Flash Report on the Consolidated Financial Results
for the Fiscal Year Ended February 28, 2017
April 12, 2017
Listed Company Name: Lawson, Inc.
Tokyo Stock Exchange (First Section)
Code No.: 2651
(URL http://www.lawson.jp/en/ir)
Company Representative: Sadanobu Takemasu, President, Representative Director
Contact: Tomoki Takanishi, Deputy Senior Vice President, Finance and Accounting Division Director
Tel.: +81-3-5435-2773
Scheduled date for the ordinary general meeting of shareholders: May 30, 2017
Scheduled date for submission of annual securities report: May 31, 2017
Scheduled date for payment of dividend: May 31, 2017
Supplementary materials for annual financial results: Yes
Holding of presentation of annual results: Yes (for institutional investors and analysts)(Amounts less than one million yen are truncated)
1. Consolidated operating results for 2016 fiscal year (from March 1, 2016 to February 28, 2017)(1) Consolidated operating results (cumulative)
Note: Percentages represent increases (decreases) compared with the previous fiscal year.

For the fiscal year ended
February 28, 2017
February 29, 2016
Note: Comprehensive income:For the fiscal year ended
February 28, 2017
February 29, 2016

Gross operating
revenue

Operating income

Ordinary income

Millionsof yen631,288583,452

Millionsof yen73,772
72,541Millionsof yen73,014
69,622

%
8.2
17.2

%
1.7
2.9

Fiscal year ended February 28, 2017
Fiscal year ended February 29, 2016

%
4.9
ሺ2.9)

Profitattributable toowners of parent
Millions%of yen36,40016.0
31,381
ሺ4.0)

35,543 million yen
32,928 million yen

Profit per
share

Diluted profit
per share

Return on
equityRatio of ordinary
income to total
assetsYen
363.96313.81

Yen
363.70313.57

%
13.5
12.0

%
8.7
8.9

7.9%
(6.5)%

Ratio ofoperating income togross operating
revenue
%
11.7
12.4

Reference: Share of profit of entities accounted for using equity method:
Fiscal year ended February 28, 2017
602 million yen
Fiscal year ended February 29, 2016
292 million yen(2) Consolidated financial position
Shareholders’
Net assets per
Total assets
Net assets
equity ratio
share
As of
Millions of yen
Millions of yen%
Yen
February 28, 2017866,577

285,995

31.7

2,748.39

February 29, 2016

803,212272,99732.9

2,643.97

Reference: Shareholders’ equity:

As of February 28, 2017
As of February 29, 2016

274,880 million yen
264,392 million yen

(3) Consolidated cash flows
Net cash providedby (used in)operating activities
For the fiscal year ended
Millions of yen
February 28, 201799,864
February 29, 2016
112,205

Net cash providedby (used in)investing activities
Millions of yen
ሺ76,227)
ሺ68,657)

Net cash providedby (used in)financing activities
Millions of yen
ሺ25,638)
ሺ50,201)

Cash and cash
equivalents at
end of period
Millions of yen
67,692
69,793

2. Dividends
Annual dividends per share
1Q

1H

3Q

Year-end

Total

Yen

Yen

Yen

Yen

Yen

2015 fiscal year－

122.50－122.502016 fiscal year2017 fiscal year
(forecast)－125.00－－127.50－Total
dividends
for the year

Payoutratio

Ratio ofdividends toshareholders’equity%%245.00Millions ofyen
24,49978.1

9.4

125.00250.0025,00368.7

9.3

127.50

255.0076.1

3. Forecast of consolidated operating results for 2017 fiscal year (from March 1, 2017 to February 28, 2018)
Note: Percentages represent increases (decreases) compared with the previous fiscal year.

1H of 2017 fiscal year2017 fiscal year

Gross operating
revenue
Millions%of yen334,000
9.1
675,000
6.9

Profit attributable Profit per
to owners of parent share
Millions%%Yenof yenሺ6.2)
21,000ሺ7.1) 209.96
ሺ10.3)
33,500ሺ8.0) 334.95

Operating income

Ordinary income

Millionsof yen37,50068,500Millionsof yen36,00065,500

%
(6.1)
ሺ7.1)

4. Notes(1) Change in significant subsidiaries during the fiscal year (Changes in certain specified subsidiaries resulting
in changes in scope of consolidation): None
Added: None

Excluded: None

(2) Changes in accounting policies, changes in accounting estimates or restatements
1. Changes in accounting policies associated with revision in accounting standards: Yes
2. Changes in accounting policies other than 1. above: None
3. Changes in accounting estimates: None
4. Retrospective restatements: None
(3) Number of shares outstanding (common stock)
1. Number of shares outstanding at the end of year (including treasury shares)
As of February 28, 2017:
100,300,000
As of February 29, 2016:

100,300,000

2. Number of treasury shares at the end of year
As of February 28, 2017:
285,191

As of February 29, 2016:

301,897

3. Average number of shares during the year
As of February 28, 2017:
100,009,948

As of February 29, 2016:

99,998,346

Note: Implementation status of audit proceduresThis flash report is exempt from audit procedures under the Financial Instruments and Exchange Act. Asof the time of disclosure of this report, audit procedures for the financial statements have not been completed.
Note: Descriptions on appropriate use of financial performance forecasts and other special notes
Forward-looking statements presented herein such as financial forecasts are based on currently available
information and certain presumptions deemed to be reasonable as of the date of announcement. The
achievement of said forecasts cannot be guaranteed. Actual results may be materially different from those in
the forecast as a result of various factors. For preconditions of these financial forecasts and notes concerning
their use, please refer to “Analysis of Operating Results and Financial Position; Outlook for Fiscal 2017” onpage 9.

Contents
1. Analysis of Operating Results and Financial Position ...........................................................................

2(1) Analysis of Consolidated Operating Results ....................................................................................

2(2) Profit and Loss .................................................................................................................................

9(3) Outlook for Fiscal 2017 ....................................................................................................................

9(4) Analysis of Financial Position ..........................................................................................................

9

2. Management Policy ................................................................................................................................

11(1) Basic Management Policy ................................................................................................................

11(2) Performance Indicators (Target).......................................................................................................

11(3) Medium-and-Long-Term Management Strategies ...........................................................................

11(4) Priority Issues of the Group..............................................................................................................

11(5) Other Important Managerial Matters ................................................................................................

12

3. Basic Approach to Selection of Accounting Standards ..........................................................................

13

4. Consolidated Financial Statements ........................................................................................................

14(1) Consolidated Balance Sheet .............................................................................................................

14(2) Consolidated Statement of Income and Consolidated Statements of Comprehensive Income.........

16

Consolidated Statement of Income ...................................................................................................

16

Consolidated Statement of Comprehensive Income .........................................................................

17(3) Consolidated Statement of Changes in Equity ................................................................................

18(4) Consolidated Statement of Cash Flows ............................................................................................

20(5) Notes to Consolidated Financial Statements ....................................................................................

21(Going Concern Assumption) ...........................................................................................................

21(Accounting Policies for the Preparation of Consolidated Financial Statements) ............................

21(Changes in Accounting Policies) ....................................................................................................

25(Accounting Standards Issued but not yet Effective) .......................................................................

26(Changes in Presentation) .................................................................................................................

27(Notes to Consolidated Balance Sheet) ............................................................................................

28(Notes to Consolidated Statement of Income) ..................................................................................

29(Notes to Consolidated Statement of Comprehensive Income) ........................................................

31(Notes to Consolidated Statement of Changes in Equity) ...............................................................

32(Notes to Consolidated Statement of Cash Flows) ...........................................................................

34(Segment Information) .....................................................................................................................

35(Per Share Information) ....................................................................................................................

41(Significant Subsequent Events) .......................................................................................................

41

1

1. Analysis of Operating Results and Financial Position(1) Analysis of Consolidated Operating Results
During the fiscal year under review, or fiscal 2016 ended February 28, 2017, we have launched our “1000Day Action Plan” and focused our business activities on building Lawson’s next-generation convenience store
model. The convenience store industry is now undergoing drastic transformation. This is attributable to changes
in community needs resulting from an aging population and the prevalence of the nuclear family, among others,
which have triggered a reorganization of the industry. Deeming the next three years as a crucial turning point
for the Lawson Group (hereinafter, the “Group”) under the “1000-Day Action Plan,” we have made efforts to
evolve our business model as a manufacturing retailer targeting small catchment areas and to raise our store
productivity to an unprecedented level toward the goal of fulfilling our customers’ needs in everyday life byserving as an essential part of their communities.
Furthermore, Lawson became a consolidated subsidiary of Mitsubishi Corporation (hereinafter,“Mitsubishi”) as of February 15, 2017 as Mitsubishi newly acquired a majority of voting rights in Lawson
following the completion of a tender offer for our common stock. Mitsubishi intends to strengthen collaboration
with Lawson while continuing to maintain its share listing on the First Section of the Tokyo Stock Exchange
and management autonomy. We will aim to establish a framework that enables the maintenance of appropriate
corporate governance as an independent listed company and that maximizes effects of synergy with MitsubishiGroup companies.
We have also focused on promoting internal control and addressing operating risks across the entire Group
based on the 2016 Basic Policy for Maintaining Internal Control Systems and we will continue promotinginternal control going forward.
Operating results by business segment were as follows:(Domestic Convenience Store Business)
In our convenience store business, in our effort to attract customers by serving as stores for everyday use,
we strengthened our product lineup of our private brand, “Lawson Select,” renovated existing stores, invested
aggressively in advertising and sales promotions, and expanded and improved merchandise selection.
[Store Operations]
In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, whichemphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic itemswith high demand; and (3) keeping our stores and communities clean, and we strengthened our merchandise
assortment of ready-made dishes, frozen food items, and seasonings by taking strong steps to renovate existing
stores, including installing more refrigerators and freezer flatbeds as well as raising the heights of productdisplay shelves and putting in more shelves.
[Merchandising and Service Strategies]
On the merchandise side, we expanded our merchandise assortment under our “Lawson Select” brand,2

focusing on products purchased for everyday life, such as Japanese ready-made dishes and salads in the daily
delivered food category. We are focused on selling products that contribute to the health of customers. For
example, the “Green Smoothie,” a NATURAL LAWSON brand product, has been in high demand, mainly fromfemale and highly health-conscious customers, while the “Nikku Yasai Itame Bento” (stir-fried meat andvegetables lunch box), which includes one half of a person’s daily vegetable requirement, has also gained wide
popularity. In the counter fast food section, the “Deka Yakitori” (grilled chicken), which weighs 20% more thanthe previous yakitori offering and is the largest in Lawson’s history, has been well received by many customers
since its launch in January 2017.
There are currently 23 Lawson Farms throughout the country. The farms assume the role of supplying safeand fresh fruits and vegetables to the Group’s stores and factories that produce LAWSON’s original products.
With the aim of establishing an appropriate farm management system for Lawson Farms, Lawson has beenendeavoring to obtain certification for Japan Good Agricultural Practice (JGAP), a set of agricultural
production process management techniques. In July 2016, Lawson and the Presidents and CEOs of Lawson
Farms were awarded the “GAP Initiative Award 2016” hosted by the Asia GAP Research Institute in recognitionof their unrivalled contribution to the dissemination of Good Agricultural Practice (GAP) *1. The Group willcontinue its efforts to deliver safe and secure products through such initiatives.
In addition to thus strengthening our merchandise lineup, we also enhanced our service offerings, one ofwhich is our “Gift Cards” *2, whose transaction value continued to remain solid.
We started accepting “Alipay”, the world’s largest mobile payment service, and “LINE Pay”, the remittanceand payment service through the communication app, LINE, at all of our outlets in January 2017, a first in theindustry.
On our sales promotion side, as part of our effort to increase the number of purchased items per customer,
we rolled out a monthly promotional “Lawson Tokuichi!” campaign, where a 10% discount was offered on“Lawson Select” chilled/frozen foods as well as some items offered in our counter cases. Furthermore, measures
to effectively attract customers were launched, including a “100-yen rice ball sale”, a “speed lottery” themedon “E-girls” and “Sandaime J Soul Brothers from EXILE TRIBE,” which demonstrated our strength in theentertainment field, and rewarding Ponta Card members with five times the points on purchases in evenings
and at night.
*1 GAP: Good Agricultural Practice (A set of agricultural production process management techniques).
*2 Gift Cards: Collective term for prepaid cards that can be used for online transactions.

3[Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business]
Fiscal year

Product group
Processed foods

Previous fiscal year
From March 1, 2015
to February 29, 2016
Sales
Percentage(Millions of yen)of total (%)
1,033,448
52.7

Current fiscal year
From March 1, 2016
to February 28, 2017
Sales
Percentage(Millions of yen) of total (%)
1,073,044
52.5

YoY (%)

103.8

Fast foods

463,43123.7

481,267

23.6

103.8

Daily delivered foods

276,886

14.1

294,141

14.4

106.2

Nonfood products

186,499

9.5

194,833

9.5

104.5

1,960,266

100.0

2,043,287

100.0

104.2

Total
[Store Development]

In opening new stores, the Group continued to prioritize developing profitable stores.
With regard to our partnership initiatives with other chain retailers, based on a mega-franchise agreement
concluded with Save On Corp., we remodeled 54 Save On stores, which operated in Yamagata, Fukushima and
Ibaraki Prefectures, into LAWSON stores in a phased manner during fiscal 2016. In the fourth quarter, we also
concluded mega-franchise agreements in Gunma, Tochigi, Niigata, Saitama, and Chiba Prefectures. Fromaround summer 2017 to the end of 2018, 503 Save On stores in these prefectures (as of end of December;includes 2 stores in Nagano Prefecture) are scheduled to be remodeled into LAWSON stores.
Furthermore, under our partnership with Three F Co., Ltd., 23 Three F stores were remodeled to become
LAWSON stores by February 2017. Also, L･TF Co., Ltd., a joint venture established in September 2016,
operates (as of the end of February) 89 LAWSON Three F stores that were formerly Three F stores.
Under our partnership with POPLAR Co., Ltd., Lawson Sanin, Inc., a joint venture between Lawson, Inc.
and POPLAR Co., Ltd., commenced operation of a regional franchise business in the Tottori and Shimane
region. The joint venture has consolidated all existing POPLAR-brand convenience stores in the region that
had wished to shift to a joint LAWSON POPLAR brand and all stores run by Lawson’s Tottori and Shimane
branch offices. As of the end of February 2017, it operates a total of 287 stores (of which 56 are LAWSONPOPLAR stores).
Furthermore, by building partnerships with dispensing pharmacy and drug store chains, we offer not only
OTC pharmaceuticals, cosmetics, and daily necessities, but also offer a more numerous assortment ofmerchandise than conventional LAWSON stores. The number of stores offering OTC pharmaceuticals hasreached 157 stores (includes 41 pharmacy LAWSON stores equipped with drug-dispensing pharmacies) as ofthe end of February 2017. Furthermore, with the addition of Lawson Kure Hironagahama store, the first store
serving as a nursing care hub center in Hiroshima Prefecture, which opened in July 2016, the number of stores
offering nursing care consultation services has reached 9 as of the end of February 2017. We will continue toengage in establishing convenience store models that address and deal with social changes such as the aging
population and increased health awareness.
With respect to LAWSON STORE100, we continued to increase the product composition ratio of 100-yen
items (excluding tax) by scaling down product portions to respond to customer needs for value, and4

strengthened our popular fruit and vegetable lineup. As a result, existing-store sales for fiscal 2016 exceeded
those for the previous fiscal year.
Consequently, the total number of LAWSON, NATURAL LAWSON, and LAWSON STORE100 stores
opened and closed during the current fiscal year stood at 1,108 and 413 stores, respectively, with the total
number of stores in Japan reaching 12,575 as of the end of February 2017. *3
In addition, the equity method affiliates Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson
Okinawa, Inc. operate 135 LAWSON chain stores in Kochi Prefecture, 191 LAWSON chain stores in
Kagoshima Prefecture and 210 LAWSON chain stores in Okinawa Prefecture, respectively, as of the end of
February 2017.
*3 The numbers of store openings and closings and total number of stores in Japan include stores operated
by both Lawson, Inc. and Lawson Sanin, Inc.
[Change in the Total Number of Domestic Stores]
Total stores as ofFebruary 29, 2016

Change during
fiscal year

Total stores as ofFebruary 28, 201710,937699

11,636

NATURAL LAWSON

134

7

141

LAWSON STORE100

809

(11)

798

11,880695

12,575LAWSON

Total(Note) These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.
[Number of LAWSON stores by prefecture (February 28, 2017)]
Prefecture

Numberof stores

Hokkaido

637

Ibaraki

193

Kyoto

328

Ehime

214

Aomori

234

Tokyo

1,588

Shiga

154

Tokushima

134

Akita

188

Kanagawa

872

Nara

128

Fukuoka

473

Iwate

169

Shizuoka256

Wakayama

137

Saga

68

Miyagi227

Yamanashi

122

Osaka

1,048

Nagasaki

106

Yamagata

105

Nagano

173

Hyogo

663

Oita

176

Fukushima

130

Aichi

629

Okayama172

Kumamoto

145

Niigata

148

Gifu

164

Hiroshima

199

Miyazaki104

Tochigi

157

Mie

131

Yamaguchi

122

Total
(domestic)

12,575

Gunma

115

Ishikawa

104

Tottori

137

Saitama599

Toyama186

Shimane

149

Chiba

550

Fukui

110

Kagawa131

Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture(Note) These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.

5

Numberof stores

[Other]With regards to our efforts in home convenience, we will strive to enhance customer convenience byadditionally partnering with other companies to establish an “Open Platform” based on the networks of
LAWSON stores that offer a range of services encompassing ordering, collection, and home delivery.
With respect to distribution, from March 2016, we commenced operation of our distribution center, a threetemperature-zone distribution center offering an integrated environment for chilled, frozen and ambienttemperature foods. Through independent operation of the distribution center, we aim at further streamlining theentire supply chain and improving store productivity.
At the LAWSON Panasonic-Mae store, our experimental “Next-generation Convenience Store” inR
Moriguchi-shi, Osaka, we started testing the industry’s first fully automated cash register, “Regi Robo○,” using

radio-frequency identification (RFID.) We will promote productivity enhancements with the aim of improving
our customers’ convenience and the efficiency of increasingly complicated store operations by eliminating
scanning at the time of payment to speed up the payment process in the future.
As a result, Domestic Convenience Store Business posted gross operating revenue of 424,608 million yen(up 6.5% from previous fiscal year) and segment profit of 59,865 million yen (down 0.2% from previous fiscal
year.)(Seijo Ishii Business)
The number of directly operated Seijo Ishii stores, a high-end supermarket chain offering quality foods,
reached 132 as of the end of February 2017. Sales remained robust, and in April 2016, the first Seijo Ishii store
combining “Le Bar a Vin 52” was opened in Atre Ebisu West. With respect to merchandise, a new private branddubbed “desica” was launched, which achieved strong sales. Collaborations between Seijo Ishii Business andour Domestic Convenience Store Business were promoted, such as expanding Seijo Ishii’s selection of wineoffered at NATURAL LAWSON stores, jointly importing confectionery, and rolling out jointly developed
products including nuts and cup soup. We will continue to improve the brand strength and corporate value of
SEIJO ISHII CO., LTD., which marked its 90th anniversary in February 2017, while absorbing the company’s
product development expertise, knowhow acquired as a manufacturing retailer, and sales methods, to strengthen
our Domestic Convenience Store Business.
As a result, Seijo Ishii Business posted gross operating revenue of 85,824 million yen (up 24.4% fromprevious fiscal year) and segment profit of 6,911 million yen (up 37.2% from previous fiscal year). Regarding
SEIJO ISHII CO., LTD, its balance sheet date was changed therefore segment profit represented a 14-month
period.
(Entertainment-related Business)
With regards to Entertainment-related Business, Lawson HMV Entertainment, which forms the core ofentertainment related business, continued to secure top position in the ticketing industry. Regarding HMV stores

6

that combine selling music CDs and DVDs, the second “HMV Record Shop,” a used analog record and CD store,
was opened in Shinjuku, and was well received. The number of HMV stores that sell music CDs and DVDs totaled
55 as of the end of February 2017. We will strive to offer an even wider selection of products and services to better
respond to customer needs, for example, by expanding our entertainment business. In April 2016, United Cinemas
Co., Ltd. opened the “Premium Dining Cinema” in Fukuoka-shi, Kyushu, as the first cinema in Japan wheremoviegoers can dine while enjoying a film. Furthermore, United Cinemas Co., Ltd. operates a total of 38 sites
with 340 screens (includes those under management contract) at its cinemas nationwide as of the end of February
2017.
As a result, Entertainment-related Business posted gross operating revenue of 72,936 million yen (down 2.8%
from previous fiscal year) and segment profit of 3,988 million yen (down 2.1% from previous fiscal year).
(Other Business)
In addition to the aforementioned businesses, the Group is also involved in the Overseas Business and the
Financial Services-related Business.
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the People’s
Republic of China, Thailand, Indonesia, the Philippines, and the United States of America (Hawaii).
In China, we marked our 20th anniversary in July 2016 since we became the first Japanese convenience store
to advance into Shanghai. We made inroads into Wuhan in China’s Hubei Province in May 2016. In February
2017, the total number of stores in China exceeded the 1,000 mark.
[Distribution of LAWSON Brand Stores Overseas by Region]
Number of stores(As of February 29,
2016)

Changeduring fiscal
year

Number of stores(As of February 28,
2017)

China Shanghai and surrounding area

458

207

665

China Chongqing

110

26

136

China Dalian

53

29

82

China Beijing

34

14

48

China Wuhan

－

72

72

Thailand

47

38

85

Indonesia

38

(2)

36

Philippines

16

14

30

United States of America Hawaii

2

－

2

758

398

1,156

Country/Region

Total

Lawson ATM Networks, Inc., which operates a Financial Services-related Business, continued contributing
to consolidated results owing to an increase in the number of ATMs installed. We strengthened partnerships
with new financial institutions bringing the total number of our financial institution partners to 87 nationwide

7

(up 7 from previous fiscal year), including online banks, and the number of ATMs installed nationwide to11,912 (up 711 from previous fiscal year) as of the end of February 2017.
In November 2016, we established Lawson Bank Preparatory Company, Inc., which aims to establish a bankleveraging Lawson’s previous experience in financial services, and meet necessary preconditions for obtaining
approval from the relevant authorities.
As a result, Other Business posted gross operating revenue of 55,147 million yen (up 17.5% from previous
fiscal year) and segment profit of 2,999 million yen (down 12.5% from previous fiscal year).
[Environmental and Social Contribution Activities]
As part of our initiative to reduce our environmental impact, we will endeavor to save energy and resources
as well as promote waste reduction not only at LAWSON stores but also throughout the entire supply chain.
In particular, we promoted the introduction of a state-of-the-art energy-saving chlorofluorocarbon-free (CO2refrigerant) refrigerator/freezer system with the aim of reducing electricity consumption at our stores. As of theend of February 2017, the system had been installed in approximately 2,000 stores. Compared to conventional
equipment used in our stores, the new system can reduce electricity consumption per store by around 12%. By
putting into practical use an energy-saving package model centered on this system, the Group will aim toachieve its target of using 20% less electricity per store by fiscal 2020 compared to the fiscal 2010 level. In
February, we opened a pilot store focusing on environmental friendliness that aims to become a “Smart Energy
Store” in Kodaira-shi, Tokyo. This store is the first convenience store to be selected by the Japanese Ministryof Economy, Trade and Industry as a “Virtual Power Plant (VPP) Construction and Demonstration Project.”Through remote control of devices and energy saving using Internet of Things (IoT), the store is ademonstration project seeking innovative new ways to achieve energy conservation.
With regard to reducing waste, we are making efforts to improve order-receiving accuracy by introducing asemi-automatic ordering system for ordering products. Moreover, we are recycling unsold food and waste
cooking oil from stores, which are being reused as feed and fertilizer, and biodiesel fuel, respectively. In Tottori
Prefecture, in particular, unsold food from stores in Sakai Minato-shi is processed into compost, which is usedat the Lawson Farm Tottori to produce daikon radish used in our popular Oden (Japanese-style stew).
We continued to pursue business activities with the aim of realizing the Group’s corporate philosophy of“Creating Happiness and Harmony in Our Communities,” and also carried out fund-raising activities fordisasters including the Kumamoto Earthquake, 2016 Typhoon No.10, and the catastrophic fire in Itoigawa-shi,
Niigata Prefecture.
As a member of society, we will continue to make unified group-wide efforts to implement initiatives that
aim to address social and environmental issues together with our franchised stores, customers and business
partners.

8(2) Profit and Loss
In terms of operating results for the fiscal year, gross operating revenue increased to 631,288 million yen (up8.2% from previous fiscal year, operating income increased to 73,772 million yen (up 1.7% from previous fiscal
year), and ordinary income increased to 73,014 million yen (up 4.9% from previous fiscal year). Profit
attributable to owners of parent increased to 36,400 million yen (up 16.0% from previous fiscal year).
(3) Outlook for Fiscal 2017
Outlook for the next fiscal year (2017 fiscal year ending February 28, 2018)
1H of 2017 fiscal year
Forecast (Millions of yen) YoY (%)

2017 fiscal year
Forecast (Millions of yen) YoY (%)

Gross operating revenue

334,000

109.1

675,000

106.9

Operating income

37,50093.9

68,50092.9

Ordinary income
Profit attributable toowners of parent

36,00093.8

65,50089.7

21,00092.9

33,50092.0(4) Analysis of Financial Position① Total assets, total liabilities, total net assets analysis

Current assets increased by 25,069 million yen from the end of the previous fiscal year to 249,278 million
yen, mainly reflecting an increase of 9,434 million yen in accounts receivable-due from franchised stores andan increase of 10,627 million yen in accounts receivable-other. Non-current assets increased by 38,296
million yen from the end of the previous fiscal year to 617,299 million yen, mainly reflecting an increase of
21,749 million yen in property and store equipment and an increase of 10,204 million yen in intangible assets
such as software. Consequently, total assets increased by 63,365 million yen from the end of the previous
fiscal year to 866,577 million yen.
Current liabilities increased by 37,175 million yen from the end of the previous fiscal year to 356,783
million yen, mainly reflecting an increase of 29,190 million yen in short-term loans payable. Non-current
liabilities increased by 13,190 million yen from the end of the previous fiscal year to 223,798 million yen,mainly reflecting an increase of 11,923 million yen in lease obligations. Consequently, total liabilities
increased by 50,366 million yen from the end of the previous fiscal year to 580,581 million yen.
Net assets increased by 12,998 million yen from the end of the previous fiscal year to 285,995 million
yen reflecting an increase of 10,553 million yen in retained earnings. Consequently, shareholders’ equity ratio
was 31.7%, down from 32.9% as of the end of the previous fiscal year.
② Cash flows during fiscal year 2016

Cash and cash equivalents at February 28, 2017 decreased by 2,101 million yen from the end of theprevious fiscal year to 67,692 million yen.
Net cash provided by operating activities was 99,864 million yen, a decrease of 12,340 million yen fromthe previous fiscal year, mainly because of an increase in notes and accounts receivable-trade and a decreasein notes and accounts payable-trade.
Net cash used in investing activities was (76,227) million yen, a decrease of 7,570 million yen from the9previous fiscal year, mainly because of increases in purchase of property and store equipment and purchaseof intangible assets.
Net cash used in financing activities was (25,638) million yen, an increase of 24,563 million yen from theprevious fiscal year, mainly because of an increase in net increase in short-term loans payable.
(Reference) Trends in cash flow indicators
2015 fiscal year

2016 fiscal year 2017 fiscal year

Shareholders’ equity ratio (%)

33.5

32.9

31.7

Shareholders’ equity ratio on market value basis (%)

102.3

108.3

89.4

Interest-bearing debt/cash flow ratio (years)

1.4

1.5

2.2

Interest coverage ratio (times)

75.3

57.5

51.9

(Note) Shareholders’ equity ratio: Shareholders’ equity/Total assets
Shareholders’ equity ratio on market value basis: Market capitalization/Total assets
Interest-bearing debt/cash flow ratio: Interest-bearing debt/Cash flow provided by operating
activities
Interest coverage ratio: Cash flow provided by operating activities/Interest expense
1. All indices are calculated using consolidated financial figures.
2. Market capitalization is calculated by multiply closing share price at the end of fiscal year with thenumber of shares outstanding at the end of fiscal year (excluding treasury shares)
3. The figure for net cash provided by operating activities in the consolidated statements of cash flows
is used as cash flow provided by operating activities. Interest-bearing debt refers to the sum of all
liabilities in the consolidated balance sheets on which interest is paid. The figure for interest paid in
the consolidated statements of cash flows is used as interest expense.

10

2. Management Policy(1) Basic Management Policy
Lawson has formulated its corporate philosophy as the basis for all its corporate activities.
[Corporate Philosophy]“Creating Happiness and Harmony in Our Communities”
Furthermore, under this corporate philosophy, the Company has set a new vision in order to clarify its goals
and orient all business activities toward achieving these goals.
[Vision]“To be a leading company in execution.
Think through customers’ needs and changes, execute with speed and become an essential part of ourcommunities.”
At the same time, in order for this vision to succeed, we also have revised our Code of Conduct to clarify theactions required for each individual and to move forward with everyone united.
[Code of Conduct]
1. Think as customers, communities and stores.
2. Master the basics and strive to innovate.
3. Improve the quality and speed of the Plan-Do-Check-Act cycle.
4. Act with discipline, take initiative and succeed as a team.
5. Grow as individuals and support the growth of our team members.
(2) Performance Indicators (Target)
From the perspective of medium-and-long-term management strategy, the Group regards return on equity(ROE) as the best measure of optimal utilization of shareholders’ equity, and believes that sustained profit
growth is essential for its improvement. The Group intends to establish a unique next-generation convenience
store model together with franchise store owners so that each store can become the leader in its area by
increasing daily sales. We will also aim to achieve consolidated operating income of 100 billion yen in themedium-and-long-term by enhancing store networks inside and outside Japan.
(3) Medium-and-Long-Term Management Strategies
The business environment facing convenience stores is defined by several factors, including: population
decline arising from Japan’s declining birthrate and aging society; progression of oligopolization; and stronger
environmental awareness. Never before has the convenience store industry experienced such an environment.
Against this backdrop, the Group recognizes the following as priority issues ahead. The Group believes that its
core business strategies must address these priority issues.
(4) Priority Issues of the Group① Provide customers with enhanced support in their daily lives

In an effort to become an indispensable part of customers’ lives in local communities, we will strive to further
expand our merchandise assortment to include a wider variety of daily necessities and ready-made dishes in11

addition to products and services offered by conventional convenience stores.
② Evolve into a manufacturing retailer targeting small catchment areas

By evolving into a manufacturing retailer deeply engaged in activities across the entire value chain, fromprocurement of raw materials and ingredients to manufacturing, logistics and sales, we will strive to achieve
cost reduction and quality improvement in our products to further strengthen our product appeal.
③ Make the most of digital technology and improve store productivity through distribution reforms

In today’s aging society with a low birth rate, various human resources, such as housewives, older workers,
and foreign nationals, are being utilized for store operations. By reviewing complicated work processes, making
maximum use of digital technology and re-examining our distribution system, we are making efforts to improve
productivity and create efficient and fulfilling work environments for a diverse workforce.
④ Take on challenges in future growth areas

We will continue to take on challenges to establish new business models in future growth areas not only inour domestic convenience store business, the core business of the Group, but also in various other fields suchas Seijo Ishii Business, Entertainment-related Business, Overseas Business, Financial Services-related Business.
We will also work hard to make maximum use of each Group company’s distinctive features to generatesynergistic effects.
⑤ Promote internal control systems and address operating risks

In order to ensure business continuity, it is imperative to foster the Group’s internal control in its entirety andaddress operating risks. In addition, we believe that taking a proactive approach to corporate governance is not
only strongly desired by all the stakeholders of the Group, but also the right way to enhance corporate value.
We will therefore continue to focus on promoting internal control and addressing operating risks.
Lawson became a consolidated subsidiary of Mitsubishi in February 2017, which has resulted in a parentsubsidiary listing. The Group plans to appoint several independent officers, who have no conflict of interest
with general shareholders, as directors. In addition, the Nomination and Compensation Advisory Committee,
consisting solely of non-executive directors and corporate auditors, has been formed on a voluntary basis. The
Committee offers advice and makes proposals to the Board of Directors on directors’ compensation and suitable
candidates for representative directors and directors, so as to ensure transparency of management and fairjudgment.
(5) Other Important Managerial Matters① Improving New Merchandise Development Capabilities

While strengthening our ability to develop healthy, safe and reliable original merchandise, we will expand
our range of products that serve as alternatives to those offered by supermarkets to better support the customers’
overall daily life. Furthermore, the Group will proactively develop merchandise suited to regional preferencesby focusing on such aspects as taste and price. We will also rebuild our value chain spanning from merchandise
development to procurement of ingredients, production, and logistics and leverage the Ponta card data to best
effect. In this process, the Group aims to raise its original added value and develop merchandise that garners astrong customer response.

12

② Improving Store Operation Capabilities

With the aim of creating stores tailored to local customers in each neighborhood, we will promotemerchandise assortments from the customers’ perspective by continuing to utilize Ponta card data. In addition,by increasing our use of the core IT system, we will strive to improve ordering precision in order to reduce
sales opportunity losses and product disposal losses. We will also seek to enhance the education and training ofsupervisors to enable more practical supervision of member stores.
③ Reinforcing Store-Development Capabilities

With a view to creating stores that achieve high ROI, we will prioritize customer convenience andprofitability for both franchise store owners and headquarters in opening new stores by following the Group’s
proprietary store development standard focused on ROI. Furthermore, we will strive further to expand store
network by building alliances with other companies.
④ Tailoring Store Formats to Suit Local Characteristics

Conscious that market needs are becoming increasingly complex and diversified, the Group provides store
formats that offer retail spaces and merchandise assortments to suit the location. As for the Group’s store
development strategy, regular LAWSON stores will be opened to target customers seeking new merchandise,famous brand goods, and convenient services; LAWSON STORE100 stores will be opened to target customers
seeking perishables packaged in small quantities and easy-to-understand, standardized prices such as 100-yen
products and fresh food. NATURAL LAWSON and Seijo Ishii stores will be opened to target customers seeking
high quality products.
⑤ Enhance convenience by fostering a variety of services

For the purpose of enhancing customer convenience, we will offer a wider variety of services based on the
Ponta card program, Loppi multimedia terminals, and ATM services. In addition, we will expand our e-payment
services in an effort to allow customers to make payments more conveniently.
⑥ Reviewing the Franchise Package to Promote Co-existence and Co-prosperity for Franchise Store

Owners and Headquarters
In our endeavor to address changes occurring in the retail industry, we will promote co-existence and coprosperity for both franchise store owners and headquarters by increasing earnings on a stable and ongoingbasis through the Group’s proprietary initiatives, such as expanding the customer base and reducing opportunity
loss, and by revising franchise agreements.
⑦ Accelerating Business Reform through Capital and Business Alliances

The Group continues to effectively respond to the rapidly changing social environment and the needs ofcustomers through capital and business alliances that enable it to improve profitability for both franchise store
owners and the Group by seeking maximum benefit and efficiency from the alliances.

3. Basic Approach to Selection of Accounting Standards
The Group applies Japanese generally accepted accounting principles, and it has no plan to apply
International Financial Reporting Standards (IFRS) for the time being. The Group intends to respond
appropriately to the application of the IFRS by considering the situation prevailing in Japan and overseas.

13

4. Consolidated Financial Statements(1) Consolidated Balance Sheet
As of February 29, 2016 and February 28, 2017
(Millions of yen)

AssetsCurrent assets:
Cash and deposits
Accounts receivable-due from franchised stores
Lease receivables
Merchandise
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and store equipment:
Buildings and structures, net
Tools, furniture and fixtures, net
Land
Leased assets, net
Construction in progress
Other, net
Total property and store equipment
Intangible assets:
Software
Goodwill
Trademark right
Other
Total intangible assets
Investments and other assets:
Investment securities
Long-term loans receivable
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

14

Previous fiscal year
As of
February 29, 2016

Current fiscal year
As of
February 28, 2017

69,79730,547
5,905
17,97667,736
4,524
27,729(8)
224,209

68,11539,982
12,33618,13078,363
3,907
28,493(50)
249,278

167,098
16,307
9,794
101,546
7,870
143
302,761

183,747
18,581
9,701
110,472
1,742
265
324,510

26,37746,30911,381
527
84,59537,56746,041
10,691499
94,80022,32540,88692,49522,016
14,782(860)
191,645579,002803,21222,28344,495
95,594
23,13813,444(968)
197,988617,299
866,577

(Millions of yen)

Liabilities
Current liabilities:
Accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Accounts payable-other
Income taxes payable
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities:
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for retirement benefits to executive officers
and audit and supervisory board members
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity:
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

15

Previous fiscal year
As of
February 29, 2016

Current fiscal year
As of
February 28, 2017

112,225
1,990
575
23,89857,2148,500
101,908
3,832
9,462
319,607

110,834
31,180575
28,012
59,734
9,876
103,156
3,427
9,985
356,783

57,562
88,060－56,70399,983
957

413

332

12,186
24,66427,719210,607530,215

13,083
26,95825,779223,798
580,581

58,506
47,697
154,608(1,280)259,532

58,50649,083
165,162(1,210)271,541

801
(566)
5,531
(906)
4,860
307
8,296
272,997803,212

274
(618)
4,610
(927)
3,338
314
10,800285,995
866,577

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
For the fiscal years ended February 29, 2016 and February 28, 2017
(Millions of yen)

Gross operating revenue
Net sales
Cost of sales
Gross profit
Operating revenue:
Income from franchised stores
Other operating revenue
Total operating revenue
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Compensation income
Share of profit of entities accounted for using equity
methodGain on valuation of derivatives
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Loss on cancellation of leases
Loss on disaster
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on change in equity
Total extraordinary income
Extraordinary losses:
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Other
Total extraordinary losses
Profit before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

16

Previous fiscal year
From March 1, 2015
to February 29, 2016
583,452
227,606
155,949
71,656

Current fiscal year
From March 1, 2016
to February 28, 2017
631,288
254,169
174,255
79,914

261,681
94,165355,846
427,503354,961
72,541

275,312
101,806
377,119457,033
383,260
73,772

759
646

725
524

292

602

－
1,155
2,853

409
1,820
4,081

1,903
1,953
－
1,916
5,772
69,622

1,919
1,274
772
873
4,839
73,014

892
892

－
－

228
4,342
10,542－
15,11255,402
19,233
4,031
23,26532,136755
31,381

294
3,554
9,535
1,174
14,55858,45618,9282,453
21,381
37,074674
36,400Consolidated Statement of Comprehensive Income
For the fiscal years ended February 29, 2016 and February 28, 2017
(Millions of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of parent
Non-controlling interests

17

Previous fiscal year
From March 1, 2015
to February 29, 2016
32,136

Current fiscal year
From March 1, 2016
to February 28, 2017
37,074

1,195
－
(15)
(387)
792
32,928

(527)
(52)
(928)
(22)
(1,530)35,54332,227701

34,878664

(3) Consolidated Statement of Changes in Equity
Previous fiscal year ended February 29, 2016 (From March 1, 2015 to February 29, 2016)(Millions of yen)
Shareholders’ equity

Balance at beginning of current period

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders' equity

58,506

47,696

147,177(1,272)

252,107

Cumulative effects of changes inaccounting policies

1,411

Restated balance

58,506

47,696

1,411

148,588(1,272)

253,519

Changes of items during period
Change in ownership interest of parent due
to transactions with non-controllingshareholders－

Dividends of surplus(24,249)(24,249)

Change of scope of consolidation(1,111)(1,111)

Profit attributable to owners of parent

31,381

31,381

Purchase of treasury shares
Disposal of treasury shares

0

(8)

(8)

0

1

Reversal of revaluation reserve for land－

Exercise of subscription rights to shares(Delivery of treasury shares)－

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period

－

0

6,020

(7)

6,013

58,506

47,697

154,608(1,280)259,532(Millions of yen)
Accumulated other comprehensive income
Valuation difference on
Revaluation
available-for-salereserve for land
securities

Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

(393)

(566)

Foreign currency Remeasurements Total accumulatedtranslationof defined benefit other comprehensive
incomeadjustment
plans

5,492

(518)

4,014

Subscription
NonTotal net
rights tocontrolling
assetssharesinterests
223

7,452

263,797
1,411

(393)

(566)

5,492

(518)

4,014

223

7,452

265,209

Changes of items during period
Change in ownership interest ofparent due to transactions with
non-controlling shareholders－

Dividends of surplus(24,249)

Change of scope of consolidation(1,111)

Profit attributable to owners ofparent31,381

Purchase of treasury shares(8)

Disposal of treasury shares

1

Reversal of revaluation reserve for
land
Exercise of subscription rights toshares(Delivery of treasury shares)
Net changes of items other thanshareholders' equity

－
－
1,195

－

38

(387)

845

84

844

1,774

Total changes of items during
period

1,195

－

38

(387)

845

84

844

7,788

Balance at end of current period

801

(566)

5,531

(906)

4,860

307

8,296

272,99718

Current fiscal year ended February 28, 2017 (From March 1, 2016 to February 28, 2017)(Millions of yen)
Shareholders’ equity
Capital stock

Capital surplus

Retained earnings

58,506

47,697

154,608

Balance at beginning of current period

Treasury shares

Total shareholders' equity(1,280)259,532

Cumulative effects of changes inaccounting policies－

Restated balance

58,506

47,697

154,608(1,280)259,532

Changes of items during period
Change in ownership interest of parent due
to transactions with non-controllingshareholders

1,387

Dividends of surplus

1,387(24,751)(24,751)

Change of scope of consolidation(1,130)(1,130)

Profit attributable to owners of parent

36,40036,400Purchase of treasury shares

(3)

(3)

Disposal of treasury shares－

Reversal of revaluation reserve for land

52

Exercise of subscription rights to shares(Delivery of treasury shares)

52

(0)

(17)

72

54

－

1,386

10,55369

12,00958,50649,083

165,162(1,210)271,541

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period(Millions of yen)
Accumulated other comprehensive income
Valuation difference on
Revaluation
available-for-salereserve for land
securities

Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

801

(566)

Foreign currency Remeasurements Total accumulatedtranslationof defined benefit other comprehensive
incomeadjustment
plans

5,531

(906)

4,860

Subscription
NonTotal net
rights tocontrolling
assetssharesinterests
307

8,296

272,997
－

801

(566)

5,531

(906)

4,860

307

8,296

272,997

Changes of items during period
Change in ownership interest ofparent due to transactions with
non-controlling shareholders

1,387

Dividends of surplus(24,751)

Change of scope of consolidation(1,130)

Profit attributable to owners ofparent36,400Purchase of treasury shares(3)

Disposal of treasury shares－

Reversal of revaluation reserve for
land
Exercise of subscription rights toshares(Delivery of treasury shares)
Net changes of items other thanshareholders' equity

52
54
(527)

(52)

(920)

(21)

(1,521)

7

2,503

989

Total changes of items during
period

(527)

(52)

(920)

(21)

(1,521)

7

2,503

12,998

Balance at end of current period

274

(618)

4,610

(927)

3,338

314

10,800285,995

19

(4) Consolidated Statement of Cash Flows
For the fiscal years ended February 29, 2016 and February 28, 2017
(Millions of yen)Previous fiscal year
From March 1, 2015
to February 29, 2016
Net cash provided by (used in) operating activities:
Profit before income taxes
Depreciation and amortization
Impairment loss
Interest income
Interest expenses
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in accounts receivable-other
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other
Increase (decrease) in deposits received
Increase (decrease) in net defined benefit liability
Other
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property and store equipment
Purchase of intangible assets
Purchase of shares of subsidiaries and associates
Decrease (increase) in long-term loans receivable - net
Purchase of long-term prepaid expenses
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Cash dividends paid
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting fromchange of scope of consolidation
Cash and cash equivalents at end of period

20

Current fiscal year
From March 1, 2016
to February 28, 2017

55,402
49,293
10,542
(759)
1,903
4,342
6,307
(12,619)
9,548
12,620(1,724)
696
1,828
137,380759(1,950)(23,985)
112,205

58,45656,199
9,535
(725)
1,919
3,554
(9,542)(10,746)(1,421)
2,724
1,243
747
7,329
119,273719(1,923)(18,204)
99,864(1,301)
1,301(40,883)(15,609)(3,361)(3,631)(1,801)(3,369)(68,657)

(842)
1,763
(42,063)(18,892)(1,805)(3,917)(3,112)(7,358)(76,227)250(25,302)(24,249)(899)(50,201)(451)(7,105)76,75429,190(30,054)(24,751)(22)(25,638)(435)(2,436)
69,793

144

335

69,79367,692

(5) Notes to Consolidated Financial Statements(Going Concern Assumption)
Not Applicable.
(Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 20(Domestic)
Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
BestPractice, Inc.
SCI, Inc.
Lawson Store100, Inc.
Lawson HMV Entertainment United Cinemas Holdings, Inc.
United Entertainment Holdings Co., Ltd.
United Cinemas Co., Ltd.
SEIJO ISHII CO., LTD.
Lawson Sanin, Inc.
(Foreign)

Chongqing Lawson, Inc.
Shanghai Lawson, Inc.
Dalian Lawson, Inc.
Lawson (China) Holdings, Inc.
Saha Lawson Co., Ltd.
Shanghai Le Song Trading Co., Ltd.
Shang Hai Gong Hui Trading Co., Ltd.
Zhejiang Lawson, Inc.
Beijing Lawson, Inc.
BEIJING LUOSONG Co., Ltd.

Among the companies mentioned above, Lawson Sanin, Inc. has been newly included in scope of
consolidation since its establishment during the current fiscal year.
On March 1, 2016, Lawson Mart, Inc. changed its corporate name to Lawson Store100, Inc.
On February 27, 2017, Shanghai Hualian Lawson, Inc. changed its corporate name to Shanghai Lawson,
Inc.
(2) Names of nonconsolidated subsidiaries and others(Domestic)
LAWSONWILL, Inc.
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Seikaken, Inc.
Lawson Syuhan, Inc.
TOKYO EUROPE TRADE CO., LTD.
SG Lawson, Inc.
Lawson Travel, Inc.
Lawson Digital Innovation Inc.
Lawson Bank Preparatory Company, Inc.
(Foreign)

Lawson USA Hawaii, Inc.

(Reasons for exclusion from the scope of consolidation)
The above nonconsolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, profit or loss (corresponding to equity interest)
and retained earnings (corresponding to equity interest) and others have no material influence on the
consolidated financial statements.

21

2. Application of the equity method(1) Equity-method associates: 3(Domestic)
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.
(2) Nonconsolidated subsidiaries excluded from the scope of the equity-method application(LAWSONWILL, Inc., HATS UNLIMITED CO., LTD., Food Marketing Japan, Inc., Seikaken, Inc.,
Lawson Syuhan, Inc., TOKYO EUROPE TRADE CO., LTD., SG Lawson, Inc., Lawson Travel, Inc.,
Lawson Digital Innovation Inc., Lawson Bank Preparatory Company, Inc. and Lawson USA Hawaii, Inc.)and entities excluded from the scope of the equity-method application (Double Culture Partners Co., Ltd.,
Daichi Wo Mamoru Kai, Co., Ltd., Loyalty Marketing, Inc., MC Retail Energy Co., Ltd., Lawson Staff,
Inc., AUGUSARENA CORPORATION., Lawson System Labo LLP, L ・ TF Co., Ltd., StageAround
TOKYO Production Committee, PG Lawson Company, Inc., Lawson Farm Chiba and others) were
excluded from the scope of the equity-method application because their profit or loss (corresponding toequity interest) and retained earnings (corresponding to equity interest) of these entities is not significant
either individually or in aggregate to the consolidated financial statements.
3. Fiscal year end of the consolidated subsidiaries
The balance sheet date of Chongqing Lawson, Inc., Shanghai Lawson, Inc., Dalian Lawson, Inc., Lawson(China) Holdings, Inc., Saha Lawson Co., Ltd., Shanghai Le Song Trading Co., Ltd., Shang Hai Gong Hui
Trading Co., Ltd., Zhejiang Lawson, Inc., Beijing Lawson, Inc. and BEIJING LUOSONG Co., Ltd. is
December 31. In order to prepare the consolidated financial statements, the Company used these companies’
financial information prepared as of such balance sheet date and significant transactions which occur between
the balance sheet date and the consolidated balance sheet date are adjusted as required for consolidation.
From the current fiscal year, the balance sheet date of SEIJO ISHII CO., LTD. was changed from the endof December to the end February to be consistent with the consolidated balance sheet date (fiscal years
beginning March 1 and ending on the final day of February of the following year), which will aims to improvethe efficiency of management and business management, such as budget compilation and performance
management of the Group.
Thus, its accounting period was 14 months for the current fiscal year. Furthermore, during the two-month
period from January 1, 2017 to February 28, 2017, it reported gross operating revenue of 12,133 million yen,operating income of 1,114 million yen, ordinary income of 1,101 million yen, and profit before income taxesof 1,034 million yen.
The fiscal year end date for the other consolidated subsidiaries corresponds with the consolidated balance
sheet date.

22

4. Summary of Significant Accounting Policies(1) Valuation basis and method for significant assets① Securities:
Marketable securities and investments in securities:
Available-for-sale securities:
Securities whose market value is readily determinable:
Recorded at market value with net unrealized gains and losses as a separate component of net
assets. The cost of securities sold is determined based on the moving-average method.
Other:
Stated at cost determined by the moving-average method.
② Derivatives:
Accounted for using the market value method.
③ Inventories:
Merchandise:Stated at cost determined mainly by the retail method (the book value in the balance sheet iswritten down based on the decline in profitability).
(2) Depreciation method of depreciable significant assets① Property and store equipment (except for leased assets):
Mainly computed by the straight-line method.
The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8 years
for tools, furniture and fixtures.
② Intangible assets (except for leased assets):
Computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which isthe estimated useful life. Furthermore, for right of trademark, amortization is mainly computed using
the straight-line method over 20 years.
③ Leased assets:
Leased assets related to finance leases that do not transfer ownership of leased property
The Company applies the straight-line method using the lease term as the useful life and a residual
value of zero.
(3) Accounting standard for significant reserves① Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
② Provision for bonuses:
Provision for bonuses is provided for payments of employees’ bonuses based on the estimated amounts.
③ Provision for retirement benefits to executive officers and audit & supervisory board members:
Provision for retirement benefits to executive officers of the Company and audit & supervisory board
members of consolidated subsidiaries is recorded under internal regulations.
(4) Accounting method for retirement benefits① Period attributable method of estimated amount of retirement benefits
In calculating retirement benefit obligation, in order to attribute estimated amount of retirement benefits
in the period up to the end of the current fiscal year, it is based on the benefit formula basis.
② Cost treatment method of actuarial difference and prior service cost
Prior service cost is amortized starting the fiscal year incurred mainly on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theirrecognition.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theirrecognition.
Certain consolidated subsidiaries apply the simplified method to estimate the amount required forvoluntary resignations at the end of the fiscal year as the retirement benefit liability in order to calculate
23net defined benefit liability and retirement benefit expenses.
(5) Significant foreign currency transactions and foreign currency financial statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the consolidated balance sheet date. The foreignexchange gains and losses from translation are recognized in the consolidated statement of income. The
consolidated balance sheet accounts as well as revenue and expense accounts of foreign subsidiaries andaffiliated companies are translated into Japanese yen at the current exchange rate as of the consolidatedbalance sheet date except for shareholders’ equity, which is translated at the historical rate. Differences
arising from such translation are shown as “foreign currency translation adjustments” and “noncontrolling interests,” a separate component of net assets.
(6) Amortization method and period of goodwill
Goodwill is amortized on a straight-line basis over the relevant years, depending on the reason for theoccurrence of goodwill, with a maximum of 20 years.
(7) Cash and cash equivalents in the consolidated statement of cash flows
Cash and cash equivalents in the consolidated statement of cash flows include cash on hand, demand
deposits and short-term investments due within 3 months from the acquired date, which are easily
convertible into cash with little risk of value fluctuation.
(8) Other significant items related to the preparation of consolidated financial statements
Accounting for consumption tax:
Consumption tax and local consumption tax are accounted for using the tax exclusion method.

24

(Changes in Accounting Policies)
The Company and its domestic consolidated subsidiaries are applying “Accounting Standard for Business
Combinations” (Accounting Standards Board of Japan (ASBJ)) Statement No. 21, revised September 13, 2013;
hereinafter, “Business Combination Accounting Standard”), “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, revised September 13, 2013; hereinafter, “Consolidated AccountingStandard”) and “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, revised September
13, 2013; hereinafter, “Business Divestiture Accounting Standard”), etc., from the fiscal year ended February
28, 2017. Under these revised accounting standards, any differences arising from changes in a parent’s
ownership interests in subsidiaries when the parent retains control are recognized in capital surplus andacquisition-related costs are expensed in the fiscal year in which they were incurred. Furthermore, the Company
applies a method in which any adjustments to the allocation of acquisition costs arising from the finalizationof provisional accounting treatment are reflected in the consolidated financial statements for the period in which
the business combination occurs. In addition, the presentation of profit, etc., was changed and “Minority
interests” was changed to “Non-controlling interests.” The consolidated financial statements for the previous
fiscal year have been reclassified to reflect this change in presentation.
In the consolidated statement of cash flows, the Company changed to a method of recording cash flows
related to changes in ownership interests in subsidiaries that do not result in change in scope of consolidation
under “Net cash provided by (used in) financing activities”, and recording cash flows related to expenses
incurred in relation to the purchases of shares of subsidiaries resulting in change in scope of consolidation and
expenses incurred in relation to changes in ownership interests in subsidiaries that do not result in change inscope of consolidation under “Net cash provided by (used in) operating activities”.
The Company has applied the transitional treatment prescribed in Article 58-2 (4) of the Business
Combination Accounting Standard, Article 44-5 (4) of the Consolidated Accounting Standard, and Article 574 (4) of the Business Divestiture Accounting Standard from the beginning of the fiscal year ended February 28,
2017. Meanwhile, the Company follows the transitional treatment set forth in Article 58-2 (1) of the Business
Combination Accounting Standard in reviewing the allocation of acquisition-related costs resulting from thefinalization of provisional accounting treatment for business combinations that take effect from the beginningof the fiscal year ended February 28, 2017.
For the consolidated statement of cash flows, the Company follows the transitional treatment set forth in
Article 26-4 of the Practical Guidelines for the Preparation of Statement of Cash Flows in Consolidated
Financial Statements, etc., and has not reclassified comparative information.
As a result of this change, capital surplus at the end of the current fiscal year increased by 1,387 million yen.
In addition, profit before income taxes for the current fiscal year decreased by 2,583 million yen. The year-end
balance of capital surplus in the consolidated statement of changes in equity for the current fiscal year increased
by 1,387 million yen.
The impact on per share information is described in the relevant section.

25

(Accounting Standards Issued but not yet Effective)・ “Implementation Guidance on Recoverability of Deferred Tax Assets” (Accounting Standards
Implementation Guidance No.26, March 28, 2016)(1) Outline
With regard to treatments concerning the recoverability of deferred tax assets, necessary reviews of thefollowing have been made, basically following the framework of Auditing Standards Board Report No.66 of
the Japanese Institute of Certified Public Accountants, the “Audit Treatment of Judgments with Regard to
Recoverability of Deferred Tax Assets," which classifies companies into five groups and estimates the recorded
amount of deferred tax assets in accordance with said classifications.
① The treatment of companies that do not fulfill any of the requirements of classifications pertaining to(Classification 1) to (Classification 5)② Requirements of classifications pertaining to (Classification 2) and (Classification 3)③ Treatment related to deductible temporary difference that cannot be scheduled at companies that fall under(Classification 2)④ Treatment related to the reasonable period when estimation of deductible temporary difference and othertaxable income before addition or subtraction is possible at companies that fall under (Classification 3)⑤ For companies that fulfill the requirements of classification pertaining to (Classification 4), the treatment
in cases where they fall under (Classification 2) or (Classification 3)(2) Scheduled implementation date
Implementation is scheduled from the beginning of 2017 fiscal year.
(3) Impact of the application of said accounting standards, etc.
There is no impact on the consolidated financial statements from the application of the implementation
guidance.

26

(Changes in Presentation)(Consolidated Balance Sheet)
In the “Current assets” section, “Lease receivables” was included in “Other” in the previous fiscal year.
Due to an increase in financial materiality, “Lease receivables” is now separately presented. To reflect thischange in method of presentation, the consolidated financial statements for the previous fiscal year have been
reclassified.
As a result, in the “Current assets” section, 5,905 million yen that was included in “Other” in theConsolidated Balance Sheet for the previous fiscal year is now presented as “Lease receivables.”(Consolidated Statement of Income)In the “Non-operating income” section, “Store equipment related income” was presented separately in theprevious fiscal year. Due to a decline in financial materiality, “Store equipment related income” is now
included in “Other.” To reflect this change in method of presentation, the consolidated financial statements
for the previous fiscal year have been reclassified.
As a result, in the “Non-operating income” section, 318 million yen that was presented as “Store equipment
related income” in the Consolidated Statement of Income for the previous fiscal year is now included in“Other.”In the “Non-operating losses” section, “Foreign exchange losses” were presented separately in the previous
fiscal year. Due to a decline in financial materiality, “Foreign exchange losses” are now included in “Other.”To reflect this change in method of presentation, the consolidated financial statements for the previous fiscal
year have been reclassified.
As a result, in the “Non-operating losses” section, 914 million yen that was presented as “Foreign exchange
losses” in the Consolidated Statement of Income for the previous fiscal year is now included in “Other.”(Consolidated Statement of Cash Flows)
In the “Cash flow from operating activities” section, “Increase (decrease) in allowance for doubtful
accounts” was presented separately in the previous fiscal year. Due to a decline in financial materiality,“Increase (decrease) in allowance for doubtful accounts” is now included in “Other.” To reflect this change
in method of presentation, the consolidated financial statements for the previous fiscal year have been
reclassified.
As a result, in the “Cash flow from operating activities” section, (311) million yen that was presented as“Increase (decrease) in allowance for doubtful accounts” in the Consolidated Statement of Cash Flows for theprevious fiscal year is now included in “Other.”In the “Cash flow from investing activities” section, “Purchase of long-term prepaid expenses” wasincluded in “Other” in the previous fiscal year. Due to an increase in financial materiality, “Purchase of longterm prepaid expenses” is now separately presented. To reflect this change in method of presentation, theconsolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the “Cash flow from investing activities” section, (1,801) million yen that was presented as“Other” in the Consolidated Statement of Cash Flows for the previous fiscal year is now presented as“Purchase of long-term prepaid expenses.”In the “Cash flow from financing activities” section, “Net increase (decrease) in short-term loans payable”
was included in “Other” in the previous fiscal year. Due to an increase in financial materiality, “Net increase(decrease) in short-term loans payable” is now separately presented. To reflect this change in method ofpresentation, the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the “Cash flow from financing activities” section, 250 million yen that was presented as“Other” in the Consolidated Statement of Cash Flows for the previous fiscal year is now presented as “Net
increase (decrease) in short-term loans payable.”In the “Cash flow from financing activities” section, “Repayments of long-term loans payable” waspresented separately in the previous fiscal year. Due to a decline in financial materiality, “Repayments oflong-term loans payable” is now included in “Other.” To reflect this change in method of presentation, theconsolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the “Cash flow from financing activities” section, (862) million yen that was presented as“Repayments of long-term loans payable” in the Consolidated Statement of Cash Flows for the previous fiscal
year is now included in “Other.”27

(Notes to Consolidated Balance Sheet)*1. Accumulated depreciation of property and store equipment

Accumulated depreciation

Previous fiscal year
As of February 29, 2016
291,655(Millions of yen)
Current fiscal year
As of February 28, 2017294,350

Previous fiscal year
As of February 29, 2016
12,205(1,017)
272
3,394
(47)

(Millions of yen)
Current fiscal year
As of February 28, 2017
13,502(1,042)
157
648
(648)

*2. Investments in associates

Investment securities (stocks)(Investment amount for jointly-controlled companies)
Investment securities (bonds)
Other (other equity investments)(Investment amount for jointly-controlled companies)*3. Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation ofLand (Law No. 34, March 31, 1998). The resulting revaluation difference has been included in net assets
as “Revaluation reserve for land.”
Revaluation method:
The value of land is determined based on the notified prices adjusted reasonably as stipulated in Article
2, Item 4 of the Ordinance Implementing the Law Concerning Revaluation of Land (Government
Ordinance No. 119, March 31, 1998) and the assessed value as stipulated in Article 2, Item 5 of the same
Ordinance.
Date of revaluation: February 28, 2002
(Millions of yen)Previous fiscal year
Current fiscal year
As of February 29, 2016
As of February 28, 2017
Difference between book value and market value of308
247
the revalued land as of balance sheet date
*4. Pledged assets and secured liabilities
Assets pledged as collateral and liabilities collateralized are as follows.
Previous fiscal year
As of February 29, 2016
2,399

Cash and deposits(Millions of yen)
Current fiscal year
As of February 28, 2017
2,601

In addition to the above, shares of consolidated subsidiaries pledged as collateral are as follows.
(Millions of yen)Previous fiscal year
Current fiscal year
As of February 29, 2016
As of February 28, 2017
Shares of consolidated subsidiaries
16,614
16,614(Amount before elimination)

28

Secured liabilities are as follows
Previous fiscal year
As of February 29, 2016

(Millions of yen)
Current fiscal year
As of February 28, 2017

Short-term loans payable
Current portion of long-terms loans payable
Long-term loans payable

1,000
575
7,562

－
575
6,703

Total

9,137

7,278

(Notes to Consolidated Statement of Income)*1 Major components of selling, general and administrative expenses are as follows.

Employees' salaries and allowances
Provision for bonuses
Retirement benefit expenses
Rents
Depreciation

Previous fiscal year
From March 1, 2015
to February 29, 2016
48,722
3,362
2,215
108,795
49,156(Millions of yen)
Current fiscal year
From March 1, 2016
to February 28, 2017
53,173
2,956
2,303
115,926
55,516

Previous fiscal year
From March 1, 2015
to February 29, 2016
223
5
0
228

(Millions of yen)
Current fiscal year
From March 1, 2016
to February 28, 2017
294
0
0
294

Previous fiscal year
From March 1, 2015
to February 29, 2016
3,284
294
679
83
0
4,342

(Millions of yen)
Current fiscal year
From March 1, 2016
to February 28, 2017
2,493
238
798
22
1
3,554

*2 Breakdown of loss on sales of non-current assets

Buildings and structures
Tools, furniture and fixtures
OthersTotal*3 Breakdown of loss on retirement of non-current assets

Buildings and structures
Tools, furniture and fixtures
Leased assets
Software
OthersTotal

29

*4 Impairment loss
The Company and its consolidated subsidiaries (collectively, the “Group”) identify each store as thesmallest cash generating unit.
The carrying value of asset groups whose profitability has significantly decreased was written down to therecoverable amount, with the difference recognized as impairment loss under extraordinary losses.
Previous fiscal year (From March 1, 2015 to February 29, 2016)
Category by use(Millions of yen)
Impairment loss

Location

AssetsTokyo

Buildings; tools, furniture and fixtures; and others

1,904

Osaka

"

1,621

Others"6,508

Others―Software

507

Total

―

―

10,542

StoresCategory by non-current assets
Buildings and structures
5,976 million yen
Tools, furniture and fixtures
607
"
Land
57
"
Leased assets
3,131"
Software
680
"
Other
88
"
The recoverable amount of the asset groups is the higher of net selling price or value in use. The net selling
price of land was calculated based on the value appraised by a real estate appraiser or contract price, and thevalue in use was calculated by discounting estimated future cash flows mainly using a discount rate of 4.8%.
Current fiscal year (From March 1, 2016 to February 28, 2017)
Category by use
Stores
Total(Millions of yen)
Impairment loss

Location

AssetsTokyo

Buildings; tools, furniture and fixtures; and others

1,702

Osaka

"

1,442

Others

"

6,390

―

―

9,535

Category by non-current assets
Buildings and structures
Tools, furniture and fixtures
Land
Leased assets
Other

5,833
529
353
2,786
32

million yen""""

The recoverable amount of the asset groups is the higher of net selling price or value in use. The net selling
price of land was calculated based on the value appraised by a real estate appraiser or contract price, and thevalue in use was calculated by discounting estimated future cash flows mainly using a discount rate of 4.3%.

30

(Notes to Consolidated Statement of Comprehensive Income)* The components of other comprehensive income for the years ended February 29, 2016 and February 28,
2017 were as follows:(Millions of yen)Previous fiscal year
Current fiscal year
From March 1, 2015
From March 1, 2016
to February 29, 2016
to February 28, 2017
Valuation difference on availablefor-sale securities
Gain or loss arising during the
1,587(1,059)periodReclassification adjustments to
238
244
profit or loss
Amount before income tax
1,825
(815)
effectIncome tax effect
(630)
287
Valuation difference on
1,195
(527)
available-for-sale securities
Revaluation reserve for land
Gain or loss arising during the－(52)
periodRevaluation reserve for land－(52)
Foreign currency translation
adjustment
Gain or loss arising during the
(15)
(905)
periodReclassification adjustments to－(23)
profit or loss
Foreign currency translation
(15)
(928)
adjustment
Remeasurements of defined benefit
plans
Gain or loss arising during the
(662)
(150)
periodReclassification adjustments to99
148
profit or loss
Amount before income tax
(562)
(2)
effect174
Income tax effect(20)
Remeasurements of defined
(387)
(22)
benefit plans
Total other comprehensive
792(1,530)income31

(Notes to Consolidated Statement of Changes in Equity)
Previous fiscal year (From March 1, 2015 to February 29, 2016)
1. Number of shares of outstanding stock and treasury shares
Number of shares at
Increase during
Decrease during
Number of shares atthe beginning of thethe period
the period
the end of the period
period(thousands of shares) (thousands of shares) (thousands of shares)(thousands of shares)
Outstanding stock
Common stock
100,300－－
100,300
Treasury shares
Common stock (*)
301
0
0
301
(*) The increase in treasury shares resulted from purchases of stock of less than one share unit.
The decrease in treasury shares resulted from requests for additional purchases of stock of less than one
share unit.
2. Subscription rights to shares and treasury subscription rights to sharesClass and number of shares
Balance at
subject to stock acquisition rights
end of the
Number (shares)
current
Terms of stock
Classification
periodacquisition rights
Beginning
Increase
Decrease
End
of
the
Class
(Millionsof theduring the during theperiodof yen)periodperiodperiodStock acquisition
Issuing company
rights (ordinary stock(Parent company)
options)

－

－

－

－

－

307

Total

－

－

－

－

－

307

3. Dividend
1) Dividend payment
Date of resolution
The General meetingof shareholders(May 26, 2015)
Directors’ meeting(October 7, 2015)

Class ofsharesDividend payment(millions of yen)

Dividend pershare (yen)Record date

Effective dateCommonstock

11,999120.00

As of
February 28, 2015

As of
May 27, 2015

Commonstock

12,249122.50As of
August 31, 2015

As ofNovember 10, 20152) Dividends for which the record date is in the current fiscal year and the effective date is after the fiscal yearend
Date of resolution

Class ofshares

Source ofdividend

Dividend payment(millions of yen)

Dividend pershare (yen)Record date

Effectivedate

The General
meeting ofshareholders(May 24, 2016)

Commonstock

Retainedearnings

12,249122.50

As of
February 29,
2016

As of
May 25,2016

32

Current fiscal year (From March 1, 2016 to February 28, 2017)
1. Number of shares of outstanding stock and treasury shares
Number of shares at
Increase during
Decrease during
Number of shares atthe beginning of thethe period
the period
the end of the period
period(thousands of shares) (thousands of shares) (thousands of shares)(thousands of shares)
Outstanding stock
Common stock
100,300－－
100,300
Treasury shares
Common stock (*)
301
0
17
285
(*) The increase in treasury shares resulted from purchases of stock of less than one share unit.
The decrease in treasury shares resulted from decreases due to exercise of stock options.
2. Subscription rights to shares and treasury subscription rights to sharesClass and number of shares
Balance at
subject to stock acquisition rights
end of the
Number (shares)
current
Terms of stock
Classification
periodacquisition rights
Beginning
Increase
Decrease End of theClass(Millionsof theduring the during theperiodof yen)periodperiodperiodStock acquisition
Issuing company
rights (ordinary stock(Parent company)
options)

－

－

－

－

－

314

Total

－

－

－

－

－

314

3. Dividend
1) Dividend payment
Date of resolution
The General meetingof shareholders(May 24, 2016)
Directors’ meeting(October 12, 2016)

Class ofsharesDividend payment(millions of yen)

Dividend pershare (yen)Record date

Effective dateCommonstock

12,249122.50

As of
February 29, 2016

As of
May 25, 2016

Commonstock

12,501125.00As of
August 31, 2016

As ofNovember 10, 2016

2) Dividends for which the record date is in the current fiscal year and the effective date is after the fiscal yearend
Plan for resolution is as follows.
Date of resolution

Class ofshares

Source ofdividend

Dividend payment(millions of yen)

Dividend pershare (yen)Record date

Effectivedate

The General
meeting ofshareholders(May 30, 2017)

Commonstock

Retainedearnings

12,501125.00

As of
February 28,
2017

As of
May 31,201733

(Notes to Consolidated Statement of Cash Flows)*1. Reconciliation between the year-end balance of cash and cash equivalents and cash and deposits in the
consolidated balance sheet(Millions of yen)Previous fiscal year
Current fiscal year
From March 1, 2015
From March 1, 2016
to February 29, 2016
to February 28, 2017
Cash and deposits
69,797
68,115Time deposits for which the deposit period
(4)
(423)
exceeds three months
Cash and cash equivalents
69,79367,692
2. Description of significant non-fund transactions
1) Assets and liabilities related to finance lease transactions are as follows.

Previous fiscal year
From March 1,2015
to February 29, 2016

(Millions of yen)
Current fiscal year
From March 1,2016
to February 28, 2017

38,15842,636

Previous fiscal year
From March 1, 2015
to February 29, 2016

(Millions of yen)
Current fiscal year
From March 1, 2016
to February 28, 2017

4,604

2,635

Assets and liabilities related to finance leasetransactions2) Significant asset retirement obligations are as follows.

Significant asset retirement obligations

34

(Segment Information)
1. Outline of reportable segments
The Company’s financial information is provided separately by reportable segment and is subject to regularreview by the board of directors with regard to the allocation of managerial resources and performance
evaluation.
The Group operates primary businesses Domestic Convenience Store Business, Seijo Ishii Business andEntertainment-related Business while incorporating other related businesses.
Therefore, the Group has made the Domestic Convenience Store Business, Seijo Ishii Business andEntertainment-related Business unit its main reportable segments, based on consideration of financial
characteristics and the nature of the services provided.
Regarding Domestic Convenience Store Business, Lawson. Inc. operates a franchise system as well as
undertaking the direct management of stores in Japan as the parent company of LAWSON, NATURALLAWSON, and LAWSON STORE100. Lawson Sanin, Inc. undertakes the direct management of LAWSON
stores in the Sanin area. Lawson Store100, Inc. undertakes the direct management of LAWSON STORE100
stores. SCI, Inc., a functional subsidiary which comprehensively manages the process from procurement tosale, aims to improve the efficiency of the entire process.
Regarding Seijo Ishii Business, SEIJO ISHII CO., LTD. operates SEIJO ISHII supermarket.
Regarding Entertainment-related Business, Lawson HMV Entertainment, Inc. conducts the management
and sales of concert tickets at LAWSON stores and others, music and video software products at HMV storesand others. In addition, United Cinemas Co., Ltd. operates multiplex movie theatres.
2. Computation method of the amount of net sales, profit or loss, assets and liabilities, and other items byreportable segment
The segment accounting policies are the same as those described in the “Accounting Policies for the
Preparation of Consolidated Financial Statements.” Segment profit is based on operating income.
Intersegment revenue and transfers are based on market value.
(Change in calculation method of profit and loss for reportable segments)
As stated in “Changes in Accounting Policies,” any differences arising from changes in a parent’s
ownership interests in subsidiaries when the parent retains control are recognized in capital surplus andacquisition-related costs are expensed in the fiscal year in which they were incurred. Furthermore, any
adjustments to the allocation of acquisition costs arising from the finalization of provisional accounting
treatment are reflected in the consolidated financial statements for the period in which the businesscombination occurs. Due to these changes, the calculation method of profit or loss for reportable segments
was similarly changed from the current fiscal year.
The impact of this change on segment profit for the current fiscal year was immaterial.

35

3. Information related to the amount of net sales, and profit or loss by reportable segment
Previous fiscal year (from March 1, 2015 to February 29, 2016)(Millions of yen)
Reportable segment
Adjustments(Note 2)

Total
(Note 3)

583,452－

583,452

1,158

6,139

(6,139)－46,921

589,592(6,139)583,452

Others(Note 1)

Total

Seijo Ishii
Business

Entertainmentrelated
Business

395,057

68,99373,63945,763

3,579

－

1,401

398,637

68,99375,040

Domestic
Convenience
Store
Business
Gross operating
revenue
Sales to externalcustomers
Intersegment sales
or transfers
Total
Segment profit

59,993

5,037

4,076

3,427

72,534

7

72,541

Segment assets

738,875

65,01664,55953,679922,131(118,918)

803,21240,768

1,756

1,375

2,590

46,490－46,490

596

1,437

664

103

2,802

－

2,802

4,745

－

－

－

4,745

－

4,745

48,467

521

4,346

3,157

56,492－56,492

Other
Depreciation
Amortization of
goodwill
Investments inaffiliates
Increase in noncurrent assets(Notes)1. The business segments within the “Others” category that do not fall under the main reportable segments,
include Overseas Business operated by Shanghai Lawson, Inc. and others, and Financial Services-related
Business operated by Lawson ATM Networks, Inc.
2. Adjustments to segment profit and segment assets are due to the elimination of intra-segment transactions.
3. Segment profit corresponds to consolidated operating income.

36Current fiscal year (from March 1, 2016 to February 28, 2017)(Millions of yen)
Reportable segment
Adjustments(Note 2)

Total
(Note 3)

631,288－631,288

919

7,228

(7,228)－72,93655,147

638,517(7,228)631,288

3,988

2,999

73,765

773,77258,70562,271

56,925

978,285(111,708)

866,577

44,796

2,005

2,278

3,386

52,468－52,468

911

1,676

501

99

3,189

－

3,189

4,922

－

－

－

4,922

－

4,922

55,488

1,054

1,483

2,928

60,955－60,955

Others(Note 1)

Total

71,54554,227－

1,390

424,60885,824

59,865

6,911

800,383

Domestic
Convenience
Store Business

Seijo Ishii
Business

Entertainmentrelated
Business

419,690

85,824

4,918

Total
Segment profit
Segment assets

Gross operating
revenue
Sales to externalcustomers
Internal sales ortransfers between
segments

Other
Depreciation
Amortization of
goodwill
Investments inaffiliates
Increase in noncurrent assets(Notes)1. The business segments within the “Others” category that do not fall under the main reportable segments,
include Overseas Business operated by Shanghai Lawson, Inc. and others, and Financial Services-related
Business operated by Lawson ATM Networks, Inc.
2. Adjustments to segment profit and segment assets are due to the elimination of intra-segment
transactions.
3. Segment profit corresponds to consolidated operating income.

37

(Related information)
Previous fiscal year (from March 1, 2015 to February 29, 2016)
1. Information by product and service
Since similar information is disclosed in segment information, this information is omitted.
2. Information by geographical area
(1) Net sales
Since sales to external customers in Japan exceed 90% of net sales on the consolidated statement ofincome, this information is omitted.
(2) Property and store equipment
Since property and store equipment in Japan exceed 90% of property and store equipment on the
consolidated balance sheet, this information is omitted.
(3) Information by major customer
Information about major customers has been omitted since there are no external customers whoconstituted more than 10% of net sales on the consolidated statement of income.
Current fiscal year (from March 1, 2016 to February 28, 2017)
1. Information by product and service
Since similar information is disclosed in the segment information, this information is omitted.
2. Information by geographical area
(1) Net sales
Since sales to external customers in Japan exceed 90% of net sales on the consolidated statement ofincome, this information is omitted.
(2) Property and store equipment
Since property and store equipment in Japan exceed 90% of property and store equipment on the
consolidated balance sheet, this information is omitted.
(3) Information by major customer
Information about major customers has been omitted since there are no external customers whoconstituted more than 10% of net sales on the consolidated statement of income.

38

(Information on impairment loss on non-current assets by reportable segment)
Previous fiscal year (from March 1, 2015 to February 29, 2016)
The Group identifies each store as the smallest cash generating unit.
Regarding asset groups whose profitability from operating activities has continuously been negative, the bookvalue of such assets has been written down to the recoverable amount, with the difference recorded as
impairment loss under extraordinary losses.
The amount of impairment loss recorded for each reportable segment is as follows.
(Millions of yen)
Reportable segment

Impairment
loss

Domestic
Convenience
Store
Business

Seijo
Ishii
Business

Entertainmentrelated
Business

9,155

80

570

Others

Total

Adjustments

Total

737

10,542－

10,542Current fiscal year (from March 1, 2016 to February 28, 2017)
The Group identifies each store as the smallest cash generating unit.
Regarding asset groups whose profitability from operating activities has continuously been negative, the bookvalue of such assets has been written down to the recoverable amount, with the difference recorded as
impairment loss under extraordinary losses.
The amount recorded for each reportable segment is as follows.
(Millions of yen)
Reportable segment

Impairment
loss

Domestic
Convenience
Store
Business

Seijo
Ishii
Business

Entertainmentrelated
Business

9,034

62

208

Others

Total

Adjustments

Total

229

9,535

－

9,535

(Information on amortization of goodwill and amortized balance by reportable segment)
Previous fiscal year (From March 1, 2015 to February 29, 2016)(Millions of yen)
Reportable segment
Domestic
Convenience
Store
Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others

Total

Adjustments

Total

Balance at
end of fiscal
8,589
26,946
9,192
1,581 46,309
46,309－year
Note: Regarding amortization of goodwill, this information is omitted since similar information is disclosed insegment information.

39

Current fiscal year (From March 1, 2016 to February 28, 2017)(Millions of yen)
Reportable segment
Domestic
Convenience
Store
Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others

Total

Adjustments

Total

Balance at
end of fiscal
11,26925,2708,690
812
46,041
46,041－year
Note: Regarding amortization of goodwill, since similar information is disclosed in segment information, thisinformation is omitted.
(Information on gain on negative goodwill by reportable segment)
Previous fiscal year (From March 1, 2015 to February 29, 2016)
Not applicable.
Current fiscal year (From March 1, 2016 to February 28, 2017)
Not applicable.

40

(Per Share Information)
Previous fiscal year
From March 1, 2015 to February 29, 2016
Net assets per share

Current fiscal year
From March 1, 2016 to February 28, 2017

2,643.97 yen

Net assets per share

2,748.39 yen

Profit per share

313.81 yen

Profit per share

363.96 yen

Diluted profit per share

313.57 yen

Diluted profit per share

363.70 yen(Note) 1. As stated in “(Changes in Accounting Policies),” the Company has applied the transitional
treatment prescribed in Article 58-2 (4) of the Business Combination Accounting Standard, Article
44-5 (4) of the Consolidated Accounting Standard, and Article 57-4 (4) of the Business Divestiture
Accounting Standard. As a result, the net assets per share, profit per share and diluted profit per
share decreased by 11.96 yen, 25.83 yen, 25.81 yen, respectively for the fiscal year.
2. The basis for the calculation of profit per share and diluted profit per share is as follows:
Previous fiscal year
From March 1, 2015 toFebruary 29, 2016

Item

Current fiscal year
From March 1, 2016 to
February 28, 2017

Profit per share
31,181

36,400－－

Profit attributable to common stock (millions of yen)

31,181

36,400

Average number of common stock during the fiscal
year (thousands of shares)

99,998100,009

－

－

78

71

(78)

(71)

─

─

Profit attributable to owners of parent (millions of yen)Amount not attributable to common shareholders(millions of yen)

Diluted profit per share
Profit attributable to owners of parent adjustment(millions of yen)
Increase in number of outstanding common shares(thousands of shares)(Subscription rights to shares) (thousands of shares)
Summary of issuable shares not included in thecomputation of diluted profit per share, since thesesecurities are not dilutive.
(Significant Subsequent Events)
Not applicable.

41