Flash Report on Consolidated Results
for the First Half of the Fiscal Year Ending February 28, 2011
October 12, 2010
Listed Company Name: LAWSON, INC.
Code No.: 2651
(URL http://www.lawson.co.jp/company/ir/index.html)
Company Representative: Takeshi Niinami, Representative Director, President & CEO
Contact:Tomoki Takanishi , General Manager , Financial & Accounting OfficeTel.: (03) 5435-2773
Scheduled date for submission of quarterly earnings report: October 15, 2010
Scheduled date for payment of dividend: November 10, 2010
Supplementary Documents quarterly results: Yes
Presentation of quarterly results: Yes (for institutional investors and analysts)
1. Consolidated Performance for the First Half of the Current Period (from March 1, 2010, to August 31, 2010)(1) Consolidated operating results
Note: Amounts below one million yen are truncated.
Total operating revenues% change¥ million
Current First Half
221,205(2.4)
Previous First Half
226,596
Net profit% change¥ million
12,288(22.6)
15,883-Current First Half
Previous First Half

Operating profit% change¥ million
30,1480.0
30,136
Net profit per share¥
123.44160.17

Recurring profit% change¥ million
29,690(0.3)
29,770Fully diluted profit per share¥
123.31160.04(2) Consolidated financial position
Total assets¥ million
At August 31, 2010
481,872
At February 28, 2010
448,131
Notes: Equity August, 2010 ¥198,922 million

Net assets
Equity ratio¥ million%
203,495
41.3
198,135
42.8
February, 2010 ¥191,930 million

Net assets per share¥
1,991.85
1,935.41

2. Dividends status
Annual dividends per share
1Q

2Q

3Q

¥
¥
¥
2009 fiscal year
80.00
―
―
2010 fiscal year
85.00―
2010 fiscal year―
(Forecast)
Note: Revision of forecast for dividends in the second quarter: None1Year-end
dividend¥
80.00¥
160.0085.00

170.00Total

3. Forecast Consolidated Performance for 2010 Fiscal Year （From March 1, 2010, to February 28, 2011）
Total operating revenues

Operating profit

Recurring profit¥ million%¥ million%¥ million
2010 fiscal year
430,000(8.0)
50,5000.4
49,100
Reference: Forecast net profit per share for the 2010 fiscal year: 220.29yen
Note: Revision of forecasts for consolidated performance during the second quarter: Yes

%
(0.7)

Net profit¥ million
22,0004. Other (Note) Please refer to Other on page 6 of the attachment for further details.
(1) Change in important subsidiaries during the period: None
(Note) This indicates any changes in specified subsidiaries during the second quarter resulting from a revisionof the scope of consolidation.
(2) Adoptions of simplified accounting methods or special accounting methods in presentation of quarterly
financial statements: Yes(Note) This indicates whether any simplified accounting methods or special accounting methods were adopted
in preparation of the quarterly financial statements.
(3) Changes in accounting principles, procedures, presentation methods, etc., pertaining to preparation of
consolidated financial statementsi) Changes associated with revision in accounting standards: Yesii) Other changes: None
(Note) This indicates whether there were any changes in the accounting principles, procedures, presentation
methods, etc. pertaining to the preparation of the consolidated financial statements as stated under Changes inSignificant Accounting Policies for the Presentation of the Quarterly Financial Statements.
(4) Number of issued sharesi) The number of shares issued at the end of term
August, 2010: 100,300,000
February, 2010: 99,600,000ii) The number of treasury shares in the end of term
August, 2010: 432,458
February, 2010: 432,190
iii) Average number of shares during the term
August, 2010: 99,545,827
August, 2009: 99,167,923
Note: Disclosure of progress of quarterly review procedures
At the time of disclosure of this quarterly flash report, review procedures for quarterly earnings reports based on
the Financial Instruments and Exchange Act had been completed.
Note: The above-mentioned forecast is based on the information, which is able to get hand at present, andincluding a potential risk and uncertainty. Actual achievements may differ from these forecasts due to manyfactors.

2

%
75.1

1．Review of Operations(1) Review of Consolidated Operating Results
During the first half of fiscal 2010, the six-month period from March 1 to August 31, 2010, the Japanese
economy saw a delayed recovery in personal consumption. On the other hand, the convenience store(CVS) industry saw higher sales of beverages and ice cream due to a record spell of extremely hot
weather after the end of the rainy season.
In this operating environment, the LAWSON Group (the “Company”) took the following actions with theaim of improving customer satisfaction in CVS operations and other businesses to realize its corporate
philosophy of “Happiness and Harmony in Our Community.”
In terms of business results for the interim period, total operating revenues was 221,205 million yen,down 5,390 million yen, or 2.4%, from the corresponding period of the previous fiscal year. Recurring
profit was 29,690 million yen, down 80 million yen, or 0.3%. Net profit was 12,288 million yen, down
3,595 million yen, or 22.6% due to extraordinary losses in the form of disposal loss of a training facility
and impairment losses for old IT systems at the subsidiary company, Ninety-nine Plus Inc.
(Convenience Store Operations)
On the merchandise front, we continued to roll out products offering a positive “surprise” to customers
with their high added value relative to price by using high-quality ingredients procured through integrated
purchasing. In the interim period under review, we reduced the pricing of the Niigata Koshihikari rice ballseries to meet customer demand, and also launched the Luxury Niigata Koshihikari rice ball series, ourmost extravagant series of rice balls ever. This new series won strong support from customers.
In sales promotions, we ran a number of campaigns that were highly successful in boosting sales such as
the LAWSON 35th Anniversary Campaign and Miffy Bowl Present Campaign, which proved popular withcustomers.
As for services, we provided customers with greater appeal and convenience. In addition to developing
the Ponta multi-partner shopping points campaign, we pursued sales promotion measures such as
distributing product vouchers in collaboration with other participating companies.
In store operations, we utilized our next-generation IT system, PRiSM that enabled franchise owners
to place orders from the customer's perspective. In addition, we instructed franchise owners to create
sales areas based on analysis of purchase data from the multi-partner shopping points program.
In new store openings the Company worked to develop stores with an emphasis on profitability, byrigorously adhering to proprietary group standards for opening stores.

3

[Change in Total Number of Stores](Stores)

LAWSON

Total stores as ofFebruary 28, 2010
Change during fiscal
year
Total stores as ofAugust 31, 2010

NATURALLAWSON

8,540

89

LAWSONSTORE100 and
SHOP99
996

Total

82

2

12

96

8,622

91

1,008

9,721

9,625

LAWSON conducted a share exchange on July 1, 2010 that made it the sole parent company ofNinety-nine Plus Inc., which operates the LAWSON STORE100 and SHOP99 formats. Ninety-nine Plus
Inc. continued to introduce LAWSON Group private brand (PB) Value Line products at stores it operates
and boxed lunches that are kept in chilled units. Ninety-nine Plus Inc. is also making ongoing efforts to
expand its service area, including opening stores in Kyushu in July 2010. Two stores were also opened on
July 30, 2010 in Fukuoka Prefecture. The number of stores managed by Ninety-nine Plus Inc. was 1,008
as of August 31, 2010.
As of August 31, 2010, the number of LAWSON stores operated by equity-method affiliate LAWSON
Okinawa, Inc. in Okinawa Prefecture was 139.

SHANGHAI HUALIAN LAWSON CO., LTD., a Chinese equity-method affiliate, in Shanghai, China,
was offering guidance to 318 stores as of August 31, 2010. Furthermore, in July 2010, CHONGQINGLAWSON CO.,LTD. in which LAWSON has a 100% equity interest, opened its first LAWSON store in
Chongqing. As of August 31, 2010, this company was operating two stores.
(Other Businesses)
In addition to convenience store operations, the Company is also involved in ticket sales, andfinancial-related services.
LAWSON conducted a share exchange on July 1, 2010 that made it the sole parent company of LAWSONENTERMEDIA, INC., which operates the ticket sales business. In the period under review, ticket
volumes for concerts, a mainstay of this business, as well as leisure-related activities and movies werestronger than the corresponding period of the previous fiscal year.
Following the misappropriation of funds that caused concern for shareholders and other stakeholders,
LAWSON ENTERMEDIA established a working group in the in-house Risk Management & Compliance
Committee. This working group is working assiduously to implement measures to prevent a reoccurrenceof this sort of incident, including by addressing issues pointed out by the third party investigating
committee.
LAWSON ATM Networks, Inc., which operates a financial services-related business, recorded higher
operating revenues and operating profit as a result of increases in the number of ATM machines installed4

nationwide in LAWSON stores and in the number of transactions. As of August 31, 2010, the number ofATMs installed nationwide reached 7,751.
Furthermore, advertising business operator Cross Ocean Media, Inc. worked to develop and operate newhigh-value-added media such as digital signage.
Sales by product group throughout all Lawson Group stores
Fiscal period

Previous 1st Half

Current 1st Half

March 1, 2009 to August 31, March 1, 2010 to August 31,
2009

Product group

2010

Sales

Percentage of

Sales

Percentage of(Millions of

Total (%)

(Millions of

Total (%)

yen)

yen)

Processed foods

459,83954.7

446,820

53.3

Fast foods

164,68519.6

160,234

19.1

Daily delivered foods

116,92213.9

132,821

15.9

Nonfood products

99,293

11.8

98,012

11.7

840,741100.0

837,889

100.0

Total

Some merchandise that was classified under fast food in the first half of the previous fiscal period has been reclassified
under daily delivered goods in the presentation for the first half of the current fiscal period. The effect of the change is
4,336 million yen.

Number of stores by prefecture (As of August 31, 2010)
Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture

Numberof stores

Hokkaido

536

Saitama

374

Gifu

121

Tottori

88

Saga

60

Aomori

166

Chiba

350

Shizuoka

178

Shimane89

Nagasaki

85

Iwate

161

Tokyo

1,265

Aichi

462

Okayama122

Kumamoto

91

Miyagi

192

Kanagawa

672

Mie

94

Hiroshima

140

Oita

137

Akita

152

Niigata

105

Shiga

123

Yamaguchi

112

Miyazaki81

Yamagata

59

Toyama

112

Kyoto

249

Tokushima104

Kagoshima

107

Fukushima

99

Ishikawa

88

Osaka

956

Kagawa98

Total

Ibaraki

105

Fukui

99

Hyogo

548

Ehime

154

Tochigi

108

Yamanashi

69

Nara

100

Kochi

57

Gunma

66

Nagano131

Wakayama

109

Fukuoka

347

5

9,721

(2)Qualitative Information Regarding Changes in Other Consolidated Financial Indicators
1) Total Assets, Total Liabilities and Total Net Assets
As of August 31, 2010, total assets stood at ¥481,872 million, an increase of ¥33,741 million fromFebruary 28, 2010. This mainly reflected a ¥33,622 million increase in cash and bank deposits.
Total liabilities increased ¥28,381 million from February 28, 2010 to ¥278,377 million. This mainlyreflected a ¥20,039 million increase in accounts payable-trade.
Net assets stood at ¥203,495 million, up ¥5,359 million from February 28, 2010. This primarily reflected
a ¥6,176 million increase in capital surplus, the result of executing share exchanges to make consolidated
subsidiaries Ninety-nine Plus Inc. and LAWSON ENTERMEDIA, INC. wholly owned subsidiaries of
LAWSON.
2) Cash Flows during the First Half
Cash and cash equivalents at August 31, 2010 stood at ¥89,465 million, up ¥34,622 million fromFebruary 28, 2010.
Operating activities provided net cash of ¥63,446 million, an increase of ¥13,882 million from thecorresponding period of the previous fiscal year, mainly due to increases in accounts payable-trade anddue to franchised stores.
Investing activities used net cash of ¥12,665 million, a decrease of ¥3,231 million from the corresponding
period of the previous fiscal year, mainly due to a decrease in payment for acquisition of property andstore equipment.
Financing activities used net cash of ¥16,157 million, ¥4,931 million more year on year. This mainlyreflected an increase in payments for purchase of treasury stock.

2. Other(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting
in revised scope of consolidation): None

(2) Adoptions of simplified accounting methods and accounting methods particular to presentation ofquarterly financial statements:① Adoption of simplified accounting methods: Yes
Regarding property and store equipment to which the declining-balance method is applied, theamount of depreciation is calculated by apportioning depreciation equally during the period.
② Accounting methods particular to presentation of quarterly financial statements: None

(3) Changes in accounting principles, procedures, presentation methods, etc., pertaining to preparation of
consolidated financial statements (Those to be stated as significant accounting policies):
The Company is applying the Accounting Standard for Business Combinations (ASBJ Statement
No.21, December 26, 2008), the Accounting Standard for Consolidated Financial Statements
6

(ASBJ Statement No.22, December 26, 2008), and the Implementation Guidance on AccountingStandard for Business Combinations and Business Divestitures (ASBJ Guidance No.10, December
26, 2008) from this fiscal year.

73. Consolidated Financial Statements etc.
(1)Consolidated Balance Sheets（Millions of yen）

As of August 31, 2010 and February 28, 2010
August 31, 2010

February 28, 2010

Cash and bank deposits

97,63964,017

Accounts receivable—due from franchised stores

12,555

20,790Marketable securities

1,000

2,500

Merchandise inventories

4,280

4,446

Accounts receivable—other

30,517

26,445

Deferred tax assets

3,392

4,587

Other

9,327

9,567

Allowance for doubtful accounts

(128)

(155)

158,584

132,198

186,235

183,841

Accumulated depreciation(91,267)(87,388)

Buildings and structures－net

94,96896,452

Vehicles, tools, furniture and fixtures

57,551

57,241

Accumulated depreciation(44,997)(44,383)

Vehicles, tools, furniture and fixtures－net

12,553

12,85849,95838,565

Accumulated depreciation(5,428)(2,567)

Other－net

44,52935,997152,052

145,308

Software28,31929,674

Goodwill

7,521

4,248

Other

486

484

Subtotal

36,32734,407Long-term loans receivable

31,512

29,724

Lease deposits

81,806

83,205

Deferred tax assets

13,275

15,274Claims provable in bankruptcy, claims provable in rehabilitation

14,777

13,631

9,109

9,018

Allowance for doubtful accounts(15,573)(14,636)

Subtotal

134,909136,216

Total

323,288

315,933

Total assets

481,872448,131

Current assets:

Total
Fixed assets:
Property and store equipment
Buildings and structures

Other

Subtotal
Intangible assets;

Investments and Other;and otherOther

8

（Millions of yen）
August 31, 2010

February 28, 2010

Accounts payable —trade93,22873,189Accounts payable— due to franchised stores

1,977

1,024

Income taxes payable

6,495

9,852

Deposits received

74,94465,858

Accrued employees’ bonuses

2,361

2,789

Provision for use of points granted

1,271

2,097

Other

26,07029,684

206,350

184,496

6,754

6,206

197

217

Deposits received from franchisees and lessees

38,28938,710Other

26,786

20,365

Total

72,02765,499Total Liabilities

278,377

249,996

Common stock

58,50658,506

Capital surplus

47,696

41,520Retained earnings

94,99894,171

Treasury stock(1,691)(1,713)

Total Owners’ equity

199,510

192,485

3

14

(634)

(634)

42

65

Valuation and translation adjustments

(588)

(554)

Stock acquisition rights

351

346

Minority interests

4,221

5,858

Total net assets

203,495

198,135

Total Liabilities and total net assets

481,872448,131

Current liabilities:

Total
Long-term Liabilities;
Allowance for employees’ retirement benefits
Allowance for retirement benefits to executive officers
and corporate auditors

Owners’ equity;

Valuation and translation adjustments;
Net unrealized gain on available-for-sale securities
Land revaluation difference
Foreign currency translation adjustments9(2) Consolidated Statements of Income
For the first half of the fiscal year ending August 31, 2009 and 2010 (March 1, 2010－August 31, 2010)（Millions of yen）
August 31, 2009
Operating revenues

August 31, 2010

120,069

124,232

Franchise commission from franchised stores

95,75898,637

Other

24,311

25,595Net sales

106,526

96,973

Total operating revenues

226,596

221,205

Cost of goods sold79,18872,044

Operating gross profit

147,407

149,161

117,271

119,01230,13630,148

Non – operating income;

806

921

Interest received

347

337

Equity in earnings of affiliates－

116

Compensation income

213

172

Other

246

295

1,172

1,380

Interest expense

128

461

Loss on cancellation of store lease

794

717

Other

249

201

29,77029,690651－

Gain on sales of noncurrent assets

24－

Gain on change in equity

625

－

2

－

4,530

7,555

1,800

1,748

－

1,258

2,051

4,193

679

355

Income before income taxes and minority interests

25,891

22,134

Income taxes;

9,110

9,402

Income taxes - current

11,330

6,206

Deferred income taxes(2,220)3,195

Minority interests in net profit

897

443

15,883

12,288Selling, general and administrative expenses
Operating profit
Non – operating income and expenses;

Non – operating expenses;

Recurring profit
Extraordinary income and loss;
Extraordinary income;

Other
Extraordinary loss;
Loss on retirement of noncurrent assets
Loss on sales of noncurrent assets
Loss on impairment of long-lived assets
Other

Net profit

10

(3)Consolidated Statements of Cash Flows
For the first half of the fiscal year ending August 31, 2009 and 2010 (March 1, 2010－August 31, 2010)(Millions of yen)August 31, 2009

August 31, 2010

Income before income taxes

25,891

22,134

Depreciation and amortization

12,01815,740600

547Interest received

(347)

(337)

Interest expense

128

461

Loss on impairment of long-lived assets

2,051

4,193

Loss on retirement of noncurrent assets

895

1,125

Other-net

201

169

10,328

8,234

(274)

(4,074)14,14021,111

Increase (decrease) in accounts payable—other(9,033)(6,801)

Increase (decrease) in deposits received

3,500

8,966

Increase (decrease) in guarantee deposits received from franchisee(2,363)(421)

Other-net

1,069

2,397

Subtotal

58,80573,448Interest income received

346

340

Interest expenses paid

(128)

(460)

(9,459)(9,882)

49,56363,446

Payments into time deposits(1,580)(8,500)

Proceeds from withdrawal of time deposits

1,500

9,500

Payment for purchase of marketable securities(1,799)－Proceeds from redemption of marketable securities

4,100

1,500

Payment for acquisition of property and store equipment(13,087)(10,755)

Payment for acquisition of intangible fixed assets(4,278)(4,389)Purchase of stocks of subsidiaries and affiliates

(100)

－

－

455

(651)

(475)

(15,897)(12,665)

Operating activities;

Increase (decrease) in provision for allowance for retirement benefits
to employees

Decrease (increase) in accounts receivable due from franchised stores
Decrease (increase) in accounts receivable－other
Increase (decrease) in accounts payable—trade and due to franchised
storesand lessees

Income taxes paid
Net cash flows provided by operating activities
Investing activities;

Proceeds from purchase of investments in subsidiaries resulting inchange in scope of consolidation
Other – net
Net cash used in investing activities

11Financing activities;
(608)

－

Repayments of lease obligations(2,610)(4,675)

Cash dividends paid

(7,933)(7,933)Purchase of treasury stock－(3,506)

Other

(75)

(42)

Net cash used in financing activities(11,226)(16,157)

Net increase in cash and cash equivalents

22,43934,622

Cash and cash equivalents, beginning of period

83,981

54,843

Cash and cash equivalents at end of period

106,42189,465

Repayment of long-term loans payable12(4) Notes to Going Concern
Not Applicable(5) Segment Information
1.

Business segment information
The Company operates mainly the franchised store business and total operating revenue, operating income of the
franchised store business account for more than 90% of the respective consolidated totals at all segments for thesix-month period ended August 31, 2010, therefore business segment information is excluded.

2.

Geographic segment information
Net sales in Japan account for more than 90% of total net sales at all segments for the six-month period ended
August 31, 2010, therefore geographical segment information is excluded.

3. Overseas sales
Overseas sales account for less than 10% of consolidated sales at all segments for the six-month period ended
August 31, 2010, therefore overseas sales information is excluded.

(6) Notes to Significant Changes in Shareholders’ Equity
As a result of the share exchange between LAWSON and Ninety-nine Plus Inc. effected on July 1, 2010, legal
capital surplus increased 5,069 million yen. Furthermore, legal capital surplus reserve increased 1,107 million yen
as a result of a share exchange between LAWSON and LAWSON ENTERMEDIA, INC. on the same date.
LAWSON repurchased 902,300 shares of common stock of the Company for 3,505 million yen in accordance witha resolution passed at the Board of Directors’ meeting held on July 5, 2010. Moreover, based on a resolution
passed at the Board of Directors’ meeting held on August 3, 2010, the Company on August 11 cancelled 902,189
shares of treasury stock costing 3,528 million yen.

13