Flash Report on the Consolidated Result
for the Fiscal Year Ended February 29, 2016
April 13, 2016
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 24, 2016
Scheduled date for payment of dividend: May 25, 2016
Scheduled date for submission of annual report: May 25, 2016
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 2015 fiscal year (from March 1, 2015, to February 29, 2016)(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%
2015 fiscal year
583,452 17.2
2014 fiscal year
497,913
2.6
Note: Comprehensive income:2015 fiscal year
2014 fiscal year

Operating income
Ordinary income
Net income¥ Million%¥ Million%¥ Million%
72,541
2.9
69,622(2.9)
31,381(4.0)
70,482
3.5
71,7144.1
32,686(13.9)
2015 fiscal year
32,928 million yen(6.5%)
2014 fiscal year
35,224 million yen(11.5%)Net income
per share

Fully diluted
profit per share

Return on
equityRatio of ordinary
income to total assets¥
313.81327.08¥313.57326.65

%
12.0
13.0

%
8.9
10.4

Reference: Equity in net income of affiliates:2015 fiscal year
2014 fiscal year

Ratio ofoperating income
to gross operating
revenue
%
12.4
14.2

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

2015 fiscal year
2014 fiscal year

Total assets

Net assets¥ Million
803,212764,614¥ Million
272,997263,797

Reference: Shareholders’ equity:

Shareholders’ equity
ratio
%
32.9
33.5

2015 fiscal year
2014 fiscal year

Net assets per share

264,392 million yen
256,122 million yen%
2,643.97
2,561.25

(3) Consolidated cash flows2015 fiscal year
2014 fiscal year

Net cash provided by(used in) operating
activities¥ Million
112,205
110,567

Net cash provided by(used in) investing
activities¥ Million(68,657)(100,433)

Net cash provided by(used in) financing
activities¥ Million(50,201)(3,289)Cash and cash
equivalents at end of
period¥ Million
69,79376,754

2. Dividends status

1Q

1H

3Q

Year-end
dividend

Total

Total
dividends forthe year¥－¥120.00¥－¥120.00¥240.00¥ Million
23,989%73.4

Ratio ofdividends toshareholders’equity%9.6－

122.50－122.50245.0024,499

78.1

9.4

－

125.00－125.00250.00

Annual dividends per share2014 fiscal year
2015 fiscal year
2016 fiscal year
(forecast)

Payoutratio

70.4

3. Forecast consolidated performance for 2016 fiscal year （from March 1, 2016 to February 28, 2017）
Note: Percentages for gross operating revenue, operating income, ordinary income and net income show increase(decrease) compared to previous fiscal year.

1H of 2016 fiscal year
2016 fiscal year

Profit attributableNet
to owners ofincomeparentper share% ¥ Million
%
¥
(6.6)
21,300
7.5 213.00
4.9
35,500 13.1 355.00

Gross operating
revenue

Operating income Ordinary income¥ Million
313,000
648,000¥ Million
39,50076,000

%
8.2
11.1

%
(6.1)

4.8

¥ Million
38,10073,0004. Notes(1) Change in important subsidiaries during this 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: None
3. Changes in accounting estimates: None
4. Retrospective restatements: None
(3) Number of issued shares:
1. The number of the stocks issued in the end of term
February, 2016:
100,300,000
February, 2015:
2. The number of treasury shares in the end of term
February, 2016:
301,897
February, 2015:
3. Average number of shares during the term
February, 2016:
99,998,346
February, 2015:

100,300,000
301,084
99,931,714

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 2016” on page 7.

Contents of Attachments

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

2(1) Analysis of Consolidated Operating Results············································································
2(2) Profit and Loss··············································································································
7(3) Outlook for Fiscal 2016 ································································································ 7(4) Analysis of Financial Position ····························································································
8
2. Management Policy ············································································································
10(1) Basic Management Policy ································································································
10(2) Performance Indicators (Target) ··························································································
10(3) Medium-and-Long-Term Management Strategies ································································ 10(4) Priority Issues of the Group ·······························································································
10(5) Other Important Managerial Matters ····················································································
11
3. Basic Approach to Selection of Accounting Standards ································································ 12
4. Consolidated Financial Statements ···························································································
13(1) Consolidated Balance Sheet ······························································································
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 to Consolidated Financial Statements ············································································
20(Notes Concerning Going Concern Assumption) ································································ 20(Basis of Presenting the Consolidated Financial Statements) ·························································
20(Changes in Accounting Policies) ························································································
20(Accounting Standards Issued but not yet Effective) ································································24(Changes in Presentation) ································································································
25(Notes to Consolidated Balance Sheet) ··················································································
28(Notes to Consolidated Statement of Income) ··········································································
29(Notes to Consolidated Statement of Comprehensive Income) ·······················································
31(Notes to Consolidated Statement of Changes in Net Assets)·························································
32(Notes to Consolidated Statement of Cash Flows) ································································ 34(Segment Information) ································································································ 35(Per Share Information) ································································································ 40(Significant Subsequent Events) ··························································································
40

1

1. Analysis of Operating Results and Financial Position(1) Analysis of Consolidated Operating Results
During the consolidated fiscal year under review, or fiscal 2015 ended February 29, 2016, the Lawson
Group (hereinafter, the “Group”) implemented business activities with the aim of realizing the Group’s
corporate philosophy of “Creating Happiness and Harmony in Our Communities.” In particular, we
reinforced the foundation of our convenience store business, for example, by enhancing our retail space,merchandise assortment, and relationship with franchise store owners. In addition, while addressing changes
in each neighborhood such as an increase in the number of working women, the declining birth rate and theaging population, we also focused on areas unique to Lawson, including over-the-counter fast food,health-oriented products, home convenience, and entertainment.
Furthermore, we also focused on promoting internal control and addressing operating risks across the entire
Group based on the 2015 Basic Policy for Improvement of Internal Control Systems. We will continue
promoting internal control across the board including companies that newly joined the Group.
Operating results by business segment were as follows:(Domestic Convenience Store Business)[Merchandising and Service Strategies]
On the merchandise front, in June 2015, we launched commemorative items focusing in mainstay category
to celebrate LAWSON 40th anniversary. Furthermore, we launched “Honkide Oishii Project (delicious inearnest project)” in serious pursuit of palatability in order to review our product development process andpaid increased attention to ingredients, production methods and taste. Under this project, we introduced andkept selling products that was made carefully with special ingredients and a special recipe such as “Sockeye
Salmon Lunchbox with Niigata Koshihikari Rice”, and they were all received well by customers.
Furthermore, we have started selling “Doughnuts” over the counter since April, and have expanded it inaround 9,700 stores by the end of February 2016. Furthermore, with the aim of supporting customers’ overall
daily life, we worked on expanding our merchandise assortment of ready-made dishes and frozen products
under our “Lawson Select” private brand.
Moreover, as a “Health Station in Town,” we also placed emphasis on selling health-oriented products. In
particular, the “Green Smoothie” sold under the NATURAL LAWSON brand and made with a full meal’sworth of vegetables was well received by female customer and health-conscious customers. Its series has
become hit products as total sales has reached over 27 million units sale in 10 months. In additional, there are
currently 23 Lawson Farms in which Lawson, Inc. holds equity stakes. The farms assume the role ofsupplying safe and fresh fruits and vegetables to the Group’s stores and factories that produce LAWSON’s
original products.
In addition to thus strengthening our product lineup, in September 2015, we began to accept China
UnionPay cards for payment at our stores and, in November 2015, we launched our prepaid Ponta card
service dubbed “Osaifu (wallet) Ponta.” Furthermore, starting December 2015, functions offered by “d Point
Card” and “WAON” will be partially integrated in an effort to offer more convenience to our customers.

2

On the sales promotion front, we rolled out some highly effective measures for attracting customers,
including a “100-yen rice ball sale,” and a “speed lottery” themed on “Sandaime J Soul Brothers from EXILE
TRIBE”, which demonstrated our strength in the entertainment field.
[Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business]
Fiscal period

Product group
Processed foods

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

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

YoY percentagechange(%)
99.9

Fast foods

429,21222.2

463,431

23.7

108.0

Daily delivered foods

277,21014.4

276,886

14.1

99.9

Nonfood products

192,0209.9

186,499

9.5

97.1

1,932,798

100.0

1,960,266

100.0

101.4

Total

[Store Operations]
In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, whichemphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic itemswith high demand; and (3) keeping our stores and communities clean, strengthened guidance to franchise
store owners and revised order placement methods as a way of reforming operations in order to create storesthat could grasp customers’ satisfactions and supports. We have put semi-automated ordering system for our
ready-made meal category in most of all stores. In addition, we also have concluded new franchise
agreements with existing stores ahead of schedule to offer enhanced support to franchise store owners. Thus,
it is beginning to appear good effects such as increase of sales in those stores which applied well these
initiatives. We will keep striving to create retail spaces that stimulate potential demand from customers andoffer what they need at any time.

[Store Development]
In opening new stores, the Group continued to focus on developing profitable store.
In November 2015, we remodeled two Poplar stores operated by Poplar Co., Ltd. into Lawson Poplar
stores based on our capital and business alliance agreement. In February 2016, a mega-franchise agreement
was concluded with Save On Corp. Under the agreement, around 50 of the Save On convenience storesoperated in Yamagata, Fukushima and Ibaraki Prefectures will be remodeled into LAWSON stores in andafter April 2016. Furthermore, by building partnerships such as with dispensing pharmacy and drug store
chains, in addition of healthcare items including OTC pharmaceuticals, cosmetics, and daily necessities, thestores offer a merchandise assortment of around 5,500 items, twice as many as conventional LAWSON stores.
The number of stores offering non-prescription drugs has reached 136 stores (included 38 pharmacy
LAWSON stores equipped with drug-dispensing pharmacies) as of the end of February 2016. Moreover, we
also engage in establishing next-generation convenience store models that address social changes such as theageing population and increased health awareness. The number of LAWSON stores housing a nursing care3

hub center offering nursing care consultation services and a lounge space, which we began rolling out fromthe fiscal year, has increased to 5 as of the end of the fiscal year.
Regarding to LAWSON STORE100, we promoted to close unprofitable stores under the business
revitalization plan. During current fiscal 2015, 345 LAWSON STORE100 (included stores which weretransformed into LAWSON stores) stores were closed. With regard to the remaining 809 stores, we increased
the product composition ratio of 100-yen items (excluding tax) by scaling down product portions to respondto customer needs for value, and strengthened our popular fruit and vegetable lineup. As a result, sales atthese stores gradually improved, with existing-store sales for current fiscal 2015 exceeding those for the same
period of the previous fiscal year.
As a result, the total number of LAWSON, NATURAL LAWSON, and LAWSON STORE100 stores
opened and closed during current fiscal year stood at 967 and 859 stores, respectively, with the total numberof stores in Japan reaching 11,880 as of the end of February 2016. In addition to the above, Lawson Kochi,
Inc. operates 132 LAWSON chain stores in Kochi prefecture, Lawson Minamikyushu, Inc. operates 192
LAWSON chain stores in Kagoshima prefecture and Lawson Okinawa, Inc. operates 191 LAWSON chain
stores in Okinawa prefecture as of the end of February 2016.
[Change in the Total Number of Domestic Stores]
Total stores as ofFebruary 28, 2015
LAWSON

Change during
fiscal year

Total stores as ofFebruary 29, 2016

10,633304

10,937

116

18

134

LAWSON STORE100／LAWSON MART

1,151

(342)

809

Total

11,900(20)

11,880NATURAL LAWSON

Note: For change during fiscal year, it includes a decrease of 128 stores which were transferred into Lawson
Kochi, Inc. from Lawson, Inc. on April 1, 2015.
[Number of LAWSON stores by prefecture (February 29, 2016)]
Prefecture

Numberof stores

Hokkaido

628

Ibaraki

158

Kyoto

322

Ehime

212

Aomori

219

Tokyo

1,535

Shiga

154

Tokushima

134

Akita

184

Kanagawa

835

Nara

128

Fukuoka

447

Iwate

165

Shizuoka

236

Wakayama

134

Saga

66

Miyagi

208

Yamanashi

119

Osaka

1,010

Nagasaki

105

Yamagata

81

Nagano

171

Hyogo

640

Oita

169

Fukushima

107

Aichi

581

Okayama155

Kumamoto

140

Niigata

139

Gifu

156

Hiroshima

186

Miyazaki103

Tochigi

147

Mie

121

Yamaguchi

123

Total (domestic)

Gunma

101

Ishikawa

104

Tottori

115

Saitama532

Toyama189

Shimane

120

Chiba

464

Fukui

106

Kagawa131

Prefecture

Numberof stores

Prefecture4

Numberof stores

Prefecture

Numberof stores

11,880[Other]With regards to our efforts in Home Convenience, in June 2015, Lawson, Inc. jointly established an
operating company with SG Holdings Co., Ltd., which owns Sagawa Express Co., Ltd. as the core operatingcompany, and started to offer delivery and order-taking service with LAWSON stores serving as hubs.
Furthermore, we started “Convenience Store Pick-up Service” for items purchased at “Rakuten Ichiba”, anInternet shopping mall in September 2015. We will strive to enhance customer convenience by additionallypartnering with other companies to establish an “Open Platform” based on the networks of LAWSON storesthat offer a range of services encompassing ordering, collection, and home delivery.

As a result, Domestic Convenience Store Business posted gross operating revenue of 398,637 million yen(up 0.8% year on year) and segment profit of 59,993 million yen (down 6.1%).

(Seijo Ishii Business)
The number of directly operated Seijo Ishii stores, a high-end supermarket chain offering quality foods,
reached 120 as of the end of February 2016. Performance was strong, driven by sales of coconut oil and chia
seed that became popular after their positive health effects were introduced on television and other media.
Collaborations between SEIJO ISHII and our Domestic Convenience Store Business were promoted, such as
expanding Seijo Ishii’s selection of wine offered at NATURAL LAWSON stores, jointly importing
confectionery, and rolling out jointly developed products including nuts and cup soup. We will continue toenhance the brand image and corporate value of SEIJO ISHII Co., Ltd., while absorbing the company’s
product development expertise, knowhow acquired as a manufacturing retailer, and sales methods, tostrengthen our Domestic Convenience Store Business.

As a result, Seijo Ishii Business posted gross operating revenue of 68,993 million yen (up 285.9% year onyear) and segment profit of 5,037 million yen (up 270.9%).

(Entertainment-related Business)
With regards to Entertainment-related Business, Lawson HMV Entertainment, which forms the core ofentertainment related business, posted a solid performance led by an increase in ticket sales and continued tosecure top position in the ticketing industry. Besides HMV’s largest entertainment complex store,“HMV&BOOKS TOKYO”, that combines selling music and books, was opened in November 2015 in
Shibuya, the number of HMV stores that sell music CDs and DVDs totaled 53 as of the end of February 2016.
We will strive to offer an even wider selection of products and services to better respond to customer needs,
for example, by expanding our ticketing business. Furthermore, United Cinemas Co., Ltd. operates a total of
38 sites with 342 screens (includes management contract) at its cinemas nationwide.

As a result, Entertainment-related business posted gross operating revenue of 75,040 million yen (up44.0% year on year) and segment profit of 4,076 million yen (up 57.5%).

5

(Other Business)
In addition to Domestic Convenience Store Business, Seijo Ishii Business, Entertainment-related Business,
the Group also involved in Overseas Business, Financial Services-related Business and other businesses.
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the
People’s Republic of China (Shanghai, Chongqing, Dalian, and Beijing), Thailand, United States of America(Hawaii), Indonesia and Philippines. In addition, we have invested in Puregold Price Club, Inc., a major
retailer in Philippines, and PG Lawson Company, Inc., a merged company, and started open stores in
Philippines since March 2015.
[Distribution of LAWSON Brand Stores Overseas by Region]

Country/Region

Number of stores

Change during

Number of stores(As of February 28,

fiscal year

(As of February 29,

2015)

2016)

China

Shanghai and surrounding area

354

104

458

China

Chongqing

104

6

110

China

Dalian

30

23

53

China

Beijing

19

15

34

Thailand

32

15

47

Indonesia

48

(10)

38

Philippines

－

16

16

3

(1)

2

590

168

758

United States of America

Hawaii

Total

Lawson ATM Networks, Inc., which operates a Financial Services-related Business, continued contributing
to consolidated results owing to an increase in the number of ATMs installed. In this fiscal 2015, starting in
September 2015, we sequentially installed new ATM that is capable of withdrawing Japanese Yen by China
UnionPay cards. Now, All LAWSON stores accept payments by China Unionpay cards. Moreover, we
strengthened partnership with new financial institution bringing the total number of our financial institution
partners to 80 nationwide (up 9 year on year), including online banks, and the number of ATMs installed
nationwide to 11,201 (up 434 year on year) as of the end of February 2016.
As a result, other businesses posted gross operating revenue of 46,921 million yen (up 23.3% year on year)
and segment profit of 3,427 million yen (up 28.7%).
[Environmental and Social Contribution Activities]
As part of our initiative to reduce environmental impact on the entire supply chain, we will endeavor tosave energy, resources and promote waste reduction not only at LAWSON stores but also throughout theentire supply chain.
In particular, we promoted the introduction of a state-of-the-art energy-saving chlorofluorocarbon-free(CO2 refrigerant) refrigerator/freezer system with the aim of reducing electricity consumption at our stores.

6As of the end of February 2016, the system was installed in approximately 1,300 stores. Compared toconventional equipment used in our stores, the new system reduces annual CO2 emissions per store byaround 50%, and electricity consumption per store by around 12%. By putting into practical use anenergy-saving package model centered on this system, the Group will aim to achieve target of using 20% lesselectricity per store by fiscal 2020 compared to the fiscal 2010 level. We received the 2015 Environment
Minister’s Award for Global Warming Prevention Activities in recognition of our initiative in Indonesia tosave energy by leveraging cutting-edge technologies. Furthermore, in February 2016, we opened a pilot store
focusing on environmental friendliness in Himeji-shi, Hyogo Prefecture. This is the first convenience store toadopt a biomass power generation system.
In our efforts to undertake social contribution activities at our stores, we continued activity named“Happiness in Communities”, and also supported through fund-raising activities for disaster that occurred inforeign countries.
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.
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, gross operating revenue increased to ¥583,452 million (up17.2% from last year), operating income increased to ¥72,541 million (up 2.9% from last year), and ordinary
income decreased to ¥69,622 million (down 2.9% from last year). Net income decreased to ¥31,381 million(down 4.0% from last year).

(3) Outlook for Fiscal 2016
Outlook for the next fiscal year
1H of 2016 fiscal year
Forecast (¥ Million)

YoY (%)

2016 fiscal year
Forecast (¥ Million)

YoY (%)

Total operating revenue

313,000

108.2

648,000

111.1

Operating income

39,50093.9

76,000104.8

Ordinary income

38,10093.4

73,000104.9

Net income

21,300107.5

35,500113.1

7

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

Total current assets stood at ¥224,209 million, climbed ¥566 million from February 28, 2015, the end of
the previous fiscal year. This reflected an increase of ¥9,069 million in accounts receivable-other and adecrease of ¥6,961 million in cash and deposits. Non-current assets grew ¥38,031 million from February 28,
2015 to ¥579,002 million, mainly owing to an increase of ¥28,325 million in property and store equipment.
Consequently, total assets climbed ¥38,598 million from the end of the previous fiscal year to ¥803,212
million.
Total current liabilities increased by ¥18,537 million from the end of the previous fiscal year to ¥319,607
million, mainly reflecting an increase of ¥13,696 million in accounts payable-other. Non-current liabilities
stood at ¥210,607 million, growing ¥10,860 million from February 28, 2015, mainly owing to an increase of¥11,886 million in lease obligations. Consequently, total liabilities increased by ¥29,398 million from the endof the previous fiscal year to ¥530,215 million.
Total net assets stood at ¥272,997 million, increased by ¥9,199 million from February 28, 2015. This was
mainly due to an increase of ¥7,431 million in retained earnings. Consequently, shareholders’ equity ratio
amounted to 32.9%, down from 33.5% as of the end of the previous fiscal year.
② Cash flow analysis

Cash and cash equivalents at the end of the fiscal year amounted to ¥69,793 million, ¥6,961 million lower
year on year.
Net cash provided in (used in) operating activities amounted to ¥112,205 million, ¥1,637 million up year
on year, mainly due to an increase of operating income.
Net cash provided in (used in) investing activities amounted to ¥(68,657) million, ¥31,776 million higher
year on year, due to no purchase of investments in subsidiaries resulting in change in scope of consolidation.
Net cash provided in (used in) financing activities amounted to ¥(50,201) million, ¥46,911 million lower
year on year, due to no proceeds from long-term loans payable.

8

(Reference) Trends in cash flow indicators
2014 fiscal year

2015 fiscal year

2016 fiscal year

Shareholders’ equity ratio (%)

39.5

33.5

32.9

Shareholders’ equity ratio on market value basis (%)

113.6

102.3

108.3

Interest-bearing debt/cash flow ratio (years)

1.0

1.4

1.5

Interest coverage ratio (times)

63.2

75.3

57.5

(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 by multiply closing share price at the end of period with thenumber 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 Policy
The Company has formulated its corporate philosophy as the basis for all its corporate activities.
[Corporate Philosophy]“Creating Happiness and Harmony in Our Communities”

Furthermore, under corporate philosophy, the Company set a new vision in order to clarify goal image andorient all business activities toward its goal image.
[Vision]“To be a leading execution-driven company.
We think through the changing needs of our customers, execute strategy with speed and become an
essential part of our communities.”

At the same time, in order to succeed this vision, we also have revised code of conducts to clarify theactions required for the individual and to move forward with everyone united.
[Code of Conduct]
1. Everything starts with our customers, our communities and our stores.
2. Master the basics and strive to innovate.
3. Improve quality and speed of the PDCA (Plan-Do-Check-Act) cycle.
4. Act with discipline, take initiative and succeed as a team.
5. Pursue growth as individuals and support the growth of others.

(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 Provide customers with enhanced support in their daily life

In an effort to become an indispensable part of customers’ lives in local communities, we will strive to10

further expand our merchandise assortment to include a wider variety of daily necessities and ready-madedishes in addition to products and services offered by conventional convenience stores.
② Evolve into a manufacturing retailer targeting small catchment areas

By evolving into a manufacturing retailer deeply engaged in activities across the entire value chain, fromprocurement of raw materials and ingredients to manufacturing, logistics and sales, we will strive to achieve
cost reduction and quality improvement in our products to further strengthen our product appeal.
③ Take on challenges in future growth areas

We will continue to take on challenges to establish new business models in future growth areas not only inour domestic convenience store business, the core business of the Group, but also in various other fields suchas Seijo Ishii Business, Entertainment-related Business, Overseas Business, Financial-related Business. We
will also work hard to make maximum use of each Group company’s distinctive features to generatesynergistic effects.
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 our ability to develop healthy, safe and reliable original merchandise, we will expand
our range of products that serve as alternatives to those offered by supermarkets to better support thecustomers’ overall daily life. Furthermore, 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 spanningfrom merchandise development to procurement of ingredients, production, and logistics and leverage thePonta card data to best effect. In this process, the Group aims to raise its original added 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 losses.
③ Reinforcing Store-Development Capabilities

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

11

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 Enhance convenience by fostering a variety of services

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

Owners and Headquarters
In our endeavor to address changes occurring in the retail industry, we will promote co-existence 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.

3. Basic approach to selection of accounting standards
The Group has used Japanese accounting standards, and has no plan to apply International Financial
Reporting Standards (IFRS) for the time being. The Group intends to respond appropriately to the applicationof the International Financial Reporting Standards (IFRS) by considering the situation prevailing in Japan andabroad.

12

4. Consolidated Financial Statements(1) Consolidated Balance Sheet
As of February 28, 2015 and February 29, 2016
(Millions of yen)

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

13

Previous fiscal year
As of
February 28, 2015

Current fiscal year
As of
February 29, 2016

76,75837,052
17,04458,666
5,299
31,400(2,578)
223,642

69,79730,547
17,97667,736
4,524
33,635(8)
224,209

153,375
14,825
9,640
91,6614,810
123
274,436

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

18,80048,18911,989550
79,53026,37746,30911,381
527
84,595

18,11837,232
93,20526,251
13,316(1,121)
187,004
540,971764,614

22,32540,88692,49522,016
14,782(860)
191,645579,002803,212(Millions of yen)

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

14

Previous fiscal year
As of
February 28, 2015

Current fiscal year
As of
February 29, 2016

103,458
1,740
575
19,94843,51813,301
103,634
2,976
11,916
301,069

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

58,42576,17457,562
88,060367

413

12,95821,53030,290199,746
500,816

12,186
24,66427,719210,607530,21558,506
47,696
147,177(1,272)
252,10758,506
47,697
154,608(1,280)259,532

(393)
(566)
5,492
(518)
4,014
223
7,452
263,797764,614

801
(566)
5,531
(906)
4,860
307
8,296
272,997803,212(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
For the fiscal years ended February 28, 2015 and February 29, 2016
(Millions of yen)

Gross operating revenue
Net sales
Cost of sales
Gross profit
Operating revenue:
Income from franchised stores
Other operating revenue
Total operating revenue
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Compensation income
Share of profit of entities accounted for using equity
methodStore equipment related income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Loss on cancellation of leases
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of investment securities
Gain on change in equity
Total extraordinary income
Extraordinary losses:
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
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 1,2014
to February 28, 2015
497,913174,044
128,116
45,928Current fiscal year
From March 1,2015
to February 29, 2016
583,452
227,606
155,949
71,656247,681
76,188323,869
369,797299,315
70,482

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

830
365

759
646

365

292

118
1,585
1,481
4,746

318
－
837
2,853

1,520
1,168
－
825
3,514
71,714

1,903
1,953
914
1,002
5,772
69,622

369
756
1,126

－
892
892

249
2,966
8,263
1,519
1,469
14,46958,37024,938312
25,25033,120433
32,686228
4,342
10,542－－
15,11255,402
19,233
4,031
23,26532,136755
31,381

Consolidated Statement of Comprehensive Income
For the fiscal years ended February 28, 2015 and February 29, 2016
(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
Remeasurements of defined benefit plans
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 1,2014
to February 28, 2015
33,120Current fiscal year
From March 1,2015
to February 29, 2016
32,136

(299)
1
961
－

1,195
－
(15)
(387)

1,441

－

2,104
35,224792
32,92834,762461

32,227701

(3) Consolidated Statement of Changes in Net Assets
For the 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 shares

Total shareholders' equity

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

242,832

Balance at beginning of current period
Cumulative effects of changes inaccounting policies－

Restated balance

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

242,832

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 shares
Disposal of treasury shares

0

Reversal of revaluation reserve for land

(289)

(289)

0

0

(1)

Exercise of subscription rights to shares(Delivery 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 on
Revaluation
available-for-salereserve for land
securities

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

(93)

(567)

Foreign currency Remeasurements Total accumulatedtranslationof defined benefit other comprehensive
incomeadjustment
plans

3,118

－

2,456

Subscription
rights tosharesMinority
interests

Total net
assets557

4,650

250,497
－

(93)

(567)

3,118

－

2,456

557

4,650

250,497

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

Change of scope of equity method(608)

Net income

32,686

Purchase of treasury shares(289)

Disposal of treasury shares

0

Reversal of revaluation reserve for
land
Exercise of subscription rights toshares(Delivery 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

13,299Balance at end of current period

(393)

(566)

5,492

(518)

4,014

223

7,452

263,79717

Consolidated fiscal year ended February 2016 (From March 1, 2015 to February 29, 2016)(Millions of yen)
Shareholders’ equity
Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders' equity

58,506

47,696

147,177(1,272)

252,107

Balance at beginning of current period
Cumulative effects of changes inaccounting policies

1,411

Restated balance

58,506

47,696

1,411

148,588(1,272)

253,519

Changes of items during period
Dividends from surplus(24,249)(24,249)

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

Net income

31,381

31,381

Purchase of treasury shares
Disposal of treasury shares

0

(8)

(8)

0

1

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

－

0

6,020

(7)

6,013

58,506

47,697

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

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

(393)

(566)

Foreign currency Remeasurements Total accumulatedtranslationof defined benefit other comprehensive
incomeadjustment
plans

5,492

(518)

4,014

Subscription
rights tosharesMinority
interests

Total net
assets223

7,452

263,797
1,411

(393)

(566)

5,492

(518)

4,014

223

7,452

265,209

Changes of items during period
Dividends from surplus(24,249)

Change of scope of consolidation(1,111)

Net income

31,381

Purchase of treasury shares(8)

Disposal of treasury shares

1

Net changes of items other thanshareholders' equity

1,195

－

38

(387)

845

84

844

1,774

Total changes of items during
period

1,195

－

38

(387)

845

84

844

7,788

Balance at end of current period

801

(566)

5,531

(906)

4,860

307

8,296

272,99718

(4) Consolidated Statement of Cash Flows
For the fiscal year ended February 28, 2015 and February 29, 2016
Previous fiscal year
From March 1,2014
to February 28,
2015
Net cash provided by (used in) operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Interest income
Interest expenses
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in accounts receivable-other
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other
Increase (decrease) in deposits received
Increase (decrease) in provision for retirement benefits
Increase (decrease) in net defined benefit liability
Other
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property and store equipment
Purchase of intangible assets
Purchase of shares of subsidiaries and associates
Purchase of investments in subsidiaries resulting in change in scopeof consolidation
Decrease (increase) in long-term loans receivable - net
OtherNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activities:
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Proceeds from share issuance to minority shareholders
Cash dividends paid
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting fromchange of scope of consolidation
Cash and cash equivalents at end of period

19(Millions of yen)
Current fiscal year
From March 1,2015
to February 29,
2016

58,37041,825
8,263
(170)
(830)
1,520
2,966
(4,584)(3,439)8,278
12,28815,609(11,275)
12,958(4,385)
137,397814(1,467)(26,176)
110,567

55,402
49,293
10,542
(311)
(759)
1,903
4,342
6,307
(12,619)
9,548
12,620(1,724)－696
2,140
137,380759(1,950)(23,985)
112,205(11,204)
19,204(41,052)(7,901)(3,335)(1,301)
1,301(40,883)(15,609)(3,361)(41,381)－(4,633)(10,129)(100,433)(3,631)(5,171)(68,657)

59,000(21,590)(20,531)2,000(22,979)811(3,289)1,150
7,995
68,759－(862)(25,302)－(24,249)213(50,201)(451)(7,105)76,754－

144

76,754

69,793

(5) Notes to Consolidated Financial Statements(Notes Concerning Going Concern Assumption)
None(Basis of Presentation the Consolidated Financial Statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 18(Domestic)
Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
BestPractice, Inc.
SCI, Inc.
Lawson Mart, Inc.
Lawson HMV Entertainment United Cinemas 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.
Shanghai Le Song Trading Co., Ltd.
Shang Hai Gong Hui Trading Co., Ltd.
Zhejiang Lawson, Inc.
Among the companies mentioned above, Shanghai Le Song Trading Co., Ltd., Shang Hai Gong Hui
Trading Co., Ltd. and Zhejiang Lawson, Inc. have been included in the scope of consolidation startingfrom the current consolidated fiscal year due to increasing materiality.
(2) Names of nonconsolidated subsidiaries and others(Domestic)
LAWSONWILL, Inc.
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Seikaken, Inc.
Lawson Syuhan, Inc.
TOKYO EUROPE TRADE CO., LTD.
SG Lawson, Inc.
Success Tours, Inc.
Lawson Digital Innovation Inc.
(Foreign)

Lawson USA Hawaii, Inc.
Beijing Lawson, Inc.
BEIJING LUOSONG Co., Ltd(Reasons for exclusion from the scope of consolidation)
The above nonconsolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, net income/loss (corresponding to equity
interest) and retained earnings (corresponding to equity interest) and others have no material influence on
the consolidated financial statements.

20

2. Application of the equity method(1) Number of affiliated companies to which the equity method is applied: 3(Domestic)
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.
Lawson Kochi, Inc., which was established during the current fiscal year and 49% of the shares of which
the Company owns, has been included in the scope of the equity method.
(2) The Company excluded from the scope of the equity method affiliate nonconsolidated subsidiaries
LAWSONWILL, Inc., HATS UNLIMITED CO., LTD., Food Marketing Japan, Inc., Seikaken, Inc.,
Lawson Syuhan, Inc., TOKYO EUROPE TRADE CO., LTD., SG Lawson, Inc., Success Tours, Inc., Lawson
Digital Innovation Inc. and Lawson USA Hawaii, Inc., Beijing Lawson, Inc., BEIJING LUOSONG Co., Ltd.
and affiliated companies Double Culture Partners Co., Ltd., Daichi Wo Mamoru Kai, Co., Ltd., Loyalty
Marketing, Inc., MC Retail Energy Co., Ltd., Lawson Staff, Inc., AUGUSARENA CORPORATION.,
Lawson System Labo LLP, Theatre VR LLP, PG Lawson Company, Inc., 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 to equity interest) of these nonconsolidated subsidiaries andaffiliated companies have minimal influence on the consolidated financial statements and are negligible evenin 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., Shanghai Le Song Trading Co., Ltd., Shang Hai
Gong Hui Trading Co., Ltd., Zhejiang Lawson, Inc. and Saha Lawson Co., Ltd. is December 31. In order toprepare the consolidated financial statements, the Company used these companies’ financial informations
prepared as of such balance sheet date and significant transactions which occur between the balance sheet date
and the consolidated balance sheet date are adjusted as required for consolidation.
From this current consolidated fiscal year, the balance sheet date of Lawson HMV Entertainment United
Cinema Holdings, Inc., United Entertainment Holdings Co., Ltd. and United Cinemas Co., Ltd. have beenchanged from March to February and become the same with consolidated balance sheet date. Thus, theiraccounting period is 14 months in this current consolidated fiscal year.
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:
Marketable securities and investments in securities:
Available-for-sale securities:
Securities whose market value is readily determinable:
Recorded at market value with net unrealized gains and losses as a separate component of net
assets. The cost of securities sold is determined based on the moving-average method.
Other:
Stated at cost determined by the moving-average method.
② Merchandise inventories:
Merchandise:Stated at cost determined mainly by the retail method (the book value in the balance sheet iswritten down based on the decline in profitability).
(2) Depreciation method of depreciable assets① Property and store equipment (except for lease assets):
Mainly computed by the straight-line method.
The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8 years
for tools, furniture and fixtures.
② Intangible assets (except for lease assets):
Computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which is21the estimated useful life. Furthermore, for right of trademark, amortization is mainly computed
using the straight-line method over 20 years.
③ Lease assets:
Leased assets related to finance leases that do not transfer ownership of leased property
The Company applies the straight-line method using the lease term as the useful life and a residual
value of 0 yen.
(3) Accounting standard for important reserves① Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
② Provision for bonuses:
Provision for bonuses is provided for payments of employees’ bonuses based on the estimated amounts.
③ Provision for retirement benefits to executive officers and audit & supervisory board members:
Provision for retirement benefits to executive officers of the Company and audit & supervisory board
members of consolidated subsidiaries is recorded under internal regulations.
(4) Accounting method for retirement benefits① Period attributable method of estimated amount of retirement benefits
In calculating retirement benefit obligation, in order to attribute estimated amount of retirement benefits
in the period up to the end of the current fiscal year, it is based on the benefit formula basis.
② Cost treatment method of actuarial difference and prior service cost
Prior service cost is amortized starting the fiscal year incurred mainly on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theiroccurrence.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theiroccurrence.
Certain consolidated subsidiaries apply the simplified method to estimate the amount required forvoluntary resignations at the end of the fiscal year as the retirement benefit liability in order to calculate
net defined benefit liability and retirement benefit expenses.
(5) Important foreign currency transactions and foreign currency financial statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the consolidated balance sheet date. The foreignexchange gains and losses from translation are recognized in the consolidated statement of income. The
consolidated balance sheet accounts as well as revenue and expense accounts of foreign subsidiaries
and affiliated companies are translated into Japanese yen at the current exchange rate as of theconsolidated balance sheet date except for shareholders’ equity, which is translated at the historical rate.
Differences arising from such translation are shown as “foreign currency translation adjustments” and“minority interests,” a separate component of net assets.
(6) Amortization method and period of goodwill
Goodwill is amortized on a straight-line basis over the relevant years, depending on the reason for theoccurrence of goodwill, with a maximum of 20 years.
(7) Cash and cash equivalents in the consolidated statement of cash flows
Cash and cash equivalents in the consolidated statement of cash flows include cash on hand, demand
deposits and short-term investments due within 3 months from the acquired date, which are easily
convertible into cash with little risk of value fluctuation.
(8) Other significant items related to the preparation of consolidated financial statements
Accounting for consumption tax:
Consumption tax and local consumption tax are accounted for using the tax exclusion method.

22

(Changes in Accounting Policies)
The Company adopted “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 issued
on May 17, 2012, hereinafter “Accounting Standard Retirement Benefits”) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25 issued on March 26, 2015, hereinafter“Guidance Retirement Benefits”) from this consolidated fiscal year included stipulations stated in themain clause of paragraph 35 of Accounting Standard Retirement Benefits, and the main clause ofparagraph 67 of Guidance Retirement Benefits. The Company reviewed the calculation method ofretirement benefit liabilities and service cost, changed the standard of payment period of retirement
benefits estimated amounts from period straight-line basis recorded to benefit formula basis. The method
for calculating the discount rate was changed from the method in which bond duration, a base used for
calculating the discount rate, was decided based on the number of years that approximates the averageremaining service period of the employees, to the method in which multiple discount rates are calculated
in accordance with the expected payment period of retirement benefits.
The application of such as accounting standards for retirement benefits has followed the transitional
treatment stipulated in paragraph 37 of Accounting Standard Retirement Benefits, and the impact due tochange of calculation method of retirement benefit liabilities and service cost was charged to Retained
earnings at the beginning of this consolidated fiscal year.
As a result, net defined benefit liability as of the beginning of this consolidated fiscal year decreased¥2,130 million, while retained earnings increased ¥1,411 million. The impact of this change on operating
income, ordinary income, and income before income taxes and minority interests for this consolidated
fiscal year is immaterial.
The impact on information per share date is described in the relevant section.

23

(Accounting Standards Issued but not yet Effective)・ “Implementation Guidance on Recoverability of Deferred Tax Assets” (Accounting Standards
Implementation Guidance No.26, December 28, 2015)(1) Outline
With regard to treatments concerning the recoverability of deferred tax assets, necessary reviews of thefollowing have been made, basically following the framework of Auditing Standards Board Report No.66 of theJapanese Institute of Certified Public Accountants, the “Audit Treatment of Judgments with Regard to
Recoverability of Deferred Tax Assets," which classifies companies into five groups and estimates the recorded
amount of deferred tax assets in accordance with said classifications.
① The treatment of companies that do not fulfill any of the requirements of classifications pertaining to(Classification 1) to (Classification 5)② Requirements of classifications pertaining to (Classification 2) and (Classification 3)③ Treatment related to deductible temporary difference that cannot be scheduled at companies that fall under(Classification 2)④ Treatment related to the reasonable period when estimation of deductible temporary difference and othertaxable income before addition or subtraction is possible at companies that fall under (Classification 3)⑤ For companies that fulfill the requirements of classification pertaining to (Classification 4), the treatment
in cases where they fall under (Classification 2) or (Classification 3)(2) Scheduled implementation date
Implementation is scheduled from the beginning of the fiscal year ending February 2018.
(3) Impact of the application of said accounting standards, etc.
The amount of impact is being evaluated at the time of preparation of these consolidated financial
statements.
・ “Accounting Standard for Business Combinations” (Accounting Standard No. 21, September 13, 2013)
・ “Accounting Standard for Consolidated Financial Statements” (Accounting Standard No. 22, September 13,
2013)
・ “Accounting Standard for Business Divestitures” (Accounting Standard No. 7, September 13, 2013)
・ “Accounting Standard for Earnings Per Share” (Accounting Standard No. 2, September 13, 2013)
・ “Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (Accounting Standards Implementation Guidance No.10, September 13, 2013)
・ “Implementation Guidance on Accounting Standard for Earnings Per Share” (Accounting Standards
Implementation Guidance No.4, September 13, 2013)(1) Outline
This Accounting Standard has been amended mainly in: ① the treatment of change in equity interest of theparent company in a subsidiary in additional acquisition of subsidiary shares when control is continued; ②treatment of acquisition-related costs; ③ the representation of net profit and the change from minority interest
to no controlling interest; and ④ temporary accounting treatment.
(2) Scheduled application date
Implementation is scheduled from the beginning of the fiscal year ending February 2017.
(3) Influence from the application of the relevant Accounting Standards
The amount of impact is being evaluated at the time of preparation of these consolidated financial statements.
Influence on the financial statements in its preparation is under evaluation.

24

(Changes in Presentation)(Consolidated Balance Sheets)
In the “Current assets” section, “Prepaid expenses” was presented separately in the previous fiscal year. In
order to increase clarity of consolidated financial statements from the current fiscal year, “Prepaid expenses”
is now included in “Other.” To reflect this change in method of presentation, the consolidated financial
statements for the previous fiscal year have been reclassified.
As a result, in the “Current assets” section, 12,235 million yen that was presented as “Prepaid expenses” in
the Consolidated Balance Sheets for the previous fiscal year is now included in “Other.”In the “Property and store equipment” section, contra assets of each asset account, which are “Accumulated
depreciation”, were presented separately in the previous fiscal year. In order to increase clarity ofconsolidated financial statements from the current fiscal year, each asset account is now presented after
offsetting their balances with contra assets while the balances of contra assets are now presented in notes of“Accumulated depreciation of property and store equipment”. 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 “Property and store equipment” section, 313,867 million yen of “Building andstructures” and (160,491) million yen of its contra asset “Accumulated depreciation”, 74,270 million yen of“Tools, furniture and fixtures” and (59,445) million yen of its contra asset “Accumulated depreciation”,
154,932 million yen of “Lease assets” and (63,270) million yen of its contra asset “Accumulated
depreciation”, and 572 million yen of “Other” and (448) million yen of its contra asset “Accumulated
depreciation”, are now presented as “Building and structures, net”, “Tools, furniture and fixtures, net”,“Lease assets, net” and “Other, net”.
In the “Intangible assets” section, “Software in progress” was presented separately in the previous fiscal
year. In order to increase clarity of consolidated financial statements from the current fiscal year, “Software in
progress” is now included in “Software.” 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 “Intangible assets” section, 6,993 million yen that was presented as “Software in
progress” in the Consolidated Balance Sheets for the previous fiscal year is now included in “Software.”In the “Investments and other assets” section, “Long-term prepaid expenses” was presented separately inthe previous fiscal year. Due to a decline in financial materiality, “Long-term prepaid expenses” is now
included 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 “Investments and other assets” section, 9,912 million yen that was presented as “Longterm prepaid expenses” in the Consolidated Balance Sheets for the previous fiscal year is now included in“Other.”In the “Current liabilities” section, “Accounts payable-trade for franchised stores” was presented separately
in the previous fiscal year. In order to increase clarity of consolidated financial statements from the current
fiscal year, “Accounts payable-trade for franchised stores” is now included in “Accounts payable-trade.” 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, 83,385 million yen that was presented as “Accounts payabletrade for franchised stores” in the Consolidated Balance Sheets for the previous fiscal year is now included in“Accounts payable-trade.”
In the “Current liabilities” section, “Due to franchised stores” was presented separately in the previous
fiscal year. In order to increase clarity of consolidated financial statements from the current fiscal year, “Dueto franchised stores” is now included in “Other.” To reflect this change in method of presentation, theconsolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the “Current liabilities” section, 1,507 million yen that was presented as “Due to franchised
stores” in the Consolidated Balance Sheets for the previous fiscal year is now included in “Other.”In the “Non-current liabilities” section, “Long-term guarantee deposited” was presented separately in theprevious fiscal year. Due to a decline in financial materiality, “Long-term guarantee deposited” is now
included in “Other.” To reflect this change in method of presentation, the consolidated financial statements forthe previous fiscal year have been reclassified.

25

As a result, in the “Non-current liabilities” section, 29,992 million yen that was presented as “Long-term
guarantee deposited” in the Consolidated Balance Sheets for the previous fiscal year is now included in“Other.”(Consolidated Statement of Income)In the “Non-operating income” section, “Compensation income” was included in “Other” in the previous
fiscal year. Due to an increase in financial materiality, “Compensation 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 365 million yen that was included in “Other” in theConsolidated Statement of Income for the previous fiscal year is now presented as “Compensation income.”
In the “Non-operating income” section, “Share of profit of entities accounted for using equity method” wasincluded in “Other” in the previous fiscal year. Due to an increase in financial materiality, “Share of profit ofentities accounted for using equity method” 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 “Non-operating income” section, the 365 million yen that was presented as “Other” in theConsolidated Statement of Income for the previous fiscal year is now presented as “Share of profit of entities
accounted for using equity method.”
In the “Non-operating income” section, “Store equipment related income” was included in “Other” in theprevious fiscal year. Due to an increase in financial materiality, “Store equipment related 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 118 million yen that was presented as “Other” in theConsolidated Statement of Income for the previous fiscal year is now presented as “Store equipment related
income.”In the “Non-operating income” section, “Penalty income” was presented separately in the previous fiscal
year. Due to a decline in financial materiality, “Penalty income” is now included in “Other.” To reflect thischange 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 618 million yen that was presented as “Penalty
income” in the Consolidated Statement of Income for the previous fiscal year is now included in “Other”.
In the “Extraordinary losses” section, “Loss on sales of non-current assets” was included in “Other” in theprevious fiscal year. In order to increase clarity of consolidated financial statements from the current fiscal
year, “Loss on sales of non-current assets” 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 “Extraordinary losses” section, the 249 million yen that was presented as “Other” in theConsolidated Statement of Income for the previous fiscal year is now presented as “Loss on sales of noncurrent assets.”(Consolidated Statement of Cash Flows)
In the “Cash flow from operating activities” section, “Decrease (increase) in inventories” was presented
separately in the previous fiscal year. Due to a decline in financial materiality, “Decrease (increase) ininventories” is now included in “Other.” To reflect this change in method of presentation, the consolidated
financial statements for the previous fiscal year have been reclassified.
As a result, in the “Cash flow from operating activities” section, (2,588) million yen that was presented as“Decrease (increase) in inventories” in the Consolidated Statement of Cash Flows for the previous fiscal year
is now included in “Other.”In the “Cash flow from operating activities” section, “Increase (decrease) in accrued consumption taxes”
was presented separately in the previous fiscal year. Due to a decline in financial materiality, “Increase(decrease) in accrued consumption taxes” 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, 5,721 million yen that was presented as

26

“Increase (decrease) in accrued consumption taxes” in the Consolidated Statement of Cash Flows for theprevious fiscal year is now included in “Other.”In the “Cash flow from operating activities” section, “Increase (decrease) in guarantee deposits received”
was presented separately in the previous fiscal year. In order to increase clarity of consolidated financial
statements from the current fiscal year, “Increase (decrease) in guarantee deposits received” is now included
in “Other.” To reflect this change in method of presentation, the consolidated financial statements for theprevious fiscal year have been reclassified.
As a result, in the “Cash flow from operating activities” section, (2,307) million yen that was presented as“Increase (decrease) in guarantee deposits received” in the Consolidated Statement of Cash Flows for theprevious fiscal year is now included in “Other.”In the “Cash flow from investing activities” section, “Purchase of investment securities” was presented
separately in the previous fiscal year. Due to a decline in financial materiality, “Purchase of investment
securities” is now included in “Other.” To reflect this change in method of presentation, the consolidated
financial statements for the previous fiscal year have been reclassified.
As a result, in the “Cash flow from investing activities” section, (6,507) million yen that was presented as“Purchase of investment securities” 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, “Decrease (increase) in short-term loans receivable”
was presented separately in the previous fiscal year. Due to a decline in financial materiality, “Decrease(increase) in short-term loans receivable” 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 investing activities” section, 3,135 million yen that was presented as“Decrease (increase) in short-term loans receivable” in the Consolidated Statement of Cash Flows for theprevious fiscal year is now included in “Other.”In the “Cash flow from investing activities” section, “Purchase of long-term prepaid expenses” waspresented separately in the previous fiscal year. Due to a decline in financial materiality, “Purchase of longterm prepaid expenses” is now included in “Other.” To reflect this change in method of presentation, theconsolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the “Cash flow from investing activities” section, (3,806) million yen that was presented as“Purchase of long-term prepaid expenses” in the Consolidated Statement of Cash Flows for the previous fiscal
year is now included in “Other.”27

(Notes to Consolidated Balance Sheet)*1. Accumulated depreciation of property and store equipment
Previous fiscal year
As of February 28, 2015
¥283,656 million

Accumulated depreciation

Current fiscal year
As of February 29, 2016
¥291,655 million*2. Investment in nonconsolidated subsidiaries and affiliated companies

Investments securities (stock)(Investment amount for jointly-controlled companies)
Investments securities (bond)
Other (other equity investments)(Investment amount for jointly-controlled companies)

Previous fiscal year
As of February 28, 2015
¥9,784 million－¥233 million¥1,662 million－

Current fiscal year
As of February 29, 2016¥12,205 million(¥1,017million)¥272 million¥3,394 million(¥47 million)*3. Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation of Land
(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, 2015

Current fiscal year
As of February 29, 2016¥314 million¥308 million

Previous fiscal year
As of February 28, 2015

Current fiscal year
As of February 29, 2016¥416 million¥2,399 million

The difference between book value and market valueof the revalued land as of balance sheet date
*4. Collateral assets and liabilities collateralized
Assets with collateral pledged as collateral are as follows.

Cash and deposits

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, 2015
As of February 29, 2016
Shares of consolidated subsidiaries¥16,614 million¥16,614 million(Amount before elimination)
Collateral liabilities are as follows.
Previous fiscal year
As of February 28, 2015

Current fiscal year
As of February 29, 2016

¥1,000 million¥1,000 million¥575 million¥575 million

Long-term loans payable¥8,425 million¥7,562 million

Total¥10,000 million¥9,137 million

Short-term loans payable
Current portion of long-terms loans payable28

(Notes to Consolidated Statement of Income)*1 Major items and amounts of selling, general and administrative expenses, are as follows.
Previous fiscal year
Current fiscal year
From March 1,2014
From March 1,2015
to February 28, 2015
to February 29, 2016
Employees' salaries and allowances¥45,187 million¥48,722 million
Provision for bonuses¥2,056 million¥3,362 million
Retirement benefit expenses¥2,215 million¥2,065 million
Rents¥96,877 million¥108,795 million
Depreciation¥41,788 million¥49,156 million*2 Distribution of loss on sales of non-current assets

Buildings and structures
Tools, furniture and fixtures
Others
Total

Previous fiscal year
From March 1,2014
to February 28, 2015
¥72 million¥177 million－¥249 million

Current fiscal year
From March 1,2015
to February 29, 2016¥223 million¥5 million¥0 million¥228 million

Previous fiscal year
From March 1,2014
to February 28, 2015
¥1,708 million¥355 million¥570 million¥332 million－¥2,966 million

Current fiscal year
From March 1,2015
to February 29, 2016
¥3,284 million¥294 million¥679 million¥83 million¥0 million¥4,342 million*3 Distribution of loss on retirement of non-current assets

Buildings and structures
Tools, furniture and fixtures
Lease assets
Software
OthersTotal*4 Impairment loss

The Company and the consolidated subsidiaries (together, the “Group”) recognized an impairment
loss mainly for each store as the smallest category having cash flows.
The carrying value of asset groups with significantly decreased profitability was written down to arecoverable amount, with the decreased amount recognized as extraordinary loss. In view of theincreasingly rapid changes occurring in the business environment, we have clarified in detail the decrease inprofitability for the fiscal year.
Previous fiscal year (From March 1, 2014 to February 28, 2015)
Location
AssetsCategory by use
StoresOthers

Total

Millions of yen

Tokyo

Buildings; Tools, furniture and fixtures; and others

1,307

Osaka

Buildings; Tools, furniture and fixtures; and others

770

Others―Buildings; Tools, furniture and fixtures; and others

4,240

Land

29

―

Software17―

Goodwill

1,897

―

―

8,263

29

Category by non-current assets
Buildings and structures
Tools, furniture and fixtures
Land
Lease assets
Software
Goodwill
Other¥3,658 million¥464 million¥29 million¥2,172 million¥17 million¥1,897 million¥24 million

Recoverable value of the assets of the Group is the higher of net selling price or value in use. Net selling
price of land was calculated based on the value appraised by a real estate appraiser or contract price, and thevalue in use was calculated by discounting estimated future cash flows to which a discount rate of 4.8% was
mainly applied.
Current fiscal year (From March 1, 2015 to February 29, 2016)
Category by use
Location
AssetsMillions of yen

Tokyo

Buildings; Tools, furniture and fixtures; and others

1,904

Osaka

Buildings; Tools, furniture and fixtures; and others

1,621

OthersBuildings; Tools, furniture and fixtures; and others

6,508

Others―Software

507

Total

―

―

10,542

StoresCategory by non-current assets
Buildings and structures
Tools, furniture and fixtures
Land
Lease assets
SoftwareOther¥5,976 million¥607 million¥57 million¥3,131 million¥680 million¥88 million

Recoverable value of the assets of the Group is the higher of net selling price or value in use. Net selling
price of land was calculated based on the value appraised by a real estate appraiser or contract price, and thevalue in use was calculated by discounting estimated future cash flows to which a discount rate of 4.8% was
mainly applied.

30

(Notes to Consolidated Statement of Comprehensive Income)* Reclassification adjustments to gain or loss and income tax relating to other comprehensive income
Previous fiscal year
From March 1,2014
to February 28, 2015
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
Revaluation reserve for land
Foreign currency translation adjustment
Gain or loss arising during the period
Reclassification adjustments to profit or loss
Foreign currency translation adjustment
Retirement benefits adjustment
Gain or loss arising during the period
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Retirement benefits adjustment
Share of other comprehensive income of associates
accounted for using equity method:Gain or loss arising during the period
Reclassification adjustments to profit or loss
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income

31(Millions of yen)
Current fiscal year
From March 1,2015
to February 29, 2016

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

1,587
238
1,825
(630)
1,195

1
1

－
－

2,089
(1,127)
961

(15)
－
(15)

－
－
－
－
－

(662)
99
(562)
174
(387)

(31)
1,472

－
－

1,441

－

2,104

792

(Notes to Consolidated Statement of Changes in Net Assets)
Previous 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 shares increase in treasury stock resulted from 40 thousand shares increase byacquisitions of treasury stock due to the purchase request of dissenting shareholders against merger and0 thousand share by purchases of stock of less than one share unit.
The 135 thousand shares decrease in treasury stock resulted from 135 thousand shares decrease due toexercise of a right for stock acquisition and 0 thousand share decrease due to requests for additionalpurchases 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
the
Class
(Millionsof theduring the during theperiodof yen)periodperiodperiodSubmitting
company(Parent company)

Stock acquisitionrights (ordinary stock
options)
Total

－

－

－

－

－

223

－

－

－

－

－

223

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

Class ofsharesAmounts of dividend
Dividend per
payment
shares (yen)(Millions of yen)

Date recorded for
dividend

Effective dateCommonstock

10,989110.00

As of
February 28, 2014

As of May 28,
2014

Commonstock

11,989120.00As of
August 31, 2014

As of November
10, 2014

2) Dividends for which effective date is after balance sheet date of year-ended, among dividends attributed in thecurrent period
Date of resolution

Class ofsharesReserve ofdividend

Amounts ofdividend payment(Millions of yen)

Dividend pershares (yen)Daterecorded for
dividend

Effectivedate

The General
meeting ofshareholders(May 26, 2015)

Commonstock

Retainedearnings

11,999120.00

As of
February 28,
2015

As of May27, 2015

32

Current fiscal year (From March 1, 2015 to February 29, 2016)
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 (*)
301
0
0
301
(*) The 0 thousand share increase in treasury stock resulted from purchases of stock of less than one shareunit.
The 0 thousand share decrease in treasury stock resulted from requests for additional purchases of stockof 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
the
Class
(Millionsof theduring the during theperiodof yen)periodperiodperiodSubmitting
company(Parent company)

Stock acquisitionrights (ordinary stock
options)
Total

－

－

－

－

－

307

－

－

－

－

－

307

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

Class ofsharesAmounts of dividend
Dividend per
payment
shares (yen)(Millions of yen)

Date recorded for
dividend

Effective dateCommonstock

11,999120.00

As of
February 28, 2015

As of
May 27, 2015

Commonstock

12,249122.50As of
August 31, 2015

As ofNovember 10, 20152) Dividends for which the record date is in the current period and the effective date is after the year-end

consolidated balance sheet date

Date of resolution

Class ofsharesReserve ofdividend

Amounts ofdividend payment(Millions of yen)

Dividend pershares (yen)Daterecorded for
dividend

Effectivedate

The General
meeting ofshareholders(May 24, 2016)

Commonstock

Retainedearnings

12,249122.50

As of
February 29,
2016

As of
May 25,2016

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
Previous fiscal year
Current fiscal year
From March 1,2014
From March 1,2015
to February 28, 2015
to February 29, 2016
Cash and deposits¥76,758 million¥69,797 million
Time deposits for which the deposit period¥(4) million¥(4) million
exceeds three months
Cash and cash equivalents¥76,754 million¥69,793 million*2. Breakdown of assets and liabilities of a newly consolidated subsidiary acquired through purchase of sharesin this consolidated fiscal year.
Previous 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 SEIJO ISHII
Co., Ltd. shares and proceeds from the purchase.
Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Purchase cost of shares of newly consolidated subsidiaries¥14,441 million¥27,417 million¥28,743 million¥(28,218) million¥(6,113) million¥36,269 million

Cash and cash equivalents of consolidated subsidiaries¥(5,803) million

Difference: Purchase of shares in consolidated subsidiaries¥30,466 million

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 thedifference between the cost of purchase of United Entertainment Holdings Co., Ltd. shares and proceedsfrom the purchase.
Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Purchase cost of shares of newly consolidated subsidiaries
Cash and cash equivalents of consolidated subsidiary
Difference: Purchase of shares in consolidated subsidiaries¥3,947 million¥7,307 million¥9,563 million¥(4,764) million¥(3,035) million¥13,017 million¥(2,102) million¥10,914 million

Current fiscal year (From March 1, 2015 to February 29, 2016)
Not applicable.
3. Description of significant non-fund transactions
1) Assets and liabilities related to finance lease transactions are as below.

Assets and liabilities related to finance lease transactions

34

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

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

¥33,682 million¥38,158 million

2) Important asset retirement obligations are as below.

Important asset retirement obligations

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

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

¥1,711 million¥4,604 million(Segment Information)
1. Outline of reporting segments
The Company’s financial information is provided separately by reporting segment and is subject to regularreview by the board of directors with regard to the allocation of managerial resources and performance
evaluation.
The Group operates primary businesses Domestic Convenience Store Business, Seijo Ishii Business andEntertainment-related Business while incorporating other related businesses.
Therefore, the Group has made the Domestic Convenience Store Business, Seijo Ishii Business andEntertainment-related Business unit its main reporting segments, based on consideration of financial
characteristics and the nature of the services provided.
Regarding to Domestic Convenience Store Business, Lawson. Inc. operates a franchise system as well as
undertaking the direct management of stores in Japan as the parent company of LAWSON, NATURALLAWSON, and LAWSON STORE100. Lawson Mart, Inc. undertakes the direct management of LAWSONSTORE100 stores. SCI, Inc. performs the increase in efficiency and optimization of the whole process as a
subsidiary which manages the process from supply to sale synthetically.
Regarding to Seijo Ishii Business, SEIJO ISHII Co., Ltd. operates SEIJO ISHII supermarket.
Regarding to Entertainment-related Business, Lawson HMV Entertainment, Inc. manages to sell concert
tickets at LAWSON stores and others, music and video soft at HMV stores and others. In addition, United
Cinemas Co., Ltd. operates a multiplex movie theatres.
Due to its rise in importance, Seijo Ishii Business, which was included in Others, has been recorded asreporting segment from this current consolidated fiscal year. Based on this change, for segment information ofprevious 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.
As stated in changes in accounting policies, due to change of calculation method of retirement benefit
liabilities and service cost, the calculation method of retirement benefit liabilities and service cost forreporting segments are changed from this consolidated fiscal year.
The impact of this change on segment profit for this consolidated fiscal year is immaterial.

35

3. Information related to the amount of sales, profit and loss by segment
Previous fiscal year (from March 1, 2014, to February 28, 2015)
Reporting segment
Domestic
Convenience
Store Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others(Note 1)

Total

Adjusted
Amount(Note 2)

Total
(Note 3)Gross operating
revenue
Sales to external392,462
17,87950,68836,882 497,913－
497,913customers
Internal sales ortransfers
2,917
1
1,412
1,168
5,499
(5,499)－betweensegments
Total
395,380
17,88052,10138,050 503,412(5,499)497,913
Segment profit
63,863
1,358
2,587
2,663
70,472
970,482
Segment asset
707,339
69,56858,323
46,395 881,626(117,012)
764,614
Other
Depreciation
36,926
447
838
2,219
40,432－40,432
Goodwill
408
359
433
191
1,392
－
1,392
amortization
Investment for
3,805
－
－
－
3,805
－
3,805
affiliates
Increase of non45,038
306
1,085
2,523
48,954－
48,954current assets(Note)
1. The “others” category refers to business segments that do not fall under the main reporting segment andincludes Financial Services-related Business operated by Lawson ATM Networks, Inc. and Overseas
Business operated by Shanghai Hualian Lawson, Inc. and others.
2. The segment profit, adjusted by segment assets and amortization of goodwill, is balance of elimination of
intra-segment transactions
3. The segment profit is adjusted against the consolidated operating income.

36Current fiscal year (from March 1, 2015, to February 29, 2016)(Millions of Yen)
Reporting segment
Domestic
Convenience
Store Business

Seijo Ishii
Business

Entertainmentrelated
Business(Note 1)Others(Note 2)

Total

Adjusted
Amount(Note 3)

Total
(Note 4)Gross operating
revenue
Sales to external
395,057
68,99373,63945,763 583,452－
583,452
customers
Internal sales ortransfers
3,579
－
1,401
1,158
6,139
(6,139)－betweensegments
Total
398,637
68,99375,04046,921 589,592(6,139)583,452
Segment profit
59,993
5,037
4,076
3,427
72,534
7
72,541
Segment asset
738,875
65,01664,55953,679 922,131(118,918)
803,212
Other
Depreciation
40,768
1,756
1,375
2,590
46,490－46,490Goodwill
596
1,437
664
103
2,802
－
2,802
amortization
Investment for
4,745
－
－
－
4,745
－
4,745
affiliates
Increase of non48,467
521
4,346
3,157
56,492－56,492current assets(Note)
1. Name of Entertainment & Home Convenience Business has been changed into Entertainment-related
Business.
2. The “others” category refers to business segments that do not fall under the main reporting segment andincludes Financial Services-related Business operated by Lawson ATM Networks, Inc. and Overseas
Business operated by Shanghai Hualian Lawson, Inc. and others.
3. The segment profit, adjusted by segment assets and amortization of goodwill, is balance of elimination of
intra-segment transactions
4. The segment profit is adjusted against the consolidated operating income.
(Related information)
Previous 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 and store equipment
Since property and store equipment in Japan exceed 90% of property and store equipment on the
consolidated balance sheet, this information is omitted.
(3) Information by Major Customer
Information about major customers has been omitted since there are no external customers who constituted
more than 10% of net sales on the consolidated statement of income.

37

Current fiscal year (March 1, 2015 to February 29, 2016)
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 and store equipment
Since property and store equipment in Japan exceed 90% of property, plant and store equipment on the
consolidated balance sheet, this information is omitted.
(3) Information by Major Customer
Information about major customers has been omitted since there are no external customers who constituted
more than 10% of net sales on the consolidated statement of income.
(Information on impairment loss in non-current assets by reported segment)
Previous consolidated fiscal year (from March 1, 2014 to February 28, 2015)
The Group groups its assets mainly with stores as the basic minimum unit that generates cash flow. For asset
groups whose profit/loss from operating activities have continuously been negative, the book value of such assets
has been written down to a recoverable amount, with the reduced amount recorded as impairment loss under
extraordinary losses. The Group recognizes as an impairment loss a part of the unamortized goodwill in theoffset difference between the investment and capital that was produced when acquiring the shares of
consolidated subsidiaries whose profitability have deteriorated. The recognized loss for the year amounted to1,897 million yen, which was recorded for the related segment.
The amount recorded for each reporting segment is as follows.
(Millions of yen)
Reporting segment

Impairment
loss

Domestic
Convenience
Store
Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others

Total

Adjusted
amount

Total

5,831

－

237

2,193

8,263

－

8,263

Current fiscal year (from March 1, 2015 to February 29, 2016)
The Group groups its assets mainly with stores as the basic minimum unit that generates cash flow. For asset
groups whose profit/loss from operating activities have continuously been negative, the book value of such assets
has been written down to a recoverable amount, with the reduced amount recorded as impairment loss under
extraordinary losses.
The amount recorded for each reporting segment is as follows.
(Millions of yen)
Reporting segment

Impairment
loss

Domestic
Convenience
Store
Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others

Total

Adjusted
amount

Total

9,155

80

570

737

10,542－

10,54238

(Information on amortization of goodwill and amortized balance by reported segment)
Previous fiscal year (From March 1, 2014 to February 28, 2015)(Millions of yen)
Reporting segment
Domestic
Convenience
Store
Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others

Total

Adjusted
amountTotal

Balance at end
8,788
28,384
9,856
1,159
48,189－48,189of fiscal year
Note: Amortization of goodwill is not indicated since the information is disclosed in “Segment Information.”
Current fiscal year (From March 1, 2015 to February 29, 2016)(Millions of yen)
Reporting segment
Domestic
Convenience
Store
Business

Seijo Ishii
Business

Entertainmentrelated
Business

Others

Total

Adjusted
amountTotal

Balance at end
8,589
26,946
9,192
1,581
46,309－46,309of fiscal year
Note: Amortization of goodwill is not indicated since the information is disclosed in “Segment Information.”(Information on gain on negative goodwill by reported segment)
Not applicable.

39

(Per Share Information)
Previous fiscal year
From March 1,2014 to February 28, 2015

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

Net assets per share

2,561.25 yen

Net assets per share

2,643.97 yen

Net income per share

327.08 yen

Net income per share

313.81 yen

Net income per share after full dilution

326.65 yen

Net income per share after full dilution

313.57 yen(Note) 1. As stated in “(Changes in accounting policies),” the Accounting Standards for Retirement Benefits,etc., were applied in accordance with the transitional treatment set forth in Article 37 of the
Accounting Standards for Retirement Benefits. As a result, the net assets per share for the fiscal year
has increased by 14.11 yen. There is no significant impact on the net income per share and net
income per share after full dilution for the fiscal year under evaluation.
2. 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
From March 1,2014
From March 1,2015
to February 28, 2015
to February 29, 2016
Net income per share
Net income (million yen)

32,686

31,181－－

32,686

31,181

99,93199,998Net income adjustment value (million yen)－－

Increase in number of outstanding commonshares (thousand shares)

133

78

(133)

(78)

─

─

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)

Net income per share after full dilution(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 applicable.

40