Flash Report on the Consolidated Result
for the Year Ended February 28, 2015
April 9, 2015
Listed Company Name: Lawson, Inc.
Tokyo Stock Exchange (First Section)
Code No.: 2651
(URL http://www.lawson.co.jp/company/ir/index.html)
Company Representative: Genichi Tamatsuka, Representative Director, President and CEO
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 26, 2015
Scheduled date for payment of dividend: May 27, 2015
Scheduled date for submission of annual report: May 27, 2015
Supplementary documents annual results: Yes
Presentation of annual results: Yes (for institutional investors and analysts)(Amounts below one million yen are truncated)
1. Consolidated performance for the 2014 fiscal year (from March 1, 2014, to February 28, 2015)(1) Consolidated operating results
Note: Percentages for gross operating revenue, operating income, ordinary income and net income show increase(decrease) compared to previous fiscal year.
Gross operating revenue¥ Million%
2014 fiscal year
497,913
2.6
2013 fiscal year
485,247(0.5)
Note: Comprehensive income:2014 fiscal year
2013 fiscal year

Operating income
Ordinary income
Net income¥ Million%¥ Million%¥ Million%
70,482
3.5
71,7144.1
32,686(13.9)
68,1262.8
68,880
4.5
37,96514.4
2014 fiscal year
35,224 million yen(11.5%)
2013 fiscal year
39,807 million yen
14.2%

Net income
per share

Fully diluted
profit per share

Return on
equityRatio of ordinary
income to total assets¥
327.08380.04¥326.65379.35

¥
13.0
16.1

¥
10.4
11.5

Reference: Equity in net income of affiliates:2014 fiscal year
2013 fiscal year

Ratio ofoperating income
to gross operating
revenue
¥
14.2
14.0

365 million yen
393 million yen(2) Consolidated financial position

2014 fiscal year
2013 fiscal year

Total assets

Net assets¥ Million
764,614620,992¥ Million
263,797
250,497

Reference: Shareholders’ equity:

Shareholders’ equity
ratio
%
33.5
39.5

2014 fiscal year
2013 fiscal year

Net assets per share

256,122 million yen
245,289 million yen%
2,561.25
2,455.25

(3) Consolidated cash flows2014 fiscal year
2013 fiscal year

Net cash provided by(used in) operating
activities¥ Million
110,567
81,503

Net cash provided by(used in) investing
activities¥ Million(100,433)(47,924)

Net cash provided by(used in) financing
activities¥ Million(3,289)(39,650)

Cash and cash
equivalents at end of
period¥ Million
76,75468,7592. Dividends status

1Q

1H

3Q

Year-end
dividend

Total

Total
dividends forthe year¥－¥
110.00¥－¥110.00¥220.00¥ Million
21,978%
57.9

Ratio ofdividends toshareholders’equity%9.3－

120.00－120.00240.0023,989

73.4

9.6

－

122.50－122.50245.00

Annual dividends per share2013 fiscal year
2014 fiscal year
2015 fiscal year
(forecast)

Payoutratio

69.6

3. Forecast consolidated performance for 2015 fiscal year （from March 1, 2015 to February 29, 2016）
Note: Percentages for gross operating revenue, operating income, ordinary income and net income show increase(decrease) from previous fiscal year.

2015 1H(accumulated)2015 fiscal year

Gross operating
revenue

Operating income

Ordinary income¥ Million%¥ Million%¥ Million%¥ Million%¥

287,000

18.6

37,000(7.5)

36,000(9.1)

18,400(15.9)

184.00578,000

16.1

71,0000.7

68,900(3.9)

35,2007.7

352.00Net profit
per share

Net income

4. Notes(1) Change in important subsidiaries during this quarterly consolidated period (Changes in certain specified
subsidiaries resulting in revised scope of consolidation): None
Added: None

Excluded: None

(2) Changes in accounting policies, changes in accounting estimates, retrospective restatements
1. Changes of accounting policies associated with revision in accounting standards: Yes
2. Other changes: Yes
3. Changes in accounting estimates: Yes
4. Retrospective restatements: None
(3) Number of issued shares:
1. The number of the stocks issued in the end of term
February, 2015:
100,300,000
2. The number of treasury shares in the end of term
February, 2015:
301,084
3. Average number of shares during the term
February, 2015:
99,931,714

February, 2014:

100,300,000

February, 2014:

395,953

February, 2014:

99,898,281

Note: Implementation status of audit proceduresThis flash report is exempt from audit procedures under the Financial Instruments and Exchange Act. As of
the time of disclosure of this report, audit procedures for the financial statements are incomplete.
Note: Descriptions on appropriate use of financial performance forecasts and other special notes

Forward-looking statements presented in this material such as financial forecasts are based on currently
available information and certain presumptions deemed to be reasonable as of the date of announcement. They
are not intended to guarantee the Company’s achievement. Actual results may differ significantly from these
forecasts due to many 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 2015” on page 8.

Contents of Attachments

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

2(1) Analysis of Consolidated Operating Results············································································
2(2) Profit and Loss··············································································································
8(3) Outlook for Fiscal 2015 ································································································ 8(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 ····················································································
11
3. Consolidated Financial Statements ···························································································
13(1) Consolidated Balance Sheets ·····························································································
13(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ··················
15
Consolidated Statements of Income ······················································································
15
Consolidated Statements of Comprehensive Income ································································16(3) Consolidated Statements of Changes in Net Assets ································································17(4) Consolidated Statements of Cash Flows ················································································
19(5) Notes Concerning Going Concern Assumption ········································································
21(Basis of Presenting the Consolidated Financial Statements) ·························································
21(Accounting Standards, etc. that are not applied)································································

25(Changes in presentation) ································································································26(Notes to Consolidated Financial Statements) ··········································································
28(Notes to Consolidated Balance Sheets) ·················································································
28(Notes to Consolidated Statement of Income) ··········································································
28(Notes to Consolidated Statement of Comprehensive Income) ·······················································
31(Notes to Consolidated Statement of Changes in Net Assets)·························································
32(Notes to Consolidated Statement of Cash Flows) ································································ 34(Notes to Lease Contracts) ································································································
36(Notes to Business Combinations, etc.) ··················································································
38(Segment Information) ································································································ 41(Per Share Information) ································································································ 45(Significant Subsequent Events) ··························································································
45

1

1. Analysis of Operating Results and Financial Position(1) Analysis of Consolidated Operating Results
During the consolidated fiscal year under review, or fiscal 2014 ended February 28, 2015, the Lawson
Group (hereinafter, the “Group”) implemented measures to reinforce its social infrastructure function thatprovides essential items and services at the local level with the aim of realizing the Group’s corporate
philosophy of “Creating Happiness and Harmony in Our Communities.”. Based on its analysis of purchasedata retrieved from the multi-partner loyalty program, Ponta, the Group focused on customer relationshipmanagement (CRM)*1 and supply chain management (SCM)*2 in order to offer a merchandise assortment thatmeets the specific needs of customers in each neighborhood.
Meanwhile, we also focused on promoting internal control and addressing operating risks across the entire
Group based on the 2014 Basic Policy for Improvement of Internal Control Systems. We will continue
promoting internal control across the board including companies that newly joined the Group.
*1

CRM: A marketing management method for providing merchandise and services that meet the specificneeds of customers.
*2

SCM: A business administration method for comprehensively managing all stages of business, fromprocurement to sales, to streamline and optimize the entire business process.
Operating results by business segment were as follows:(Domestic Convenience Store Business)[Merchandising Strategies]
On the merchandise front, we promoted a variety of initiatives in order to enhance satisfaction of customers
visiting our stores. One of those is we reviewed coffee sizes and prices offered on the menu at “MACHI
Café”. In response to high demand from customers, we newly introduced blend coffee and iced coffee in S
size at a price of 100 yen, including tax, while expanding menu options by adding café latte and other items.
As a result, MACHI café achieved robust sales. We also strengthened our merchandise assortment ofready-made dishes and daily delivered foods with the aim of attracting female and senior customers, whousually shop at supermarkets.
In our lineup of ready-made meals, high-priced items such as Niigata-produced Koshihikari rice balls
stuffed with fatty pork, beef harami (innards) and nakaochi kalbi (between-the-ribs) recorded strong sales.
Chilled gyudon (beef bowl) lunch boxes launched in November 2014 were also popular. In addition, we
strived to boost sales in the sandwich category by offering high-value-added fruit sandwiches (Mont Blanc
chestnuts, shine Muscat grapes, etc.) on an ongoing basis.
In the over-the-counter fast foods category, “Ougon Chicken Umashio,” a tender and juicy fried chicken
product flavored with rock salt and black pepper, was well-received.
Moreover, as a “Health Station in Town,” we also placed emphasis on selling health-oriented products.
Specifically, we offered “Bran Bread”*3 on an ongoing basis for carbohydrate-conscious consumers, as wellas “Soba [buckwheat] Noodles Containing Dietary Fiber” approved as food for specified health uses(“Tokuho” in Japanese) and “Pre-cut Vegetables” made with vegetables produced based on the Nakashima

2

Farming Method*4 in some areas.
There are currently 22 Lawson Farms in which Lawson, Inc. holds equity stakes. The farms continue toassume the role of stably supplying fruits and vegetables to the Group’s stores and factories that produce
LAWSON’s original products.
Based on these initiatives, we will further boost Lawson’s corporate brand image as a “Health-promoting
Company”.
In addition to the strengthening of these product line-up, we are increasing our lineup of “Gift Cards”*5
offered at our stores.
In sales promotions, we implemented a point-reward campaign targeting Ponta members to encouragepurchasing with the aim of increasing the rate of repeat visits. Total Ponta members reached 68 million as ofthe end of February 2015, including members that joined through other participating companies. The sales
ratio of Ponta members reached approximately 48%.
*3

Bran: The external layer of wheat. Contains abundant nutrition including dietary fiber, iron, calcium,magnesium, zinc, and copper. The food is noted for its low level of carbohydrate.
*4

Nakashima Farming Method: A cultivation method that supplies appropriate nutrients in accordance withthe growth status of crops and the nutritional balance of the soil (mineral balance). Uses techniques fordeveloping healthy soil based on diagnosis of soil conditions in conjunction with techniques to control thegrowth process of crops to maintain healthy growth.
*5

Gift cards: Collective term for prepaid cards that can be used for online transactions.

[Store Operations]
In store operations, we continued to reinforce adherence to the Three Essential Practices, which emphasizes(1) serving customers courteously; (2) offering a merchandise assortment focused on basic items with highdemand; and (3) keeping our stores and communities clean, in addition to expanding our lineup of
health-conscious products. Notably, with the increasing number of stores equipped with “MACHI Café”,
store employees are more capable of offering products and services in a caring manner through better
communication with customers. We strived to further improve the quality of stores by clarifying the customer
service goals to be pursued by store employees and fostering leaders among them.
We will continue to promote merchandise assortments that best suit customers in each neighborhood byleveraging store-by-store analysis reports on Ponta members’ purchase data, shelf allocation tailored to thelocational characteristics of each store, and sharing of best practices presented at monthly area-based
meetings where we discuss area strategies with franchise store owners.

[Store Development and Store Format Strategy]
In opening new stores, the Group prioritized profitability based on its proprietary return on investment(ROI)-focused store development standard.
In December 2014, Lawson, Inc. concluded an absorption-type company split agreement with SUNNY
MART Co., Ltd., the parent company of Three-F Chu-Shikoku Co., Ltd. Based on this agreement, we havetaken a phased approach to transforming Three-F stores in Shikoku into LAWSON stores. Effective April 1,

3

2015, Lawson Kochi, Inc. will be established, with SUNNY MART Co., Ltd. and Lawson, Inc. holding 51%
and 49% equity stakes, respectively. LAWSON stores in Kochi Prefecture will be operated by Lawson Kochi,
Inc.
Furthermore, the Group has been striving to expand the number of stores offering non-prescription drugs,
and it reached 104 stores as of the end of February 2015. Moreover, by building partnerships in local area, in
addition of healthcare items including OTC pharmaceuticals, cosmetics, and daily necessities, the stores offer
a merchandise assortment of around 5,000 items, twice as many as conventional Lawson stores. In total, thenumber of Pharmacy Lawson stores equipped with drug-dispensing pharmacies reached 39 as of the end of
February 2014.
LAWSON MART, a store format the Group launched in February 2014, has endeavored to capture
customer needs as an evolutionary fresh foods convenience store by fostering its expertise in functioning as asupermarket alternative and to better support the daily lives of customers in residential areas. We havedecided to incorporate the expertise developed by LAWSON MART into LAWSON stores. At the same time,with regard to LAWSON STORE100, we intend to expand its merchandise assortment of fresh foods andvalue-for-money 100-yen products in order to better support the daily lives of customers. The Group as awhole will thus address increasingly polarizing customer needs.
As a result, the total number of LAWSON, NATURAL LAWSON, and LAWSON STORE100 (including
LAWSON MART) stores opened and closed during the fiscal year under review stood at 979 and 400 stores,
respectively, with the total number of stores in Japan reaching 11,900 as of the end of February 2015.
Furthermore, Lawson Minamikyushu, Inc., an affiliated companies accounted for by equity method, operates
202 LAWSON chain stores in Kagoshima prefecture and Lawson Okinawa, Inc. operates 174 LAWSON
chain stores in Okinawa prefecture as of the end of February 2015.

[Change in the Total Number of Stores]
Total stores as ofFebruary 28, 2014
LAWSON

Change during
fiscal year

Total stores as ofFebruary 28, 2015

10,108525

10,633

107

9

116

LAWSON STORE100 ／LAWSONMART

1,202

(51)

1,151

Total

11,417483

11,900NATURAL LAWSON

Note: 1. Small stores are included in this figure.
2. For change during fiscal year, it includes a decrease of 120 stores based on absorption-type split
contract of Lawson Group and Lawson Minamikyushu, Inc., and an increase of 24 stores based on
absorption-type split contract of Lawson Group and Lawson Kumamoto, Inc.

4

[Number of LAWSON stores by prefecture (February 28, 2015)]
Prefecture

Numberof stores

Hokkaido619

Ibaraki

150

Kyoto

324

Ehime

189

Aomori

208

Tokyo

1,597

Shiga

155

Tokushima

130

Akita

184

Kanagawa

862

Nara

131

Kochi

107

Iwate

161

Shizuoka225

Wakayama

124

Fukuoka442

Miyagi227

Yamanashi

111

Osaka

1,036

Saga

67

Yamagata

78

Nagano

150

Hyogo

634

Nagasaki

105

Fukushima

103

Aichi

583

Okayama

145

Oita

166

Niigata

130

Gifu

151

Hiroshima

177

Kumamoto

135

Tochigi

141

Mie

111

Yamaguchi

123

Miyazaki

103

Gunma

93

Ishikawa

102

Tottori

111

Total (domestic)

Saitama514

Toyama188

Shimane

117

Chiba

463

Fukui

106

Kagawa122

Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture

Number of stores

11,900Note: Small stores are included in this figure.

[Net Sales at All LAWSON Stores in the Convenience Store Business]
Fiscal period

Product group
Processed foods

Previous fiscal year
March 1, 2013
to February 28, 2014
Sales
Percentage of(Millions of
total (%)
yen)
1,060,455
54.7

Current fiscal year
March 1, 2014
to February 28, 2015
Sales
Percentage of(Millions of
total (%)
yen)
1,034,355
53.5

YOY percentagechange(%)
97.5

Fast foods

408,672

21.1

429,212

22.2

105.0

Daily delivered foods

275,43714.2

277,210

14.4

100.6

Nonfood products

192,726

10.0

192,0209.9

99.6

1,937,292

100.0

1,932,798

100.0

99.8

Total

5

(Other Businesses)
In addition to domestic convenience store business, the Group is involved in overseas business,
Entertainment & Home Convenience business, financial services-related business, Seijo Ishii business andother businesses.
With regards to overseas business, the Group’s operating companies opened LAWSON stores in Shanghai,Chongqing, Dalian, and Beijing in the People’s Republic of China. In Thailand, Saha Lawson Co., Ltd., ajoint venture between LAP and the SAHA Group, Thailand’s leading distributor of consumer goods, operates
stores under the store brand of LAWSON 108 and 108SHOP. In addition, in Hawaii in the United States,
Lawson USA Hawaii, Inc. operates LAWSON stores. Furthermore, in Indonesia, PT MIDI UTAMAINDONESIA Tbk, also operates LAWSON stores.

[Distribution of LAWSON Brand Stores Overseas by Region]

CompanyCountry/region

Number of stores

ChangeNumber of stores(As of February

during fiscal(As of February

28, 2014)

year

28, 2015)

Shanghai Hualian Lawson, Inc.

Shanghai, China

289

65

354

Chongqing Lawson, Inc.

Chongqing, China

77

27

104

Dalian Lawson, Inc.

Dalian, China

18

12

30

Beijing Lawson, Inc.

Beijing, China

5

14

19

Saha Lawson, Co., Ltd.

Bangkok, Thailand

29

3

32

Lawson USA Hawaii, Inc.

Hawaii, U.S.A.

4

(1)

3

61

(13)

48

483

107

590

Capital City of
PT MIDI UTAMA INDONESIA Tbk

Jakarta and its
suburbs, Indonesia

Total

Note: Saha Lawson, Co., Ltd. operates 169 stores other than LAWSON brand stores.
With regards to Entertainment & Home Convenience business, Lawson HMV Entertainment, which forms
the core of entertainment related business, posted a solid performance led by an increase in ticket sales andcontinued to secure top position in the ticketing industry. The number of HMV stores that sell music CDs andDVDs totaled 53 as of the end of February 2015. Furthermore, United Cinemas Co., Ltd., which became aconsolidated subsidiary in August 2014, operates a total of 331 screens at its cinemas nationwide. We will
strive to offer an even wider selection of products and services to better respond to customer needs, forexample, by expanding our ticketing business.
Furthermore, we entered into a partnership with Amazon Japan K.K. in November 2014 and launched a
new service in Shizuoka Prefecture, which enables customers to pick up items ordered online from Amazon at
Lawson stores. We will strive to enhance customer convenience by additionally partnering with othercompanies to establish an “Open Platform” based on the networks of Lawson stores that offer a range of6

services encompassing ordering, collection, and home delivery.
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. In this fiscal year 2014, we
strengthened partnership with new financial institution bringing the total number of our financial institution
partners to 71 nationwide (up 6 year on year), including online banks, and the number of ATMs installed
nationwide to 10,767 (up 649 year on year) as of the end of February 2015.
Finally, on October 2014, Lawson, Inc. acquired all shares of SEIJO ISHII Co., Ltd., which operates Seijo
Ishii, a chain of small supermarkets that seeks to develop and manufacture high-value-added products. The
number of company-operated stores of Seijo Ishii reached to 107 stores as of the end of February 2015. Byleveraging the business infrastructure of the Lawson Group, we aim to further reinforce Seijo Ishii’s strengths
and contribute to its enhancement of corporate value. At the same time, we will strive to strengthen ourdomestic convenience store business by absorbing Seijo Ishii’s knowhow acquired as a manufacturing retailer
and expertise in product selection and presentation, including its central kitchen function.
[Environmental and Social Contribution Activities]
The Company’s Social Contribution Division promoted environmental protection and social contribution
activities, working together with franchise store owners and Group employees.
Furthermore, as part of our initiative to reduce environmental impact on the entire supply chain, we will
endeavor to save energy, resources and 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 ofthe end of February 2015, the system was installed in approximately 580 stores. Compared to conventional
equipment used in our stores, the new system reduces annual CO2 emissions per store by around 50%, andelectricity consumption per store by around 12%. By putting into practical use an energy-saving packagemodel centered on this system, the Group will aim to achieve its medium-term energy conservation target ofusing 20% less electricity per store by fiscal 2020 compared to the fiscal 2010 level. Furthermore, the Group
received the Director-General of the Food Industry Affairs Bureau Award at the Second Food Industry
Mottainai Awards in recognition of its contribution to the reduction of CO2 emissions through these efforts tosave and generate energy. We will strive to make improvements by verifying the outcome at these stores, andapply our accumulated expertise and knowhow to Lawson stores nationwide.
In our efforts to undertake social contribution activities at our stores, the Support for Dreams Fund andthe TOMODACHI Fund, which aims to support education of students in Tohoku mainly through a US-Japan
exchange endeavor. For all these initiatives, we continued activity named “Happiness in Communities”,
which was combined of three activities “LAWSON Green Fund”, “Support for Dreams Fund” and“TOMODACHI Fund”.
In addition, the Group issues the Lawson Integrated Report, which incorporates both financial andnon-financial information for all stakeholders, while also making efforts to disclose on its website anincreasingly wider scope of information in the social and environmental fields.

7

As a member of society, the Group will continue to make unified group-wide efforts to implement
initiatives that aim to address social and environmental issues together with franchised stores, its customers
and business partners.

(2) Profit and Loss
In terms of operating results for the fiscal year under review, gross operating revenue increased to¥497,913 million (up 2.6%), resulting from an increase of ¥6,780 million in operating revenue due to increasein number of franchised stores, and an increase of ¥5,884 million in net sales resulting from acquiring United
Cinema Co., Ltd. on August, SEIJO ISHII Co., Ltd. on October despite of a decrease in the number ofcompany-operated stores. As a result, cost of sales climbed ¥1,478 to ¥128,116 million (up 1.2%) and selling,
general and administrative expenses climbed ¥8,831 million to ¥299,315 million (up 3.0%). Furthermore,
despite operating income grew ¥2,834 million to ¥71,714 million (up 4.1%), since extraordinary losses
increased to ¥14,469 million (up 51.3%) due to closures of unprofitable LAWSON STORE100 stores andwithdrawal of LAWSON MART business, net income decreased ¥5,279 million to ¥32,686 million (down
13.9%).

(3) Outlook for Fiscal 2015
Outlook for the next fiscal year
2015 2Q (accumulated)2015 fiscal year

¥ Million

YoY, %¥ Million

YoY, %

Total operating revenues

287,000

118.6

578,000

116.1

Operating income

37,00092.5

71,000100.7

Ordinary income

36,00090.9

68,90096.1

Net income

18,40084.1

35,200

107.7(4) Analysis of Financial Position① Total assets, Total liabilities, Total net assets analysis
Total assets increased by ¥143,621 million year on year to ¥764,614 million, mainly due to an increase of¥51,049 million in intangible assets.
Total liabilities stood at ¥130,321 million, a year-on-year increase of ¥500,816 million, mainly due to anincrease of ¥58,425 million in long-term loans payable.
Net assets increased by ¥13,299 million year on year to ¥263,797 million, mainly due to an increase of¥9,035 million in retained earnings.
② Cash flow analysis
Net cash provided in (used in) operating activities amounted to ¥110,567 million, ¥29,064 million lower
year on year, due to an increase of ¥15,559 million in deposits received.
Net cash provided in (used in) investing activities amounted to ¥100,433 million, ¥52,509 million higher
year on year, mainly due to an increase of ¥41,381 million in purchase of investments in subsidiaries resulting
in change in scope of consolidation.

8

Net cash provided in (used in) financing activities amounted to ¥3,289 million, ¥36,360 million lower year
on year, mainly due to an increase of ¥59,000 million in repayments of lease obligations.

(Reference) Trends in cash flow indicators2012 fiscal year

2013 fiscal year

2014 fiscal year

Shareholders’ equity ratio (%)

39.1

39.5

33.5

Shareholders’ equity ratio on market value basis (%)

118.7

113.6

102.3

Interest-bearing debt/cash flow ratio (years)

0.7

1.0

1.4

Interest coverage ratio (times)

69.6

63.2

75.3

(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 debts/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 as closing share price at the end of period x the number of shares
outstanding at the end of period (excluding treasury stock)
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 debts refer to the sum for 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.

92. Management Policy(1) Basic Management Policy① Corporate Philosophy and Code of Conduct
The Group’s corporate philosophy of “Creating Happiness and Harmony in Our Communities” reflects its
belief that its social significance derives from relationships with all its stakeholders. Under this concept, theGroup has established a Code of Conduct based on three principles governing its day-to-day corporate
activities:
1) Act with utmost consideration for others,
2) Challenges with innovative ideas and actions, and
3) Have a strong will to attain the objectives.

② Vision
The Group, as a “Health Station in Town” (Machi no kenko station in Japanese), pursues its vision ofhelping customers lead healthy lifestyles through its products and services, as well as enabling all franchise
store owners and Group employees to continue their business activities while maintaining their health.

(2) Performance Indicators (Target)
From the perspective of medium-and-long-term management strategy, the Group believes that investing inbusinesses with high return on investment (ROI) will maximize efficiency in the use of shareholders’ equity,which will in turn enhance shareholder value. The Group regards return on equity (ROE) as the best measureof optimal utilization of shareholders’ equity. Accordingly, the Group is targeting an ROE of 20% on aconsolidated basis over the medium term.

(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; deflation; and stronger environmental
awareness. Never before has the convenience store industry experienced such an environment. Against thisbackdrop, the Group recognizes the following as priority issues ahead. The Group believes that its corebusiness strategies must address these priority issues.

(4) Priority Issues of the Group①

Increase franchise store earnings
With the aim of increasing franchise store earnings, the Group will push forward its operational reform inconjunction with franchise stores and reinforce their retail spaces and merchandise appeal from thecustomers’ perspective.
②

Generate synergistic effects within the GroupThe Group will capitalize on its range of store formats tailored to meet an expanded customer base,diversified needs and health-oriented preferences, while strengthening and evolving its merchandise
assortment. In addition, by making maximum use of each Group company’s distinctive features, we will

10

strive to generate synergistic effects within the Group.
③

Develop overseas business
The Group will establish profitable business models that suit each country/region by striving to understandlocal customer needs, differentiate its products and services from competitors, and enhance its brandrecognition.
④

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

and address operating risks. In addition, we believe that taking a proactive approach to corporate governanceis 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.

(5) Other Important Managerial Matters①

Improving New Merchandise Development Capabilities

While strengthening its ability to develop safe and reliable original merchandise, the Group will proactively
develop merchandise suited to regional preferences by 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 originaladded value and develop merchandise that garners a strong customer response.
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 losses③

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.
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; and NATURAL LAWSON stores will be opened to target
customers seeking beauty, health, and amenity. LAWSON STORE 100 stores will be opened to target
customers seeking perishables packaged in small quantities and easy-to-understand, standardized prices.
⑤

Enhancing Convenience by Opening Stores in Special Locations and Expanding Financial Services
Through tie-ups with other corporations, the Group will open stores in special locations (captivecommercial spaces providing high profitability due to the absence of competing stores). In its financial
services, the Group will aim to increase convenience for customers by expanding the Ponta card programs

11

and offering various services via the “Loppi” multimedia terminals and in-store ATMs. In addition, we are
striving to enhance convenience by expanding our infrastructure for electronic payment (e.g., Suica).
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 andco-prosperity 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.

123. Consolidated Financial Statements(1) Consolidated Balance Sheet
As of February 28, 2014 and February 28, 2015
(Millions of yen)

AssetsCurrent assets:
Cash and deposits
Accounts receivable－due from franchised stores
Merchandise
Prepaid expenses
Accounts receivable－other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and store equipment:
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Vehicles, tools, furniture and fixtures
Accumulated depreciation
Vehicles, tools, furniture and fixtures, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Others
Accumulated depreciation
Others, net
Total property and store equipment
Intangible assets:
Software
Software in progress
Goodwill
Right of trademark
Other
Total intangible assets
Investments and other assets:
Investments securities
Long-term loans receivable
Long-term prepaid expenses
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

13

Previous fiscal year
As of
February 28, 2014

Current fiscal year
As of
February 28, 2015

76,76332,186
9,596
10,71654,193
4,481
10,240(2,393)
195,784

76,75837,052
17,044
12,23558,666
5,299
19,164(2,578)
223,642

265,952(137,117)
128,835
65,944(53,861)
12,083
8,773
126,056(45,289)
80,767
2,977－－－
233,436

313,867(160,491)
153,375
74,270(59,445)
14,8259,640
154,932(63,270)
91,661
4,810
572
(448)
123
274,436

14,902
3,360
9,719
106
391
28,48011,806
6,993
48,18911,989550
79,53012,82133,7278,260
86,15021,627
1,669(965)
163,291425,208
620,992

18,11837,232
9,912
93,20526,251
3,404(1,121)
187,004
540,971764,614

(Millions of yen)

Liabilities
Current liabilities:
Accounts payable－trade
Accounts payable－trade for franchised stores
Accounts payable－due to franchised stores
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
Provision for retirement benefits
Provision for retirement benefits to executive officers
and audits & supervisory board members
Net defined benefit liability
Long-term guarantee deposited
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
Minority interests
Total net assets
Total liabilities and net assets

14

Previous fiscal year
As of
February 28, 2014

Current fiscal year
As of
February 28, 2015

9,726
79,444
1,405
680－
16,58529,344
14,33087,585
2,372
5,232
246,706

20,072
83,385
1,507
1,740
575
19,94843,51813,301
103,634
2,976
10,408301,069－
61,666
11,08258,42576,174
－

408

367

－
32,252
17,874
502
123,788
370,494

12,95829,992
21,530297
199,746
500,816

58,50647,741138,141(1,556)
242,832

58,506
47,696
147,177
1,272
252,107

(93)
(567)
3,118
－
2,456
557
4,650
250,497
620,992

(393)
(566)
5,492
(518)
4,014
223
7,452
263,797764,614(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
For the fiscal year ended February 28, 2014 and February 28, 2015
(Millions of yen)

Gross operating revenue
Net sales
Cost of sales
Gross profit
Operating revenue:
Income from franchised stores
Other
Total operating revenue
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Foreign exchange gains
Penalty income
Other
Total non-operating income
Non-operating expenses:
Interest expense
Loss on cancel of lease contracts
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of investment securities
Gain on change in equity
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses:
Loss on retirement of non-current assets
Impairment loss
Loss on liquidation of business
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Income taxes
Income before minority interests
Minority interests in income
Net income

15

Previous fiscal year
From March 1,2013
to February 28, 2014
485,247
168,159
126,637
41,521

Current fiscal year
From March 1,2014
to February 28, 2015
497,913174,044
128,116
45,928242,078
75,009317,088358,610
290,483
68,126247,681
76,188323,869
369,797299,315
70,482

860
272
142
1,920
3,195

830
1,585
618
1,712
4,746

1,294
570
577
2,442
68,880

1,520
1,168
825
3,514
71,714

403
－
51
11
466

369
756
－
－
1,126

2,648
5,744
－
1,168
9,560
59,78526,758(5,136)
21,622
38,163
197
37,965

2,966
8,263
1,519
1,719
14,46958,37024,938312
25,25033,120433
32,686

Consolidated Statement of Comprehensive Income
For the fiscal year ended February 28, 2014 and February 28, 2015
(Millions of yen)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Share of other comprehensive income of associates
Accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of the parent
Minority interests

16

Previous fiscal year
From March 1,2013
to February 28, 2014
38,163Current fiscal year
From March 1,2014
to February 28, 2015
33,120

(171)
－
2,655

(299)
1
961

(839)

1,441

1,643
39,8072,104
35,22439,732
74

34,762461

(3) Consolidated Statement of Changes in Net Assets
Consolidated fiscal year ended February 2014 (From March 1, 2013 to February 28, 2014)(Millions of yen)
Shareholders’ equity
Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders' equity

58,50647,718

121,154(1,593)

225,785

Balance at beginning of current period
Changes of items during period
Dividends from surplus(20,978)(20,978)

Net income

37,96537,965Purchase of treasury stock

(11)

(11)

Disposal of treasury stock

0

0

0

Exercise of subscription rights toshares(Issuance of treasury shares)

22

48

70

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

22

16,98737

17,04758,50647,741138,141(1,556)

242,832(Millions of yen)
Accumulated other comprehensive income

Balance at beginning of current
periodValuationdifference on
available-forsale securities

Revaluation
reserve for land

78

(567)

Foreign currency Total accumulatedtranslation
other comprehensive
adjustment
income1,179

690

Subscription
Minority Total net
rights tointerests
assetsshares427

3,279

230,181

Changes of items during period
Dividends from surplus(20,978)

Net income

37,965Purchase of treasury stock(11)

Disposal of treasury stock0

Exercise of subscription rights toshares(Issuance of treasury shares)

70

Net changes of items other thanshareholders' equity(171)

Total changes of items during
period(171)

Balance at end of current period

(93)

1,938

1,766

130

1,371

3,268

－

1,938

1,766

130

1,371

20,315

(567)

3,118

2,456

557

4,650

250,49717

Consolidated fiscal year ended February 2015 (From March 1, 2014 to February 28, 2015)(Millions of yen)
Shareholders’ equity
Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders' equity

58,50647,741138,141(1,556)

242,832

Balance at beginning of current period
Changes of items during period
Dividends from surplus(22,979)(22,979)

Change of scope of equity method

(608)

(608)

Net income

32,68632,686

Purchase of treasury stock
Disposal of treasury stock0

Reversal of revaluation reserve for land

(289)

(289)

0

0

(1)

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

(1)

(44)

(63)

573

465

－

(44)

9,035

284

9,274

58,506

47,696

147,177(1,272)

252,107

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
Foreign currency Remeasurements Total accumulated
other
Revaluation
on available-for-saletranslationof defined benefit
reserve for landcomprehensive
plans
securities
adjustment
incomeBalance at beginning of current
period

(93)

(567)

3,118

－

2,456

Subscription
Minorityrights tointerests
sharesTotal net
assets557

250,497

4,650

Changes of items during period
Dividends from surplus(22,979)

Change of scope of equity
method(608)

Net income

32,686

Purchase of treasury stock(289)

Disposal of treasury stock0

Reversal of revaluation reserve
for landExercise of subscription rights
to shares(Issuance of treasury shares)
Net changes of items other thanshareholders' equity

(1)
465
(299)

1

2,374

(518)

1,557

(334)

2,801

4,024

Total changes of items during
period

(299)

1

2,374

(518)

1,557

(334)

2,801

13,229Balance at end of current period

(393)

(566)

5,492

(518)

4,014

223

7,452

263,79718

(4) Consolidated Statement of Cash Flows
For the fiscal year ended February 28, 2014 and February 28, 2015
(Millions of yen)

Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Increase (decrease) in provision for retirement benefits
Increase (decrease) in net defined benefit liability
Increase (decrease) in allowance for doubtful accounts
Interest income
Interest expenses
Loss (gain) on sales of investment securities
Loss on retirement of noncurrent assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in accounts receivable-other
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in deposits received
Increase (decrease) in guarantee deposits received
Other
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Decrease (increase) in short-term loans receivable
Decrease (increase)in long-term loans receivable, net
Purchase of investments in subsidiaries resulting in change inscope of consolidation
Proceeds from purchase of investments in subsidiaries resulting inchange in scope of consolidation
Purchase of investment securities
Purchase of shares of subsidiaries and associates
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of long-term prepaid expenses
Other
Net cash used in investing activities

19

Previous fiscal year
From March 1,2013
to February 28,
2014

Current fiscal year
From March 1,2014
to February 28,
2015

59,78547,888
5,744
1,184
－
564
(860)
1,294
(403)
2,648
(6,648)(211)(7,607)
65
2,907
2,595
50
(2,558)2,570
108,889860(1,290)(26,956)
81,50358,37041,825
8,263(11,275)
12,958
(170)
(830)
1,520
759
2,966
(4,584)(2,588)(3,439)8,278
12.288
5,721
15,609(2,307)(5,969)137,397814(1,467)(26,176)
110,567(22,000)
26,000(4,145)(1,999)－(11,204)
19,2043,135(4,633)(41,381)

1,733

－

(45)
(4,051)(34,857)(5,499)(2,373)(730)(47,924)(6,507)(3,335)(41,052)(7,901)(3,806)(2,951)(100,433)

(Millions of yen)Previous fiscal year
From March 1,2013
to February 28,
2014
Net cash provided by (used in) financing activities
Repayment of long-term loans payable
Proceeds from long-term loans payable
Proceeds from share issuance to minority shareholders
Repayments of lease obligations
Cash dividends paid
Other
Net cash 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
Cash and cash equivalents at end of period

20

(185)
－
－
(17,477)(20,978)(1,008)(39,650)
2,064(4,006)
72,76668,759Current fiscal year
From March 1,2014
to February 28,
2015(21,590)
59,0002,000(20,531)(22,979)811(3,289)1,150
7,995
68,75976,754

(5) Notes Concerning Going Concern Assumption
None(Basis of Presenting the Consolidated Financial Statements)
1. Scope of consolidation(1)Consolidated subsidiaries: 15(Domestic)
Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
BestPractice, Inc.
SCI, Inc.
Lawson Mart, Inc.
Lawson HMV Entertainment United Cinema Holdings, Inc.
United Entertainment Holdings Co., Ltd.
United Cinemas Co., Ltd.
SEIJO ISHII Co., Ltd.
(Foreign)
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.
Dalian Lawson, Inc.
Lawson (China) Holdings, Inc.
Lawson Asia Pacific Holdings Pte. Ltd.
Saha Lawson Co., Ltd.
Among the companies mentioned above, Lawson HMV Entertainment United Cinema Holdings, Inc.,
which was established during the current fiscal year, has been included in the scope of consolidation.
United Entertainment Holdings Co., Ltd. and its subsidiary United Cinemas Co., Ltd. have been
included in the scope of consolidation as a result of acquisition of shares of United Entertainment
Holdings Co., Ltd. from the current fiscal year.
SEIJO ISHII CO., LTD. has been included in the scope of consolidation as a result of acquisition ofits shares from the current fiscal year.
Smart Kitchen, Inc. was excluded from the scope of consolidation since its liquidation was completed
as of January 28, 2015.
(2) Non-consolidated subsidiaries(Domestic)
LAWSONWILL, Inc.
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Seikaken, Inc.
Lawson Syuhan, Inc.
Lawson Staff, Inc.
TOKYO EUROPE TRADE CO., LTD.
(Foreign)
Lawson USA Hawaii, Inc.
Shanghai Le Song Trading Co., Ltd.
Zhejiang Lawson, Inc.
Beijing Lawson, Inc.
BEIJING LUOSONG Co., Ltd.
(Reasons for exclusion from the scope of consolidation)
The above non-consolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, net income (corresponding to equity interest)
and retained earnings (corresponding to equity interest), etc. have no material influence on the
consolidated financial statements.

21

2. Application of the equity method(1) Affiliated companies to which the equity method is applied: 2(Domestic)
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Minamikyushu, Inc., 49% of the shares of which the Company owns, has been included in
the scope of the equity method affiliate starting from the current consolidated fiscal year due toincreasing materiality.
PT MIDI UTAMA INDONESIA Tbk, which had been an equity method affiliate in the previous
consolidated fiscal year, was excluded from the scope of the equity method affiliate since all of its
owned shares were sold.
(2) The Company excluded from the scope of the equity method affiliate non-consolidated subsidiaries
LAWSONWILL, Inc., HATS UNLIMITED CO., LTD., Food Marketing Japan, Inc., Seikaken, Inc.,
Lawson Syuhan, Inc., Lawson Staff, Inc., TOKYO EUROPE TRADE CO., LTD., Lawson USA
Hawaii, Inc., Shang Hai Le Song Trading Co., Ltd., Zhejiang Lawson, Inc., Beijing Lawson, Inc.,
BEIJING LUOSONG Co., Ltd. and affiliated companies Double Culture Partners Co., Ltd., Daichi Wo
Mamoru Kai, Co., Ltd., Kyodo Classics, Inc., Loyalty Marketing, Inc., Shang Hai Gong Hui Trading
Co., Ltd., Lawson Farm Chiba and others were excluded from the scope of the equity-method affiliate
because net income/loss (corresponding to equity interest) and retained earnings (corresponding toequity interest) of these nonconsolidated subsidiaries and affiliated companies have minimal influenceon the consolidated financial statements and are negligible even in aggregate.
3. Fiscal year end of the consolidated subsidiaries
The balance sheet date of SEIJO ISHII CO., LTD., Chongqing Lawson, Inc., Shanghai Hualian
Lawson, Inc., Dalian Lawson, Inc., Lawson (China) Holdings, Inc. and Saha Lawson Co., Ltd. is
December 31. In order to prepare the consolidated financial statements, the Company used thesecompanies’ 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 forconsolidation. Also the balance sheet date of Lawson HMV Entertainment United Cinema Holdings, Inc.,
United Entertainment Holdings Co., Ltd. and United Cinemas Co., Ltd. is March 31. In order to prepare theconsolidated financial statements, the Company used these companies’ financial information prepared as ofrecent quarterly results dates, and significant transactions which occur between the recent quarterly results
dates and the consolidated balance sheet date are adjusted as required for consolidation. The fiscal year end
date for the other consolidated subsidiaries corresponds with the balance sheet date.

4. Summary of Significant Accounting Policies(1) Valuation basis and method for important assets① Securities:
Held-to-maturity debt securities: Carried at amortized cost.
Available-for-sale securities:
Securities whose market value is readily determinable: Reported at market value, with unrealized
gains and losses, net of applicable taxes, reported in a separate component of net assets. The costof securities sold is determined based on the moving-average method.
Other: Stated at cost determined by the moving-average method.
② Inventories:
Mainly adopted the retail cost method.
(For balance sheet is determined by the method according to the book value write-down based on
the reduction of profitability)
Certain consolidated subsidiaries have adopted the gross-average cost method. (For balance sheet isdetermined by the method according to the book value write-down based on the reduction of
profitability)22

(2) Depreciation method of depreciable assets① Property and store equipment (except for lease assets):
Depreciation is mainly computed by the straight-line method at rates based on the estimated useful
lives of the assets. The range of useful lives is from 10 to 34 years for buildings and from 5 to 8
years for furniture, fixtures and equipment.
② Intangible assets (except for lease assets):
Amortization of intangible assets is computed by the straight-line method.
Software costs of software for internal use are amortized by the straight-line method over 5 years,
which is the internal useful life.
③ Lease assets:
Previously, these leases were accounted for as rental transactions. Furthermore, in terms of thedepreciation method for leased assets related to finance leases that do not transfer ownership ofleased property, the Company applies the straight-line method using the lease term as the useful life
and a residual value of zero.
However, the Company has continued to treat as rental transactions finance leases that do nottransfer ownership of leased property and that commenced before the first fiscal year in which the
new accounting standard was applied.
④ Long-term prepaid expense:
Amortization of long-term prepaid expense is computed by the straight-line method.
(3) Accounting standard for important reserves① Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at an amount of possible losses from uncollectable
receivables based on the actual rate of losses from bad debt for ordinary receivables, and on
estimated recoverability for specific doubtful receivables.
② Provision for bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on theestimated amounts.
③ Provision for retirement benefits to executive officers and auditors
Allowance for retirement benefits to executive officers of the Company, and to directors andcorporate auditors of the certain consolidated subsidiary are calculated to state the liability at 100%of the amount that would be required if all corporate auditors, executive officers and directors
resigned their services with the Company at the balance sheet date.
(4) Accounting method for retirement benefits:
Allowance for employees’ retirement benefits is provided at the amount accrued based on theretirement benefit liability and pension assets at the balance sheet date for provision for retirement
benefits to employees.
・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 straight-line
attribution basis.
・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 overa certain period (10 years) within an average remaining service period of employees at the time of
their occurrence.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis
over a certain period (10 years) within an average remaining service period of employees at thetime of their occurrence.
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 tocalculate net defined benefit liability and retirement benefit expenses.
(5) Foreign currency transactions and foreign currency financial statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies
are translated into Japanese yen at the exchange rates at the consolidated balance sheet date. The
foreign exchange gains and losses from translation are recognized in the consolidated statement ofincome. The consolidated balance sheet accounts as well as revenue and expense accounts of foreign
23subsidiaries and affiliated companies are translated into Japanese yen at the current exchange rate asof the consolidated balance sheet date except for shareholders’ equity, which is translated at thehistorical rate. Differences arising from such translation are shown as “foreign currency translation
adjustments”, a separate component of net assets.
(6) Amortization 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.
(Changes in accounting policies and others)
Changes in accounting policies
Application of Accounting Standards for Retirement Benefits, etc.
With regard to the Accounting Standards for Retirement Benefits, etc., the Company carried out thefollowing: implemented “Accounting Standards for Retirement Benefits” (May 17, 2012, AccountingStandards Board of Japan (ASBJ) Statement No. 26) and “Implementation Guidance on AccountingStandards for Retirement Benefits” (May 17, 2012, ASBJ Guidance No. 25. Hereinafter referred to as
the “Guidance on Accounting Standards for Retirement Benefits”) from the end of the current
consolidated fiscal year (excluding stipulations stated in the main clause of paragraph 35 of the
Accounting Standards for Retirement Benefits and the main clause of paragraph 67 of the Guidance on
Accounting Standards for Retirement Benefits), changed to a method of recording the projected benefit
obligation after deducting therefrom the amount of pension assets as liabilities related to retirement
benefits, and recorded the unrecognized actuarial difference and the unrecognized prior service cost as
liabilities related to retirement benefits. The application of Accounting Standards for Retirement
Benefits, etc. complies with transitional treatment stipulated in paragraph 37 of the AccountingStandards for Retirement Benefits. The effect of the said change is added and subtracted from theaccumulated adjustment amount concerning retirement benefits for accumulated other comprehensive
income at the end of the current consolidated fiscal year.
As a result, 12,958 million yen in liabilities related to retirement benefits were recorded at the end of thecurrent consolidated fiscal year. In addition, other comprehensive income (accumulated) decreased 518
million yen.
Changes in accounting policies and others that are difficult to differentiate from changes in accounting
estimation
The depreciation method of property and store equipment (excluding lease assets) of the Company
and domestic consolidated subsidiaries, which had primarily consisted of the declining-balance method,
was changed to the straight-line method from the first quarter consolidated accounting period.
The Lawson Group reviewed the depreciation method of its property and store equipment upon the
adoption of a strategy to reinforce the competitiveness of its existing stores such as the utilization ofmembership card data and the restructuring of the Group under a policy of placing emphasis on existing
stores. As a result, the depreciation method was changed to a straight-line method from the first quarter
consolidated accounting period since it is expected that the number of visiting customers, which is
proportionate to the utilization of facilities, the principle factor for economic depreciation, can be
maintained even if store assets aged, and since equal distribution of depreciation is considered to be
more appropriate going forward.
Due to this change, operating income, recurring profit and net income before income taxes and minority
interests for the current consolidated fiscal year increased by 9,422 million yen each compared to whenusing the previous method.

24

(Accounting Standards, etc. that are not applied)・Accounting Standard for Retirement Benefits (ASBJ Statement NO. 26, on May 17, 2012)
・Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance NO. 25, on May 17, 2012)
1. Outline
This accounting standard, etc., based on the aspects and international trends to improve the financial
reporting, differences and unrecognized treatment method of the past service cost of unrecognizedactuarial, expansion of the calculation method and disclosure of retirement benefit obligations and service
costs the is what has been revised in the center.
2. Scheduled application date
The application will start from the end of a fiscal year that commences after March 1, 2015.
3. Influence from the application of the relevant Accounting Standards
Influence on the financial statements in its preparation is under evaluation.
• Revised Accounting Standard for Business Combinations (ASBJ Statement No.21 of September 13,
2013)• Revised Accounting Standard for Consolidated Financial Statements (ASBJ Statement No.22 ofSeptember 13, 2013)• Revised Accounting Standard for Business Divestitures (ASBJ Statement No.7 of September 13, 2013)• Revised Accounting Standard for Earnings Per Share (ASBJ Statement No.2 of September 13, 2013)• Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures (ASBJ Guidance No.10 of September 13, 2013)• Revised Guidance on Accounting Standard for Earnings Per Share (ASBJ Guidance No.4 of September
13, 2013)
1. Outline
The above Revised Accounting Standards mainly concern revisions to: (1) accounting treatment ofchanges in equity of a parent company in a subsidiary due to additional acquisition of shares or othertransactions while the parent company continues to hold a controlling interest; (2) accounting treatmentof acquisition-related costs; (3) the presentation of “net income” and the name of item from “minority
interest” to “non-controlling interest”; and (4) provisional accounting treatment.
2. Scheduled application date
The Revised Accounting Standards will be applied starting from the beginning of the fiscal year ending
February 28, 2017.
3. Influence of application of the relevant Accounting Standards
The level of influence was under evaluation at the time the financial statements for the current period
were being prepared.

25

(Changes in presentation)(Consolidated Balance Sheets)
In the “Current liabilities” section, “Right of trademark” were presented in “Other” in the previous
fiscal year. Due to an increase in financial materiality, “Right of trademark” is now separately presented.
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 “Current liabilities” section, the 106 million yen that had previously been presented
as “Other” in the Consolidated Balance Sheets for the previous fiscal year is now separately presented as“Right of trademark”.
In the “Current liabilities” section, “Provision for point card certificates” was presented separately inthe previous fiscal year. Due to a decline in financial materiality, “Provision for point card certificates”
is now presented 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 “Current liabilities” section, the 132 million yen that had previously been presented
as “Provision for point card certificates” in the Consolidated Balance Sheets for the previous fiscal year
is now included in “Other.”(Consolidated Statement of Income)"Selling, general and administrative expenses" which had been presented separately for each expense
item in the previous fiscal year, in order to increase the list and clarity of the consolidated income
statement from the current fiscal year, as "selling, general and administrative expenses" and collectively
stated, we have changed the method to note the major items and amounts. In order to reflect the changeof this display method, we have conducted a reclassification of consolidated financial statements for theprevious fiscal year.
In addition, major items, as well as the amount of selling, general and administrative expenses in theprevious fiscal year and the current fiscal year, are as described in the "Notes (Consolidated Statement of
Income)".
In the “Extraordinary income” section, “Foreign exchange gains” was included in “Other” in theprevious fiscal year. Due to an increase in financial materiality, “Foreign exchange gains” is now
separately presented. 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 “Extraordinary income” section, the 272 million yen that had previously beenpresented as “Other” in the Consolidated Statement of Income for the previous fiscal year is now
presented as “Foreign exchange gains”.
In the “Non-operating income” section, “Compensation income” was presented separately in theprevious fiscal year. Due to a decline in financial materiality, “Compensation income” is now presented
in “Other.” To reflect this change in method of presentation, the consolidated financial statements forthe previous fiscal year have been reclassified.
As a result, in the “Non-operating income” section, the 794 million yen that had previously beenpresented as “Compensation income” in the Consolidated Statement of Income for the previous fiscal
year is now included in “Other”.
In the “Non-operating income” section, “Penalty income” was included in “Other” in the previous
fiscal year. Due to an increase in financial materiality, “Penalty income” is now separately presented. 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, the 142 million yen that had previously been
included in “Other” in the Consolidated Statement of Income for the previous fiscal year is now
separately presented as “Penalty income”.
In the “Non-operating income” section, “Equity in earnings of affiliates” was presented separately inthe previous fiscal year. Due to a decline in financial materiality, “Equity in earnings of affiliates” is
now presented 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, the 393 million yen that had previously beenpresented as “Equity in earnings of affiliates” in the Consolidated Statement of Income for the previous
fiscal year is now included in “Other”.

26

(Consolidated Statement of Cash Flows)
In the “Cash flow from operating activities” section, “Equity in (earnings) losses of affiliates” waspresented separately in the previous fiscal year. Due to a decline in financial materiality, “Equity in(earnings) losses of affiliates” is now included in “Other.” 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 operating activities” section, the (119) million yen that had
previously been presented as “Equity in (earnings) losses of affiliates” in the Consolidated Statement of
Cash Flows for the previous fiscal year is now included in “Other.”In the “Cash flow from investing activities” section, “Purchase of investment securities” was included
in “Other” in the previous fiscal year. Due to an increase in financial materiality, “Purchase ofinvestment securities” 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, the (45) million yen that had
previously been presented in “Other” in the Consolidated Statement of Cash Flows for the previous
fiscal year is now separately presented as “Purchase of investment securities”.
In the “Cash flow from financing activities” section, “Repayment of long-term loans payable” wasincluded in “Other” in the previous fiscal year. Due to an increase in financial materiality, “Repaymentof long-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, the (185) million yen that had
previously been presented in “Other” in the Consolidated Statement of Cash Flows for the previous
fiscal year is now separately presented as “Repayment of long-term loans payable”.

27

(Notes to Consolidated Balance Sheet)*1. Investment in non-consolidated subsidiaries and affiliated companies
Previous fiscal year
Current fiscal year
As of February 28, 2014 As of February 28, 2015
Investments in securities (stock)¥10,544 million¥9,784 million
Investment amount for jointly-controlled companies－¥233 million
Other (other equity investments)¥436 million¥1,662million*2. Accounts receivable due from franchised stores, accounts payable due to franchised stores—theamounts of credits and debts incurred for the deal with franchised stores.
*3. Accounts payable-trade for franchised stores—the amounts payable to vendors for merchandisepurchased by franchised stores.
*4. Long-term guarantee deposited—the amounts received from mainly franchised stores.
*5. 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 land revaluation difference.
Revaluation method:
The value of land is determined based on the road-based 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
Previous fiscal year
As of February 28, 2014

Current fiscal year
As of February 28, 2015

¥319 million¥314 million*6. Collateral assets and liabilities collateralized
Assets and liabilities with collateral pledged as collateral are as follows.
Previous fiscal year
As of February 28, 2014
Cash and deposits－

Current fiscal year
As of February 28, 2015
¥416 million

The difference between book value and market
value of the revalued land as of balance sheet datePrevious fiscal year
As of February 28, 2014
Shares of consolidated subsidiaries(Amount before elimination)－

Current fiscal year
As of February 28, 2015
¥16,614 million

In addition to the above, consolidated subsidiary shares to be pledged as collateral are as follows.
Previous fiscal year
Current fiscal year
As of February 28, 2014
As of February 28, 2015
Short-term loans payable－¥1,000 million
Current portion of long-term loans payable－¥575 million

Long-term loans payable－¥8,425 million

Total

－

¥10,000 million

28

(Notes to Consolidated Statement of Income)*1 Net sales, cost of goods sold, operating gross profit—the amounts from mainly company operated
stores.
*2 Major items and amounts of selling, general and administrative expenses, are as follows.

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

Previous fiscal year

(Millions of yen)
Current fiscal year

From March 1, 2013 to
February 28, 2014

From March 1, 2014 to
February 28, 2015

44,2792,367
2,192
89,48447,88845,187
2,056
2,065
96,877
41,788*3 Distribution of loss on disposal of fixed assets

Buildings and structures
Furniture, fixtures and equipment
Leased property
SoftwarePrevious fiscal year

(Millions of yen)
Current fiscal year

From March 1, 2013 to
February 28, 2014

From March 1, 2014 to
February 28, 2015

1,653
425
328
240

1,708
355
570
332

*4 Impairment loss
The Group recognized an impairment loss mainly for each stores as the smallest category bear cash
flows.
The carrying amount of those assets was written down to the recoverable amount. The Group
recognized impairment loss as special losses on following assets due to a decline in value of therelated asset categories due mainly to a continuous operating losses.
Previous fiscal year (From March 1, 2013 to February 28, 2014)
Location
AssetsCategory by use
Buildings and structures; furniture, fixtures andTokyoequipment; and others
Buildings and structures; furniture, fixtures andStoresOsakaequipment; and others
Buildings and structures; furniture, fixtures andOthersequipment; and others―
Buildings and structures; furniture, fixtures andequipment; and others
Others―Software―
Others
Total――

Category by fixed assets(Millions of yen)

Buildings and structures
Furniture, fixtures and equipment
Lease assets
Software
Other

2,868
359
1,251
1,236
29

29

Million of yen
729
598
2,565
607
1,236
7
5,744

Recoverable value of the assets of the Group is the higher amount of net selling price or value in use.
Not selling price of land was calculated based on appraised value by real estate appraiser or contract
price, and the value in use was calculated by discounting estimated future cash flows to which the
4.3% discount rate was mainly applied.
Current fiscal year (From March 1, 2014 to February 28, 2015)
Category by use
Location
AssetsBuildings and structures; furniture, fixtures andTokyoequipment; and others
Buildings and structures; furniture, fixtures andStoresOsakaequipment; and others
Buildings and structures; furniture, fixtures andOthersequipment; and others
Others

Total

Million of yen
1,307
770
4,240

―

Land

29

―

Software17―

Goodwill

1,897

―

―

8,263

Category by fixed assets
Buildings and structures
Furniture, fixtures and equipment
Land
Leased property
Software
Goodwill
Other(Millions of yen)
3,658
464
29
2,172
17
1,897
24

Recoverable value of the assets of the Group is the higher amount of net selling price or value in use.
Not selling price of land was calculated based on appraised value by real estate appraiser or contract
price, and the value in use was calculated by discounting estimated future cash flows to which the
4.8% discount rate was mainly applied.
*5 Business liquidation loss
The Company and its consolidated subsidiaries, the fiscal year in conjunction with the businessliquidation occurred Lawson Mart business exit costs that went, the Company recorded an
extraordinary loss losses due to store closed.
Breakdown of business liquidation loss
Loss on cancellation of rental contracts
Loss on cancellation of FC contracts
Loss on abandonment of goods
Other(Millions of yen)
429
370
369
351

In addition, an impairment loss 2,753 one million yen due to the business liquidation is included in"*4 Impairment loss".

30

(Notes to Consolidated Statement of Comprehensive Income)* Reclassification adjustments to gain or loss and income tax relating to other comprehensive income(Millions of yen)Previous fiscal year
Current fiscal year

Valuation difference on available-for-sale securities
Gain or loss arising during the period
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Valuation difference on available-for-sale securities
Revaluation reserve for land
Gain or loss arising during the period
Foreign currency translation adjustment:
Gain or loss arising during the period
Share of other comprehensive income of associates
accounted for using equity method:Gain or loss arising during the period
Total other comprehensive income

31

From March 1, 2013 to
February 28, 2014

From March 1, 2014 to
February 28, 2015

(263)
(8)
(272)
100
(171)

(431)
(22)
(454)
154
(299)

－

1

2,655

961

(839)
1,643

1,441
2,104

(Notes to Consolidated Statement of Changes in Net Assets)
Previous fiscal year (From March 1, 2013 to February 28, 2014)
1. Number of shares of outstanding stock and treasury stock
Number of shares at
Increase during the Decrease during the Number of shares atthe beginning of theperiodperiodthe end of the period
period(thousand shares)(thousand shares)(thousand shares)(thousand shares)
Outstanding stock
Common stock
100,300——
100,300
Treasury stock
Common stock(*)
406
1
12
395
(*) The 1 thousand share increase in treasury stock resulted from the purchase of stock of less than
one share unit.
The 12 thousand share decrease in treasury stock resulted from the 12 thousand share decrease due
to exercise of a right for stock acquisition and the 0 thousand share decrease due to requests for
additional purchase of stock of less than one share unit.
2. Stock acquisition rights and treasury stock acquisition rights
Class and number of shares
Balance at
subject to stock acquisition rights
end of theTerms of stock
Number (shares)
current
Classificationacquisition rights
periodBeginning Increase Decrease End of theClass(Millionsof theduring the during theperiodof yen)periodperiodperiodSubmitting
Stock acquisition
company
rights (ordinary
—
—
—
—
—
557
(Parent
stock options)company)
Total

—

—

—

—

—

557

3. Dividend
1) Dividend payment
Date of resolution

Class ofsharesAmounts ofdividend payment(Millions of yen)

Dividend
per shares(yen)

Date recorded for
dividend

Effective date

The General meetingof shareholders(May 21, 2013)

Common
stock

9,989

100

As of February 28,
2013

As of May 22,
2013

Directors’ meeting(October 8, 2013)

Commonstock

10,988110

As of August 31,
2013

As of
November 11,
20132) Dividends for which effective date is after balance sheet date of year-ended, among dividends
attributed in the current period
Amounts of
Date
Class of Reserve of
Dividend per
Effective
Date of resolution
dividend payment
recorded forsharesdividend
shares (yen)date(Millions of yen)
dividend
The General
As ofmeeting ofCommon Retained
As of May
10,989110Februaryshareholders
stock
earnings
28, 2014
28, 2014(May 27, 2014)32

Current fiscal year (From March 1, 2014 to February 28, 2015)
1. Number of shares of outstanding stock and treasury stock
Number of shares at
Increase during
Decrease during Number of shares atthe beginning of thethe period
the period
the end of the period
period(thousand shares)(thousand shares)(thousand shares)(thousand shares)
Outstanding stock
Common stock
100,300－－
100,300
Treasury stock
Common stock (*)
395
40
135
301
(*) The 40 thousand share increase in treasury stock resulted from the acquisition of treasury stock due
to the purchase request of dissenting shareholders against merger (an increase of 40 thousand) andthe purchase of stock of less than one share unit.
The 135 thousand share decrease in treasury stock resulted from the 135 thousand share decrease
due to exercise of a right for stock acquisition and the 0 thousand share decrease due to requests
for additional purchase 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)
Terms of stock
current
Classificationacquisition rights
periodBeginning
Increase
Decrease
End
of
Class
of theduring the during the the period (Millionsof yen)periodperiodperiodSubmitting
company(Parent company)

Stock acquisitionrights (ordinary
stock options)

Total

－

－

－

－

－

223

－

－

－

－

－

223

3. Dividend
1) Dividend payment
Date of resolution
The General
meeting ofshareholders(May 27, 2014)
Directors’ meeting(October 7, 2014)

Class ofsharesAmounts ofdividend payment(Millions of yen)

Dividend
per shares(yen)

Date recorded for
dividend

Effective dateCommonstock

10,989110

As ofFebruary 28, 2014

As of May 28,
2014

Commonstock

11,989120

As ofAugust 31, 2014

As of November
10, 2014

2) Dividends for which effective date is after balance sheet date of year-ended, among dividends attributedin the current period
Amounts of
Date
Class of Reserve of
Dividend per
Effective
Date of resolution
dividend payment
recorded forsharesdividend
shares (yen)date(Millions of yen)
dividend
The General
As ofmeeting ofCommon Retained
As of May
11,999120
Februaryshareholders
stock
earnings
27, 2015
28, 2015(May 26, 2015)

33

(Notes to Consolidated Statement of Cash Flows)*1. Relations between the year-end balance of cash and cash equivalents and the accounts listed in the
consolidated balance sheets(Millions of yen)Previous fiscal year
Current fiscal year
From March 1, 2013
From March 1, 2014
to February 28, 2014
to February 28, 2015
Cash and deposits
76,76376,758Time deposits, etc., for which the deposit period exceeds(8,004)(4)
three months
Cash and cash equivalents
68,75976,754*2. Breakdown of assets and liabilities of a newly consolidated subsidiary acquired through purchase ofshares in this consolidated fiscal year.
Previous fiscal year (From March 1, 2013 to February 28, 2014)
The following is a breakdown of assets and liabilities at the time Saha Lawson Co., Ltd. was newly
consolidated through purchase of shares, and the difference between the cost of purchase of Saha
Lawson shares and proceeds from the purchase.
(Millions of yen)
Current assets
3,224
Fixed assets
698
Goodwill
8
Current liabilities
1,525
Minority interests
1,223
Additional purchase cost of shares of theconsolidated subsidiary
1,183
Purchase cost made up to acquisition
111
Cash and cash equivalents of the newly consolidated
subsidiary
2,804
Difference: Proceeds from the purchase of shares of
the consolidated subsidiary
1,733
Current fiscal year (From March 1, 2014 to February 28, 2015)
The following is a breakdown of assets and liabilities at the time SEIJO ISHII Co., Ltd. was newly
consolidated through purchase of shares, and the difference between the cost of purchase of SEIJOISHII Co., Ltd. shares and proceeds from the purchase.
(Millions of yen)
Current assets
14,441
Fixed assets
27,417
Goodwill
24,466
Current liabilities
28,218Non-current liabilities
1,836
Purchase cost of shares of newly consolidated
36,269subsidiary
Cash and cash equivalents of the newly consolidated
5,803
subsidiary
Difference: Purchase of shares in consolidated
30,466
subsidiaries

34

The following is a breakdown of assets and liabilities at the time United Entertainment Holdings Co.,
Ltd. and its subsidiary United Cinema Co., Ltd. was newly consolidated through purchase of shares,
and the difference between the cost of purchase of United Entertainment Holdings Co., Ltd. shares andproceeds from the purchase.
Current assets
Fixed assets
Goodwill
Current liabilities
Non-current liabilities
Purchase cost of shares of newly consolidated
subsidiary
Cash and cash equivalents of the newly consolidated
subsidiary
Difference: Purchase of shares insubsidiaries

consolidated

3,947
7,307
9,563
4,764
3,035
13,017
2,102
10,914*3 Description of significant non-fund transactions
Assets and liabilities related to finance lease transactions
From March 1, 2013
to February 28, 2014
Assets and liabilities related to finance lease transactions

35

32,291(Millions of yen)
From March 1, 2014
to February 28, 2015
33,682

(Notes to Lease Contracts)
1. Finance lease transactions (lessees)
Non-ownership-transferred finance lease transactions① Details of leased assets
Mainly store furniture (including fixtures and fittings) used in the domestic convenience store
business② Depreciation method for leased assets
As stated in the Basis of Presentation of the Consolidated Financial Statements under “4.
Accounting standards (2) Depreciation methods for important depreciable assets.”
With regard to non-ownership-transferred finance lease transactions whose effective date of leasetransaction precedes February 28, 2009, the Company applies the accounting method that it uses toaccount for ordinary lease transactions. Details of the transaction are summarized below.
1) The assumed data as to acquisition cost, accumulated depreciation and net leased property(Millions of yen)Previous fiscal year
As of February 28, 2014
Accumulated
Accumulated
depreciation
impairment loss

Acquisition cost

Leased property

Furniture, fixturesand equipment

13,772

11,490

672

1,609

Total

13,772

11,490672

1,609(Millions of yen)
Current fiscal year
As of February 28, 2015
Accumulated
Accumulated
depreciation
impairment loss

Acquisition cost

Leased property

Furniture, fixturesand equipment

7,763

7,187

428

146

Total

7,763

7,187

428

146

2) Obligations under finance leases(Millions of yen)
Current fiscal year
As of February 28, 2015

Previous fiscal year
As of February 28, 2014
Obligations under finance leases
Due within one year

1,793

610

Due after one year

629

3

2,422

613

374

243

Total
Allowance for impairment loss
on leased property363) Lease payments, depreciation expense, interest expense and impairment loss

3,016

(Millions of yen)
Current fiscal year
From March 1, 2014
to February 28, 2015
1,833

177

140

2,661

1,686

Interest expense

103

38

Impairment loss

32

8Previous fiscal year
From March 1, 2013
to February 28, 2014
Lease payments
Transfer from allowance for
impairment loss on leased property
Depreciation expense4) Computation method of depreciation expense
Depreciation expense is computed by the straight-line method, assuming the lease period as the usefullife and no residual value.
5) Computation method of amount equivalent to interest
The difference between the total lease contract amount and the acquisition cost is regarded as an
amount equivalent to interest, and shall be allocated over the lease term based on the interest method.
2. Operating lease contracts
Obligations under non-cancellable operating leases(Millions of yen)Previous fiscal year
As of February 28, 2014

Current fiscal year
As of February 28, 2015

Due within one year

913

1,064

Due after one year

1,295

1,498

Total

2,208

2,562

37

(Notes to Business Combinations, etc.)
Business combinations due to acquisition
1. Acquisition of United Entertainment Holdings Co., Ltd. and United Cinema Co., Ltd.
(1) Outline of business combination① Name of the absorbed business and its outline
Name of business: United Entertainment Holdings Co., Ltd. and United Cinema Co., Ltd.
Business outline: Manage and construct movie theatre business② The main reason that made the business combination
1. The acquiring company has been developing its business in the movie industry, which the Company had
been monitoring for some time, and is seeing steady revenue growth in the movie business, which has alarge number of participants and boasts continued stable growth.

2. The acquiring company has a strong connection to the entertainment business, which the Group is
engaged in, and offers expectations of mutual customers and business synergies.
③ Date of business combination
August 28, 2014
④ Legal form of business combination
Shares acquisition⑤ Name of company after the business combination
There is no change.
⑥ Acquire of voting rights
100％⑦ The main reason that made decision to acquire companies
The Company's consolidated subsidiary Lawson HMV Entertainment United Cinemas Holdings, Inc.
has acquired the stock of United Entertainment Holdings, Inc.
(2) Period of performance of the acquired company are included in the consolidated financial statements
From September 1, 2014 to December 31, 2014
(3) Acquisition cost and breakdown of the acquired company(Millions of yen)
Acquisition priceCash and deposits

Costs directly required for theacquisition

Advisory costs

12,97343

Acquisition cost

13,017(4) Amount, cause, amortization method and period of goodwill generated① Amount of goodwill generated
9,563 million yen② Cause of the generation of goodwill
Mainly excess earning power that is anticipated from the low cost business model of a highrevenue retail manufacturing business in which stable growth is expected
Method and period of amortization
Straight-line method over 20 years(5) The amount and major breakdown of assets accepted and liabilities taken on the day in which thebusinesses are combined(Millions of yen)
Current assets
3,947
Non-current assets

7,307

Total assets

11,254Current liabilities

4,764

Non-current liabilities

3,035

Total liabilities

7,800

38

(6) The estimated amount and its calculation method regarding the impact on the consolidated profit andloss statement for the current consolidated fiscal year assuming that the business combination iscompleted on the first day of the current consolidated fiscal year
(Millions of yen)
Net sales
10,108Operating income

640

Ordinary income

568

Income before minority interests(520)

Net income per share(323.70)(Calculation method for the estimated amount)
The difference between sales and profit/loss information assessed under the assumption that thebusiness combination completed on the first day of the current consolidated fiscal year and the sales andprofit/loss information in the consolidated profit and loss statement of the acquiring company has beentreated as the estimated amount of impact.
This note has not received an audit certificate.
2. Acquisition of SEIJO ISHII Co., Ltd.
(1) Outline of business combination① Name of the absorbed business and its outline
Name of business: SEIJO ISHII Co., Ltd
Business outline: Food retailing, import, wholesale, food manufacture and restaurant operations
business② The main reason that made the business combination
The Company and the acquired company are both engaged in retail manufacturing and an alliancewith the acquiring company, which has product appeal and sales power that exceed those of ordinary
supermarkets, has the potential to generate huge synergy.
③ Date of business combination
October 31, 2014 (Acquisition date)
September 30, 2014 (Deemed acquisition date)④ Legal form of business combination
Shares acquisition⑤ Name of company after the business combination
There is no change.
⑥ Acquire of voting rights
100％⑦ The main reason that made decision to acquire companies
It has acquired the stock of SEIJO ISHII Co., Ltd.
(2) Period of performance of the acquired company are included in the consolidated financial statements
From October 1, 2014 to December 31, 2014
(3) Acquisition cost and breakdown of the acquired company(Millions of yen)
Acquisition priceCash and deposits

36,138

Costs directly required for theacquisition

Advisory costs

131

Acquisition cost

36,269(4) Amount, cause, amortization method and period of goodwill generated① Amount of goodwill generated
28,743 million yen② Cause of the generation of goodwill
Mainly excess earning power that is anticipated from the business model of a high revenue retail39manufacturing business in which stable growth is expected.
③ Method and period of amortization
Straight-line method over 20 years(5) Amortization period by amount and type allocated to intangible assets other than goodwill
Category

Right of trademark

Amount of money

12,000 million yen

Amortization period

20 years(6) The amount and major breakdown of assets accepted and liabilities taken on the day in which thebusinesses are combined(Millions of yen)
Current assets
14,441
Non-current assets

15,417

Total assets

29,858Current liabilities

28,218Non-current liabilities

1,836

Total liabilities

30,055(7) The estimated amount and its calculation method regarding the impact on the consolidated profit andloss statement for the current consolidated fiscal year assuming that the business combination iscompleted on the first day of the current consolidated fiscal year
(Millions of yen)
Net sales
45,198Operating income

3,038

Ordinary income

2,773

Income before minority interests

2,750

Net income per share

14,961.02(Calculation method for the estimated amount)
The difference between sales and profit/loss information assessed under the assumption that thebusiness combination completed on the first day of the current consolidated fiscal year and the sales andprofit/loss information in the consolidated profit and loss statement of the acquiring company has beentreated as the estimated amount of impact.
This note has not received an audit certificate.
(2) Outline of the accounting process applied
The business combination was processed as a common control transaction pursuant to the AccountingStandard for Business Combinations (ASBJ Statement No.21 of December 26, 2008) and Revised
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No.10 of December 26, 2008).

40

(Segment Information)
1. Outline of reporting segments
The Company’s financial information is provided separately by reporting segment and is subject toregular review by the board of directors with regard to the allocation of managerial resources andperformance evaluation. The Group’s primary business is the operation of convenience stores, which isundertaken by the incorporation of related businesses.
Therefore, the Group has made the domestic convenience store business and Entertainment & Home
Convenience business unit its main reporting segments, based on consideration of financial
characteristics and the nature of the services provided.
Lawson. Inc. operates a franchise system as well as undertaking the direct management of stores inJapan as the parent company of LAWSON, NATURAL LAWSON, LAWSON STORE100, LAWSONMART and other chains. Lawson Mart, Inc. undertakes the direct management of LAWSONSTORE100 and LAWSON MART stores. SCI, Inc. performs the increase in efficiency and optimizationof the whole process as a subsidiary which manages the process from supply to sale synthetically.
For Entertainment & Home Convenience business, Lawson HMV Entertainment, Inc. manages to sell
concert tickets at Lawson store, CD and video soft at HMV stores. In addition, United Cinemas Co., Ltd.
operates construction and management of multiplex movie theatres.
From this current consolidated fiscal year under review, for Lawson HMV Entertainment, Inc, due to
its rise in importance, there are changes in record method of reporting segments. Based on this change,
for segment information of previous fiscal year, it stated by classification after the change and [3.
Information related to amounts of sales, profit and loss by segment] of previous fiscal year.
2. Computation method of the amount of sales, profit and loss, assets and liabilities, and other items byreporting segment
The segment accounting policies are the same as those described in the “Basis of Presenting theConsolidated Financial Statements.” Segment profit is based on operating income. Internal earnings andtransfers between segments are based on market value.

41

3. Information related to the amount of sales, profit and loss by segment
Previous fiscal year (from March 1, 2013, to February 28, 2014)(Millions of yen)
Reporting segment

Adjusted
Amount(Note 2)

Total
(Note 3)

485,247－

485,247

1,084

4,810

(4,810)－46,040
97834,817

33,694
3,803
46,229490,058
68,081
682,756(4,810)45(61,763)

485,247
68,126620,992

44,008842

2,111

46,961－

46,961

419

273

268

961

(34)

927

2,295

－

3,875

6,171

－

6,171

37,170

1,187

1,998

40,356－40,356

Others(Note 1)

Domestic
Convenience
Store businessEntertainment &Home Conveniencebusiness

408,018

44,61932,610

2,305

1,421

410,323
63,299601,709

Total

Gross operating
revenue
Sales to externalcustomers
Internal sales ortransfers between
segments
Total
Segment profit
Segment asset
Other
Depreciation
Goodwill
depreciation
Invest foraffiliates
Increase of fixed
assets(Note)
1. The “others” category refers to business segments that do not fall under the main reporting segment
and includes financial services-related business operated by Lawson ATM Networks, Inc. andoverseas segment operated of Shanghai Hualian Lawson, Inc. and others.
2. The segment profit, adjusted by segment assets and amortization of goodwill, is balance ofelimination of intra-segment transactions
3. The segment profit is adjusted against the operating profits consolidated.
Current fiscal year (from March 1, 2014, to February 28, 2015)
Reporting segment
OthersDomestic
Entertainment &Convenience
Home Convenience(Note 1)
Store businessTotalbusiness

Adjusted
Amount(Note 2)

Total
(Note 3)Gross operating
revenue
Sales to externalcustomers
Internal sales ortransfers between
segments
Total
Segment profit
Segment asset
Other
Depreciation
Goodwill
depreciation
Invest foraffiliates
Increase of fixed
assets392,462

50,68854,762497,913－497,913

2,917

1,412

1,169

5,499

(5,499)－395,380
63,863707,339

52,101
2,587
57,87055,931
4,021
111,816

503,41270,472877,026(5,499)9(112,412)

497,91370,482
764,61436,926838

2,630

40,396－40,396

408

433

550

1,392

－

1,392

3,805

－

－

3,805

－

3,805

45,038

1,085

2,830

48,954－

48,95442

(Note)1. The “others” category refers to business segments that do not fall under the main reporting segment
and includes SEIJO ISHII business operated SEIJO ISHII Co., Ltd. financial services-related business
operated by Lawson ATM Networks, Inc. and overseas segment operated of Shanghai Hualian
Lawson, Inc. and others.
2. The segment profit, adjusted by segment assets and amortization of goodwill, is balance ofelimination of intra-segment transactions
3. The segment profit is adjusted against the operating profits consolidated.
(Related information)
Previous consolidated fiscal year (March 1, 2013 to February 28, 2014)
1. Information by Product and Service
Since similar information is described in the segment information, this information is omitted.
2. Information by 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, plant and store equipment
Since property, plant and equipment in Japan exceed 90% of property, plant and 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 (March 1, 2014 to February 28, 2015)
1. Information by Product and Service
Since similar information is described in the segment information, this information is omitted.
2. Information by 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, plant and store equipment
Since property, plant and equipment in Japan exceed 90% of property, plant and 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.

43

(Information on impairment loss in noncurrent assets by reported segment)
Previous consolidated fiscal year (March 1, 2013 to February 28, 2014)(Millions of yen)
Reporting segment
Domestic
Convenience
Store businessImpairment loss

5,837Entertainment& HomeConvenience
Store business
65

Others391

Total

Adjusted
amount

Total

6,294

(550)

5,744

Current fiscal year (March 1, 2014 to February 28, 2015)(Millions of yen)
Reporting segment
Domestic
Convenience
Store businessImpairment loss

5,831

Entertainment& HomeConvenience
Store business
237

Others

2,193

Total

Adjusted
amount

Total

8,263

－

8,263

(Information on amortization of goodwill and amortized balance by reported segment)
Previous consolidated fiscal year (March 1, 2013 to February 28, 2014)(Millions of yen)
Reporting segment

Balance at endof fiscal year
under review

Domestic
Convenience
Store businessEntertainment& HomeConvenience
Store business

6,027

726

Others

2,965

Total

Adjusted
amount

Total

9,719

－

9,719

Current fiscal year (March 1, 2014 to February 28, 2015)(Millions of yen)
Reporting segment

Balance at endof fiscal year
under review

Domestic
Convenience
Store businessEntertainment& HomeConvenience
Store business

8,788

9,856

Others29,543

44

Total

Adjusted
amountTotal

48,189－48,189

(Information on gain on negative goodwill by reported segment)
Not applicable(Per Share Information)
Previous fiscal year
(March 1, 2013 to February 28, 2014)
Net assets per share
Net income per share
Net income per share after full
dilution

Current fiscal year
(March 1, 2014 to February 28, 2015)

2,455.25 yen
380.04 yen
379.35 yen

Net assets per share
Net income per share
Net income per share after full
dilution

2,561.25 yen
327.08 yen
326.65 yen(Note) The basis for the calculation of net income per share and net income per share after full dilution
is as follows:
Previous fiscal year
Current fiscal year
Item
(March 1, 2013 to(March 1, 2014 to
February 28, 2014)
February 28, 2015)
Net income per share
Net income (million yen)Amount not attributable to common
stockholders (million yen)
Net income attributable to common stock(million yen)
Average number of common stock during the
fiscal year (thousand shares)

37,96532,686－－37,96532,68699,89899,931

－

－

181

133

(181)

(133)

Net income per share after full dilution
Net income adjustment value (million yen)
Increase in number of outstanding commonshares (thousand shares)(Stock acquisition rights）(thousand
shares)Summary of issuable shares not included in thecomputation of net income per share after full
dilution, since these securities are not dilutive.

──────────(Significant Subsequent Events)
Not applicable45──────────