ................................................................
4) Consolidated Statements of Changes in Equity ........................................................................
5) Consolidated Statements of Cash Flows ...................................................................................
Notes to the Consolidated Financial Statements ...........................................................................
1. General Information ....................................................................................................................
2. Accounting Policies .....................................................................................................................
3. Significant Accounting Estimates and Judgments ......................................................................
4. Segment Information ..................................................................................................................
5. Cash and Cash Equivalents .......................................................................................................
6. Accounts Receivable — Trade ...................................................................................................
7. Financial Assets for Securities Business ....................................................................................

8. Loans for Credit Card Business ..................................................................................................
9. Investment Securities for Banking Business ..............................................................................
10. Loans for Banking Business .....................................................................................................
11. Investment Securities for Insurance Business ..........................................................................
12. Derivative Assets and Derivative Liabilities ..............................................................................
13. Investment Securities ...............................................................................................................
14. Other Financial Assets ..............................................................................................................
15. Allowance for Doubtful Accounts ..............................................................................................
16. Investments in Associates and Joint Ventures .........................................................................
17. Property, Plant and Equipment .................................................................................................
18. Intangible Assets ......................................................................................................................
19. Deposits for Banking Business .................................................................................................
20. Financial Liabilities for Securities Business ..............................................................................
21. Bonds and Borrowings .............................................................................................................
22. Other Financial Liabilities .........................................................................................................
23. Provisions .................................................................................................................................
24. Policy Reserves and Others for Insurance Business ...............................................................
25. Income Tax Expense ................................................................................................................
26. Common Stock, Capital Surplus, Retained Earnings and Treasury Stock ..............................
27. Revenue ...................................................................................................................................
28. Operating Expenses .................................................................................................................
29. Other Income and Other Expenses ..........................................................................................
30. Financial Income and Financial Expenses ...............................................................................
31. Earnings per Share ...................................................................................................................
32. Assets Pledged as Collateral and Assets Received as Collateral ............................................
33. Hedge Accounting ....................................................................................................................
34. Contingent Liabilities and Commitments ..................................................................................
35. Share-based Payments ............................................................................................................
36. Dividends ..................................................................................................................................
37. Classification of Financial Instruments .....................................................................................
38. Gains and Losses Generated from Financial Instruments .......................................................
39. Fair Value of Financial Instruments ..........................................................................................
40. Offsetting of Financial Assets and Financial Liabilities .............................................................
41. Financial Risk Management .....................................................................................................
42. Capital Management ................................................................................................................
43. Related Parties .........................................................................................................................
44. Business Combinations ............................................................................................................
45. Major Subsidiaries ....................................................................................................................
46. Structured Entities ....................................................................................................................
47. Subsequent Events ..................................................................................................................
48. Classification of Current and Non-current ................................................................................
(2) Others .............................................................................................................................................

Independent Auditor’s Report .......................................................................................................................

[Cover][Document Submitted]

Annual Securities Report (“Yukashoken Hokokusho”)[Article of the Applicable Law
Requiring Submission ofThis Document][Submitted to]

Article 24, Paragraph 1 of the Financial Instruments andExchange Act of Japan[Date of Submission]

March 27, 2015

[Accounting Period][Company Name]

The 17th Fiscal Year (from January 1, 2013 to December
31, 2013) and The 18th Fiscal Year (from January 1, 2014
to December 31, 2014)
Rakuten Kabushiki-Kaisha[Company Name in English]

Rakuten, Inc.

Director, Kanto Local Finance Bureau[Position and Name of Representative] Hiroshi Mikitani, Chairman, President and Representative
Director[Location of Head Office]4-12-3 Higashishinagawa, Shinagawa-ku, Tokyo[Phone No.]+81-3-6387-1111 (main)[Contact for Communications]

Yoshihisa Yamada, CFO, Executive Vice
Executive Officer and Representative Director[Nearest Contact]

4-12-3 Higashishinagawa, Shinagawa-ku, Tokyo[Phone No.]+81-3-6387-1111 (main)[Contact for Communications]

Yoshihisa Yamada, CFO, Executive Vice
Executive Officer and Representative Director[Place Where Available
for Public Inspection]

Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

President

PresidentPart I
I.

Information on the Company

Overview of the Company

1. Key Financial Data and Trends(1) Consolidated Financial Data, etc.
(Millions of Yen, unless otherwise stated)
14th

15th

16th

16th

17th

18th

JGAAP

JGAAP

JGAAP

IFRS

IFRS

IFRS

Dec. 2010

Dec. 2011

Dec. 2012

Dec. 2012

Dec. 2013

Dec. 2014

346,144

379,900

443,474

400,444518,568

598,565

62,301

68,26771,514

—

—

—

—

—

—

49,106

88,610104,245

34,956(2,287)

19,413

21,13643,481

71,103—(7,706)33,586

31,57467,881

123,822249,233

231,025

262,451

235,942300,063421,562

1,949,516

1,915,892

2,108,409

2,287,634

3,209,808

3,680,695

Fiscal year
Year endNet
sales
revenueorOrdinary profit
Incomebeforeincome tax
Net income (loss)
Comprehensive
incomeNetassetsorequity attributableto owners of theCompany
Total assets
Net
assetspershareorequityattributabletoownersoftheCompany per share

Yen

18,160.62

170.89193.73179.48227.70318.74(Basic) net (loss)
income / (loss)
earnings per share

Yen

2,666.28(1.74)

14.77

15.59

32.60

53.47

Dilutednet
income/earnings
per shareYen

2,657.43

—

14.74

15.56

32.41

53.15

(%)

12.2

11.7

12.1

10.3

9.3

11.5

(%)

15.8

(1.0)

8.1

9.2

16.0

19.6

25.5

—

45.6

43.2

48.0

31.5

30,304

27,585

19,508104,687

1,485

111,860(60,538)

56,351

136,548

67,44030,584(261,085)

27,609(34,648)(47,099)(56,820)

75,252

189,512

100,736

149,752

260,656

270,114384,008

428,635

7,119

7,615

9,311

9,311

10,867

11,723Equity ratio or
equity attributableto owners of theCompany ratio
Return on equity ornet
incometoequity attributableto owners of theCompany ratio

Price earnings ratio (Times)
Net cash from/(used in) operating
activities
Net cash from/
(used
in)
investing activities
Net cash from/
(used
in)
financing activities
Cash and cash
equivalents at endof the year
Employees(Persons)

(Notes) 1 consolidated financial statements for the 16th fiscal year and thereafter have been
prepared in accordance with the designated International Financial Reporting Standards(hereinafter referred to as the “IFRS”).
2 Fractions of less than ¥1 million are rounded off to the nearest million for the 16th IFRS
fiscal year and thereafter.
3 Consumption tax is not included in Net sales or revenue.
4 Average number of shares during the fiscal year is calculated on a daily basis.
5 Diluted net income per share is not presented for the 15th fiscal year, as net loss per
share is reported in the fiscal year.
6 From 16th fiscal year, the Company applies “the Accounting Standard for Earnings Per
Share” (Accounting Standards Board of Japan (here in after referred to as “ASBJ”)
Statement No. 2, revised June 30, 2010), “the Guidance on Accounting Standard for
Earnings Per Share” (ASBJ Guidance No. 4, revised June 30, 2010) and “the Practical
Solution on Accounting for Earnings Per Share” (Practical Issue Task Force (here in afterreferred to as “PITF”) No. 9, June 30, 2010) for JGAAP Consolidated Financial Data.
Such change in the accounting policy has been applied retroactively and adjustments
have been made for the 15th fiscal year. Diluted net income per share is not stated forthe 15th fiscal year although potential shares exist as net loss per share is reported in thefiscal year. The Company conducted a share split on July 1, 2012. However, net assets
per share or equity attributable to owners of the Company per share, net income (loss)
per share, and Diluted Net income per share are calculated on the assumption that theCompany conducted such share split at the beginning of the 15th fiscal year.
7 As timing to recognize provision for customer points changed in the 16th fiscal year, suchchange is retroactively applied to figures for the 15th fiscal year.
8 Price earnings ratio is not stated for the 15th fiscal year, as net loss per share is reported
in the fiscal year.
9 Number of Employees does not include those serving concurrently as employees andDirectors, temporary staff and part-time employees.

(2) Financial Data, etc. of the Company submitting Annual Securities report(Millions of Yen, unless otherwise stated)
Fiscal year

14th
JGAAP

15th
JGAAP

16th
JGAAP

17th
JGAAP

18th
JGAAP

Year end

Dec. 2010

Dec. 2011

Dec. 2012

Dec. 2013

Dec. 2014

Net sales

136,806

146,603

163,708

189,041

235,443

Ordinary profit

44,42249,531

66,883

71,91582,881

Net (loss) income

21,978(8,915)32,92332,162

65,173

Common stock

107,779

107,959

108,255

109,530

111,601

13,181,697

13,194,578

1,320,626,600

1,323,863,100

1,328,603,400

Net assets

286,758

272,524

302,869

338,795

398,626

Total assets

548,501

526,067

538,309635,301

866,457

Total number
issuedofshares(Share)Net assets per share

Yen

21,780.91

206.58229.28255.42298.90

Dividend per share

Yen

200.00250.00

3.00

4.00

4.50

(Interim dividend per share)

Yen

(―)

(―)

(―)

(―)

(―)

Net (loss) income per share

Yen

1,676.40(6.79)

25.05

24.43

49.34

Diluted net income per share

Yen

1,670.87

―

24.99

24.30

49.05

Equity ratio

(%)

52.1

51.6

56.0

53.0

45.6

Return on equity

(%)

8.0

(3.2)

11.5

9.6

17.8

Price earnings ratio(Times)

40.6

―

26.9

64.0

34.1

Dividend payout ratio

(%)

11.9

―

12.0

16.4

9.1

Number of employees(Persons)

3,042

3,209

3,498

3,762

4,527

(Notes) 1 Consumption tax is not included in Net sales.
2 Average number of shares during the year is calculated on a daily basis.
3 Diluted net income per share is not stated for the 15th fiscal year, as net loss per share isreported in the fiscal year.
4 From 16th fiscal year and thereafter, the Company applies “the Accounting Standard for
Earnings Per Share” (ASBJ Statement No. 2, revised June 30, 2010), “the Guidance on
Accounting Standard for Earnings Per Share” (ASBJ Guidance No. 4, revised June 30,2010) and “the Practical Solution on Accounting for Earnings Per Share” (PITF No. 9,
June 30, 2010). Such change in the accounting policy is applied retroactively andadjustments are made for the 15th fiscal year. Diluted net income per share is not stated
for the 15th fiscal year although potential shares exist as net loss per share is reported in
the fiscal year. The Company conducted a share split on July 1, 2012. However, Net
assets per share, Net income (loss) per share, and Diluted net income per share arecalculated on the assumption that the Company conducted such share split at the
beginning of the 15th fiscal year.
5 As timing to recognize provision for customer points changed in the 16th fiscal year, suchchange is retroactively applied to figures for the 15th fiscal year.
6 Price earnings ratio and dividend payout ratio are not stated for the 15th fiscal year, as
net loss per share is reported in these years.

7 Dividend of ¥4 per share for the 17th fiscal year includes ¥1 of commemorative dividend
for listing on the First Section of the Tokyo Stock Exchange.
8 Number of employees does not include those serving concurrently as employees andDirectors, employees seconded to other group companies, temporary staff and part-time
employees.

2. Corporate History
PeriodOverview

Feb

MDM Co., Ltd. is founded to develop online commerce server and operate an
Internet shopping mall, Rakuten Ichiba, with capital of ¥10 million at 1-6-7 Atago,
Minato-ku, Tokyo.

May

Rakuten Ichiba, the Internet shopping mall, commences its operation.

1998

Aug

Head office is transferred to 2-8-16 Yutenji, Meguro-ku, Tokyo.

1999

Jun

MDM Co., Ltd. is renamed as Rakuten, Inc.

2000

Apr

Rakuten, Inc. is listed with the Japan Securities Dealers Association.

May

Head office is transferred to 2-6-20 Nakameguro, Meguro-ku, Tokyo.

2001

Mar

Rakuten Travel starts its services.

2002

Nov

Rakuten Super Points program is introduced.

2003

Sep

Rakuten, Inc. acquires 100% of shares in MyTrip.net, an accommodations booking
sites operator.

Oct

Head office is transferred to 6-10-1 Roppongi, Minato-ku, Tokyo.

Nov

Rakuten, Inc. consolidates DLJdirect SFG Securities (currently Rakuten Securities,Inc.) as a subsidiary.

Oct

Rakuten Baseball, Inc. is founded.

Nov

Nippon Professional Baseball approves new entry of Tohoku Rakuten Golden
Eagles.
Rakuten, Inc. goes public on Jasdaq Securities Exchange Inc. (currently Tokyo
Securities Exchange JASDAQ (standard)).
Rakuten, Inc. consolidates Kokunai Shinpan Co., Ltd. (former Rakuten KC Co.,
Ltd.) as a subsidiary.
Rakuten, Inc. acquires 100% of shares in LinkShare Corporation (currently
RAKUTEN MARKETING LLC) through Rakuten USA, Inc.
Rakuten, Inc. consolidates Fusion Communications which operates IP telephonybusiness as a subsidiary.

1997

2004

Dec
2005

Jun
Sep

2007

Aug

2008

Apr

Head office is transferred to 4-12-3 Higashishinagawa, Shinagawa-ku, Tokyo.

2009

Feb

2010

Jan

Rakuten, Inc. converts preferred stocks of eBank Corporation (currently Rakuten
Bank, Ltd.) into common stocks, and consolidates the company as a subsidiary.
Rakuten, Inc. consolidates bitWallet, Inc., (currently Rakuten Edy, Inc.) as a
subsidiary.
Buy.com Inc. (currently RAKUTEN COMMERCE LLC), an e-commerce site
operator in the U.S., becomes a wholly owned subsidiary of Rakuten, Inc. throughRakuten USA, Inc.
PRICEMINISTER S.A. (currently PRICEMINISTER S.A.S.), an e-commerce site
operator in France, becomes a wholly owned subsidiary through Rakuten Europe
S.a.r.l.

Jul

Jul

Period
2011

Aug

Oct
2012

Jan
May
Jun
Oct

2013

2014

Sep

Overview
Rakuten Card-related business of Rakuten KC Co., Ltd., is transferred to Rakuten
Credit Co., Ltd. (currently Rakuten Card Co., Ltd.) in an absorption-type split and
Rakuten Inc. sells its holding of Rakuten KC’s shares, etc.
Rakuten, Inc. acquires 100% of shares in Play Holdings Limited (currently Rakuten
UK Shopping S.a.r.l), one of the UK’s e-commerce platform providers.
Rakuten, Inc. acquires 100% of shares in Kobo Inc. (currently Rakuten Kobo Inc.)
which offers e-book services worldwide.
Rakuten, Inc. acquires shares in Kenko.com, Inc. through a third party allocationand makes the company a subsidiary.
Rakuten, Inc. acquires 100% of shares in Wuaki. TV, S.L. that provides video
streaming services in Spain.
Rakuten, Inc. additionally acquires shares in AIRIO Life Insurance Co., Ltd.
(currently Rakuten Life Insurance Co., Ltd.), an associate accounted for using theequity method, and makes the company a subsidiary.
Rakuten, Inc. acquires 100% of shares in VIKI, Inc. that provides video streaming
services worldwide.

Nov

Tohoku Rakuten Golden Eagles win the first victory in the Nippon Series.

Dec

Rakuten, Inc. changes the stock marketing listing to the First Section of the Tokyo
Stock Exchange.
Rakuten, Inc. acquires 100% of shares in VIBER MEDIA LTD. which operates
mobile messaging and VoIP services worldwide.
Rakuten, Inc. acquires 100% of shares in Ebates Inc. which operates leading
membership-based online cash-back site in the U.S.

Mar
Oct

3. Description of BusinessAs a comprehensive Internet service provider engaged in two main business activities, Internet
Services and Internet Finance, the Group Companies embrace three reportable segments thatare “Internet Services,” “Internet Finance” and “Others.”
Each of these segments has available financial information, which is separate from theGroup Companies’ business units and is individually subject to review by the Board of Directors,
regularly to make decisions about resources to be allocated to the segment and assess its
performance.
“Internet Services” segment comprises business running various e-commerce (electroniccommerce) sites including an Internet shopping mall Rakuten Ichiba, online cash back sites,
travel booking sites, portal sites and digital contents sites, along with business for sales ofadvertising on these sites.
“Internet Finance” segment engages in business providing services over the Internet related
to banking and securities, credit cards, life insurance and electronic money.
“Others” segment comprises business involving provision of messaging and communication
services and others, and management of a professional baseball team and others.
The following segments are classified in the same way as in the “Segment Information”
stated in the notes of the consolidated financial statements.
Descriptions of the significant services provided by the Group Companies and the main
entities involved in such services are as follows.
Internet Services

Internet shopping mall service, Rakuten Ichiba

Main entities involved in suchservices
Rakuten, Inc.

Online book store, Rakuten Books

Rakuten, Inc.

Online golf course reservation service, Rakuten GORA

Rakuten, Inc.

A comprehensive Internet travel site, Rakuten Travel

Rakuten, Inc.

Internet shopping sites

Kenko.com, Inc.

e-book services

Rakuten Kobo Inc.

Performance marketing services

RAKUTEN MARKETING LLC

PRICEMINISTER, an EC site based primarily in France

PRICEMINISTER S.A.S.

Rakuten.com Shopping, an EC site based primarily in the U.S.

RAKUTEN COMMERCE LLC

Video streaming services

VIKI, Inc.

EBATES, an EC site based primarily in the U.S.

Ebates Inc.

Significant services provided

Internet FinanceSignificant services provided

Main entities involved in suchservices

Issuance of credit card, Rakuten Card and provision of related
Rakuten Card Co., Ltd.
services
Internet banking service
Rakuten Bank, Ltd.
Online securities trading service
Life insurance business

Rakuten Securities, Inc.
Rakuten Life Insurance Co.,Ltd.

Planning and Management of Edy business that supplies prepaid
Rakuten Edy, Inc.
electronic money
OthersSignificant services provided
Transit telephone service and IP telephone services

Main entities involved in suchservices
FusionCommunications
Corporation

Professional baseball team, Tohoku Rakuten Golden Eagles and
Rakuten Baseball, Inc.
related businesses
Bridal information service, O-net
O-net, Inc.
Mobile messaging and VoIP services

VIBER MEDIA LTD.

[Business Organization Chart]
The Group Companies’ business described above can be illustrated in the following businessorganization chart.

4. Information on Subsidiaries and Associates
Company nameLocation

Paid in capital

Ratio ofvotingPrincipal
Relationshipbusiness rights holding(held)

Note

Consolidated Subsidiaries
Involving
60.0 interlocking
directorates

1,650 million yen

Internet
Services

1 U.S. dollar

Internet
Services

259 million yen

Internet
Services

RAKUTEN COMMERCE LLC U.S.

11 million U.S. dollar

Internet
Services

PRICEMINISTER S.A.S.

France356 thousand euros

Internet
Services

Rakuten Kobo Inc.

Canada823 million Internet
Canadian dollars Services

Kenko.com, Inc.

Minato-ku, Tokyo

2,204 million yen

Internet
Services

VIKI, Inc.

U.S.

1 U.S. dollar

Internet
Services

Ebates Inc.

U.S.

0.1 U.S. dollar

Internet
Services

Rakuten Bank, Ltd.

Shinagawa-ku, Tokyo

25,954 million yen

Internet
Finance

Rakuten Securities, Inc.

Shinagawa-ku, Tokyo

7,496 million yen

Internet
Finance

Rakuten Card Co., Ltd.

Shinagawa-ku, Tokyo

19,324 million yen

Internet
FinanceInvolving
100.0 interlocking
directorates

Rakuten Edy, Inc.

Shinagawa-ku, Tokyo

1,840 million yen

Internet
FinanceInvolving
100.0 interlocking
directorates

2,500 million yen

Internet
FinanceInvolving
100.0 interlocking
directorates

Rakuten Auction, Inc.

Shinagawa-ku, Tokyo

RAKUTEN MARKETING LLC U.S.

LinkShare Japan K.K.

Shinagawa-ku, Tokyo

Rakuten Life Insurance Co.,
Minato-ku, TokyoLtd.

Rakuten Baseball, Inc.

FusionCorporation

Communications

VIBER MEDIA LTD.

Miyagino-ku,
MiyagiSendai-shi,

Chiyoda-ku, Tokyo

CyprusInvolving
100.0interlocking(100.0)directorates
Involving
100.0interlocking(27.5)
directorates
Involving
100.0interlocking(100.0)directorates
Involving
100.0interlocking(100.0)directorates
Involving
100.0 interlocking
directorates
Involving
56.8
interlocking(10.5)
directorates
Involving
100.0interlocking(100.0)directorates

Note 9Note 10Note 7Note 8Note 6100.0(100.0)Note 2Involving
100.0 interlocking
directorates
Involving
100.0 interlocking
directorates

Note 7Note 7Note 11

Involvinginterlocking
directorates
400 million yen Others

100.0
Involving
provisionloans

2,026 million yen Others

Involving
55.0 interlocking
directorates

71 thousand U.S. dollar Others

100.0 Involving
interlocking(100.0)directorates

ofNote 2

Associate Accounted for Using
the Equity Method
Rakuten ANA Travel Online
Shinagawa-ku, Tokyo
Co., Ltd.
TECHMATRIXCORPORATION

Minato-ku, Tokyo

90 million yen

Internet
Services

50.0

1,298 million yen

Internet
Services

Involving
31.6 interlocking
directorates

Note 6(Notes) 1 Names of business segments in the segment information are stated in the box of

Principal business.
2 This company newly became a subsidiary during the current fiscal year.
3 There are 95 consolidated subsidiaries other than stated above.
4 There are seven associates accounted for using equity method.
5 Figures in the brackets represent percentage of indirect holding included in Ratio ofvoting rights holding.
6 This company is obliged to file securities reports and securities registration statements.
7 This company is a specified subsidiary.
8 Rakuten Kobo Inc. changed its name from Kobo Inc. as of July 1, 2014.
9 RAKUTEN MARKETING LLC changed its name from LinkShare Corporation as of July
31, 2014.
10 RAKUTEN COMMERCE LLC changed its name from Buy.com Inc. as of July 31, 2014.
11 Revenue from Rakuten Card Co., Ltd. (excluding the internal revenue recorded among
consolidated companies) accounts for more than 10% in consolidated revenue.
Key data of income or loss
(Millions of Yen)
Rakuten Card Co., Ltd.
Revenue
98,163
Income before income tax
18,700Net income
11,259Total equity
59,856
Total assets
849,912

5. Employees(1) Consolidated Companies
As of December 31, 2014
Name of business segments
Number of employees
Internet Services
9,035Internet Finance
1,984
Others623
Company-wide (common)
81
Total
11,723(Notes) 1 Number of employees represents the number of persons engaged, excluding thoseserving concurrently as employees and Directors, temporary staff and part-time
employees.
2 Company-wide (common) figure primarily represents the number of employees in
Administrative Department that cannot be classified into a certain segment.
(2) Company Submitting Financial Reports
Number of
employees
4,527

Average age
32.8

As of December 31, 2014
Average annual
Average length ofsalaryservice(Yen)
4.3
6,607,979

Name of business segments
Number of employees
Internet Services
4,527Internet Finance―
Others―Company-wide (common)
―
Total
4,527
(Notes) 1 Number of employees represents the number of persons engaged, excluding thoseserving concurrently as employees and Directors, employees seconded to othercompanies, temporary staff and part-time employees.
2 Average annual salary includes bonus and extra wage.
(3) Status of Labor Union
In the absence of labor union in the Company, relationship between labor and management isstable.

II. Business Overview
1. Summary of Results(1) Business Results
In the world economy during the fiscal year ended December 31, 2014, there was increasing
uncertainty concerning factors such as the impact of reduced monetary easing by the U.S., theeconomic outlook in emerging nations and crude oil price movements. Meanwhile, in theJapanese economy, despite the risk of factors such as the cooling in consumer sentimentfollowing the consumption tax hike causing downward pressure on the economy, a moderate
recovery has continued against a backdrop of improvements in the wage and employment
environment.
Meanwhile, according to the most recent White Paper on Information andCommunications released by the Ministry of Internal Affairs and Communications*,
information and communications technology (ICT) such as Internet and mobile phones isspreading rapidly in many newly developing regions as well. The number of Internet users
worldwide continues to rise, climbing from 1.02 billion globally in 2005 to 2.92 billion in 2014. In
particular, the number of smartphone users, who are the customer base for mobile Internet, issaid to reach 1.75 billion.
Under such environment, the Rakuten Group has further promoted its growth strategy. In
March 2014, we acquired VIBER MEDIA LTD. (hereinafter “Viber”), which operates a mobile
messaging service and VoIP service on a global scale, and made it a wholly owned subsidiary.
We believe that Viber’s wide customer base will complement the Group’s digital strategy, whilefirming up our platform for global expansion of Internet Services and Internet Finance services.
In addition, in October 2014, the Group acquired Ebates Inc. (hereinafter “Ebates”), provider ofthe leading membership-based online cash-back site in the U.S., and made it a wholly owned
subsidiary. By integrating Ebates’ strong retail network with the business assets and technologyof the Rakuten Group, we believe Rakuten Group can develop a unique and innovative ecommerce platform.
In addition, in Internet Services, the Rakuten Group enhanced its services for smart
devices (smartphones and tablet devices), and promoted Rakuten Ichiba’s B2B2C marketplacemodel business to the world through large-scale sales events such as the Rakuten Super Sale.
In Internet Finance, the membership base for Rakuten Card expanded further. Through thesemeasures, the Rakuten Eco-System continues to show solid expansion and growth.
As a result of these efforts, the Rakuten Group for the fiscal year ended December 31,
2014 achieved revenue of ¥598,565 million, up 15.4% year-on-year, operating income of¥106,397 million, up 17.9% year-on-year, and net income attributable to owners of the Companyof ¥70,614 million, up 64.6% year-on-year.
(Millions of Yen)
Fiscal year
Fiscal year
Amount Change% Change
ended December ended December
YoY
YoY
31, 2013
31, 2014
Revenue
518,568
598,565
79,997
15.4%
Operating income
Net income
attributable toowners of theCompany

90,244

106,397

16,15317.9%

42,90070,61427,71464.6%

* Source: 2014 Status Report of the Information and Communication (Ministry of Internal Affairs
and Communications)
Business results for each segment are as follows:(Internet Services)
In the Internet Services segment for the fiscal year ended December 31, 2014, Rakuten actively
worked on strengthening its services for smart devices, promoting personalized marketing which
utilizes big data, and executing large-scale sales events such as the Rakuten Super Sale among
other initiatives in its core Rakuten Ichiba service. As a result of these initiatives, despite thediscontinuation of events including the Rakuten VictorySale that contributed significantly tobusiness results during the previous fiscal year, domestic e-commerce gross merchandise sales
continued high level of growth, rising by 13.7% over the previous fiscal year. In Travel services,demand was strong for services including leisure travel sales, corporate services, car rental, andinbound services.
With regard to overseas e-commerce services, Rakuten contributed to the growth in grossmerchandise sales by focusing on marketplace-model services while also horizontally rolling out
a range of expertise that have proven successful in Japan. In addition, Ebates was made into a
subsidiary in October 2014, which resulted in the expansion of operations.
Furthermore, in contents services, we continued strategic investments for future profit
growth, while making efforts such as an initiative to reduce fixed costs. Consequently, theperformance is improving.
As a result, revenue for the segment rose to ¥362,751 million, a 15.1% year-on-yearincrease. While advance investments are continued to be made in future growth fields, profit
from existing businesses grew steadily, resulting in segment profit of ¥58,806 million. Year-onyear, this represented an 23.9% increase, due in part to the backlash from the posting of
impairment loss in the previous fiscal year.
(Millions of Yen)
Fiscal year
Fiscal year
Amount Change
ended December ended December% Change YoY
YoY
31, 2013
31, 2014
Segment
315,228
362,751
47,523
15.1%
Revenue
Segment Profit
47,45558,806
11,351
23.9%(Internet Finance)
In the Internet Finance segment for the fiscal year ended December 31, 2014, in credit card andrelated services, shopping transaction value, accompanying an increase in Rakuten Card
membership, rose significantly over the previous fiscal year. Moreover, solid growth in revolving
balances resulted in a rise in income including commission income, and notable growthcontinues in profit. In securities services, balances of investment trusts that will lead to thestabilization of revenue grew significantly, while commissions on foreign exchange services werealso robust. However, these services were affected by stock market conditions and other factors
compared with the previous fiscal year. Meanwhile, in banking services, both revenue and profits
grew significantly due to the steady growth in loan balances.
As a result of the above, the Internet Finance segment recorded ¥236,520 million inrevenue, 17.4% increase over the previous fiscal year, while segment profit was ¥48,399million,

9.6% increase over the previous fiscal year.
(Millions of Yen)

Segment
Revenue
Segment Profit

Fiscal year
ended December
31, 2013

Fiscal year
ended December
31, 2014

Amount Change
YoY% Change YoY

201,494

236,52035,02617.4%

44,174

48,399

4,225

9.6%

(Others)
During the fiscal year ended December 31, 2014, revenue in the others segment firmed up as
the professional sports division was strong due to the transfer fee revenue accompanying thetransfer of key players in addition to the growth in sponsor revenue and sales of related goods.
Meanwhile, strategic investments have been made for the future growth of Viber, which became
a consolidated subsidiary in March 2014.
As a result, revenue for the segment was ¥42,445 million, an 18.7% year-on-year increase,
while segment loss was ¥639 million, -% year-on-year.
(Millions of Yen)
Fiscal year
Fiscal year
Amount Change
ended December ended December% Change YoY
YoY
31, 2013
31, 2014
Segment
35,74642,445
6,699
18.7%
Revenue
Segment Profit
3,762
(639)
(4,401)―%(2) Cash Flows
Cash and cash equivalents at the end of the fiscal year on December 31, 2014 was ¥428,635
million, an increase of ¥44,627 million from the end of the previous fiscal year. Among these,
deposit with the Bank of Japan for banking business was ¥246,411 million, an increase of¥16,112 million from the end of the previous fiscal year. Cash flow conditions and their major
factors for the fiscal year on December 31, 2014 are as follows:(Cash flows from operating activities)
Net cash flows from operating activities for the fiscal year ended December 31, 2014 resulted ina cash inflow of ¥111,860 million (compared with a cash inflow of ¥1,485 million for the previous
fiscal year). Primary factors included a cash outflow of ¥148,572 million for an increase in loans
for credit card business, a cash inflow of ¥177,383 million for an increase in deposits for banking
business, and recording of ¥104,245 million for income before income tax.
(Cash flows from investing activities)
Net cash flows from investing activities for the fiscal year ended December 31, 2014 resulted ina cash outflow of ¥261,085 million (compared with a cash inflow of ¥30,584 million for theprevious fiscal year). Primary factors included a cash outflow of ¥174,469 million for acquisitionof subsidiaries, and a net cash outflow of ¥23,697 million for purchase and sales of investment
securities for banking business (a cash outflow of ¥365,787 million for the purchase ofinvestment securities and a cash inflow of ¥342,090 million for proceeds from sales andredemption of investment securities).

(Cash flows from financing activities)
Net cash flows from financing activities for the fiscal year ended December 31, 2014 resulted ina cash inflow of ¥189,512 million (compared with a cash inflow of ¥75,252 million for theprevious fiscal year). Primary factors included a net cash inflow of ¥169,043 million for proceeds
and repayment of long-term debt (a cash inflow of ¥251,860 million for proceeds from long-term
debt and a cash outflow of ¥82,817 million for repayment of long-term debt), and a cash inflow of¥29,828 million for proceeds from issuance of bonds.
(3) Difference between the main items of the consolidated financial statements prepared inaccordance with IFRS, and the comparable items of the consolidated financial statements
prepared in accordance with JGAAPFor the year ended December 31, 2014
1) Revenue
Future financial costs, due to the points granted under the point programs to encourage repeatedaccess and shopping by customers, are recorded as a provision for point card certificates as partof operating expenses in accordance with JGAAP, whereas in accordance with IFRS, such costs
associated with the points deemed to meet the requirements of IFRIC 13 “Customer Loyalty
Programmes” are deducted from revenue at the time they are granted. Due to this difference,revenue in accordance with IFRS is approximately ¥35,684 million less than that in accordancewith JGAAP.
For sales of books by the Group Companies, revenue is recorded and associated cost of
sales is presented on gross basis in accordance with JGAAP. Since in accordance with IFRS
such transactions are deemed to be conducted by the Group Companies as an agent of third
parties, revenue is presented on a net basis. Due to this difference, revenue in accordance withIFRS is approximately ¥26,488 million less than that in accordance with JGAAP.
2) Operating income
Goodwill is amortized on a regular basis for certain period of time in accordance with JGAAP,
while in accordance with IFRS goodwill is not subject to amortization but an annual impairment
test is required. Due to this difference, operating income in accordance with IFRS isapproximately ¥14,202 million more than that in accordance with JGAAP.

2. Production, Order and Sales Status(1) Production Results
As the Group Companies provide various Internet-based services as their main line of business,without any activities classified as production, no information is presented in respect of
production result.
(2) Order Results
As the Group Companies are not engaged in any make-to-order production, no information ispresented in respect of order results.
(3) Sales Results
By segment sales results in the current fiscal year are as follows.
RevenueYear-on-year (%)(Millions of Yen)
Internet Services
362,751
15.1
Internet Finance236,520
17.4
Others42,445
18.7
Intersegment transactions(43,151)―
Total
598,565
15.4(Note) Consumption tax is not included in the above amounts.
Name of business segments

3. Challenges
The Internet sector is expected to undergo continued rapid expansion. The challenge for theGroup Companies is to build structures capable of supporting sustainable long-term growth inthat environment, reacting according to changes of business environment.
(1) Management structure
The Rakuten Shugi (Rakuten principles) define the corporate philosophy of the Rakuten Group
together with its values and code of conduct. We will make sure that these principles are
assimilated by executives and employees in Japan and overseas as we increase our businessspeed and quality. Furthermore, we will strengthen governance through expanding the functionsof our regional headquarters in accordance with globalization of our businesses, strengtheningof our risk management system and business management structure, and developing humanresources. Through these initiatives, we will strive to build a corporate brand that will be trusted
by our stakeholders.
(2) Business strategy
The Rakuten Group aim to contribute to economic growth and the advancement of the Internet
sector by extending the Rakuten Eco-System business model both domestically andinternationally.
1) Internet services
In Internet services, particularly e-commerce and travel, we will work with our partner companies
to lift user satisfaction through efforts including creating more new services for smart devices,
expanding our product lineup, improving the quality of deliveries, and providing services in
multiple channels. With a company the Group acquired, Ebates Inc., we will develop a nextgeneration type e-commerce platform in Japan and overseas and aim to lead global e-commercemarkets.

2) Financial services
By offering financial services in such areas as credit cards, net banking and online securities, we
aim to create a more robust Rakuten Eco-System business model in which Rakuten members
can enjoy one-stop access to a multitude of services, thereby growing these services even morethrough group synergies.
3) Digital contents services
We will aim to provide greater value to our users through new digital contents services including
our e-book services and video streaming services.
4) Telecommunications services
Through a messaging apps developed by Viber, which the Group acquired, andtelecommunications services such as mobile virtual network operator (MVNO) service, we will
pursue the expansion of membership base of the Rakuten Eco-System as well as further
improvement in user-friendliness.
(3) Development of technology
In order to ensure stable and efficient operations, we will aim to build a globally unified platform.
Moreover, we will promote research and development related to foundation of analysis andmethodology for data sets including big data and build a system that easy to use for our users.
We will strengthen our development organization, including overseas development centers, withthe aim of building a reputation for Rakuten as a company with unique, world-class technology.

4. Business Risk and Other Risk Factors
Described below are the main aspects of the business activities and finances of the Group
Companies that are considered to be potential risk factors or that may influence decisions byinvestors. Having identified these risks, the policy of the Group Companies is to take steps toprevent occurrences or to take appropriate action in response to contingencies. This policy
notwithstanding, the Group Companies’ position is that decisions to invest in the Company’s
securities should be preceded by careful examination of relevant information, including
information provided elsewhere.
Unless otherwise stated, all forward-looking statements herein are based on judgments by
the Group Companies as of the date of filing of the Yukashoken-Hokokusho to the Financial
Services Agency of the Japanese government. They are subject to uncertainty and could differ
from actual results.
1

Risks Relating to Business Environment(1) Growth Potential of the Internet Industry
The Group Companies are primarily active in the Internet sector. They provide a variety ofservices, both domestic and overseas.
Given the worldwide growth in Internet users, the expansion of business-to-consumer ecommerce and other factors, we anticipate continuing growth trends in both gross transaction
value and the number of unique buyers* on the Group Companies websites. However, the Group
Companies’ financial performance could be affected if the growth of the Internet sector as awhole and the e-commerce market decelerates because of external factors, such as regulatory
systems that limit Internet use, growing awareness of information security issues, especially in
relation to personal information, or because of economic trends, excessive competition or otherfactors, and if as a result of these factors gross transaction value on the Group Companies’
websites fails to expand as expected. Sales from Internet advertising and similar sources
makeup a certain share of the Group Companies’ net sales. Since the advertising market ishighly likely to be affected by economic trends, the Group Companies’ financial performance
could be affected if there is a downturn in business confidence.
* Number of unique buyers: The total number of buyers who purchase items at least once on
Rakuten Ichiba during a specified period.
(2) Competition
As the number of Internet users increases, many companies are moving into Internet-related
services across a wide spectrum of product categories and service formats. In addition to its
Internet-related service operations, the Group Companies also face competition from numerous
companies in its other areas of service.
The Group Companies aim to expand their services by continuously enhancing their
response to customer needs. However, it is possible that these initiatives will fail to yield theanticipated benefits, or that the revenues of the Group Companies will fall because of changes in
the competitive environment, such as the emergence of a competitor with revolutionary services
and intensifying competition. There is also a possibility that the Group Companies will be forced
to increase their capital investment and advertising expenditure. Such situations could have aserious impact on the business activities and financial performance of the Group Companies.

(3) Technological Changes in the Industry
The Group Companies are expanding their service in the Internet field, where progress andchanges in technology are particularly pronounced and new services and products are
introduced with high frequency. It is necessary for the Group Companies to respond swiftly tosuch changes. Should the Group Companies’ response be slow for some reason, there is a riskthat our services could be seen as obsolete and our competitiveness deteriorate. Furthermore,even if we respond appropriately, we may incur increased expenses associated with upgrading
existing systems and undertaking new development. These market trends and our responses
may therefore have an impact on the financial performance of the Group Companies. In addition,technology may be developed that damages the operation of the Group Companies. If thistechnology becomes widespread, it may also have an impact on the business activities andfinancial performance of the Group Companies.
2

Risks Relating to International Business Expansion
Global expansion is one of the Group Companies’ key strategies, and we are dynamicallyextending our existing business model into other countries. For example, we are extending ourInternet services to many regions including Europe, the Americas and Asia. The Group
Companies will continue to expand their overseas service and R&D sites. We will also work to
improve and expand our international services while strengthening collaboration among ourservices in different countries. The Group Companies will also gradually expand cross-borderservices that allow users in Japan or overseas to purchase products and services from eachother.
However, development of global services entails a variety of potential risks, including
differences in languages, geographical factors, legal and taxation systems, economic andpolitical instability, communication environment, and differing commercial practices. There is afurther risk that competition with rival companies that are competitive in specific countries orregions or are globally competitive will intensify and the risk of sudden changes in theregulations of foreign governments. The business activities and financial performance of theGroup Companies could be affected if these risks are not handled properly.
In its international expansion, the Group Companies are likely to incur additional costs
when setting up corporations and services in other countries, including recruitment costs, systemdevelopment costs and costs for making strategic changes in business models. Group profits
may temporarily come under pressure from these additional costs, and it will take time before
new operations start to generate stable sales. The necessary time to recover this investment
could have adverse effects on the financial performance and financial position of the Group
Companies.

3

Risks Relating to Business Expansion and Development(1) Promoting the Rakuten Brand
To further raise its gross transaction value, the Group Companies are converting their various
service brands to the Rakuten brand, and integrating their member IDs by unifying membership
databases and developing a common points program. Changes to brand names and member IDs
could lead to loss of loyalty among existing members or cause them to withdraw from member
organizations. If the above measures fail to produce the anticipated benefits, gross transaction
value among Group Companies websites and the financial performance of the Group Companies
could be affected.

(2) M&A
The Group Companies actively engage in merger and acquisition (M&A) activities and theestablishment of joint ventures, both in Japan and overseas. Our aim is to move into new areasof service and overseas markets, gain new users, expand our existing services and acquire
related technologies. These activities are regarded as important management strategies.
When acquiring a company, the Group Companies seek to avoid various risks as much as
possible by conducting detailed due diligence concerning the financial position, contractual
relationships and other aspects of the potential acquisition. However, it is not always possible tocarry out due diligence exhaustively because of the circumstances surrounding individualacquisitions, such as time restrictions, and it is possible that contingent or unrecognized liabilities
will come to light after an acquisition. Furthermore, it is impossible to predict reliably how thecharacteristics of a newly created service will affect the business operations and performance of
the Group Companies. It may also become impossible to develop the new service as anticipatedbecause of changes in the business environment or other factors. In such cases, the financial
performance and financial condition of the Group Companies may be adversely affected, and it
may not be possible to recover the invested capital.
It is also possible that the information systems and internal control systems of an acquiredcompany cannot be integrated successfully, or that executives, employees and customers of an
acquired company will be lost after the acquisition. In addition, because future investment andlending could be substantial compared with the current scale of business operations, there is thepossibility of increased risk affecting the financial position and other factors of all of the Group
Companies.
Also, for engagements in joint ventures and business alliances, the Group Companies seek
to avoid risk as much as possible concerning operating partner through detailed investigations offinancial performance and financial condition and thorough discussion of future businessagreements and synergistic effects. However, if disagreements arise over management policy
after the start of the service, there is a possibility that the anticipated synergistic effects will not
be realized. In such cases, the financial performance and financial condition of the Group
Companies may be adversely affected, and it may not be possible to recover the invested capital.
(3) Expansion of Area of Service
The Group Companies provide services in a variety of industrial sectors, primarily in the Internet
sector where technologies and business models change rapidly. The Group Companies haveentered into new areas of services in order to create new services and to construct businessmodels along with the trend of the times. When the Group Companies launch a new service inan area in which they have not previously been involved, it becomes exposed to risk factors
specific to that activity, in addition to a considerable amount of prior investment. It is possible that
the Group Companies will be affected by risk factors not listed in this section as a result.
The Group Companies may not be able to achieve the results initially expected, depending
on expansion speed and growth scale of the market which they newly enter into. In addition, theGroup Companies may incur a loss due to disposal and amortization of said business assets incases such as discontinuation or withdrawal of such service. Such case may possibly affect theGroup Companies’ financial performance and financial position.
(4) Goodwill
The Group Companies have adopted the International Financial Reporting Standards (IFRS) toprepare the consolidated financial statements, starting in the three months ended March 31,
2013. IFRS does not require amortization of goodwill which differs from JGAAP. On the other
hand, the financial performance and financial position of the Group Companies could be
adversely affected by a possible impairment of goodwill, if the goodwill relating to a company islikely to be impaired due to such factors including deterioration of financial performance and theresulting recoverable amount is less than the carrying amount of goodwill.
4 Business Risks(1) Marketplace Service
Marketplace services such as Rakuten Ichiba and Rakuten Auction, accommodation booking
services such as Rakuten Travel, and online cash-back services such as Ebates basicallyprovide venues for trading, and the Group Companies are not party to trading contracts. To
ensure a sound market, the Group Companies strive to eliminate counterfeit goods or othergoods that infringe on rights. The rules for these marketplaces stipulate that the Group
Companies will incur no liability in the event of disputes between sellers or service providers andpurchasers, and that disputes must be settled between the parties. However, if users of ourmarketplace services engage in activities that defame other parties or infringe their rights,
including intellectual property rights and privacy rights, or if they engage in illegal activities, suchas fraud, the resulting liabilities could affect not only the parties responsible for the actions thatcaused the problems, but also the Group Companies as venue provider. There could also bedamage to the brand image of the Group Companies. Furthermore, sellers and service providers
participating in our marketplace service can easily move to alternatives, such as othermarketplaces or their own sites. It is possible that unless the Group Companies continue toprovide a marketplace highly attractive to customers in addition to highly convenient and reliable
services, the Group Companies’ financial performance will be affected by a decline in thenumber of sellers and service providers.
(2) Direct Selling Service
The Group Companies have service categories that involve direct selling of goods and services
to general consumers, such as Rakuten Books and Rakuten Kobo. In these categories, theGroup Companies are a party to sales contracts, etc., and is therefore liable for the quality andcontent of goods and services. When selling goods or providing services, the Group Companies
take all possible steps to ensure compliance with relevant laws and regulations. However, if a
defective product is sold or a defective service is provided, the Group Companies could become
subject to actions by supervisory agencies. The Group Companies could also incur costs
resulting from product recalls, liability for damages or other consequences. There could also be
reputational damage leading to a decline in sales. The financial performance of the Group
Companies could be affected in such situations. In addition, although the Group Companies
control purchasing and inventory of products in accordance with the demand forecast, if the
anticipated demand does not appear or if the product prices largely decline due to technologicalinnovation or a competition with the competitor’s products, write-off of products accounted for as
inventory may need to be recorded in the Group Companies’ financial accounts.
(3) Digital Contents Service
The e-book service and the video streaming service which provide digital contents often require
a conversion of service format to those provided by the Group Companies when contents
materials are being procured, in addition to licensing fees for film distribution agencies as well asthe possible requirement of advance payment of minimum insurance amount for the licensors.
Such prior expense may temporarily impact the financial performance and financial position of
the Group Companies. Furthermore, if the revenue from the contents services falls below suchcosts of supply, the financial performance and financial condition of the Group Companies may
be adversely affected.
(4) Logistic Service
The Group Companies focus on improvement of delivery and shipping quality through measures
including an expansion of logistics agency service for clients in order to further enhance user
and client satisfaction.
The Group Companies utilize renting to expand distribution centers and make capital
investments for equipment inside warehouses based on orders anticipated in the future.
However, in addition that such expenditure would possibly become a prior investment since it willtake a certain period of time to build such facilities and start the operation, if the actual revenue
from logistic agency service falls below the forecast, unable to make up for the prior investment,
the financial performance and financial position of the Group Companies could be adversely
affected. Furthermore, the Group Companies may incur a loss due to a disposal or amortizationof said business assets in case of transfer or discontinuation of such facilities.
(5) Financial Businesses
1) Regulatory Requirements
Rakuten Card Co., Ltd., Rakuten Bank, Ltd., Rakuten Securities, Inc., Rakuten Life InsuranceCo., Ltd. and other subsidiaries are involved in finance-related services. The activities of thesecompanies are subject to the provisions of the Law Concerning the Regulation of Receiving ofCapital Subscription, Deposits and Interest on Deposits (hereinafter referred to as the “Capital
Subscription Law”), the Banking Law, the Interest Rate Restriction Law, the Money-Lending
Control Law, the Installment Sales Law, the Financial Instruments and Exchange Act, theCommodities Futures Trading Law, the Trust Business Law, the Insurance Business Act andother laws and regulations and regulatory requirements relating to financing activities, as well as
the guidelines of supervisory agencies, and the rules imposed by autonomous regulatory bodies,such as stock exchanges and industry organizations. If any of the above subsidiaries becomessubject to a suspension of business, license revocation or other actions for any reason, if new
regulatory requirements, supervisory agency policies, regulations or supervisory guidelines are
established, or if there are any changes that would adversely affect their services, the business
operations and financial performance of the Group Companies could be seriously affected.
Under the Money-Lending Control Law, which came into full effect in June 2010, Rakuten
Card Co., Ltd. is required to use information about consumers’ annual incomes and data fromcredit agencies to limit the total amount of credit provided to no more than one-third of theborrower’s annual income. It is necessary to restrict new lending and other conditions. In addition,lenders are obliged to tighten their credit management under the amended Installment Sales Law,
which came into full effect in December 2010. All of these factors could affect earnings.
Furthermore, Rakuten Card Co., Ltd. has a small portion of loan contracts dating before
December 31, 2007 that stipulate interest rates in excess of the maximum rates outlined in theInterest Rate Restriction Law. If there is an increase in the factors used to calculate Rakuten
Card Co., Ltd.’s allowances, such as the average amount of claims, the financial performance ofthe business concerned could be affected by the need to make an additional provision.

2) Business Environment
Rakuten Card Co., Ltd. deals mainly with individual customers and procures operating funds
primarily by securitization of receivables and loans from financial institutions. The financial
performance of the Group Companies could be affected if deteriorating economic conditions
cause a downturn in consumer spending and demand for credit, or if rising unemployment leads
to an increase in personal bankruptcies or the number of heavily-indebted creditors, or if there isdeterioration in the state of financial markets or the credit situation of the Group Companies. If
serious problems arise, affecting the Group Companies’ ability to maintain and operate the credit
control systems used to reduce the risk of uncollectable receivables, or its ability to recruit
personnel with loan collection expertise, business operations and financial performance may beaffected.
Securities make up a portion of the investment assets used by Rakuten Bank, Ltd. and may
have a certain amount of effect on its investment income. Those investment assets consist ofvarious financial products, including finance receivables, bonds and securitization and liquidation
products. Returns on investments in financial products are significantly affected by factors that
include interest rates, foreign exchange rates, market fluctuations and debtor credit risk. If thisbusiness is affected by losses on these investments, it is possible that the financial performanceof the Group Companies will be affected. Credit costs relating to loan receivables, including
allowances for doubtful receivables or guarantee charges, could increase if economic conditions
deteriorate or if there are changes to accounting standards, changes in the credit situation ofguarantee companies, or changes in guarantee performance conditions. Such situations could
affect the financial performance and financial condition of the Group Companies.
Rakuten Securities, Inc. implements various types of transactions for individual investors,
including margin transactions, foreign exchange margin transactions, investment trust sales,bond transaction, futures and options transactions, foreign futures transactions, CFD
transactions, and commodities futures transactions. Because its main source of revenue isbrokerage commissions, the company is affected by conditions in financial markets including
securities markets. As the financial markets are affected by economic conditions, global trends infinancial markets, political developments, regulatory changes, investor sentiment and otherfactors, the financial performance and financial condition of the Group Companies may beaffected under certain circumstances, such as if financial markets stagnate, or if there is a
decline in margin balances and money lent to clients for margin transactions cannot berecovered because of sudden stock price fluctuations, interest rate increases or other factors.
Rakuten Life Insurance Co., Ltd. sells traditional protection-type life insurance products forindividuals. Its main source of revenue is insurance revenue paid by the insured. The financial
performance and financial condition of the Group may be affected under certain circumstances,such as if the rate of insured events increases (for example, the death rate or the hospitalization
rate exceeding the forecast at the conclusion of insurance contracts), revenue from investment
decreases due to a change in investment environments etc., the number of in-force contract
drastically decreases due to a decrease in the number of new contracts and an increase incancellation, and the policy reserve for future payment of insurance claims and benefits requiredby the law becomes underfunding due to a change in the assumed condition, increasing thereserve.

3) Liquidity
Rakuten Bank, Ltd. operates an Internet banking service. Since customers are able to makewithdrawals from ordinary deposit accounts, close time deposits and transfer or remit funds toother financial institutions via the Internet, unforeseeable circumstances, such as the spread ofrumors that impact on the reputation of this subsidiary or the Group Companies, could cause
deposit outflows to occur more rapidly than would be the case in a conventional bank. The
financial performance and financial position of the Group Companies could be affected if theoutflow significantly exceeds the anticipated level.
4) Efficacy of Risk Management
In recent years, the financial markets faced rapid and large-scale changes and chaos during
such events as “Lehman Shock” stemmed from a bankruptcy of the major U.S. financial
institution and European financial crisis arising from financial problems in countries including
Greece. Rakuten Bank, Ltd., Rakuten Securities, Inc. and Rakuten Life Insurance Co., Ltd. haveorganized risk management policies and procedures to put into operation. However, the financial
performance and financial condition of these companies may be adversely affected as a result of
the possibility that a part of such risk management policies and procedures of these companies
are not necessarily able to precisely predict various future risks in the financial markets and are
not able to function effectively.
(6) Third-Party Outsourcing and Alliances
1) Outsourcing and Alliances with Financial Institutions
Rakuten Bank, Ltd. does not have its own ATM network. For this reason, it has concluded ATM
utilization agreements with Seven Bank, Ltd., Japan Post Bank Co., Ltd. and Aeon Bank, Ltd.
The business operations and performance of the Group Companies would be seriously affected
if its relationships with these banks deteriorate, or if it becomes unable to use these services andsystems.
2) Alliances with Travel-Related Businesses
In the Travel services, our policy is to improve the overall quality of our travel-related services
and develop the services through cooperation with domestic and overseas travel-related
businesses, airlines and railroad companies, and by promoting globalization. Business
operations and financial performance in this segment could be affected if relationships with thesepartners deteriorate, or if negotiations with prospective new partners are unsuccessful.
3) Interconnection Agreements with Telecommunications Providers
To ensure the efficient provision of telecommunications services, Fusion Communications
Corporation has concluded interconnection agreements providing for reciprocal connections
between its telecommunications facilities and those of other telecommunications providers.
Telecommunications carriers that own telecommunications facilities are, in principle, required toallow other providers to connect to those facilities. The business operations, financial
performance and financial position of the Group Companies could be affected if changes to thissituation, such as the abolition or relaxation of this requirement, result in increased usage
charges for this company, or if the conditions are amended in ways disadvantageous to thiscompany.

4) Supply of Goods and Services, Content and Technology
The Group Companies rely on outside suppliers or licensing arrangements for the supply of
goods and services for their direct selling services, for certain types of content or technology
used on their websites, such as search engines, news and other services. If the supply isinterrupted and the Group Companies become unable to access quality content and technology
efficiently, if prices increase, or if licenses are terminated because of deteriorating relationships
with suppliers, bankruptcies, demand growth, changing economic conditions, contract changes
or other factors, the Group Companies’ ability to provide services could be compromised, andthe financial performance of the Group Companies could be affected.
5) Delivery of Goods
Marketplace-model services such as Rakuten Ichiba and direct selling model services such as
Rakuten Books rely primarily on outside shipping and delivery providers to deliver goods fromseller to purchaser. The financial performance of the Group Companies may be affected if userand store satisfaction regarding delivery deteriorates due to an increase in delivery charges,
worsening of delivery conditions or other factors in the future.
5

Compliance Risk

(1) Possibility of Imposition of Regulatory Restrictions
In addition to the items listed under “Section 4 (5) 1) Regulatory Requirements,” the Group
Companies are subject to the provisions of various other laws and regulations, including the Act
against Unjustifiable Premiums and Misleading Representations (Premiums andRepresentations Act), the Act Concerning the Prohibition of Unauthorized Computer Access; theAct on the Limitation of Liability for Damages of Specified Telecommunications Service Providers
and the Right to Demand Disclosure of Identification Information of the Senders; the Act on
Specified Commercial Transactions; the Act on Regulation of Transmission of Specified
Electronic Mail; the Consumer Contract Act; the Act against Delay in Payment of Proceeds andothers to Subcontractors; the Secondhand Articles Dealer Act; the Travel Agency Act; theTelecommunications Business Act; the Employment Security Act; and the Act Concerning theCreation of Conditions, for the Safe and Secure Use of the Internet by Young People; the Act
Concerning Financial Settlements, as well as policies and guidelines established by regulatory
agencies. If the Group Companies’ business activities become subject to new restrictions due tothe establishment and amendment of laws and regulations, the cancellation of approvals andpermits by regulatory agencies, or the formulation of new guidelines and voluntary rules, or forother reasons, there could be an impact on the Group Companies’ financial performance andfinancial position.
If the scale of the Group Companies’ service provision expands, it is possible that issues
will be raised under the Act on Prohibition of Private Monopolization and Maintenance of Fair
Trade concerning measures implemented by the Group Companies to provide a healthybusiness environment for merchants, service providers and other partners, or the content ofagreements on which those measures are based. If this happens, new restrictions could be
imposed on the Group Companies’ services. This could affect the Group Companies’ businessactivities, financial performance and financial position.
(2) Possibility of Litigation
The Group Companies could be exposed to litigation or other claims if merchants, purchasers,

participants or other users engage in illegal activities or get involved in disputes, if users violate
the rights of third parties through illegal actions or the distribution of harmful information, or if
losses are incurred by merchants, purchasers, participants or other users as a result of system
failures or other situations. As for e-book readers, although its manufacturing are commissioned
to partner companies, there is a possibility that product defects or other deficiencies may arise,
which may cause the Group Companies to incur product liability or other obligations concerningcompensation for damages or other penalties. Furthermore, the Internet itself is still a relatively
new phenomenon, and there is the possibility of unforeseeable litigation or other actions
resulting from new contingencies or business risks that have not yet become apparent.
If the Group Companies’ rights are infringed or damaged in some way by third parties, of if
the Group Companies are not protected from the infringement of its rights by third parties, it ispossible that substantial costs will be incurred due to litigation or other actions to protect thoserights. Depending on the nature of such litigation and other actions and the amounts sought,
such situations could impact on the business activities, performance and financial performanceof the Group Companies.
6

Risks Pertaining to Intangible Assets(1) Group Branding
Since its establishment, the Group Companies have worked to invest substantial management
resources in developing a diversity of services and advertising with the aim of building the
Rakuten brand. While the Group Companies believe that they have achieved a certain level ofbrand recognition among consumers, if future initiatives fail to produce the anticipated benefits, it
is possible that these efforts will not result in revenues for the Group Companies. If there areproblems relating to development of services, confidence in the Rakuten brand could be eroded,with possible implications for the Group Companies’ financial performance and financial position.
(2) Intellectual Property
The Group Companies endeavor to protect their technologies and content used by the Group
Companies to acquire intellectual property rights such as patents, trademarks, copyrights anddomain names, and to receive licenses granted to them. However, the business activities,
performance and financial position of the Group Companies could be affected if they are unable
to protect their intellectual property from infringement by third parties, or if substantial costs are
incurred in order to protect intellectual property. Costs or losses could also be incurred if it
becomes necessary to defend against or settle claims of intellectual property infringements inrelation to technology, content and other items used by the Group Companies. Such situations
could also result in the restriction of the Group Companies’ ability to provide specific content orservices or use specific technologies. The business activities, performance and financial positionof the Group Companies could be affected in such cases.
7

Market Risks(1) Interest Rate Fluctuations
Through its consolidated subsidiaries, the Group Companies are involved in financial services
including, credit card, securities and life insurance businesses. Funds for these activities areprocured mainly through loans from financial institutions and bond issues. As of December 31,
2014, the balance of consolidated interest-bearing debt from financial institutions outside of theGroup Companies amounted to ¥595,928 million. This amount consists of short-term and long-term loans, corporate bonds, commercial paper, loans payable for margin transactions for the
securities business, and lease obligations. The consolidated subsidiary involved in the banking
business also procure deposits and use the funds raised for investment in securities, lending andother purposes. For this reason, the financial performance and financial position of the Group
Companies could be affected by movements in market interest rates.
(2) Fluctuations in the Prices of Securities, etc.
The Group Companies hold substantial amounts of financial products, including securities andmoney trusts. Fluctuations in the market prices of these securities and other financial products
could affect the financial performance and financial position of the Group Companies.
(3) Exchange Rate Risk
Items in foreign currencies among the foreign-currency denominated investment and thetransactions in foreign currencies are executed by the Group Companies for the purpose ofhedging exchange rate risk. Although the Group Companies translate items denominated in local
currencies into Japanese yen for the business performance, assets and liabilities pertaining tooverseas associates when preparing its consolidated financial statements, it is difficult tocompletely avoid such risks. For this reason, the financial performance and financial position of
the Group Companies could be affected by movements in foreign exchange rates.
8

Risks Relating to Financing
Loan contracts and commitment lines that the Group Companies have concluded are in somecases subject to covenants clauses, and any deterioration in the financial performance, financial
position or credit rating of the Group Companies could result in demands for full repayment ofexisting debt or the provision of new collaterals under these clauses, or increases in interest
rates or commission rates. There is no guarantee that the Group Companies will be able toprocure funds on favorable terms in a timely manner under certain circumstances, such as if
financial markets become unstable or if the Group Companies’ credit status deteriorates and thecredit rating given to the Group Companies by credit rating agencies is lowered. Such situations
could have a limiting effect on the development of the Group Companies’ services, and could
affect the financial performance and financial position of the Group Companies.

9

Risks Relating to Deferred Tax Assets
The Company and some of its consolidated subsidiaries currently recognize future tax benefits
as deferred tax assets, in accordance with International Financial Reporting Standards (IFRS).
The computation of deferred tax assets is based on various projections and assumptions,
including estimates of future taxable income based on business forecasts. It is possible that
actual results will differ from these projections and assumptions. If estimates of future taxable
income indicate that the Company or its subsidiaries will be unable to recover part or all of theirdeferred tax assets, the financial position and financial performance of the Group Companies
would be affected by the consequent reduction in the value of said deferred tax assets.

10 Risks Pertaining to Financial Reporting
According to Internal control reporting requirements under the Financial Instruments andExchange Act, the Group Companies strengthened their internal control systems in relation tofinancial reporting. However, the public reputation of the Group Companies could be damaged if
serious errors are discovered, and the financial performance and financial position of the Group
Companies could be affected.
11 Human Resources Risk
The services of the Group Companies require human resources with specialized skills relating toindividual service segments including Internet and finance. As the Group Companies expand
their activities and develop their business internationally, it is indispensable to continue therecruitment of personnel. The business activities, financial performance and financial position of
the Group Companies could be affected if it becomes difficult to secure skilled staff in the future
due to reasons such as escalating competition for human resources in specific fields or regions,changes in market needs, or if there is an exodus of existing staff.
In addition, the business activities, the financial performance and financial position of theGroup Companies could be seriously affected if Hiroshi Mikitani the founder and the Chairman
and President and Representative Director of the Company, were to resign or become incapableof performing his duties.
12 Information Security Risks and Risks Pertaining to Telecommunication Networks and Systems
The Group Companies acquire personal information that can be used to identify users, includingnames, addresses, telephone numbers and credit card numbers in various services they provide.
The Group Companies take all possible care to protect privacy and personal information of users
through proper information management. However, the possibility of information leaks or abuseor other accidents due to activities including illegal access cannot be ruled out, and it is possiblethat such incidents will result in legal disputes or actions by domestic and overseas regulatory
agencies. Such situations could impact on the business activities and financial performance of
the Group Companies.
Many of the Group Companies’ services are provided by the use of telecommunications
networks linking computer systems. However, there lies the possibility that troubles might occur
in the provision of normal services, or that illegal usage, deletion or fraudulent procurement ofimportant data and others might occur due to reasons such as failure occurring in thetelecommunication network, failure or defects affecting the hardware or software in the networkor the computer system, criminal activities such as external access to computer resources using
illegal methods such as computer viruses or malware, and errors by employees and executives.
If the service is suspended or the performance is deteriorated as a result of these, thepossibility of loss of income opportunities, a decline in confidence in the Group Companies’
systems, compensation claims, or actions by regulatory agencies could be expected.
In addition, regarding the illegal use of the Company’s services, if indemnification cannot besought to any specific entity, the Group Companies will incur the loss. Such situations could
impact on the business activities and financial performance of the Group Companies.
13 Risks Pertaining to Natural Disasters, Conflicts and Accidents
Natural disasters such as earthquakes, typhoons, tsunamis, fires, power outages, infections
caused by previously unknown diseases, international conflict and other contingencies couldhave a serious impact on the service operations of the Group Companies
Since the main business premises of the Group Companies are located in the greater
Tokyo area and the East Coast and West Coast of the U.S., a massive natural disaster or otherevents in these areas could disrupt services. In addition to degrading the Company’s reliability
and damaging its brand image, such situations could also impact on the financial performanceand financial position of the Group Companies.
The Group Companies have worked to enhance preparation and arrangement for
emergency response measures, including the formulation of business continuity plans. However,there is no guarantee that these measures will be sufficient to mitigate all of the effects of various
natural disasters or other events, and the continuity of service operations may be difficult or
jeopardized if there are serious losses to physical and human resources.
14 Administration Risk
The Group Companies, in their conduct of business, implements numerous measures toincrease the accuracy and efficiency of work operations including implementation of doublechecking systems that enforce redundant checks of operation details by utilization of information
systems and by employees other than those parties responsible for the operation. However,there are certain operations for which specialized information systems have not been introduced
and which are entrusted to manual handling, and errors in administrative procedure may occur
due to misrecognition by company officers and employees, incorrectly performed operations andother factors. Depending on the nature of the work operation, it is possible that errors in
administrative procedures will hinder reliable provision of service or lead to business losses or tothe outflow of information such as personal information and may affect Group operations andbusiness and financial performance.
The Group Companies endeavor to standardize and document internal regulations andadministrative procedures. However, it is possible that as a result of the organizational changes
and addition of employees in conjunction with the Group Companies’ rapid expansion of services
that sharing and transfer of required expertise for business execution would be inadequate. As aresult, there may be increased errors in administrative procedures and lower productivity, which
could affect Group business operation and financial performance.
15 Reputation Risk
There is the possibility that various kinds of publicity and information about the Group
Companies may be spread. Although such publicity and information include those not based oncorrect information and others based on speculation, they could possibly affect theunderstanding and perception of users of the Company’s services and its investors, regardlessof whether or not such publicity and information are accurate or whether or not they areconcerning the Group Companies. Depending on the contents, the scale and other details ofsuch publicity and information, the Group Companies’ business activities and stock price among
others may be affected.

5. Material Business Agreements, etc.
At an Extraordinary Board of Directors Meeting on September 9, 2014, the Company resolved to
execute a share purchase agreement to acquire all the shares of Ebates Inc. (head office:California, U.S.), which operates a membership-based online cash-back site, for the purpose of
making Ebates Inc. a subsidiary. Ebates Inc. was made a subsidiary as of October 9.
In addition, for the purpose of the acquisition of Ebates Inc., on October 8, 2014, theCompany concluded a monetary loan agreement with Mizuho Bank, Ltd. and Sumitomo Mitsui
Banking Corporation in the amount of ¥75 billion with a maturity date of October 31, 2022.
Details are described in “V. Financial Information, 1. Consolidated Financial Statements, Notes to theConsolidated Financial Statements, 44. Business Combinations.”
Furthermore, at a Board of Directors Meeting on March 11, 2015, the Company resolved to
execute a new share purchase agreement to acquire all shares of Lyft, Inc., through its
subsidiary.
Additionally, at an Ordinary Board of Directors Meeting on March 19, 2015, the Company
resolved to execute a share purchase agreement to acquire all issued shares of OverDrive
Holdings, Inc., an operator of a leading e-book and audio content marketplace, to make it asubsidiary. The acquisition amount of the relevant shares was approximately 410 million U.S.
dollars.
Details are described in “V. Financial Information, 1. Consolidated Financial Statements,
Notes to the Consolidated Financial Statements, 47. Subsequent Events.”
6. Research and Development Activities
Our research and development activities are carried out independently within each of thebusiness segments with the purpose of contributing to the development operations of theCompany and the Group Companies. In June 2010, a research base was established in New
York, the United States, and in February 2014 in Paris, France, adding to our Facilities in Japan,
to expand our research system. We explore research themes focused on three areas, namely
language processing/data analysis, multimedia user/interface and large-scale distribution, basedon our corporate vision on the future direction of Internet development, with the details given
below. Since the Group Companies’ research and development activities cover Internet-related
basic technologies, which cannot be classified into specific segments, the activities are not listed
by segment. The total expense of research and development in the current fiscal year was¥2,392 million.
1) Language Processing/Data analysis
In the area of language processing/data analysis, we develop advanced technologies to analyze
the abundant amount of text data that the Group Companies possess, as well as technologies tospeed up the computation of massive data. The aim is to create diverse recommendations thatcan be horizontally expanded to each business.
2) Multimedia/User Interface
We have developed a user interface that features a rich content experience, by retrieving andanalyzing multi-media content of videos, still images and music that continuously proliferate on
the Web, to fully enhance the user-interface level of the Company and the Group Companies.
3) Large-scale Distribution

As the systems of the Company and the Group Companies expand, we create competitive
advantages by developing infrastructure for processing such as parallel distributed processing toanalyze with remarkable efficiency logs and customer/product data that continuously proliferate.

7. Analyses of Consolidated Business Results, Financial Position and Cash Flows(1) Description of BusinessWe are a comprehensive Internet service provider engaging in two main activities of Internet
Services and Internet Finance. In the domestic e-commerce business, the core of Internet
Services, we are the leading company holding the top share (*1) in transaction value.
(*1: Mail Order and e-Commerce Business: Current Status and Future, FUJI KEIZAI)(2) Analysis of Business Results(Revenue)
The Group Companies, for the fiscal year ended December 31, 2014, achieved revenue of¥598,565 million, an increase of ¥79,997 million (15.4%) from ¥518,568 million for the previous
fiscal year. The factors for these were sales expansions due to robust domestic e-commercegross merchandise sales (transaction value) mainly for Rakuten Ichiba services in the Internet
Services segment and contribution of the newly consolidated subsidiaries. An increase incommission income accompanying an increase in Rakuten Card membership in the Internet
Finance segment and solid growth in credit card loan balances also contributed to sales increase.
(Operating expenses)
Operating expenses for the fiscal year ended December 31, 2014 amounted to ¥491,279 million,
an increase of ¥70,905 million (16.9%) from ¥420,374 million for the previous fiscal year. Thiswas due to increases in employee benefits expenses, advertising expenses, promotion
expenses and other expenses in conjunction with business expansions.
(Other income)
Other income for the fiscal year ended December 31, 2014 amounted to ¥6,724 million, an
increase of ¥4,893 million (267.2%) from ¥1,831 million for the previous fiscal year. This was dueto the posting of foreign exchange gain arising from loans to overseas subsidiaries.
(Other expenses)
Other expenses for the fiscal year ended December 31, 2014 amounted to ¥7,613 million, adecrease of ¥2,168 million (22.2%) from ¥9,781 million for the previous fiscal year. This was due
to a drop in impairment loss that was posted in the previous fiscal year in the Internet Service
segment.
(Operating income)Operating Income for the fiscal year ended December 31, 2014 amounted to ¥106,397 million,
an increase of ¥16,153 million (17.9%) from ¥90,244 million for the previous fiscal year. This wasdue to steady growth of profit from existing businesses while advance investments were
continued to be made in future growth fields, in addition to improvements in profitability ofbusiness which advance investments were made and is expected to grow in the future in theInternet Service segment and robust performance in profits in conjunction with an increase in
Rakuten Card membership in the Internet Finance segment.
(Income before income tax)
Income before income tax for the fiscal year ended December 31, 2014 amounted to ¥104,245

million, an increase of ¥15,635 million (17.6%) from ¥88,610 million for the previous fiscal year.
This was due to an increase in financial expenses accompanying increased borrowings as well
as factors explained in operating income increase.
(Income tax expense)
Income tax expense for the fiscal year ended December 31, 2014 amounted to ¥33,142 million,a decrease of ¥11,987 million (26.6%) from ¥45,129 million for the previous fiscal year. The
effective tax rate for the fiscal year ended December 31, 2014 was 31.8%, which fell below thestatutory income tax rate in Japan, because deferred tax liabilities were extinguished at thetiming of merger and deferred tax assets of overseas subsidiaries were recognized.
(Net income)As a result of the above, net income for the fiscal year ended December 31, 2014 amounted to¥71,103 million, an increase of ¥27,622 million (63.5%) from ¥43,481 million for the previous
fiscal year.
(Net income attributable to owners of the Company)
As a result of the above, net income attributable to owners of the Company for the fiscal year
ended December 31, 2014 amounted to ¥70,614 million, an increase of ¥27,714 million (64.6%)
from ¥42,900 million for the previous fiscal year.
(3) Analysis of Financial Position(Assets)
Total assets at the end of the fiscal year ended December 31, 2014 amounted to ¥3,680,695
million, an increase of ¥470,887 million from ¥3,209,808 million at the end of the previous fiscal
year. The primary factors was a ¥108,099 million decline in financial assets for securities
business, which was offset by an increase of ¥254,798 million in intangible assets associatedwith factors such as the acquisition of Viber and Ebates, an increase of ¥148,572 million in loans
for credit card business, an increase of ¥82,059 in loans for banking business, and an increaseof ¥44,627 million in cash and cash equivalents.
(Liabilities)
Total liabilities at the end of the fiscal year ended December 31, 2014 were ¥3,252,609 million,
an increase of ¥349,255 million from ¥2,903,354 million at the end of the previous fiscal year.
The primary factor was a decrease of ¥82,830 million in financial liabilities for securities business,
which was offset by a ¥200,244 million increase in bonds and borrowings, and a ¥177,235
million increase in deposits for banking business.
(Equity)
Equity at the end of the fiscal year ended December 31, 2014 was ¥428,086 million, an increaseof ¥121,632 million compared with the ¥306,454 million at the end of the previous fiscal year.
The primary factors were a ¥63,570 million increase in retained earnings resulting from factors
including ¥70,614 million in net income attributable to owners of the Company for the current
fiscal year, and a ¥53,884 million increase in other components of equity resulting fromfluctuations in the foreign exchange market.

(4) Status of Cash Flows
Cash and cash equivalents at the end of the fiscal year ended December 31, 2014 was¥428,635 million, an increase of ¥44,627 million from the end of the previous fiscal year. Amongthese, deposit with the Bank of Japan for banking business was ¥246,411 million, an increase of¥16,112 million from the end of the previous fiscal year. Cash flow conditions and their major
factors for the fiscal year ended December 31, 2014 are as follows:(Net cash flows from operating activities)
Net cash flows from operating activities for the fiscal year ended December 31, 2014 resulted ina cash inflow of ¥111,860 million (compared with a cash inflow of ¥1,485 million for the previous
fiscal year). Primary factors included a cash outflow of ¥148,572 million for an increase in loans
for credit card business, a cash inflow of ¥177,383 million for an increase in deposits for banking
business, and a cash inflow of ¥104,245 million for income before income tax.
(Net cash flows from investing activities)
Net cash flows from investing activities for the fiscal year ended December 31, 2014 resulted ina cash outflow of ¥261,085 million (compared with a cash inflow of ¥30,584 million for theprevious fiscal year). Primary factors included a cash outflow of ¥174,469 million for acquisitionof subsidiaries, and a net cash outflow of ¥23,697 million for purchase and sales of investment
securities for banking business (a cash outflow of ¥365,787 million for the purchase ofinvestment securities and a cash inflow of ¥342,090 million for proceeds from sales andredemption of investment securities).
(Net cash flows from financing activities)
Net cash flows from financing activities for the fiscal year ended December 31, 2014 resulted ina cash inflow of ¥189,512 million (compared with a cash inflow of ¥75,252 million for theprevious fiscal year). Primary factors included a net cash inflow of ¥169,043 million for proceeds
and repayment of long-term debt (a cash inflow of ¥251,860 million for proceeds from long-term
debt and cash outflow of ¥82,817 million for repayment of long-term debt), and a cash inflow of¥29,828 million for proceeds from issuance of bonds.
(5) Recognition and Presentation of Revenues
We are comprehensive Internet service providers engaged in two main activities of Internet
Services and Internet Finance and operate in multiple businesses including the core EC
business.
The basic attribute of marketplace-model e-commerce services such as Rakuten Ichiba andaccommodation booking services such as Rakuten Travel is to provide venues for trading, andfor the management of these services, the Group Companies provide sellers and service
providers, such as stores, with services including services related to the launch of e-commerce
website and system utilization, credit card settlement services related to settlements between
sellers or service providers and customers, advertising related services to expand sales tocustomers through the Group Companies, and affiliate service to increase trade volumes. These
services are categorized based on its contents as follows and revenues are recognized inaccordance with the pattern in which each service is provided.

With regard to services for setting up e-commerce websites, the Group Companies provides
services to open shops on our marketplace-model e-commerce websites to sellers for acontracted term based on an agreement. Because these services are provided over the term of
the contract, progress of service provision is measured based on the passage of time, andrevenue based on the amount stipulated in the agreement for each type of shop is recognized
as gross revenue.
With regard to services related to use of systems, the Group Companies provide various
systems related to the operation of services to sellers and service providers based on anagreement. By providing various systems related to the operation of services, we provide
services related to the conclusion of individual transactions between sellers or service providers
and consumers. Because provision of these services is completed when the individualtransaction between the seller or service provider and the consumer is concluded, the grossmerchandise sales (monthly net sales of sellers and service providers) of concluded transactions
at that point are multiplied by the rate stipulated separately for each service, plan, or scale ofgross merchandise sales, and the amount is recognized as net revenue.
With regard to advertising-related services, the Group Companies provide fixed-term model
advertising-related services and pay-for-performance model advertising-related services(advertising-related services achieved through specified advertising results such as sales) to ad
owners such as sellers and service providers based on an advertising agreement. Both services
are similar in that they are advertisements intended to increase sales, but it has been deemed
appropriate to treat them differently as the method of transfer to customers of the service differs.
For fixed-term model advertising-related services, because the services are provided bydisplaying the advertisement over the contracted term, the progress of service provision ismeasured based on the passage of time, and gross revenue is recognized according to theamount stipulated in the agreement for each type of advertisement. As for pay-for-performancemodel advertising-related services, provision of individual services to the ad owner such as
seller or service provider is completed when the objective set as the result is achieved.
Therefore, at that point the amount stipulated in the agreement is recognized as gross revenue.
With regard to card settlement services, based on a card settlement agreement, Rakuten, Inc.
provides card settlement services between consumers and sellers or service providers who use
the services provided by Group Companies. These services provide individual services such as
settlement, cancellation, and other data processing. The economic value of card settlement forthe seller or service provider is the ability to promptly convert accounts receivable into cash. In
light of this economic situation, provision of service is considered to be complete when the
shopping payment has been transferred to the seller or service provider through the consumer’s
use of a card. Therefore, net revenue is recognized at that point based on the amount stipulated
in the agreement. As for the monthly fixed-rate segment of card settlement services, because it
is a payment for card settlement services provided over the term of the contract, the progress ofservice provision is measured based on the passage of time, and net revenue is recognizedaccording to the amount stipulated in the agreement.
With regard to R-mail service, Rakuten, Inc. provides system that enables sending email toconsumers who use services provided by the Group Companies to sellers and service providers
throughout the contract term. Because these services are provided over the term of the contract,
the progress of service provision is measured based on the passage of time, and gross revenue
is recognized according to the amount stipulated in the agreement. As for volume usage service
based on the number of emails, provision of service is complete when each email has been sent,
and at that point gross revenue is recognized according to the amount stipulated in theagreement.
With regard to affiliate services, Rakuten, Inc. provides Rakuten Ichiba shops a system toincrease merchandise sales volume using methods such as banner links between affiliates and
Rakuten Ichiba shops, based on an affiliate agreement. In these affiliate services provided by
Rakuten, Inc., provision of affiliate services is complete when the results are achieved by theaffiliate. Therefore, at that time, gross revenue is recognized according to the amount stipulated
in the agreement. Rakuten, Inc. also provides advanced affiliate services that offer affiliate
programs customized for each shop. Because these services are provided over the monthly orother contract term, the progress of service provision is measured based on the passage of time,and gross revenue is recognized according to the amount stipulated in the agreement. Within
affiliate services, with regard to the performance compensation itself that is paid to affiliates, theoccurrence of the compensation amount and the payment to the affiliate are the same amount,
and are recognized as net revenue.
Among Internet Services, with regard to services which the Group Companies provide goods
and services for general consumers, such as Rakuten Books and Rakuten Kobo, the Group
Companies are a party to sales contracts. In these direct selling services, revenue is recognizedbased on attainment criteria by which goods and services are considered to have been provided
to the consumer, and is recognized as gross revenue.
With regard to Internet Finance, we engage in financial services businesses such as credit cards,
Internet banking, and online securities, and recognize the primary revenue as follows.
Rakuten Bank, Ltd. provides a wide range of services including banking operations (deposits,
foreign exchange, and loans), as well as financial instruments brokerage services for Rakuten
Securities, over-the-counter foreign exchange margin transactions (FX transactions) as servicesof a registered financial institution, sales of “toto” and lottery tickets (Numbers), and debit cardbusiness. Revenue such as commissions arising from these transactions and interest on
securities arising from management of deposits is recognized in interest income, fees andcommissions, other ordinary income, and other income. With regard to loans, Rakuten Bank
handles loans such as loans for individuals known as “Rakuten Super Loans” and home loans
known as “Rakuten bank home loan (flexible interest rate)” and earns interest income from a set
interest rate applied to the balance of loans.
Rakuten Securities, Inc. engages in financial instruments transaction services and otherassociated services. Its sources of revenue include the commissions arising in association withthese transactions, net trading income, and interest, and it primarily records commissions
received, net trading income, financial revenue, and other operating revenue. There are a rangeof financial instruments transactions, including domestic stock transactions, foreign stocktransactions, and sales of investment trust, but the commission structure for each transaction
differs. Rakuten Securities records net trading income on foreign exchange margin transactions,commissions received on domestic margin transactions, as well as interest revenue on open
contracts.
Rakuten Card Co., Ltd. engages in the credit card business, as well as the credit guarantee
business and money lending business. It primarily records revenue from credit card business,financing revenue, revenue from credit guarantee, lease sales profit, other revenue, andfinancial revenue. Revenue from credit card business includes membership fees received frommember shops, along with revolving payment commissions and installment commissions
received from credit card users. Commissions, which apply fixed rates respectively to the credit
card settlement amount, revolving balance, and the number of payment installments, arerecognized as revenue. Financing revenue includes cash advance commissions, and interest
income that applies a set rate to the cash advance balance is received from credit card users.
(6) Recoverability of Deferred Tax Assets
In terms of deferred tax assets, the Group Companies recognize all deductible temporary
differences as well as all carryforward of unused tax loss and tax credit, to the extent that there
will likely be sufficient taxable income in the future to which they will be applied. The Group
Companies believe that its estimates in the assessment of the recoverability of deferred tax
assets are reasonable and that a recoverable amount of deferred tax assets has beenrecognized. However, as these estimates contain uncertainties beyond the Group Companies’
control, if unforeseeable changes occur in the assumptions, which precipitate changes to theestimates relating to the assessment of recoverability, the Group Companies may reduce thedeferred tax assets in the future.
(7) Financial Assets Measured at Fair ValueAs financial assets for the Group Companies’ securities business are mainly settled on shortterm, their fair values approximate their carrying amounts.
The fair value of loans for the Group Companies’ credit card business and loans for theGroup Companies’ banking business is measured at present value calculated by discounting
each portion of future cash flows classified by period, for the corresponding remaining maturity
using the applicable interest rate considering credit risk.
Additionally, in terms of the Group Companies’ investment securities, investment securities
for banking business and investment securities for insurance business, the fair value of listed
shares is measured at the consolidated fiscal year-end closing market price, while the fair valueof unlisted shares is measured by using an appropriate valuation technique, such as a method ofcomparison with similar sectors. The fair value of bonds is measured by reasonable valuation
methods based on available information, including reference trading statistics and brokers’
quotes.
As other financial assets and financial liabilities are mainly settled on short-term, their fairvalues approximate their carrying amounts.

III. Equipment and Facilities
1. Status of Capital Expenditures, etc.
Capital expenditure in the current fiscal year was ¥38,217 million, mainly in the area ofdevelopment and acquisition of software.
2. Situation of Major Equipment(1) Company Submitting Financial Reports
As of December 31, 2014
Book value (Millions of Yen)
Business Place Name of
Details of(Location)
segments major facilities

Head Office(Shinagawaku, Tokyo)

Internet
Services

Buildings andaccompanying
facilities

Furniture,
Fixtures andequipment

418

201

Facilities
involved withall operations

Software18,111

Total

Number of
employees

18,7302,474(Notes) 1 Consumption tax is not included in the above amounts.
2 Number of employees represents the number of persons engaged.
(2) Domestic Subsidiaries
As of December 31, 2014
Book value (Millions of Yen)
Name ofcompanies

Location

Name ofsegments

Rakuten(Shinagawa- Internet
Securities, Inc. ku, Tokyo) Finance

Details ofmajor
facilities

Buildings
andaccompany-ing
facilities

Furniture,
Fixturesandequipment

Software

235

1,125

10,033

Facilities
involved withalloperations

Total

11,393

Number of
employees

256(Notes) 1 Consumption tax is not included in the above amounts.
2 Number of employees represents the number of persons engaged.
3. Plans for Introduction, Disposals, etc. of Facilities(1) Introduction, etc. of Major Facilities
As of December 31, 2014
Planned investment
amountDetails of
Method ofPlannedName of
Name of
Locationmajor
procuring Start datecompletion
Total
Paid
segments
companies
facilities
funds
date
(Millions of (Millions of
Yen)
Yen)
of
PrivateRakuten Card(Shinagawa- Internet Update
13,7002,702
August 2014 March 2016
Co., Ltd.
fundku, Tokyo) Finance main system(2) Major Facility Disposal, etc.
Not applicable.

IV. Information on the Company Submitting Financial Reports
1. Information on the Company’s Shares(1) Total Number of Shares, etc.
1) Total Number of Shares
Class

Total number of shares authorized to be issued

Common stock

3,941,800,000

Total

3,941,800,000

2) Total Number of Shares Issued
As of the end of the
As of theClass
current fiscal year
submission date
(December31,2014) (March 27, 2015)
Common stock

1,328,603,400

Total

1,328,603,400(Note)

Stock exchange on
which theDescription
Company is listed
Tokyo StockOne unit of stock
Exchange
constitutes 100
1,329,649,100(First Section)common stocks.
1,329,649,100――

Number of shares issued as of the submission date of this Annual Securities Report does
not include the number of shares issued in association with exercise of subscription
warrants and exercise of Subscription Rights to Shares between March 1, 2015 and such
submission date.

(2) Status of the Subscription Rights to Shares
1) Subscription Rights to Shares
Extraordinary Resolution at General Shareholders’ Meeting (March 30, 2005)
As of the end of fiscal year
(December 31, 2014)

As of the end of month
preceding the submission date(February 28, 2015)

Number of Subscription Rights
32,1442,000
24,5342,000
to Shares
Of the Subscription Rights toShares, the number of own
21,045―21,045―
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Common stock
Same as on the left
Rights to Shares
Number of shares to be issued
3,214,400
200,000
2,453,400
200,000
upon exercise of Subscription
(Note
1)
(Note
1)
(Note
1)
(Note 1)
Rights to Shares
Cash payment upon exercise¥913 per share ¥1,039 per share ¥913 per share ¥1,039 per shareof Subscription Rights to(Note 1)
(Note 1)
(Note 1)
(Note 1)
SharesFrom March 31, 2009
Exercise period of Subscription
Same as on the left
Rights to Shares
to March 29, 2015
Issue
price: Issue
price: Issue
price: Issue
price:
Issue price for shares issued¥913¥1,039¥913¥1,039through
exerciseofAmount to be Amount to be Amount to be Amount to be
Subscription Rights to Shares
includedin included
in included
in includedinand the amount to be included
capital: ¥457
capital: ¥520
capital: ¥457
capital: ¥520
in capital(Note 1)
(Note 1)
(Note 1)
(Note 1)Those who received the allotmentof the issue of Subscription
Rights to Shares shall remain
Directors, Company Auditors or
employees of the Company, or its
subsidiaries or associates at thetime of exercising such rights,
provided
however
that
exceptional treatment may beallowed in this regard by the
Boardof
DirectorsinConditions for exercise of
consideration of circumstances.
Same as on the left
Subscription Rights to Shares
Other conditions for the exercise
shall be subject to the provisionsof the agreement on the allotmentof Subscription Rights to Shares
to be concluded between the
Company and the holders ofSubscription Rights to Shares,
based on resolution at the Boardof Directors on the issuance ofSubscription Rights to Shares.
Subscription Rights to Shares
Matters concerning transfer of shall not be inherited, offered for
Subscription Rights to Shares
pledge or disposed of in any
other way.
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring

Same as on the left―
(Note 3)

(Notes) 1 If the Company splits its common stock or consolidates its common stock after the dateof issuance of Subscription Rights to Shares, exercise price shall be adjusted according
to the following formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the date of issuance of Subscription Rights to Shares(except those associated with the exercise of Subscription Rights to Shares, or those
associated with the exercise of Subscription Rights to Shares in accordance with
provisions of Article 280-19 of the Commercial Code prior to its amendment on April 1,
2002, or those associated with the exercise of subscription warrants on bond inaccordance with the provisions of Article 341-8 of the said Code), exercise price shall be
adjusted according to the following formula. Any fraction less than ¥1 as a result of suchadjustment shall be rounded up. In other cases of issuance of Subscription Rights toShares (insofar as price of the shares issued in association with the exercise of such
subscription rights is below the market value at the time of issuance of the Subscription
Rights to Shares), exercise price shall be adjusted likewise.
Number of shares issued in the following formula shall refer to the total number of sharesissued in the Company less the number of treasury stocks held by the Company.
Number of shares newly issued ×
Exercise
Exercise
Number of shares
Cash payment per share
price
price
＋
issued＝×
after
beforeShare price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

2 Scheduled number of shares including those yet to be cancelled.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.

7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Extraordinary Resolution at General Shareholders’ Meeting (March 30, 2006)
As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
23,7105,151
to Shares
Of the Subscription Rights toShares, the number of own
11,2692,375
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Common stock
Rights to Shares
Number of shares to be issued
2,371,000
515,100
upon exercise of Subscription(Note
1)(Note 1)
Rights to Shares
Cash payment upon exercise¥1,010 per share ¥559 per shareof Subscription Rights to(Note 1)
(Note 1)
SharesFrom March 31, 2010
Exercise period of Subscription
Rights to Shares
to March 29, 2016
Issue
price: Issue
price:
Issue price for shares issued¥1,010¥853
through
exerciseofAmount to be Amount to be
Subscription Rights to Shares
includedin includedinand the amount to be included
capital: ¥505
capital: ¥427
in capital(Note 1)
(Note 1)Those who received the allotmentof the issue of Subscription Rights
to Shares shall remain Directors,
Company Auditors or employeesoftheCompany,orits
subsidiaries or associates at thetime of exercising such rights,
provided however that exceptional
treatment may be allowed in thisregard by the Board of Directors
Conditions for exercise of in consideration of circumstances.
Subscription Rights to Shares
Other conditions for exercise shallbe subject to the provisions of theagreement on the allotment of
Subscription Rights to Shares tobe concluded between the
Company and the holders ofSubscription Rights to Shares,
based on resolution at the Boardof Directors on the issuance ofSubscription Rights to Shares.
Subscription Rights to Shares
Matters concerning transfer of shall not be inherited, offered for
Subscription Rights to Shares
pledge or disposed of in any otherway.
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring

As of the end of month
preceding the submission date(February 28, 2015)
22,9394,737

11,2692,375

Same as on the left
2,293,900(Note 1)

473,700(Note 1)

¥1,010 per share ¥559 per share(Note 1)
(Note 1)Same as on the left
Issue
price:¥1,010
Amount to be
includedincapital: ¥505
(Note 1)

Issue
price:¥853
Amount to be
includedincapital: ¥427
(Note 1)Same as on the left

Same as on the left―
(Note 3)(Notes) 1 If the Company splits its common stock or consolidates its common stock after the dateof issuance of Subscription Rights to Shares, exercise price shall be adjusted accordingto the following formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the date of issuance of Subscription Rights to Shares(except those associated with the exercise of Subscription Rights to Shares, or those
associated with the exercise of Subscription Rights to Shares in accordance with
provisions of Article 280-19 of the Commercial Code prior to its amendment on April 1,
2002, or those associated with the exercise of subscription warrants on bond inaccordance with the provisions of Article 341-8 of the said Code), exercise price shall be
adjusted according to the following formula. Any fraction less than ¥1 as a result of suchadjustment shall be rounded up. In other cases of issuance of Subscription Rights toShares (insofar as price of the shares issued in association with the exercise of such
subscription rights is below the market value at the time of issuance of the Subscription
Rights to Shares), exercise price shall be adjusted likewise.
Number of shares issued in the following formula shall refer to the total number of sharesissued in the Company less the number of treasury stocks held by the Company.
Number of shares newly issued ×
Exercise
Exercise
Number of shares
Cash payment per share
price
price
＋
issued＝ before ×
after
Share price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

2 Scheduled number of shares including those yet to be cancelled.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.

7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Extraordinary Resolution at General Shareholders’ Meeting (March 27, 2008)
As of the end of fiscal year
(December 31, 2014)

As of the end of month
preceding the submission date(February 28, 2015)

Number of Subscription Rights
17,428
16,205to Shares
Of the Subscription Rights toShares, the number of own
7,145
7,145
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Common stock
Same as on the left
Rights to Shares
Number of shares to be issued
1,742,800 (Note 1)
1,620,500 (Note 1)
upon exercise of Subscription
Rights to Shares
Cash payment upon exercise¥563 per share¥563 per shareof Subscription Rights to(Note 1)
(Note 1)
SharesFrom March 28, 2012
Exercise period of Subscription
Same as on the left
Rights to Shares
to March 26, 2018
Issue price for shares issued
through
exerciseof Issue price: ¥841
Issue price: ¥841
Subscription Rights to Shares Amount to be included in capital: Amount to be included in capital:
and the amount to be included ¥421 (Note 1)¥421 (Note 1)
in capitalThose who received the allotmentof the issue of Subscription
Rights to Shares shall remain
Directors, Company Auditors or
employees of the Company, or its
subsidiaries or associates at thetime of exercising such rights,
provided
however
that
exceptional treatment may beallowed in this regard by the
Boardof
DirectorsinConditions for exercise of
consideration of circumstances.
Same as on the left
Subscription Rights to Shares
Other conditions for exercise
shall be subject to the provisionsof the agreement on the allotmentof Subscription Rights to Shares
to be concluded between the
Company and the holders ofSubscription Rights to Shares,
based on resolution at the Boardof Directors on the issuance ofSubscription Rights to Shares.
Subscription Rights to Shares
Matters concerning transfer of shall not be inherited, offered for
Subscription Rights to Shares
pledge or disposed of in any
other way.
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring

Same as on the left―
(Note 3)(Notes) 1 If the Company splits its common stock or consolidates its common stock after the dateof issuance of Subscription Rights to Shares, exercise price shall be adjusted accordingto the following formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the date of issuance of Subscription Rights to Shares(except those associated with the exercise of Subscription Rights to Shares, or those
associated with the exercise of Subscription Rights to Shares in accordance with
provisions of Article 280-19 of the Commercial Code prior to its amendment on April 1,
2002, or those associated with the exercise of subscription warrants on bond inaccordance with the provisions of Article 341-8 of the said Code), exercise price shall be
adjusted according to the following formula. Any fraction less than ¥1 as a result of suchadjustment shall be rounded up. In other cases of issuance of Subscription Rights toShares (insofar as price of the shares issued in association with the exercise of such
subscription rights is below the market value at the time of issuance of the Subscription
Rights to Shares), exercise price shall be adjusted likewise.
Number of shares issued in the following formula shall refer to the total number of sharesissued in the Company less the number of treasury stocks held by the Company.
Exercise
Exercise
Number of shares newly issued ×
Number of shares
Cash payment per share
price
price
＋
issued＝ before ×
after
Share price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

2 Scheduled number of shares including those yet to be cancelled.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.

7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Extraordinary Resolution at General Shareholders’ Meeting (March 27, 2009)
As of the end of month preceding
the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights toSharesOf the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued upon
exercise of Subscription Rights toSharesNumber of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exercise of
Subscription Rights to Shares
Exercise period of Subscription
Rights to Shares
Issue price for shares issued
through exercise of Subscription
Rights to Shares and the amount to
be included in capital

Conditionsfor
exercise
Subscription Rights to Shares

8,237

7,798

3,153

3,153

Common stock

Same as on the left

823,700 (Note 1)

779,800 (Note 1)¥707 per share (Note 1)¥707 per share (Note 1)

From March 28, 2013
to March 26, 2019

Same as on the left

Issue price: ¥1,029
Amount to be included
capital: ¥515 (Note 1)

Issue price: ¥1,029
in Amount to be included
capital: ¥515 (Note 1)

Those who received theallotment of the issue of
Subscription Rights to SharesshallremainDirectors,
Executive Officers, Company
Auditors or employees of theCompany, or its subsidiaries or
associates at the time of
exercisingsuchrights,provided
however
that
exceptional treatment may beallowed in this regard by the
Boardof
Directors
inof considerationofcircumstances.

Other conditions for the
exercise shall be subject to theprovisions of the agreement on
the allotment of Subscription
Rights to Shares to beconcluded
betweentheCompany and the holders ofSubscription Rights to Shares,
based on resolution at theBoard of Directors on theissuance of Subscription Rights
to Shares.
Subscription Rights to Shares
Matters concerning transfer of shall not be inherited, offered
Subscription Rights to Sharesfor pledge or disposed of in any
other way.
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring

Same as on the left

Same as on the left―
(Note 3)in(Notes) 1 If the Company splits its common stock or consolidates its common stock after the dateof issuance of Subscription Rights to Shares, exercise price shall be adjusted according
to the following formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the date of issuance of Subscription Rights to Shares(except those associated with the exercise of Subscription Rights to Shares, or those
associated with the exercise of Subscription Rights to Shares in accordance with
provisions of Article 280-19 of the Commercial Code prior to its amendment on April 1,
2002, or those associated with the exercise of subscription warrants on bond inaccordance with the provisions of Article 341-8 of the said Code), exercise price shall be
adjusted according to the following formula. Any fraction less than ¥1 as a result of suchadjustment shall be rounded up. In other cases of issuance of Subscription Rights toShares (insofar as price of the shares issued in association with the exercise of such
subscription rights is below the market value at the time of issuance of the Subscription
Rights to Shares), exercise price shall be adjusted likewise.
Number of shares issued in the following formula shall refer to the total number of sharesissued in the Company less the number of treasury stocks held by the Company.
Number of shares newly issued ×
Exercise
Exercise
Number of shares
Cash payment per share
price
price
＋
issued＝×
after
beforeShare price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

2 Scheduled number of shares including those yet to be cancelled.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.

6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.
7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Extraordinary Resolution at General Shareholders’ Meeting (March 29, 2012)
As of the end of month
preceding the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

3,521

1,098

3,521

1,098

859

165

894

176

Common stock
352,100(Note 1)
¥1 per share(Note 2)Same as on the left
109,800(Note 1)

¥1 per share(Note 2)

From March 30, 2016
to March 28, 2022
(Note 3)Issue
price: Issue
price:¥815¥770
Amount to be Amount to be
includedin includedin
capital: ¥408
capital: ¥385
(Note 5)(Note 5)352,100(Note 1)

109,800(Note 1)

¥1 per share(Note 1)

¥1 per share(Note 1)Same as on the left
Issue
price:¥815
Amount to be
includedincapital: ¥408
(Note 5)Issue
price:¥770
Amount to be
includedincapital: ¥385
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.
2 Value of the assets to be contributed upon exercise of Subscription Rights to SharesThis shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such

issue; hereinafter the same) of each Subscription Right to Shares (hereinafter referred toas “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares.
Exercise Price shall be ¥1 per share. If the Company slits its common stock or
consolidates its common stock after the issue date, Exercise Price shall be adjusted
according to the following formula. Any fraction less than ¥1 per Subscription Right toShares as a result of such adjustment shall be rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according as othersuch circumstances that make it necessary to adjust the Exercise Price after issuance,
the Exercise Price may be adjusted as appropriate within a necessary and reasonable
range.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 30, 2016 to March
28, 2022. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval ofthe Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of

Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 29, 2012)
As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

As of the end of month
preceding the submission date(February 28, 2015)

5

14,7805

14,780

1

2,727

1

2,899

Common stock
500(Note 1)
¥1 per share(Note 2)Same as on the left

1,478,000(Note 1)
¥1 per share(Note 2)

From March 30, 2016
to March 28, 2022
(Note 3)Issue
price: Issue
price:¥770¥835
Amount to be Amount to be
includedin includedin
capital: ¥385
capital: ¥418
(Note 5)(Note 5)500
(Note 1)

1,478,000(Note 1)

¥1 per share(Note 2)

¥1 per share(Note 2)Same as on the left
Issue
price:¥770
Amount to be
includedincapital: ¥385
(Note 5)Issue
price:¥835
Amount to be
includedincapital: ¥418
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.
2 Value of the assets to be contributed upon exercise of Subscription Rights to SharesThis shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such

issue; hereinafter the same) of each Subscription Right to Shares (hereinafter referred toas “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares.
Exercise Price shall be ¥1 per share. If the Company slits its common stock or
consolidates its common stock after the issue date, Exercise Price shall be adjusted
according to the following formula. Any fraction less than ¥1 per Subscription Right toShares as a result of such adjustment shall be rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according as othersuch circumstances that make it necessary to adjust the Exercise Price after issuance,
the Exercise Price may be adjusted as appropriate within a necessary and reasonable
range.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 30, 2016 to March
28, 2022. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval ofthe Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of

Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 29, 2012)
As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toShares

As of the end of month
preceding the submission date(February 28, 2015)

2,462

2,462

1,566

1,566

Common stock
246,200(Note 1)
¥1 per share (Note 2)

Same as on the left
246,200(Note 1)
¥1 per share (Note 2)

A. One third of grated shares
From April 20, 2014 to April 20,
2022
B. One third of grated shares
From April 20, 2015 to April 20,
2022
C. One third of grated shares
From April 20, 2016 to April 20,
2022(Note 3)
A. Issue price: ¥889
Amount to be included in capital:¥445
B. Issue price: ¥886
Amount to be included in capital:¥443
C. Issue price: ¥884
Amount to be included in capital:¥442(Note 5)

A. Issue price: ¥889
Amount to be included in capital:¥445
B. Issue price: ¥886
Amount to be included in capital:¥443
C. Issue price: ¥884
Amount to be included in capital:¥442(Note 5)

Conditions for exercise of
Subscription Rights to Shares(Note 4)(Note 4)

Matters concerning transfer ofSubscription Rights to Shares(Note 7)(Note 7)――(Note 8)(Note 8)Exercise period of Subscription
Rights to Shares

Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital

Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

Same as on the left

(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.

Number of Issued
Number of Issued=
Shares after
Shares before × Ratio of split or consolidation
adjustment
adjustment
In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.
2 Value of the assets to be contributed upon exercise of Subscription Rights to SharesThis shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such
issue; hereinafter the same) of each Subscription Right to Shares (hereinafter referred toas “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares.
Exercise Price shall be ¥1 per share. If the Company slits its common stock or
consolidates its common stock after the issue date, Exercise Price shall be adjusted
according to the following formula. Any fraction less than ¥1 per Subscription Right toShares as a result of such adjustment shall be rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according as othersuch circumstances that make it necessary to adjust the Exercise Price after issuance,
the Exercise Price may be adjusted as appropriate within a necessary and reasonable
range.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from the second year throughto the tenth year of the day of the granting and allotting. If the final day of the exercise
period falls on a holiday of the Company, the final day shall be the working day
immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of issue of Subscription Rights to Shares may
exercise all or a part of the stock options in accordance with the followingclassifications:(i) Those who received the allotment of issue of Subscription Rights to Shares may
not exercise any of the Subscription Rights to Shares allotted to him/her from
Issue Date to the date immediately preceding the second year of the Issue Date.
(ii) Those who received the allotment of issue of Subscription Rights to Shares may
exercise one-third of the Subscription Rights to Shares allotted to him/her from thesecond year of the Issue Date to the date immediately preceding the third year of
the Issue Date (in calculating the number of Subscription Rights to Shares thatwould have become exercisable, any fraction less than one shall be roundeddown).
(iii) Those who received the allotment of issue of Subscription Rights to Shares may
exercise two-thirds (However, if a part of the Subscription Rights to Sharesallotted is exercised by the third year, exercisable Subscription Rights to Sharesshall be within two-thirds of the allotted Subscription Rights to Shares, including
the already exercised Subscription Rights to Shares) of the Subscription Rights toShares allotted to him/her from the third year of the Issue Date to the date
immediately preceding the fourth year of the Issue Date (in calculating the numberof Subscription Rights to Shares that would have become exercisable, any
fraction less than one shall be rounded down).
(iv) Those who received the allotment of issue of Subscription Rights to Shares may
exercise all the Subscription Rights to Shares allotted to him/her from the fourthyear of the Issue Date through to the tenth year of the Issue Date.
2) Those who received the allotment of issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights; provided however
that, this shall not apply to cases where (i) those who received the allotment of theissue of Subscription Rights to Shares exercise Subscription Rights to Shares which
are exercisable at the time of the termination of delegation or employment relationship(including a case where those who received the allotment of the issue of Subscription
Rights to Shares have passed away) between them and the Company’s overseas
subsidiaries or affiliates with which they primarily have said delegation or employment
relationship within 30 days from such termination, or (ii) it is allowed as an exceptionalcase by the Board of Directors in consideration of circumstances.
In addition, allotted Subscription Rights to Shares which are not then
exercisable shall not be exercised thereafter: (a) in cases where those who received
the allotment of the issue of Subscription Rights to Shares retire or leave the Companyof their own accord; those who received the allotment of the issue of Subscription
Rights to Shares are dismissed or displaced by Kobo Inc. due to reasons imputable tothem under the governing law for its incorporation; or delegation or employment
relationship between those who received the allotment of the issue of Subscription
Rights to Shares and Kobo Inc. terminated due to death of those who received theallotment of the issue of Subscription Rights to Shares, permanent invalidity which
disables them to continue to execute their duties for Kobo Inc. or an affiliate under thegoverning law for its incorporation, or mandatory retirement, (b) in cases where those
who received the allotment of the issue of Subscription Rights to Shares retire or leave
the Company of their own accord because significant disadvantageous changes in thebasic terms of the delegation or employment contract are unilaterally imposed on themby Kobo Inc. or an affiliate thereof under the governing law for its incorporation, those
who received the allotment of the issue of Subscription Rights to Shares,
notwithstanding the provision in 1), may also exercise their rights with respect toallotted Subscription Rights to Shares to the extent of the number obtained bymultiplying the ratio of the period from the anniversary date of the Issue Date(hereinafter referred to as “Commencement Date”) to the date of the retirement orleaving of the company (hereinafter referred to as “Date of Leaving”) against the oneyear period which includes the Date of Leaving and commences on theCommencement Date by the number of Subscription Rights to Shares that would havebecome exercisable pursuant to the provision in 1) at the time when the said one-year
period has elapsed (However, in cases where those who received the allotment of theissue of Subscription Rights to Shares retire or leave the Company on or before thesecond anniversary date of the Issue Date, those who received the allotment of theissue of Subscription Rights to Shares may exercise their rights with respect to allotted
Subscription Rights to Shares to the extent of the number obtained by multiplying theratio of the period from the Issue Date to the Date of Leaving against the two-year
period by the number of Subscription Rights to Shares that would have become
exercisable pursuant to the provision in 1) (ii) on the second year of the date of theIssue Date) (in calculating the number of Subscription Rights to Shares that would
have become exercisable, any fraction less than one shall be rounded down) (However,those who received the allotment of the issue of Subscription Rights to Shares shall
exercise Subscription Rights to Shares within 30 days from the date of the terminationof delegation or employment relationship with Kobo Inc.), and (c) in cases where those
who received the allotment of the issue of Subscription Rights to Shares are dismissed
or displaced by Kobo Inc. despite the lack of reasons imputable to them under thegoverning law for its incorporation, those who received the allotment of the issue of
Subscription Rights to Shares may, notwithstanding the provision in 1), exercise all of

allotted Subscription Rights to Shares that are held at the time of receiving thenotification of dismissal or displacement (However, those who received the allotment of
the issue of Subscription Rights to Shares shall exercise Subscription Rights to Shareswithin 30 days from the date of the termination of delegation or employment
relationship with Kobo Inc.).
3) Notwithstanding the provisions of 1) above, in the event of a sale of all or substantiallyall of the assets of the business of Kobo Inc. to a third party other than the Company oran affiliate of Kobo Inc. under the governing law for its incorporation, or in the event ofa reorganization, such as merger (except for reorganization carried out by solely
involving Kobo Inc. and one or more of its affiliates under the governing law for its
incorporation), with respect to which all or substantially all of the persons who were thebeneficial owners of the common shares of Kobo Inc. immediately prior to suchtransaction do not, following such transaction, beneficially own directly or indirectly,
more than 50% of the resulting voting rights of all shareholders of Kobo Inc. (including
all the voting rights of Kobo Inc. or other similar rights which may be issued ortransferred as a result of the exercising of the Subscription Rights to Shares of Kobo
Inc.), the holder of the Subscription Rights to Shares may exercise all the rights he/sheholds at the time of such event, provided that such Subscription Rights to Shares are
exercised immediately before such event comes into force.
4) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
5) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 2) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of a

corporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to SharesFractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 29, 2012)
As of the end of month
preceding the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

2,761

6,549

2,761

6,549

―

604

―

604

Common stock
276,100(Note 1)
¥1 per right(Note 2)Same as on the left
654,900(Note 1)

¥1 per right(Note 2)

From March 30, 2016
to March 28, 2022
(Note 3)Issue
price: Issue
price:¥792¥792
Amount to be Amount to be
includedin includedin
capital: ¥396
capital: ¥396
(Note 5)(Note 5)276,100(Note 1)

654,900(Note 1)

¥1 per right(Note 2)

¥1 per right(Note 2)Same as on the left
Issue
price:¥792
Amount to be
includedincapital: ¥396
(Note 5)Issue
price:¥792
Amount to be
includedincapital: ¥396
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number ofIssued Shares.”)
If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 30, 2016 to March
28, 2022. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).

8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2013)
As of the end of month
preceding the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

11,463120

11,463

120

2,219

―

2,362

―

Common stock
1,146,300(Note 1)
¥1 per right(Note 2)Same as on the left
12,000(Note 1)

¥1 per right(Note 2)

From March 29, 2017
to March 27, 2023
(Note 3)Issue
price: Issue
price:¥1,187¥1,575
Amount to be Amount to be
includedin includedin
capital: ¥594
capital: ¥788
(Note 5)(Note 5)

1,146,300(Note 1)

12,000(Note 1)

¥1 per right(Note 2)

¥1 per right(Note 2)Same as on the left
Issue
price:¥1,187
Amount to be
includedincapital: ¥594
(Note 5)Issue
price:¥1,575
Amount to be
includedincapital: ¥788
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2017 to March
27, 2023. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to SharesTo be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2013)
As of the end of month
preceding the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

8,395

3,876

8,395

3,876

860

334

1,023

341

Common stock
839,500(Note 1)
¥1 per right(Note 2)Same as on the left
387,600(Note 1)

¥1 per right(Note 2)

From March 29, 2017
to March 27, 2023
(Note 3)Issue
price: Issue
price:¥1,675¥1,450
Amount to be Amount to be
includedin includedin
capital: ¥838
capital: ¥725
(Note 5)(Note 5)

839,500(Note 1)

387,600(Note 1)

¥1 per right(Note 2)

¥1 per right(Note 2)Same as on the left
Issue
price:¥1,675
Amount to be
includedincapital: ¥838
(Note 5)Issue
price:¥1,450
Amount to be
includedincapital: ¥725
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2017 to March
27, 2023. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to SharesTo be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2013)
As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

As of the end of month
preceding the submission date(February 28, 2015)

4,090

4,090

110

110

Common stock

Same as on the left

409,000(Note 1)

409,000(Note 1)

¥1 per right (Note 2)¥1 per right (Note 2)

From March 29, 2017
to March 27, 2023
(Note 3)Same as on the left

Issue price: ¥1,307
Amount to be included in capital:¥654(Note 5)

Issue price: ¥1,307
Amount to be included in capital:¥654(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2017 to March
27, 2023. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational
Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to SharesTo be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2014)
As of the end of month
preceding the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

2,810

10,2172,810

10,217

―

570

―

733

Common stock
281,000(Note 1)
¥1 per right(Note 2)Same as on the left

1,021,700(Note 1)
¥1 per right(Note 2)

From March 29, 2018
to March 27, 2024
(Note 3)Issue
price: Issue
price:¥1,336¥1,331
Amount to be Amount to be
includedin includedin
capital: ¥668
capital: ¥666
(Note 5)(Note 5)

281,000(Note 1)

1,021,700(Note 1)

¥1 per right(Note 2)

¥1 per right(Note 2)Same as on the left
Issue
price:¥1,336
Amount to be
includedincapital: ¥668
(Note 5)Issue
price:¥1,331
Amount to be
includedincapital: ¥666
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2018 to March
27, 2024. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to Stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged tolevy income tax, etc., the relevant company obliged to levy income tax, etc. shall beable to levy tax from such Holders of Subscription Rights to Shares by the methods
listed below.
i) Receipt by Cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational

Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2014)
As of the end of month
preceding the submission date(February 28, 2015)

As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

5,238

1,444

5,238

1,444

99

―

462

―

Common stock
523,800(Note 1)
¥1 per right(Note 2)Same as on the left
144,400(Note 1)

¥1 per right(Note 2)

From March 29, 2018
to March 27, 2024
(Note 3)Issue
price: Issue
price:¥1,320¥1,201
Amount to be Amount to be
includedin includedin
capital: ¥660
capital: ¥601
(Note 5)(Note 5)523,800(Note 1)

144,400(Note 1)

¥1 per right(Note 2)

¥1 per right(Note 2)Same as on the left
Issue
price:¥1,320
Amount to be
includedincapital: ¥660
(Note 5)Issue
price:¥1,201
Amount to be
includedincapital: ¥601
(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2018 to March
27, 2024. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to Stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged tolevy income tax, etc., the relevant company obliged to levy income tax, etc. shall beable to levy tax from such Holders of Subscription Rights to Shares by the methods
listed below.
i) Receipt by Cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational

Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2014)
As of the end of fiscal year
(December 31, 2014)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toSharesExercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

As of the end of month
preceding the submission date(February 28, 2015)

17,13017,13012

12Common stock

Same as on the left

1,713,000(Note 1)

1,713,000(Note 1)

¥1 per right (Note 2)¥1 per right (Note 2)

From March 29, 2018
to March 27, 2024
(Note 3)Same as on the left

Issue price: ¥1,230
Amount to be included in capital:¥615(Note 5)

Issue price: ¥1,230
Amount to be included in capital:¥615(Note 5)(Note 4)(Note 4)(Note 7)(Note 7)――(Note 8)(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2018 to March
27, 2024. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to Stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged tolevy income tax, etc., the relevant company obliged to levy income tax, etc. shall beable to levy tax from such Holders of Subscription Rights to Shares by the methods
listed below.
i) Receipt by Cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational

Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

Extraordinary Resolution at General Shareholders’ Meeting (March 28, 2014)
As of the end of month
preceding the submission date(February 28, 2015)
Number of Subscription Rights
to Shares
Of the Subscription Rights toShares, the number of own
Subscription Rights to SharesClass of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares to be issued
upon exercise of Subscription
Rights to Shares
Cash payment upon exerciseof Subscription Rights toShares8,731
88Common stock
873,100(Note 1)
¥1 per right (Note 2)
From March 29, 2018
to March 27, 2024
(Note 3)

Exercise period of Subscription
Rights to Shares
Issue price for shares issued
through
exerciseof
Subscription Rights to Sharesand the amount to be included
in capital
Conditions for exercise of
Subscription Rights to Shares
Matters concerning transfer ofSubscription Rights to Shares
Matters concerning collateral
payment
Matters concerning issuance ofSubscription Rights to Sharesaccompanying organizational
restructuring

Issue price: ¥1,629
Amount to be included in capital: ¥815
(Note 5)(Note 4)(Note 7)―(Note 8)(Notes) 1 Class and number of shares to be issued upon exercise of Subscription Rights to Shares(hereinafter referred to as “Issued Shares”)
100 shares shall be issued for each Subscription Right to Shares. (The number of sharesfor each Subscription Right to Shares shall be hereinafter referred to as “Number of
Shares.”)If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of Issued=
Shares after
adjustment

Number of Issued
Shares before ×
adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the Number ofIssued Shares shall be adjusted within a reasonable range, taking into account theconditions of the merger, company split, share exchange, share transfer, etc.

2 Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The value of the assets to be contributed upon the exercise of one Subscription Right toShares shall be ¥1, and the number of shares subject to the Subscription Rights toShares (shares to be issued upon exercise of Subscription Rights to Shares) shall be 100
shares. The value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount obtained by multiplying the price of each
Subscription Right to Shares (¥1) by the number of subject Subscription Rights to Shares
to be exercised by Directors, Executive Officers, Company Auditors and employees of theCompany, the Company’s subsidiaries and associates.
Provided, however, that in the event of any adjustment in the number of shares stipulated
in 1 above, the number of shares subject to one Subscription Right to Shares shall be
adjusted likewise.
3 Exercise period of Subscription Rights to Shares
Exercise period of Subscription Rights to Shares shall be from March 29, 2018 to March
27, 2024. If the final day of the exercise period falls on a holiday of the Company, the final
day shall be the working day immediately preceding the final day.
4 Conditions for exercise of Subscription Rights to Shares
1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of the Company,or its subsidiaries or affiliates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however that exceptional
treatment may be allowed in this regard by the Board of Directors in consideration of
circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to Stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged tolevy income tax, etc., the relevant company obliged to levy income tax, etc. shall beable to levy tax from such Holders of Subscription Rights to Shares by the methods
listed below.
i) Receipt by Cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5 Matters concerning increase in capital stock and capital reserve by issuing of shares
upon exercise of Subscription Rights to Shares
1) Amount of increase in capital stock by issuing shares upon exercise of Subscription
Rights to Shares shall be half of the upper limit of capital increase as calculated
pursuant to the provisions of Article 17, Paragraph 1 of the Ordinance on Accounting ofCompanies, where any resultant fraction less than one yen shall be rounded up.
2) Amount of increase in capital reserve by issuing shares upon exercise of Subscription
Rights to Shares shall be the upper limit of capital stock increase as described in 1)
above less the amount of increase in capital stock set out therein.
6 Reasons and conditions for the acquisition of Subscription Rights to Shares
1) In case that the proposal of any merger agreement under which the Company is
dissolved, or any absorption-type company split (kyushu-bunkatsu) agreement orincorporation-type company split (shinsetsu-bunkatsu) plan in which the Company will
be a splitting company, or any share exchange agreement or share transfer plan inwhich the Company will be a wholly owned subsidiary of another company is approved
at a General Shareholders’ Meeting of the Company, the Company may acquire
Subscription Rights to Shares at the date specifically determined by the Board of
Directors of the Company without any compensation therefor.
2) In case that Holders of Subscription Rights to Shares ceases to accommodate theconditions of 4 1) above before exercising Subscription Rights to Shares, the Company
may acquire such Subscription Rights to Shares at the date specifically determined by
the Board of Directors of the Company without any compensation therefor.
7 Restriction on the acquisition of Subscription Rights to Shares by transfer
Any acquisition of Subscription Rights to Shares by transfer shall require an approval of
the Board of Directors of the Company by its resolution.
8 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation that survives after the merger, a corporation incorporated as a result of themerger, a corporation that succeeds, whole or part, to any rights and obligations that theCompany holds in connection with its business as a result of an absorption-type company
split, a corporation incorporated as a result of the incorporation-type company split, acorporation that acquires all of the issued shares of the Company effecting the shareexchange, or a corporation incorporated as a result of the share transfer (hereinafterreferred to as “Restructured Company”) shall be delivered under the following conditions
to each those who received the allotment of the issue of Subscription Rights to Sharesremaining unexercised (hereinafter referred to as “Remaining Subscription Rights toShares”) at the time when Organizational Restructuring takes effect. In this case, theRemaining Subscription Rights to Shares will lapse and the Restructured Company will
issue new Subscription Rights to Shares. However, the foregoing shall apply only tocases in which the delivery of Subscription Rights to Shares of the Restructured
Company according to the following conditions is stipulated in the merger agreement, theabsorption-type company split agreement, the incorporation-type company split plan, theshare exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be delivered
The Restructured Company shall deliver Subscription Rights to Shares, the number ofwhich shall equal the number of Subscription Rights to Shares held by the holder ofthe Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to 1 above after taking into consideration the conditions, etc.
of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription Rightto Shares granted shall be the amount paid per share after restructuring obtained byadjusting the Exercise Price stipulated in 2 above after taking into consideration theconditions, etc. of Organizational Restructuring multiplied by the number of shares of
the Restructured Company to be issued upon the exercise of the Subscription Rights
to Shares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of Subscription
Rights to Shares as stipulated in 3 above, or the date on which the Organizational

Restructuring becomes effective and ending on the expiration date for the exercise of
Subscription Rights to Shares as stipulated in 3 above.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to Shares
To be determined in accordance with 5 above.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to the approvalof the Board of Directors of the Company under Organizational Restructuring (or by the
majority decision of Directors if such company is not a company with Board of
Directors).
8) Reason and conditions for acquisition of Subscription Rights to Shares
To be determined in accordance with 6 above.
9 Rules pertaining to fractions of less than one share arising from the exercise of
Subscription Rights to Shares
Fractions of less than one share in the number of shares to be delivered to holders ofSubscription Rights to Shares who exercised Subscription Rights to Shares shall bediscarded.

(3) Status in the Exercise of Bonds with Subscription Rights to Shares with Exercise Price
Amendment
Not applicable.
(4) Rights Plans
Not applicable.
(5) Changes in the Total Number of Shares Issued and the Amount of Common Stock and Others(Millions of Yen, unless otherwise stated)

PeriodFrom January 1,
2010 to October
14, 2010(Note 1)
October
15,
2010(Note 2)
From October
15, 2010 to
December 31,
2010 (Note 1)
From January 1,
2011
toDecember 31,
2011 (Note 1)
From January 1,
2012 to June30, 2012 (Note1)
July 1, 2012
(Note 3)
From July 1,
2012
toDecember 31,
2012 (Note 1)
From January 1,
2013
toDecember 31,
2013 (Note 1)
From January 1,
2014
toDecember 31,
2014 (Note 1)

Changes in the
total number ofshares issued(shares)

Balance of thetotal number ofshares issued(shares)

Changesincommonstock

Balance ofcommonstock

Changesin legal
capitalsurplus

Balanceoflegal
capitalsurplus

8,489

13,105,469

66

107,672

66

71,43061,934

13,167,403―

107,672

3,777

75,207

14,294

13,181,697

106

107,779106

75,315

12,881

13,194,578

179

107,959

179

75,495

6,082

13,200,660

154

108,113154

75,6491,306,865,340

1,320,066,000―

108,113―75,649560,600

1,320,626,600

141

108,255

141

75,791

3,236,500

1,323,863,100

1,274

109,530

1,274

77,0664,740,300

1,328,603,400

2,071

111,601

2,071

79,138

(Notes) 1 Through the exercise of Subscription Rights to Shares or subscription warrants.
2 An increase due to new share issue associated with the implementation of shareexchange with Rakuten Bank, Ltd.
3 The Company conducted a 100-for-1 share split on July 1, 2012. As a result of this, thenumber of shares issued increased by 1,306,865,340 shares.
4 Due to the exercise of Subscription Rights to Shares, total number of shares issued
increased by 1,045,700 shares, common stock increased by ¥477 million and legal
capital surplus increased by ¥477 million in the period from January 1, 2015 to February
28, 2015.
(6) Status of Shareholders
As of December 31, 2014
Status of shares (the number of minimum unit is 100 shares)
Classification

Numberofshareholders
Numbershares(Unit)

ofheld

Percentage ofsharesheld(%)(Note)

Government andDomestic
local
Financial
municipali- institutions
ties

Foreign corporations, etc.
Financial
Other
instruments
Domestic
business
OthersIndividuals
corporations
operators

1

48

37

368

604

135

1,170

1,575,234

105,6122,524,237

5,066,013

4,914

0.01

11.86

0.80

19.00

38.13

0.03

Individuals
and others

Total

Status ofsharesbelow unit
(shares)

73,640―4,008,647 13,285,827

20,70072,44730.17

100.00―6,008,089 shares of treasury stocks are included as 60,080 units in the item of“Individuals and others” and as 89 shares in the “Status of shares below unit.”

(7) Major Shareholders
As of December 31, 2014
Name

Address

Percentage of
Number ofshares held toshares held the total number(shares)of issued shares(%)

Crimson Group, Inc.

ARK Hills Executive Tower N211,
226,419,000
1-14-5 Akasaka, Minato-ku, Tokyo

17.04

Hiroshi Mikitani

Minato-ku, Tokyo

176,372,000

13.28

Haruko Mikitani

Shibuya-ku, Tokyo

132,625,000

9.98

270 PARK AVENUE, NEW
JP MORGAN CHASE BANK 380055
YORK, NY 10017,(Standing proxy: Settlement & Clearing UNITED STATES OF AMERICA
Services Division, Mizuho Bank, Ltd.)(4-16-13 Tsukishima, Chuo-ku,
Tokyo)

66,387,404

5.00

The Master Trust Bank of Japan, Ltd.
(Trust Account)

2-11-3 Hamamatsucho, Minatoku, Tokyo

39,346,400

2.96

GIC PRIVATE LIMITED168 ROBINSON ROAD #37-01
CAPITAL TOWER SINGAPORE
068912(3-11-1 Nihombashi, Chuo-ku,
Tokyo)

33,743,887

2.54Japan Trustee Services Bank, Ltd.
1-8-11 Harumi, Chuo-ku, Tokyo(Trust account)

31,110,300

2.34

Culture Convenience Club Co., Ltd.

23,662,000

1.78

360
N.CRESCENTDRIVETHE CHASE MANHATTAN BANK 385036 BEVERLY HILLS, CA 90210(Standing proxy: Settlement & Clearing U.S.A.
Services Division, Mizuho Bank, Ltd.)(4-16-13 Tsukishima, Chuo-ku,
Tokyo)

22,036,500

1.66

25 BANK STREET, CANARY
JP MORGAN CHASE BANK 385164
WHARF, LONDON, E14 5JP,
(Standing proxy: Settlement & Clearing UNITED KINGDOM
Services Division, Mizuho Bank, Ltd.)(4-16-13 Tsukishima, Chuo-ku,
Tokyo)

19,991,600

1.50

771,694,091

58.08(Standing proxy: Custody Operations
Division, Tokyo Branch, The Hong Kongand Shanghai Banking Corporation
Limited)Total

2-5-25 Umeda, Kita-ku, Osaka－

(Note)The Company received a Report of Possession of Large Volume (Change Report), dated
August 6, 2014, filed by Baillie Gifford & Co. and its joint owner, Baillie Gifford Overseas
Limited, which indicates that the companies are holding the following number of theCompany’s shares as of July 31, 2014. However, as the Company was unable to confirm
the number of shares held as of the end of the current fiscal year, the companies are notincluded in the Major Shareholders above.
The content of such Report of Possession of Large Volume (Change Report) is asfollows:
Percentageof shareNumber ofcertificates,
shareetc. held toName

Address

certificates,
the totaletc.
number(shares)issued(%)

Baillie Gifford & Co.
Baillie Gifford Overseas Limited
Total

Calton Square, 1 Greenside Row,
Edinburgh, EH1 3AN, Scotland
Calton Square, 1 Greenside Row,
Edinburgh, EH1 3AN, Scotland―

12,231,412

0.92

96,355,155

7.26

108,586,567

8.18

(8) Status of Voting Rights
1) Issued shares
As of December 31, 2014
Number of voting
Details
rightsClassification

Number of shares (shares)

Shares without voting
rightsShareswithlimitedvoting rights (treasury
stock, etc.)
Shareswithlimitedvoting rights (others)

―

―

―

―

―

―

―

―

―

(Treasury
stock)―
Common6,008,000
Shares with full voting
stockrights (treasury stock,(Reciprocallyetc.)
held shares)―
Common79,000stock
Shares with full voting Common
1,322,495,700
13,224,957
rights (others)stockCommonShares below unit
20,700―stock
Total number of shares
1,328,603,400―
issuedTotal voting rights held―
13,224,957
by all shareholders(Note) 89 shares of treasury stock are included in “Shares below unit.”

―

―
―
―
―
―

2) Treasury Stock, etc.

Shareholder

Address ofshareholder

Number of
Number ofshares held
shares held
under theunder own
names ofnameothers(shares)(shares)

As of December 31, 2014
Percentageof shares
Total
held to the(shares) total number
of issued
shares (%)(Treasury stock)
Rakuten, Inc.

4-12-3
Higashishinagawa,Shinagawa-ku, Tokyo(Reciprocally held
shares)TECHMATRIX
4-10-8
Takanawa,
CORPORATION
Minato-ku, Tokyo
Total

－

6,008,000―

6,008,000

0.45

79,000―79,0000.01

6,087,000―

6,087,000

0.46

(9) Stock Option Plans
1) The Company applies a stock option plan that grants stock options to Directors, Company
Auditors and employees of the Company based on Subscription Rights to Shares in accordancewith the provisions of Articles 280-20 and 280-21 of the amended Commercial Code in 2001.
Schedule of the plan is as follows.
Date of resolution

Classification andpersons received

March 30, 2005

numberof

Directors of theCompany
Company Auditorsof the Company
Employees of theCompany
Directors of theCompany’s
subsidiaries
Employees of theCompany’s
subsidiaries

14

Employees of theCompany

1

3
547
3
6

Class of shares to be issued upon
Common stock
exercise of Subscription Rights toSharesNumber of shares
5,441,000 (Note 1)
200,000 (Note 1)
Cash payment upon exercise of¥913 (Note 1)¥1,039 (Note 1)
Subscription Rights to Shares
Exercise period of Subscription
From March 31, 2009 to March 29, 2015
Rights to Shares
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 Cash payment shall be the average value (a fraction less than ¥1 shall be rounded up) of
the closing price (last trading price) of the Company’s common stock published by
Jasdaq Securities Exchange on all business days (excluding no trading days) of themonth preceding the month of the grant date. If such average value turns out to be lessthan the closing price on the grant date, such closing price shall apply.
If the Company splits its common stock or consolidates its common stock, exercise
price shall be adjusted according to the following formula. Any fraction less than ¥1 as aresult of such adjustment shall be rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the grant date (except those associated with the exerciseof Subscription Rights to Shares, or those associated with the exercise of Subscription
Rights to Shares in accordance with provisions of Article 280-19 of the Commercial Codeprior to its amendment on April 1, 2002, or those associated with the exercise ofsubscription warrants on bond in accordance with the provisions of Article 341-8 of thesaid Code), exercise price shall be adjusted according to the following formula. Any
fraction less than ¥1 as a result of such adjustment shall be rounded up.

Number of shares newly issued ×
Exercise
Exercise
Number of shares
Cash payment per share
price
price
＋
issued＝ before ×
after
Share price prior to new issuanceadjustment adjustment
Number of shares issued＋number of shares newly issued

2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Other conditions for the exercise shall be subject to the provisions of the agreementon allotment of Subscription Rights to Shares, concluded between the Company andholders of Subscription Rights to Shares, based on the resolution at the meeting of
the Board of Directors on issuance of Subscription Rights to Shares.
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.
7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Date of resolution

March 30, 2006
Directors
Company

Classification andpersons received

number

of

of

the

13

Company Auditorsof the Company

3

Employees of theCompany765

Directors ofCompany’s
subsidiaries

theEmployees of theCompany’s
subsidiaries

Directors of theCompany
Company
Auditors of theCompany
Employees of theCompany

13
3
68

3
22

Class of shares to be issued upon
exercise of Subscription Rights to
Common stock
SharesNumber of shares
3,000,000 (Note 1)
1,434,000 (Note 1)
Cash payment upon exercise of¥1,010 (Note 1)¥559 (Note 1)
Subscription Rights to Shares
Exercise period of Subscription
From March 31, 2010 to March 29, 2016
Rights to Shares
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 Cash payment shall be the average value (a fraction less than ¥1 shall be rounded up) of
the closing price (last trading price) of the Company’s common stock published by
Jasdaq Securities Exchange on all business days (excluding no trading days) of themonth preceding the month of the grant date. If such average value turns out to be lessthan the closing price on the grant date, such closing price shall apply.
If the Company splits its common stock or consolidates its common stock, exercise
price shall be adjusted according to the following formula. Any fraction less than ¥1 as aresult of such adjustment shall be rounded up.
Exercise priceafter adjustment=

Exercise pricebefore adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the grant date (except those associated with the exerciseof Subscription Rights to Shares, or those associated with the exercise of Subscription
Rights to Shares in accordance with provisions of Article 280-19 of the Commercial Codeprior to its amendment on April 1, 2002, or those associated with the exercise ofsubscription warrants on bond in accordance with the provisions of Article 341-8 of thesaid Code), exercise price shall be adjusted according to the following formula. Any
fraction less than ¥1 as a result of such adjustment shall be rounded up.
Exercise
Exercise
Number of shares newly issued ×
Number of shares
Cash payment per share
price
price
＋
issued＝×
after
beforeShare price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Other conditions for the exercise shall be subject to the provisions of the agreementon allotment of Subscription Rights to Shares, concluded between the Company andholders of Subscription Rights to Shares, based on the resolution at the meeting of
the Board of Directors on issuance of Subscription Rights to Shares.
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.
7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

2)

The Company applies a stock option plan that grants stock options to Directors, Company
Auditors and employees of the Company based on Subscription Rights to Shares in accordancewith the provisions of Articles 236, 238 and 239 of the Companies Act. Schedule of the plan is
as follows.

Date of resolution

March 27, 2008
Directors,
Company
Auditors
Classification and number of andemployees
of
the
2,035
persons received
Company
Class of shares to be issued upon
exercise of Subscription Rights to
Common stock
SharesNumber of shares
3,305,000 (Note 1)
Cash payment upon exercise of¥563 (Note 1)
Subscription Rights to Shares
Exercise period of Subscription
From March 28, 2012 to March 26, 2018
Rights to Shares
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 Cash payment per share issued through the exercise (including the transfer of treasury
stock as substitute for such issue; hereinafter the same) of each Subscription Rights toShares (hereinafter referred to as “Exercise Price”) shall be the average value of theclosing price of the regular transactions in the Company’s shares, as published by the
Jasdaq Securities Exchange on all business days (excluding no trading days) of themonth preceding the month the Subscription Rights to Shares are issued (hereinafterreferred to as “Issue Date”). Any fraction less than ¥1 as a result of the calculation shallbe rounded up.
If such average value turns out to be less than the closing price on the Issue Date (or theclosing price on the previous business day, if no closing price is recorded on the Issue
Date), such closing price shall apply.
If the Company splits its common stock or consolidates its common stock after the Issue
Date, Exercise Price shall be adjusted according to the following formula. Any fraction
less than ¥1 as a result of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the Issue Date (except those associated with the exerciseof Subscription Rights to Shares, or those associated with the exercise of subscription
warrants in accordance with the provisions of Article 280-19 of the Commercial Codeprior to its amendment on April 1, 2002), the Exercise Price shall be adjusted according
to the following formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up. In other cases of issuance of Subscription Rights to Shares (insofar as priceof the shares issued in association with the exercise of such subscription rights is below
the market value at the time of issuance of the Subscription Rights to Shares), Exercise
Price shall be adjusted likewise.
“Number of shares issued” in the following formula shall refer to the total numberof shares issued in the Company less the number of treasury stocks held by the Company.
In case of disposing treasury stock, “shares newly issued” shall read “treasury stock
disposed” or “cash payment per share” shall read “disposal proceeds per share”.

Number of shares newly issued ×
Exercise
Exercise
Number of shares
Cash payment per share
price
price
＋
issued＝ before ×
after
Share price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

Besides the above, in case the Company carries out a merger etc., or according
as other such circumstances that make it necessary to adjust the Exercise Price afterissuance, the Exercise Price may be adjusted as appropriate within a necessary andreasonable range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Other conditions for the exercise shall be subject to the provisions of the agreementon allotment of Subscription Rights to Shares, concluded between the Company andholders of Subscription Rights to Shares, based on the resolution at the meeting of
the Board of Directors on issuance of Subscription Rights to Shares.
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event of share exchange or share transfer in which the Company becomes awholly owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.
7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Date of resolution

March 27, 2009
Directors,
Company
Auditors
Classification and number of andemployees
of
the
2,379
persons received
Company
Class of shares to be issued upon
exercise of Subscription Rights to
Common stock
SharesNumber of shares
1,198,900 (Note 1)
Cash payment upon exercise of¥707 (Note 1)
Subscription Rights to Shares
Exercise period of Subscription
From March 28, 2013 to March 26, 2019
Rights to Shares
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 Cash payment per share issued through the exercise (including the transfer of treasury
stock as substitute for such issue; hereinafter the same) of each Subscription Rights toShares (hereinafter referred to as “Exercise Price”) shall be the average value of theclosing price of the regular transactions in the Company’s shares, as published by the
Jasdaq Securities Exchange on all business days (excluding no trading days) of themonth preceding the month the Subscription Rights to Shares are issued (hereinafterreferred to as “Issue Date”). Any fraction less than ¥1 as a result of the calculation shallbe rounded up.
If such average value turns out to be less than the closing price on the Issue Date (or theclosing price on the previous business day, if no closing price is recorded on the Issue
Date), such closing price shall apply.
If the Company splits its common stock or consolidates its common stock after the Issue
Date, exercise price shall be adjusted according to the following formula. Any fraction
less than ¥1 as a result of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the Issue Date (except those associated with the exerciseof Subscription Rights to Shares, or those associated with the exercise of subscription
warrants in accordance with the provisions of Article 280-19 of the Commercial Codeprior to its amendment on April 1, 2002), the exercise price shall be adjusted according to
the following formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up. In other cases of issuance of Subscription Rights to Shares (insofar as priceof the shares issued in association with the exercise of such subscription rights is below
the market value at the time of issuance of the Subscription Rights to Shares), exercise
price shall be adjusted likewise.
“Number of shares issued” in the following formula shall refer to the total numberof shares issued in the Company less the number of treasury stocks held by the Company.
In case of disposing treasury stock, “shares newly issued” shall read “treasury stock
disposed” or “cash payment per share” shall read “disposal proceeds per share”.
Exercise
Exercise
price
price
＝ beforeafter
adjustment
adjustment

Number of shares newly issued ×
Cash payment per share×
Share price prior to new issuance
Number of shares issued＋number of shares newly issued
Number of shares＋issuedBesides the above, in case the Company carries out a merger etc., or according
as other such circumstances that make it necessary to adjust the Exercise Price afterissuance, the Exercise Price may be adjusted as appropriate within a necessary andreasonable range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Other conditions for the exercise shall be subject to the provisions of the agreementon allotment of Subscription Rights to Shares, concluded between the Company andholders of Subscription Rights to Shares, based on the resolution at the meeting of
the Board of Directors on issuance of Subscription Rights to Shares.
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the vent of share exchange or share transfer in which the Company becomes a wholly
owned subsidiary, obligations based on the Subscription Rights to Shares shall be
succeeded by the company which becomes the Company’s wholly-owning parent as aresult of such share exchange or share transfer (hereinafter referred to as “Succeeding
Company”). Policy for determining the contents of Subscription Rights to Shares to be
succeeded shall be as follows.
1) Class of Shares to be Issued
Shares in the Succeeding Company of the same class as the common stocks in the
Company.
2) Number of Shares to be Issued
This shall be calculated by multiplying the number of shares to be issued upon theexercise of Subscription Rights to Shares by the number of shares in the Succeeding
Company allotted to one share in the Company at the time of share exchange orshare transfer (hereinafter referred to as “Share Allotment Ratio”). Any fraction lessthan one share shall be rounded up.
3) Exercise PriceThis shall be the amount calculated by dividing the cash payment at the time of
exercise of the Subscription Rights to Shares by the Share Allotment Ratio. Any
fraction less than ¥1 shall be rounded up.
4) Exercise Period
This shall be the exercise period of these Subscription Rights to Shares. In the eventthat such exercise period has already started at the time of the succession, it shallstart on the effective date of the share exchange or share transfer, and shall end on
the expiry date of such exercise period.
5) Conditions for Exercise
This shall be determined in accordance with the conditions for the exercise of these
Subscription Rights to Shares.
6) Reasons and Conditions for Cancellation
This shall be determined in accordance with the reasons of and conditions for thecancellation of these Subscription Rights to Shares.
7) Restriction on Transfer
Transfer of Subscription Rights to Shares requires approval by the Board of Directorsof the Succeeding Company.

Date of resolution
March 30, 2010
Classification and number of
Directors, Company Auditors and employees of thepersons received
Company, the Company’s subsidiaries and associates
Class of shares to be issued upon
exercise of Subscription Rights to
Common stock
SharesNumber of shares
Maximum 6,000,000 (Note 1)
Cash payment upon exercise of(Note 1)
Subscription Rights to Shares
Exercise period of Subscription
From March 31, 2014 to March 29, 2020
Rights to Shares
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 Cash payment per share issued through the exercise (including the transfer of treasury
stock as substitute for such issue; hereinafter the same) of each subscription right toshares (hereinafter referred to as “Exercise Price”) shall be the average value of theclosing price of the regular transactions in the Company’s shares, as published by the
Jasdaq Securities Exchange on all business days (excluding no trading days) of themonth preceding the month the Subscription Rights to Shares are issued (hereinafterreferred to as “Issue Date”). Any fraction less than ¥1 as a result of the calculation shallbe rounded up.
If such average value turns out to be less than the closing price on the Issue Date(or the closing price on the previous business day, if no closing price is recorded on theIssue Date), such closing price shall apply.
If the Company splits its common stock or consolidates its common stock after the Issue
Date, exercise price shall be adjusted according to the following formula. Any fraction
less than ¥1 as a result of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the Issue Date (except those associated with the exerciseof Subscription Rights to Shares, or those associated with the exercise of subscription
warrants in accordance with the provisions of Article 280-19 of the Commercial Codeprior to its amendment on April 1, 2002), the Exercise Price shall be adjusted by thefollowing formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up. In other cases of issuance of Subscription Rights to Shares (insofar as priceof the shares issued in association with the exercise of such subscription rights is below
the market value at the time of issuance of the Subscription Rights to Shares), Exercise
Price shall be adjusted likewise.
“Number of shares issued” in the following formula shall refer to the total numberof shares issued in the Company less the number of treasury stocks held by the Company.
In case of disposing treasury stock, “shares newly issued” shall read “treasury stock
disposed” or “cash payment per share” shall read “disposal proceeds per share.”Exercise
Exercise
Number of shares newly issued ×
Number of shares
Cash payment per share
price
price
＋
issued＝ before ×
after
Share price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

Besides the above, in case the Company carries out a merger etc., or according
as other such circumstances that make it necessary to adjust the Exercise Price afterissuance, the Exercise Price may be adjusted as appropriate within a necessary andreasonable range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Other conditions for the exercise shall be subject to the provisions of the “agreementon allotment of Subscription Rights to Shares,” concluded between the Company andholders of Subscription Rights to Shares, based on the resolution at the meeting of
the Board of Directors on issuance of Subscription Rights to Shares.
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of theCompanies Act (hereinafter referred to as “Restructured Company”) shall be delivered
under the following conditions to each those who received the allotment of issue of
Subscription Rights to Shares remaining unexercised (hereinafter referred to as“Remaining Subscription Rights to Shares”) at the time when Organizational
Restructuring takes effect. In this case, the Remaining Subscription Rights to Shares will
lapse and the Restructured Company will issue new Subscription Rights to Shares.
However, the foregoing shall apply only to cases in which the delivery of Subscription
Rights to Shares of the Restructured Company according to the following conditions is
stipulated in the merger agreement, the absorption-type company split agreement, theincorporation-type company split plan, the share exchange agreement or the sharetransfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be
Delivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the Assets to be Contributed upon the Exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.

5) Exercise Period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters Concerning Increase in Common Stock and Legal Capital Reserve by
Issuing of Shares by the Restructured Company upon the Exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on Acquisition of Subscription Rights to Shares by Transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).
8) Reason and Conditions for Acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Date of resolution
March 30, 2011
Classification and number of
Directors, Company Auditors and employees of thepersons received
Company, the Company’s subsidiaries and associates
Class of shares to be issued upon
exercise of Subscription Rights to
Common stock
SharesNumber of shares
Maximum 6,000,000 (Note 1)
Cash payment upon exercise of(Note 1)
Subscription Rights to Shares
Exercise period of Subscription
From March 31, 2015 to March 29, 2021
Rights to Shares
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 Cash payment per share issued through the exercise (including the transfer of treasury
stock as substitute for such issue; hereinafter the same) of each Subscription Rights toShares (hereinafter referred to as “Exercise Price”) shall be the average value of theclosing price of the regular transactions in the Company’s shares, as published by Osaka
Securities Exchange JASDAQ (standard) on all business days (excluding no tradingdays) of the month preceding the month the Subscription Rights to Shares are issued(hereinafter referred to as “Issue Date”). Any fraction less than ¥1 as a result of thecalculation shall be rounded up.
If such average value turns out to be less than the closing price on the Issue Date (or theclosing price on the previous business day, if no closing price is recorded on the Issue
Date), such closing price shall apply.
If the Company splits its common stock or consolidates its common stock after the Issue
Date, exercise price shall be adjusted according to the following formula. Any fraction
less than ¥1 as a result of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Furthermore, in the event of issuance of common stock or disposal of treasury stock at
price below market value after the Issue Date (except those associated with the exerciseof Subscription Rights to Shares, or those associated with the exercise of subscription
warrants in accordance with the provisions of Article 280-19 of the Commercial Codeprior to its amendment on April 1, 2002), the Exercise Price shall be adjusted by thefollowing formula. Any fraction less than ¥1 as a result of such adjustment shall be
rounded up. In other cases of issuance of Subscription Rights to Shares (insofar as priceof the shares issued in association with the exercise of such subscription rights is below
the market value at the time of issuance of the Subscription Rights to Shares), Exercise
Price shall be adjusted likewise.
“Number of shares issued” in the following formula shall refer to the total numberof shares issued in the Company less the number of treasury stocks held by the Company.
In case of disposing treasury stock, “shares newly issued” shall read “treasury stock
disposed” or “cash payment per share” shall read “disposal proceeds per share.”Exercise
Exercise
Number of shares newly issued ×
Number of shares
Cash payment per share
price
price
＋
issued＝ before ×
after
Share price prior to new issuanceadjustment
adjustment
Number of shares issued＋number of shares newly issued

Besides the above, in case the Company carries out a merger, etc., or according asother such circumstances that make it necessary to adjust the Exercise Price afterissuance, the Exercise Price may be adjusted as appropriate within a necessary andreasonable range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Other conditions for the exercise shall be subject to the provisions of the “agreementon allotment of Subscription Rights to Shares,” concluded between the Company andholders of Subscription Rights to Shares, based on the resolution at the meeting of
the Board of Directors on issuance of Subscription Rights to Shares.
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of theCompanies Act (hereinafter referred to as “Restructured Company”) shall be delivered
under the following conditions to each those who received the allotment of issue of
Subscription Rights to Shares remaining unexercised (hereinafter referred to as“Remaining Subscription Rights to Shares”) at the time when Organizational
Restructuring takes effect. In this case, the Remaining Subscription Rights to Shares will
lapse and the Restructured Company will issue new Subscription Rights to Shares.
However, the foregoing shall apply only to cases in which the delivery of Subscription
Rights to Shares of the Restructured Company according to the following conditions is
stipulated in the merger agreement, the absorption-type company split agreement, theincorporation-type company split plan, the share exchange agreement or the sharetransfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be
Delivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the Assets to be Contributed upon the Exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions, etc.

5)

6)

7)

8)

of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
Exercise Period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
Matters Concerning Increase in Common Stock and Legal Capital Reserve by
Issuing of Shares by the Restructured Company upon the Exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
Restriction on Acquisition of Subscription Rights to Shares by Transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).
Reason and Conditions for Acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Subscription Rights to Shares (A)Date of resolution
Classification and number of Employeesofthe 2,529
persons received
Company

March 29, 2012
Directors,
Company
Auditors andemployees of 714
theCompany’s
subsidiaries

Employees of
the Company’s 4
subsidiaries

Class of shares to be issued
upon exercise of Subscription
Common stock
Rights to Shares
Number of shares
352,100 (Note 1)
109,800 (Note 1)
500 (Note 1)
Cash payment upon exerciseof Subscription Rights to¥ 1 (Note 1)
SharesExercise period of Subscription
From March 30, 2016 to March 28, 2022
Rights to Shares
Conditions for exercise of(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring(Notes) 1 This shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such
issue; hereinafter the same) of each Subscription Rights to Shares (hereinafter referred
to as “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares. Exercise Price shall be ¥1 per share. If the Company
splits its common stock or consolidates its common stock after the Issue Date, exercise
price shall be adjusted according to the following formula. Any fraction less than ¥1 as aresult of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according asother such circumstances that make it necessary to adjust the Exercise Price afterissuance, the Exercise Price may be adjusted as appropriate within a necessary andreasonable range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of theCompany, or its subsidiaries or associates at the time of exercising such rights,
provided however that exceptional treatment may be allowed in this regard by the
Board of Directors in consideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way,4) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively

referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of theCompanies Act (hereinafter referred to as “Restructured Company”) shall be delivered
under the following conditions to each those who received the allotment of issue of
Subscription Rights to Shares remaining unexercised (hereinafter referred to as“Remaining Subscription Rights to Shares”) at the time when Organizational
Restructuring takes effect. In this case, the Remaining Subscription Rights to Shares will
lapse and the Restructured Company will issue new Subscription Rights to Shares.
However, the foregoing shall apply only to cases in which the delivery of Subscription
Rights to Shares of the Restructured Company according to the following conditions is
stipulated in the merger agreement, the absorption-type company split agreement, theincorporation-type company split plan, the share exchange agreement or the sharetransfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be
Delivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the Assets to be Contributed upon the Exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions, etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise Period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters Concerning Increase in Common Stock and Legal Capital Reserve by
Issuing of Shares by the Restructured Company upon the Exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on Acquisition of Subscription Rights to Shares by Transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).
8) Reason and Conditions for Acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Subscription Rights to Shares (A)Date of resolution

March 29, 2012

EmployeesoftheCompany
andDirectors,
Classification and number of Company
4,632
persons received
Auditors
andemployeesoftheCompany’s
subsidiaries
Class of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares
1,478,000 (Note 1)

Directors oftheCompany’s
subsidiaries

Directors,
Company
Auditors
andemployees ofCompany
1 theand Directors 77
and employeesoftheCompany’s
subsidiaries

Common stock
276,100 (Note 1)

654,900 (Note 1)

Cash payment upon exerciseof Subscription Rights to¥ 1 (Note 1)
SharesExercise period of Subscription
From March 30, 2016 to March 28, 2022
Rights to Shares
Conditions for exercise of(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring(Notes) 1 This shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such
issue; hereinafter the same) of each Subscription Rights to Shares (hereinafter referred
to as “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares. Exercise Price shall be ¥1 per share. If the Company
splits its common stock or consolidates its common stock after the Issue Date, exercise
price shall be adjusted according to the following formula. Any fraction less than ¥1 as aresult of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according as othersuch circumstances that make it necessary to adjust the Exercise Price after issuance,
the Exercise Price may be adjusted as appropriate within a necessary and reasonable
range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of theCompany, or its subsidiaries or associates at the time of exercising such rights,
provided however that exceptional treatment may be allowed in this regard by the
Board of Directors in consideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way,4) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of theCompanies Act (hereinafter referred to as “Restructured Company”) shall be delivered
under the following conditions to each those who received the allotment of issue of
Subscription Rights to Shares remaining unexercised (hereinafter referred to as“Remaining Subscription Rights to Shares”) at the time when Organizational
Restructuring takes effect. In this case, the Remaining Subscription Rights to Shares will
lapse and the Restructured Company will issue new Subscription Rights to Shares.
However, the foregoing shall apply only to cases in which the delivery of Subscription
Rights to Shares of the Restructured Company according to the following conditions is
stipulated in the merger agreement, the absorption-type company split agreement, theincorporation-type company split plan, the share exchange agreement or the sharetransfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be
Delivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the Assets to be Contributed upon the Exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions, etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise Period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters Concerning Increase in Common Stock and Legal Capital Reserve by
Issuing of Shares by the Restructured Company upon the Exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on Acquisition of Subscription Rights to Shares by Transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).
8) Reason and Conditions for Acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Subscription Rights to Shares (B)Date of resolution

March 29, 2012

Directors
andEmployeesoftheof employees of the 15
Company’s
overseas1
Company’s overseas
subsidiaries
subsidiaries
Class of shares to be issued upon
Common stock
exercise of Subscription Rights toSharesNumber of shares
1,105,100 (Note 1)
103,300 (Note 1)
Cash payment upon exercise of¥1 (Note 1)¥1 (Note 1)
Subscription Rights to Shares
A. One third of shares
A. One third of shares
grantedgrantedFrom April 20, 2014
From November 21, 2014
to April 20, 2022
to November 21, 2022
B. One third of shares
B. One third of shares
grantedgrantedExercise period of Subscription
Rights to Shares
From April 20, 2015
From November 21, 2015
to April 20, 2022
to November 21, 2022
C. One third of shares
C. One third of shares
grantedgrantedFrom April 20, 2016
From November 21, 2016
to April 20, 2022
to November 21, 2022
Conditionsfor
exerciseof(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters
concerning
collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying
organizational
restructuring(Notes) 1 This shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such
issue; hereinafter the same) of each subscription right to shares (hereinafter referred toas “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares. Exercise Price shall be ¥1 per share. If the Company
splits its common stock or consolidates its common stock after the Issue Date, exercise
price shall be adjusted according to the following formula. Any fraction less than ¥1 as aresult of such adjustment shall be rounded up.
Classification andpersons received

numberExercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according as othersuch circumstances that make it necessary to adjust the Exercise Price after issuance,
the Exercise Price may be adjusted as appropriate within a necessary and reasonable
range.
2 1) Subscription Rights to Shares shall not be inherited, provided however thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way,3) Those who received the allotment of issue of Subscription Rights to Shares may
exercise all or a part of the stock options in accordance with the followingclassifications:

(i)

4)

Those who received the allotment of issue of Subscription Rights to Shares
may not exercise any of the Subscription Rights to Shares allotted to him/herfrom Issue Date to the date immediately preceding the second year of theIssue Date.
(ii) Those who received the allotment of issue of Subscription Rights to Shares
may exercise one-third of the Subscription Rights to Shares allotted to him/herfrom the second year of the Issue Date to the date immediately preceding thethird year of the Issue Date (in calculating the number of Subscription Rights toShares that would have become exercisable, any fraction less than one shallbe rounded down).
(iii) Those who received the allotment of issue of Subscription Rights to Shares
may exercise two-thirds (However, if a part of the Subscription Rights toShares allotted is exercised by the third year, exercisable Subscription Rights
to Shares shall be within two-thirds of the allotted Subscription Rights toShares, including the already exercised Subscription Rights to Shares) of the
Subscription Rights to Shares allotted to him/her from the third year of theIssue Date to the date immediately preceding the fourth year of the Issue Date(in calculating the number of Subscription Rights to Shares that would havebecome exercisable, any fraction less than one shall be rounded down).
(iv) Those who received the allotment of issue of Subscription Rights to Shares
may exercise all the Subscription Rights to Shares allotted to him/her from thefourth year of the Issue Date through to the tenth year of the Issue Date.
Those who received the allotment of issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of theCompany, or its subsidiaries or affiliates at the time of exercising such rights;
provided however that, this shall not apply to cases where (i) those who received theallotment of the issue of Subscription Rights to Shares exercise Subscription Rights
to Shares which are exercisable at the time of the termination of delegation or
employment relationship (including a case where those who received the allotmentof the issue of Subscription Rights to Shares have passed away) between them andthe Company’s overseas subsidiaries or affiliates with which they primarily have saiddelegation or employment relationship (hereinafter referred to as “Company ofPrimary Involvement”) within 30 days from such termination, or (ii) it is allowed as an
exceptional case by the Board of Directors in consideration of circumstances.
In addition, allotted Subscription Rights to Shares which are not then
exercisable shall not be exercised thereafter: (a) in cases where those who received
the allotment of the issue of Subscription Rights to Shares retire or leave theCompany of their own accord; those who received the allotment of the issue of
Subscription Rights to Shares are dismissed or displaced by the Company ofPrimary Involvement due to reasons imputable to them under the governing law for
its incorporation; or delegation or employment relationship between those who
received the allotment of the issue of Subscription Rights to Shares and theCompany of Primary Involvement terminated due to death of those who received theallotment of the issue of Subscription Rights to Shares, permanent invalidity which
disables them to continue to execute their duties for the Company of Primary
Involvement or an affiliate under the governing law for its incorporation, or mandatory
retirement, (b) in cases where those who received the allotment of the issue of
Subscription Rights to Shares retire or leave the Company of their own accord
because significant disadvantageous changes in the basic terms of the delegation or
employment contract are unilaterally imposed on them by the Company of Primary
Involvement or an affiliate thereof under the governing law for its incorporation, those
who received the allotment of the issue of Subscription Rights to Shares,
notwithstanding the provision in 3), may also exercise their rights with respect toallotted Subscription Rights to Shares to the extent of the number obtained bymultiplying the ratio of the period from the anniversary date of the Issue Date(hereinafter referred to as “Commencement Date”) to the date of the retirement orleaving of the company (hereinafter referred to as “Date of Leaving”) against the
one-year period which includes the Date of Leaving and commences on theCommencement Date by the number of Subscription Rights to Shares that would
have become exercisable pursuant to the provision in 3) at the time when the said
one-year period has elapsed (However, in cases where those who received theallotment of the issue of Subscription Rights to Shares retire or leave the Company
on or before the second anniversary date of the Issue Date, those who received theallotment of the issue of Subscription Rights to Shares may exercise their rights withrespect to allotted Subscription Rights to Shares to the extent of the number
obtained by multiplying the ratio of the period from the Issue Date to the Date ofLeaving against the two-year period by the number of Subscription Rights to Sharesthat would have become exercisable pursuant to the provision in 3) (ii) on the second
year of the date of the Issue Date) (in calculating the number of Subscription Rights
to Shares that would have become exercisable, any fraction less than one shall be
rounded down) (However, those who received the allotment of the issue of
Subscription Rights to Shares shall exercise Subscription Rights to Shares within 30
days from the date of the termination of delegation or employment relationship with
the Company of Primary Involvement.), and (c) in cases where those who received
the allotment of the issue of Subscription Rights to Shares are dismissed ordisplaced by the Company of Primary Involvement despite the lack of reasons
imputable to them under the governing law for its incorporation, those who received
the allotment of the issue of Subscription Rights to Shares may, notwithstanding theprovision in 3), exercise all of allotted Subscription Rights to Shares that are held at
the time of receiving the notification of dismissal or displacement (However, those
who received the allotment of the issue of Subscription Rights to Shares shall
exercise Subscription Rights to Shares within 30 days from the date of thetermination of delegation or employment relationship with the Company of Primary
Involvement.).
5) Notwithstanding the provisions of 3) above, in the event of a sale of all or
substantially all of the assets of the business of the Company of Primary Involvement
to a third party other than the Company or an affiliate of the Company of Primary
Involvement under the governing law for its incorporation, or in the event of areorganization, such as merger (except for reorganization carried out by solely
involving the Company of Primary Involvement and one or more of its affiliates under
the governing law for its incorporation), with respect to which all or substantially all of
the persons who were the beneficial owners of the common shares of the Company
of Primary Involvement immediately prior to such transaction do not, following suchtransaction, beneficially own directly or indirectly, more than 50% of the resulting
voting rights of all shareholders of the Company of Primary Involvement (including all
the voting rights of the Company of Primary Involvement or other similar rights which
may be issued or transferred as a result of the exercising of the Subscription Rights
to Shares of the Company of Primary Involvement), the holder of the Subscription
Rights to Shares may exercise all the rights he/she holds at the time of such event,
provided that such Subscription Rights to Shares are exercised immediately before
such event comes into force.
6) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively

referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of theCompanies Act (hereinafter referred to as “Restructured Company”) shall be delivered
under the following conditions to each those who received the allotment of issue of
Subscription Rights to Shares remaining unexercised (hereinafter referred to as“Remaining Subscription Rights to Shares”) at the time when Organizational
Restructuring takes effect. In this case, the Remaining Subscription Rights to Shares will
lapse and the Restructured Company will issue new Subscription Rights to Shares.
However, the foregoing shall apply only to cases in which the delivery of Subscription
Rights to Shares of the Restructured Company according to the following conditions is
stipulated in the merger agreement, the absorption-type company split agreement, theincorporation-type company split plan, the share exchange agreement or the sharetransfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to bedelivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions, etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters concerning increase in common stock and legal capital reserve by issuing ofshares by the Restructured Company upon the exercise of Subscription Rights toSharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).
8) Reason and conditions for acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Date of resolution

March 28, 2013

EmployeesoftheCompany
andDirectors,
Employees ofClassification and number of Company
4,645
the Company’s 1
persons received
Auditors
subsidiaries
andemployeesoftheCompany’s
subsidiaries
Class of shares to be issued
upon exercise of Subscription
Common stock
Rights to Shares
Number of shares
1,146,300 (Note 1)
12,000 (Note 1)
Cash payment upon exerciseof Subscription Rights to¥ 1 (Note 1)
SharesExercise period of Subscription
From March 29, 2017 to March 27, 2023
Rights to Shares
Conditions for exercise of(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring(Notes) 1 This shall be the amount calculated by multiplying the cash payment per share issued asa result of the exercise (including the transfer of treasury stock as substitute for such
issue; hereinafter the same) of each Subscription Rights to Shares (hereinafter referred
to as “Exercise Price”) by the number of shares to be issued upon exercise of the
Subscription Rights to Shares. Exercise Price shall be ¥1 per share. If the Company
splits its common stock or consolidates its common stock after the Issue Date, exercise
price shall be adjusted according to the following formula. Any fraction less than ¥1 as aresult of such adjustment shall be rounded up.
Exercise Priceafter adjustment=

Exercise Price
before adjustment

×1
Ratio of split or consolidation

Besides the above, in case the Company carries out a merger, etc., or according as othersuch circumstances that make it necessary to adjust the Exercise Price after issuance,
the Exercise Price may be adjusted as appropriate within a necessary and reasonable
range.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares shallremain Directors, Executive Officers, Company Auditors or employees of theCompany, or its subsidiaries or associates at the time of exercising such rights,
provided however that exceptional treatment may be allowed in this regard by the
Board of Directors in consideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way,4) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.

3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of theCompanies Act (hereinafter referred to as “Restructured Company”) shall be delivered
under the following conditions to each those who received the allotment of issue of
Subscription Rights to Shares remaining unexercised (hereinafter referred to as“Remaining Subscription Rights to Shares”) at the time when Organizational
Restructuring takes effect. In this case, the Remaining Subscription Rights to Shares will
lapse and the Restructured Company will issue new Subscription Rights to Shares.
However, the foregoing shall apply only to cases in which the delivery of Subscription
Rights to Shares of the Restructured Company according to the following conditions is
stipulated in the merger agreement, the absorption-type company split agreement, theincorporation-type company split plan, the share exchange agreement or the sharetransfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be
Delivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the Assets to be Contributed upon the Exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions, etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise Period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters Concerning Increase in Common Stock and Legal Capital Reserve by
Issuing of Shares by the Restructured Company upon the Exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on Acquisition of Subscription Rights to Shares by Transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).

8) Reason and Conditions for Acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Date of resolution

March 28, 2014

Classification and number of Employees of the Company and Directors, Executive Officers,
persons received
Company Auditors and employees of the Company’s subsidiaries
Class of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares

Common stock
Maximum 7,000,000(Note 1)

Cash payment upon exercise(Note 1)of Subscription Rights toSharesExercise period of Subscription
From March 29, 2018 to March 27, 2024
Rights to Shares
Conditions for exercise of(Note 2)
Subscription Rights to Shares
Matters concerning transfer of(Note 2)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 3)
accompanying organizational
restructuring(Notes) 1 1) Cash payment for Subscription Rights to SharesNo cash payment is required for Subscription Rights to Shares.
2) Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The Price for one Subscription Rights to Shares shall be one yen.
2 1) Those who received the allotment of the issue of Subscription Rights to Shares(hereinafter referred to as “Holders of Subscription Rights to Shares”) shall remain
Directors, Executive Officers, Company Auditors or employees of the Company, or its
subsidiaries or associates at the time of exercising such rights, provided howeverthat exceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited, provided however thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way,4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to Stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged
to levy income tax, etc., the relevant company obliged to levy income tax, etc. shallbe able to levy tax from such Holders of Subscription Rights to Shares by themethods listed below.
i) Receipt by Cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
3 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-type

company split, or conducts a share exchange or a share transfer (hereinafter collectively
referred to as “Organizational Restructuring”), Subscription Rights to Shares of acorporation described in Article 236, Paragraph 1, Items 8-1 through 8-5 of the Companies
Act (hereinafter referred to as “Restructured Company”) shall be delivered under thefollowing conditions to each those who received the allotment of issue of Subscription
Rights to Shares remaining unexercised (hereinafter referred to as “Remaining
Subscription Rights to Shares”) at the time when Organizational Restructuring takes effect.
In this case, the Remaining Subscription Rights to Shares will lapse and the Restructured
Company will issue new Subscription Rights to Shares. However, the foregoing shallapply only to cases in which the delivery of Subscription Rights to Shares of the
Restructured Company according to the following conditions is stipulated in the merger
agreement, the absorption-type company split agreement, the incorporation-typecompany split plan, the share exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to be
Delivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of Shares of the Restructured Company to be Issued upon the Exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the Assets to be Contributed upon the Exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 1) after taking into consideration the conditions, etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise Period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters Concerning Increase in Common Stock and Legal Capital Reserve by
Issuing of Shares by the Restructured Company upon the Exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on Acquisition of Subscription Rights to Shares by Transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of directors if such company is not a company with board of directors).
8) Reason and Conditions for Acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Date of resolution

March 27, 2015

Classification and number of Employees of the Company and Directors, Executive Officers
persons received
and employees of the Company’s subsidiaries
Class of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares
Cash payment upon exerciseof Subscription Rights toSharesCommon stock
Maximum 9,000,000(Note 1)
(Note 2)The exercise period shall be from the date on which one year has
passed from the issuance of the Subscription Rights to Shares
Exercise period of Subscription(hereinafter “date of issuance”) to the date on which ten years
Rights to Shares
have passed from the date of issuance. If the final day of theexercise period falls on a holiday of the Company, the final day
shall be the working day immediately preceding the final day.
Conditions for exercise of(Note 3)
Subscription Rights to Shares
Matters concerning transfer of(Note 3)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 4)
accompanying organizational
restructuring(Notes) 1 If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of shares
Number of shares×
after adjustment = before adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the number ofshares shall be adjusted within a reasonable range, taking into account the conditions of
the merger, company split, share exchange, share transfer, etc.
2 1) Cash payment for Subscription Rights to SharesNo cash payment is required for Subscription Rights to Shares.
2) Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The Price for one Subscription Rights to Shares shall be one yen.
3 1) Those who received the allotment of the issue of Subscription Rights to Shares(hereinafter “Holders of Subscription Rights to Shares”) shall remain Directors,
Executive Officers, Company Auditors or employees of the Company, or its
subsidiaries or affiliates at the time of exercising such rights; provided, however, thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited; provided, however, thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) Subscription Rights to Shares may be exercised by the Holder of Subscription Rights

to Shares, in whole or in part, according to the following categories.
i) The entire allotment of Subscription Rights to Shares shall not be exercised prior
to the date on which one year has passed from the date of issuance.
ii) 15% of the allotment of Subscription Rights to Shares may be exercised from thedate on which one year has passed from the date of issuance to the date prior to
the date on which two years have passed from the date of issuance (if a fraction
less than one unit arises in the number of exercisable Subscription Rights toShares, such fraction shall be discarded).
iii) 35% of the allotment of Subscription Rights to Shares (if a portion of the allotmentof Subscription Rights to Shares had been exercised prior to the date on which
two years have passed from the date of issuance, the total amount exercisable
including the previously exercised portion shall be 35%) may be exercised fromthe date on which two years have passed from the date of issuance to the dateprior to the date on which three years have passed from the date of issuance (if afraction less than one unit arises in the number of exercisable Subscription Rights
to Shares, such fraction shall be discarded).
iv) 65% percent of the allotment of Subscription Rights to Shares (if a portion of theallotment of Subscription Rights to Shares had been exercised prior to the date on
which three years have passed from the date of issuance, the total amount
exercisable including the previously exercised portion shall be 65%) may be
exercised from the date on which three years have passed from the date ofissuance to the date prior to the date on which four years have passed from thedate of issuance (if a fraction less than one unit arises in the number of
exercisable Subscription Rights to Shares, such fraction shall be discarded).
v) The entire allotment of Subscription Rights to Shares may be exercised from thedate on which four years have passed from the date of issuance to the date on
which ten years have passed from the date of issuance.
5) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged
to levy income tax, etc., the relevant company obliged to levy income tax, etc. shallbe able to levy tax from such Holders of Subscription Rights to Shares by themethods listed below.
i) Receipt by cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
6) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
4 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively“Organizational Restructuring”), Subscription Rights to Shares of a corporation describedin Article 236, Paragraph 1, Items 8.1 through 8.5 of the Companies Act (hereinafter“Restructured Company”) shall be delivered under the following conditions to Holders ofSubscription Rights to Shares remaining unexercised (hereinafter “Remaining
Subscription Rights to Shares”) at the time when Organizational Restructuring takes
effect. In this case, the Remaining Subscription Rights to Shares will lapse and the
Restructured Company will issue new Subscription Rights to Shares. However, theforegoing shall apply only to cases in which the delivery of Subscription Rights to Sharesof the Restructured Company according to the following conditions is stipulated in themerger agreement, the absorption-type company split agreement, the incorporation-typecompany split plan, the share exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to bedelivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 2) after taking into consideration the conditions etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription
Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of Directors if such company is not a company with Board of Directors).
8) Reasons and conditions for the acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Date of resolution

March 27, 2015

Classification and number of Outside Directors of the Company’s subsidiaries
persons received
Class of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares

Common stock
Maximum 100,000(Note 1)

Cash payment upon exerciseof Subscription Rights to(Note 2)
SharesExercise period of Subscription
From March 28, 2019 to March 26, 2025
Rights to Shares
Conditions for exercise of(Note 3)
Subscription Rights to Shares
Matters concerning transfer of(Note 3)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 4)
accompanying organizational
restructuring(Notes) 1 If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of shares
Number of shares×
after adjustment = before adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the number ofshares shall be adjusted within a reasonable range, taking into account the conditions of
the merger, company split, share exchange, share transfer, etc.
2 1) Cash payment for Subscription Rights to SharesNo cash payment is required for Subscription Rights to Shares.
2) Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The Price for one Subscription Rights to Shares shall be one yen.
3 1) Those who received the allotment of the issue of Subscription Rights to Shares(hereinafter “Holders of Subscription Rights to Shares”) shall remain Directors,
Executive Officers, Company Auditors or employees of the Company, or its
subsidiaries or affiliates at the time of exercising such rights; provided, however, thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited; provided, however, thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged

to levy income tax, etc., the relevant company obliged to levy income tax, etc. shallbe able to levy tax from such Holders of Subscription Rights to Shares by themethods listed below.
i) Receipt by cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
4 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively“Organizational Restructuring”), Subscription Rights to Shares of a corporation describedin Article 236, Paragraph 1, Items 8.1 through 8.5 of the Companies Act (hereinafter“Restructured Company”) shall be delivered under the following conditions to Holders ofSubscription Rights to Shares remaining unexercised (hereinafter “Remaining
Subscription Rights to Shares”) at the time when Organizational Restructuring takes
effect. In this case, the Remaining Subscription Rights to Shares will lapse and the
Restructured Company will issue new Subscription Rights to Shares. However, theforegoing shall apply only to cases in which the delivery of Subscription Rights to Sharesof the Restructured Company according to the following conditions is stipulated in themerger agreement, the absorption-type company split agreement, the incorporation-typecompany split plan, the share exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to bedelivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 2) after taking into consideration the conditions etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription

Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of Directors if such company is not a company with Board of Directors).
8) Reasons and conditions for the acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

Date of resolution

March 27, 2015

Classification and number of Company Auditors of the Company’s subsidiaries
persons received
Class of shares to be issued
upon exercise of Subscription
Rights to Shares
Number of shares

Common stock
Maximum 300,000(Note 1)

Cash payment upon exerciseof Subscription Rights to(Note 2)
SharesExercise period of Subscription
From March 28, 2019 to March 26, 2025
Rights to Shares
Conditions for exercise of(Note 3)
Subscription Rights to Shares
Matters concerning transfer of(Note 3)
Subscription Rights to Shares
Matters concerning collateral―
payment
Matters concerning issuance ofSubscription Rights to Shares(Note 4)
accompanying organizational
restructuring(Notes) 1 If the Company splits its common stock (including allotment of its common stock withoutcompensation; hereinafter the same shall apply) or consolidates its common stock, thenumber of shares to be issued upon exercise of each unit of such Subscription Rights toShares shall be adjusted according to the following formula; provided that suchadjustment shall be made only to those remain unexercised or uncanceled at the time ofsuch adjustment and; provided, further, that if any fraction less than one share arises as aresult of such adjustment, such fraction shall be discarded.
Number of shares
Number of shares×
after adjustment = before adjustment

Ratio of split or consolidation

In addition, if the Company carries out a merger, a company split, share exchange, sharetransfer, etc. that makes it necessary to adjust the number of shares, the number ofshares shall be adjusted within a reasonable range, taking into account the conditions of
the merger, company split, share exchange, share transfer, etc.
2 1) Cash payment for Subscription Rights to SharesNo cash payment is required for Subscription Rights to Shares.
2) Value of the assets to be contributed upon exercise of Subscription Rights to Shares
The Price for one Subscription Rights to Shares shall be one yen.
3 1) Those who received the allotment of the issue of Subscription Rights to Shares(hereinafter “Holders of Subscription Rights to Shares”) shall remain Directors,
Executive Officers, Company Auditors or employees of the Company, or its
subsidiaries or affiliates at the time of exercising such rights; provided, however, thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
2) Subscription Rights to Shares shall not be inherited; provided, however, thatexceptional treatment may be allowed in this regard by the Board of Directors inconsideration of circumstances.
3) Subscription Rights to Shares shall not be offered for pledge or disposed of in any
other way.
4) The Holders of Subscription Rights to Shares have duties to pay all taxes (including
but not limited to income tax, social security contributions, pensions, and employment
insurance premium) specified by laws and regulations in relation to stock options andshares. In the case where the Company and its subsidiaries and affiliates is obliged

to levy income tax, etc., the relevant company obliged to levy income tax, etc. shallbe able to levy tax from such Holders of Subscription Rights to Shares by themethods listed below.
i) Receipt by cashii) Appropriation of shares owned by the Holders of Subscription Rights to Sharesiii) Deduction from salaries, bonuses, etc. of the Holders of Subscription Rights toSharesiv) Other methods specified by the Company
5) Any acquisition of Subscription Rights to Shares by transfer shall require an approvalof the Board of Directors of the Company by its resolution.
4 In the event the Company merges (limited to cases where the Company becomes adissolving company), performs an absorption-type company split or an incorporation-typecompany split, or conducts a share exchange or a share transfer (hereinafter collectively“Organizational Restructuring”), Subscription Rights to Shares of a corporation describedin Article 236, Paragraph 1, Items 8.1 through 8.5 of the Companies Act (hereinafter“Restructured Company”) shall be delivered under the following conditions to Holders ofSubscription Rights to Shares remaining unexercised (hereinafter “Remaining
Subscription Rights to Shares”) at the time when Organizational Restructuring takes
effect. In this case, the Remaining Subscription Rights to Shares will lapse and the
Restructured Company will issue new Subscription Rights to Shares. However, theforegoing shall apply only to cases in which the delivery of Subscription Rights to Sharesof the Restructured Company according to the following conditions is stipulated in themerger agreement, the absorption-type company split agreement, the incorporation-typecompany split plan, the share exchange agreement or the share transfer plan.
1) Number of Subscription Rights to Shares of the Restructured Company to bedelivered
The Restructured Company shall deliver Subscription Rights to Shares, the numberof which shall equal the number of Subscription Rights to Shares held by the holderof the Remaining Subscription Rights to Shares.
2) Class of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
Shares of common stock of the Restructured Company
3) Number of shares of the Restructured Company to be issued upon the exercise of
Subscription Rights to Shares
To be decided according to class and number of shares of the Restructured
Company to be issued upon the exercise of Subscription Rights to Shares and total
number of Subscription Rights to Shares above after taking into consideration theconditions, etc. of the Organizational Restructuring.
4) Value of the assets to be contributed upon the exercise of Subscription Rights toSharesThe value of the assets to be contributed upon the exercise of each Subscription
Right to Shares shall be the amount paid after restructuring obtained by adjusting theExercise Price stipulated in (Note 2) after taking into consideration the conditions etc.
of Organizational Restructuring multiplied by the number of shares of the
Restructured Company to be issued upon the exercise of the Subscription Rights toShares as determined in accordance with 3) above.
5) Exercise period of Subscription Rights to SharesStarting from the later of either the first date of the exercise period of thisSubscription Rights to Shares or the date on which the Organizational Restructuring
becomes effective and ending on the expiration date for the exercise of thisSubscription Rights to Shares.
6) Matters concerning increase in capital stock and capital reserve to be increased byissuing of shares by the Restructured Company upon the exercise of Subscription

Rights to SharesThis is to be determined in accordance with matters concerning increase in common
stock and legal capital reserve by issuing of shares upon exercise of Subscription
Rights to Shares.
7) Restriction on acquisition of Subscription Rights to Shares by transfer
Acquisition of Subscription Rights to Shares by transfer shall be subject to theapproval of the Board of Directors of the Restructured Company (or by the majority
decision of Directors if such company is not a company with Board of Directors).
8) Reasons and conditions for the acquisition of Subscription Rights to SharesThis is to be determined in accordance with reasons and conditions for theacquisition of Subscription Rights to Shares.

2. Status of Acquisition of Treasury Stock, etc.
Class of stocks, etc.

Acquisition of common stock(1) Status of the Acquisition of Treasury Stock Resolved at Shareholders’ Meetings
Not applicable.
(2) Status of the Acquisition of Treasury Stock Resolved at the Meetings of the Board of Directors
Not applicable.
(3) Details of the Acquisition of Treasury Stock not Based on the Resolutions of Shareholders’Meetings or the Resolutions of the Meetings of the Board of Directors
Not applicable.

(4) Status of the Disposition and Holding of Acquired Treasury StockClassification

Current fiscal year
Current period
Total disposition
Total disposition
Number of
Number ofamountamountshares (shares)
shares (shares)(Millions of Yen)
(Millions of Yen)

Acquired treasury stock for
―
―
―
―
which
subscribers
weresolicited
Acquired treasury stock that――――was cancelled
Acquired Treasury stocktransferred due to merger,――――
stock exchange or company
split
Others (―)――――
Number of treasury stock
6,008,089―
6,008,089―
held(Note) The number of shares of treasury stock acquired during the current period does not include
the number of shares due to purchase of shares below unit during the period from March 1,
2015 to the filing date of this securities report.
3. Basic Policy on Dividends
Under its basic policy for return of profit, the Company has constantly kept paying dividends,
while fully aware of the necessity to maintain sound financial position, and to provide sufficientretained earnings for active business development in the future, with the ultimate aim to
maximize its corporate value.

For the current fiscal year, the Company decided to pay dividend of ¥4.5 per share (¥4 pershare for the previous fiscal year including ¥1 of commemorative dividend), by the resolution of
the meeting of the Board of Directors held on February 12, 2015, in accordance with theaforementioned basic policy.
As a general rule of the Company, distribution of dividends of surplus is decided by the
Board of Directors, and payment in principle is made once a year in the form of year-end
dividends. Payment of dividends in accordance with the provisions of Article 459, Paragraph 1 of
the Companies Act shall be subject to the flexible judgment allowing for the management
circumstance and other factors.
(Note) Payment of dividends based on record date for the current fiscal year is as follows.
Resolution date

Total dividend amount(Millions of Yen)

Dividend per share (Yen)

5,952

4.50

February 12, 2015
ResolutionattheMeeting of the Board of
Directors(Reference) Trends in dividend per share (after adjustment for share split)
Fiscal period

14th

15th

16th

17th

18th

Year-end

December
2010

December
2011

December2012

December
2013

December
2014

Dividend per
2.00
2.50
3.00
4.00
share (yen)(Note) The Company conducted a 100-for-1 share split of its common stock on July 1, 2012.

4.50

4. Changes in Share Prices(1) The Highest and Lowest Share Prices by Fiscal Year during the Recent Five Years
Fiscal period

14th

15th

16th

December
2011

December
2012

17th

18th

December
December
2013
2014
1,637
Highest (yen)74,30094,800912
1,843*1,589672
Lowest (yen)56,20061,300641
1,130*1,450(Notes) 1 The above highest and lowest prices of the Company’s share prices are recorded on the
JASDAQ Securities Exchange for the period before March 31, 2010, on the Osaka
Securities Exchange (JASDAQ market) for the period from April 1, 2010 to October 11,
2010, the Osaka Securities Exchange JASDAQ (standard) for the period from October 12,2010 to July 15, 2013, the Tokyo Stock Exchange JASDAQ (standard) for the period from
July 16, 2013 to December 2, 2013, and the First Section of the Tokyo Stock Exchange
for the period since December 3, 2013.
2 Although the Company conducted the share split (a 100-for-1 share split on July 1, 2012
based on the resolution at the Board of Directors on February 20, 2012) during the 16th
fiscal year, the highest and lowest prices of the fiscal year are stated on the assumptionthat the Company had conducted such share split at the beginning of the fiscal year.
3 * marks indicate the highest and lowest prices recorded on the First Section of the Tokyo
Year-end

December
2010

Stock Exchange. The Company changed the listing of its shares to the First Section of
the Tokyo Stock Exchange as of December 3, 2013.
(2) The Highest and Lowest Share Prices by Month during the Recent Six Months
Month

July 2014

AugustSeptember

OctoberNovember

DecemberHighest (yen)

1,405

1,383

1,380

1,252

1,657

1,749

Lowest (yen)

1,313

1,276

1,234

1,130

1,260

1,508

(Note)

The above highest and lowest prices of the Company’s shares are recorded on the First
Section of the Tokyo Stock Exchange.

5. Directors
Title

Position

Name

Date of birth

Career summary

April 1988
May 1993
February
1996

February
1997
February
2001
March 2004
April 2006
Chairman
andRepresentative President
and Hiroshi
Director
Chief Executive Mikitani
Officer

March
1965

11,
January 2008
February
2010

November
2010
October 2011
January 2012
August 2012

January 2014

Joined The Industrial Bank of Japan,
Limited
Received MBA from Harvard Business
SchoolPresident and Representative Director(currently Representative Partner) ofCrimson Group, Inc. (currently Crimson
Group, LLC.) (current position)
FounderandPresident
andRepresentative
DirectoroftheCompany
ChairmanandPresident
andRepresentative
DirectoroftheCompany (current position)
Chief Executive Officer of the Company(current position)
Chairman and Representative Directorof Crimson Football Club, Inc. (current
position)
Chairman and Representative Directorof Rakuten Baseball, Inc.
Representative Director of Japan ebusiness Association (currently Japan
Association of New Economy) (current
position)
Director (President of Board of
Directors) of PRICEMINISTER S.A.S.
(current position)
Chairman of Tokyo Philharmonic
Orchestra (current position)
Director of Kobo Inc. (currently Rakuten
Kobo Inc.)
Chairman and Representative Director
and team owner of Rakuten Baseball,Inc. (current position)
Director (Chairman) of Kobo Inc.
(currently Rakuten Kobo Inc.) (current
position)

Term

March
2015 toMarch
2016

Number ofshares of theCompany
held(Thousandsof shares)

176,036

TitlePosition

Name

Executive Vice
President
Executive
Representative
Toru
Director of Digital
Director
ShimadaContent
andCommunication
Business Office

Career summary

Date of birth

March
1965

April 1987

Joined RECRUIT CO., LTD.

June 1989

Founded INTELLIGENCE, LTD

September
1989
November
2004
December
2004
March 2005

Director of INTELLIGENCE, LTD

3, March 2006
January 2008

November
2014

President and Representative Director
and team owner of Rakuten Baseball,Inc.
Executive Vice President Executive
Officer of the Company (current
position)
Executive
Directorof
DigitalContents
andCommunication
Business Office of the Company(current position)
Representative Director of theCompany (current position)

April 1983

Joined IBM Japan Ltd.

January 2001

Director, Manager of the Software
Division of IBM Japan Ltd.
Vice President of the Software Group ofInternational
Business
Machines
Corporation (U.S.)
Joined Microsoft Co., Ltd. (currently
Microsoft Japan Co., Ltd.)
Director of Microsoft Co., Ltd.

August 2014

October 2014

July 2002

March 2003
Executive Vice
President
Chief Information
Representative
Yasufumi
OfficerandDirector
Hirai
Rakuten Mobile
business
unit
officer

May 2003
November17, 1960

Vice President and Director of Rakuten
Baseball, Inc.
President and Representative Directorof Rakuten Baseball, Inc.
Director of the Company
Executive Officer of the Company
Managing Executive Officer of theCompany

July 2006
March 2008
August 2010
October 2012
February
2015
March 2015

Number ofshares of theCompany
held(Thousandsof shares)

Term

March
2015 to
March
2016

March
Senior Managing Executive Officer of 2015
Microsoft Co., Ltd.
March
Senior Vice President of Cisco Systems 2016
G.K.
President and General Manager of
Cisco Systems G.K.
Senior Vice President of Cisco
Systems, Inc.
Executive Vice President Executive
Officer of the Company (current
position)
Representative Director of theCompany (current position)

to

487

―

TitlePosition

Executive
President
Representative Executive
Director
Director
FinanceBusiness

Name

Date of birth

April 1980

Joined ORIX Credit Corporation

December2003
May 2005

General Manager Personal Finance
Department of the Company
Executive Officer of the Company

February
2006

President and Representative Directorof Rakuten Credit, Inc. (currently
Rakuten Card Co., Ltd.)
Vice Chairman and Director of Rakuten
Credit, Inc.
President and Representative Directorof Rakuten Credit, Inc. (current
position)
Executive Director of Rakuten Card
Business of the Company (current
position)Managing Executive Officer of theCompany
Executive Vice President Executive
Officer of the Company
Representative
DirectoroftheCompany (current position)
Joined The Industrial Bank of Japan,
Limited
Received MBA from Harvard Business
SchoolJoined Goldman Sachs Japan Co., Ltd.

March 2007

Vice
Masayukiof Hosaka

Career summary

July 31, 1954

April 2009

April 2012

February
2013
January 2014
March 2014
April 1987
May 1992

Executive Vice
President
Chief Financial
Representative Officer
Yoshihisa
Director
Executive
YamadaDirectorofFinance
Department

April
1964

September
1999
February
2000
17, March 2007
August 2010
March 2012
March 2013
January 2014

Director

Managing
Executive Officer
Masatada
Executive
Kobayashi
Director of Asia
RHQ

June 8, 1971

April 1994
November
1996
April 1997
November
1999
March 2003

Term

Number ofshares of theCompany
held(Thousandsof shares)

March2015 to
March
2016

243

March
2015 to
March
2016

131

March
2015 to
March
2016

2,515

Senior Director of the Company
Resigned as Director of the Company
Managing Executive Officer of theCompany
Director of the Company
Chief Financial Officer of the Company(current position)
Vice President and Representative
Director, Executive Vice President
Executive Officer of the Company(current position)
Joined Dai Nippon Printing Co., Ltd.
Joined RCA Co. Ltd.
Joined the Company
Director of the Company (current
position)
Executive Officer of the Company

April 2006

Managing Executive Officer of theCompany (current position)

September
2014

Executive Director of Asia Regional
Headquarters of the Company (current
position)TitlePosition

Name

Career summary

Date of birth

March 1996

Director

Managing
Executive Officer
Executive
Akio
DirectorofSugihara
GlobalHuman
Resources
Department

August1969

April 1997
November
1999
26,
March 2003
April 2006
April 2012

April 1986
May 1993

Director

Managing
Executive Officer
Kazunori
Executive
TakedaDirector of Travel
Business

May
1961

17,

July 2006
March 2007
January 2014

June 1990

Director

Managing
Executive Officer
Executive
KentaroDirectorof
HyakunoGeneralPlanning
Department

February
2007
July 2009
June 6, 1967
March 2013
April 2014

April 1997

Director

Managing
Executive Officer Hiroaki
Executive
Yasutake
Director of DU

July 2, 1971

October 1998
May 2005
March 2007
April 2007
January 2014

Founder and Senior Managing Directorof RCA Co., Ltd.
Joined the Company
Director of the Company (current
position)
Executive Officer of the Company
Managing Executive Officer of theCompany (current position)
Executive Director of Global Human
Resources
Department
oftheCompany (current position)
JoinedTOYOTAMOTORCORPORATION
Received MBA from Harvard Business
SchoolManaging Executive Officer of theCompany (current position)
Director of the Company (current
position)
Executive
DirectorofTravelBusiness of the Company (current
position)
JoinedTOYOTAMOTORCORPORATION
Executive Officer of the Company
Managing Executive Officer of theCompany (current position)
Director of the Company (current
position)
Executive
Directorof
GeneralPlanning
Department
oftheCompany (current position)
Joined NIPPON TELEGRAPH AND
TELEPHONE CORPORATION
Joined the Company
Executive Officer of the Company
Director of the Company (current
position)Managing Executive Officer of theCompany (current position)
Executive Director of DU of theCompany (current position)

Term

Number ofshares of theCompany
held(Thousandsof shares)

March2015 to
March
2016

5,899

March
2015 to
March
2016

451

March
2015 to
March
2016

358

March
2015 to
March
2016

402

TitlePosition

Name

Date of birth

Career summary

October 1998
March 2001
March 2003
July 2004
Director

Charles B. April
Baxter1965

19,
September
2005
March 2011
April 1980

June 1985
May 1986
November 1986
June 1994
Director

Koichi
Kusano

March
1955

22,
January 1996
November 1999
January 2004

April 2013
September
2014
April 1975
November 1993
April 1999

June 2000
November 2003
Director

Ken
Kutaragi

August1950

2, December 2006

June 2007
March 2010
June 2011
June 2013CEO of eTranslate, Inc.
Director of the Company
Retired as Director of the Company
Chairman of Wineshipping.com LLC(current position)
Manager of LinkShare Corporation(currently RAKUTEN MARKETING
LLC) (current position)
Director of the Company (current
position)
Registered with Dai-ichi Tokyo Bar
Association
Joined Nishimura & Partners
Attorney and Partner of Nishimura &Partners
Graduated from Harvard Law School(LL.M.)
Admitted as Attorney-at-law in New
York, USA
Outside Corporate Auditor of KOITO
MANUFACTURING
CO.,
LTD.
(current position)
Attorney and Deputy Senior Partnerof Nishimura & Partners
Director of the Company (current
position)
Attorney and Senior Partner ofNishimura & Partners (currently
Nishimura & Asahi) (current position)
Professor of Keio University Law
School (current position)
Visiting Professor of Harvard Law
School (current position)
Joined Sony Corporation
DirectorofSonyComputerEntertainment Inc.
President
andRepresentative
DirectorofSonyComputerEntertainment Inc.
Director of Sony Corporation
Director, Executive Vice President
and COO of Sony Corporation
Representative Director, Chairman
and Group CEO of Sony ComputerEntertainment Inc.
Honorary
ChairmanofSony
Computer Entertainment Inc.
Director of the Company (current
position)
OutsideDirectorofNojimaCorporation (current position)
Outside Director of MarvelousAQL
Inc. (current position)

Term

Number ofshares of theCompany
held(Thousandsof shares)

March2015 to
March
2016

―

March
2015 to
March
2016

70

March
2015 to
March
2016

10

TitlePosition

Name

Career summary

Date of birth

April 1965
December
1974
March 1986

Director

Hiroshi
FukinoSeptember
February 4, 1994
1942
May 2002
May 2004

March 2008
August 1984
March 1987
April 1987
April 1990

Director

Jun Murai

March
1955

29,

April 1997

May 2005
October 2009

September
2011
March 2012
June 1996
July 1997
July 1998
July 2003

Director

Youngme
Moon

April
1964

24,

September
2005
July 2007

July 2010

July 2013
July 2014

March 2015

Joined JEOL Ltd.
Joined Seiko Instruments & Electronics
Ltd. (currently Seiko Instruments Inc.)
President of Seiko Instruments &Electronics USA (currently Seiko
Instruments USA Inc.)
Representative Director and Chairmanof Dell Computer Japan (currently Dell
Japan Inc.)
Outside Director of MISUMI Group Inc.
(current position)
President and Representative Directorof Fukino Consulting Inc. (current
position)
Director of the Company (current
position)
Assistant at Information Processing
Center of Tokyo Institute of Technology
Received Ph. D in Engineering from
Keio University
Assistant at Large-scale Computer
Center, the University of Tokyo
Associate Professor of Faculty ofEnvironment and Information Studies of
Keio University
Professor of Faculty of Environment
and Information Studies of Keio
University (current position)
Vice-PresidentofKeio
GijukuEducational Corporation
Dean of Faculty of Environment andInformation Studies of Keio University(current position)
Outside Director of BroadBand Tower,
Inc. (current position)
Director of the Company (current
position)
Received Ph. D from Stanford
University
Assistant Professor of Massachusetts
Institute of Technology (MIT)Assistant
ProfessorofHarvardBusiness School
Associate
ProfessorofHarvardBusiness School
Director of Avid Technology, Inc.
(current position)
Donald K. David Professor of Business
Administration of Harvard Business
SchoolSenior Associate Dean for and Chair ofthe MBA Program and Donald K. David
Professor of Harvard Business School
Director of Zulily, Inc. (current position)
Senior Associate Dean of Strategy andInnovation and Donald K. David
Professor of Harvard Business School(current position)
Director of the Company (current
position)

Term

Number ofshares of theCompany
held(Thousands ofshares)March2015 to
March
2016

―

March
2015 to
March
2016

―

March
2015 to
March
2016

―

TitlePosition

Name

Date of birth

Career summary

April 1969

January 1993
November
1994
April 1999

Company
Auditor(Full-time)

YoshiakiSenoo

February 5,
1947

June 2007
October 2007
June 2008
June 2010
March 2011
March 2011
April 1982

June 1988
June 1995

July 1997

June 2000
Company
Auditor

Takeo
HirataJanuary 16,
1960
January 2001

July 2002
April 2006

March 2007
March 2007
August 2013

Joined The Sumitomo Bank, Limited(currently Sumitomo Mitsui Banking
Corporation)
Manager of Gotanda Branch of The
Sumitomo Bank, Limited
Senior Director of Sumitomo Capital
Securities Co., Ltd.
Company Auditor of Daiwa Securities
SB Capital Markets Co., Ltd. (currently
Daiwa Securities Co. Ltd.)
Corporate Officer of Japan Post
Holdings Co., Ltd.
Executive Officer of Japan Post
Holdings Co., Ltd.
Managing Executive Officer of Japan
Post Holdings Co., Ltd.
Outside Company Auditor of Rakuten
Bank, Ltd. (current position)
Company Auditor of the Company(current position)
Outside Company Auditor of Rakuten
Auction, Inc. (current position)
Joined the Ministry of International
Trade and Industry (currently Ministryof Economy, Trade, and Industry)
Received a master’s degree from
Harvard Kennedy School
Legal Examination Commissioner ofGeneral Affairs Division of Minister’s
Secretariat of International Trade andIndustry
Financial
Cooperation
OfficeofInternational Trade Policy Bureau of
Ministry of International Trade andIndustry
Director of Petroleum Exploration and
Production Division of Agency of
Natural Resources and Energy of
Ministry of International Trade andIndustry
Director of Petroleum and Natural Gas
Division of Agency for Natural
Resources and Energy of Ministry of
Economy, Trade and Industry
General Secretary of Japan Football
Association
Professor of Waseda University
Graduate School of Sport Sciences(current position)
Company Auditor of the Company(current position)
Chairman of the Japan Society ofSports Industry (current position)
Special Advisor to the Cabinet (current
position)

Term

Number ofshares of theCompany
held(Thousandsof shares)

March2015 to
March
2019

―

March
2015 to
March
2019

―

TitlePosition

Name

Date of birth

Career summary

April 1991

May 1997
September
1997
January 1998
May 1998

Company
Auditor

Katsuyuki September
Yamaguchi 22, 1966

February
1999
July 1999
August 2000
March 2001
January 2004

July 2007
March 2011

September
2013
Total

Term

Number ofshares of theCompany
held(Thousands)

Registered with Dai-ichi Tokyo Bar
Association
Joined Nishimura & Partners
Graduated from Columbia Law School(LL.M.)
Served Debevoise & Plimpton LLP in
New York
Admitted as Attorney-at-law in New
York, USA
Served Debevoise & Plimpton LLP in
Paris
Served Simeon & Associes in Paris
Reinstated at Nishimura & Partners
Attorney and Partner of Nishimura &Partners
Company Auditor of the Company(current position)
Attorney and Partner of Nishimura &Partners (currently Nishimura & Asahi)(current position)
Company Auditor of FreeBit Co., Ltd.
(current position)
Outside Audit & Supervisory Board
Member of Jupiter Telecommunications
Co., Ltd. (current position)
Outside Company Auditor of BrainPad
Inc. (current position)

March2012 to
March
2016

54

186,656(Notes) 1 Five Directors, Koichi Kusano, Ken Kutaragi, Hiroshi Fukino, Jun Murai and Youngme
Moon are all External Directors.
2 Three Company Auditors, Yoshiaki Senoo, Takeo Hirata and Katsuyuki Yamaguchi are allExternal Company Auditors.
3 To prepare for when the number of Company Auditors falls below the number stipulated inlaws and regulations, the Company appointed one Substitute Company Auditor inaccordance with Article 329, Paragraph 2 of the Companies Act. The career summary of
the Substitute Company Auditor is as follows.

Name

Date of birth

Career summary
April 1982
June 1999

HiroshiTakahashi

November 2003
May 11, 1957
March 2012
June 2013

Number of sharesof the Company
held

Joined Wako Securities Co., Ltd. (currently Mizuho
Securities Co., Ltd.)
Joined the Company
Company Auditor of DLJdirect SFG Securities, Inc.
(currently Rakuten Securities, Inc.) (current position)
Company Auditor of bitWallet, Inc. (currently Rakuten
Edy, Inc.) (current position)
Company Auditor of Stylife Corporation (current
position)

21(Notes) 1 No material interest exists between the Company and the Substitute Company Auditor.
2 Substitute Company Auditor Hiroshi Takahashi is the Company Auditor of Stylife
Corporation, although, he will retire from the position of Company Auditor of the said
company as of March 31, 2015, due to the transfer of fashion e-commerce business ofthe said company to the Company, and due to the absorption-type merger whosescheduled effective date is April 1, 2015 where the Rakuten Super Logistics, Inc., theCompany’s wholly owned subsidiary, as the surviving company will succeed Stylife
Corporation, the dissolved company.

6. Corporate Governance(1) Status of Corporate Governance
Basic Approach to Corporate Governance
The Group Companies give top priority to effective corporate governance. The Group
Companies have implemented a range of measures to strengthen their competitiveness andmaximize corporate value by maintaining effective internal control and risk management
systems, with a view to realizing their goal of becoming the world’s leading Internet services
companies.
1)

Corporate Governance(a) Basic Structure of Corporate Governance and Reasons for Adoption
The Company supervises management by using a Company Auditor System. In March 2003, theCompany adopted an Executive Officer System to separate the supervisory and executive rolesof management. Under that system, functions previously performed by the Board of Directors
were separated, with directors retaining responsibility for “management decision making andsupervision,” while “executive functions” were transferred to the Executive Officers.
In April 2012, the Company reviewed the scope of duties of Executive Officers to speed up
their execution processes. In addition, the Company has introduced corporate functions, which
comprehensively manage all Group Companies businesses, aiming to strengthen a group-wide
internal control.
(b) Corporate Organization(Directors, Board of Directors, Executive Officers, etc.)
The Board of Directors consists of 16 Directors, including five External Directors. It is stipulated
in the Articles of Incorporation that the number of Directors shall be not more than 16.
Resolutions to appoint Directors must be approved by a majority of voting rights at an Annual
General Shareholders’ Meeting attended by shareholders holding at least one-third of voting
rights.
In addition to regular monthly meetings, the Board of Directors holds special meetings as
required. At these meetings, Directors make decisions on important management matters andsupervise Executive Officers’ activities. Executive Officers, upon receiving business execution
orders from the CEO, carry out business execution within the administrative authority set forth by
the Company. To enhance the corporate value, as to a case that requires new capital
expenditure including any investment, members, including External Directors, of the Investment
Committee preliminarily deliberate on whether the case should be proceeded or not. The resultof such deliberation shall be reported to the Board of Directors.
Status of business results for major segments is shared weekly at the Budget Meeting,which Executive Officers attend. To ensure appropriate and efficient conduct of business
operations, activities in individual segments are supervised by management councils convened
within each segment, as well as by management councils convened by each corporate function
such as human resources, financial management, accounting, legal management and othermanagement aspects across the Group Companies.

(Company Auditors and the Board of Auditors)
The Company has three Company Auditors, including one full-time auditor. All three are external
auditors.
A three-member Company Auditors’ Office assists the Company Auditors in theperformance of their duties. In addition to its regular meetings, the Board of Auditors holds
special meetings as required. To prepare for when the number of Company Auditors falls below
the number stipulated in laws and regulations, the Company appointed one Substitute Company
Auditor.
In accordance with audit policies and plans established by the Board of Auditors, theCompany Auditors attend meetings of the Board of Directors and other important management
meetings, and receive reports about the state of the Company’s operations from Directors, theInternal Audit Department and other sources. In addition, they check the operations of theCompany’s head office and subsidiaries. In addition, the Company Auditors receive audit reports
from the independent auditors and peruse financial statements and business reports. They also
discuss various matters with the CEO.
<Corporate Governance Structure>(c) Internal Control Systems
Basic internal control policies for the Company are determined by the Board of Directors. The
Company has declared its intention to comply with all regulatory requirements, and to apply highethical standards to its business activities.
The performance of business operations by Directors and employees is subject to regular
operational audits by the Internal Audit Department, an independent unit reporting directly to theCEO. The Compliance Committee also helps to ensure that all operations are conducted
appropriately by implementing group-wide compliance initiatives. Compliance training is provided
for all Directors and employees to enable them to develop the knowledge and ethical perceptions
needed to perform their duties. In addition, the Company has set up a hotline, the Rakuten
Hotline, for reporting of compliance violations. Furthermore, the operation status of the hotline
and compliance-related matters that have been detected by the Internal Audit Department
through audits are reported, as necessary, to the Compliance Committee.
Directors and employees are closely supervised in the performance of their duties by theExternal Directors and External Company Auditors. Attorneys have been appointed to help eachof the external directors and external auditors verify compliance with the Articles of Incorporation
and regulatory requirements from an objective perspective based on expert knowledge.
The Company is also expanding the Rakuten Group Regulations (RGR) as the basis for
integrated group management, with the aim of strengthening corporate governance and paving
the way for further growth.
(d) Risk Management Systems
The Company has established a Group Risk Management Committee chaired by the CEO forthe comprehension of risks, from a unified perspective, that may have a material adverse effecton the Group Companies and for providing an appropriate response to such risks. Under theGroup Risk Management Committee, the Company conducts risk management by establishingrisk control sections within business units, responsible for 10 risk categories including
compliance risk, information security risk, and risks pertaining to natural disasters, conflicts andaccidents. The Governance Risk Compliance Department and risk control sections, which aregroup-wide department/sections in charge of risk management, draw up a policy under which
each business unit and each group company implements measures.
Each business units, in accordance with the Rakuten Group Regulations (RGR),
consolidates risk information and ensures thorough and consistent application of risk
management through such actions as reporting on risks related to business execution at theManagement Conferences held in each business unit, as well as defining risks through risk
assessments regularly conducted by the Governance Risk Compliance Department. Each groupcompany has also established its own risk management system, especially in financial
businesses, and instituted the PDCA cycle to handle company-specific risks other than groupwide risks.
In addition, measures for risks on information security and information systems are also
implemented in development divisions, and the Company makes efforts to minimize this risk
factor throughout the group including the acquisition of ISMS (Information Security Management
System) certification.
As to risks pertaining to the occurrences of natural disasters, etc., the Company works to
prepare emergency response measures including the formulation of business continuity plans.

2)Internal Audits, Company Auditor Organization, Personnel and ProceduresInternal audits are conducted by the 23-member Internal Audit Department, which is anindependent unit reporting directly to the CEO. Head office divisions, business units and groupcompanies are all subject to internal auditing. Audits are implemented under plans approved by
the Board of Directors with the aim of verifying the legality, appropriateness and efficiency ofoperations. The purpose of the internal audit process is to ensure that business operations are
conducted in an appropriate manner by identifying any improvements that may be required, andby monitoring the implementation of those improvements. Audit results are reported to the Boardof Directors, the CEO, the Compliance Committee responsible for areas covered by audits, andthe Company Auditors. The Internal Audit Department also cooperates with the Board of Auditors.
The Internal Audit Department is also working to enhance the effectiveness of internal audits
throughout the group by working closely with audit units in the Group Companies. In addition toholding regular exchanges of opinions and conducting information sharing, the Group
Companies shares the results of the internal audits with the Independent Auditors, as necessary.
Information about audits by Company Auditors can be found under “1) Corporate
Governance (b) Corporate Organization (Company Auditors and the Board of Auditors).”3)

External Directors and External Company Auditors
The Company’s 16-member Boards of Directors currently includes five External Directors, and all
three Company Auditors are External Company Auditors. Mr. Koichi Kusano, External Director, isa Senior Partner in Nishimura & Asahi, and Mr. Katsuyuki Yamaguchi, External Director, is aPartner in Nishimura & Asahi, a law firm with which the Company has a business relationshipthat includes provision of services. Ms. Youngme Moon, External Director, is Director of Zulily,Inc., with which the Company competes in the U.S. Internet services business. Mr. Koichi
Kusano and Mr. Ken Kutaragi, both External Directors, and Mr. Katsuyuki Yamaguchi, External
Company Auditor, respectively hold the Company’s shares, and the numbers of shares held bythem are as described in the respective columns of “Number of shares held” in “IV. Informationon the Company Submitting Financial Reports 5. Directors.” There are no other personal, capitalor business relationships or significant interests.
Although the Company has not established standards and policies to ensure theindependence from the Company for electing External Directors and External Company Auditors,
the Company has referred to the criteria of Tokyo Stock Exchange, Inc. regarding independence
of independent directors (III 5. (3)-2 of the Guidelines concerning Listed Company Compliance,etc.) in the appointment of its highly independent External Directors and External Company
Auditors. Three External Directors, Ken Kutaragi, Hiroshi Fukino and Jun Murai are Independent
Directors specified by the regulations of the Tokyo Stock Exchange, Inc. Our External Directors
and External Company Auditors’ expertise and objective viewpoints strengthen supervision of
the Board of Directors in performance of its duties. They also enhance the effectiveness ofcorporate governance by allowing a wide range of discussion with the Board of Directors.
The five External Directors include attorneys, notably Mr. Koichi Kusano, who cancontribute wide-ranging knowledge and experience of corporate law. Another, Mr. Ken Kutaragi,
has extensive knowledge of the entertainment business and technology and wide-ranging
experience in business management. Mr. Hiroshi Fukino also has extensive experience ofbusiness management and expertise as a business consultant. Mr. Jun Murai has adistinguished background as an academic expert in Internet technology. And Ms. Youngme
Moon has a distinguished background as an academic in the field of business management. All
External Directors have been appointed for their ability to provide management with advice andrecommendations based on their experience and expert knowledge.
There are three External Company Auditors. Mr. Yoshiaki Senoo has extensive knowledge
and experience relating primarily to finance business, business management and compliance. Mr.
Takeo Hirata brings wide-ranging expert knowledge and experience relating primarily to sportand education. Mr. Katsuyuki Yamaguchi was selected as a person who could contribute to theCompany’s audit systems through his extensive knowledge and experience, especially as an
attorney, and through his perspectives as an expert on corporate law. Documents for meetings ofthe Board of Directors are forwarded in advance to the External Directors and External Company
Auditors, who, if necessary, can also seek advance briefings from and consultations with theunits concerned. As noted above, the External Auditors also actively exchange views with theInternal Audit Department and the independent auditors.
The Company has signed an agreement with each of its External Directors and External
Company Auditors under the provisions of Article 427, Paragraph 1 of the Companies Act. Thisagreement is summarized below:
Provided that duties have been carried out in good faith and without gross negligence, thetotal liability in situations as defined in Article 423, Paragraph 1 of the Companies Act will belimited to the sum of the amounts stipulated in the following items:i. Two times the bigger of the sum of fees, bonuses and other payments received or asset
benefits received in the year that includes the date on which the event that resulted in the liability
occurred, and in the preceding year, or the value of asset benefits to be received (excluding
benefits stipulated under Item ii below).
ii.Two times the smaller of the sum of retirement bonuses or asset benefits that are in the natureof retirement bonuses, or that amount divided by the number of years during which the office ofExternal Director was held.
iii. The amounts stipulated below if Subscription Rights to Shares, as defined in Article 238,
Paragraph 3 of the Companies Act, were exercised or transferred after the person was
appointed as an External Director.
1. If the Rights have been Exercised
An amount calculated by subtracting the sum of the issue price of the Subscription Rights toShares and the paid-in value per share on the exercise date from the market price per shareon the exercise date and multiplying the result by the number of shares granted through theexercise of the Subscription Rights to Shares.
2. If the Rights have been Transferred
An amount calculated by subtracting the issue price of the Subscription Rights to Sharesfrom the transfer price and multiplying the result by the number of Subscription Rights toShares.

4)

Remuneration for Directors and Company Auditors(a) Total Amounts of Fees, etc., for Each Category of Officers of the Company Submitting Financial
Reports, Total Amount of Each Type of Remuneration Paid, and Number of Officers Eligible
Category of Officer Total Amount of Fees, etc.

Category of officer

Total amountof fees, etc.
(Millions of
Yen)

Directors (excluding
External Directors)
Company Auditors(excluding External
Company Auditors)
External Directors
andCompany
Auditors

Total amount of each type of remuneration(Millions of Yen)
Basic fees

Stock
options

Number ofrecipients

Bonuses

494

380

99

15

11

―

―

―

―

0

126

119

7

―

9

(b) Consolidated Total Amount of Fees, etc., for Directors and Company Auditors of the Company
Submitting Financial Reports
For purposes of full disclosure, we declare that no person in the filing company received a
consolidated total amount of fees of more than 100 million yen this fiscal year.
(c) Total Amount of Significant Items Included in Salaries and Bonuses Paid to Directors who are
Also Employees
Total amount (Millions of Yen)

Number of recipients

270

6

Details
Salaries (including bonuses) paid to
directors who are also employees(d) Policies Concerning Amounts of Remuneration for Directors and Company Auditors, and the
Adoption of Methods for Calculating Those Amounts
Business performance is taken into account in decisions concerning remuneration for Directors
and Company Auditors. A resolution of the 18th Annual General Shareholders’ Meeting held on
March 27, 2015, set the upper limit for total remuneration over the year at ¥1,400 million(including ¥200 million for External Directors). Total remuneration for Company Auditors is within
the upper limit of ¥120 million as stipulated in a resolution of the 10th Annual General
Shareholders’ Meeting held on March 29, 2007.
5) Status of Securities Held by the Company(a) Shares Held for Other Reasons than Pure Investment Purpose
Number of stock names 12
Total balance sheet amount ¥1,787 million

(b) Nature of Holdings, Stock Names, Number of Shares, Total Amount Recorded in Balance Sheet,
Purpose of Holdings of the Shares Held for Other Reasons than Pure Investment Purpose(Previous fiscal year)
Special Investment Securities
Number of shares(shares)Amount recorded inbalance sheet(Millions of Yen)

F@N Communications, Inc.

2,311,600

7,235

Synergy Marketing, Inc.

1,136,000

Stock name

FreeBit Co., Ltd.

199,200

Alpen Co., Ltd.

18,000Purpose of holding

To enhance business
relationshipTo enhance business
971
relationshipTo enhance business
394
relationshipTo enhance business
34
relationship(Current fiscal year)
Special Investment Securities
Number of shares(shares)Amount recorded inbalance sheet(Millions of Yen)

FreeBit Co., Ltd.

199,200

224

Alpen Co., Ltd.

18,000Stock namePurpose of holding

To enhance business
relationshipTo enhance business
30
relationship(c) Shares Held Purely for Investment Purposes
Not applicable.
6) Audits by Independent Auditors
The Company has entered into an auditing agreement with Ernst & Young ShinNihon LLC, which
conducts financial audits in accordance with the Japanese Companies Act and the Financial
Instruments and Exchange Act.
In fiscal 2014, audits were conducted by the following certified public accountants andassistants.
[Certified public accountants]
Designated and Engagement Partner
Designated and Engagement Partner
Designated and Engagement Partner*

Tokuya Takizawa
Hiroshi Nishida
Kenji Takagi

Since these accountants have conducted audits for fewer than or equal to seven years, thenumber of years has been omitted.

[Names of Assistants]
25 certified public accountants and 42 others

7) Other Provisions of the Articles of Incorporation(a) Matters Requiring Resolutions of Shareholders’ Meetings that Can Be Implemented by
Resolutions of the Board of Directors
The Articles of Incorporation of the Company state that, unless otherwise stipulated in laws andregulations, the Board of Directors is authorized to pass resolutions on matters pertaining to the
distribution of surpluses and other matters, as stipulated in the items of Article 459, Paragraph 1of the Companies Act, without resolutions of shareholders’ meetings. The purpose of thisprovision is to allow the Board of Directors to implement a flexible dividend policy.
(b) Items Requiring Special Resolutions of Shareholders’ Meetings
The Articles of Incorporation of the Company state that matters requiring resolutions ofshareholders’ meetings, as stipulated in Article 309, Paragraph 2 of the Companies Act, require
resolutions supported by at least two-thirds of voting rights at shareholders’ meetings attended
by shareholders holding at least one-third of voting rights. The purpose of this provision is tofacilitate the administration of shareholders’ meetings by easing the quorum requirements for
special resolutions.
(2) Audit Fees, etc.
1) Audit Fees Paid to Certified Public Accountants, etc.
Item

2013

2014

Millions of Yen

Millions of Yen

Fees paid for Fees paid foraudit certification non-audit
services
services
Companysubmitting financial
reports
Consolidated
subsidiaries
Total

Fees paid for Fees paid
audit certification non-audit
services
services

for

153

0

89

21

218

17

126

8

371

17

215

29

2) Other Important Matters Pertaining to Fees
Fiscal year ended December 31, 2013
Some consolidated subsidiaries of the Company are audited by EY member firms, which belong
to the same network as Ernst & Young ShinNihon LLC, independent auditor of the Company andfees paid to the firms amounted to ¥81 million.
Fiscal year ended December 31, 2014
Some consolidated subsidiaries of the Company are audited by EY member firms, which belong
to the same network as Ernst & Young ShinNihon LLC, independent auditor of the Company andfees paid to the firms amounted to ¥133 million.
3) Non-Audit Services Provided to the Company Submitting Financial Reports by Certified Public
Accountants and Other Audit Personnel
Fiscal year ended December 31, 2013
The non-audit services for which the Company pays fees to certified public accountants andother audit personnel consist primarily of advisory services, etc. relating to the systemmanagement structure.
Fiscal year ended December 31, 2014
The non-audit services for which the Company pays fees to certified public accountants andother audit personnel consist primarily of advisory and instruction services relating to internal
controls over financial reporting.
4) Policy on Setting of Audit Fees
The policy of the Company regarding audit fees paid to certified public accountants and other audit
personnel is to pay fees that are appropriate based on relevant factors, including the size of theCompany, the characteristics of its business activities, and the number of days required for audits.

V. Financial Information
1. Basis of Preparation of Consolidated and Non-Consolidated Financial Statements(1) The consolidated financial statements of the Company are prepared in accordance with
International Financial Reporting Standards (hereinafter referred to as “IFRS”), as issued by the
IASB, as the Company satisfies the requirements of a “specified company” prescribed in Article
1-2 of the Rules on Terminology, Formats and Compilation Methods of Consolidated Financial
Statements (Cabinet Office Ordinance No. 28 of 1976; hereinafter referred to as the “Rules on
Consolidated Financial Statements”) as provided in Article 93.
(2) The non-consolidated financial statements of the Company are prepared in accordance with theRules on Terminology, Formats and Compilation Methods of Non-Consolidated Financial
Statements, etc. (Cabinet Office Ordinance No. 59 of 1963; hereinafter referred to as the “Rules
on Non-Consolidated Financial Statements, etc.”).
The non-consolidated financial statements are prepared in accordance with the provisions set
out in Article 127 of the Rules on Non-Consolidated Financial Statements, etc., as the Company
is categorized as a company that may be allowed to prepare its financial statements according to
special provisions.
(3) Differences in main accounting items between the consolidated financial statements prepared inaccordance with IFRS and those prepared in accordance with JGAAP are stated in “II. Business
Overview 1. Summary of Results.”
2. Audit Reports
Pursuant to the provisions set out in Paragraph 1, Article 193-2 of the Financial Instruments andExchange Act, the Company’s consolidated financial statements and non-consolidated financial
statements for the fiscal year (from January 1, 2014 to December 31, 2014) were audited by
Ernst & Young ShinNihon LLC.
3. Specific Efforts to Ensure the Appropriateness of Consolidated Financial Statements
The Company has undertaken specific measures to ensure the appropriateness of its
consolidated financial statements, the details of which are as follows.
In order to establish a structure for adequately understanding the accounting standards in detailand appropriately responding to changes in them, the Company has become a member of the
Financial Accounting Standards Foundation and has been expanding its understanding ofaccounting standards as well as responding to new standards.
4. Establishment of a Structure to Enable the Proper Preparation of Consolidated Financial
Statements in Accordance with IFRSThe Company continually works towards the establishment of a structure that enables it toproperly prepare consolidated financial statements under IFRS, the details of which are as
follows.
In terms of IFRS application, the Company keeps updated on the latest standards by obtainingpress releases and statements of standards released by the International Accounting Standards
Board, as necessary. Additionally, in order to properly prepare consolidated financial statementsin accordance with IFRS, the Company has prepared Group Accounting Policies and Accounting
Guidelines in accordance with IFRS, and has conducted its accounting accordingly.

1. Consolidated Financial Statements(1) Consolidated Financial Statements
1) Consolidated Statements of Financial Position
Thousands of
U.S. Dollars

Millions of Yen

31,
Note December
2013
AssetsCash and cash equivalents
Accounts receivable — trade
Financial assets for securities
business
Loans for credit card business
Investment securities for banking
business
Loans for banking business
Investment securities for insurance
business
Derivative assets
Investment securities
Other financial assets
Investments in associates and joint
ventures
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Total assets
Liabilities
Accounts payable — trade
Deposits for banking business
Financial liabilities for securities
business
Derivative liabilities
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provisions
Policy reserves and others for
insurance business
Deferred tax liabilities
Other liabilities
Total liabilities
EquityEquity attributable to owners of theCompany
Common stock
Capital surplus
Retained earnings
Treasury stock
Other components of equity
Total equity attributable toowners of the Company

December 31,
2014

December 31,
2014¥384,008
73,443
1,218,987¥428,635
88,871
1,110,888$3,573,149
740,8399,260,487

544,314
197,897

692,886
222,297

5,775,975
1,853,093

239,818
10,233321,877
12,2052,683,203
101,742

12,58834,025
159,058
8,189

13,92750,506144,283
8,932

116,097
421,024
1,202,759
74,45830,408235,881
31,59429,365
3,209,808

34,811490,679
35,00624,8923,680,695

290,188
4,090,355
291,814207,503
30,682,686

115,357
959,960
1,077,971

137,042
1,137,195
995,141

1,142,397
9,479,785
8,295,607

8,023
389,683
226,771
30,191
41,02018,852

11,769589,927
242,616
27,12943,96919,847

98,1084,917,698
2,022,474
226,150
366,531
165,447

25

9,123
26,4032,903,354

12,43735,5373,252,609

103,676
296,240
27,114,113

26
26
26
26

109,530
116,555
61,226(3,649)16,401

111,602
118,528
124,796(3,649)70,285930,327
988,063
1,040,313(30,419)585,904

300,063421,5623,514,188

5
6
7
8
9
10
11
12
13
14
16
17
18
25

19
20
12
21
22
23
24

Millions of Yen

Non-controlling interests
Total equity
Total liabilities and equity

31,
Note December
2013
6,391
306,454
3,209,808

December 31,
2014
6,524
428,086
3,680,695

Thousands of
U.S. Dollars

December 31,
2014
54,3853,568,573
30,682,686

2) Consolidated Statements of Income
Thousands of
U.S. Dollars

Millions of Yen

Year ended
Note December 31,
2013
Continuing operations
Revenue
Operating expenses
Other income
Other expenses
Operating income
Financial income
Financial expenses
Share of income of associates andjoint ventures
Income before income tax
Income tax expense
Net income

27
28
29
29
30
30
16
25

Net income attributable to:
Owners of the Company
Non-controlling interests
Net income

Year ended
December 31,
2014

Year ended
December 31,
2014¥518,568
420,374
1,831
9,781
90,244
197
1,962
131

¥598,565
491,279
6,724
7,613
106,397
230
2,986
604

$4,989,705
4,095,357
56,052
63,463886,937
1,917
24,891
5,035

88,61045,12943,481

104,245
33,142
71,103868,998
276,275
592,723

42,900581
43,481

70,614489
71,103588,646
4,077
592,723

Yen

Earnings per share attributable toowners of the Company:
31
Basic
31
Diluted¥32.6032.41

U.S. Dollars¥53.47
53.15

$0.45
0.44

3) Consolidated Statements of Comprehensive Income
Thousands of
U.S. Dollars

Millions of Yen

Year ended
Note December 31,
2013

Year ended
December 31,
2014

Year ended
December 31,
2014¥43,481¥71,103$592,723

38

9,500

19,200160,05325(3,330)(7,160)(59,686)

16

54

4

33

6,224

12,044100,400

18,29440,876

340,747

33

(407)

2,002

16,689

25
33

145

(767)

(6,394)

33

227

284

2,367

25
33

(83)

(110)

(917)

33

―

(2,597)(21,649)

25
33

―

987

8,228

18,176

40,675339,071

24,40052,719439,471

67,881

123,822

1,032,194

Net income
Other comprehensive income
Items that will not be reclassified to net
income:Gains (losses) on financial assets
measured at fair value through othercomprehensive income
Income tax effect of gains andlosses on financial assets measured
at fair value
throughothercomprehensive income
Share of other comprehensive
income of associates and joint
venturesTotal items that will not bereclassified to net income
Items that may be reclassified to net
income:Foreigncurrencytranslation
adjustments
Gains (losses) on cash flow hedges
recognized in other comprehensive
incomeIncome tax effect of gains or losses
on cash flow hedges recognized inother comprehensive income
Gains (losses) on cash flow hedges
reclassified
from
other
comprehensive income to net
incomeIncome tax effect of gains or losses
on cash flow hedges reclassified
from other comprehensive income to
net income
Gains or losses on effective cash
flow hedges reclassified from othercomprehensive income to initialcarrying amount of the hedged item
Income tax effect of gains or losses
on effective cash flow hedges
reclassified
from
other
comprehensive income to initialcarrying amount of the hedged item
Total items that may be reclassified
to net income
Other comprehensive income, net oftax

Comprehensive income

Thousands of
U.S. Dollars

Millions of Yen

Comprehensive income attributable to:
Owners of the Company
Non-controlling interests
Comprehensive income

Year ended
Note December 31,
2013

Year ended
December 31,
2014

Year ended
December 31,
2014

67,253628
67,881

123,319503
123,822

1,028,001
4,193
1,032,194

4) Consolidated Statements of Changes in Equity(Millions of Yen)
Other components of equity

Note

As of January 1, 2013

Financial
Total equity
instruments
Common Capital Retained Treasury Foreign
attributable tomeasured
at
Cash
Total
other
stock surplus earnings stock
owners of thecurrency
fair value
flow components
Companytranslation
through other hedges of equity
adjustments
comprehensive
income¥108,255 ¥116,599¥20,873 ¥(3,626)¥(7,782)¥1,826¥(203)¥(6,159)¥235,942

Noncontrollinginterests

Total
equity¥5,970 ¥241,912

Comprehensive income
Net income

42,900

Other comprehensive
income, net of tax
Total comprehensive
incomeTransactions
owners

－

－

1,275

1,275

42,900－42,900581

43,481

18,273

6,198

(118)

24,35324,35347

24,40018,273

6,198

(118)

24,353

67,253628

67,881

withContributions by anddistributions to owners
Issuancecommon stockofCash dividends paid

26, 3526, 36(3,944)

Reclassified
fromother components of37
equity to retained
earnings
Others1,793

26

Total contributions
by and distributions
to owners
Changes in ownershipinterests in subsidiaries
Issuance of common
stock
Acquisitions
anddisposals of non- 45
controlling interests

1,275

OthersTotal changes inownership interestsin subsidiaries
Total transactions withowners
As of2013

December

31,(1,793)

812

(396)

(23)

2,087

(2,547)(23)－(1,793)(1,793)－(1,793)

2,550

2,550

(3,944)(3,944)

－

－

393

393

(1,001)－(1,001)50

50(2,135)(2,135)(208)(2,343)

4

4

(49)

(45)

－

(2,131)

－

－

－

－

－

－

(2,131)(207)(2,338)

1,275

(44)

(2,547)(23)－(1,793)－(1,793)(3,132)(207)(3,339)109,530 116,555

61,226(3,649)10,491

6,231

(321)

16,401300,063

6,391 306,454

Comprehensive income
Net income

70,614

Other comprehensive
income, net of tax
Total comprehensive
incomeTransactions
owners

－

－

2,072

2,071

70,614－70,614489

71,10352,71940,863

12,043(201)

52,70552,705

14

40,863

12,043(201)

52,705

123,319503 123,822

4,143

4,143

(5,271)(5,271)

－

－

with

Contributions by anddistributions to owners
Issuance of common
26, 35stock
Cash dividends paid

26, 36

Reclassified
fromother components of37
equity to retained
earnings(5,271)(1,179)

1,179

1,179

Other components of equity

Note

OthersFinancial
Total equity
instruments
Common Capital Retained Treasury Foreign
attributable tomeasured
at
Cash
Total
other
stock surplus earnings stock
owners of thecurrency
fair value
flow components
Companytranslation
through other hedges of equity
adjustments
comprehensive
income26

Total
contributions
by and distributions
to owners
Changes in ownershipinterests in subsidiaries
Issuance of common
stock
Acquisitions
anddisposals of non- 45
controlling interests

2,072

OthersTotal changes inownership interestsin subsidiaries
Total transactions withowners
As of2014

December

31,

1,159

(594)

3,230

(7,044)

Noncontrollinginterests

565
－

－

1,179

－

1,179

(563)

Total
equity

565
－

(563)

132

132

(1,190)(1,190)(531)(1,721)

(67)

(67)

29

(38)

－

(1,257)

－

－

－

－

－

－

(1,257)(370)(1,627)

2,072

1,973

(7,044)

－

－

1,179

－

1,179

(1,820)(370)(2,190)111,602 118,528

124,796(3,649)51,354

19,453(522)

70,285421,5626,524 428,086

(Thousands of U.S. Dollars)
Other components of equity

Note

As of
2013

December

31,

Common Capitalstock
surplusRetainedearnings

Treasurystock$913,054$510,387$(30,419)$971,616

Financial
Total equity
instruments
Total attributable to NonForeign
measured at Cashother owners of the controlling Total equity
currencyinterests
fair value
flow compon Company
translation
through other hedges ents ofadjustments
comprehensi
equityve income$87,454$51,942 $(2,675) $136,721$2,501,359$53,276$2,554,635

588,646

4,077

592,723

Comprehensive income
Net income

588,646

Other comprehensive
income, net of tax
Total comprehensive
incomeTransactions
owners－－17,273

17,264

588,646－

340,639

100,392(1,676) 439,355

439,355

116

439,471

340,639

100,392(1,676) 439,355

1,028,001

4,193

1,032,194

withContributions by anddistributions to owners
Issuance of common
26, 35stock
Cash dividends paid

26, 36(43,940)

Reclassified
fromother components of37
equity to retained
earnings
Others(9,828)26

Total
contributions
by and distributions
to owners
Changes in ownershipinterests in subsidiaries
Issuance of common
stock
Acquisitions
anddisposals of non- 45
controlling interests

17,273

OthersTotal changes inownership interestsin subsidiaries
Total transactions withowners
As of2014

December

31,

9,662

(4,952)

26,926(58,720)

9,828

－

－

9,828

9,828

－

9,828

34,53734,537(43,940)(43,940)

－

－

4,710

4,710

(4,693)－(4,693)

1,100

1,100

(9,920)(9,920)(4,426)(14,346)

(559)

(559)

242

(317)

－

(10,479)

－

－

－

－

－

－

(10,479)(3,084)(13,563)

17,273

16,447(58,720)

－

－

9,828

－

9,828

(15,172)(3,084)(18,256)

930,327

988,063

1,040,313(30,419)

428,093

162,162(4,351) 585,904

3,514,188

54,3853,568,573

5) Consolidated Statements of Cash Flows
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013

Year ended
December 31,
2014

Year ended
December 31,
2014

Income before income tax
Depreciation and amortization
Other loss
Increase in operating receivables
Increase in loans for credit cardbusiness
Increase in deposits for banking
business
Decrease (increase) in call loans
for banking business
Increase in loans for banking
business
Increase in operating payables
Decrease (increase) in financial
assets for securities business
Increase (decrease) in financial
liabilities for securities business
OthersIncome tax paid
Net cash flows from operating
activities
Cash flows from investing activities¥88,610
26,086
5,509(3,035)(141,895)¥104,245
30,1401,643(1,901)(148,572)$868,998
251,250
13,696(15,847)(1,238,513)

150,429

177,383

1,478,685(32,000)

15,000125,042(50,149)(82,060)(684,061)

29,464(603,284)

17,917
132,864

149,358
1,107,569

519,916(106,851)(890,722)

23,142(11,308)
1,485

20,476(48,424)
111,860

170,690(403,668)
932,477

Increase in restricted deposits
Increase in time deposits
Decrease in time deposits
Purchase of property, plant andequipment
Purchase of intangible assets
Acquisition of subsidiaries
Purchase of investment securities
for banking business
Proceeds
from
sales
and
redemptionofinvestment
securities for banking business
Purchase of investment securities
for insurance business
Proceeds
from
sales
and
redemptionofinvestment
securities for insurance business
Purchase of investment securities
Proceeds
from
sales
and
redemptionofinvestment
securities
Other payments
Other proceeds
Net cash flows from/(used in)investing activities
Cash flows from financing activities(3,169)(8,089)5,155(10,018)(20,138)(11,187)
8,162(9,959)(167,873)(93,256)
68,039(83,019)(22,412)(30,198)(150,512)(26,783)(174,469)(365,787)(223,266)(1,454,393)(3,049,241)

251,178

342,090

2,851,701(6,228)(8,522)(71,040)

9,591

6,596

54,985(4,728)5,654(8,845)
12,907(73,733)
107,594(7,249)1,609
30,584(13,396)8,246(261,085)(111,671)
68,739(2,176,434)

NoteCash flows from operating activities

44Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013
62,305

Year ended
December 31,
2014
8,126

Year ended
December 31,
2014
67,73923,000(10,300)(85,862)

63,210(66,966)
1,483(3,962)(3,818)75,252

251,860(82,817)
29,828(5,251)(1,934)
189,5122,099,533(690,372)
248,650(43,773)(16,122)
1,579,793

6,573

4,340

36,179113,894

44,627372,0155

270,114384,008

3,201,134

5

384,008

428,635

3,573,149

Note
Net
increaseinshort-termborrowings
Increase (decrease) in commercial
papersProceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Cash dividends paid
OthersNet cash flows from financing
activities
Effect of change in exchange rates oncash and cash equivalents
Net increase in cash and cash
equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the endof the year

21

[Notes to the Consolidated Financial Statements]
1. General Information(1) Reporting Entity
Rakuten, Inc. (hereinafter referred to as the “Company”) is a company located in Japan. The
Company and its subsidiaries (hereinafter referred to as the “Group Companies”), providers of awide-range of internet-related services, have aligned their businesses along two main axes:
internet services and internet finance. The activities in the “Internet Services” segment consist of
the operation of EC (e-commerce) sites, including the “Rakuten Ichiba” internet shopping mall,online cash-back sites, travel booking sites, portal sites and digital contents sites, and others, aswell as services based on these sites, such as advertising. The activities in the “Internet Finance”
segment involve internet banking and securities services via the internet, credit card services,
life insurance, e-money services and other financial services. Activities in the “Others” segment
consist of messaging and communication services and others, and the management of aJapanese professional baseball team. Please refer to Note 4. Segment Information for moredetails.
(2) Basis of Preparation
The Group Companies prepare its consolidated financial statements in accordance with theInternational Financial Reporting Standards (hereinafter referred to as “IFRS”) released by theInternational Accounting Standards Board. The Company meets the requirements set out under
Article 1-2 of the “Ordinance on Terminology, Forms and Preparation Methods of Consolidated
Financial Statements” under which the Company is qualified as a “specified company” and duly
applies the provisions of Article 93 of the said ordinance.
The consolidated financial statements were approved by the Representative Director on
March 23, 2015.
(3) Functional Currency and Presentation Currency
Items included in the financial statements of each consolidated subsidiary and associate aremeasured using the currency of the primary jurisdiction in which they conduct their business
operations (“functional currencies”). The consolidated financial statements are presented inJapanese yen, the functional currency of the Company and the presentation currency of theGroup. The amounts in the consolidated financial statements are presented in millions of yen
rounded to the nearest million.
(4) Basis of Measurement
The consolidated financial statements have been prepared on a historical cost basis, except for
those financial instruments that have been measured at fair value.
(5) Use of Estimates and Judgments
The preparation of the consolidated financial statements in accordance with IFRS requires the useof certain critical accounting estimates. It also requires the management of the Group Companies
to exercise judgment in the process of applying the accounting policies of the Group Companies.
The areas involving a higher degree of judgment or complexity, areas where assumptions andestimates are significant to the consolidated financial statements, or information in respect of
uncertainties of assumptions and estimates which have a significant risk of causing material

adjustment in the next year are disclosed in Note 3. Significant Accounting Estimates and Judgments.
(6) Early Adoption of Standards and Interpretations
Since December 31, 2012, the Group Companies have early adopted the following standards
prior to its mandatory effective date.
- IFRS 9, “Financial instruments” (issued Nov. 2009, amended Oct. 2010 and Dec. 2011)(7) New Standards and Interpretations Not Yet Applied
As of December 31, 2014, the Group Companies have not applied the following standards,
interpretations and amendments to standards or interpretations issued before the approval dateof the consolidated financial statements but which are not yet effective. The Group Companies
are currently analyzing the estimated impact of adopting such standards on the results ofoperations, financial position or cash flows. At present, we are unable to estimate the impact
associated with the adoption of IFRS 9, but are calculating the impact of IFRS 15.
Group Companies’
Mandatory
adoption period
IFRS
adoption
Description(reporting(effective date)period ended)
Financial
instruments(Revised
in
Nov.
2013:
hedge
Revision on hedge
accounting;
IFRS 9accounting, impairment,
revised in July. January 1, 2018 Not determinedclassification and2014:
measurement
impairment
accounting,classificationandmeasurement)
Revenue fromcontracts with
Early
adoptionon New standard on accounting
IFRS 15 customers
January 1, 2017 January
1,2015 and disclosure for revenue(Newly issued
plannedrecognitionin May 2014)(8) U.S. Dollar Amounts
The translation of Yen amounts into U.S. dollar amounts is included solely for convenience, as amatter of arithmetic computation only, at ¥119.96=US$1.00, the approximate exchange rate ineffect as of March 31, 2015. This translation should not be construed as a representation that
Yen have been, could have been, or could in the future be, converted into U.S. dollars at theabove or any other rate.

2. Accounting Policies(1) Basis of Consolidation
1) Subsidiaries
A subsidiary is an entity (including structured entities) that is controlled by the Group Companies.
The Group Companies control an entity when they are exposed, or have rights, to variable
returns from involvement with the entity and have the ability to affect those returns throughpower over that entity. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group Companies control
another entity or not. Between the date of obtaining control and the date of losing control, theconsolidated financial statements of the Group Companies include the financial statements ofeach controlled subsidiary.
The Group Companies apply the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred by the Group Companies to the former owners of the acquiree
and the equity interests issued by the Group Companies. The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement.
Acquisition-related costs incurred by the Group Companies, such as agent commissions, legal
fees, due diligence costs, other professional fees and other consulting costs, are recognized as
expenses in the period in which they are incurred. Identifiable assets acquired and liabilities
assumed in a business combination are measured initially at their fair value at the acquisition
date. The acquisition date is the date when control is transferred to the acquirer. Judgments may
be required in deciding the acquisition date and whether control is transferred from one party toanother. Further, the Group Companies recognize any non-controlling interest in the acquireethat are present ownership interests and entitle their holders to a proportionate share of theacquiree’s net assets in the event of liquidation, on an acquisition-by-acquisition basis, either atfair value or at the non-controlling interest’s proportionate share of the recognized amounts ofacquiree’s identifiable net assets.
Goodwill is initially measured as the excess of the aggregate of the considerationtransferred, the fair value of non-controlling interest and the fair value of any pre-existing interestin the acquiree at the acquisition date over the net identifiable assets acquired and liabilities
assumed. Whereas if the aggregate of the consideration transferred, the fair value of noncontrolling interest in the acquiree and the fair value of pre-existing interest in the acquiree at theacquisition date is lower than the fair value of the net assets of the subsidiary acquired, thedifference is recognized in the Consolidated Statements of Income as a bargain purchasetransaction.
Changes in the ownership interest in subsidiaries are accounted for as equity transactions
if the Group Companies retain control over the subsidiaries. Any difference between theadjustment to the non-controlling interests and the fair value of the consideration transferred or
received is recognized directly in equity attributable to owners of the Company.
Intercompany balances and transactions are eliminated in consolidation. Unrealized gains
or losses included in assets resulting from transactions within the Group Companies are also
eliminated. The financial statements of each subsidiary are adjusted, if necessary, to comply withthe accounting policies of the Group Companies.
2) Associates and Joint Arrangements
Associates are entities over which the Group Companies have significant influence but do nothave control over the financial and operating policies of such entities. Significant influence ispresumed to exist when the Group Companies hold 20% to 50% of the voting power of anotherentity. The factors considered in determining whether or not the Group Companies havesignificant influence include representation on the board of directors. The existence of thesefactors can lead to the determination that the Group Companies have significant influence, eventhough the investment of the Group Companies is less than 20% of the voting stock.
Joint control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the activities that have significant influence on variable returns fromarrangements require the unanimous consent of the parties sharing control. Investments in ajoint arrangement are classified as a joint operation or a joint venture depending upon the rights
and obligations of the parties to the arrangement. A joint operation is a joint arrangement
whereby parties that have joint control of the arrangement have rights to the assets, andobligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement
whereby parties that have joint control of the arrangement have rights to the net assets of thearrangement.
Investments in associates and joint ventures are accounted for using the equity method,
except where they are classified as assets held for sale in accordance with IFRS 5 “Non-current
Assets Held for Sale and Discontinued Operations” and accordingly accounted for in accordancewith IFRS 5. The Group Companies’ share of the operating results of associates and joint
ventures is adjusted to conform with the accounting policies of the Group Companies, and isreported in the Consolidated Statements of Income as “Share of income of associates and joint
ventures.” The Group Companies’ share of investees’ gains or losses resulting fromintercompany transactions is eliminated on consolidation. Under the equity method of accounting,the investment of the Group Companies in associates and joint ventures are initially recorded atcost, and subsequently increased (or decreased) to reflect both the Group Companies’ share of
the post-acquisition net income and other movements included directly in equity of theassociates and joint ventures.
Goodwill arising on the acquisition of associates or joint ventures is included in the carrying
value of the investment, and the Group Companies carry out any impairment testing on theentire interest in an associate. The Group Companies assess whether there is any objective
evidence that the investments in associates and joint ventures are impaired at each reporting
date. If there is any objective evidence of impairment, an impairment test is performed bycomparing the investment’s recoverable amount, which is the higher of its value in use or fairvalue less costs of disposal, to its carrying amount. An impairment loss recognized in priorperiods is only reversed if there has been a change in the estimates used to determine theinvestment’s recoverable amount since the last impairment loss was recognized. The impairment
loss is reversed to the extent that the carrying amount of the investment equals the recoverable
amount.
For investments in joint operations, the Group Companies recognize their share of therevenues, expenses, assets and liabilities of each joint operation.
(2) Business Combinations
The Group Companies use the acquisition method to account for business combinations. In
accordance with the recognition principles of IFRS 3 “Business Combinations,” the identifiable
assets, liabilities and contingent liabilities of the acquiree are measured at their fair values at theacquisition date except:

- Deferred tax assets or liabilities and liabilities (or assets) related to employee benefit
arrangements are recognized and measured in accordance with IAS 12 “Income taxes” andIAS 19 “Employee benefits,” respectively; and liabilities related to share-based payments arerecognized and measured in accordance with IFRS 2 “Share-based Payment;” and- Non-current assets and operations classified as held for sale are measured in accordance withIFRS 5 “Non-current Assets Held for Sale and Discontinued Operations.”
If the initial accounting for business combinations is incomplete by the end of the reporting
period in which the business combinations occur, the Group Companies report provisionalamounts for the items for which the accounting is incomplete. Those provisional amounts are
retrospectively adjusted during the measurement period to reflect new information obtained
about facts and circumstances that existed at the acquisition date that, if known, would haveaffected the amounts recognized as of that date. Additional assets or liabilities are recognized if
new information, if known, would have resulted in the additional recognition of assets or liabilities.
The measurement period does not exceed one year.
Goodwill relating to acquisitions prior to the date of transition to IFRSs is reported inaccordance with the previous generally accepted accounting principles (“GAAP”).
(3) Foreign Currencies
1) Foreign Currency Transactions
Foreign currency transactions are translated into the functional currencies of individual foreignsubsidiaries using the spot exchange rate at the date of the transactions. At the end of eachreporting period, monetary assets and liabilities denominated in foreign currencies are
retranslated into the functional currencies using the spot exchange rate at the end of eachreporting period. Non-monetary assets and liabilities measured at fair value that are
denominated in foreign currencies are retranslated using the spot exchange rates at the datewhen the fair value was determined.
Exchange differences arising from settlement and translation of foreign currency
denominated monetary assets and liabilities at the period end closing rate are recognized in theConsolidated Statements of Income. However, when profits or losses related to non-monetary
items are recognized in comprehensive income, any exchange differences are also recognizedin other comprehensive income.
2) Foreign Operations
Assets and liabilities of foreign operations (including goodwill and fair value adjustments arisingon the acquisition of foreign operations) are translated into Japanese yen using the spot
exchange rate at the reporting date. Income and expenses are translated into Japanese yen at
the average exchange rates for the period.
Exchange differences arising from translation of financial statements of foreign operations
are recognized in other comprehensive income.
These differences are presented as “Foreign currency translation adjustments” in othercomponents of equity. On disposal of the entire interest of foreign operations, and on the partial
disposal of an interest which involves loss of control, significant influence or joint control, thecumulative amount of the exchange differences is reclassified to income as a part of gains orlosses on disposal.

(4) Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, and othershort-term highly liquid investments with original maturities of three months or less andinsignificant risk of changes in value. However, short-term highly liquid investments in thebanking business are excluded.
(5) Financial Instruments
1) Non-derivative Financial Assets
The Group Companies recognize trade and other receivables at the time they arise. All otherfinancial assets are recognized at the contract dates when the Group Companies become aparty to the contractual provisions of the instrument.
The following is a summary of the classification and measurement model of non-derivative
financial assets.
Financial Assets Measured at Amortized Cost
Financial assets that meet the following conditions are subsequently measured at amortized
cost:- The asset is held within the Group Companies’ business model with the objective of holding
assets in order to collect contractual cash flows; and- The contractual terms of the instrument give rise on a specified date to cash flows that aresolely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortized cost are initially measured at fair value plus
directly attributable transaction costs. Subsequently, the carrying amount of the financial assets
measured at amortized cost is calculated using the effective interest method, less impairment
loss when necessary.
Impairment of Financial Assets Measured at Amortized Cost
For financial assets measured at amortized cost, on a quarterly basis, the Group Companies
assess whether there is any objective evidence that financial assets are impaired. Financial
assets are impaired and impairment losses are incurred if:- There is any objective evidence of impairment as a result of a loss event that occurred after
the initial recognition of the assets and up to the reporting date; and- The loss event had an impact on the estimated future cash flows of the financial assets and a
reliable estimate can be made.
Objective evidence that a financial asset is impaired includes:- A breach of contract, such as a default or delinquency in interest or principal payments;- Extension of the collection period of a receivable under specific conditions, which would nothave been given in the absence of such circumstances;- Indication of borrower’s bankruptcy; and- The disappearance of an active market.
The Group Companies review the evidence of impairment for financial assets measured atamortized cost individually or collectively. For significant financial assets, the Group Companies
assess the evidence of impairment individually. If it is not necessary to impair significant financial
assets individually, the Group Companies collectively assess whether or not any incurred but not
yet reported impairment exists. Financial assets are grouped based on similar credit risk
characteristics and collectively assessed for impairment.

In collectively assessing for impairment, the Group Companies adjust the impairment loss if
it is determined that the actual loss, which reflects the current economic and credit conditions,differs from historical experience, estimated timing of recovery, and expected amount of loss.
The amount of the impairment loss for financial assets is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows. The
present value of the estimated future cash flows is discounted at the financial asset’s original
effective interest rate. The carrying amount of the financial assets is reduced through the use ofan allowance account and the amount of the loss is recognized in the Consolidated Statementsof Income. The allowance for doubtful accounts is written off when there is no realistic prospectof recovery and all collateral has been realized or has been transferred to the Group Companies.
If, in a subsequent period, the amount of the estimated impairment loss decreases and thedecrease can be objectively linked to an event occurring after the impairment was recognized,
the impairment loss shall be reversed by adjusting the allowance account in the Consolidated
Statements of Income. The reversal shall not result in a carrying amount of the financial asset
that exceeds what the amortized cost would have been had the impairment not been recognizedat the date the impairment is reversed.
Financial Assets at Fair Value through Profit or Loss (“FVTPL”)
Financial assets other than equity instruments that do not meet the conditions for amortized cost
are measured at fair value with gains or losses on remeasurement recognized in the Consolidated
Statements of Income. Those financial assets include financial assets held for trading.
Equity investments are measured at fair value with gains or losses on re-measurement
recognized in the Consolidated Statements of Income unless the Group Companies make anirrevocable election to measure equity investments as at fair value through other comprehensive
income (“FVTOCI”) on initial recognition.
Financial assets measured at FVTPL are initially measured at fair value and transaction
costs are recognized in the Consolidated Statements of Income when they are incurred.
Financial Assets at FVTOCI
On initial recognition, the Group Companies may make an irrevocable election to measureinvestments in equity instruments as at FVTOCI. The election is made only for equity
investments other than those held for trading.
Financial assets measured at FVTOCI are initially measured at their fair value (including
directly attributable transaction costs). Subsequently, they are measured at fair value, and gains
and losses arising from changes in fair value are recognized in other comprehensive income andpresented as “Gains (losses) on financial assets measured at fair value through othercomprehensive income” in other components of equity.
However, dividends on financial assets measured at FVTOCI are recognized in theConsolidated Statements of Income as “Revenue” or “Financial income.”
Derecognition of Financial Assets
The Group Companies derecognize a financial asset when the contractual rights to the cash
flows from the asset expire, or when the Group Companies transfer the contractual right toreceive cash flows from financial assets in transactions in which substantially all the risks andrewards of ownership of the asset are transferred to another entity. Any interest in transferredfinancial asset qualifying for derecognition created or retained by the Group Companies areaccounted for separately.

2) Non-derivative Financial Liabilities
Debt securities issued by Group Companies are initially recognized on the issue date. All otherfinancial liabilities are recognized when the Group Companies become a party to the contractual
provisions of the instruments.
The Group Companies derecognize financial liabilities when they are extinguished, i.e.,
when the obligation specified in the contract is discharged, cancelled or expired.
The Group Companies classify financial liabilities as accounts payable-trade, deposits forbanking business, financial liabilities for securities business, bonds and borrowings and otherfinancial liabilities as non-derivative financial liabilities, initially measure them at fair value, andsubsequently measure them at amortized cost using the effective interest method.
To reduce differences substantially caused by measurement of assets or liabilities orrecognition of income on different bases, some deposits for banking business are designated as
financial liabilities at FVTPL. Among unrealized gains and losses arising from changes in the fairvalues of such financial liabilities, any due to changes in the credit risk of the liabilities areincluded in a separate component of net assets.
3) Derivatives
Derivatives Qualifying for Hedge Accounting
The Group Companies enter into derivative transactions to manage the risk of fair value
fluctuations due to changes in interest rates, interest rate risk and foreign currency risk. The
primary derivatives used by the Group Companies are interest rate swaps and foreign exchange
forward contracts.
At the initial designation of the hedging relationship, the Group Companies document therelationship between the hedging instrument and the hedged item, along with their risk
management objective and strategy for undertaking the hedge, the hedging instrument, thehedged item, the nature of the risk being hedged, the evaluation of the effectiveness of thehedging instrument in offsetting the hedged risk, and the measurement of ineffectiveness.
At the inception of the hedge and on an ongoing basis, the Group Companies assess
whether the Group Companies can forecast if the hedging instrument is highly effective inoffsetting changes in fair value or cash flows of the hedged item attributable to the hedged risk
throughout the period for which the hedge is designated.
Derivatives are initially recognized at fair value with transaction costs recognized in theConsolidated Statements of Income as incurred. Subsequently derivatives are measured at fairvalue, and gains and losses arising from changes in the fair value are accounted for as follows:-

Fair Value Hedges
The changes in the fair value of the hedging instrument are recognized in the Consolidated
Statements of Income. The gains or losses on the hedged items attributable to the hedged risks
are recognized in the Consolidated Statements of Income, and the carrying amounts of thehedged items are adjusted.

-

Cash Flow Hedges
When derivatives are designated as hedging instruments to hedge the exposure to variability incash flows that are attributable to a particular risk associated with recognized assets or liabilities,
the portion of the gain and loss on the derivative that is determined to be an effective hedge ispresented as “Gains (losses) on cash flow hedges recognized in other comprehensive income”
in the other components of equity. The balances of cash flow hedges are reclassified to income
from other comprehensive income in the periods when the cash flows of hedged items affectincome, in the same line items of the consolidated statements of comprehensive income as
those of hedged items. The gain or loss relating to the ineffective portion is recognized
immediately in the Consolidated Statements of Income. In cases where hedged items result in
the recognition of non-financial assets or liabilities, the amounts recognized as othercomprehensive income are accounted for as adjustments to the original carrying amount of nonfinancial assets or liabilities.
Hedge accounting is discontinued prospectively when the hedge no longer qualifies forhedge accounting, or when the hedging instrument is expired, sold, terminated or exercised, orwhen the designation is revoked.
Derivatives Not Qualifying for Hedge Accounting
The Group Companies hold some derivatives for hedging purposes that do not qualify for hedge
accounting. Derivatives may also be held for trading as opposed to hedging purposes. Anychanges in fair value of these derivatives are recognized immediately in the Consolidated
Statements of Income.
Embedded Derivatives
Some hybrid contracts, which contain both a derivative and a non-derivative component, areincluded among the financial instruments and other contracts. In such cases, the derivative
component is termed an embedded derivative, with the non-derivative component representing
the host contract. Where the host contract is a financial liability, if the economic characteristics
and risks of embedded derivatives are not closely related to those of the host contract and aseparate instrument with the same terms as the embedded derivative would meet the definitionof a derivative, and the hybrid contract itself is not classified as FVTPL as a financial liability, theembedded derivative is separated from the host contract and accounted for as a derivative. The
financial liability component of the host contract is then accounted for in accordance with theGroup Companies’ accounting policy for non-derivative financial liabilities.
4) Presentation of Financial Instruments
Financial assets and liabilities are offset, with the net amount presented in the consolidated
statements of financial position, only if the Group Companies hold a currently enforceable legal
right to set off the recognized amounts, and there is an intention to settle on a net basis or to
realize the asset and settle the liability simultaneously.
5) Financial Guarantee Contracts
Financial guarantee contracts are contracts that require the guarantor to make specified
payments to reimburse the guarantee for losses incurred due to a debtor failing to makepayments when due in accordance with the original or modified terms of a debt instrument.
Such financial guarantee contracts are measured initially at fair value on the date of thecontract. Subsequent to initial recognition, the Group Companies measure the financial
guarantee at the higher of the best estimate of expenditure required to settle the obligation
under the financial guarantee contract, and the unamortized balance of the total amount of
future guarantee charges.

(6) Property, Plant and Equipment
All property, plant and equipment are recorded at cost less any accumulated depreciation andaccumulated impairment losses.
Cost includes costs directly attributable to the acquisition of and dismantling and removal of
the asset, as well as any estimated costs of restoring the site on which they are located. Property,
plant and equipment are subsequently carried on the historical cost basis measured using thecost model.
Depreciation is calculated based on the depreciable amount. The depreciable amount is
the cost of an asset less its residual value.
Depreciation of property, plant and equipment is mainly computed under the straight-line
method based on the estimated useful life of each component. The straight-line method is usedbecause it is considered to most closely approximate the pattern in which the future economic
benefits of assets are expected to be consumed by the Group Companies. Leased assets are
depreciated over the shorter of the lease term and their useful lives if there is no reasonablecertainty that the Group Companies will obtain ownership by the end of the lease term. Land is
not depreciated.
The estimated useful lives of significant assets for the years ended December 31, 2013 and2014 are as follows:- Buildings and accompanying facilities 10–50 years- Furniture, fixtures and equipment 5–10 years
The depreciation methods, useful lives and residual values are reviewed at the end of eachreporting period, and revised if necessary.
(7) Intangible Assets
1) Goodwill
Initial Recognition
Goodwill arising on the acquisition of a subsidiary is recognized as an intangible asset.
Measurement of goodwill on initial recognition is described in (1) Basis of Consolidation.
Subsequent Measurement
Goodwill is measured at cost less accumulated impairment losses.
2) Capitalized Software Costs
The Group Companies incur certain costs to purchase or develop software primarily for internaluse.
Expenditures arising from research activities to obtain new scientific or technical knowledge
are recognized as expenses when they are occurred. Expenditures arising from development
activities are capitalized as software, if, and only if, they are reliably measurable, they aretechnically feasible, it is highly probable that they will generate future economic benefits, and theGroup Companies intend and have adequate resources to complete their developments and use
or sell them.
Capitalized software is measured at cost less accumulated amortization and any
accumulated impairment losses.
3) Intangible Assets Acquired in Business Combinations

Intangible assets that are acquired in business combinations, such as trademarks and othersimilar items, are recognized separately from goodwill, and are initially recognized at fair value atthe acquisition date.
Subsequently such intangible assets are measured at cost less any accumulated
amortization and accumulated impairment losses.
4) Other Intangible Assets
Other intangible assets with finite useful lives are measured at cost less any accumulated
amortization and accumulated impairment losses.
5) Amortization
Amortization is calculated based on the acquisition cost of an asset less its residual value. Within
intangible assets with definite useful lives, the value of the insurance business and its customer
relationships acquired through business combinations are amortized based on the ratio of actual
insurance revenue occurring in a year over the total expected insurance revenue over the period.
Other intangible assets are amortized under the straight-line method. These methods are usedbecause they are considered to most closely approximate pattern in which the future economic
benefits of intangible assets are expected to be consumed by the Group Companies.
Estimated useful lives of significant intangible assets with definite useful lives are as
follows:- Software mainly 5 years- Value of the insurance business and its acquired customer relationships 30 years
The amortization methods, useful lives and residual values are reviewed at the end of eachreporting period, and revised if necessary.
(9) Leases (Lessee)
Leasing Transactions
The determination of whether an arrangement is, or contains, a lease is based on the substanceof the arrangement at the inception date. In the case that fulfillment of the arrangement isdependent on the use of a specific asset or assets or the arrangement conveys a right to use theasset, such transactions are classified as lease transactions.
Finance Leases
Leases that transfer all risks and benefits of ownership of the leased item to the lessee areclassified as finance leases.
Finance leases are capitalized at the commencement of the lease at the lower of the fairvalue of the leased asset and the present value of the minimum lease payments. Aftercommencement of the lease, the Group Companies’ accounting policy appropriate to each asset
is applied.
The discount rate used in calculating the present value of the minimum lease payments is
the implicit interest rate of the lease, where this can be determined practically. Where it isimpractical to determine such a rate, the lessee’s incremental borrowing rate shall be used.
The minimum lease payments are apportioned between finance charges and the reductionof the lease liability so as to achieve a constant rate of interest on the remaining balance of theliability.
A leased asset is depreciated over the shorter of the estimated useful life of the asset andthe lease term.
Operating Leases
Lease arrangements, except for finance leases that have not been capitalized in the
consolidated statements of financial position, are classified as operating leases.
Under operating lease transactions, lease payments are recognized as an expense using
the straight-line method over the lease term in the Consolidated Statements of Income.
(10) Impairment of Non-financial Assets
The Group Companies assess at each reporting date whether there is an indication that a nonfinancial asset, except for inventories and deferred tax assets, may be impaired. If any such
indication exists, the Group Companies estimate the recoverable amount of the asset. For
goodwill, intangible assets with indefinite useful lives, and intangible assets not yet available foruse, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit, or group of cash-generating
units (CGU) is the higher of its value in use and fair value less costs of disposal. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and therisks specific to the asset. A CGU is the smallest group of assets, which generates cash inflows
from continuing use that are largely independent of the cash inflows from other assets or groupof assets.
The CGU to which goodwill is allocated is determined based on the unit by which the
goodwill is monitored for internal management purposes, and in principle, each entity is
considered to be a CGU for the purposes of goodwill allocation.
Since corporate assets do not generate independent cash flows, if there is an indicationthat corporate assets may be impaired, the recoverable amount is determined for the CGU orgroup of CGUs to which the corporate assets belong.
Impairment losses are recognized in the Consolidated Statements of Income when the
carrying amount of an asset or CGU exceeds its recoverable amount. Such impairment losses
are recognized first reducing the carrying amount of any allocated goodwill and then areallocated to the other assets of the CGU on a pro-rata basis based on the carrying amount ofsuch assets.
Impairment losses recognized in respect of goodwill are not reversed. Assets other than
goodwill are reviewed at the end of each reporting period to assess whether there is any
indication that an impairment loss recognized in prior years may no longer exist or may havedecreased. An impairment loss recognized is reversed if an indication of the reversal of
impairment losses exists and there is a change in the estimates used to determine the asset’s
recoverable amount. The reversal of an impairment loss does not exceed the carrying amount,net of depreciation and amortization, which would have been determined if any impairment loss
had never been recognized for the asset in prior years.
(11) Provisions
Provisions are recognized when the Group Companies have a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required tosettle the obligation, and the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures expected to be requiredto settle the obligation using a pre-tax discount rate that reflects current market assessments ofthe time value of money and the risks specific to the obligation.
(12) Insurance
General Insurance Accounting
Insurance contracts issued and reinsurance contracts held by insurers are accounted for under
IFRS 4 “Insurance contracts” based on the accounting policies previously applied in accordancewith Japanese accounting standards for insurance companies.
Policy reserves and others for insurance business
The Group Companies apply the measurement of insurance liabilities which has been applied
for insurance contracts in Japan. A liability adequacy test is performed in consideration of
estimated present value of cash inflows, such as related insurance premiums and investment
income, and cash outflows such as insurance claims and benefits and operating expenses. If
the test shows that the liability is inadequate, the entire deficiency is recognized in theConsolidated Statements of Income.
(13) Equity
Common Stock
Proceeds from the issuance of equity instruments by the Company are included in “Common
stock” and “Capital surplus.” Direct issuance costs (net of tax) are deducted from “Common
stock” and “Capital surplus” proportionately based on the proceeds received.
Treasury Stock
When the Company repurchases treasury stock, the consideration paid, including directtransaction costs (net of tax), is recognized as a deduction from equity. When the Company
sells treasury stock, the consideration received is recognized as an addition to equity.
(14) Share-based Payments
The Group Companies have stock option plans as incentive plans for directors, executive
officers, and employees. The fair value of stock options at the grant date is recognized as an
employee expense over the vesting period from the grant date as a corresponding increase incapital surplus. The fair value of the stock options is measured using the Black-Scholes modelor other models, taking into account for the terms of the options granted. The Group Companies
regularly review the assumptions and revise estimates of the number of options that are
expected to vest, as necessary.
(15) Revenue
The Group Companies mainly provide EC (e-commerce) sites including an Internet shopping
mall Rakuten Ichiba, travel booking sites, portal sites and digital contents sites, along withbusiness for sales of advertising on these sites. The Group Companies also provide various
internet finance services, such as credit card, banking, securities, and insurance services.
Revenue is measured at the fair value of the consideration for goods sold and services provided
in the ordinary course of business, less sales related taxes. The revenue of the Group
Companies is recognized as follows:Sales of Goods
Revenue from the sale of goods is recognized when all the following conditions are satisfied:- The Group Companies have transferred to the buyer the significant risks and rewards ofownership of the goods;- The Group Companies retain neither continuing managerial involvement to the degree usuallyassociated with ownership nor effective control over the goods sold;- The amount of revenue can be measured reliably;- It is probable that the economic benefits associated with the transaction will flow to the Group
Companies; and- The cost incurred in respect of the transaction can be measured reliably.
Rendering of Services
The outcome of a transaction involving the rendering of services can be estimated reliably, andrevenue is recognized by reference to the stage of completion of the transaction at the end ofeach reporting period, when all the following conditions are satisfied:- The amount of revenue can be measured reliably;- It is probable that the economic benefits associated with the transaction will flow to the Group
Companies;- The stage of completion of the transaction at the end of each reporting period can bemeasured reliably; and- The cost incurred for the transaction and the cost to complete the transaction can bemeasured reliably.
Interest Income
Revenue arising from interest is recognized using the effective interest method when thefollowing conditions are satisfied:- The amount of revenue can be measured reliably; and- It is probable that the economic benefits associated with the transaction will flow to the Group
Companies.
(16) Financial Income and Expenses
Financial income mainly comprises interest income, dividend income and changes in the fairvalue of financial assets measured at FVTPL. Interest income is accrued using the effective
interest method. Dividend income is recognized on the date when the right of the Group
Companies to receive the dividend is established.
Financial expenses mainly comprise interest expenses and impairment losses on financial
assets measured at amortized cost. Interest expenses are accrued using the effective interest
method.
Financial income and expenses incurred from the finance business of the subsidiaries areincluded in “Revenue” and “Operating expenses.”(17) Short-term Employee Benefits
Short-term employee benefits are measured on an undiscounted basis and are expensed during
the period when the related service is rendered. Accrued bonus and holiday pay are recognized
as liabilities, when the Group Companies have present legal or constructive obligation and whenreliable estimates of the obligations can be made.

(18) Current and Deferred Income Tax
The income tax expense comprises current and deferred taxes. These are recognized in theConsolidated Statements of Income, except for income taxes which arise from businesscombinations or which are recognized either in other comprehensive income or directly in equity.
Current taxes are calculated by the expected tax payable or receivables on the taxable
income, using the tax rates enacted or substantially enacted by the end of the reporting period.
Deferred tax assets and liabilities are recognized on temporary differences between the
carrying amounts of assets and liabilities in the consolidated statements of financial position andtheir corresponding tax bases. Deferred tax assets and liabilities are not recognized if thetemporary difference arises from the initial recognition of an asset or liability in a transaction,
which is not a business combination and, at the time of the transaction, affects neither income in
the Consolidated Statements of Income nor taxable income.
Deferred tax assets and liabilities are measured at the tax rate that is expected to apply inthe period when the related deferred tax assets is realized or the deferred tax liability is settled,based on tax laws that have been enacted or substantively enacted by the end of reporting
period.
Deferred tax assets are recognized for unutilized tax losses, tax credits and deductible
temporary differences, only to the extent that it is probable that future taxable income will beavailable against which such temporary differences can be utilized.
Deferred tax assets and liabilities are recognized for taxable temporary differences
associated with investments in subsidiaries, associates, and joint ventures. However, if theGroup Companies are able to control the timing of the reversal of the temporary differences andit is probable that the temporary differences will not reverse in the foreseeable future, deferred
tax liabilities are not recognized. Deferred tax assets are recognized only to the extent that it isprobable that there will be sufficient taxable income against which the benefit of temporary
differences can be utilized and the temporary differences will reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and the deferred tax assets anddeferred tax liabilities relate to income taxes levied by the same taxation authority on either thesame taxable entity or different taxable entities which intend to settle current tax assets andliabilities on a net basis.
(19) Earnings Per ShareThe Group Companies disclose basic and diluted earnings per share (attributable to the ownersof the Company) related to common stock. Basic earnings per share is calculated by dividing net
income (attributable to equity owners of the Company) by the weighted average number ofcommon stock outstanding during the reporting period, adjusted for the number of treasury stock
held. Diluted earnings per share are calculated, for the dilutive effects of all potential common
stock by dividing net income (attributable to the owners of the Company) by the weighted
average number of common stock outstanding during the reporting period, adjusted for thenumber of treasury stock. Potential common stock of the Group Companies relates to the stock
option plan.
(20) Operating Segments

Operating segments correspond to business activities, from which the Group Companies earnrevenues and incur expenses, including revenues and expenses relating to transactions withother operating segments. Discrete financial information for operating results of all operating
segments is available, and is regularly reviewed by the Board of Directors of the Group
Companies in order to determine the allocation of resources to the segment and assess its
performance.
(Impact from the Adoption of the New Accounting Standards)
The Group Companies started to adopt the following accounting standards from the current fiscal
year ended December 31, 2014.
IFRS

Newly issued or revised contents
Clarification of the meaning of “currently has
a legally enforceable right to set-off” and also
Financial instruments:
clarification of the application of
IAS 32
presentation
the IAS 32 offsetting criteria to settlement(Amended in Dec. 2011)
systems which apply gross settlement
mechanisms that are not simultaneous.
Clarification of the guidelines on disclosuresof the recoverable amount of cashImpairment of assets
IAS 36
generating units, which include significant(Amended in May 2013)
goodwill and intangible assets with indefinite
useful lives
These standards have been adopted in accordance with their respective transitional provisions,and the adoption of the above standards has no significant impact on the consolidated financial
statements for the fiscal year ended December 31, 2014.

3. Significant Accounting Estimates and Judgments(1) Significant Accounting Estimates and Assumptions
In the preparation of the consolidated financial statements in accordance with IFRS, the Group
Companies make estimates and assumptions concerning future events. These accounting
estimates are inherently not anticipated to equal actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the following reporting period are addressed below.
(a) Goodwill Evaluation (Note 2 “Accounting Policies” (9) and Note 18 “Intangible Assets”)
An impairment test is conducted at least once a year for goodwill recognized by the Group
Companies, regardless of whether there is an indication of impairment or not. The recoverable
amount of CGUs, to which goodwill is allocated, is mainly calculated based on estimated future
cash flows, estimated growth rate, and discount rate. This calculation is based on judgments andassumptions that are made by the management of the Group Companies, considering businessand market conditions. The Group Companies consider these assumptions to be significant
because, if the assumed conditions change, the estimated recoverable amounts might besignificantly different.
(b) Recoverability of Deferred Tax Assets (Note 2 “Accounting Policies” (17) and Note 25 “Income
Tax Expense”)
For temporary differences that are differences between carrying value of an asset or liability inthe consolidated statements of financial position and its tax base, the Group Companies
recognize deferred tax assets and deferred tax liabilities in respect of such deferred tax assets
and deferred tax liabilities calculated using the tax rates based on tax laws that have beenenacted or substantively enacted by the end of the reporting period and the tax rates that are
expected to apply to the period when the deferred tax asset is realized or the deferred tax liability
is settled. Deferred tax assets are recognized for all deductible temporary differences, theunutilized tax losses carried forward and the unutilized tax credit carried forward to the extent
that it is probable that taxable income will be available. The estimation of the taxable income forthe future is calculated based on the business plan approved by the management of the Group
Companies, and is based on management’s subjective judgments and assumptions. The Group
Companies consider these assumptions to be significant because changes in the assumed
conditions and amendments of tax laws in the future might significantly affect the calculation of
the amounts of deferred tax assets and deferred tax liabilities.
(c) Methods of Determining Fair Value for Financial Instruments Measured at Fair Value Including
Derivative Instruments (Note 2 “Accounting Policies” (5) and Note 39 “Fair Value of Financial
Instruments”)
Financial assets and financial liabilities including derivatives, held by Group Companies aremeasured at the following fair values:- Quoted prices in active markets for identical assets or liabilities;- Fair value calculated using observable inputs other than quoted prices for the assets or liability,
either directly or indirectly; and- Fair value calculated using valuation techniques incorporating unobservable inputs.
In particular, the fair value estimated through valuation techniques that incorporate
unobservable inputs is premised on the decisions and assumptions of the management of theGroup Companies, such as appropriate experience assumptions, suppositions, and the modelutilized. The Group Companies consider the estimations to be significant as it is probable thatthe changes of estimations and assumptions might have significant influence on the calculationof fair value for financial instruments.
(d) Impairment of Financial Assets Measured at Amortized Cost (Note 2 “Accounting Policies” (5)and Note 41 “Financial Risk Management”)
For financial assets measured at amortized cost, the Group Companies assess whether there is
any objective evidence that financial assets are impaired each quarter. Where any such objective
evidence exists, the Group Companies recognize the difference between the carrying value ofthe asset and the present value of estimated future cash flows as impairment losses.
When estimating future cash flows, management makes judgments considering theprobability of default, time of recovery and historical experience, and whether after reflecting
current economic and credit conditions, actual losses are greater than or less than such trends
in the past. If these estimations and assumptions change, the amount of any impairment losses
for financial assets measured at amortized cost might vary widely, therefore, the Group
Companies consider these estimations to be significant.
(e) Provisions (Note 2 “Accounting Policies” (10) and Note 23 “Provisions”)
The Group Companies record certain provisions, such as provision for customer points.
Regarding the provision for customer points, in preparation for the future use of points bycustomers, the Group Companies use historical experience to estimate the provision for the
Rakuten Super Point Program. The provision is estimated on the premise of management’s
decisions and the assumptions of the Group Companies. The Group Companies consider theestimation to be significant as it is probable that the changes of estimation and assumptions
could have a significant influence on the calculation of the amount of the provisions.
(f) Liability Adequacy Test for Insurance Contracts (Note 2 “Accounting Policies” (11) and Note 24“Policy Reserves and Others for Insurance Business”)
The Group Companies perform a liability adequacy test for insurance contracts in considerationof estimated present value of cash inflows such as related insurance premiums and investment
income, and cash outflows such as insurance claims and benefits and operating expenses.
(2) Significant Judgment in Applying the Accounting Policies of the Group Companies
In the process of applying the accounting policies, the management of the Group Companies
has made certain decisions which have a significant influence on the amounts recognized in the
consolidated financial statements.
The Group Companies, mainly in the banking business and the credit card business,transact with structured entities, which are designed so that voting rights or similar rights are not
the dominant factor in deciding who controls the entities. The management of the Group
Companies decide whether the Group Companies are controlling the entities or not. All related
facts and circumstances on the involvement with the structured entity are considered in deciding
whether control over such an entity exists.

4. Segment Information(1) General Information
As a comprehensive internet service provider engaged in the two main activities of Internet
Services and Internet Finance, the Group Companies are organized into three reportablesegments: “Internet Services,” “Internet Finance” and “Others.”
Discrete financial information for operating results of all operating segments is available,
and is regularly reviewed by the Board of Directors of the Company in order to determine theallocation of resources and assess performance.
The “Internet Services” segment comprises businesses running various EC (e-commerce) sites
including an internet shopping mall Rakuten Ichiba, online cash-back sites, travel booking sites,
portal sites and digital contents sites, along with business for advertising and similar on thesesites.
The “Internet Finance” segment engages in businesses providing services over the internet
related to banking and securities, credit cards, life insurance and electronic money.
The “Others” segment comprises businesses involving provision of messaging andcommunication services and others, and management of a Japanese professional baseball team.
(2) Measurement of Segment Profit and Loss
The reported operating segment information has been prepared in accordance with IFRS as
stated in Note 2. Accounting Policies, and except for certain consolidated subsidiaries, theoperating segment revenue and profit or loss is presented before intersegment eliminations andother consolidation adjustments. Operating segment profit or loss is based on operating income
or loss in accordance with IFRS and includes allocated corporate expenses.
The Group Companies do not allocate assets and liabilities to operating segment
information reviewed by the chief operating decision maker.
For the year ended December 31, 2013
(Millions of Yen)
Internet
Services
Segment revenue
Segment profit or loss

Internet
Finance

OthersTotal¥315,228¥201,494¥35,746¥552,468

47,45544,174

3,762

95,391

16,032

8,223

1,665

25,920

Other items
Depreciation and amortization
For the year ended December 31, 2014
(Millions of Yen)
Internet
Services
Segment revenue
Segment profit or loss

Internet
Finance

OthersTotal¥362,751¥236,520¥42,445¥641,716

58,806

48,399(639)

106,566

19,520

8,858

2,593

30,971Other items
Depreciation and amortization

Segment revenue
Segment profit or loss

Internet
Services(Thousands of U.S. Dollars)Internet
Others
Total
Finance$3,023,933$1,971,657$353,826$5,349,416

490,213

403,459(5,326)888,346

162,72173,841

21,616258,178

Other items
Depreciation and amortization

The reconciliation of segment revenue to consolidated revenue is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013

Year ended
December 31,
2014

Year ended
December 31,
2014

Segment revenue¥552,468¥641,716$5,349,416

Intercompany transactions, etc.

(33,900)(43,151)(359,711)

Consolidated revenue

518,568

598,565

4,989,705

The reconciliation of segment profit or loss to income before income tax is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013¥95,391

Year ended
December 31,
2014¥106,566

Year ended
December 31,
2014$888,346Intercompany transactions, etc.

(5,147)(169)(1,409)Operating income

90,244

106,397

886,937

Financial income and expenses(1,765)(2,756)(22,974)

131

604

5,035

88,610104,245868,998

Segment profit

Share of income of associates andjoint ventures
Income before income tax(3) Products and Services
Revenue from external customers by major products and services of the Group Companies is asfollows:(Millions of Yen)
Revenue
RakutenRakutenRakuten
Othersfrom external
IchibaCard
Bankcustomers
Year ended¥129,271¥60,074¥36,621¥292,602¥518,568
December 31, 2013
Year ended
141,728
77,604
43,523335,710598,565
December 31, 2014

Year ended
December 31, 2014

RakutenIchibaRakutenCard$1,181,460$646,916(Thousands of U.S. Dollars)
Revenue
Rakuten
Othersfrom externalBankcustomers$362,813$2,798,516$4,989,705(4) Geographic Information
For the year ended December 31, 2013
Japan
Revenue from externalcustomers
Property, plant andequipment
andintangible assets

Americas(Millions of Yen)
OthersTotal

Europe¥458,973¥39,359¥18,421¥1,815¥518,568

144,030

75,48043,006

3,773

266,289

For the year ended December 31, 2014
(Millions of Yen)
Japan
Revenue from externalcustomers
Property, plant andequipment
andintangible assets

Americas

EuropeOthersTotal¥516,963¥53,901¥22,889¥4,812¥598,565

157,878

211,080

152,760

3,772

525,490(Thousands of U.S. Dollars)
Revenue from externalcustomers
Property, plant andequipment
andintangible assets

Japan

Americas

EuropeOthersTotal$4,309,462$449,325$190,805$40,113$4,989,705

1,316,089

1,759,586

1,273,424

31,4444,380,543(5) Major Customers
For the year ended December 31, 2013
Disclosure of major customers is omitted because the proportion of revenue from an individual
external customer does not exceed 10% of consolidated revenue.
For the year ended December 31, 2014
Disclosure of major customers is omitted because the proportion of revenue from an individual
external customer does not exceed 10% of consolidated revenue.

5. Cash and Cash Equivalents
Breakdown of Cash and Cash Equivalents
Thousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

December 31,
2014

Cash and deposits¥384,008¥428,635$3,573,149

Cash and cash equivalents

384,008

428,635

3,573,149

Funds (cash and cash equivalents) stated in the Group Companies’ Consolidated Statements ofCash Flows include cash in hand, deposits held at call with banks, and other short-term highly
liquid investments with original maturities of three months or less and insignificant risk ofchanges in value. However, short-term highly liquid investments in the banking business are
excluded.
6. Accounts Receivable — Trade
Breakdown of Accounts Receivable — Trade
Thousands of
U.S. Dollars

Millions of Yen

December 31,
2013
Gross amount of notes andaccounts receivable — trade
Allowance for doubtful
Accounts
Net amount of notes andaccounts receivable — trade

December 31,
2014

December 31,
2014¥75,299¥91,023$758,778(1,856)(2,152)(17,939)

73,44388,871

740,839

Accounts receivable — trade is mainly generated from sales related to the Internet Services
business and is measured at amortized cost.

7. Financial Assets for Securities Business
Breakdown of Financial Assets for Securities BusinessThousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

December 31,
2014¥432,404¥451,001$3,759,595

427,678

275,9082,300,000

317,956

312,6072,605,927

32,74358,886490,880

8,858

12,953

107,978

1,219,639

1,111,355

9,264,380(1,406)(1,147)(9,562)

1,218,233

1,110,208

9,254,818

754

680

5,669

1,218,987

1,110,888

9,260,487

Financial assets measured at amortized
cost
Cash segregated as deposits
Accounts receivable relating toinvestment securities transactions
Margin transactions assets
Short-term guarantee deposits
OthersGross amount of financial assets
measured at amortized cost
Allowance for doubtful accounts
Net amount of financial assets
measured at amortized cost
Financial assets measured at FVTPL
Total financial assets for securities
business

Investment securities held for trading purposes are included in financial assets measured at
FVTPL.
Derivative assets held for trading purposes are included in “Derivative assets,” while
operating investment securities are included in “Investment securities.”
8. Loans for Credit Card Business
Breakdown of Loans for Credit Card BusinessThousands of
U.S. Dollars

Millions of Yen

Gross amount of loans for credit cardbusiness
Allowance for doubtful accounts
Net amount of loans for credit cardbusiness

December 31,
2013

December 31,
2014

December 31,
2014¥564,607¥713,249$5,945,723(20,293)(20,363)(169,748)

544,314

692,886

5,775,975

Loans for credit card business mainly comprise accounts receivable arising from the use ofcredit cards by customers based on installment contracts and similar.
Loans for credit card business are measured at amortized cost because they are classified
as financial assets held as part of the Group Companies’ business model with the objective ofcollecting contractual cash flows, and such cash flows are limited to solely repayments ofprincipal including interest on the principal balance outstanding.

9. Investment Securities for Banking Business
Breakdown of Investment Securities for Banking BusinessThousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

December 31,
2014¥23,756¥21,306$177,609

Domestic bonds

53,059115,781965,164

Foreign bonds

86,18355,413461,929―

12,000100,033

162,998

204,500

1,704,735

(55)

(92)

(767)

162,943

204,408

1,703,968

Trust beneficiary rights

1,597

―

―

Domestic bonds

8,652

8,608

71,757

Foreign bonds

24,705

9,280

77,35934,954

17,888149,1160

1

9

197,897

222,297

1,853,093

Financial assets measured at amortized
cost
Trust beneficiary rights

OthersGross amount of financial assets measured
at amortized cost
Allowance for doubtful accounts
Net amount of financial assets measured atamortized cost
Financial assets measured at FVTPL

Total financial assets measured at FVTPL

Financial assets measured at FVTOCI
Total investment securities for banking
business

Within investment securities for banking business, investment securities held as part of theGroup Companies’ business model with the objective of collecting contractual cash flows limited
to solely payments of principal and interest on the principal amount outstanding on a specified
date in accordance with the contractual terms, are classified as financial assets measured atamortized cost, while all other investment securities are classified as financial assets measured
at fair value. Within financial assets measured at fair value, investments in equity instruments
are designated as financial assets measured at FVTOCI.

10. Loans for Banking Business
Breakdown of Loans for Banking BusinessThousands of
U.S. Dollars

Millions of Yen

Gross amount of loans for banking
business
Allowance for doubtful accounts
Net amount of loans for banking
business

December 31,
2013

December 31,
2014

December 31,
2014¥240,618¥322,838$2,691,214

(800)

(961)

(8,011)

239,818

321,877

2,683,203

Loans for banking business mainly comprise loan receivables from individual customers.
Loans for banking business are measured at amortized cost because they are defined as
financial assets held as part of the Group Companies’ business model with the objective ofcollecting contractual cash flows, and such cash flows are limited to repayments of principal
including interest on the principal balance outstanding.
11. Investment Securities for Insurance Business
Breakdown of Investment Securities for Insurance BusinessThousands of
U.S. Dollars

Millions of Yen

Trust beneficiary rights
Domestic bonds
Total investment securities for insurance
business

December 31,
2013

December 31,
2014

December 31,
2014

¥―

¥1,400$11,670

10,233

10,80590,072

10,233

12,205

101,742

Investment securities for insurance business are measured at amortized cost because they aredefined as financial assets held as part of the Group Companies’ business model with theobjective of collecting contractual cash flows, and such cash flows are limited to solely
repayments of principal including interest on the principal balance outstanding.

12. Derivative Assets and Derivative Liabilities
The fair values and notional principal amounts of derivatives qualifying for hedge accounting andderivatives not qualifying for hedge accounting are as follows:
Derivatives Qualifying for Hedge Accounting(Millions of Yen)
December 31, 2013
Notional
principal
amountFair value hedges
Interest rate swap
contracts

December 31, 2014

Notional
principal
Assets Liabilities amount
Fair value

Fair value
AssetsLiabilities¥12,500¥―¥512¥12,500¥―¥769

52,274―538

72,098―830

64,774―

1,050

84,598―

1,599

Cash flow hedges
Interest rate
contracts
Total

swap

(Thousands of U.S. Dollars)
December 31, 2014

Fair value hedges
Interest rate swap
contracts

Notional
principal
amountAssetsLiabilities$104,201$―$6,410601,017―

6,919

705,218―

13,329Fair value

Cash flow hedges
Interest rate
contracts
Total

swap

Derivatives Not Qualifying for Hedge Accounting(Millions of Yen)
December 31, 2014

December 31, 2013

Foreigncurrency
contracts
Foreignexchange
forward contracts
Foreignexchange
margin contracts
Subtotal of foreign
currency contracts
Interest rate contracts
Interest rate swaption
contracts
Others
Total

Notional
principal
amountNotional
principal
Assets Liabilities amount

AssetsLiabilities¥95,446¥1,596¥97,820¥1,672¥46

1,508,031

6,572

6,149 2,216,945

7,572

9,696

1,603,477

8,168

6,178 2,314,765

9,244

9,742

184,389

4,420

795

196,828

4,682

427

175

0

0

663

1

1

1,788,041

12,588

6,973 2,512,256

13,927

10,170Fair value¥29

Fair value

(Thousands of U.S. Dollars)
December 31, 2014

Foreigncurrency
contracts
Foreignexchange
forward contracts
Foreignexchange
margin contracts
Subtotal of foreign
currency contracts
Interest rate contracts
Interest rate swaption
contracts
Others
Total

Notional
principal
amountAssetsLiabilities$815,438$13,938$383

18,480,702

63,12180,827

19,296,140

77,05981,2101,640,780

39,030

3,560

5,527

8

8

20,942,447

116,097

84,778Fair value

13. Investment Securities
Breakdown of Investment Securities
Thousands of
U.S. Dollars

Millions of Yen

Financial assets measured at amortized
cost

December 31,
2013¥8,635

December 31,
2014¥10,531

December 31,
2014$87,788

―

20

167

697

2,358

19,656697

2,378

19,823

11,506

6,548

54,585

13,18731,049258,828

24,69337,597

313,41334,02550,506

421,024

Financial assets measured at FVTPL
ListedUnlisted
Total financial
FVTPL

assets measuredatFinancial assets measured at FVTOCI
ListedUnlisted
Total financial
FVTOCI

assets measured

Total investment securitiesat14. Other Financial Assets
Breakdown of Other Financial Assets
Thousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

Financial assets measured at amortizedcost
Accounts receivable — other¥38,246¥47,916$399,433

Call loans for banking business

43,00028,000233,411

Security deposits

4,668

5,315

44,307

Guarantee deposits

21,800――51,79663,523

529,535

159,510

144,754

1,206,686

(454)

(472)

(3,935)

159,056

144,282

1,202,751

Financial assets measured at FVTPL

2

1

8

Financial assets measured at FVTOCI

―

―

―

159,058

144,283

1,202,759

OthersGross amount of financial assets
measured at amortized cost
Allowance for doubtful accounts
Net amount of financial assets
measured at amortized cost

Total other financial assets

December 31,
2014

15. Allowance for Doubtful Accounts
Changes in the allowance for doubtful accounts by type of financial assets measured atamortized cost are as follows:
For the year ended December 31, 2013
(Millions of Yen)

January 1, 2013
Increases
duringtheperiod(allowancefor
doubtful accounts
chargedtoexpenses)
Increases
duringthe period (others)
Decreases during
the period (utilized)
Decreases during
theperiod(reversals)
Decreaseduringthe period (others)
December 31, 2013

Financial Loans for Investment Loans for
Accounts assets
for credit card securities banking
receivable securities
banking— tradebusiness forbusinessbusiness business¥2,022¥1,670¥20,537
¥247
¥652

Other
financialassets

Total

¥298

¥25,426

910

76

11,776

―

134

226

13,122

145

―

655

―

14

11

825

(1,046)(340)(12,675)

―

―

(2)

―

―

(192)

―

―

(194)

(173)

―

―

―

―

(61)

(234)

1,856

1,406

20,293

55

800

454

24,864(20) (14,081)

For the year ended December 31, 2014
(Millions of Yen)

January 1, 2014
Increases
duringtheperiod(allowancefor
doubtful accounts
chargedtoexpenses)
Increases
duringthe period (others)
Decreases during
the period (utilized)
Decreases during
theperiod(reversals)
Decreaseduringthe period (others)
December 31, 2014

Financial Loans for Investment Loans for
Accounts assets
for credit card securities banking
receivable securities
banking— tradebusiness forbusinessbusiness business¥1,856¥1,406¥20,293
¥55
¥800

Other
financialassets

Total

¥454

¥24,864

585―

16,211

37

145

63

17,041

347

36

777

―

20

7

1,187

(636)

(218)

(16,918)―(4)(52) (17,828)

―

(77)

―

―

―

(0)

(77)

―

(0)

―

―

―

―

(0)

2,152

1,147

20,363

92

961

472

25,187(Thousands of U.S. Dollars)

January 1, 2014
Increases
duringtheperiod(allowancefor
doubtful accounts
chargedtoexpenses)
Increases
duringthe period (others)
Decreases during
the period (utilized)
Decreases during
theperiod(reversals)
Decreaseduringthe period (others)
December 31, 2014

Accounts Financial
Loans for Investment
forfor credit
securities Loans
receivable assets
cardbankingbanking— trade securities
business forbusinessbusiness business$15,472$11,721 $169,164$458$6,669OtherfinancialassetsTotal$3,785$207,269

4,876―

135,137

309

1,209

525

142,056

2,893

300

6,477

―

167

58

9,895

(5,302)(1,817)(141,030)

―

(34)

(433)

(148,616)

―

(642)

―

―

―

(0)

(642)

―

(0)

―

―

―

―

(0)

17,939

9,562

169,748

767

8,011

3,935

209,962

16. Investments in Associates and Joint Ventures(1) Investments in Associates
The Group Companies account for investments in associates using the equity method.
The carrying amounts of investments in associates, which are all individually insignificant,are as follows:
Millions of Yen

Total carrying amount

December 31,
2013¥7,755

December 31,
2014¥8,418

Thousands of
U.S. Dollars

December 31,
2014$70,173

Financial information on associates, which are all individually insignificant, is as follows. The

following amounts represent the Group Companies’ percentage of ownership.
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013
¥460

Year ended
December 31,
2014
¥487

Year ended
December 31,
2014$4,059Other comprehensive income

54

17

142

Comprehensive income

514

504

4,201

Net income(2) Investments in Joint Ventures
For certain investments in companies, the Group Companies have entered into contracts which
require unanimous consent among the counterparties for decisions that significantly affect thereturns from the investment. As the Group Companies exercise joint control with suchcounterparties and have rights to the investee’s net assets, such companies are determined tobe joint ventures and are accounted for using the equity method.
The total carrying amounts of investments in individually insignificant joint ventures are as
follows:
Thousands of
U.S. Dollars

Millions of Yen

Total carrying amount

December 31,
2013
¥434

December 31,
2014
¥514

December 31,
2014$4,285Aggregate financial information on individually insignificant joint ventures is as follows. The
following amounts represent the Group Companies’ percentage of ownership.
Thousands of
U.S. Dollars

Millions of Yen

Net income
Comprehensive income

Year ended
December 31,
2013
¥43

Year ended
December 31,
2014
¥122

Year ended
December 31,
2014$1,017

43

122

1,017

17. Property, Plant and Equipment(1) Schedule of Changes in Property, Plant and Equipment(Millions of Yen)
Buildings andaccompanying
facilities

Furniture,
Fixtures andequipment¥17,890¥26,855¥11,015¥55,760(6,217)(17,739)(7,661)(31,617)

11,673

9,116

3,354

24,143

1,687

5,576

4,047

11,310

275

1,098

106

1,479

(65)

(242)

(210)

(517)

(574)

(108)

(24)

(706)

(1,574)(3,571)(721)(5,866)

209

488

167

864

0

(26)

(273)

(299)

20,00230,933

14,741

65,676(8,371)(18,602)(8,295)(35,268)

11,631

12,331

6,446

30,408

4,871

5,128

1,323

11,322

140

354

98

592

(203)

(294)

(207)

(704)

(75)

(44)

(1)

(120)

(1,847)(4,214)(365)(6,426)

Exchange rate differences

109

226

(34)

301

Other changes

(23)

1,493

(2,032)(562)

24,25834,952

11,702

70,912(9,655)(19,972)(6,474)(36,101)

14,603

14,9805,228

34,811Others

Total

January 1, 2013
Cost
Accumulated depreciation andaccumulated impairment losses
Carrying amount
Increases
Acquisition throughcombinations
Disposals and sales

business

Impairment losss
Depreciation
Exchange rate differences
Other changes
December 31, 2013
Cost
Accumulated depreciation andaccumulated impairment losses
Carrying amount
Increase
Acquisition throughcombinations
Disposal and sales

business

Impairment loss
Depreciation

December 31, 2014
Cost
Accumulated depreciation andaccumulated impairment losses
Carrying amount

Depreciation is presented within “Operating expenses” in the Consolidated Statements ofIncome.

(Thousands of U.S. Dollars)
Buildings andaccompanying
facilities

Furniture,
Fixtures andequipment$166,739

OthersTotal$257,861$122,883$547,483(69,782)(155,068)(69,148)(293,998)

96,957102,793

53,735

253,485

40,60542,747

11,02994,381

1,167

2,951

817

4,935

(1,692)(2,451)(1,726)(5,869)

(625)

(367)

(8)

(1,000)(15,397)(35,128)(3,043)(53,568)

Exchange rate differences

909

1,884

(284)

2,509

Other changes(192)

12,446(16,939)(4,685)202,217291,364

97,549591,130(80,485)(166,489)(53,968)(300,942)

121,732

124,875

43,581

290,188

December 31, 2013
Cost
Accumulated depreciation andaccumulated impairment losses
Carrying amount
Increase
Acquisition throughcombinations
Disposal and sales

business

Impairment loss
Depreciation

December 31, 2014
Cost
Accumulated depreciation andaccumulated impairment losses
Carrying amount

Depreciation is presented within “Operating expenses” in the Consolidated Statements of Income.
(2) Impairment of Property, Plant and Equipment
The Group Companies assess, at each reporting date, whether there are any indications thatproperty, plant and equipment may be impaired. If any indication exists, the Group Companies
estimate the recoverable amount of the asset.
In principle, the Group Companies estimate the recoverable amount of individual assets.
However if estimation of the recoverable amount of individual assets is not possible, thenestimation of the recoverable amount of the CGU to which the asset belongs is made. A CGU is
the smallest identifiable groups of assets, which generates cash inflows that are largely
independent of the cash inflows from other assets or group of assets. As a principle, each groupcompany is considered to be a CGU. Idle assets for which no future use is anticipated areconsidered individually as CGUs. Impairment losses are included in “Other expenses.”
For the year ended December 31, 2013
Impairment losses for the year ended December 31, 2013 was mainly due to the termination ofcontracts for certain distribution bases of Rakuten Logistics, Inc.
(3) Property, Plant and Equipment Pledged as Collateral
As of December 31, 2013
Buildings and accompanying facilities of ¥470 million are pledged as collateral for borrowings.

As of December 31, 2014
Buildings and accompanying facilities of ¥452 million ($3,768 thousand) are pledged ascollateral for borrowings.
(4) Finance Leases (as Lessee)
Carrying amounts of leased assets under finance lease arrangements are as follows.
Thousands of
U.S. Dollars

Millions of Yen

Buildings
Furniture,equipment
OthersTotal

fixturesandDecember 31,
2013¥5,935

December 31,
2014¥8,245

December 31,
2014$68,731

1,850

1,713

14,280

1,133
8,918

325
10,283

2,709
85,720Included in the above is a baseball stadium facility, which has been donated to Miyagi Prefecture
based on a franchise contract, and which is recognized as a finance lease as the Group
Companies have the right of use in relation to the stadium facility. The related carrying amounts
as of December 31, 2013 and 2014 were ¥6,038 million and ¥8,351 million ($69,615 thousand),
respectively. There are no lease obligations associated with this lease arrangement.
Lease obligations based on finance lease contracts as of December 31, 2013 and 2014 were
¥2,663 million and ¥1,568 million ($13,071 thousand), respectively.

18. Intangible Assets(1) Schedule of Changes in Intangible Assets(Millions of Yen)
Goodwill

Software

Others

Total

January 1, 2013
Cost
Accumulated amortization andaccumulated impairment losses
Carrying amount¥145,093¥99,441¥55,538¥300,072(37,198)(59,434)(15,426)(112,058)

107,895

40,007

40,112

188,014Additions
Acquisition through businesscombinations
Disposal and sales

44

20,133

3,090

23,26725,373

3,620

5,355

34,348

―

(634)

(4)

(638)

Impairment loss

(4,557)(1,514)(1,354)(7,425)―(14,300)(5,900)(20,200)

Exchange rate differences

12,343661

4,063

17,067

Other changes

1,128

440

(120)

1,448

193,008

122,851

68,161

384,020(50,782)(74,438)(22,919)(148,139)

142,226

48,41345,242

235,881

Amortization

December 31, 2013
Cost
Accumulated amortization andaccumulated impairment losses
Carrying amount
Additions
Acquisition through businesscombinations
Disposal and sales―

24,6643,353

28,017

188,754750

25,020214,524―(1,350)(1)(1,351)

Impairment losses(1,510)

(577)

(94)

(2,181)―(16,211)(7,503)(23,714)34,286832

4,507

39,625

(111)

(57)

46

(122)

400,929

145,857

93,214640,000(37,284)(89,393)(22,644)(149,321)

363,645

56,46470,570490,679

Amortization
Exchange rate differences
Other changes
December 31, 2014
Cost
Accumulated amortization andaccumulated impairment losses
Carrying amount

Software under intangible assets mainly comprises internally generated software.
Amortization of intangible assets is presented in “Operating expenses” in the Consolidated
Statements of Income.

(Thousands of U.S. Dollars)
Goodwill

Software

Others

Total

Cost
Accumulated amortization andaccumulated impairment losses
Carrying amount$1,608,936$1,024,100$568,197$3,201,233(423,324)(620,524)(191,055)(1,234,903)

1,185,612

403,576

377,142

1,966,330

Additions
Acquisition through businesscombinations
Disposal and sales―

205,602

27,951

233,553

1,573,474

6,252

208,570

1,788,296―(11,254)(8)(11,262)(12,588)(4,810)(783)(18,181)―(135,137)(62,546)(197,683)

285,812

6,936

37,571

330,319

(925)

(475)

383

(1,017)

3,342,189

1,215,880

777,043

5,335,112(310,804)(745,190)(188,763)(1,244,757)

3,031,385

470,690588,280

4,090,355

December 31, 2013

Impairment losses
Amortization
Exchange rate differences
Other changes
December 31, 2014
Cost
Accumulated amortization andaccumulated impairment losses
Carrying amount

Software under intangible assets mainly comprises internally generated software.
Amortization of intangible assets is presented in “Operating expenses” in the Consolidated
Statements of Income.

Research and development expenses recognized as expenses for the years ended December
31, 2013 and 2014 were ¥856 million and ¥2,392 million ($19,940 thousand), respectively.
Goodwill acquired through business combinations for the year ended December 31, 2013 ismainly attributable to the acquisitions of VIKI, Inc. and Direct Technology Solution SAS. The
amounts of such goodwill were ¥16,353 million and ¥6,195 million, respectively were acquired.
Goodwill acquired through business combinations for the year ended December 31, 2014 ismainly attributable to the acquisitions of Ebates Inc. and VIBER MEDIA LTD. For details, pleaserefer to Note 44 “Business Combinations.”
Acquisitions of Others within Intangible Assets through business combinations for the year
ended December 31, 2014 are mainly attributable to customer-related intangible asset acquiredin the acquisition of Ebates Inc. of ¥14,740 million ($122,874 thousand), and trademarks andtechnology obtained through the acquisition of VIBER MEDIA LTD. of ¥7,933 million ($66,130
thousand).

(2) Impairment of Goodwill and Intangible Assets with Indefinite Useful Lives
The balance of goodwill and intangible assets with indefinite useful lives of each CGU is asfollows. Intangible assets with indefinite useful lives mainly comprise trademarks. These
trademarks, which were acquired in business combinations, will basically continue to exist as
long as the business continues and thus are considered to be intangible assets with indefinite
useful lives.
(Millions of Yen)
December 31, 2013
December 31, 2014
Intangible
Intangible
OperatingCGU
assetswithassetswithsegment
Goodwill
Goodwill
indefinite
indefinite
useful lives
useful lives
PRICEMINISTER¥15,519¥6,462¥15,679¥6,528S.A.S.
Rakuten
Kobo
19,76632
20,81334
Internet
Inc.
Services Ebates Inc.
――
99,493―
Others57,101
926
78,126931
Total
92,386
7,420
214,111
7,493
Rakuten Bank,
32,886―32,886―Ltd.
Internet
Others13,731―
14,085―
FinanceTotal
46,617―
46,971
―
VIBER
MEDIA
―
―
99,349―LTD.
OthersOthers
3,223
―
3,214
―
Total
3,223
―
102,563―
Total
142,2267,420
363,645
7,493

Operatingsegment

Internet
Services

Internet
Finance

OthersCGU

PRICEMINISTER
S.A.S.
Rakuten
Kobo
Inc.
Ebates Inc.
OthersTotal
Rakuten Bank,
Ltd.
Others
Total
VIBER
MEDIA
LTD.
Others
Total
Total(Thousands of U.S. Dollars)
December 31, 2014
Intangible
assets with
Goodwill
indefinite
useful lives$130,702$54,418

173,499283

829,385
651,267
1,784,853―
7,761
62,462

274,141―

117,414391,555――

828,185―

26,792854,977
3,031,385――
62,462

For the year ended December 31, 2013
For the year ended December 31, 2013, an impairment loss of ¥4,557 million relating to goodwill
allocated to the CGU of others in the Internet Services segment was recorded in “Other
expenses” in the Consolidated Statements of Income. From the year ended December 31, 2014,of the amount of goodwill allocated to Rakuten Bank, Ltd. (CGU in the Internet Finance segment),¥1,500 million was recorded as goodwill for Others (CGU) in the Internet Finance segment,
following the transfer of the unit’s investment trust business to Rakuten Securities, Inc.
For the year ended December 31, 2014
An impairment loss of ¥1,510 million ($12,588 thousand) for the CGU classified as “Others” in
the Internet Services segment was recorded under “Other expenses” in the Consolidated
Statements of Income.
When conducting an impairment test for goodwill and intangible assets with indefinite useful lives,
the Group Companies, as a general rule, consider each company to be a CGU and allocate
goodwill and intangible assets with indefinite useful lives to the CGUs expected to benefit fromsynergies associated with business combinations. A CGU is the smallest identifiable group ofassets, which generates cash inflows that are largely independent of the cash inflows from otherassets or group of assets.
The Group Companies perform impairment testing of goodwill at least annually, regardlessof whether there is any indication of impairment. Intangible assets with indefinite useful lives are
not amortized; instead they are tested for impairment annually. The Group Companies
individually determine the timing of impairment test for goodwill and intangible assets withindefinite useful lives taking into consideration the timing of the formulation of the relevantbusiness plan. Indications of impairment are also assessed every quarter; and if any such
indication exists, impairment testing is performed.
The recoverable amount of a CGU with allocated goodwill is the higher of value in use and fairvalue less costs of disposal. On December 31, 2014, the recoverable amounts of all CGUs towhich goodwill was allocated, except for Ebates Inc. (CGU) and VIBER MEDIA LTD. (CGU),
were determined with reference to their calculated values in use. The recoverable amounts ofEbates Inc. and VIBER MEDIA LTD. were determined based on their fair values less costs ofdisposal.
Value in use is calculated based on the business plans approved by the management ofeach CGU, using pre-tax, estimated future cash flows for primarily three to five years and otherassumptions for a three to five year period. These business plans have been drawn up based
primarily on gross merchandise sales in the Internet Services segment, and the number ofaccounts and the number of registered members in the Internet Finance segment. For periods
beyond those covered by the business plans, the terminal value is assessed.
Terminal value is calculated using the estimated growth rate of each CGU. Also the pre-tax
discount rate used in the assessment of value in use is calculated for each CGU.
The growth rates used in predicting cash flows for periods beyond those covered by thebusiness plans of each CGU reflect the status of the country and the industry to which the CGU
belongs and do not exceed the average long-term growth rate of the industry in which the CGU
is active. Pre-tax discount rates used in calculating terminal value reflect the inherent risks of therelevant businesses of each CGU. Discount rates are determined based on comparable

companies of each CGU, incorporating market interest rates, the size of the subsidiarycomprising the CGU, and other factors.
Fair value less costs of disposal is based on an estimated fair value less costs of disposal
based on the discounted cash flow method for a five to ten year period. This measurement of fairvalue is classified as Level 3 in the fair value hierarchy due to the unobservable inputs used inthis valuation technique.
Additionally, the business plan, which forms the basis for the measurement of therecoverable amount in the impairment tests of goodwill and intangible assets with indefinite
useful lives, is compared with past performance and consideration is made as to whether thebusiness plan is a reasonable basis for predicting future cash flows.
Significant assumptions used in the calculation of the recoverable amount as of December 31,
2013 and 2014 are as follows. The following estimates have been used in the analysis of each
CGU.

Operatingsegment

Internet
Services

December 31, 2013
Discount
Growth rate
rate

CGU
PRICEMINISTER
S.A.S.
Rakuten
Kobo
Inc.
Ebates Inc.
OthersInternet
Finance

OthersRakutenLtd.
OthersVIBER
LTD.
Others

2.0%

12.6%

2.0%

10.6%

3.0%

13.7%

3.0%

15.3%

-

9.4%~
32.3%

3.0%

15.2%
8.3%~
27.4%

2.0%~5.5%
Bank,

MEDIA

December 31, 2014
Discount
Growth rate
rate

2.0%~5.0%

2.0%

10.8%

2.0%

10.4%

2.0%

10.3%~
20.5%

2.0%

12.9%~
20.2%

-

-

3.0%

33.3%

2.0%

12.3%

2.0%

13.2%

Sensitivity Analysis
The Group Companies have recorded goodwill and intangible assets with indefinite useful lives
for PRICEMINISTER S.A.S. (CGU) and Rakuten Kobo Inc. (CGU). For the year ended
December 31, 2014, since the amounts by which the recoverable amounts exceed the carrying
amounts in PRICEMINISTER S.A.S. and Rakuten Kobo Inc. remain low, if the major
assumptions used in impairment test were to change within a reasonably predictable range,
there is a possibility that impairment would be occurred. The recoverable amounts of other
CGUs to which goodwill has been allocated significantly exceed their carrying amounts,
therefore the Group Companies judge that significant impairment is unlikely occurred for these
CGUs, even if the major assumptions used in impairment test were to change within areasonably predictable range.
(3) Impairment of Intangible Assets (Except for Goodwill and Intangible Assets with Indefinite UsefulLives)The Group Companies assess, at each reporting date, whether there is an indication that

intangible assets (except for goodwill and intangible assets with indefinite useful lives) may be
impaired. If any indication exists, the Group Companies estimate the recoverable amount of theasset.
In principle, the Group Companies estimate the recoverable amount for the individual asset,
but if estimation of the recoverable amount of individual assets is not possible, an estimation of
the recoverable amount of the CGU to which the asset belongs is made. Idle assets for which
future use is not anticipated are considered individually.
For the year ended December 31, 2013
In the year ended December 31, 2013, an impairment loss of ¥2,868 million on intangible assets(except for goodwill and intangible assets with indefinite useful lives) arising in the Internet
Services segment was recorded within “Other expenses” in the Consolidated Statements ofIncome.
For the year ended December 31, 2014
In the year ended December 31, 2014, an impairment loss of ¥671 million ($5,594 thousand) on
intangible assets (except for goodwill and intangible assets with indefinite useful lives) arising in
the Internet Services and Internet Finance segments was recorded within “Other expenses” in
the Consolidated Statements of Income.
19. Deposits for Banking Business
Breakdown of Deposits for Banking BusinessThousands of
U.S. Dollars

Millions of Yen

Financial liabilities measured
at amortized cost
Demand deposits
Time deposits
Totalfinancialliabilities
measured at amortized cost
Financial liabilities measured
at FVTPLTime deposits
Total deposits
businessforbanking

December 31, 2013

December 31, 2014

December 31, 2014

¥556,765¥628,330$5,237,829

323,977

437,645

3,648,258

880,742

1,065,975

8,886,087

79,21871,220593,698

959,960

1,137,195

9,479,785

20. Financial Liabilities for Securities Business
Breakdown of Financial Liabilities for Securities BusinessThousands of
U.S. Dollars

Millions of Yen

December 31, 2013

December 31, 2014

December 31, 2014

¥425,332¥275,320$2,295,098

44,82046,858

390,614329,307343,604

2,864,321

118,774

136,299

1,136,204

158,824

193,027

1,609,095

914

33

275

1,077,971

995,141

8,295,607

Accounts payable relating toinvestment
securities
transactions
Margin transactions liabilities
Deposits received
Borrowings
securedbysecurities
Guarantee deposits received
OthersTotal financial liabilities
securities business

forFinancial liabilities for securities business are measured at amortized cost.
Derivative liabilities classified as held for trading are included in “Derivative liabilities.”
21. Bonds and Borrowings
Schedule of Bonds
Thousands of
U.S. Dollars

Millions of Yen

Name

Type

Rakuten, Inc. The 1st
unsecured bondRakuten, Inc.
Currency: JPY
Maturity: three years
Rakuten, Inc. The 2nd
unsecured bondRakuten, Inc.
Currency: JPY
Maturity: three years
The 1st unsecured
RakutenCard bondCo., Ltd.
Currency: JPY
Maturity: five years
The 3rd unsecured
FusionbondCommunications
Currency: JPY
Corporation
Maturity: five years
T
Total bonds

Interest
rate

December 31, December 31, December 31,
2013
2014
2014

0.377%¥―¥9,960$83,0280.38%―

19,897

165,864

0.91%

1,339

1,043

8,694

0.64%

480

240

2,001

―

1,819

31,140259,587

All bonds are measured at amortized cost.
The nominal interest rates applied for each bond in the year ended December 31, 2013 or2014 stated in the “Interest rate” column differ from the effective interest rates.

Schedule of Borrowings
Thousands of
U.S. Dollars

Millions of Yen

Short-term debt
Long-term debt
Floating-rate debt
Maturity: 1 to 9 years (JPY)(Note)
Fixed-rate debt
Maturity: 2 to 25 years (JPY)Commercial paper
Total borrowings

Interest
rate
0.22%~3.90%

0.484%~2.44%
0.528%~4.38%
0.2%~0.65%―

December 31,
2013

December 31,
2014

December 31,
2014¥147,399¥155,511$1,296,357

161,760

329,805

2,749,292

21,90526,971

224,833

56,80046,500387,629

387,864

558,787

4,658,111

All borrowings are measured at amortized cost.
The nominal interest rates applied for each borrowing in the year ended December 31,
2013 or 2014 stated in the “Interest rate” column differ from the effective interest rates.
(Note) The above borrowings include the underlying hedged items of cash flow hedges where
floating rate debt is swapped for fixed rate debt, and the interest rates stated in the“Interest rate” column incorporate the effect of the cash flow hedges.
22. Other Financial Liabilities
Breakdown of Other Financial Liabilities
Thousands of
U.S. Dollars

Millions of Yen

December 31, 2013

December 31, 2014

December 31, 2014

Other payables¥71,973¥99,747$831,502

Accrued expenses

23,83528,360236,412

Deposits received

83,78190,504754,451

Margin deposits received

32,0683,135

26,134

Others15,11420,870173,975

Total other financial liabilities

226,771242,616

2,022,474

Other financial liabilities are measured at amortized cost.

23. Provisions(1) Schedule of Changes in Provisions(Millions of Yen)
Provision forcustomer points
January 1, 2013
Increases during the period(provisions made)Increases during the period(others)
Decreases during the period(provisions used)
Decreases during the period(others)
December 31, 2013
Increases during the period(provisions made)Increases during the period(others)
Decreases during the period(provisions used)
Decreases during the period(others)
December 31, 2014

OthersTotal¥25,676¥3,938¥29,614

34,641

2,526

37,167

60

1,370

1,430

(25,591)(1,182)(26,773)

(206)

(212)

(418)

34,5806,440

41,02039,292

1,595

40,887

287

367

654

(34,388)(2,752)(37,140)(244)(1,208)(1,452)

39,527

4,442

43,969(Thousands of U.S. Dollars)
Provision forcustomer points
December 31, 2013
Increases during the period(provisions made)Increases during the period(others)
Decreases during the period(provisions used)
Decreases during the period(others)
December 31, 2014

OthersTotal$288,263$53,684$341,947

327,543

13,296

340,839

2,392

3,060

5,452

(286,662)(22,941)(309,603)(2,034)(10,070)(12,104)

329,502

37,029366,531(2) Provision for Customer Points
The Group Companies operate points programs, including the Rakuten Super Points program,and grant points to customers as part of product sales, provisioning of services, and based on
customer usage of the Group Companies’ assets, the completion of various membershipregistrations, customer referrals and limited-time promotions. Customers are able to exchange
accumulated points for products and services, obtain discounts, or transfer their points to point
programs of other companies. Points have an expiry date and once they expire a customer
forfeits the right to use them.
In anticipation of the future use of such points by customers, the Group Companies
recorded a provision for customer points at an estimated amount based on historical experienceas the majority of points granted to customers are borne by the registered retailers, which are notrelated to the Group Companies, in Rakuten Ichiba. These are estimates and there is an inherent
uncertainty regarding the extent of usage of such points by customers.

(3) Other Provisions
Other provisions include asset retirement obligations and provision for loss on interest
repayments.
These provisions are attributable to transactions in the ordinary course of business, and,are not individually significant.
24. Policy Reserves and Others for Insurance Business(1) Breakdown of policy reserves and others for insurance businessThousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

December 31,
2014

Reserve for outstanding claims¥1,796¥1,863$15,530

Liability reserves
Total policy reserves and others for insurance
business

17,056

17,984

149,917

18,852

19,847

165,447

Regarding the funding method for liability reserves, the method stipulated in the Notification No.
48 of the Ministry of Finance, 1996 is applied for contracts subject to standard liability reserves,and the level premium method is applied for contracts not subject to standard liability reserves.
Mortality rates based on Standard Mortality Table 2007 (Standard Mortality Table 1996 forcontracts with an effective date on or before March 31, 2007) and a product crediting rate of
1.0% (1.5% for contracts with an inception date of policy on or before March 31, 2013 and 2.0%
for contracts with an effective date on or before March 31, 2001) are used for the calculation of
liability reserves.
The breakdown of changes in policy reserves is as follows.
Thousands of
U.S. Dollars

Millions of Yen

Balance at the beginning of the year
Insurance premium (net)(Note 1)

Insurance claims and other payments
Other changes
Balance at the end of the year

(Note 2)

December 31,
2013¥18,496

December 31,
2014¥18,852

December 31,
2014$157,152

13,84914,570

121,457(10,859)(10,165)(84,736)(2,634)(3,410)(28,426)

18,852

19,847

165,447(Notes) 1 The amount is calculated by deducting costs allocated to the operation of the insurance
business from insurance revenue, etc.
2 The amount includes interest on liability reserves, mortality gain, etc.
(2) Liability Adequacy Test for Insurance Contracts
The Group Companies perform a liability adequacy test for insurance contracts taking into
consideration estimated present value of cash inflows, such as related insurance premiums andinvestment income, and cash outflows, such as insurance claims and benefits and operating
expenses. As a result of testing, the amount of the liability was considered to be adequate, andno additional recognition of liability and expense was recognized.

(3) Insurance Risk
For sound and appropriate insurance business operations, it is important to accurately
comprehend and adequately manage increasingly diversified and complex risks. Therefore, across-organizational risk management framework was developed, and the role and process at
departments responsible for risk management were clarified. The Group Companies ensure
appropriate business operations by having all employees and officers fully understand theimportance of risk management. Specifically, the Group Companies established a crossorganizational “Risk Management Committee,” and undertake the following overall risk
management activities: appointing departments responsible for risk management according to
the type of risk; developing a risk management framework; comprehending, analyzing andassessing risk status; and instructing operational departments.
Concerning insurance underwriting risk as a major risk in the insurance business, the Group
Companies have identified and analyzed risks through regular monitoring of the frequency of
insured events and surrender ratio. In developing new products, risk analysis is carried out inconsideration of an appropriate balance with profitability.
Under Japanese laws and regulations, life insurance companies are required to calculate risks
associated with payments of insurance claims and benefits and risks associated with asset
management in preparation for the occurrence of various risks to which life insurance companies
are exposed on a scale beyond a normally predictable level. The amounts equivalent to risks
before tax are as follows, which are recognized as representing the impact on the Consolidated
Statements of Income in the event of occurrence of such risks. The confidence level of risk
quantity is generally assumed to be 95%, with variance depending on the type of risk.
Thousands of
U.S. Dollars

Millions of Yen

Insurance risk impact amount

December 31,
2013¥1,100December 31, December 31,
2014
2014
¥378
$3,151

Third-sector insurance risk impact amount

1,099

912

7,603

Product crediting rate risk impact amount

3

3

25

Minimum guarantee risk impact amount

―

―

―

1,051

1,108

9,236

65

48

400

Investment risk impact amount
Minimum business risk impact amount

The Group Companies only handle standard insurance products, and insured events are mainly
death (first sector product), hospitalization and surgery, etc. (third sector product). The policy
period of insurance products is mainly 10 years and lifetime, and the insurance liabilities varywith the acquisition of new contracts, occurrence of insured events and contract cancellations,etc.
In future periods covered by the liability adequacy test it is expected that insurance
revenues will exceed the associated insurance costs.

25. Income Tax Expense
The deferred tax assets and liabilities as of December 31, 2013 and 2014 include the following:Thousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

December 31,
2014

Deferred tax assets
Tax losses carried forward¥17,380¥17,329$144,456

Allowance for doubtful accounts

4,032

4,190

34,928Provision for customer points

13,113

14,150117,956

Taxable goodwill

3,626

1,774

14,788Others

14,72812,869107,278

Total

52,87950,312

419,406(7,568)(135)(1,125)(3,555)(1,479)(12,329)

Intangible assets(14,926)(20,191)(168,314)

Others(4,359)(5,938)(49,500)

Total(30,408)(27,743)(231,268)

Deferred tax assets

31,59435,006

291,814

Deferred tax liabilities(9,123)(12,437)(103,676)Net

22,471

22,569188,138

Deferred tax liabilities
Tax deductible losses due totransfer of shares
Gains and losses of financial
assets measured at FVTOCINet amount of deferred tax assets

Deferred tax assets related to tax losses carried forward as of December 31, 2013 and 2014 aremainly recognized by one of the Company’s subsidiaries, Rakuten Bank, Ltd. In Rakuten Bank,
Ltd., due to non-performing loans and investment securities, which gave rise to tax losses
carried forward in the past, being reduced to controllable levels, and an environment underwhich it can steadily produce continuous and stable earnings made possible through various
initiatives aimed toward capturing customers and ensuring stable performance as a result of
joining the Group Companies, tax losses carried forward were partially deducted in calculating
Rakuten Bank’s taxable income for the years ended December 31, 2013 and 2014. In addition, it
is considered to be highly probable that future taxable income will be available.

The changes in net deferred tax assets and liabilities were as follows:
For the year ended December 31, 2013
(Millions of Yen)
Recognized in
Recognized
Changes inJanuary 1,
otherDecemberin profit orscope of
Others2013
comprehensive
31, 2013
loss
consolidation
incomeTax losses carried forward
Allowancefordoubtfulaccounts
Provision for customer points¥26,362¥(9,204)

¥222

¥―

¥―

¥17,380

3,474

558

―

―

―

4,032

9,786

3,327

―

―

―

13,113

Taxable goodwill
Tax deductible losses due totransfer of shares
Gains and losses of financial
assets measured at FVTOCI
Intangible assets

4,916(1,290)

―

―

―

3,626

(7,568)

―

―

―

―

(7,568)(1,233)―(2,322)――(3,555)(12,199)

645

(853)

(2,519)―(14,926)

Others

10,592

(740)

79

―

438

10,369

Total

34,130(6,704)(2,874)(2,519)438

22,471For the year ended December 31, 2014
(Millions of Yen)
Recognized in
Recognized
Changes inJanuary 1,
otherDecemberin profit orscope of
Others2014
comprehensive
31, 2014
loss
consolidation
incomeTax losses carried forward¥17,380¥(574)

¥431

¥92

¥―

¥17,329

Allowance for doubtful accounts

4,032

158

―

―

―

4,190

Provision for customer points

13,113

1,037

―

―

―

14,150

Taxable goodwill
Tax deductible losses due totransfer of shares (Note)
Gains and losses of financial
assets measured at FVTOCI
Intangible assets

3,626(1,852)

―

―

―

1,774

(7,568)

7,433

―

―

―

(135)

(3,555)

―

2,076

―

―

(1,479)(14,926)

2,287(1,239)(6,313)―(20,191)

Others

10,369(4,098)

(175)

734

101

6,931

Total

22,471

4,391

1,093

(5,487)101

22,569(Notes)

The amount recognized in profit or loss represents the amount of an extinguishment ofdeferred tax liabilities following the merger between the Company and former Rakuten
Travel, Inc.

(Thousands of U.S. Dollars)
Recognized in
Recognized
Changes inJanuary 1,
otherDecemberin profit orscope of
Others2014
comprehensive
31, 2014
loss
consolidation
incomeTax losses carried forward$144,882$(4,785)$3,592$767$―$144,456

Allowance for doubtful accounts

33,611

1,317

―

―

―

34,928Provision for customer points

109,311

8,645

―

―

―

117,956

Taxable goodwill
Tax deductible losses due totransfer of shares
Gains and losses of financial
assets measured at FVTOCI
Intangible assets

30,227(15,439)―――

14,788(63,087)

61,962―――(1,125)(29,635)―

17,306――(12,329)(124,425)

19,065(10,328)(52,626)―(168,314)

Others86,437(34,161)(1,459)

6,119

842

57,778

Total

187,32136,604

9,111(45,740)

842

188,138

The breakdown of deductible temporary differences, tax losses carried forward and tax credits
carried forward for which no deferred tax asset is recognized in the consolidated statements offinancial position is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deductible
temporarydifferences
Unused tax losses carriedforwardTax credits carried forward

December 31, 2013

December 31, 2014

December 31, 2014

¥11,031¥8,434$70,307

27,17833,391

278,351

215

75

625

38,424

41,900349,283

Total

Deferred tax assets associated with the above are not recognized, as it is unlikely that futuretaxable income necessary for the Group Companies to utilize their benefits would be generated.
Tax losses carried forward for which no deferred tax asset is recognized in the consolidated
statements of financial position, if unutilized, will expire as follows:
Thousands of
U.S. Dollars

Millions of Yen

December 31, 2013

December 31, 2014

December 31, 2014

¥309

¥643

$5,360One year or lessOver one year to five
years
Over five years

3,533

2,703

22,53323,33630,045

250,458

Total

27,17833,391

278,351

There are no deductible temporary differences with an expiry date or significant temporarydifferences associated with investments in subsidiaries and associates accounted for using theequity method for which there are unrecognized deferred tax liabilities. There will be no
significant impact on the Group Companies’ tax payment, even if the retained earnings of thesubsidiaries or associates are remitted to the Group Companies in the future.
Breakdown of income tax expense recognized through income is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013
Current tax expense
Income tax expense for net
incomeSubtotal
Deferred tax expense
Generation and reversal of
temporary difference
Changes in unused tax losses
carried forward
Subtotal
Total income tax expense

Year ended
December 31,
2014

Year ended
December 31,
2014¥38,425¥37,533$312,879

38,42537,533

312,879(2,500)(4,965)(41,389)

9,204

574

4,785

6,704

(4,391)(36,604)

45,12933,142276,275

Reconciliations between the tax rate in Japan and effective tax rate on income tax expense aspresented in the Consolidated Statements of Income are as follows:(%)
Year ended December 31, 2013 Year ended December 31, 2014
Statutory tax rate in Japan

38.0

38.0

1.9

3.7

(Reconciliations)
Permanent non-deductible items

Permanent non-taxable items
(0.5)
(2.4)
Effect from assessing recoverability
6.2
(4.3)
of deferred tax assets
Differences due to statutory tax rate
3.3
1.8
of subsidiaries (Note 1)
Extinguishment of deferred tax
Liabilities related to tax deductible(7.1)―
losses due to transfer of shares(Note 2)Others2.0
2.1
Effective tax rate on income tax
50.9
31.8
expense(Notes) 1 The difference is due to difference in the statutory tax rate of Japan, where theCompany is located, and that of the other jurisdictions where certain subsidiaries arelocated.
2 This represents the amount of an extinguishment of deferred tax liabilities following themerger between the Company and former Rakuten Travel, Inc.

26. Common Stock, Capital Surplus, Retained Earnings and Treasury Stock
Common Stock
Schedule of shares authorized to be issued and total number of shares issued.
(Thousands of shares)
Total number of authorized shares
Total number of shares issued(Common stock with no par value) (Common stock with no par value)
January 1, 2013
3,941,800
1,320,627
Changes during the period:
Increases due to issuance of―
3,236
common stock
December 31, 2013
3,941,800
1,323,863
Changes during the period:
Increases due to issuance of―
4,740
common stock
December 31, 2014
3,941,800
1,328,603
Capital Surplus
The Companies Act of Japan (hereinafter referred to as the “Companies Act”) requires that atleast 50% of the proceeds of certain issues of common shares be credited to common stock,
while the remainder of the proceeds be credited to capital reserve included in capital surplus.
The Companies Act permits, upon approval at the General Shareholders’ Meeting, the transfer ofamounts from capital reserve to common stock.
Retained Earnings
The Companies Act requires that an amount equal to 10% of dividends of retained earnings be
appropriated as capital reserve (within capital surplus) or as legal reserve (within retained
earnings) until the aggregate amount of the capital reserve and the legal reserve equals to 25%
of common stock. The legal reserve may be used to eliminate or reduce a deficit or betransferred to retained earnings upon approval at the General Shareholders’ Meeting.
Retained earnings available for dividends under the Companies Act are based on theamount recorded in the Company’s general accounting records prepared in accordance with
JGAAP.
Treasury Stock
Schedule of Changes in Treasury Stock(Thousands of shares)
Year ended December 31, 2013 Year ended December 31, 2014
January 1

6,008

6,008

Acquisition0―

Disposal

―

―

6,008

6,008

December 31

Stocks of the Company Held by Subsidiaries or Associates
Schedule of Changes in Stocks of the Company Held by Subsidiaries or Associates(Thousands of shares)
Year ended December 31, 2013 Year ended December 31, 2014
January 1

79

79

Acquisition――

Disposal――

December 31

79

79

27. Revenue
Breakdown of revenue for the years ended December 31, 2013 and 2014 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31, 2013
¥59,072

Year ended
December 31, 2014
¥58,756

Year ended
December 31, 2014
$489,796

Rendering of services (Note)

382,502438,918

3,658,870

Interest income

69,36689,378745,065

Others7,628

11,513

95,974

Total

518,568

598,565

4,989,705

Sales of goods(Note) Rendering of services includes revenue arising from insurance contracts amounting to¥26,838 million for the year ended December 31, 2013 and ¥31,768 million ($264,822
thousand) for the year ended December 31, 2014.

28. Operating Expenses
Breakdown of operating expenses for the years ended December 31, 2013 and 2014 is asfollows:
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31,
2013

Year ended
December 31,
2014¥75,408¥83,884$699,266

93,206

108,898

907,786

Depreciation and amortization
Communication and maintenanceexpenses
Consignment
andsubcontract
expenses
Allowance for doubtful accounts
charged to expenses
Cost of sales of merchandise andservices renderedInterest
expenseforfinancebusiness
Commission fee expense for financebusiness
Insurance
claimsandotherpayments, and provision of policy
reserves and others for insurance
business
Others

26,08630,140251,250

18,254

19,055

158,845

27,95931,343

261,279

12,928

16,964141,41484,625

101,367

845,007

4,864

5,590

46,599

5,300

6,399

53,343

11,215

15,963133,069

60,52971,676597,499

Total

420,374

491,279

4,095,357

Advertisingandpromotion
expenditures
Employee benefits expenses

Year ended
December 31,
2014

Employee expenses (employee benefits expenses) are as follows:
1) Schedule of Employee Expenses
Thousands of
U.S. Dollars

Millions of Yen

Wages and salaries

Year ended
December 31,
2013¥79,135

Year ended
December 31,
2014¥92,745

Year ended
December 31,
2014$773,133

Retirement benefits

3,864

4,733

39,455

6,088

50,750

1,942

16,1893,390
108,898

28,259907,786

Legal welfare expenses
5,497
Stock option expenses relating
to directors and employees
1,679(Note)
Other salaries
3,031
Total
93,206(Note) Please refer to Note 35. Share-based Payments.

2) Number of Employees
December 31, 2013
Number of employees

December 31, 2014

10,867

11,723(Note) Number of employees represents the number of persons employed at the Group
Companies.
29. Other Income and Other Expenses(1) Breakdown of Other Income
Thousands of
U.S. Dollars

Millions of Yen

Foreign exchange gainYear ended
December 31, 2013
462

Year ended
December 31, 2014
¥3,133

Year ended
December 31, 2014
$26,117

Gain on step acquisition

―

1,437

11,979Others

1,369

2,154

17,956

Total

1,831

6,724

56,052(2) Breakdown of Other Expenses
Thousands of
U.S. Dollars

Millions of Yen

Year ended
December 31, 2013

Year ended
December 31, 2014

Year ended
December 31, 2014

¥5,485¥2,301$19,181

908

968

8,070

―

2,875

23,966

Others

3,388

1,469

12,246

Total

9,781

7,613

63,463

Impairment losses
Disposal of property, plant andequipment, and intangible
assetsRestructuring loss (Note)(Note) This represents losses due to changes in the strategies of certain subsidiaries.
30. Financial Income and Financial Expenses(1) Breakdown of Financial Income
Thousands of
U.S. Dollars

Millions of Yen

Interest income

Year ended
December 31, 2013¥140

Year ended
December 31, 2014¥184

Year ended
December 31, 2014
$1,534

Dividend income

57

46

383

Total

197

230

1,917

(2) Breakdown of Financial Expenses
Thousands of
U.S. Dollars

Millions of Yen

Interest expense

Year ended
December 31, 2013
¥1,676

Year ended
December 31, 2014
¥2,758Year ended
December 31, 2014
$22,991

Commission fee

286

228

1,900

1,962

2,986

24,891Total

31. Earnings per Share
Basic earnings per share is calculated by dividing the net income attributable to owners of theCompany by the weighted average number of common stock outstanding during the year. The
weighted average number of common stock outstanding during the year does not include
treasury stock.
Diluted earnings per share is calculated on the assumption of full conversion of potentiallydilutive common stock, adjusted for the weighted average number of common stock outstanding.
The Company has potential common stock related to stock options. The number of sharesthat may be acquired through these stock options is calculated at fair value (annual averagestock price of the Company) based on the value of the stock acquisition rights that would be
granted to unexercised stock options.
The net income attributable and the weighted average number of shares used in the calculationof earnings per share are as follows:Net
incomeattributabletoowners of theCompany(Millions of Yen)
[Thousands of
U.S. Dollars]
Weighted
average numberofshares(Thousands ofshares)
Earnings
pershare (yen)[U.S. Dollars]Year ended December 31, 2013

Year ended December 31, 2014

Basic

¥42,900

1,315,997¥32.60Adjustments

Diluted

Basic

¥(7)

¥42,893¥70,614[$588,646]¥(6)[$(50)]¥70,608[$588,596]

7,378 1,323,375

1,320,627

7,815

1,328,442¥53.47[$0.45]¥(0.32)[$(0.01)]¥53.15[$0.44]¥(0.19)¥32.41

Adjustments

DilutedThe following potential shares were not included in the calculation of diluted earnings per sharebecause there would be no dilutive effects.
Year ended December 31, 2013

Year ended December 31, 2014

Subscription Rights to Shares of the Company
Stock options in accordance with theprovisions of Article 236, Article 238 and
Article 239 of the Companies Act
March 28, 201312
Resolution
atGeneralthousand
Shareholders’ Meetingshares―There were no transactions during the period from December 31, 2014 to the date of approval of
the consolidated financial statements that materially impacted the calculation of earnings per
share.
32. Assets Pledged as Collateral and Assets Received as Collateral(1) Assets Pledged as Collateral
The Group Companies pledge assets mainly to secure debts from borrowing contracts, e-money
deposits, margin trading and security lending transactions conducted under normal terms andconditions, and as monetary deposits in derivative transactions.
The carrying amounts of assets pledged as collateral for liabilities and contingent liabilities
by the Group Companies are as follows:
Millions of Yen

Thousands of
U.S. Dollars

December 31, 2013 December 31, 2014

December 31, 2014

Cash and cash equivalents
Loans for credit card business(Note)
Investment securities¥1,110¥1,125$9,37845,40045,803381,819

6,831

6,827

56,911

Total

53,34153,755448,108(Note) Loans for credit card business include securitized receivables.
In addition to the above, investment securities for banking business, which were pledged ascollateral for foreign exchange settlements, derivative trading and other transactions, and forcommitment lines as of December 31, 2013 and 2014, were ¥50,583 million and ¥51,157 million($426,450 thousand), respectively.
Within other financial assets, guarantee deposits for futures trading held by a consolidated
subsidiary involved in the banking business as of December 31, 2013 and 2014, were ¥8,014
million and ¥3 million ($25 thousand), respectively.
Within financial assets for securities business, short-term guarantee deposits as ofDecember 31, 2013 and 2014, were ¥32,743 million and ¥58,886 million ($490,880 thousand),
respectively.
For assets pledged as collateral, the counterparty has no right to sell or to repledge thecollateral.
(2) Assets Received as Collateral
The Group Companies receive securities pledged as collateral in lieu of guarantee deposits andcollateral for other transactions, which are conducted under normal terms and conditions. The
Group Companies hold the rights to sell or repledge the received assets, provided that the
securities are returned at the time the relevant transactions are completed. The fair values of
securities received by the Group Companies as collateral to which the Group Companies held
the right to sell or repledge the collateral as of December 31, 2013 and 2014 were ¥719,585
million and ¥728,713 million ($6,074,633 thousand), respectively. Within such collateral, the fairvalues of the collateral actually sold or pledged as of December 31, 2013 and 2014 were¥201,333 million and ¥195,346 million ($1,628,426 thousand), respectively.
33. Hedge Accounting(1) Fair Value Hedges
In order to offset the risk of fair value fluctuation on certain fixed rate bonds as a result offluctuations in interest rates, subsidiaries of the Group Companies have entered into fixed-forfloating interest rate swap contracts with financial institutions as fair value hedges. The fairvalues of the interest rate swaps as hedging instruments are stated in Note 12. Derivative Assets
and Derivative Liabilities.
Gains or losses from remeasuring such interest rate swaps at fair value were a gain of ¥54
million for the year ended December 31, 2013 and a loss of ¥257 million ($2,142 thousand) inthe year ended December 31, 2014. Additionally, gains or losses on the underlying hedged items
due to the hedged risks were a loss of ¥54 million for the year ended December 31, 2013 and again of ¥257 million ($2,142 thousand) for the year ended December 31, 2014.
(2) Cash Flow Hedges
In order to offset the risk of fluctuations on future cash flows from floating rate borrowings,
subsidiaries of the Group Companies have entered into fixed-for-floating interest rate swap
contracts with financial institutions as cash flow hedges. The purpose of these hedges is tohedge the risk of future fluctuations of cash flows from borrowings by effectively converting
floating rate borrowings into fixed rate borrowings. As a result of these hedges, it will become
possible to offset the fluctuations of cash flows from floating rate borrowings with the fluctuationsof cash flows from the interest rate swaps. Existing hedging relationships are expected tocontinue to the year ending December 31, 2019.
The fair values of the interest rate swaps used as the hedging instruments are stated in
Note 12. Derivative Assets and Derivative Liabilities.

Schedule of changes in the amounts recognized in other comprehensive income
Thousands of
U.S. Dollars

Millions of Yen

January 1
Changes for the period
Reclassification
tonet
incomeReclassification to initialcarrying amount of nonfinancial assets or nonfinancial liabilities
December 31

Year ended
December 31, 2013¥(203)

Year ended
December 31, 2014¥(321)

Year ended
December 31, 2014$(2,676)

(262)

1,235

10,295

144

174

1,450

―

(1,610)(13,421)

(321)

(522)

(4,352)(Note) The amounts reclassified to net income are included in “Revenue” in the Consolidated
Statements of Income.
34. Contingent Liabilities and Commitments(1) Commitment Line Lending Contracts and Guarantee Obligations
Certain consolidated subsidiaries are engaged in consumer lending business through cash
advances and credit card loans, which are related to the credit cards.
Since these contracts expire without the actual loan being drawn, in addition to the Group
Companies having discretion to increase or decrease the limits on the loan amounts, the unusedbalance of these loans would not necessarily have a material impact on the Group Companies’
cash flows.
Certain consolidated subsidiaries are engaged in the credit guarantee business providing
general customers with guarantees on liabilities corresponding to loans which such customers
have received from business partners of other subsidiaries.
The balances of the unused lending commitment lines and guarantee obligations given in
the credit guarantee business stated above are as follows:

Lending commitment lines
Financial guarantee contracts
Total

Millions of Yen

Thousands of
U.S. Dollars

December 31, 2013 December 31, 2014

December 31, 2014

¥2,034,622¥2,312,745$19,279,301

17,52314,806

123,425

2,052,145

2,327,551

19,402,726(2) Commitment Line Borrowing Contracts
The Company and certain consolidated subsidiaries have entered into commitment line
borrowing contracts with multiple financial institutions and the balances of the unused portions ofsuch commitment lines available are as follows:Totalcommitment
borrowings
Amounts borrowed
Unused commitment lines

line

Millions of Yen

Thousands of
U.S. Dollars

December 31, 2013 December 31, 2014

December 31, 2014

¥111,798¥137,639$1,147,374

1,607

30

250

110,191

137,609

1,147,124(3) Commitments (Contracts)
As of December 31, 2013 and 2014, there were no significant capital expenditures(commitments) for which contracts had been entered into and which were unrecognized in the
consolidated financial statements.
35. Share-based Payments
Employee expenses relating to stock options recognized by the Group Companies during theyears ended December 31, 2013 and 2014 were ¥1,679 million and ¥1,942 million ($16,189
thousand), respectively. The Group Companies have elected to apply the exemption under IFRS
1 and have consequently accounted for the 2008 and 2009 stock options, 2012 and 2013 stock
options 1) to 5) and 2014 stock options 1) to 12) granted by the Company, and 2012 stock option
1) to 6) and 2013 stock option granted by Rakuten Kobo Inc. in accordance with IFRS 2.
The Company has granted equity-settled stock options to its executives and employees, its
subsidiaries, and associates. Rakuten Kobo Inc. has granted stock options with a cash
alternative option to executives and employees of Rakuten Kobo Inc. and its subsidiaries.
Conditions for vesting of the stock options require that those who received stock options
continue to be employed by the Company, its subsidiaries or associates from the grant date to
the vesting date.
On July 1, 2012, the Company implemented a 100-for-1 share split. The number of stock
options issued for each year has been adjusted for the share split. The following is a summary of
the Company’s stock options.

NameGrant date

Vesting date2004 stock September 7,
March 30,
option2004
2008
2005 stock December 15, March 30,
option 1)
2005
20092005 stock February 13,
March 30,
option 2)
2006
20092006 stock
April 20,
March 30,
option 1)
2006
20102006 stock December 14, March 30,
option 2)
2006
20102008 stock January 19,
March 27,
option2009
20122009 stock February 12,
March 27,
option2010
20132012 stock
April 20,
April 19,
option 1) A
2012
2014
2012 stock
April 20,
April 19,
option 1) B
2012
2015
2012 stock
April 20,
April 19,
option 1) C
2012
2016
2012 stock
July 1,March 29,
option 2)2012
20162012 stock
August 1,
March 29,
option 3)
2012
20162012 stock August 20,
March 29,
option 4)2012
20162012 stock November 21, November 20,
option 5) A
2012
2014
2012 stock November 21, November 20,
option 5) B
2012
2015
2012 stock November 21, November 20,
option 5) C
2012
2016
2013 stock February 1,
March 29,
option 1)
2013
20162013 stock
March 1,March 29,
option 2)
2013
20162013 stock
March 1,March 29,
option 3) A
2013
2016
2013 stock
March 1,March 29,
option 3) B
2013
2016
2013 stock
July 1,March 28,
option 4)2013
20172013 stock December 1,
March 28,
option 5)201320172014 stock February 1,
March 28,
option 1)2014
20172014 stock
March 1,March 28,
option 2)2014
20172014 stock March 19,
March 28,
option 3)2014
20172014 stock
May 1,March 28,
option 4)
2014
2018

Balance of
Exerciseoutstanding
price
options(Yen)(Note)
¥755

―

913

1,109,900

1,038

200,000

1,010

1,244,100

559

277,600

563

1,028,300

707

508,400

0.01

6,800

0.01

41,2000.01

41,6000.01

266,200

0.01

93,300

0.01

400

0.01

―

0.01

―

0.01

―

0.01

1,205,300

0.01

276,100

0.01

444,500

0.01

150,000

0.01

924,400

0.01

12,0000.01

753,500

0.01

354,200

0.01

398,000

0.01

281,000

Exercise period
From March 31, 2008 to
March 29, 2014
From March 31, 2009 to
March 29, 2015
From March 31, 2009 to
March 29, 2015
From March 31, 2010 toMarch 29, 2016
From March 31, 2010 toMarch 29, 2016
From March 28, 2012 toMarch 26, 2018
From March 28, 2013 toMarch 26, 2019
From April 20, 2014 toApril 20, 2022
From April 20, 2015 toApril 20, 2022
From April 20, 2016 toApril 20, 2022
From March 30, 2016 to
March 28, 2022
From March 30, 2016 to
March 28, 2022
From March 30, 2016 to
March 28, 2022
From November 21, 2014 toNovember 21, 2022
From November 21, 2015 toNovember 21, 2022
From November 21, 2016 toNovember 21, 2022
From March 30, 2016 to
March 28, 2022
From March 30, 2016 to
March 28, 2022
From March 30, 2016 to
March 28, 2022
From March 30, 2016 to
March 28, 2022
From March 29, 2017 toMarch 27, 2023
From March 29, 2017 toMarch 27, 2023
From March 29, 2017 toMarch 27, 2023
From March 29, 2017 toMarch 27, 2023
From March 29, 2017 toMarch 27, 2023
From March 29, 2018 toMarch 27, 2024

Name

Grant date

Vesting date2014 stock
option 5)2014 stock
option 6)
2014 stock
option 7)2014 stock
option 8)2014 stock
option 9)2014 stock
option 10)2014 stock
option 11)
2014 stock
option 12)

July 1,2014
September 1,
2014
September 1,
2014
October 1,
2014
October 1,
2014
November 1,
2014
November 1,
2014
November 1,
2014

March 28,2018
March 28,2018
March 28,2018
March 28,2018
March 28,2018
March 28,2018
March 28,2018
March 28,2018

Balance of
Exerciseoutstanding
price
options(Yen)(Note)
0.01

964,700

0.01

56,0000.01

457,900

0.01

135,500

0.01

8,900

0.01

799,300

0.01

663,800

0.01

248,700

Exercise period
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024
From March 29, 2018 toMarch 27, 2024

(Note) The balance of outstanding options has been converted into the number of shares.

The following is a summary of Rakuten Kobo Inc.’s stock options.
Exercise
Balance of
priceoutstanding
Name
Grant date
Vesting date
Exercise period(Canadianoptions
dollars)(Note)
Rakuten
Kobo
Inc. January 11,
January 10,
From January 11, 2014 to$1.00
150,000
2012 stock
2012
2014
January 11, 2018
option 1) A
Rakuten
Kobo
Inc. January 11,
January 10,
From January 11, 2015 to
1.00
739,458
2012 stock
2012
2015
January 11, 2018
option 1) B
Rakuten
Kobo
Inc. January 11,
January 10,
From January 11, 2016 to
1.00
739,458
2012 stock
2012
2016
January 11, 2018
option 1) C
Rakuten
Kobo
Inc. February 27, February 26,
From February 27, 2014 to
1.00―
2012 stock
2012
2014
February 27, 2018
option 2) A
Rakuten
Kobo
Inc. February 27, February 26,
From February 27, 2015 to
1.00
158,334
2012 stock
2012
2015
February 27, 2018
option 2) B
Rakuten
Kobo
Inc. February 27, February 26,
From February 27, 2016 to
1.00
158,333
2012 stock
2012
2016
February 27, 2018
option 2) C
Rakuten
Kobo
Inc.
April 9,April 8,From April 9, 2014 to
1.00―
2012 stock
2012
2014
April 9, 2018
option 3) A
Rakuten
Kobo
Inc.
April 9,April 8,From April 9, 2015 to
1.00
121,666
2012 stock
2012
2015
April 9, 2018
option 3) B
Rakuten
Kobo
Inc.
April 9,April 8,From April 9, 2016 to
1.00
121,667
2012 stock
2012
2016
April 9, 2018
option 3) C
Rakuten
Kobo
Inc.
April 23,
April 22,
From April 23, 2014 to
1.00―
2012 stock
2012
2014
April 23, 2018
option 4) A
Rakuten
Kobo
Inc.
April 23,
April 22,
From April 23, 2015 to
1.00―
2012 stock
2012
2015
April 23, 2018
option 4) B
Rakuten
Kobo
Inc.
April 23,
April 22,
From April 23, 2016 to
1.00―
2012 stock
2012
2016
April 23, 2018
option 4) C
Rakuten
Kobo
Inc.
July 9,July 8,From July 9, 2014 to
1.00―
2012 stock
2012
2014
July 9, 2018
option 5) AName
Rakuten
Kobo
Inc.
2012 stock
option 5) B
Rakuten
Kobo
Inc.
2012 stock
option 5) C
Rakuten
Kobo
Inc.
2012 stock
option 6) A
Rakuten
Kobo
Inc.
2012 stock
option 6) B
Rakuten
Kobo
Inc.
2013 stock
optionGrant date

Exercise
price
Vesting date
(Canadiandollars)

Balance ofoutstanding
options(Note)

Exercise period

July 9,2012

July 8,
2015

1.00

―

From July 9, 2015 toJuly 9, 2018

July 9,2012

July 8,
2016

1.00

―

From July 9, 2016 toJuly 9, 2018

October 5,
2012

December 30,
2013

1.00

400,000

From December 31, 2013 to
October 5, 2018

October 5,
2012

December 30,
2014

1.00

400,000

From December 31, 2014 to
October 5, 2018

January 11,
2013

January 11,
2013

0.01

―

From January 11, 2013 toJanuary 11, 2018

(Note) The balance of outstanding options has been converted into the number of shares.
The number of options and the weighted average exercise price related to stock options grantedby the Company are as follows:Year ended December 31, 2013
Number ofoptions(Note)

Year ended December 31, 2014

Weighted
average
exercise price(Yen)

Number ofoptions(Note)

Weighted
average
exercise price(Yen)

Balance at the beginning of
the year

13,684,400¥687

13,272,000¥516

Granted

3,567,300

0.01

5,320,000

0.01

Forfeited739,200

530

752,100

55

Exercised3,236,500

665

4,740,300

659

4,000

275

148,000

755

13,272,000

516

12,951,600

276

8,343,300

821

4,375,100

816

ExpiredOutstanding balance at theend of the year
Exercisable amount at theend of the year
Weighted average remaining
contract years

4.53 years(Note) The number of options has been converted into the number of shares.

6.15 years

The number of options and the weighted average exercise price related to stock options grantedby Rakuten Kobo Inc. are as follows:Year ended December 31, 2013
Number ofoptions(Note)

Year ended December 31, 2014

Weighted
average
exercise price(Canadiandollars)

Number ofoptions(Note)

Weighted
average
exercise price(Canadiandollars)

Balance at the beginning of
the year

20,303,573$1.00

21,427,255$0.90

Granted

2,188,682

0.01

―

―

Forfeited

1,065,000

1.00

17,518,881

0.88

Exercised――919,458

1.00

ExpiredOutstanding balance at theend of the year
Exercisable amount at end of
the year
Weighted average remaining
contract years

―

―

―

―

21,427,255

0.90

2,988,916

1.00

2,588,682

0.16

950,000

1.00

4.16 years

3.31 years(Note) The number of options has been converted into the number of shares.
The weighted average stock prices of the Company as of the exercise date were ¥1,231 and¥1,417 for the years ended December 31, 2013 and 2014, respectively.
The expiration dates and the exercise prices of the outstanding options for stock options grantedby the Company are as follows:
Exercise price(Yen)

Number of options (Note)
December 31, 2013

December 31, 2014

2014

¥755

1,154,000―

2015

913~1,038

3,038,800

1,309,900

2016

559~1,010

2,096,500

1,521,700

2018

563

1,368,600

1,028,300

2019

707

685,400

508,400

2022

0.01

3,871,200

2,525,400

2023

0.01

1,057,500

2,442,1002024
Balance at end of theperiod0.01―

3,615,800―

13,272,000

12,951,600(Note) The number of options has been converted into the number of shares.

The expiration dates and the exercise prices of the outstanding options related to stock options
granted by Rakuten Kobo Inc. are as follows:
Exercise price(Canadiandollars)
2018
Balance at end of theperiodNumber of options (Note)
December 31, 2013

December 31, 2014$0.01~1.00

21,427,255

2,988,916―

21,427,255

2,988,916(Note) The number of options has been converted into the number of shares.
The Company granted equity-settled stock options to its executives and employees, its
subsidiaries, and associates during the year ended December 31, 2014. The fair value of theoptions granted has been calculated using the Black-Scholes model adjusted for dividends. The
fair value and assumptions used in the calculation are as follows.
Expected volatility of the Company has been calculated as an annual rate based on thehistorical period of stock prices corresponding to the expected remaining period and weekly
data (weekly closing price versus volatility of the previous week), assuming 52 weeks in a year.
December 31, 2014
The Company
The Company
The Company
2014 stock option 1) 2014 stock option 2) 2014 stock option 3)
Weighted average stock
prices (Yen)
Exercise price (Yen)¥1,684¥1,459¥1,316

¥0.01

¥0.01

¥0.01

Expected volatility (%)

34.5

34.5

35.7

Remaining term (Years)

3.16

3.08

3.03

Expected dividend (Yen)

¥3.00

¥3.00

¥3.00

Risk-free rate (%)

0.11

0.10

0.10

¥1,675¥1,450¥1,307

Fair value per share (Yen)

December 31, 2014
The Company
The Company
2014 stock option 4) 2014 stock option 5)
Weighted average stock
prices (Yen)
Exercise price (Yen)

The Company
2014 stock option
6), 7)¥1,352¥1,346¥1,334

¥0.01

¥0.01

¥0.01

Expected volatility (%)

34.3

34.9

35.5

Remaining term (Years)

3.91

3.75

3.58

Expected dividend (Yen)

¥4.00

¥4.00

¥4.00

Risk-free rate (%)

0.14

0.10

0.10

¥1,336¥1,331¥1,320Fair value per share (Yen)December 31, 2014
The Company
2014 stock option8), 9)The Company
2014 stock option10), 11), 12)¥1,215¥1,244

¥0.01

¥0.01

Expected volatility (%)

35.2

35.9

Remaining term (Years)

3.50

3.41

Expected dividend (Yen)

¥4.00

¥4.00

Risk-free rate (%)

0.10

0.05

¥1,201¥1,230Weighted average stock
prices (Yen)
Exercise price (Yen)Fair value per share (Yen)36. Dividends
Year ended December 31, 2013

Year ended December 31, 2014

Dividends per
share
(Yen)

Amount ofdividends(Millions ofYen)

Dividends per
share
(Yen)
[U.S. Dollars]

Amount ofdividends(Millions of Yen)
[Thousands of
U.S. Dollars]

Dividends paid
Dividends by resolution at
the Board of Directors in theprevious year
Dividends paid during thecurrent year¥3

¥3,944¥4[$0.03]¥5,271[$43,940]

―

―

―

―

Total
dividends
applicable to the year

3

3,944

4
[0.03]

5,271[43,940]

paid

The Company continues to make stable dividend payments under the principle of returning
profits with the maximization of corporate value in mind, while maintaining a sound financial
position and enhancing retained earnings to prepare for proactive business development.
Furthermore, the Board of Directors of the Company determines the payment ofdividends. In principle, the Company distributes dividends once a year at year-end. For dividend
distributions pursuant to Article 459, Paragraph 1 of the Companies Act, the Company makes its
determination taking into consideration the business environment and other factors.
(Note) Cash dividends paid with record date during the year ended December 31, 2014 are as
follows:
Total dividends (Millions of Yen)
Dividends per share (Yen)
Date of resolution[Thousands of U.S. Dollars][U.S. Dollars]
Resolution at the Board of¥5,952¥4.5
Directors on February 12,[$49,617][$0.04]2015

37. Classification of Financial Instruments
The Group Companies’ financial instruments are classified as follows:
As of December 31, 2013
(Financial Assets)(Millions of Yen)
Financial assets measured
at fair value

Financial assets
measured atamortized cost

Total

Financial assets
measured at
FVTPL

Financial assets
measured at
FVTOCI¥―¥―¥384,008¥384,008――

73,44373,443754―

1,218,233

1,218,987――

544,314544,31434,9540

162,943

197,897――

239,818

239,818――

10,233

10,233

12,588――

12,588Investment securities

697

24,693

8,635

34,025

Other financial assets

2―

159,056

159,058

48,995

24,6932,800,683

2,874,371

Cash
and
cash
equivalents
Accounts receivable ―trade
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Derivative assets

Total(Financial Liabilities)(Millions of Yen)
Financial liabilities measured
at fair value
Financial
Financial liabilities
liabilities subject
designated as
to mandatory
being measured
measurement at
at FVTPL
fair value
Accounts payable ―trade
Deposits for banking
business
Financial liabilities forsecurities business
Derivative liabilities

Financialliabilities
measured atamortized cost

Total

¥―

¥―

¥115,357¥115,357―

79,218880,742959,960――

1,077,971

1,077,971

8,023

―

―

8,023

Bonds and borrowings――

389,683

389,683

Other financial liabilities――

226,771

226,771

8,023

79,2182,690,524

2,777,765

Total

As of December 31, 2014
(Financial Assets)(Millions of Yen)
Financial assets measured
at fair value

Financial assets
measured atamortized cost

Total

Financial assets
measured at
FVTPL

Financial assets
measured at
FVTOCI¥―¥―¥428,635¥428,635――

88,871

88,871680―

1,110,208

1,110,888――

692,886

692,886

17,8881

204,408

222,297――

321,877

321,877――

12,205

12,205

13,927――

13,927

Investment securities

2,378

37,597

10,53150,506

Other financial assets

1―

144,282

144,283

34,87437,5983,013,903

3,086,375

Cash
and
cash
equivalents
Accounts receivable ―trade
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Derivative assets

Total(Thousands of U.S. Dollars)
Financial assets measured
at fair value

Financial assets
measured atamortized cost

Total

Financial assets
measured at
FVTPL

Financial assets
measured at
FVTOCI$―$―$3,573,149$3,573,149――

740,839

740,839

5,669―

9,254,818

9,260,487――

5,775,975

5,775,975

149,1178

1,703,968

1,853,093――

2,683,203

2,683,203――

101,742

101,742

116,097――

116,097

Investment securities

19,823

313,41387,788421,024

Other financial assets

8―

1,202,751

1,202,759

290,714313,42125,124,233

25,728,368

Cash
and
cash
equivalents
Accounts receivable ―trade
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Derivative assets

Total

(Financial Liabilities)(Millions of Yen)
Financial liabilities measured
at fair value
Financial
Financial liabilities
liabilities subject
designated as
to mandatory
being measured
measurement at
at FVTPL
fair value
Accounts payable ―trade
Deposits for banking
business
Financial liabilities forsecurities business
Derivative liabilities

Financialliabilities
measured atamortized cost

Total

¥―

¥―

¥137,042¥137,042―

71,2201,065,975

1,137,195――

995,141995,141

11,769――11,769Bonds and borrowings――

589,927

589,927

Other financial liabilities――

242,616

242,616

11,76971,2203,030,701

3,113,690

Total(Thousands of U.S. Dollars)
Financial liabilities measured
at fair value
Financial
Financial liabilities
liabilities subject
designated as
to mandatory
being measured
measurement at
at FVTPL
fair value
Accounts payable ―trade
Deposits for banking
business
Financial liabilities forsecurities business
Derivative liabilities

Financialliabilities
measured atamortized cost

Total

$―

$―

$1,142,397$1,142,397―

593,698

8,886,087

9,479,785――

8,295,607

8,295,607

98,108――

98,108

Bonds and borrowings――

4,917,698

4,917,698

Other financial liabilities――

2,022,474

2,022,474

98,108593,698

25,264,263

25,956,069

Total(1) Investments in Equity Instruments Designated as Measured at FVTOCI
Since shares held by the Group Companies are investments held over the long term for the
purpose of strengthening business relationships or in anticipation of synergistic effects inbusiness operations rather than only for trading purposes, most of such shares are designatedas financial assets measured at FVTOCI.
Equity instruments designated as measured at FVTOCI as of December 31, 2013 mainlycomprise shares in Pinterest, Inc. and F@N Communications, Inc., with fair values of ¥8,757
million and ¥7,235 million, respectively. Equity instruments designated as measured at FVTOCI
as of December 31, 2014 mainly comprise shares in Pinterest, Inc., with a fair value of ¥25,538
million.

During the year ended December 31, 2013, shares of investments from which synergistic
effects could no longer be anticipated were sold. The fair value of such investments at the time ofsale was ¥3,388 million, and a gain on sales of ¥2,880 million was recognized. Similarly, during
the year ended December 31, 2014, shares of investments from which synergistic effects could
no longer be anticipated were sold. The fair value of such investments at the time of sales was¥7,502 million ($62,538 thousand), and a gain on sales of ¥7,341 million ($61,195 thousand)was recognized.
Additionally, during the year ended December 31, 2013, dividend income recognized fromshares designated as financial assets measured at FVTOCI was ¥112 million, all of which thiswas for dividends relating to shares held as of December 31, 2013. Furthermore, during the year
ended December 31, 2014, dividend income recognized from shares designated as financial
assets measured at FVTOCI was ¥115 million ($959 thousand), of which, the amount relating
to shares held as of December 31, 2014 was ¥77 million ($642 thousand).
During the year ended December 31, 2013, the Group Companies reclassified ¥1,793
million of cumulative gains in equity, related to shares designated as financial assets measured
at FVTOCI, to retained earnings on the sale of such shares, etc. During the year ended
December 31, 2014, the Group Companies reclassified ¥1,179 million ($9,828 thousand) incumulative losses in equity, related to shares designated as financial assets measured at
FVTOCI, to retained earnings on the sale of such shares, etc. The cumulative losses in equity
that were reclassified as retained earnings during the year ended December 31, 2014 include anamount equivalent to taxes on a gain on sales generated from a transfer of shares between
consolidated group companies.
(2) Financial Liabilities Designated as Measured at FVTPL
The Group Companies classify certain time deposits with special clauses included in “Deposits
for banking business” as financial liabilities measured at FVTPL.
Fair values of such deposits of the Group Companies are measured at present value
calculated by discounting each portion of future cash flows, classified by period, for thecorresponding remaining maturity using the applicable interest rate considering credit risk.
(Millions of Yen)
December 31, 2014

December 31, 2013
Carrying
Contractual
amountobligations at(Fair value)
maturity
Depositsforbankingbusiness
Total

Difference

Carrying
Contractual
amountobligations at(Fair value)
maturity

Difference¥79,218¥77,584¥1,634¥71,220¥68,999¥2,221

79,21877,584

1,634

71,22068,9992,221

(Thousands of U.S. Dollars)
December 31, 2014
Carrying
Contractual
amountobligations at(Fair value)
maturity
Depositsforbankingbusiness
Total

Difference$593,698$575,183$18,515593,698

575,183

18,515The amount of payment demanded at maturity has been calculated assuming that the liabilities
will be repaid on the earliest maturity date on which the repayment can be demanded.
38. Gains and Losses Generated from Financial Instruments
The analysis of the gains and losses generated from financial instruments held by the Group
Companies is as follows:
For the year ended December 31, 2013
(1) Breakdown of Net Gains and Losses Generated from Financial Assets by Type of Financial
Instruments(Millions of Yen)
Financial assets measured
at fair value
Financial assets
measured at
Total
Financial assets Financial assets
amortized costmeasured atmeasured at
FVTPL
FVTOCI
Revenue
Operating expenses
Financial income
Other comprehensive
income¥17,112

¥54

¥(45)

¥17,121―――57

12,929―12,929
57

(180)

9,500

―

9,320

Net gains generated from financial assets measured at fair value include interest income,dividend income and commissions received relating to such assets.

(2) Breakdown of Net Gains and Losses Generated from Financial Liabilities by Type of Financial
Instruments(Millions of Yen)
Financial liabilities measured
at fair value
Financial
Financialliabilities
Financial liabilities
Total
liabilities subject
measured at
designated as
to mandatory
amortized cost
being measured
measurement at
at fair value
fair value
Revenue¥―¥(183)¥―¥(183)
Operating expenses

―

(620)

―

(620)

(3) Total Interest Income and Interest Expenses (Calculated Using the Effective Interest Method)
Associated With Financial Assets Measured at Amortized Cost or Financial Liabilities Measured
at Amortized Cost
(Millions of Yen)
Total interest income fromTotal interest expenses fromfinancial assets measured atfinancial liabilities measured atamortized costamortized cost
Revenue¥66,204¥―
Operating expenses
Financial income

―
140

3,922
―

Financial expenses

―

1,676

66,344

5,598

Total

(4) Commission Revenue and Commission Fees Expense Generated from Financial Assets
Measured at Amortized Cost, Financial Liabilities Measured at Amortized Cost, and Trust andOther Trustee Operations(Millions of Yen)
Commission
Commission
Commission
fees
fees
revenue fromexpensesCommission Commission
expensesfinancialfromrevenue from fees expenses
from financial
assetsfinancialtrust andfrom trust andassetsmeasured at
liabilities
other trustee other trustee
measured atamortized
measured at operations
operations
amortized
cost
amortized
cost
cost
Financial expenses
¥―
¥―
¥286
¥―
¥―

(5) Impairment Loss (or Reversal of Impairment Loss) by Type of Financial Asset(Millions of Yen)
Impairment
loss (orreversal of
impairment
loss)
Accounts receivable¥908― tradeFinancial assets for76
securities business
Loans for credit card
11,776business
Investment securities(192)
for banking business
Loans for banking
134
business
Other financial assets
226
Total

12,928(6) Analysis of Gains and Losses Arising from Derecognition of Financial Assets Measured at
Amortized Cost and Reason for Derecognition(Millions of Yen)
Gains arising from derecognition Losses arising from derecognitionof financial assets measured at of financial assets measured atamortized costamortized cost
Investment securities for¥9¥1banking business
Reason for Derecognition
Rakuten Life Insurance Co., Ltd. derecognized certain investment securities for the insurance
business due to the sale of such assets to adjust its investment portfolios to reflect the modified
forecast duration.
For the year ended December 31, 2014
(1) Breakdown of Net Gains and Losses on Financial Assets by Type of Financial Instruments(Millions of Yen)
Financial assets measured
Financialat fair value
assets
Total
Financial assets
measured at
Financial assets
measured atamortized costmeasured at FVTPL
FVTOCI
Revenue¥13,214¥70¥311¥13,595

Operating expenses――

16,964

16,964

Financial income
Other comprehensive
income

―

46

―

46

2,286

19,200―21,486(Thousands of U.S. Dollars)
Financial assets measured
Financialat fair value
assets
Total
Financial assets
measured at
Financial assets
measured atamortized costmeasured at FVTPL
FVTOCI
Revenue$110,153$584$2,592$113,329

Operating expenses――

141,414

141,414

Financial income
Other comprehensive
income

―

383

―

383

19,057160,053―

179,110

Net gains on financial assets measured at fair value include interest income, dividend income
and commissions received relating to such assets.
(2) Breakdown of Net Gains and Losses on Financial Liabilities by Type of Financial Instruments(Millions of Yen)
Financial liabilities measured
at fair value
Financial
Financial
Financialliabilities
Total
liabilities which
liabilities
measured atmust bedesignated asamortized costmeasured at fair measured at fair
value
value
Revenue¥―¥(588)¥―¥(588)
Operating expenses

―

(556)

―

(556)

(Thousands of U.S. Dollars)

Revenue
Operating expenses

Financial liabilities measured
at fair value
Financial
Financialliabilities which
liabilities
must bedesignated asmeasured at fair measured at fair
value
value
$―
(4,902)―(4,635)

Financialliabilities
measured atamortized cost

Total

$―

$(4,902)―(4,635)

(3) Total Interest Income and Interest Expenses (Calculated Using the Effective Interest Method)
Associated With Financial Assets Measured at Amortized Cost or Financial Liabilities Measured
at Amortized Cost
(Millions of Yen)
Total interest income associatedTotal interest expenses
with financial assets measured associated with financial liabilities
at amortized costmeasured at amortized cost
Revenue¥84,447¥―
Operating expenses

―

4,613

Financial income

184―

Financial expenses

―

2,758

84,631

7,371

Total

Revenue
Operating expenses
Financial income
Financial expenses
Total(Thousands of U.S. Dollars)
Total interest income associatedTotal interest expenses
with financial assets measured associated with financial liabilities
at amortized costmeasured at amortized cost$703,959$――

38,454

1,534

―

―

22,991

705,493

61,445(4) Commission Revenue and Commission Expense relating to Financial Assets Measured at
Amortized Cost, Financial Liabilities Measured at Amortized Cost, and Trust and Other Trustee
Operations(Millions of Yen)
Commission Commission
Commission
expenseexpenseCommission
revenue from
Commission
relating torelating to
expensefinancial
revenue fromfinancialfinancialrelating to trust
assetstrust and
assetsliabilities
and othermeasured atother trustee
measured at measured attrusteeamortized
operations
amortized
amortized
operations
cost
cost
cost
Financial expenses
¥―
¥―
¥228
¥―
¥―

Financial expenses(Thousands of U.S. Dollars)Commission Commission
Commission
expenseexpenseCommission
revenue from
Commission
relating torelating to
expensefinancial
revenue fromfinancialfinancialrelating to trust
assetstrust and
assetsliabilities
and othermeasured atother trustee
measured at measured attrusteeamortized
operations
amortized
amortized
operations
cost
cost
cost
$―
$―
$1,901$―$―

(5) Impairment Loss (or Reversal of Impairment Loss) by Type of Financial Asset
Impairment loss
(or reversal of impairment loss)
Thousands of
U.S. Dollars

Millions of Yen

Accounts receivable― tradeFinancial assets forsecurities business
Loans for credit cardbusiness
Investment securities
for banking business
Loans for banking
business
Other financial assets
Total

¥585

$4,877

(77)

(642)

16,211

135,137

37

308

145

1,209

63

525

16,964141,414(6) Analysis of Gains and Losses on Derecognition of Financial Assets Measured at Amortized Costand Reason for Derecognition(Millions of Yen)
Gains on derecognition ofLosses on derecognition offinancial assets measured atfinancial assets measured atamortized costamortized cost
Investment securities for¥54¥―
insurance business

Gains on derecognition offinancial assets measured atamortized cost
Investment securities
insurance business

for

$450

(Thousands of U.S. Dollars)
Losses on derecognition offinancial assets measured atamortized cost$―

Reason for Derecognition
Rakuten Life Insurance Co., Ltd. derecognized certain investment securities for the insurance
business due to the sale of such assets to adjust its investment portfolios to reflect the modified
forecast duration.

39. Fair Value of Financial Instruments(1) Fair Value and Carrying Amount of Financial Instruments
The following table provides a comparison between carrying amounts and fair values of thefinancial instruments held by the Group Companies.
(Millions of Yen)
For the year ended
For the year ended
December 31, 2013
December 31, 2014
Carrying amount
Fair value
Carrying amount
Fair value(Financial assets)
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Derivative assets
Investment securities
Total(Financial liabilities)
Deposits for banking
business
Financial liabilities forsecurities business
Derivative liabilities
Bonds and borrowings
Total¥1,218,987¥1,218,987¥1,110,888¥1,110,888

544,314554,390692,886

701,051

197,897

198,238

222,297

222,606

239,818

240,896

321,877

323,275

10,233

10,38012,20512,807

12,588

12,58813,927

13,92734,025

34,10450,50650,762

2,257,862

2,269,583

2,424,586

2,435,316

959,960

960,267

1,137,195

1,137,558

1,077,971

1,077,971

995,141995,141

8,023

8,023

11,76911,769389,683

388,781589,927

590,105

2,435,637

2,435,042

2,734,032

2,734,573

(Thousands of U.S. Dollars)
For the year ended
December 31, 2014
Carrying amount
Fair value(Financial assets)
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Derivative assets$9,260,487$9,260,487

5,775,975

5,844,040

1,853,093

1,855,668

2,683,203

2,694,857

101,742

106,760

116,097

116,097

421,024

423,158

20,211,621

20,301,067

9,479,785

9,482,811

8,295,607

8,295,607

98,108

98,108

Bonds and borrowings

4,917,698

4,919,181

Total

22,791,198

22,795,707

Investment securities
Total(Financial liabilities)
Deposits for banking
business
Financial liabilities forsecurities business
Derivative liabilities

Measurement of Fair Values- Financial assets for securities businessAs financial assets for securities business are subject to short-term settlement, their fairvalues approximate their carrying amounts.
- Loans for credit card business and loans for banking business
The fair value of loans for credit card business and loans for banking business is measured
at present value calculated by discounting each portion of future cash flows classified byperiod, for the corresponding remaining maturity using the applicable interest rateconsidering credit risk.
- Investment securities, investment securities for banking business and investment securities
for insurance businessOf these investment securities, fair value of listed shares is measured at the year-end closing
market price, while fair value of unlisted shares is measured by using an appropriate
valuation technique, such as a method of comparison with similar sectors. The fair value ofbonds is measured by reasonable valuation methods based on available information,
including reference trading statistics and brokers’ quotes.
- Derivative assets and liabilities
Within derivative assets and liabilities, forward exchange contracts are measured at fair value
at the end of year based on forward exchange rates. Fair value of interest rate swaps ismeasured at the present value calculated by discounting future cash flows for the remaining

-

-

-

maturity using the rate of the interest rate swap at the end of year. Since counterparties ofinterest rate swap contracts are limited to financial institutions with superior credit ratings,
consideration of credit risk is not incorporated in the calculation of fair value as it is minimal.
Deposits for banking businessFor demand deposits of the deposits for banking business, amounts payable on request at
the year-end closing date (carrying amount) are considered to represent fair value. Fair valueof time deposits is measured at the present value calculated by discounting each portion of
future cash flows classified by period, for the corresponding remaining maturity, using theapplicable interest rate considering credit risk. For time deposits with short remaining
maturities (one year or less), the carrying amount is deemed as fair value as such fair value
approximates the carrying amount.
Financial liabilities for securities businessAs financial liabilities for securities business are subject to short-term settlement, their fairvalues approximate their carrying amounts.
Bonds and borrowings
Among bonds and borrowings, fair value of those with longer remaining maturities ismeasured at the present value calculated by discounting each portion of future cash flowsclassified by period, for the corresponding remaining maturity, using the applicable interest
rate considering credit risk.
As other financial assets and liabilities are subject to short-term settlement, their fair values
approximate their carrying amounts.

(2) Fair Value Hierarchy
The following table shows the fair value measurement classified into one of three levels fromLevel 1 to Level 3 based on the fair value hierarchy.
[Definition of Each Level of Hierarchy]
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Fair value calculated by using inputs that are directly or indirectly observable forassets or liabilities, other than quoted prices included within Level 1
Level 3: Fair value calculated by using the valuation technique including inputs that areunobservable
The Group Companies recognize transfers between each level in hierarchy at the year-end
closing date.

Classification by level of assets and liabilities measured at fair value in the Consolidated
Statements of Financial Position
For the year ended December 31, 2013
Level 1
Financial assets forsecurities business
Investment
securities
for banking business
Investment securities
Deposits for banking
business
Derivative
assets/liabilities

Level 2

Level 3

(Millions of Yen)
Total

¥―

¥754

¥―

¥754

―

―

34,95434,954

11,506―

13,88325,389―79,218―79,218

―

4,565

―

4,565

There were no significant transfers between Level 1 and Level 2 during the year ended
December 31, 2013.
For the year ended December 31, 2014
Level 1
Financial assets forsecurities business
Investment
securities
for banking business
Investment securities
Deposits for banking
business
Derivative
assets/liabilities

Level 2
¥―

¥680

¥―

¥680

―

―

17,88917,8896,568―

33,40739,975―71,220―71,220

―

2,158

―

2,158

Level 1
Financial assets forsecurities business
Investment
securities
for banking business
Investment securities
Deposits for banking
business
Derivative
assets/liabilities

Level 3

(Millions of Yen)
Total

(Thousands of U.S. Dollars)
Level 3
Total

Level 2$―

$5,669$―$5,669――149,124

149,124

54,751―

278,485

333,236―

593,698―

593,698―

17,989―17,989There were no significant transfers between Level 1 and Level 2 during the year ended
December 31, 2014.

Classification by level of assets and liabilities not measured at fair value in the consolidated
statements of financial position
For the year ended December 31, 2013
Level 1
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Investment securities
Deposits for banking
business
Financial liabilities forsecurities business
Bonds and borrowings

Level 2

Level 3

(Millions of Yen)
Total

¥―

¥1,218,155¥78¥1,218,233――

554,390554,390

41,405―

121,879

163,284――

240,896

240,896

10,380――10,380

6,899

1,800

16

8,715

―

881,049―

881,049―

1,077,971―

1,077,971―

388,781―

388,781

For the year ended December 31, 2014
Level 1
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Investment securities
Deposits for banking
business
Financial liabilities forsecurities business
Bonds and borrowings

Level 2

Level 3

(Millions of Yen)
Total

¥―

¥1,110,149¥59¥1,110,208――

701,051

701,051

97,887―

106,830

204,717――323,275

323,275

11,362―

1,445

12,807

7,083

800

2,904

10,787―

1,066,338―

1,066,338―

995,141―995,141―

590,105―

590,105

Level 1
Financial assets forsecurities business
Loans for credit cardbusiness
Investment
securities
for banking business
Loans
for
bankingbusiness
Investment
securities
for insurance business
Investment securities
Deposits for banking
business
Financial liabilities forsecurities business
Bonds and borrowings(Thousands of U.S. Dollars)
Level 3
Total
$492
$9,254,818$―

Level 2
$9,254,326――

5,844,040

5,844,040

815,997―

890,547

1,706,544――

2,694,857

2,694,857

94,715―

12,045

106,760

59,045

6,669

24,20889,922―8,889,113―

8,889,113―

8,295,607―

8,295,607―

4,919,181―

4,919,181(3) Reconciliation of Level 3 of the Hierarchy
The following reconciliation table indicates changes in the balances, from the beginning to theend of each year, of the financial instruments classified as Level 3, with one or more significant
inputs not supported by observable market data.
For the year ended December 31, 2013
(Millions of Yen)

January 1, 2013

Investment
securities forbankingbusiness¥38,859

Investment
securities

Derivative
assets/liabilities

Total¥10,349¥(18)¥49,190

Gains or losses
Net income
Other
comprehensive
incomeAcquisition

2,738

17

―

2,755

0

45

―

45

―

1,122

―

1,122

Disposal

(704)

(15)

―

(719)

Issuance

―

―

―

―

Settlement

―

―

18

18

Redemption(5,939)――(5,939)Others

―

2,365

―

2,365

Transfer to Level 3

―

―

―

―

Transfer from Level 3

―

―

―

―

34,954

13,883―

48,837

2,773

17

―

2,790

December 31, 2013
Total net income on financial
instruments held at the end of
previous year

Gains or losses included in net income during the year ended December 31, 2013 are included
in “Revenue.”
For the year ended December 31, 2014
(Millions of Yen)
Investment
securities forbanking business
January 1, 2014

Investment
securities

Total¥34,954¥13,883¥48,837

223

16

239

0

17,26017,260―(1,676)

1,745
(313)

1,745
(1,989)―――Settlement
Redemption
OthersTransfer to Level 3
Transfer from Level 3 (Note)―(15,612)
―
―
―

―
―
3,376
―
(2,560)―(15,612)3,376―(2,560)December 31, 2014
Total net income on financial
instruments held at the end ofcurrent year

17,88933,40751,296

233

16

249

Gains or losses
Net income
Other
comprehensive
incomeAcquisition
DisposalIssuance(Thousands of U.S. Dollars)

January 1, 2014

Investment
securities forbanking business$291,380

Investment
securities

Total$115,730$407,110

1,859

133

1,992

Gains or losses
Net income
Other
comprehensive
incomeAcquisition
Disposal

0143,881

143,881―(13,972)

14,547(2,609)14,547(16,581)Issuance
Settlement
Redemption
OthersTransfer to Level 3
Transfer from Level 3 (Note)――(130,143)
―
―
―

―
―
―
28,143―(21,340)――(130,143)
28,143―(21,340)

December 31, 2014
Total net income on financial
instruments held at the end ofcurrent year

149,124

278,485

427,609

1,942

133

2,075

(Note) Transfers were due to significant inputs used to measure fair value becoming observable.
Gains or losses included in net income during the year ended December 31, 2014 are included
in “Revenue.”
The fair values of unlisted shares are measured in accordance with rules specified by theadministrative department independent of the sales department. In measuring fair value, theGroup Companies employ different valuation models that can most appropriately assess theproperty, characteristics and risks of each asset. The grounds for the employment of valuation
models and fair value measurement processes are reported to the Risk Management
Department with the aim of ensuring the utilization of appropriate fair value measurement
policies and procedure.
The fair values of investment securities in the banking business are measured by the Risk
Management Department in accordance with the office standard of market value calculation.
Prices presented by transacting financial institutions and others are categorized by types ofinvestment securities. To validate the consistency of changes in these prices, movements inimportant data that may affect a change in the market value of these categories of investment
securities are carefully monitored. Validation results are reported to the Risk Management
Committee, Management Meetings and the Board of Directors on a monthly basis.
For investment securities in the banking business classified as Level 3, if each input were to bechanged to reasonable alternative assumptions, any resulting changes in fair value are notexpected to be significant. Additionally, for other financial assets classified as Level 3, significant
changes in fair value are not anticipated if each input were to be changed to reasonable
alternative assumptions.
40. Offsetting of Financial Assets and Financial Liabilities
The Group Companies’ gross amount prior to offsetting of recognized financial assets andfinancial liabilities that are presented on net basis after offsetting in the statements of financial
position, the offsetting amount and the net balance after offsetting are as follows. Additionally,
the potential effect of offsetting legally enforceable master netting arrangements or similar
agreements relating to recognized financial assets or financial liabilities are disclosed foramounts that are not presented on a net basis after offsetting.

As of December 31, 2013
(Financial assets that are presented on a net basis after offsetting in the statement of financial
position, and legally enforceable master netting arrangements or similar agreements)(Millions of Yen)
Gross amount of
Net amount ofGross amountrecognizedfinancial assets
Financialof recognizedfinancial liabilities
Type of transaction
presented in theassetsfinancial
offset in thestatement ofassetsstatement offinancial position
financial position
Derivative
Derivatives¥13,904¥(1,865)¥12,039
assets
Reverse repurchaseagreements, investment
securities borrowing
317,956―
317,956
Financialagreements and similar
assets foragreements
securities
Accounts receivable, etc.
businessrelating to investment
815,560(388,268)
427,292
securities and othertransactions, etc.
Other
Accounts receivable —financial
20,206(16,441)
3,765
other, etc.
assets(Millions of Yen)

Type of transaction

Derivatives
Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts receivable, etc.
relating to investment
securities and othertransactions, etc.
Accounts receivable —other, etc.

Net amount offinancial assets
presented in thestatement offinancial position

Related amounts that are notpresented on a net basis after
offsetting in the statement offinancial position
Financial
Collateral
instruments
received

Net amount¥12,039¥(8,570)¥(228)¥3,241

317,956(317,956)――

427,292(395,542)―

31,750

3,765

―

―

3,765

(Financial liabilities that are presented on a net basis after offsetting in the statement of financial
position, and legally enforceable master netting arrangements or similar agreements)(Millions of Yen)
Gross amount of
Net amount ofGross amountrecognizedfinancial liabilities
Financialof recognizedfinancial assets
Type of transaction
presented in theliabilities
financial
offset in thestatement ofliabilities
statement offinancial position
financial position
Derivative
Derivatives¥9,187¥(1,865)¥7,322
liabilities
Reverse repurchaseagreements, investment
securities borrowing
163,594―
163,594
Financialagreements and similar
liabilities foragreements
securities
Accounts payable, etc.
businessrelating to investment
1,108,317(388,268)
720,049
securities and othertransactions, etc.
Other
Accounts payable —financial
28,493(16,441)
12,052other, etc.
liabilities(Millions of Yen)

Type of transaction

Derivatives
Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts payable, etc.
relating to investment
securities and othertransactions, etc.
Accounts payable — other,etc.

Net amount offinancialliabilities
presented in thestatement offinancial position

Related amounts that are notpresented on a net basis after
offsetting in the statement offinancial position
Financial
Collateral
instruments
pledgedNet amount¥7,322¥(7,080)¥(242)¥―

163,594(162,117)

―

1,477

720,049(566,534)―

153,515

12,052――

12,052

As of December 31, 2014
(Financial assets that are presented on a net basis after offsetting in the statement of financial
position, and legally enforceable master netting arrangements or similar agreements)(Millions of Yen)
Gross amount of
Net amount ofGross amountrecognizedfinancial assets
Financialof recognized financial liabilities
Type of transaction
presented in theassetsfinancial
offset in thestatement ofassetsstatement offinancial position
financial position
Derivative
Derivatives¥17,122¥(3,655)¥13,467
assets
Reverse repurchaseagreements, investment
securities borrowing
312,607―
312,607
Financialagreements and similar
assets foragreements
securities
Accounts receivable, etc.
businessrelating to investment
530,505(253,173)
277,332
securities and othertransactions, etc.
Other
Accounts receivable —financial
27,874(24,468)
3,406
other, etc.
assetsFinancialassetsType of transaction

Derivative
assetsDerivatives

Financialassets forsecurities
business

Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts receivable, etc.
relating to investment
securities and othertransactions, etc.

Otherfinancialassets

Accounts receivable —other, etc.

Gross amountof recognizedfinancialassets(Thousands of U.S. Dollars)
Gross amount of
Net amount ofrecognizedfinancial assets
financial liabilities
presented in theoffset in thestatement ofstatement offinancial position
financial position$142,731$(30,469)$112,262

2,605,927―

2,605,927

4,422,349(2,110,478)

2,311,871

232,361(203,968)

28,393

(Millions of Yen)

Type of transaction

Derivatives
Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts receivable, etc.
relating to investment
securities and othertransactions, etc.
Accounts receivable —other, etc.

Type of transaction

Derivatives
Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts receivable, etc.
relating to investment
securities and othertransactions, etc.
Accounts receivable —other, etc.

Net amount offinancial assets
presented in thestatement offinancial position

Related amounts that are notpresented on a net basis after
offsetting in the statement offinancial position
Financial
Collateral
instruments
received

Net amount¥13,467¥(10,053)¥―¥3,414

312,607(312,406)―201

277,332(275,488)

―

1,844

3,406

―

―

3,406

Net amount offinancial assets
presented in thestatement offinancial position(Thousands of U.S. Dollars)
Related amounts that are notpresented on a net basis after
offsetting in the statement of
Net amountfinancial position
Financial
Collateral
instruments
received$112,262$(83,803)$―$28,459

2,605,927(2,604,251)

―

1,676

2,311,871(2,296,499)―

15,37228,393――28,393(Financial liabilities that are presented on a net basis after offsetting in the statement of financial
position, and legally enforceable master netting arrangements or similar agreements)(Millions of Yen)
Gross amount of
Net amount ofGross amountrecognizedfinancial liabilities
Financialof recognizedfinancial assets
Type of transaction
presented in theliabilities
financial
offset in thestatement ofliabilities
statement offinancial position
financial position
Derivative
Derivatives¥14,223¥(3,655)¥10,568
liabilities
Reverse repurchaseagreements, investment
securities borrowing
183,157―
183,157
Financialagreements and similar
liabilities foragreements
securities
Accounts payable, etc.
businessrelating to investment
836,375(253,173)
583,202
securities and othertransactions, etc.
Other
Accounts payable —financial
34,773(24,468)
10,305other, etc.
liabilities

Financialliabilities

Type of transaction

Derivative
liabilities

Derivatives

Financialliabilities forsecurities
business

Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts payable, etc.
relating to investment
securities and othertransactions, etc.

Otherfinancialliabilities

Accounts payable —other, etc.

Gross amountof recognizedfinancialliabilities(Thousands of U.S. Dollars)
Gross amount of
Net amount ofrecognizedfinancial liabilities
financial assets
presented in theoffset in thestatement ofstatement offinancial position
financial position$118,565$(30,469)$88,096

1,526,817―

1,526,817

6,972,115(2,110,478)

4,861,637

289,872(203,968)

85,904

(Millions of Yen)

Type of transaction

Derivatives
Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts payable, etc.
relating to investment
securities and othertransactions, etc.
Accounts payable — other,
etc.

Type of transaction

Derivatives
Reverse repurchaseagreements, investment
securities borrowing
agreements and similar
agreements
Accounts payable, etc.
relating to investment
securities and othertransactions, etc.
Accounts payable — other,etc.

Net amount offinancial liabilities
presented in thestatement offinancial position

Related amounts that are notpresented on a net basis after
offsetting in the statement offinancial position
Financial
Collateral
instruments
pledgedNet amount¥10,568¥(8,349)¥(500)¥1,719183,157(177,955)

―

5,202

583,202(376,460)―

206,742

10,305――

10,305

Net amount offinancial liabilities
presented in thestatement offinancial position(Thousands of U.S. Dollars)
Related amounts that are notpresented on a net basis after
offsetting in the statement of
Net amountfinancial position
Financial
Collateral
instruments
pledged$88,096$(69,598)$(4,168)$14,330

1,526,817(1,483,453)―

43,3644,861,637(3,138,213)―

1,723,424

85,904――85,904

The right to offset recognized financial assets and liabilities subject to a legally enforceable masternetting agreement or other similar agreements that are not presented on a net basis after offsettingin the statement of financial position becomes enforceable and affects the realization or settlementof individual financial assets and liabilities only following a default or other specified circumstances
not expected to arise in the normal course of business.

41. Financial Risk Management
The objective of Group Companies’ investment activities is to protect the principal and ensure
the efficient use of funds, fully taking into account various risks including credit risk, market risk
and liquidity risk. In addition, in view of factors such as the current economic environment, theGroup Companies’ fund-raising activities are based on the best conceivable choice of thealternative options among direct as well as indirect financing methods.
The Group Companies’ subsidiaries engage in the banking business with a primary focus on
deposit-taking, foreign exchange business, and lending to individual customers, and they accept
ordinary deposits from individual as well as corporate customers, and offer time deposits and foreign
currency deposits to individual customers. In addition, using such financial liabilities as major
resources, the subsidiaries provide unsecured card loans and residential mortgages to individual
customers, as well as acquiring investment securities and monetary claims, establishing monetarytrusts, engaging in market transactions such as call loans, along with derivative transactions andforeign exchange transactions associated with the sales of financial instruments to customers. The
subsidiaries are always aware of the significance of a bank’s social responsibility and public mission,
which strictly restrains it from entering into investment transactions beyond its management capacity
in the undue pursuit of profit, and emphasis is placed on investing deposits entrusted by customers
with full consideration of safety. Furthermore, to ensure an optimum asset and liability structure alongwith appropriate capital adequacy over the entire financial operations from funding to investment, thesubsidiaries engage in Asset and Liability Management (ALM) focused on interest rate sensitivity,
funding liquidity and market liquidity.
The Group Companies’ subsidiaries engaged in the securities business primarily focus onstock brokerage activities for individual investors, segregate the deposits and guarantee
deposits received from customers in trusts for the separate management of deposit money andsecurities, under the Financial Instruments and Exchange Act, and invest in accordance withlaws and regulations. When utilizing funds, importance is placed on the safety of investments,
such as bank deposits and financial assets with high liquidity, while fund-raising is conducted
mainly by borrowing from financial institutions.
The Group Companies’ subsidiaries engaged in the credit card business (including thecomprehensive credit purchase intermediation business, individual credit purchase intermediation
business, credit guarantee business and loan business) restrict their investment of funds to shortterm deposits, while obtaining funding through borrowings from banks and other financial institutions
and through direct financing by issuance of commercial paper and securitization of receivables.
The Group Companies’ subsidiaries engaged in the insurance business consider ensuringsafety and profitability as their priority mission in asset management, in order to honor theircommitment to the reliable payment of insurance claims and benefits over the years to come.
Their policy in asset management is to invest mainly in domestic public and corporate bonds
seeking to disperse risks, focusing primarily on government bonds and industrial bonds withsuperior credit ratings with an aim to receive consistent investment yields over the medium- tolong-term, in an effort to develop a safety-first liquidity-oriented investment portfolio. Under the
corporate policy, derivative transactions are handled responsibly, never to be treated as
speculative instruments. Derivative transactions include foreign exchange margin transactions
conducted by the securities business. In an effort to mitigate market risks associated with thesetransactions with clients, the Group Companies enter into cover deals with counterparties.
These financial assets are well diversified both in terms of the investees’ types of businessand their geographical locations, avoiding particular concentration of credit risk.

(1) Credit Risk
1) Outline of Credit Risk Associated with Financial Instruments
Financial assets held by the Group Companies are mainly accounts receivable ― installment,
operating loans, investment securities, banking business-related assets held by the subsidiaries
engaged in the banking business, securities business-related assets held by the subsidiaries
engaged in the securities business and insurance business-related assets held by thesubsidiaries engaged in the insurance business.
Accounts receivable ― installment and operating loans include credit card receivables,
loan receivables, consumer loans and secured loans held by the subsidiaries engaged in thecredit card business, all of which are presented as loans for credit card business. These areexposed to credit risk associated with respective debtors.
Investment securities include debt instruments, which are exposed to credit risk.
Banking business-related assets include investment securities for banking business andloans for banking business. Investment securities for banking business mainly include securities
in shares, domestic bonds and foreign bonds, as well as trust beneficiary rights. Such securities
are exposed to credit risk subject to the financial position of issuers, while trust beneficiary rights
are exposed to credit risk of the issuers as well as underlying assets. Loans for banking
business include unsecured card loans and residential mortgages for individual customers thatare exposed to credit risk of individual customers. Securities business-related assets include
cash segregated as deposits for securities business and margin transaction assets, which arepresented as financial assets for securities business. Cash segregated as deposits for securities
business are primarily trust segregated for customer’s money, which are invested in bankdeposits, thus exposed to the credit risk of the deposit-taking financial institutions. Margintransaction assets are exposed to customers’ credit risk.
Insurance business-related assets include investment securities for insurance business.
Investment securities for insurance business mainly include government bonds, municipal bonds
and corporate bonds, and are exposed to credit risk related to the financial position of issuers.
2) Management System of Credit Risks Associated with Financial Instruments
Specific methods and systems to manage various risks within the Group Companies are set out
under various risk management regulations established at each Group Company.
Credit risks are managed under the above regulations, through establishing individual
credit limits, understanding the credit status of individual customers, and controlling due dates
and loan balances on a regular basis, while efforts are made on early detection and mitigation of
the risk of default resulting from deterioration of borrowers’ financial conditions and other factors.
Meanwhile, derivative transactions are managed based on “the Detailed Regulations for Hedge
Trading Management.” Derivative transactions are exposed to the risk of financial loss resulting
from a counterparty’s contractual default, though credit risk is deemed to be minimal, because
counterparties are mainly financial institutions with superior credit ratings.
3) Exposure to Credit Risks
The Group Companies’ maximum exposure to credit risk is as follows:
The maximum credit risk exposure (gross) represents the maximum exposure to credit risk
without taking into account the collateral held by the Group Companies and any other credit
enhancement. The maximum credit risk exposure (net) represents the maximum credit risk
exposure, after reflecting the amount of credit risk mitigation through the collateral held by theGroup Companies and any other credit enhancement. The amount of credit risk mitigation
through the collateral held by the Group Companies and any other credit enhancement does notinclude part of the amount of collateral and others stated in “Note 40. Offsetting of Financial
Assets and Financial Liabilities.”
The maximum exposure to credit risk (gross) associated with financial assets stated as onbalance sheet items recognized in the Statements of Financial Position in the following table, arethe same as their carrying amounts. The maximum exposure to credit risk associated with theprovision of financial guarantees stated as off-balance sheet items in the following table, are themaximum amount payable in the event that exercise of the guarantee is requested. Meanwhile,
the maximum exposure to credit risk associated with commitment line agreements is the unused
portion of such commitment lines.
As of December 31, 2013
(Millions of Yen)
Classification by
creditworthiness
Financial
Financialassetsassets Financial
neitherpast due assets
past due
but not impaired
nor
impaired
impaired

Allowance Maximum Total amount Maximumforcredit risk of collateral credit risk
doubtful exposureand credit
exposureaccounts(gross) enhancement
(net)

Total

Items recognized in theStatementofFinancial
Position:
Cash and cash equivalents¥―¥384,008¥―¥384,008(1,856)73,443―73,443

1,470 1,220,393(1,406) 1,218,987

317,956

901,031

10,021

22,570564,607(20,293)544,314―544,314

197,952――

197,952(55)

197,897―

197,897

Loans for banking business

240,202406

10

240,618(800)

239,818―

239,818

Investment securities
insurance business

10,233――

10,233―

10,233―

10,233

Derivative assets

12,588――

12,588―

12,588―

12,588Investment securities

9,332

―

―

9,332

―

9,332

―

9,332

Other financial assets

158,595

439

478

159,512(454)

159,058―

159,058

2,829,413

18,232

Commitment lines

―

―

―

Financialguarantee
agreements
Total
of
items
not
recognizedintheConsolidated Statement of
Financial Position:

―

―

―

―

2,829,413

18,232

Accounts receivable ―trade
Financialassetsforsecurities business
Loans for credit cardbusiness
Investment securities forbanking businessforTotal of items recognized in
the Consolidated Statementof Financial Position:¥384,008¥―

65,675

7,255

1,218,812

111

532,016¥― ¥384,008
2,369

75,29926,897 2,874,542(24,864) 2,849,678

317,956 2,531,722―― 2,034,622― 2,034,622

―

―

―

―

―

―

― 2,052,145― 2,052,145

26,897 2,874,542(24,864) 4,901,823

317,956 4,583,867

Items not recognized in theStatementofFinancial
Position:

Total

17,523

17,523

As of December 31, 2014
(Millions of Yen)
Classification by
creditworthiness
Financial
Financialassetsassets Financial
neitherpast due assets
past due
but not impaired
nor
impaired
impaired

Allowance Maximum Total amount Maximumforcredit risk of collateral credit risk
doubtful exposureand credit
exposureaccounts(gross) enhancement
(net)

Total

Items recognized in theStatementofFinancial
Position:
Cash and cash equivalents¥428,635¥―¥―¥428,635¥―¥428,635¥―¥428,635

79,930

8,945

2,148

91,023(2,152)

88,871―

88,871

1,110,648

157

1,230 1,112,035(1,147) 1,110,888

312,607798,281

677,273

12,05523,921

713,249(20,363)

692,886―

692,886

222,389――

222,389(92)

222,297―

222,297

Loans for banking business

322,067755

16

322,838(961)

321,877―

321,877

Investment securities
insurance business

12,205――

12,205―

12,205―

12,205Derivative assets

13,927――

13,927―

13,927―

13,927

Investment securities

12,909――12,909―12,909―12,909Other financial assets

143,836

143

776

144,755(472)

144,283―

144,283

3,023,819

22,055

Commitment lines

―

―

―

Financialguarantee
agreements
Total
of
items
not
recognizedintheConsolidated Statement of
Financial Position:

―

―

―

―

3,023,819

22,055

Accounts receivable ―trade
Financialassetsforsecurities business
Loans for credit cardbusiness
Investment securities forbanking businessforTotal of items recognized in
the Consolidated Statementof Financial Position:

28,091 3,073,965(25,187) 3,048,778

312,607 2,736,171―― 2,312,745― 2,312,745

―

―

―

―

―

―

― 2,327,551― 2,327,551

28,091 3,073,965(25,187) 5,376,329

312,607 5,063,722

Items not recognized in theStatementofFinancial
Position:

Total

14,806

14,806(Thousands of U.S. Dollars)
Classification by
creditworthiness
Financial
Financialassetsassets Financial
neitherpast due assets
past due
but not impaired
nor
impaired
impaired

Allowance Maximum Total amount Maximumforcredit risk of collateral credit risk
doubtful exposureand credit
exposureaccounts(gross) enhancement
(net)

Total

Items recognized in theStatementofFinancial
Position:
Cash and cash equivalents$3,573,149$―

666,305

74,567

17,906

758,778(17,939)

740,839―

740,839

9,258,486

1,309

10,2549,270,049(9,562)9,260,487

2,605,927

6,654,560

5,645,824

100,491

199,408

5,945,723(169,748)

5,775,975―

5,775,975

1,853,860――

1,853,860(767)

1,853,093―

1,853,093

2,684,787

6,294

133

2,691,214(8,011)2,683,203―

2,683,203

101,742――

101,742―

101,742―

101,742

Derivative assets

116,097――

116,097―

116,097―

116,097

Investment securities

107,611――

107,611―

107,611―

107,611

Other financial assets

1,199,033

1,192

6,469

1,206,694(3,935)

1,202,759―

1,202,759

Total of items recognized in
the Consolidated Statementof Financial Position:

25,206,894

183,853

Commitment lines

―

―

―

Financialguarantee
agreements
Total
of
items
not
recognizedintheConsolidated Statement of
Financial Position:

―

―

―

―

25,206,894

183,853

Accounts receivable ―trade
Financialassetsforsecurities business
Loans for credit cardbusiness
Investment securities forbanking business
Loans for banking business
Investment securities
insurance businessfor$― $3,573,149

234,170 25,624,917$― $3,573,149$― $3,573,149(209,962) 25,414,955

2,605,927 22,809,028―― 19,279,301― 19,279,301

―

―

―

―

―

―

― 19,402,726

234,170 25,624,917(209,962) 44,817,681

Items not recognized in theStatementofFinancial
Position:

Total

123,425

123,425― 19,402,726

2,605,927

42,211,754

Classification of creditworthiness of loans for banking business and investment securities forbanking business is based on a determination of borrower’s repayment capability considering
their financial condition, cash flow and earnings capacity, and the respective financial assets aremanaged based on the probability of recovery from each borrower as well as the extent ofassociated impairment risks.
Classification of creditworthiness of loans for credit cardbusiness is based on consideration of the delinquency status and the repayment capability ofeach borrower.

4) Aging Analysis of Past Due But Not Impaired Financial Assets
Aging analysis of past due but not impaired financial assets is as follows.
In the following aging analysis, amounts of financial assets, for which the payment terms
have been extended or payment has not been made since the contractual due dates, areclassified according to the length of the overdue period from the respective due dates for eachfiscal year.
As of December 31, 2013
(Millions of Yen)

¥7,201

Over six months to
one year
¥44

44

37

30

7,229

2,792

―

406

―

―

41

1

397

14,921

2,874

437

Six months or lessAccounts receivable ― trade
Financial assets for securities
business
Loans for credit card business(Note)
Loans for banking business
Other financial assets
Total

Over one year
¥10

(Note) Among the loans for credit card business, those past due for three months or less is ¥5,386
million, while those past due between three and six months is ¥1,843 million.
As of December 31, 2014
(Millions of Yen)

¥8,581

Over six months to
one year
¥244

96

6

55

9,073

2,982

―

755

―

―

99

1

43

18,6043,233

218

Six months or lessAccounts receivable ― trade
Financial assets for securities
business
Loans for credit card business(Note)
Loans for banking business
Other financial assets
Total

Six months or lessAccounts receivable ― trade
Financial assets for securities
business
Loans for credit card business(Note)
Loans for banking business
Other financial assets
Total$71,532

Over one year
¥120

(Thousands of U.S. Dollars)Over six months toOver one year
one year$2,035$1,000

800

50

459

75,63324,858

―

6,294

―

―

826

8

358

155,085

26,951

1,817

(Note) Among the loans for credit card business, those past due for three months or less is ¥6,569
million ($54,760 thousand), while those past due between three months and six months is¥2,504 million ($20,874 thousand).
5) Financial Assets Individually Assessed as Impaired
Analysis of the financial assets individually assessed as impaired is as follows:
As of December 31, 2013

Carrying amount

Allowance for
doubtful accounts¥2,369¥(1,028)(Millions of Yen)
Carrying amountless allowance for
doubtful accounts¥1,341

1,470(1,372)

98

22,570(13,411)

9,159

Loans for banking business

10

(10)

―

Other financial assets

478

(306)

172

26,897(16,127)

10,770Carrying amount

Allowance for
doubtful accounts¥2,148¥(1,320)(Millions of Yen)
Carrying amountless allowance for
doubtful accounts
¥828

1,230

(1,147)83

23,921(12,325)

11,596Loans for banking business

16

(16)

―

Other financial assets

776

(239)

537

28,091(15,047)

13,044

Accounts receivable ― trade
Financial assets for securities
business
Loans for credit card business

Total
As of December 31, 2014

Accounts receivable ― trade
Financial assets for securities
business
Loans for credit card business

Total

Carrying amountAccounts receivable ― trade
Financial assets for securities
business
Loans for credit card business
Loans for banking business
Other financial assets
Total$17,906(Thousands of U.S. Dollars)
Carrying amount
Allowance forless allowance for
doubtful accounts
doubtful accounts$(11,004)$6,902

10,254(9,562)

692

199,408(102,743)

96,665

133

(133)

―

6,469

(1,992)

4,477

234,170(125,434)

108,736(2) Liquidity Risk
1) Outline of Liquidity Risk Associated with Financial Instruments
Within financial liabilities held by the Group Companies, borrowings are mainly exposed tomarket risks, and banking business-related liabilities are exposed to liquidity risk.
2)

Management of Liquidity Risk Associated with Financial Instruments
Methods to control liquidity risk associated with funding include a cash management plan toensure adequate liquidity on hand in accordance with regulations established by each Group
Company. Liquidity risk arising from factors, such as holding investment securities, is managed
by limiting the acquisition of securities to the amount necessary from a business standpoint, andcarefully evaluating the financial conditions of issuers.

3)

Analysis of Maturity of Financial Liabilities
The balances by maturity of financial liabilities (including derivatives) are as follows:
As of December 31, 2013

One yearor less
Financial liabilities otherthan derivatives
Accounts payable ―trade
Deposits for banking
business
Financial liabilities forsecurities business
Bonds and borrowings(Millions of Yen)
Over twoOver one
Over three Over four
years toOver five
year toyears toyears to
three
years
two years
four years five years
years¥115,357

¥―

¥―

¥―

¥―

¥―

807,485

11,422

6,065

8,558

14,556132,614

1,077,971

―

―

―

―

―

265,323

45,22145,41530,092

7,747

142

220,939

3,711

1,254

565

180

121

Derivative liabilities

6,634

298

220

151

124

347

Derivatives associated withcover deals of special time
deposits(605)(1,210)

(701)

(815)

(295)

(5,174)

Other financial liabilities

Off-balance sheet items
Commitment lines
2,034,622―――――
Financialguarantee
17,523―――――agreements(Note) Financial liabilities payable on demand are classified as “One year or less.” “Deposits forbanking business” include ¥556,765 million of demand deposits.
“Derivatives associated with cover deals of special time deposits” are related to“Deposits for banking business.”

As of December 31, 2014

One yearor less
Financial liabilities otherthan derivatives
Accounts payable ―trade
Deposits for banking
business
Financial liabilities forsecurities business
Bonds and borrowings(Millions of Yen)
Over twoOver one
Over three Over four
years toOver five
year toyears toyears to
three
years
two years
four years five years
years¥137,042

¥―

¥―

¥―

¥―

¥―

959,769

9,125

19,782

13,4996,453

135,139995,141

―

―

―

―

―

264,599

78,44789,74150,35841,73675,403219,867

21,378

780

445

146

―

Derivative liabilities

10,238

408

302

209

146

236

Derivatives associated withcover deals of special time
deposits(1,308)

(783)

(847)

(340)

(216)

(5,300)2,312,745

―

―

―

―

―

14,806

―

―

―

―

―

Other financial liabilities

Off-balance sheet items
Commitment lines
Financialguarantee
agreements

One year
or less
Financial liabilities otherthan derivatives
Accounts payable ―$1,142,397
trade
Deposits for banking
8,000,742
business
Financial liabilities for
8,295,607
securities business
Bonds and borrowings
2,205,727(Thousands of U.S. Dollars)Over twoOver one
Over three Over four
years toOver five
year toyears toyears to
three
years
two years
four years five years
years

$―

$―

$―

$―

$―

76,067

164,905

112,529

53,793

1,126,534

―

―

―

―

―

653,943748,091

419,790347,916

628,568

1,832,836

178,209

6,502

3,710

1,217

-

Derivative liabilities

85,345

3,401

2,518

1,742

1,217

1,967

Derivatives associated withcover deals of special time
deposits(10,904)(6,527)(7,061)(2,834)(1,801)(44,181)Commitment lines
19,279,301
Financialguarantee
123,424agreements

―

―

―

―

―

―

―

―

―

―

Other financial liabilities

Off-balance sheet items(Note) Financial liabilities payable on demand are classified as “One year or less.” “Deposits forbanking business” include ¥628,330 million ($5,237,829 thousand) of demand deposits.
“Derivatives associated with cover deals of special time deposits” are related to“Deposits for banking business.”(3) Market Risk
1) Outline of Market Risk Associated with Financial Instruments
The Group Companies’ activities are exposed mainly to risks associated with changes in theeconomic environment and the financial market environment. Risks associated with changes in
the financial market environment are specifically, exchange rate risk, interest rate risk and pricefluctuation risk.
Financial assets held by the Group Companies exposed to market risks are mainly
investment securities, investment securities for banking business, and investment securities for
insurance business. Investment securities include shares that are exposed to price fluctuation
risk. Investment securities for banking business mainly include investment securities such as
shares, government bonds, municipal bonds and foreign securities as well as various trust
beneficiary rights, with exposure to interest rate risk and exchange rate risk, along with exposure
to price fluctuation risk which, however, is minimal as the Group Companies do not hold any
listed shares. Investment securities for insurance business mainly include government bonds,
municipal bonds and corporate bonds, for which exposure to price fluctuation risk is minimal.
Within the financial liabilities held by the Group Companies, those exposed to market risks

are mainly borrowings and banking business-related liabilities, which are exposed primarily tointerest rate risk. Banking business-related liabilities include ordinary deposits for individual andcorporate customers, general time deposits for individual customers, new types of time deposits,
as well as ordinary foreign currency deposits and foreign currency time deposits. Although new
types of time deposits are exposed to interest rate risk, such risk is hedged by entering into
corresponding interest rate swap transactions. Although ordinary foreign currency deposits andforeign currency time deposits are exposed to exchange rate risk, such risk is hedged byentering into corresponding forward exchange contracts.
2) Management of Market Risks Associated with Financial Instruments
Within the financial instruments associated with market risks, investment securities are subject
to investment decisions based on consultation with the Board of Directors, as part of the
management to ensure that such investment securities are appropriately evaluated according tointernal regulations. With regard to foreign currency receivables arising from sales to customers,
the Group Companies’ own positions are regulated by establishing position limits and maximum
allowable losses for the prevention of any loss in excess of certain levels, in addition to themonitoring of daily sales conditions. With regard to financial assets held by subsidiaries engaged
in the banking business, such financial assets and liabilities are measured at fair value assuming
certain fluctuations in interest rates and exchange rates, and the effects on the net balance after
offsetting such financial assets and liabilities (referred to as the “present value”) are used in aquantitative analysis to manage interest rate risk and exchange rate risk.
3) Interest Rate Risk (Excluding the Subsidiaries Engaged in Banking Business)
The Group Companies’ main financial liabilities are borrowings from financial institutions, ofwhich borrowings at floating interest rates are exposed to interest rate risk.
Exposures associated with the Group Companies’ financial liabilities are as follows:
Thousands of
U.S. Dollars

Millions of Yen

December 31, 2013

December 31, 2014

December 31, 2014

¥389,683¥589,927$4,917,698

Floating interest rate

216,023

340,720

2,840,280

Fixed interest rate

173,660

249,2072,077,418

Bonds and borrowings

In respect of the above exposures, given all the risk variables remaining constant, except forinterest rate risk, if all the key interest rates increased by 10 basis points (0.1%) for the year
ended December 31, 2013, income and equity would be negatively impacted by ¥121 million.
Conversely, in the event of a decrease of 0.1%, income and equity would be positively impactedby ¥121 million compared to the amounts reported for the year ended December 31, 2013.
Similarly, given all the risk variables remaining constant, except for interest rate risk, if all the key
interest rates increased by 10 basis points (0.1%) for the year ended December 31, 2014,
income and equity would be negatively impacted by ¥269 million ($2,242 thousand). Conversely,in the event a decrease of 0.1%, income and equity would be positively impacted by ¥269 million($2,242 thousand) compared to the amounts reported as of December 31, 2014.
Within bonds and borrowings with floating interest rates, the Group Companies have
implemented interest rate swap transactions to reduce interest rate fluctuation risk, and thebalances of fixed interests were ¥52,274 million and ¥72,098 million ($601,017 thousand) as ofDecember 31, 2013 and 2014, respectively.
4) Price Fluctuation Risk
The Group Companies are exposed to share price fluctuation risk associated with equity
instruments. Equity instruments are not held for short-term trading purposes, but for the efficient
implementation of business strategies. The Group Companies regularly check the market pricesof their equity instruments and financial conditions of their issuers.
The Group Companies carried out a sensitivity analysis as follows, based on the price riskof equity instruments at the end of the year.
In the event of a 5% rise in share prices, accumulated other comprehensive income (before
tax effect) would increase by ¥575 million for the year ended December 31, 2013 due tochanges in fair value. Conversely, in the event of a 5% fall, it would decrease by ¥575 million.
Similarly, in the event of 5% rise in share prices, accumulated other comprehensive income(before tax effect) for the year ended December 31, 2014 would increase by ¥327 million($2,726 thousand) due to changes in fair value. Conversely, in the event of 5% fall, it would
decrease by ¥327 million ($2,726 thousand).
5) Management of Market Risks for Subsidiaries Engaged in Banking Business(Interest Rate Risk)
At the Group Companies’ subsidiaries engaged in the banking business, financial assets
exposed to interest rate risk, which is a significant risk variable, are mainly investment securities
for banking business and loans for banking business.
Financial liabilities exposed to interest rate risk include, ordinary deposits for individual andcorporate customers, general time deposits and new type of time deposits for individual
customers, as well as foreign currency ordinary deposits, foreign currency time deposits andinterest rate swap transactions as part of derivative transactions.
For subsidiaries engaged in the banking business, the effect of present value of thesefinancial assets and liabilities, given certain fluctuations in interest rates, is used in quantitative
analysis as part of the process to manage interest rate risk.
In calculating the effect of the present value, the corresponding financial assets and financial
liabilities are classified into a fixed rate group and a floating rate group, and then the balance ofeach group is allocated to an appropriate period based on maturity with a fluctuation range of theinterest rate for the period. Specifically, given all other risk variables remaining constant, except for
the interest rate risk, when all the key interest rates increase 10 basis points (0.1%) for the year
ended December 31, 2013, the present value as of December 31, 2013 would decrease by ¥1,483
million. Conversely, in the case a decrease of 10 basis points (0.1%), it would increase by ¥1,483
million. Similarly, given all the risk variables remaining constant except for interest rate, when all
the key interest rates increase 10 basis points (0.1%) for the year ended December 31, 2014, thepresent value as of December 31, 2014 would decrease by ¥2,736 million ($22,808 thousand).
Conversely, in the case of a decrease of 10 basis points (0.1%), it would increase by ¥2,736 million($22,808 thousand).
These effects do not take into account correlations between interest rates and other risk
variables, further foreign currency-denominated assets and liabilities are calculated in Japanese
yen as translated by the exchange rates on December 31, 2013 and 2014. Additionally, the effects
of a 10 basis point decline leading to negative interest rates in certain periods have not been

excluded.
(Exchange Rate Risk)
For the Group Companies’ subsidiaries engaged in the banking business, financial assets
exposed to exchange rate risk, which is a significant risk variable, are foreign securities andforeign exchange transactions.
Financial liabilities exposed to exchange rate risk include, foreign currency ordinary
deposits and foreign currency time deposits of all deposits, and forward exchange contracts aspart of derivative transactions.
For the subsidiaries engaged in the banking business, the effect of the present value ofthese financial assets and liabilities from exchange fluctuations is used for a quantitative analysis
as part of the process to manage exchange rate risk.
In calculating the effect of the present value, the corresponding financial assets andfinancial liabilities are classified by currency and the respective currency’s fluctuation range isused as the basis for analysis. Specifically, given all the other risk variables remaining constant,
except for the exchange rate risk, in the event of a 10% appreciation in the value of theJapanese yen against each foreign currency, the present value as of December 31, 2013 would
decrease by ¥14 million. Conversely, in the event of a 10% depreciation in the value of theJapanese yen against each foreign currency, the present value would increase by ¥14 million.
Similarly, given all the other risk variables remaining constant, except for the exchange rate risk,in the event of a 10% appreciation in the value of the Japanese yen against each foreign
currency, the present value as of December 31, 2014 would decrease by ¥14 million ($117
thousand). Conversely, in the event of a 10% depreciation in the value of the Japanese yen
against each foreign currency, the present value would increase by ¥14 million ($117 thousand).
These effects do not take into account correlations between exchange rates and other risk
variables, while the effect of the present value by currency is calculated in Japanese yen astranslated by the exchange rates on December 31, 2013 and 2014.
6) Management of Market Risks for Subsidiaries Engaged in Securities Business(Exchange Rate Risk)
For the Group Companies’ subsidiaries engaged in the securities business, contracts andmanagement structure regarding foreign exchange margin transactions have been changed fromthe year ended December 31, 2013. Financial assets and liabilities exposed to exchange raterisk, which is a significant risk variable, are mainly derivative assets and liabilities arising fromthese foreign exchange margin transactions.
The subsidiaries conduct a quantitative analysis on the effect of the present value of thesefinancial assets and liabilities, given certain fluctuations in exchange rate.
In calculating the effect of the present value, the corresponding financial assets andfinancial liabilities are classified by currency and the respective currency’s fluctuation range isused as the basis for analysis. Specifically, given all the other risk variables remaining constant,
except for the exchange rate risk, in the event of a 10% appreciation in the value of theJapanese yen against each foreign currency, the present value as of December 31, 2013 would
decrease by ¥3 million. Conversely, in the event of a 10% depreciation in the value of theJapanese yen against each foreign currency, the present value would increase by ¥3 million.
Similarly, given all the other risk variables remaining constant, except for the exchange rate risk,in the event of a 10% appreciation in the value of the Japanese yen against each foreign

currency, the present value as of December 31, 2014 would decrease by ¥17 million ($142
thousand). Conversely, in the event of a 10% depreciation in the value of the Japanese yen
against each foreign currency, the present value would increase by ¥17 million ($142 thousand).
These effects do not take into account correlations between exchange rates and other risk
variables, while the effect of the present value by currency is calculated in Japanese yen astranslated by the exchange rates on December 31, 2013 and 2014.
42. Capital Management
The Group Companies’ capital structure is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Total liabilities
Less:
Cash
equivalents
Net liabilities

andDecember 31, 2013

December 31, 2014

December 31, 2014

¥2,903,354¥3,252,609$27,114,113

384,008

428,635

3,573,149

2,519,346

2,823,974

23,540,964

306,454428,086

3,568,573

cash

Total equity

The Company’s subsidiaries, Rakuten Bank, Ltd., Rakuten Securities, Inc. and Rakuten Life
Insurance Co., Ltd. are subject to regulations by the Financial Services Agency over their equity
ratio, capital-to-risk ratio and solvency margin ratio, which are duly complied with.
43. Related Parties
Related party transactions and their corresponding outstanding balances of receivables andpayables between the Group Companies and other related parties are as follows. Although theconsolidated subsidiaries are related parties of the Company, such transactions and thecorresponding outstanding balances with subsidiaries are not subject to disclosure as they are
eliminated for the purpose of consolidated financial statements.
(1) Related Party Transactions(Millions of Yen)
December 31, 2014

December 31, 2013

Revenue
Operatingexpenses
Accounts
receivable―
trade (Note 1)
Depositsforbanking business
Financialliabilitiesforsecurities
business
Common stock
Capital reserve

Associates

Executives

Total

Associates Executives

Total¥2,209¥19¥2,228¥1,354¥―¥1,354

1,893

―

1,893

1,402

19

1,421

104

―

104

104

―

104

―

3,770

3,770

―

207

207

―

25

25

―

―

―

―

235

235

―

617

617

―

235

235

―

617

617

(Thousands of U.S. Dollars)
December 31, 2014
Associates Executives
Revenue
Operatingexpenses
Accounts
receivable―
trade (Note 1)
Depositsforbanking business
Financialliabilitiesforsecurities
business
Common stock
Capital reserve

Total$11,287$―$11,287

11,687

159

11,846

867

―

867

―

1,726

1,726

―

―

―

―

5,143

5,143

―

5,143

5,143

(Notes) 1. An allowance for doubtful accounts of ¥35 million has been recorded against accounts
receivable―trade at December 31, 2013. An allowance for doubtful accounts of ¥72
million ($600 thousands) has been recorded against accounts receivable―trade at
December 31, 2014.
2. There are no transactions involving collateral and guarantees.
(2) Transactions with Companies in which Majority of Voting Rights are Held by the Group
Companies’ Principal Shareholders (Individuals) and their Close Relatives
Thousands of
U.S. Dollars

Millions of Yen

December 31, 2013

December 31, 2014

December 31, 2014

Revenue (Note 1)

¥16

¥27

$225

Operating expenses (Note 2)

342

444

3,701

Other assets (Note 3)

21

28

233

Deposits for banking business
47
24
200
Accounts payable ― trade2
3
25(Note 4)(Notes) 1 Revenue is from commissions on ticket sales, and ticket sales are entrusted by Crimson
Football Club, Inc. Commissions on ticket sales are determined in a similar manner as
general business terms and conditions. Chairman and President and Representative
Director of the Company, Hiroshi Mikitani indirectly owned 100% of the voting rights in
Crimson Football Club, Inc. Crimson Football Club, Inc. became a wholly owned
subsidiary of the Company as of January 5, 2015. The above transactions occurred up
to the fiscal year ended December 31, 2014.
2 Operating expenses are sponsorship fees payable to Crimson Football Club, Inc. forplanning and organizing football matches and other events. The amount of sponsorshipfees is determined in view of the past transactions at other football clubs.
3 Other assets are prepaid expenses resulting from advertising transactions. Thesereceivables are unsecured in effect, charging no interest. Allowance for doubtful
accounts is not recorded for the receivables from related parties.
4 Accounts payable ― trade is accounts payable resulting from advertising transactions,due one month after the purchase date. No interest is charged to these payables.
(3) Executive Compensation
Executive compensation is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Short-term employee benefits(Note)
Share-based payments
Total

Year ended
December 31, 2013

Year ended
December 31, 2014

Year ended
December 31, 2014

¥856

¥801

$6,677

48

107

892

904

908

7,569

(Note) Short-term employee benefits include salaries and bonuses for those employees who serve
concurrently as employees and Directors.
44. Business Combinations
For the year ended December 31, 2013
There are no significant business combinations to be disclosed.
For the year ended December 31, 2014
Business Combination with VIBER MEDIA LTD.
(1) Outline of the business combination is as follows:
1) Name of the Acquiree and Business Description
Name of the Acquiree: VIBER MEDIA LTD.
Description of the Business: Mobile messaging service and VoIP service operator
2) Reason for the Business Combination
The Company operates three main businesses on a global scale: e-commerce, financial services,and digital contents. VIBER MEDIA LTD. is a worldwide operator of mobile messaging and VoIP
services called “Viber.” By making VIBER MEDIA LTD. a subsidiary, the Company aims to utilize
Viber’s broad customer base and strengthen its platform for providing EC services and digitalcontents which operate worldwide.
3) Acquisition Date: March 11, 20144) Type of the Business Combination: Acquisition of shares5) Name after the Business Combination: No change in the name of the company after thebusiness combination
6) Ratio of Acquired Voting Rights:
100.0%
7) Rationale for determining that the Company is the Acquirer
The Company acquired all the shares in VIBER MEDIA LTD. in exchange for cash consideration.

(2) Information on Consideration Paid for Acquiree
Thousands of
U.S. Dollars

Millions of Yen

Consideration paid:
CashTotal consideration paid

¥81,654$680,677

81,654680,677(3) Costs directly associated with the acquisition were ¥110 million ($917 thousand) presented as“Operating expenses.”(4) The amount of, and reason for goodwill recognized are as follows:
1) Amount of goodwill:
824 million U.S. dollars
2) Reason for goodwill recognition: Goodwill has been recognized based on a reasonableestimation of the excess earnings power anticipated inassociation with future business development.
(5) Assets acquired and liabilities assumed at the acquisition date are as follows:(Millions of U.S. dollars)
Fair Value
AssetsCash and cash equivalents$7

Intangible assets

77

Others9

Total assets

93

Liabilities
Accounts payable — other21

Borrowings

82

Others17

Total liabilities

120(6) The impact on the Group Companies’ revenue and net income on the assumption that thebusiness combination had taken place on January 1 would be insignificant, and thus thedescription is omitted.
Business Combination with Ebates Inc.
(1) Outline of the business combination is as follows:
1) Name of the Acquiree and the Description of its Business
Name of the Acquiree:Ebates Inc.
Description of the Business: Operator of membership-based online cash-back sites
2) Reason for the Business Combination
Ebates Inc., founded in 1999, is a pioneer and major operator of membership-based online cashback sites. The company has established and provides a robust platform to support the growth of
e-commerce business for major retailing stores. Its network has spread to more than 2,600
enterprises across a variety of type of business types and product categories, ranging from

3)
4)
5)
6)
7)

major e-commerce websites, bricks and mortar retailers increasing their focus on e-commerce
operations to online travel agencies, etc. Ebates Inc. also has 2.5 million active loyal members,
and the purchase amount per member is steadily increasing. The Company believes that
Ebates Inc. has a high affinity for Rakuten’s business model as both companies’ businessmodels are membership-based businesses. By integrating the two companies, the Company
intends to create an attractive and innovative membership-based marketplace with particularemphasis on point programs. Through this share acquisition, the Group Companies aim todramatically improve its global e-commerce strategy and lead the global e-commerce market.
Acquisition Date: October 9, 2014
Type of Business Combination:
Acquisition of shares
Name after Business Combination:
No change in the name of the company after thebusiness combination
Ratio of Acquired Voting Rights:
100.0%
Rationale for determining that the Company is the Acquirer
The Company acquired shares of Ebates Inc. in exchange for cash consideration.

(2) Information on Consideration Paid for Acquiree
Thousands of
U.S. Dollars

Millions of Yen

Consideration paid:
CashTotal consideration paid

¥99,401$828,618

99,401

828,618(3) Costs directly associated with the acquisition were ¥872 million ($7,269 thousand) presented as“Operating expenses.”(4) The amount of, and reason for goodwill recognized are as follows:
1) Amount of Goodwill:
825 million U.S. dollars
2) Reason for goodwill recognized: Goodwill has been recognized based on a reasonableestimation of excess earning power anticipated in association
with the future business development.
(5) Assets acquired and liabilities assumed at the acquisition date are as follows:(Millions of U.S. dollars)
Fair Value
AssetsCash and cash equivalents$52

Intangible assets

138

Others99

Total assets

289

Liabilities
Accounts payable — other

96

Others87

Total liabilities

183

(6) The impact on the Group Companies’ revenue and net income on the assumption that thebusiness combination had taken place on January 1 would be insignificant, and thus thedescription is omitted.
45. Major Subsidiaries(1) Major Subsidiaries
Major subsidiaries of the Group Companies are as follows:
December 31, 2013
CapitalLocation(Millions of Yen) Voting
rightsOwnership
ratio

Name

Internet
Segment:

December 31, 2014
Votingrightsratio

Notes
Ownership

Services

Rakuten Travel, Inc.
RAKUTEN
MARKETING LLC
RAKUTEN
COMMERCE LLC
PRICEMINISTER
S.A.S.

Tokyo

―

100%

100%

―

― (Note 8)U.S.

1 U.S. dollar

100%

100%

100%

100% (Note 6)

100%

100%

100%

100% (Note 7)

100%

100%

100%

100%

¥1,650

60.0%

60.0%

60.0%

60.0%

¥259

100%

100%

100%

100%

823 million
Canadiandollars

100%

100%

100%

100% (Note 5)

U.S.
FranceRakuten Auction, Inc. Tokyo
LinkShare
K.K.

Japan

Tokyo

11 million
U.S. dollars
356 thousand
euros

Rakuten Kobo Inc.

CanadaKenko.com, Inc.

Tokyo

¥2,204

51.2%

50.8%

56.8%

56.8% (Note 3)

Rakuten
Inc.

Tokyo

―

100%

100%

―

― (Note 9)

VIKI, Inc.

U.S.

1 U.S. dollar

100%

100%

100%

100%

Ebates Inc.

U.S.

0.1 U.S. dollar

―

―

100%

100%

Internet
Finance
Segment:
Rakuten Card Co.,
Tokyo
Ltd.
Rakuten Securities,
Tokyo
Inc.

¥19,324

100%

100%

100%

100%

¥7,496

100%

100%

100%

100%

Rakuten Bank, Ltd.

Tokyo

¥25,954

100%

100%

100%

100%

Rakuten Edy, Inc.

Tokyo

¥1,840

85.0%

85.0%

100%

100%

Rakuten
Life
Tokyo
Insurance Co., Ltd.

¥2,500

100%

100%

100%

100% (Note 1)

―

97.1%

94.8%

―

― (Note 4)¥2,026

54.8%

55.0%

55.0%

55.0% (Note 2)

¥400

100%

100%

100%

100%

71 thousand
U.S. dollars

―

―

100%

100% (Note 10)

Logistics,

Dot Commodity, Inc.

Tokyo

(Note 10)

Others Segment:
FusionCommunications
Tokyo
Corporation
RakutenBaseball,
MiyagiInc.
VIBER MEDIA LTD.
(Notes)Cyprus1

AIRIO Life Insurance Co., Ltd. was renamed Rakuten Life Insurance Co., Ltd. on April 1, 2013.

2

The discrepancy between the voting rights ratio and ownership of Fusion Communications Corporation

is due primarily to the fact that Fusion Communications Corporation has issued preferred shares.
3

The discrepancy between the voting rights ratio and ownership of Kenko.com, Inc. is due primarily tothe fact that Kenko.com, Inc. holds treasury stock.

4 The discrepancy between the voting rights ratio and ownership of Dot Commodity, Inc. is due primarily
to the fact that Dot Commodity, Inc. holds treasury stock. In addition, on July 1, 2014, an absorptiontype merger between Rakuten Securities, Inc. and Dot Commodity, Inc. was conducted, with the former
being the surviving company and the latter the dissolved company.
5 Rakuten Kobo Inc. changed its name from Kobo Inc. on July 1, 2014.
6 LinkShare Corporation was renamed RAKUTEN MARKETING LLC on July 31, 2014.
7 Buy.com Inc. was renamed RAKUTEN COMMERCE LLC on July 31, 2014.
8 On April 1, 2014, an absorption-type merger was carried out with the Company being the surviving
company and Rakuten Travel, Inc., the dissolved company.
9 On July 1, 2014, an absorption-type merger was carried out with the Company being the surviving
company and Rakuten Logistics, Inc., the dissolved company.
10 Ebates Inc. and VIBER MEDIA LTD. have became consolidated subsidiaries of the Company from theyear ended December 31, 2014.

(2) Changes in Ownership
For the year ended December 31, 2013
In February 2013, with the approval of the French authorities, Rakuten Europe S.a r.l., a wholly
owned subsidiary of the Company, acquired 41.2% of shares in Alpha Direct Services S.A.S., a
French logistics company, as well as the entire shares of Direct Technology Solutions S.A.S.
which held 58.8% of the shares in Alpha Direct Services S.A.S., making Alpha Direct Services
S.A.S. a wholly owned subsidiary.
In September 2013, Rakuten USA, Inc., a wholly owned subsidiary of the Company, made VIKI,
Inc. its wholly owned subsidiary through the merger of VIKI with another wholly owned
subsidiary that had been established for the purpose of this merger.
For the year ended December 31, 2014
The Group Companies acquired control over VIBER MEDIA LTD. on March 11, 2014 andEbates Inc. on October 9, 2014, making them subsidiaries. The transactions associated withthese acquisitions are described in Note 44. Business Combinations.
46. Structured Entities
Consolidated Structured Entities
The Group Companies consolidate certain structured entities as trusts for securitizing
receivables.
These trusts for securitization and other funds are structured entities, which have been
designed so that voting or similar rights are not the dominant factor in deciding who controls
these entities.
The Group Companies have the right to direct the investment or servicing activities of thesestructured entities. In addition, the Group Companies, by holding subordinated beneficial
interests collateralized by entrusted assets, will be exposed to variability of investment returns.
Accordingly, it is determined that the Group Companies have control over these structured
entities.
In accordance with the contractual arrangements with the structured entities, use of assets

and settlement of liabilities of these consolidated structured entities are restricted to the
purposes for which they are structured.
The carrying amounts of assets and liabilities of the consolidated structured entities are as
follows:
Carrying amounts of assets and liabilities of the consolidated structured entities
Thousands of
U.S. Dollars

Millions of Yen

December 31,
2013

December 31,
2014

December 31,
2014¥27,200¥28,832$240,347

Others551

1,280

10,670Total assets

27,751

30,112251,017

11,00011,00091,697

―

125

1,042

11,00011,12592,739AssetsLoans for credit card businessLiabilities
Bonds and borrowings
OthersTotal liabilities

Unconsolidated Structured Entities
The Group Companies engage in investment activities involving structured entities as part oftheir banking business and other businesses. These structured entities handle securitized
products that are set up by third parties and collateralized assets including various real estates,monetary claims such as auto loans and consumer loans, credit derivatives, and other bonds.
The Group Companies have interests in these structured entities as a result of holding bonds
issued by such entities and through trust beneficiary interests. The risks of these products aremanaged regularly on an individual basis under the group management regulations for thebanking business and other businesses, for early recognition and mitigation of the risk of default
resulting from deterioration of the debtors’ financial conditions and other factors.
Additionally, the Group Companies set up investment trust funds that are provided to meetthe needs of investors as part of their investment management business. However, the Group
Companies do not hold interests in such investment trust funds. Certain subsidiaries that are notcategorized as investment management business provide investment trust services, but theGroup Companies do not hold interests in such trusts.
The Group Companies do not provide any guarantee or commitment to these structured
entities. As a result, the maximum exposure to loss associated with the Group Companies’
interests in these unconsolidated structured entities is limited to the carrying amount of theinvestments in bonds and trust beneficiary interests held therein. The maximum exposure toloss represents the potential maximum loss the Group Companies could incur and does notreflect the likelihood of such a loss being incurred.
The following table shows the summary of the Group Companies’ maximum exposure toloss from its interests in these structured entities by class of asset held therein.
Carrying amount of unconsolidated structured entities and maximum exposure to loss frominterests in such entities

Thousands of
U.S. Dollars

Millions of Yen

Consolidated
Class of asset held bystatements of financial
structured entities
position
Investment
Securitization products
securities
for
set up by third parties
banking business
Public and corporate
bonds
Real estates
Monetary claims forindividual customers
OthersOthers
Total

December 31,
2013

December 31,
2014

December 31,
2014¥9,500¥2,500$20,840

1,597

―

―

31,15023,502

195,915

516

3,520

29,343―

1,400

11,671

42,76330,922257,769

47. Subsequent Events
Acquisition of shares of Lyft, Inc.
The Company, at its Extraordinary Board of Directors Meeting held on March 11, 2015, resolvedto acquire the shares of Lyft, Inc. through its subsidiary, and concluded a new share purchaseagreement. Said shares will be purchased for 300 million U.S. dollars, which is likely to result inan 11.9% stake in Lyft, Inc. by the Group Companies.
Acquisition of shares of OverDrive Holdings, Inc.
The Company, at its Ordinary Board of Directors Meeting held on March 19, 2015, resolved toacquire all issued shares of OverDrive Holdings, Inc., an operator of an e-book and audio
content marketplace business, to make it a wholly owned subsidiary, and concluded a sharepurchase agreement. Said shares will be purchased for 410 million U.S. dollars.
In addition, the activation of the contracts must satisfy the requirements of the competition andantitrust laws in the U.S. on a timely basis.

48. Classification of Current and Non-current
As of December 31, 2013
(Millions of Yen)
Collection or settlement period

Total

12 months or lessOver 12 months¥384,008¥―¥384,008

72,197

1,246

73,443

1,218,863

124

1,218,987

403,188

141,126

544,314

114,768

83,129

197,897

3,497

236,321239,818

2,512

7,721

10,233

8,679

3,909

12,588

1,852

32,17334,025

149,241

9,817

159,058

―

8,189

8,189

―

30,40830,408Intangible assets―

235,881

235,881Deferred tax assets―

31,594

31,594

Other assets

25,406

3,959

29,365

Total assets

2,384,211

825,597

3,209,808

Accounts payable ― trade115,357―

115,357

Deposits for banking business
Financialliabilitiesforsecurities business
Derivative liabilities

829,604

130,356

959,960

1,077,971―

1,077,971

6,546

1,477

8,023

Bonds and borrowings

263,455

126,228

389,683

Other financial liabilities

220,939

5,832

226,771

Income taxes payable

30,191―30,191

Provisions
Policy reserves and others for
insurance business
Deferred tax liabilities

36,944

4,076

41,020―18,852

18,852

―

9,123

9,123

Other liabilities

25,816587

26,403

Total liabilities

2,606,823

296,5312,903,354

AssetsCash and cash equivalents
Accounts receivable ― trade
Financial assets for securities
business
Loans for credit card business
Investment
securities
forbanking business
Loans for banking business
Investment
securitiesfor
insurance business
Derivative assets
Investment securities
Other financial assets
Investments in associates andjoint ventures
Property, plant and equipment

Liabilities

As of December 31, 2014
(Millions of Yen)
Collection or settlement period

Total

12 months or lessOver 12 months¥428,635¥―¥428,635

88,042829

88,871

1,110,788

100

1,110,888

482,267

210,619

692,886

118,919

103,378

222,297

13,653308,224

321,877

268

11,937

12,205

9,197

4,730

13,927

6,465

44,04150,506

124,781

19,502

144,283

―

8,932

8,932

―

34,811

34,811Intangible assets―

490,679

490,679

Deferred tax assets―

35,00635,006

Other assets

20,762

4,130

24,892

Total assets

2,403,777

1,276,918

3,680,695

Accounts payable ― trade137,042―

137,042

Deposits for banking business
Financialliabilitiesforsecurities business
Derivative liabilities

958,461

178,734

1,137,195

995,141―995,141

10,2701,499

11,769Bonds and borrowings

261,371328,556

589,927

Other financial liabilities

221,335

21,281

242,616

Income taxes payable

27,129―27,129Provisions
Policy reserves and others for
insurance business
Deferred tax liabilities

42,037

1,932

43,969―19,847

19,847―

12,437

12,437

Other liabilities

34,802735

35,537

Total liabilities

2,687,588

565,021

3,252,609

AssetsCash and cash equivalents
Accounts receivable ― trade
Financial assets for securities
business
Loans for credit card business
Investment
securities
forbanking business
Loans for banking business
Investment
securitiesfor
insurance business
Derivative assets
Investment securities
Other financial assets
Investments in associates andjoint ventures
Property, plant and equipment

Liabilities

(Thousands of U.S. Dollars)Collection or settlement period
Total
12 months or lessOver 12 months
AssetsCash and cash equivalents$3,573,149$―$3,573,149

733,928

6,911

740,839

9,259,653

834

9,260,487

4,020,232

1,755,743

5,775,975

991,322861,771

1,853,093

113,8132,569,390

2,683,203

2,234

99,508

101,742

76,66739,430116,097

53,893367,131421,024

1,040,188

162,571

1,202,759―

74,45874,458―290,188

290,188

Intangible assets―

4,090,355

4,090,355

Deferred tax assets―

291,814

291,814

Other assets

173,075

34,428207,503

Total assets

20,038,154

10,644,532

30,682,686

Accounts payable ― trade

1,142,397―

1,142,397

Deposits for banking business
Financialliabilitiesforsecurities business
Derivative liabilities

7,989,838

1,489,947

9,479,785

8,295,607―

8,295,607

85,612

12,496

98,108

Bonds and borrowings

2,178,818

2,738,880

4,917,698

Other financial liabilities

1,845,073

177,401

2,022,474

Income taxes payable

226,150―

226,150

Provisions
Policy reserves and others for
insurance business
Deferred tax liabilities

350,426

16,105366,531―

165,447

165,447―

103,676

103,676

Other liabilities

290,113

6,127

296,240

Total liabilities

22,404,034

4,710,079

27,114,113

Accounts receivable ― trade
Financial assets for securities
business
Loans for credit card business
Investment
securities
forbanking business
Loans for banking business
Investment
securitiesfor
insurance business
Derivative assets
Investment securities
Other financial assets
Investments in associates andjoint ventures
Property, plant and equipment

Liabilities

(2) [Others]
Quarterly Information for the current fiscal year

(Cumulative period)

1Q

Revenue
Income before
income tax
Net income
Basic earnings per
share (yen)¥138,263(Each quarter)
Basic earnings per
share (yen)1Q(Millions of Yen, unless otherwise stated)Year ended
2Q
3Q
December 31,
2014¥276,602¥424,216¥598,565

22,21043,742

71,603

104,245

16,193

23,34642,71971,103¥12.22¥17.49¥32.06¥53.47¥12.22

2Q

3Q
¥5.28

¥14.564Q¥21.40