(TRANSLATION ONLY)
Securities code: 2651
May 7, 2010
To Those Shareholders With Voting Rights
Takeshi Niinami
Representative Director
LAWSON, INC.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 35th ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 35th Ordinary General Meeting of Shareholders to be held as follows.
If you are unable to attend the meeting, please exercise your voting rights using either of the methods described below after
reading the attached REFERENCE DOCUMENTS FOR THE GENERAL MEETING OF SHAREHOLDERS.
[Voting in Writing (by Mail)]
Please indicate your approval or disapproval of the matters to be resolved on the Voting Rights Exercise Form enclosed
herewith and return it so that it reaches us by 5:45 p.m. on Monday, May 24, 2010.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 24 2010 after reading the attached document “Exercising
Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 25, 2010
2. Place: Mielparque Hall, 5-20, Shiba-Koen 2-chome, Minato-ku, Tokyo
3. Objectives of the Meeting
Reports
The Business Report, the Consolidated Financial Statements and the Non-Consolidated Financial Statements for the 35th
Fiscal Term (from March 1, 2009 to February 28, 2010), as well as the Audit Reports Thereof
Matters to Be Resolved
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Seven (7) Directors
Proposal No. 3: Election of Two (2) Corporate Auditors
Proposal No. 4: Presentation of Retirement Benefits to Retiring Corporate Auditors•••

For those attending, please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at the meeting. Pleasearrive a little early because the reception desk can be congested immediately before the meeting begins.
If you wish to exercise your voting rights by proxy, your proxy is requested to present a document evidencing his/her proxy, such asa power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at the reception desk. (The qualified
proxy is limited to one shareholder having voting rights for this meeting as per the relevant provision in the Articles ofIncorporation.)
If any amendment is made to this notice, such amendment will be posted on the Company’s Web site.
Results of resolutions will also be posted on the Company’s Web site.
(http://www.lawson.co.jp/company/ir/index.html)

1

(TRANSLATION ONLY)
BUSINESS REPORT(March 1, 2009 through February 28, 2010)
I. CURRENT STATUS OF THE CORPORATE GROUP
1. Summary of Operations(1) Business Developments and Results of Operations
During fiscal 2009, the year ended February 28, 2010, concerns about job security and falling personal incomes caused
consumers to exercise more restraint in spending, prolonging the difficult conditions facing the Japanese retail industry.
Deflation added to the industry's ongoing difficulties.
In this operating environment, the LAWSON Group (the "Company") took the following actions with the aim of improving
customer satisfaction in convenience store (“CVS”) operations and other businesses to realize its corporate philosophy of"Happiness and Harmony in Our Community."
In terms of our operating results, total operating revenues rose 33.7% year-on-year to ¥467,192 million, despite a ¥1,271
million decrease in franchise commissions from franchised stores. The overall increase reflected the first full-year
consolidation of Ninety-nine Plus Inc., which became a consolidated subsidiary in the previous fiscal year. Ordinary profit
increased ¥653 million, or 1.3%, to ¥49,440 million. However, net income decreased ¥14,243 million, or 56.3%, to ¥11,063
million, the result mainly of the recording of a ¥12,616 million impropriety-related loss relating to the alleged
misappropriation of funds by two former directors of consolidated subsidiary LAWSON ENTERMEDIA, INC. and therecording of a ¥1,936 million loss on prior period adjustment.
Operating results by business segment were as follows:
Convenience Store Operations
Merchandise Strategy and Services
On the merchandise front, the Company focused on product development in certain product categories during the fiscal year,
namely fried foods, desserts, and cooked noodles. In fried foods, L Chiki fried chicken, which went on sale in March 2009,
won strong support for its reasonable price and generous volume. Regarding desserts, LAWSON launched a new brandcalled Uchi Café Sweets in September 2009. Products made using fresh cream, such as Premium Whipped Cream Roll, won
strong customer support. In cooked noodles, we revamped our pasta lineup and offered customers bona fide fresh pasta likethat found in specialty stores by employing a vacuum extrusion production method.
We also sought to reduce costs by integrating purchasing of high-quality ingredients and proposing menus based aroundthose ingredients. To this end, we continued to develop products offering a positive "surprise" to consumers with their highadded value relative to price. One example is Stamina Grilled Beef Bento, which uses high-quality beef.
Moreover, to support our customers in their increased restraint in spending, we have also been expanding our VL (valueline) series of private brand products that had hitherto mainly been featured in LAWSON STORE100 stores into LAWSON
and other stores also.
In sales promotions, the Company prioritized highly effective campaigns such as the Spring Rilakkuma Fair, and Ponyo
Ramen Bowl Present campaign. These promotions were popular with customers.
On the services front, the Company's bill settlement services processed approximately 162 million transactions forcustomers, representing a total transaction value of ¥1,553.8 billion. Meanwhile, ATMs (automatic teller machines) were
installed in stores in 3 new prefectures, bringing the total number of prefectures with LAWSON stores that have ATMs to
40. The Company expanded the range of merchandise eligible for bonus points under the LAWSON PASS and MY
LAWSON POINT customer loyalty programs, and ran a promotion that enabled card holders to collect more shopping
points on certain days of the week, among other initiatives. As a result, the total number of point card members exceeded 11
million, reflecting continued support for the Company's customer loyalty programs.
Store Operations
In store operations, the Company continued providing guidance to franchise owners in order to ensure merchandise
assortments match customer needs in each location. Guidance is continuously provided to individual stores based on athorough understanding of the customers in each area so as to create merchandise assortments that will satisfy these2customers. In addition, following the launch of a new ordering system, the Company is offering guidance to stores on how
to place orders based on customer-generated data, and applying data collected from the loyalty card programs to the creationof merchandise assortments.
The Company also continued to implement the "Mystery Shopper" program, which helps strengthen store operation
capabilities. In this program, "undercover" researchers visit individual LAWSON stores as ordinary shoppers andobjectively and quantitatively evaluate them from a customer's perspective.
Store Development
The Company worked to develop stores that it expects to generate high earnings, by rigorously adhering to proprietary
standards for opening stores. This entailed concentrating on opening new stores mainly in major metropolitan areas in the
Kanto, Kinki and Chubu regions.
In terms of store format strategy, the Company leveraged the LAWSON, NATURAL LAWSON and LAWSON STORE100
formats to promote new store openings and store renovations that match customer needs in each location.
Ninety-nine Plus Inc., which is developing a chain of fresh food convenience stores, continued to perform strongly as it
responded to increased restraint in consumer spending by providing customers with a range of valuable products at a single
fixed price. Going forward, the Company will continue to pursue an integrated business strategy involving Ninety-nine Plus
Inc. that seeks to improve LAWSON Group management efficiency and bolster competitiveness.
[Change in Total Number of Stores] (March 1, 2009 to February 28, 2010)(Stores)
LAWSON
Total
LAWSON
NATURALLAWSONSTORE100 and
SHOP99Total stores as of
8,509
93
925
9,527
February 28, 2009
Change during fiscal
31
-4
71
98
year
Total stores as of
8,540
89
996
9,625
February 28, 2010
Note: On December 1, 2009, LAWSON split off its convenience store business in Okinawa Prefecture to LAWSON
Okinawa, Inc., transferring 136 LAWSON stores to the latter company.
As of February 28, 2010, the number of LAWSON stores operated by equity-method affiliate LAWSON Okinawa, Inc. in
Okinawa Prefecture was 136.
In overseas operations, SHANGHAI HUALIAN LAWSON CO., LTD., a Chinese equity-method affiliate, was operating
300 stores in Shanghai, China, as of December 31, 2009.
Corporate Social Responsibility (CSR) Activities
In the CSR field, the CSR Promotion Office, which reports directly to the president, continued to lead environmental
protection and social contribution activities, working together with franchise owners and employees.
As part of efforts to help create a low-carbon society, the Company set targets for reducing the CO2
generated by power consumption at each store, and actively installed energy-saving devices. Moreover, all new stores
opened after June 2009 feature energy-efficient LED lighting for signs and in stores. LAWSON also became the firstretailer in Japan to introduce electric vehicles for use in business activities. In a collaborative effort with customers to fightglobal warming, in April 2008 the Company launched a carbon offset program, which allows customers to contribute to
reducing CO2 by purchasing carbon credits using their accumulated shopping points or cash, or by purchasing products
designated for carbon offset. As of February 28, 2010, approximately 12,800 tons of CO2 had been offset through thisprogram. In recognition of its actions, LAWSON received the 2009 Minister of the Environment Award for Global
Warming Prevention Activities. In addition, the LAWSON "Green Fund", active since 1992, in combination with donation
drives in regions hit by disasters such as torrential rain, raised a total of ¥269 million in fiscal 2009.
Moving forward, working together with customers, the Company will actively continue its environmental protection andsocial contribution activities.

3

Other Activities
On August 24, 2009, the Company concluded a basic agreement on a business alliance with Matsumotokiyoshi Holdings
Co., Ltd., as part of actions the Company is taking to capitalize on the June 1, 2009 amendments to the Pharmaceutical
Affairs Law. Based on the business theme that "food is medicine," the two companies will help customers to achieve thehealthy and comfortable lifestyles they seek. This will be achieved by providing high-value-added, highly-specialized
merchandise and services and developing new types of stores.
Regarding CVS operations in Okinawa Prefecture, on December 1, 2009, we transferred 51% of the total outstanding sharesof LAWSON Okinawa, Inc., which was established as a wholly owned LAWSON subsidiary, to SAN-A CO., LTD.,
Okinawa’s largest food supermarket operator. Both LAWSON and SAN-A will now jointly manage LAWSON Okinawa.
Through LAWSON Okinawa, we aim to further develop the LAWSON chain in Okinawa Prefecture, as well as better
create stores that cater to regional needs.
[Total Operating Revenues in the Convenience Store Business]
Total Operating Revenues (¥ millions)441,618

Year-over-Year (%)
134.8[Net Sales at All LAWSON Stores in the Convenience Store Business]
Product Group
Sales (¥ millions)Composition Ratio (%)
Processed foods
902,306
54.2
Fast foods
324,197
19.5
Daily delivered foods
239,088
14.3
Non-food products
200,54412.0
Total
1,666,136
100.0Year-over-Year (%)
106.9
97.4
128.5
102.6
106.9

Other Businesses
In addition to convenience store operations, the LAWSON Group is involved in ticket sales, financial services, and otherbusinesses.
On July 20, 2009, LAWSON TICKET, INC., which operates the ticket sales business, changed its name to LAWSONENTERMEDIA, INC. The company recorded a strong performance on the back of rising sales of mainstay concert tickets
as well as sporting event tickets.
LAWSON ATM Networks, Inc., which operates a financial services-related business, performed strongly as a result of anincrease in the number of ATM machines installed nationwide in LAWSON stores and a rise in the number of transactions.
[Total Operating Revenues in Other Businesses]
Total Operating Revenues (¥ millions)
29,582Year-over-Year (%)
112.6

4

(2) Capital Expenditures and Financing
Capital expenditures of the LAWSON Group during the year totaled ¥40,170 million, of which ¥31,037 million was
primarily for store facility investment in land and buildings, and ¥8,999 million was for the upgrading of information
systems.
The LAWSON Group’s own funds were used for all capital expenditures during the year ended February 28, 2010.
(3) Changes in Operating Results and Financial Position
1) Changes in Operating Results and Financial Position of the Corporate Group
Category/Fiscal
Fiscal 2006
Fiscal 2007
Fiscal 2008
Fiscal 2009
nd
rd
th
Term
32 Term
33 Term
34 Term
35th Term
Total operating
283,053
301,176
349,476
467,192
revenues(¥ millions)
Ordinary profit
44,646
46,244
48,78749,440(¥ millions)
Net income
20,983
22,11925,306
11,063(¥ millions)
Net income per201.50214.69255.22111.55
share (¥)
Total assets
398,258
397,107436,171448,131(¥ millions)
Net assets
199,493
188,573
203,178
198,135(¥ millions)
Net assets per
1,868
1,867
1,983
1,935
share (¥)
Note: In the Consolidated Statements of Income for the year under review, we recorded a ¥12,616 million
impropriety-related loss and a ¥1,936 million loss on prior period adjustment, relating to the alleged misappropriation offunds by two former directors of consolidated subsidiary LAWSON ENTERMEDIA, INC. If the income adjustment loss
for the previous year is included retrospectively, the operating results and financial position for the 34th and 35th terms
would be as follows.

5Category/Fiscal
Term
Total operating
revenues(¥ millions)
Ordinary profit(¥ millions)
Net income(¥ millions)
Net income pershare (¥)
Total assets(¥ millions)
Net assets(¥ millions)
Net assets per
share (¥)

Fiscal 2008
34th Term
349,476

Fiscal 200935th Term
467,192

48,78749,44023,807

12,562240.10126.67436,096

448,131

201,166

198,135

1,968

1,935

2) Changes in Operating Results and Financial Position of the Company
Category/Fiscal
Term
Total net sales of
LAWSON storesincludingfranchised stores(¥ millions)
Total operating
revenues(¥ millions)
Ordinary profit(¥ millions)
Net income(¥ millions)
Net income pershare (¥)
Total assets(¥ millions)
Net assets(¥ millions)
Net assets per
share (¥)

Fiscal 2006
32nd Term
1,377,842

Fiscal 2007
33rd Term
1,402,786

Fiscal 2008
34th Term
1,506,312

Fiscal 200935th Term
1,472,415

256,023

269,582279,739

271,51344,52645,29847,321

44,577

21,73318,89922,066

20,665208.70183.43222.54208.38389,109385,335

402,117420,444

200,257

187,146

195,634

200,506

1,917

1,886

1,969

2,018

(4) Pressing Issues
During fiscal 2010, although we expect to see a recovery in the Japanese economy as overseas economies improve andemergency economic measures take effect, there is a risk that factors such as worsening employment and deflation willcontinue to hold the economy back. We also believe that a full-fledged rebound in consumer spending is unlikely.
Furthermore, with the increasingly competitive environment in the convenience store industry, we anticipate continued
severe conditions.

6

In this environment, LAWSON is promoting the following management measures with the aim of realizing its corporate
philosophy of "Happiness and Harmony in Our Community" by responding to the changing needs of an aging society.
1) Create merchandise assortments and sales spaces based on customer-generated data
Determined to create stores and merchandise assortments that meet the needs of customers in each location, LAWSON willcontinue to use point card data to develop customer-centric merchandise assortments. Using the next-generation information
system introduced in fiscal 2009, we will work to reduce sales opportunity losses and product disposal losses, and improveordering precision and product development capabilities in store operations.
2) Promote the fresh foods convenience store businessAs society ages and households become smaller in Japan, LAWSON will further promote the fresh foods convenience store
business, mainly in residential areas, responding to customers who increasingly want to prepare and eat food at home, while
expanding the customer base.
3) Provide appealing services through introduction of a multi-partner shopping points program
In March 2010, LAWSON joined the Ponta multi-partner shopping points program issued, operated and managed by
Loyalty Marketing, Inc. Through the program, LAWSON will pursue broader marketing analysis and sales promotion
measures in collaboration with the other participating companies as it works to provide customers with more convenient andappealing services.
4) Respond to demand for OTC drugs and healthcare
Following the June 1, 2009 amendment of the Pharmaceutical Affairs Law, LAWSON will expand OTC drug sales and help
customers to achieve the healthy and comfortable lifestyles they seek based on the business theme that “food is medicine.”
This will be achieved by providing high-value-added, highly-specialized merchandise and services and by developing new
types of stores.
We offer our sincerest apologies for any inconvenience and concern caused by the large loss recorded as a result of thealleged misappropriation of funds by two former directors of consolidated subsidiary LAWSON ENTERMEDIA, INC. that
was announced in February of this year. We are treating this matter seriously and have already taken steps aimed atpreventing a reoccurrence by strengthening internal management systems and internal checks and balances at LAWSON
and subsidiaries alike. We are determined to do our best to regain the trust of shareholders through these actions.
We look forward to the continued support and encouragement of our shareholders.

72. Current Status at the End of February 2010
(1) Major Business Operations and Principal Offices
Convenience Store Business
1) LAWSON, INC.
Major Business:
LAWSON, INC. operates the LAWSON-brand franchise system andCompany-operated stores as the headquarters of LAWSON and NATURALLAWSON convenience store chains
Head Office:Shinagawa-ku, Tokyo
Principal Offices:
Hokkaido LAWSON Branch (Chuo-ku, Sapporo), Tohoku LAWSON Branch(Aoba-ku, Sendai), Kanto LAWSON Branch (Shinagawa-ku, Tokyo), Chubu
LAWSON Branch (Naka-ku, Nagoya), Kinki LAWSON Branch (Suita, Osaka),
Chugoku & Shikoku LAWSON Branch (Kita-ku, Okayama) and Kyushu LAWSON
Branch (Hakata-ku, Fukuoka)
Note: In addition to the above sites, the Company has 102 offices throughout Japan including
District Offices.

Stores:Prefecture
Hokkaido
Aomori
Akita
Iwate
Miyagi
Yamagata
Fukushima
Niigata
Tochigi
Gunma
Saitama
Chiba

Number ofStores
518
167
148
161
193
59
100
104
106
65
374
351

Prefecture
IbarakiTokyo
Kanagawa
Shizuoka
Yamanashi
Nagano
Aichi
Gifu
Mie
Ishikawa
ToyamaFukui

Number ofStores
105
1,255
664
173
66
133
446
117
90
85
111
96

Prefecture
Kyoto
Shiga
Nara
Wakayama
Osaka
Hyogo
Okayama
Hiroshima
Yamaguchi
Tottori
ShimaneKagawa8

Number ofStores
245
123
102
109
954
541
123
140
109
89
87
97

Prefecture
Ehime
Tokushima
Kochi
Fukuoka
Saga
Nagasaki
Oita
Kumamoto
MiyazakiKagoshima
Total

Number ofStores
156
105
58
339
60
85
136
91
82
107
9,625

2) Ninety-nine Plus Inc.
Major Business:

Ninety-nine Plus Inc. operates the Company-operated and franchise system stores as theheadquarters of the LAWSON STORE100 and SHOP99 convenience store chains.
The 996 LAWSON STORE100 and SHOP99 stores operated by Ninety-nine Plus areincluded in the table above.
Shinjuku-ku, Tokyo
Note: On May 1, 2009, Ninety-nine Plus Inc. absorbed VALUE LAWSON, Inc., which
had been operating a convenience store business, at the end of the previous fiscal year,
by a merger. Also, on December 1, 2009, Ninety-nine Plus Inc. absorbed Ninety-nine
Plus Kansai Inc., which had been operating a convenience store business at the end of
the previous fiscal year, by a merger.

Head Office:

Other BusinessCompany NameLAWSON ENTERMEDIA,INC.
LAWSON ATM Networks,
Inc
BestPractice Inc.

Head Office
Shinagawa-ku,
Tokyo
Shinagawa-ku,
Tokyo
Shinagawa-ku,
Tokyo

Major Business
Ticket sales
Sells tickets for various events
business
inside LAWSON stores, etc.
Financial
Installs jointly operated ATMs
services–related
in LAWSON stores, etc.
business
Consulting business Conducts surveys of
convenience stores to give
advice and make specificproposals for the improvementof LAWSON storesNote: On March 1, 2009, LAWSON ENTERMEDIA, INC. absorbed i-Convenience, Inc., which had been operating an e-commercebusiness at the end of the previous fiscal year, by a merger. Also, on July 1, 2009, it changed its company name from LAWSON TICKET,
INC. to LAWSON ENTERMEDIA, INC.

(2) Employees
1) Employees of the Corporate Group
Designation of Business Segment
Convenience store business
Ticket sales business
Financial services-related business
Consulting business
Total2) Employees of the Company
Number of Employees
3,424

Number of Employees (YoY Change)
4,805
282
22
127
5,236

(YoY Change)(3) Status of Major Business Combinations
1) Important Subsidiaries
Company Name
Common Stock(¥ millions)
Ninety-nine Plus Inc.
5,338
LAWSON ENTERMEDIA,
2,892
INC.
LAWSON ATM Networks, Inc.
3,000
BestPractice Inc.

Average Age
(-35)

37.9

Shareholding
(%)
77.7
75.5
49.0

10

100.0

(-15)
(32)
(1)
(32)
(50)

Average Years of Service
11.0

Major BusinessConvenience store business
Ticket sales business
Financial services-related
business
Consulting businessNotes:
1. On March 1, 2009, LAWSON ENTERMEDIA, INC. absorbed i-Convenience, Inc., which had been a consolidated subsidiary of
LAWSON at the end of the previous fiscal year, by a merger. Also, on July 1, 2009, it changed its company name from LAWSONTICKET, INC. to LAWSON ENTERMEDIA, INC.
2. On May 1, 2009, Ninety-nine Plus Inc. absorbed VALUE LAWSON, Inc., which had been a consolidated subsidiary of Ninety-nine

9Plus Inc. at the end of the previous fiscal year, by a merger. On December 1, 2009, Ninety-nine Plus Inc. absorbed Ninety-nine Plus
Kansai, Inc., which had been a consolidated subsidiary wholly owned by Ninety-nine Plus Inc. at the end of the previous fiscal year, bya merger. On November 19, 2009, a share exchange agreement was concluded with the aim of making LAWSON the sole parent
company and Ninety-nine Plus Inc. a wholly-owned subsidiary, but on February 9, 2010, it was decided to dissolve this agreement.

2) Other Important Business Combinationsi) Important Affiliated Companies
Company Name

Common Stock

SHANGHAI HUALIANLAWSON CO., LTD.
LAWSON Okinawa, Inc.

CNY165,898
thousand¥10 million

Shareholding
(%)
49.0

Major BusinessConvenience store business49.0

Convenience store businessNote: LAWSON Okinawa, Inc. was established as a wholly owned LAWSON subsidiary on October 9, 2009. On December 1, 2009, wetransferred 51% of the total outstanding shares of LAWSON Okinawa to SAN-A CO., LTD., thereby making LAWSON Okinawa anequity-method affiliate.

ii) Important Business Alliances
Mitsubishi Corporation holds 32.7% of the total voting rights (32,399 thousand shares) of the Company (including
indirect holdings). Recognizing Mitsubishi Corporation as the most important strategic partner, the Company hasentered into an extensive business tie-up agreement with Mitsubishi Corporation for the enhancement of existing
businesses and the development of new businesses.
On March 13, 2009, LAWSON concluded a comprehensive business alliance agreement with am/pm Japan Co.,
Ltd., but on May 19, 2009, the Company announced that this agreement would be dissolved.

10II. CURRENT STATUS OF THE COMPANY
1. Shares at the End of the Year
(1) Total Number of Shares Authorized to Be Issued:
409,300,000 shares(2) Total Number of Shares Issued and Outstanding: 99,600,000 shares(Including 432,190 shares of treasury stock)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
35,691(5) Major Shareholders:Shareholder’s Name
Mitsubishi Corporation
Marubeni Foods Investment Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
STATE STREET BANK AND TRUST COMPANY 505223
NTT DoCoMo, Inc.
The Chase Manhattan Bank NA, London SL, Omnibus Account
STATE STREET BANK AND TRUST COMPANY 505225
Trust & Custody Services Bank, Ltd. (Securities investment trust account)
Mizuho Securities Co., Ltd.
Notes:
1. The number of shares held in the above table is based on the register of shareholders.
2. The equity position in the above table is calculated after deducting treasury stock.

11

Investment in the Company
Number of shares
Shareholding (%)
held (Thousands)
32,089
32.4
4,786
4.8
3,765
3.8
3,363
3.4
2,543
2.6
2,092
2.1
1,856
1.9
1,337
1.3
1,184
1.2
1,087
1.1

2. Status of stock acquisition rights(1) Stock Acquisition Rights Held by Corporate Officers of the Company as of February 28, 2010
4th Stock
6th (a) Stock
5th Stock
Acquisition
Acquisition
Acquisition Rights
RightsRightsNumber of option holders and the number of stock acquisition rights (units)
Directors
3 persons
1 person
3 persons(Excluding outside(160 units)(112 units)(137 units)
directors)
Outside directors
3 persons
3 persons
3 persons(90 units)(21 units)(18 units)
Class and number of Common stock of Common stock ofCommon stock ofshares subject to
LAWSON, INC.
LAWSON,LAWSON, INC.
stock acquisition
25,000INC.
15,500rights13,300
Value of property
invested in
exercising stock¥4,160¥1¥1acquisition rights(per share)
Exercise period
October 12, 2007
October 13, 2005
October 27, 2006
throughthrough May 31,
through May 26,
December 31,
2025
2026
2010
Main exercise
Note 1
Note 2
Note 3
conditions

6th (b) Stock
Acquisition
Rights3 persons (180units)
3 persons (90units)
Common stock of
LAWSON, INC.
27,000¥4,053October 28, 2008
through October
26, 2011
Note 47th (a) Stock
8th (a) Stock
9th Stock Acquisition
Acquisition Rights
Acquisition Rights
RightsNumber of option holders and the number of stock acquisition rights (units)
Directors (Excluding
4 persons (239 units)
4 persons (194 units)
4 persons (162 units)
outside directors)
Outside directors
3 persons (18 units)
3 persons (25 units)
3 persons (21 units)
Class and number ofCommon stock ofCommon stock ofCommon stock ofshares subject to stock LAWSON, INC.
LAWSON, INC.
LAWSON, INC.
acquisition rights
18,00026,40021,500
Value of property
invested in exercising¥1
stock acquisition¥1¥1
rights (per share)
Exercise period
September 6, 2007
January 17, 2009
February 18, 2010
through August 20,
through December 15, through February 1,
2027
2028
2030
Main exercise
Note 3Note 3Note 3
conditions
Notes:
1. A stock acquisition rights holder may apply to the Company to exercise his or her rights only when the stock price of the Company’scommon stock on the Tokyo Stock Exchange exceeds the amount of the above “Value of property invested in exercising stock acquisitionrights (per share)” by 1.1 times or more.
2. A stock acquisition rights holder may exercise his or her rights only for a period of five (5) years from the day after losing his or her
position as a director of the Company.

12

3. A stock acquisition rights holder may exercise his or her rights within the exercise period only for a period of five (5) years from the
day after losing his or her position as either director and/or executive officer of the Company.
4. A stock acquisition rights holder may exercise his or her stock options when the closing price for ordinary transactions of theCompany’s common stock on the Tokyo Stock Exchange on the day immediately preceding the exercise date (the closing price of thenearest preceding trading day if such closing price was not established on the preceding day) exceeds the amount of the above “Value of
property invested in exercising stock acquisition rights (per share)” by 1.1 times or more (with a fraction below one (1) yen to be rounded
up).

13

3. Directors and Corporate Auditors(1) Positions, Names and Assignments
Position

Name

Representative
Director
Director
Director
DirectorTakeshi Niinami

Director
Director
DirectorStanding Corporate
AuditorStanding Corporate
AuditorCorporate Auditor
Corporate Auditor

Hiroshi Tasaka
Reiko Yonezawa
Takehiko Kakiuchi
Munehiko Nakano

Yoshiyuki Yahagi
Manabu Asano
Toru Moriyama

Assignments and Important Concurrent Positions
Note: Important concurrent positions of outside directors
given later in (3) Outside Directors and Outside
Corporate Auditors
President and CEO
Senior Executive Vice President and CFO
Executive Vice President and CCO
Senior Vice President Assistant to Group CEO, Living
Essentials Group Mitsubishi Corporation

Kenji Yamakawa
Tetsuo Ozawa
Hiroshi Kuwata

Notes:
1. Directors Hiroshi Tasaka, Reiko Yonezawa and Takehiko Kakiuchi are outside directors as stipulated in Article 2, Item 15, of the
Corporate Law of Japan.
2. Standing Corporate Auditor Munehiko Nakano and Corporate Auditors Tetsuo Ozawa and Hiroshi Kuwata are outside corporate
auditors as stipulated in Article 2, Item 16, of the Corporate Law.
3. Standing Corporate Auditor Munehiko Nakano has assumed responsible posts for many years in the accounting and administration
departments of Mitsubishi Corporation and therefore has considerable expertise in finance and accounting.
Standing Corporate Auditor Kenji Yamakawa has assumed responsible posts for many years in the finance and accounting
departments of the Company and other companies and therefore has considerable expertise in finance and accounting.
Corporate Auditor Tetsuo Ozawa, lawyer, has practiced law and advised on legal matters and risk management mainly in relation to
the legal affairs of companies and therefore has considerable expertise in finance and accounting.
Corporate Auditor Hiroshi Kuwata has served for many years in the investment management and examination departments and risk
management of Mitsubishi Corporation and therefore has considerable expertise in finance and accounting.

4. Executive officers who are not directors are as follows:
Senior Executive Vice
Takatoshi Kawamura
President
Senior Vice President
Norikazu Nishiguchi
Senior Vice President
Shigeaki Kawahara
Senior Vice President
Takaki Mizuno
Senior Vice President
Syuichi Imagawa
Senior Vice President
Tatsushi Sato
Senior Vice President
Jun Miyazaki
Senior Vice President
Hajime Nakai

Senior Vice President

Yoichi Yokomizo

Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President

Noriyuki Nobayashi
Kei Murayama
Ichiro Kijima
Atsushi Maeda
Kazuo Togasa
Masahiro Oyama(2) Amounts of Remuneration, etc., Paid to Directors and Corporate Auditors
Category
Number of persons
Amount paid (¥ millions)
Directors
7284
Corporate Auditors
4
65
11
350
Total
Notes:
1. As of February 28, 2010, the number of directors in office was 7 and that of corporate auditors was 4.
2. Of the above total, the remuneration to 6 outside corporate officers (outside directors and outside corporate auditors) was ¥97 million.
In addition to the above, total remuneration received from LAWSON subsidiaries, etc. by outside corporate officers was ¥1 million,
which was received by 1 person.
3. The above remuneration figures include amounts corresponding to stock acquisition rights as stock options to directors and thereserve for retirement benefits to corporate auditors for the reporting year.

14(3) Outside Directors and Outside Corporate Auditors
1) Relationship Between Major Positions Concurrently Held and the Company
Position in the
Name
Position
Details
Company
Concurrently Held

Director

Hiroshi Tasaka

Graduate Schoolof Tama
University
SophiaBank
LimitedSBI Holdings, Inc.

Director

Reiko Yonezawa

The Japan
Research Institute,
LimitedThe R Co., Ltd.
CultureConvenience Club
Co., Ltd.

Director

Takehiko
KakiuchiMitsubishi
Corporation
Kentucky Fried
Chicken Japan,
Ltd.
The Nisshin
OilliO Group, Ltd.
MARUICHI Co.,Ltd.

Professor

President
Director
FellowPresident
Outside director

The Company and
The R Co., Ltd., inwhich Reiko
Yonezawa is
President, have abusinessrelationship withregard to theentrustment of
reception services
and employment
agency services.

Division COO,
Foods
(Commodity) Div.
Outside director

The Company and
Mitsubishi
Corporation, of
which Mr.
Kakiuchi is an
employee andwhich is a large
shareholder of theCompany, have abusinessrelationship underan extensive
business allianceagreement.
The Company and
Ninety-nine Plus
Inc. have abusiness alliancemainly regarding
joint procurement
and joint productdevelopment.

Outside director
Outside director

Corporate auditor

Munehiko Nakano

Ninety-nine Plus
Inc.

Outside corporate
auditorCorporate auditor

Tetsuo Ozawa

Tokyo Fuji Law
OfficeMonex Group,Inc.
CEMEDINE CO.,LTD.

Lawyer(Partner)
Outside corporate
auditorOutside corporate
auditor15

Relationship
Between the
Company andCompany Where
Position
Concurrently HeldCorporate auditor

Hiroshi Kuwata

Mitsubishi
Corporation

General Manager,
Risk Management
Department

The Company and
Mitsubishi
Corporation, of
which Mr. Kuwata
is an employee
and which is alarge shareholderof the Company,
have a business
relationship underan extensive
business allianceagreement.

Note: Where nothing is written in the column Relationship Between the Company and Company Where Position Concurrently Held, itmeans that the Company has no important business or other relationship with that company.

2) Major Activities During the Year
Position in the Company
Name
Director
Hiroshi Tasaka

Major Activities
Mr. Tasaka attended 12 of 16
Board meetings held during theyear and appropriately
questioned and/or remarked
based on his abundant
experience and knowledge as alearned person and amanagement executive.

Director

Reiko Yonezawa

Ms. Yonezawa attended 13 of 16
Board meetings held during theyear and appropriately
questioned and/or remarked
based on her abundant
experience and knowledge as amanagement executive.

Director

Takehiko Kakiuchi

Mr. Kakiuchi attended 12 of 16
Board meetings held during theyear and appropriately
questioned and/or remarked
based on his deep knowledge
about the consumer lifestyles
industry.

Corporate auditor

Munehiko Nakano

As a standing corporate auditor,
Mr. Nakano examined financial
documents, and visited relevant
establishments and business
partners to examine business
operations and financial
positions thereof. He monitored
and verified the execution ofduties of directors and otherpersonnel including thoserelating to the improvement ofinternal control systems, and was
also responsible for smooth
operations of the Board of
Corporate Auditors as its
Chairman.

16

Corporate auditor

Tetsuo Ozawa

Mr. Ozawa attended 14 of 16
Board of Directors’ meetings and
16 of 16 Board of Corporate
Auditors’ meetings held during
the year and appropriately
questioned and/or remarked
based on his abundant
experience and knowledge as alawyer.

Corporate auditor

Hiroshi Kuwata

Mr. Kuwata attended 12 of 16
Board of Directors’ meetings and
15 of 16 Board of Corporate
Auditors’ meetings held during
the year and appropriately
questioned and/or remarked
based on his abundantoccupational experience in risk
management.

(4) Outline of Liability Limitation Agreements With Outside Directors and Outside Corporate Auditors
The Company has entered into agreements with the outside directors and outside corporate auditors to limit their liability
with regard to the damages outlined under Article 423, Paragraph 1, of the Corporate Law, whereby their liability shall be,
at a maximum, the total sum of the amounts set forth in the respective relevant items of Article 425, Paragraph 1, of the
Corporate Law.
4. Independent Auditor(1) Independent Auditor
Deloitte Touche Tohmatsu LLC
Note: The Independent Auditor changed its name from Deloitte Touche Tohmatsu to Deloitte Touche Tohmatsu LLC on
July 1, 2009 to reflect its change in type of audit corporation to a limited liability company.
(2) Amounts of Remunerations, etc., to Be Paid to the Independent Auditor
1) Remuneration to be paid by the Company to the Independent Auditor2) Sum of money and other property benefits to be paid by the Company and its
subsidiaries to the Independent Auditor¥79 million¥149 million

Note: The audit agreement entered into by the Independent Auditor and the Company does not clearly distinguish the amount for theaudit under the Corporate Law and that for the audit under the Financial Instruments and Exchange Act, and the two amounts
cannot be substantially distinguished from each other. Therefore, the amount in 1) above indicates the total for the two audits.

(3) Non-Audit Services
The Company entrusts the following services, which do not come under the services set forth in Article 2, Paragraph 1,of the Certified Public Accountant Law (non-audit services), to the Independent Auditor:
1) Advice on and guidance on the preparation of documents translated into English for earnings reports and othervarious financial documents; and2) Work related to supporting the internal control systems.
(4) Policy on Decisions Concerning Dismissal or Non-Reappointment of the Independent Auditor
If the Independent Auditor violates or infringes the Corporate Law, the Certified Public Accountant Law, or other laws
or regulations, or the Company considers it necessary to do so, the Board of Directors shall, after obtaining theagreement of the Board of Corporate Auditors, submit a proposal for dismissal or non-reappointment of the Independent
Auditor to a general meeting of shareholders. In addition, the Board of Corporate Auditors can dismiss the Independent
Auditor with a unanimous resolution if it determines that any act or circumstance of the Independent Auditor falls under
any items of Article 340, Paragraph 1, of the Corporate Law.

17

III.

SYSTEMS TO ENSURE COMPLIANCE OF THE DIRECTORS’ EXECUTION OF DUTIES WITH LAWS
AND REGULATIONS AND THE ARTICLES OF INCORPORATION, AS WELL AS OTHER SYSTEMS TO
ENSURE THE PROPRIETY OF BUSINESS OPERATIONSAt the Board of Directors’ meeting held on February 22, 2010, based on improvements and the operation of thepreceding “2009 Basic Policy for Improvement of Internal Control Systems,” which was approved at the Board of
Directors’ meeting held on February 18, 2009, the Company passed a resolution called the “2010 Basic Policy for
Improvement of Internal Control Systems,” as indicated below.

(1) Systems to Ensure Compliance of the Execution of Duties by Directors and Employees with Laws and Regulations
and the Articles of Incorporation
1) The Board of Directors shall determine the improvement policies and plans for internal control systems, including
those for compliance with laws, regulations and the like (hereinafter the “Compliance”), and receive status
reports thereof periodically.
2) The Board of Directors shall maintain and improve the supervising function regarding the execution of duties by
the Directors by electing outside Directors on an ongoing basis.
3) The Corporate Auditors shall independently audit the execution of duties by the Directors, including the statusconcerning the improvement of the internal control systems.
4) The Internal Audit Department, which is independent from the business-executing bodies, shall audit the statusconcerning the improvement of the internal control systems, and recommend improvements thereof, as required.
5) The Board of Directors shall maintain and raise the awareness of officers and employees regarding compliance bythoroughly disseminating the LAWSON Group Code of Conduct and the LAWSON Ethical Mission Statement bysuch measures including, but not limited to, as appointing a Chief Compliance Officer (CCO), establishing adepartment to oversee compliance, assigning personnel in charge of compliance at each department, streamlining
the rules in relation to compliance, and providing periodic training on ethics and awareness surveys oncompliance.
6) The Legal Affairs Department shall be reinforced to fortify foundations for complying with legal requirements byidentifying the laws and regulations applicable to the Company’s businesses and communicating the content
thereof to the relevant departments and sections.
7) The Company shall establish and upgrade normal reporting routes for reporting any violations of laws,
regulations or internal rules, and upgrade reporting and consulting systems (internal and outside contact points
and a group-wide consulting contact point) that fully protect informants.
8) The Company shall never become involved with antisocial forces or bodies that threaten the order and security ofsociety, and shall take a firm stance on and deal with improper demands by consulting with lawyers, the police
and the like.
(2) Systems to Preserve and Manage Information Pertaining to the Execution of Duties by Directors
1) The Company shall record, preserve and manage information relating to decision making at important meetings
such as those of the Board of Directors and the Management Council, and authorizing documents, including those
approved by the President, as well as financial, clerical and risk- and compliance-related information (including
information contained in electromagnetic media). Moreover, the Company shall put in place a system allowing
relevant parties to inspect the above information.
2) The Company shall manage and monitor its information systems in a secure manner, in addition to maintaining
the systems by sufficiently taking into account contingencies.
3) The Company shall establish and maintain rules regarding the management of documents (including
electromagnetic recording media), keep everyone informed about the responsibility and authority for document
management, document storage periods and management methods, and periodically monitor the status of
document storage and management.
4) The Company shall establish and maintain rules regarding the protection of personal information and the
management of trade secrets, and appropriately and safely store and manage personal information and important
trade secrets.
5) The Company shall establish and maintain rules regarding the disclosure of important Company information, andupgrade the system for disclosing information that must be disclosed according to the requirements of laws,
regulations and stock exchanges, in an appropriate, timely and fair manner.
(3) Rules and Other Systems Regarding Risk Management
1) The Company shall establish a department to oversee risk management, improve rules related to risk management,
and improve group-wide risk-prevention systems during normal operations. Moreover, the Company shall
respond according to the characteristics of risks by identifying risks that might have adverse effects on the18Company’s management in connection with its business purposes in each department, analyzing the probabilityof such risk factors materializing and their impact, and evaluating whether intensive countermeasures should betaken.
2) To ensure the effectiveness of risk management, the Company shall establish a specialist committee(“Compliance & Risk Management Committee”), and clarify the authority and responsibility of the committee
and its chairperson. Furthermore, the Company shall endeavor to increase awareness about risk management by
assigning risk management staff to departments and associated companies and conducting risk management
training.
3) The Company shall develop contingency systems and formulate policy for contingency-response bodies inadvance to prepare for the occurrence or possible occurrence of unanticipated situations or events, which might
have adverse effects on management of the Company, in order to provide a quick response to any actual
occurrence thereof and to take effective measures to prevent a reoccurrence. In particular, the Company shallformulate a Business Continuity Plan (BCP) and a Business Continuity Management (BCM) system to minimize
the business interruption in the event of the occurrence of situations or events inflicting substantial damage on the
Company such as a large-scale natural disaster or an epidemic of a new-type influenza.
(4) Systems to Ensure the Efficient Execution of Duties by Directors
1) The Company shall clarify the functional authority and responsibility of corporate officers and employees for
decision making and execution of business affairs. The Company shall also improve rules for the division ofduties to ensure and encourage more appropriate division of duties and collaboration among organizational
bodies.
2) The Company shall work to raise operational efficiency by simplifying business processes, streamlining theorganization and making appropriate use of IT.
3) In order to promote the proper communication of information and communications between officers andemployees, the Company shall improve systems so that management guidelines and policies are disseminated to
employees by corporate officers, and important field information is properly communicated by employees tocorporate officers in a timely manner.
(5) Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group Consisting of theCompany and Its Subsidiaries
1) The Company shall endeavor to maintain and enhance the LAWSON brand through close collaboration withsubsidiaries and affiliated companies (hereinafter “Associated Companies”). However, with regards to affiliatedcompanies, the Company will work to appropriately establish and maintain systems through phased
implementation, taking into account such factors as relations with other leading shareholders, difference in laws,
regulations and business customs and the like of foreign countries.
2) While respecting the independence of Associated Companies, in view of the purpose of the Company’s equity
participation in Associated Companies, the Company shall establish Group regulations such as basic policies forthe management of Associated Companies and management policies thereof, and keep the Associated Companies
informed of these regulations.
3) The Internal Audit Department shall cooperate in auditing the status of establishment of internal control systems
at Associated Companies, and promote improvements based on the results of audits.
(6) Necessary Systems to Ensure Proper Financial Reporting by the Company and its Group of Companies
1) The Company shall enhance systems for preparing financial statements according to laws and regulations andaccounting standards and disclosing the same after they have been discussed, examined and confirmed inaccordance with regulations governing information disclosure, in order to report financial information in a properand timely manner.
2) The Company shall establish a dedicated internal organization in order to properly implement the internal control
reporting system required by the Financial Instruments and Exchange Act, as an internal control for financial
reporting. Furthermore, the Company shall establish a system for self- and third-party evaluation andimprovement through the identification and recording of business processes at important business bases and thestatus of Company-wide internal controls. The results of these evaluations of and improvements at the Company
and important subsidiaries shall be regularly reported to the Board of Directors.
(7) Matters Concerning Employees Where a Corporate Auditor Requests Employees to Assist With Duties
1) The Company shall assign appropriate personnel to the Auditors’ Office as employees exclusively to assist
Corporate Auditors in the execution of their duties (hereinafter “Corporate Auditors’ Staff”).
2) Corporate Auditors’ Staff may serve concurrently as Corporate Auditors of Associated Companies.
3) Corporate Auditors’ Staff shall have the authority to conduct investigations necessary for audits by Corporate

19

Auditors following the instructions of Corporate Auditors.
4) The Legal Affairs, Risk Management and Finance and Accounting departments of the Company shall assist in
conducting necessary surveys for audits when requested by any Corporate Auditor.
(8) Independence of Employees From Directors in the Preceding Item
Performance reviews of Corporate Auditors’ Staff shall be conducted by the Standing Corporate Auditors toensure that Corporate Auditors’ Staff carry out their duties appropriately. Personnel changes require the priorconsent of the Standing Corporate Auditors.
(9) Systems for Directors and Employees to Report to Corporate Auditors and Other Reporting Systems to the Corporate
Auditors
1) Directors and employees of the Company shall report important corporate management and businessadministration matters, as well as the status and results of the execution of their duties, to Corporate Auditors sothat the Corporate Auditors can carry out their duties effectively. Such important matters include compliance- andrisk-related issues and other matters relating to internal control.
2) If directors become aware of any fact or event that will likely cause the Company to suffer significant damage orloss, they shall immediately inform the Board of Corporate Auditors.
3) Reports to Corporate Auditors shall basically be made in good faith without fail, and shall be made promptly if
required in addition to periodic reports.
(10) Other Systems to Ensure Effective Audits by Corporate Auditors
1) The Representative Directors and Corporate Auditors shall have regular meetings to enhance smoothcommunications with each other.
2) Directors shall cooperate with the Corporate Auditors with regards to communications, the collection andexchange of information and so on between the Corporate Auditors and the corporate directors and the like of
Associated Companies so that the Corporate Auditors can perform their duties appropriately.
3) Directors shall also cooperate in conducting surveys of significant business partners, which the Corporate
Auditors deem necessary.
4) Directors shall enable the Corporate Auditors to collaborate with outside experts such as lawyers and certified
public accountants, if any Corporate Auditor deems it necessary in executing his/her duties.
The above amounts and the number of shares in this Business Report are rounded down to the nearest unit and the ratios arerounded to the nearest whole number.

20

Consolidated Balance Sheet (As of February 28, 2010)(Millions of yen)
Assets
Account item
Current assets
Cash and bank deposits
Accounts receivable—due from
franchised stores
Marketable securities
Merchandise inventories
Prepaid expenses
Accounts receivable—other
Deferred tax assets
Other
Allowance for doubtful accounts
Fixed assets
Property and store equipment
Buildings and structures

Amount132,198
64,017
20,790
2,500
4,446
6,980
26,445
4,587
2,587
(155)
315,933
145,308
96,452

Furniture, fixtures and equipment

12,858

Land

6,526

Lease assets

28,867

Construction in progress
Intangible assets
Software
Software development inprogress
Goodwill
Other
Investments and other
Investments in securities
Long-term loans receivable
Long-term prepaid expenses

603
34,407
26,259
3,415
4,248
484
136,216
2,053
29,724
5,753

Lease deposits
Deferred tax assets

83,205
15,274Claims provable in bankruptcy,
claims provable in rehabilitationand other
Other
Allowance for doubtful accounts
Total Assets

Liabilities
Account item
Current liabilities
Accounts payable —trade
Accounts payable— due tofranchised stores
Lease obligations
Accounts payable—other
Income taxes payable
Deposits received
Accrued employees’ bonuses
Provision for use of points granted
Other
Long-term liabilities
Lease obligations
Allowance for employees’
retirement benefits
Allowance for retirement benefits
to executive officers and corporate
auditors
Deposits received from
franchisees and lessees
Allowance for impairment loss on
leased property
Other
Total liabilities
Net assets
Owners’ equity

Amount184,496
73,1891,024
4,641
22,134
9,852
65,858
2,789
2,097
2,909
65,49919,4106,206
217

38,710471
484
249,996
192,485
58,506
41,52094,171(1,713)(554)
14

13,631

Common stock
Capital surplus
Retained earnings
Treasury stock
Valuation and translation adjustments
Net unrealized loss onavailable-for-sale securities
Land revaluation difference
Foreign currency translation
adjustments
Stock acquisition rights

1,211(14,636)
448,131

Minority interests
Total net assets
Total Liabilities, and total net assets

5,858
198,135
448,131

21

(634)
65
346

Consolidated Statement of Income(From March 1, 2009 to February 28, 2010)(Millions of yen)Account item
Operating revenues
Franchise commissions from franchised stores
Other
Net sales
Net sales
Total operating revenues
Cost of goods sold
Gross profit on sales
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest received
Compensation received for removal
Equity in earnings of affiliates
Other
Non-operating expenses
Interest expense
Loss on cancellation of store lease contract
Other
Ordinary profit
Special gains
Gain on change in equity
Gain on sales of investment in subsidiaries
Other
Special losses
Loss on disposal of fixed assets
Loss on impairment of long-lived assets
Impropriety-related loss
Loss on prior period adjustment
Other
Income before income taxes and minority interests
Income taxes －current
Income taxes – deferred
Minority interests in net income
Net income

Amount185,656
47,842(233,693)(173,722)(59,970)

233,498
233,693
467,192
173,722
293,469
243,193
50,275

696
342
61
575
394
1,578
539

625
1,628
143
3,898
3,903
12,616
1,936
1,544
18,392(1,092)

22

1,676

2,511
49,4402,397

23,89927,93817,299(424)
11,063

Consolidated Statement of Changes in Net Assets(From March 1, 2009 to February 28, 2010)(Millions of yen)
Owners’ equity

Balance at the end of
previous period

Valuation and translation adjustments

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
owners’equity58,506

41,52099,310(1,712)

197,624Net
unrealizedLand
loss onrevaluation
availabledifference
for-salesecurities
(28)

(969)

Foreigncurrencytranslation
adjustments

59

Stock
Total
valuation and acquisitionrightstranslation
adjustments
(937)

274

Minority
interests

Total net
assets6,217

203,178

Changes of items during
the period
Dividends from surplus(15,866)(15,866)(15,866)

Net income

11,063

11,063

11,063

Reversal of land
revaluation difference,
net of tax

(334)

(334)

(334)

(0)

(0)

Purchase of treasury
stock – at cost(0)

Net changes of items
other than owners’ equity– net
Total changes of items
during the period
Balance at the end of thecurrent period

42

334

6

383

71

(359)

95

－

－

(5,138)(0)(5,138)

42

334

6

383

71

(359)

(5,043)58,506

41,52094,171(1,713)

192,485

14

(634)

65

(554)

346

5,858

198,135

23

(Notes to the Consolidated Financial Statements)
1.

Scope of consolidation
Consolidated subsidiaries: 4(Domestic) LAWSON ENTERMEDIA, INC.
LAWSON ATM Networks, Inc.
BestPractice Inc.
Ninety-nine Plus Inc.
Because LAWSON ENTERMEDIA, INC. merged on March 1, 2009 with i-Convenience, Inc., which
was a LAWSON consolidated subsidiary at the end of the previous fiscal year, i-Convenience, Inc. has
been excluded from the number of LAWSON’s consolidated subsidiaries.
Because Ninety-nine Plus Inc. merged on May 1, 2009 with VALUE LAWSON, Inc., which was aconsolidated subsidiary of LAWSON at the end of the previous fiscal year, VALUE LAWSON, Inc. has
been excluded from the number of LAWSON’s consolidated subsidiaries. Furthermore, since Ninety-nine
Plus Inc. on December 1, 2009 merged Ninety-nine Plus Kansai Inc., which was a wholly owned
consolidated subsidiary of the former at the end of the previous fiscal year, Ninety-nine Plus Kansai Inc.
has also been excluded from the number of consolidated subsidiaries. In all cases, income statements
were consolidated up until the merger dates.

2. Application of the equity method(1)Affiliated companies to which the equity method is applied: 2(Domestic) LAWSON Okinawa, Inc.
(Foreign) SHANGHAI HUALIAN LAWSON CO., LTD.
LAWSON Okinawa, Inc. was established as a wholly owned LAWSON subsidiary on October 9, 2009,
but became an equity-method affiliate following the transfer of 51% of total outstanding shares of thecompany to SAN-A CO., LTD. on December 1, 2009.
(2) Affiliated companies to which the equity method is not applied
The Company does not apply the equity method to two affiliated companies (Live Asia, Inc. and KOBE HOT
DELI Co., LTD.), because the financial figures such as net income, retained earnings, and others are negligibly
insignificant in comparison with the Company’s consolidated financial statements.
(3) Special notes concerning procedures for application of the equity method:Among equity method application companies, the closing date is December 31 for SHANGHAI HUALIANLAWSON CO., LTD. . When preparing the consolidated financial statements, the Company used thesecompanies’ financial information prepared based on the financial data at the end of the most recently fiscal
quarter and, as required, made certain adjustments for significant transactions that subsequently occurred in theintervening period until the end of the consolidation fiscal year.

3.

Fiscal year end of the consolidated subsidiaries
Ninety-nine Plus Inc. changed its fiscal year end from March 31 at the end of the previous fiscal
year to February 28 at its ordinary general meeting of shareholders on June 25, 2009. As a resultof this change, the number of months included in the current fiscal year is 14, representing theperiod from January 1, 2009 through February 28, 2010.

24

4.

Summary of significant accounting policies(1) Valuation basis and method for important assets
Marketable securities and investments in securities:
Held-to-maturity debt securities: Carried at amortized cost (Straight – line method).
Available-for-sale securities:
Securities whose market value is readily determinable: Recorded at the market value with net unrealized
gains and losses as a separate component of net assets. The cost of securities sold is determinedbased on the moving-average method.
Other: Stated at cost determined by the moving-average method.
Inventories:
Merchandise inventories are stated principally at cost being determined by the retail method (the book valueon the balance sheet is written down for a decline in profitability).
(2) Depreciation
Property and store equipment (except for lease assets):
Depreciation is computed using the declining-balance method at rates based on estimated useful lives of
the assets. The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8
years for furniture, fixtures and equipment.
Intangible assets (except for lease assets):
Amortization of intangible assets is computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which is theinternal useful life.
Lease assets:
In terms of the depreciation method for lease assets related to finance leases that do not transfer ownershipof leased properties, the Company applies the straight-line method using the lease terms as the useful lives
and a residual value of zero.
Long-term prepaid expenses:
Amortization of long-term prepaid expenses is computed by the straight-line method.
(3) Accounting policies for important reserves
Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at an amount of possible losses from uncollectible receivables
based on the actual rate of losses from bad debt for ordinary receivables, and on estimated recoverability
for specific doubtful receivables.
Accrued employees’ bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimatedamounts.
Provision for use of points granted:
The Company provides LAWSON PASS holders and MY LAWSON POINT holders when purchasing
goods, an entitlement to certain points that the holder can redeem for a discount on subsequent purchasesfrom LAWSON stores.
Allowance for employees’ retirement benefits:
Allowance for employees’ retirement benefits are provided at the amount calculated based on the projected
benefit obligations and plan assets at the balance sheet date. Actuarial differences are amortized from thefollowing fiscal year on a straight-line basis over a certain period (10 years) within an average remaining
service period of employees at the time of their occurrence. Prior service cost is amortized, starting with thefiscal year incurred, on a straight-line basis over a certain period (10 years) within an average remaining
service period of employees.

25Allowance for retirement benefits to executive officers and corporate auditors:
Allowance for retirement benefits to corporate auditors and executive officers of the Company, and todirectors and corporate auditors of a certain consolidated subsidiary are calculated to state the liability at
100% of the amount that would be required if all corporate auditors, executive officers and directors
resigned their services with the Company at the balance sheet date.
(4) Foreign currency translation 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 balance sheet date. The foreign exchange gains andlosses from translation are recognized in the consolidated statements of income. The balance sheet accounts
as well as revenue and expense accounts of foreign affiliated companies are translated into Japanese yen at
the current exchange rate as of the 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” in a separate component of Net assets.
(5) Leases
The Company continues to account for as rental transactions finance leases that do not transfer
ownership of leased properties and that commenced before the first fiscal year in which the new
accounting standard was applied.
(6) Accounting for consumption tax
Consumption tax is excluded from income and expense.
(7) Change of significant accounting policies
1) Adoption of Accounting Standard for Measurement of Inventories
Effective March 1, 2009, the Company adopted the “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9 (July 5, 2006)) and states inventories principally at cost, being determined by the retailmethod (the book value on the balance sheet is written down for a decline in profitability) in accordance withthis standard. In the past, the Company principally accounted for inventories at cost determined by the retailmethod. This change had no effect on earnings.
2) Adoption of Accounting Standard for Lease Transactions
Effective March 1, 2009, the Company adopted the “Accounting Standard for Lease Transactions” (ASBJ
Statement No. 13 (June 17, 1993 (First Subcommittee of the Business Accounting Council), revised March 30,2007)) and the “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16 (January 18,
1994 (Accounting Committee of the Japanese Institute of Certified Public Accountants), revised March 30,2007). As a result, the Company now accounts for finance leases that do not transfer ownership in a similarmanner with ordinary sale and purchase transactions.
As a result, compared with the previous method, the Company recorded lease assets of ¥28,867 million under
fixed assets, and lease obligations of ¥4,641 million and ¥19,410 million under current liabilities and long-term
liabilities, respectively, on the consolidated balance sheet. The impact on earnings was negligible.
However, the Company continues to account for as rental transactions finance leases that do not transfer
ownership of leased properties and that commenced before the fiscal year in which the new accounting standard
was applied.
3) Change of Disclosure Method
Effective March 1, 2009, the line item“claims provable in bankruptcy, claims provable in rehabilitation andother”is shown separately due to an increase in monetary materiality. This item was included in“Other” in thefiscal year ended February 28, 2009, at which point it amounted to ¥1,032 million.

26

5.

Valuation of assets and liabilities of consolidated subsidiaries
The assets and liabilities of consolidated subsidiaries, including the portion attributable to minority
interests, are valued at their fair values at the respective dates when the subsidiaries were initiallyconsolidated.

6.

Amortization of goodwill
Goodwill is amortized on a straight-line basis over relevant years, depending on the reason for the occurrence of
goodwill, with a maximum of 20 years.

(Notes to the Consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:¥ 134,339 million

2. 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
The difference between book value and market value of the revalued land as of the balance sheet date was ¥ 232
million.

(Notes to the Consolidated Statement of Income)
1. Impropriety-related loss and loss on prior period adjustment
LAWSON booked an impropriety-related loss of ¥12,616 million and a loss on prior period adjustment of ¥1,936
million in the consolidated statement of income in connection with the discovery of alleged misconduct by two former
directors of consolidated subsidiary LAWSON ENTERMEDIA, INC. The loss on prior period adjustment relates to the34th fiscal term ended February 28, 2009. If it had been retroactively adjusted instead of being recognized as aone-off item in the fiscal year ended February 28, 2010, the consolidated net profit for the fiscal year ended February
28, 2009 would have decreased by ¥1,498 million and the consolidated net profit for the fiscal year ended February 28,
2010 would have been higher by the same amount.

27

2. Long-lived assets
The Group recognized an impairment loss mainly for each store with the smallest cash generating unit.
The Group recognized an impairment loss on the following assets that declined in value due mainly to continuous
operating losses. The carrying amount of those assets were written down to the recoverable amount and were recordedin special losses.
Category by use

Location
Tokyo
Osaka

StoresOthers
Other
Total

―
―

Category by fixed assets
Buildings and structures
Furniture, fixtures and equipment
Land
Goodwill
Leased property

AssetsBuildings and structures・Furniture, fixtures andequipment and others
Buildings and structures・Furniture, fixtures andequipment and others
Buildings and structures・Furniture, fixtures andequipment and others
Goodwill―

Millions of yen
427
191
2,784
500
3,903

（Millions of yen）
2,125
273
395
500
442

Other
166
Recoverable value of the impaired assets is calculated based on the net selling price or value in use. The net selling
price of land was calculated based on the appraised value by the real estate appraiser or expected contract price, andthe value in use was calculated by discounting estimated future cash flows to which mainly the 4.9% discount rate
was applied.

(Notes to the Consolidated Statement of Changes in Net Assets)
1. Number of shares of outstanding stock and treasury stock.
Number of shares at
Increase during the Decrease during the Number of shares atthe end of previous
periodperiodthe end of the period
period(thousand shares)(thousand shares)(thousand shares)(thousand shares)
Outstanding stock
99,600―99,600Common stock―
Treasury stock
Common stock

463
0
432
―
Note: Increase in 0 thousand shares in treasury stock resulted from the purchase of stock less than unit share.

28

2. Dividend(1) Dividend payment

Date ofresolution
The General
meeting ofshareholders(May 26, 2009)
Directors’
meeting(October 8,
2009)Class ofsharesAmount ofdividend
payment(Millions ofyen)

Dividend pershare (yen)Date attributable todividend

Effective dateCommon
stock

7,933

80

As of February, 28,2009

As of May, 27, 2009

Common
stock

7,933

80

As of August 31,
2009

As of November,
10, 2009(2) Dividends for which the effective date is after the year - end balance sheet date, while dividends attributed in thisperiod.

Date ofresolution

Class ofsharesReserve of
Dividend

The General
meeting ofshareholders(May 25,
2010)

Commonstock

Retained
Earnings

Amount ofdividend
Dividend per Date attributable topayment
share (yen)dividend(Millionsof yen)Effective date

As of February, 28,2010

As of May, 26,
2010

7,933

80

3. Kind and number of stock which can be exercised by outstanding stock acquisition rights (excluding those before
exercisable period).
Common stock 324,800 shares

29

(Accounting for Income Taxes)
Components of deferred tax assets and liabilities were described as follows:(Millions of yen)Enterprise taxes payable
Accrued employees' bonuses
Excess of depreciation
Excess of amortization of software
Allowance for employees’ retirement benefits
Allowance for doubtful accounts
Impairment loss
Tax loss carryforward
Loss on replacement of computer system
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets

906
1,135
5,371
919
4,797
5,807
2,396
1,523
412
3,668
26,937(7,076)
19,861(Accounting for Retirement Benefits)
Summary of the retirement benefit plans:
The Company and a certain domestic subsidiary have defined benefit lump - sum severance indemnity plans which
cover substantially all of their employees. The Company established a trust fund for its lump - sum severance
indemnity plan.
In addition, the Company has a defined contribution plan for severance payments.
Projected benefit obligations
a. Projected benefit obligations
b. Plan assets
c. Projected benefit obligations in excess of plan assets (= a + b)
d. Unrecognized prior service coste. Unrecognized actuarial differences
f. Allowance for employees’ retirement benefits (=c + d + e)

(Millions of yen)
(12,528)
5,576(6,952)702
43(6,206)

Net periodic benefit cost
(Millions of yen)
972
242
175
136
1,527
271
1,799

a. Service costb. Interest costc. Amortization of prior service costd. Amortization of actuarial differences
e. Net periodic benefit cost (= a + b +c + d)
f. Contribution to defined contribution plang. Total (= e + f)

Note: Net periodic benefit cost in the consolidated subsidiary, which adopted the simplified method, are included in “a. Service
cost.”

30

Basis of calculation of projected benefit obligations
a. Discount rate
b. Expected rate of return on plan assetsc. Allocation method of estimated total retirement
benefits(Per Share Data)
1. Net assets per share

2. Net income per share

1,935.41

yen

111.55

yen

2.0%
0%
Straight-line basis (a method to allocate estimatedtotal retirement benefits equally to respective
periods in employee’s whole service period)31Non-consolidated Balance Sheet (As of February 28, 2010)(Millions of yen)
Assets
Account item
Current assets
Cash and bank deposits
Accounts receivable—due from
franchised stores
Marketable securities
Merchandise inventories
Prepaid expenses
Accounts receivable—other
Deferred tax assets
Other
Allowance for doubtful accounts
Fixed assets
Property and store equipment
Buildings

Amount111,41253,862
20,767
2,500
1,063
6,339
21,484
3,188
2,280
(74)
309,031
133,828
77,843Structures

11,968

Furniture, fixtures and equipment

11,708

Land

6,526

Lease assets
Construction in progress
Intangible assets
Software
Software development in progress
Goodwill
Other
Investments and other
Investments in securities
Investments in subsidiaries andaffiliated company
Investments in affiliated limited
private company
Long-term loans receivable

25,177603
27,80723,226
3,336
786
458
147,395
294
18,301Long-term prepaid expenses
Lease deposits
Deferred tax assets

5,201
79,33814,424

Other
Allowance for doubtful accounts

1,705(1,979)Total Assets

Liabilities
Account item
Current liabilities
Accounts payable —trade
Accounts payable— due tofranchised stores
Lease obligations
Accounts payable—other
Income taxes payable
Accrued expenses
Deposits received
Accrued employees’ bonuses
Provision for use of points granted
Other
Long-term liabilities
Lease obligations
Allowance for employees’
retirement benefits
Allowance for retirement benefits
to executive officers and corporate
auditors
Deposits received from
franchisees and lessees
Allowance for impairment loss on
leased property
Other
Total liabilities
Net assets
Owners’ equity
Common stock
Capital surplus
Additional paid-in capital
Retained earnings
Legal reserve
Other retained earnings

438
29,670420,444

General reserve
Earned surplus brought
forwardTreasury stock
Valuation and translation adjustments
Net unrealized loss onavailable-for-sale securities
Land revaluation difference
Stock acquisition rights
Total net assets
Total Liabilities, and total net assets

32

Amount157,764
64,271905
3,751
17,502
8,812
1,778
55,999
2,629
2,095
17
62,173
16,2986,095
201

38,735452
390
219,937
200,80358,506
41,52041,520102,490727

50,00051,762(1,713)
(643)
(8)
(634)
346
200,506
420,444Non-consolidated Statement of Income(From March 1, 2009 to February 28, 2010)(Millions of yen)Account item
Operating revenues
Franchise commissions from franchised stores
Other
Net sales
Net sales
Total operating revenues
Cost of goods sold
Gross profit on sales
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest and dividend income
Compensation received for removal
Other
Non-operating expenses
Interest expense
Loss on cancellation of store lease contract
Other
Ordinary profit
Special gains
Gain on sales of investment in subsidiaries
Other
Special losses
Loss on disposal of fixed assets
Loss on impairment of long-lived assets
Other
Income before income taxes
Income taxes - current
Income taxes - deferred
Net income

Amount183,566
22,112(65,834)(47,046)(18,788)

205,678
65,834
271,51347,046
224,467
179,469
44,997

864
294
359
264
1,382
292

1,671
97
3,863
2,867
1,143
16,903
902

33

1,518

1,939
44,577

1,769

7,874
38,471
17,806
20,665

Non-consolidated Statement of Changes in Net Assets(From March 1, 2009 to February 28, 2010)(Millions of yen)
Owners’ equity
Capital surplus
Commonstock

Balance at the end of previous
periodChanges of items during the period
Dividends from surplus
Net income
Reversal of land revaluationdifference, net of tax
Purchase of treasury stock – at cost

58,506

Additional
paid-in capital

41,520Total
capitalsurplusLegalreserve

41,520727

Retained earnings
Other retained earnings
EarnedGeneralsurplusreservebrought
forward50,000Total
retainedearnings

Treasurystock(1,712)Total
owners’equity47,29898,025

196,339(15,866)
20,665(15,866)
20,665(15,866)
20,665

(334)

(334)

(334)
(0)

(0)

Net changes of items other thanowners’ equity – net
Total changes of items during theperiodBalance at the end of the current
period

－

－

－

－

－

4,464

4,464

(0)

4,463

58,506

41,52041,520727

50,00051,762

102,490(1,713)200,803

34

Valuation and translation adjustments
Net
unrealized
loss onavailablefor-salesecurities
Balance at the end of
previous periodLand
revaluationdifference

(10)

(969)

Total
Stock
valuation andacquisitiontranslationrightsadjustments

(979)

274

Total
net assets

195,634

Changes of during theperiodDividends from surplus(15,866)

Net income

20,665

Reversal of land
revaluation difference, netof tax(334)

Purchase of treasury stock– at cost(0)

Net changes of items
other than owners’ equity
– net

2

334

336

71

408

Total changes of items
during the period

2

334

336

71

4,871

Balance at the end of thecurrent period

(8)

(634)

(643)

346

200,506

35

(Notes to the Non-consolidated Financial Statements)
1. Valuation of securities
Held-to-maturity debt securities: Carried at amortized cost. (Straight-line method)
Available-for-sale securities:
Securities whose market value is readily determinable: Recorded at the market value with net unrealized gains andlosses as a separate component of net assets. The cost of securities sold is determined based on the moving-averagemethod.
Other: Stated at cost determined by the moving-average method.
Investments in subsidiaries and affiliated companies: Stated at cost determined by the moving-average method.
2. Valuation of inventories
Merchandise inventories:
Principally at cost being determined by the retail method (the book value on the balance sheet is written down for a
decline in profitability).
3. Depreciation
Property and store equipment(except for lease assets):
Depreciation is computed using the declining-balance method at rates based on estimated useful lives of the assets.
The ranges of useful lives are from 10 to 34 years for buildings and from 5 to 8 years for furniture, fixtures andequipment.
Intangible assets(except for lease assets):
Amortization of intangible assets is computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which is the internal usefullife.
Lease assets:
In terms of the depreciation method for lease assets related to finance leases that do not transfer ownership of leased
properties, the Company applies the straight-line method using the lease terms as the useful lives and residual
values of zero.
Long-term prepaid expenses:
Amortization of long-term prepaid expenses is computed by the straight-line method
4. Accounting policies for important reserves
Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at an amount of possible losses from uncollectable receivables basedon the actual rate of losses from bad debt for ordinary receivables, and on estimated recoverability for specificdoubtful receivables.
Accrued employees’ bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimated amounts.
Provision for use of points granted:
The Company provides LAWSON PASS holders and MY LAWSON POINT holders when purchasing goods, anentitlement to certain points that the holder can redeem for a discount on subsequent purchases from LAWSON
stores.
Allowance for employees’ retirement benefits:

36

Allowance for employees’ retirement benefits are provided at the amount calculated based on the projected benefit
obligations and plan assets at the balance sheet date. Actuarial differences are amortized from the following fiscal
year on a straight-line basis over a certain period (10 years) within an average remaining service period of
employees at the time of their occurrence. Prior service cost is amortized, starting with the fiscal year incurred, on astraight-line basis over a certain period (10 years) within an average remaining service period of employees.
Allowance for retirement benefits to executive officers and corporate auditors:
Allowance for retirement benefits to corporate auditors and executive officers of the Company is calculated to state
the liability at 100% of the amount that would be required if all corporate auditors, executive officers resigned
their services with the Company at the balance sheet date.
5. Leases
The Company continues to account for as rental transactions finance leases that do not transfer ownership of leased
properties and that commenced before the first fiscal year in which the new accounting standard was applied.

6. Accounting for consumption tax
Consumption tax is excluded from income and expense.
7. Change of significant accounting policies(1) Adoption of Accounting Standard for Measurement of Inventories
Effective March 1, 2009, the Company adopted the “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9 (July 5, 2006)) and states inventories principally at cost, being determined by the retail method (thebook value on the balance sheet is written down for a decline in profitability) in accordance with this standard. In the past,
the Company principally accounted for inventories at cost determined by the retail method. This change had no effect onearnings.
(2) Adoption of Accounting Standard for Lease Transactions
Effective March 1, 2009, the Company adopted the “Accounting Standard for Lease Transactions” (ASBJ Statement No.
13 (June 17, 1993 (First Subcommittee of the Business Accounting Council), revised March 30, 2007)) and the“Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16 (January 18, 1994 (Accounting
Committee of the Japanese Institute of Certified Public Accountants), revised March 30, 2007). As a result, the Company
now accounts for finance leases that do not transfer ownership in a similar manner with ordinary sale and purchasetransactions.
As a result, compared with the previous method, the Company recorded lease assets of ¥25,177 million under fixed
assets, and lease obligations of ¥3,751 million and ¥16,298 million under current liabilities and long-term liabilities,
respectively, on the consolidated balance sheet. The impact on earnings was negligible.
However, the Company continues to account for as rental transactions finance leases that do not transfer ownership ofleased properties and that commenced before the fiscal year in which the new accounting standard was applied.

(Notes to the Non-consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment: ¥ 127,314 million
2. Due from / to subsidiaries and affiliated companies
Short-term receivables due from subsidiaries and affiliated companies ¥ 1,020 million
Long-term receivables due from subsidiaries and affiliated companies ¥ 12 million
Short-term payables due to subsidiaries and affiliated companies ¥ 1,755 million
Long-term payables due to subsidiaries and affiliated companies ¥ 30 million

37

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
The difference between book value and market value of the revalued land as of the balance sheet date was ¥ 232 million.

38

(Notes to the Non-consolidated Statement of Income)1. Transactions with subsidiaries and affiliated companies
Operating transactions
Operating revenues
Selling, general and administrative expenses
Transactions other than operating transactions:¥ 2,680 million¥ 3,484 million¥ 200 million

2. Long-lived assets
The Company recognized an impairment loss mainly for each store with the smallest cash generating unit.
The Company recognized an impairment loss on the following assets that declined in value due mainly to continuous
operating losses. The carrying amounts of those assets were written down to the recoverable amount and were recordedin special losses.
Category by use

Stores

Total

Location

AssetsMillions of yen

Tokyo

Buildings・Furniture, fixtures and equipment andothers191

Osaka

Buildings・Furniture, fixtures and equipment andothers127

OthersBuildings・Furniture, fixtures and equipment andothers―2,549―

Category by fixed assets
Buildings
Structures
Furniture, fixtures and equipment

2,867(Millions of yen)
1,567
269
203

Land
395
Leased property
418
Other
14
Recoverable value of the impaired assets is calculated based on the net selling price or value in use. The net selling priceof land was calculated based on the appraised value by the real estate appraiser or expected contract price, and the value
in use was calculated by discounting estimated future cash flows to which the 4.9% discount rate was applied.

(Notes to the Non-consolidated Statement of Changes in Net Assets)
Number of shares and kind of treasury stock
Common stock

432,190 shares

39

(Accounting for Income Taxes)
Components of deferred tax assets and liabilities were described as follows:(Millions of yen)Enterprise taxes payable
Accrued employees' bonuses
Loss on write-down of investments in affiliated companies
Excess of depreciation
Excess of amortization of software
Allowance for employees’ retirement benefits
Allowance for doubtful accounts
Impairment loss
Loss on replacement of computer system
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets

764
1,069
1,931
5,296
875
4,749
634
2,169
412
2,333
20,237(2,624)
17,613(Accounting for Retirement Benefits)
Summary of the retirement benefit plans:
The Company has a defined benefit lump - sum severance indemnity plans which cover substantially all of theiremployees. The Company established a trust fund for its lump - sum severance indemnity plan.
In addition, the Company has a defined contribution plan for severance payments.
Projected benefit obligations
a. Projected benefit obligations
b. Plan assets
c. Projected benefit obligations in excess of plan assets (= a + b)
d. Unrecognized prior service coste. Unrecognized actuarial differences
f. Allowance for employees’ retirement benefits (= c + d + e)

(Millions of yen)
(12,417)
5,576(6,841)702
43(6,095)

Net periodic benefit cost
(Millions of yen)
921
242
175
136
1,477
271
1,748

a. Service costb. Interest costc. Amortization of prior service costd. Amortization of actuarial differences
e. Net periodic benefit cost (= a + b + c + d)
f. Contribution to defined contribution plang. Total (= e + f)

Basis of calculation of projected benefit obligations
a. Discount rate
2.0%
b. Expected rate of return on plan assets
0%c. Allocation method of estimated total retirement
Straight-line basis (a method to allocate estimatedbenefits
total retirement benefits equally to respective
periods in employee’s whole service period)40

(Leases)Finance lease contracts other than those by which the ownership of the leased property is to be transferred to lessees:(1) The assumed data as to acquisition cost, accumulated depreciation and net leased property(Millions of yen)
Acquisition cost
Furniture, fixturesand equipment

Accumulated
depreciation

34,491

18,287

Accumulated
impairment loss

Leased property

1,047

15,156(2) Obligations under finance leases(Millions of yen)
5,422
11,177
16,599452

Due within one year
Due after one year
Total
Allowance for impairment loss on leased property(3) Lease payments, transfer from allowance for impairment loss on leased property, depreciation expense, interest
expense and impairment loss:(Millions of yen)
Lease payments
7,290
Transfer from allowance for impairment loss on leased property
319
Depreciation expense
7,140Interest expense
518
Impairment loss
418(4) Computation method of depreciation expense
Depreciation expense is computed by the straight-line method, assuming the lease period as the useful life and noresidual value.
(5) Computation method of interest expense
The difference between the total lease contract amount and the acquisition cost is assumed to be interest, and interest
expense is computed by the interest method.

41

(Related Party Transactions)
Subsidiaries of an affiliated company of the Company
Relationship with the
Attribute

Company

Business line or Equity ownership

nameprofession

RYOSHOKU Sales of
Subsidiaries

LIMITEDpercentage(Ownership)processed foods theTransaction

Company
Directors Description ofBusinesstransactions
posts held
relationshipconcurrently―

Vendoramount(Millions ofPurchases for

Account item

(Millions of
yen)

yen)
4,893 Accounts

the Company-

0.3 %Ending balance

5,810

payable-tradeof ancompany

operated stores

affiliatedis directly(Purchases for thecompany of

ownedfranchised stores)(81,065)

Purchases for

13,127 Accounts

the Company

Food Service Sales of fast――

VendorNetwork Co, foods and daily

the Company-

Ltd

operated storesdelivered foods

16,455payable-trade(Purchases forthe franchised(208,461)

stores)―SAN-ESU

Confectionary

INC.

wholesale

the Company-

business

operated stores―

VendorPurchases for

1,786 Accounts

2,802

payable-trade(Purchases forthe franchised
stores)(29,430)

Transaction conditions and the principles on the decision thereof:
The terms and conditions for purchase transactions are determined as the same as those for other general business
transactions, except that regarding the purchases made for the franchised stores, the Company acts as an alternative payer,
not as direct party of purchase.
(Per Share Data)
1. Net assets per share
2. Net income per share

2,018.39
208.38yenyen

The above amounts and the number of shares in these consolidated and non-consolidated statements are truncated below
the unit, and the ratios are rounded to the nearest whole number.

42

（TRANSLATION ONLY）
INDEPENDENT AUDITORS' REPORT

April 12, 2010

To the Board of Directors of
LAWSON, INC.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant: Kinya Suzuki
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant: Hiroyuki Morita

Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited thefinancial statements, namely, the balance sheet as of February 28, 2010 of LAWSON, INC. (the “Company”),
and the related statements of income and changes in net assets, and the related notes for the 35th fiscal
year from March 1, 2009 to February 28, 2010 and the accompanying supplemental schedules. These
financial statements and the accompanying supplemental schedules are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial statements and theaccompanying supplemental schedules based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements and the accompanying supplemental schedules are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements and the accompanying supplemental schedules. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement and the accompanying supplemental schedules presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the accompanying supplemental schedules referred to above present fairly, inall material respects, the financial position of the Company as of February 28, 2010, and the results of its operations for theyear then ended in conformity with accounting principles generally accepted in Japan.
Our firm and the engagement partners do not have any financial interest in the Company for which
disclosure is required under the provisions of the Certified Public Accountants Law.

The above represents a translation, for convenience only, of the original report issued in the Japanese
language.

43

（TRANSLATION ONLY）
INDEPENDENT AUDITORS' REPORT

April 12, 2010

To the Board of Directors of
LAWSON, INC.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant: Kinya Suzuki
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant: Hiroyuki Morita

Pursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited the consolidated
financial statements, namely, the consolidated balance sheet as of February 28, 2010 of LAWSON, INC.
(the “Company”) and consolidated subsidiaries, and the related statements of income and changes in net
assets, and the related notes for the fiscal year from March 1, 2009 to February 28, 2010. These
consolidated financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An
audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall consolidated financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company and consolidated subsidiaries as of February 28, 2010, and the results of their operations for theyear then ended in conformity with accounting principles generally accepted in Japan.
As discussed in Notes to the consolidated statement of income, the Company recorded an
impropriety-related loss and a loss on prior period adjustment in connection with the discovery of alleged
misconduct in a consolidated subsidiary.
Our firm and the engagement partners do not have any financial interest in the Company for which
disclosure is required under the provisions of the Certified Public Accountants Law.
The above represents a translation, for convenience only, of the original report issued in the Japanese
language.

44

(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Corporate Auditors>

AUDIT REPORTRegarding the execution of duties by the Directors for the 35th business term from March 1, 2009 to February 28,2010,
we have prepared this Audit Report, through due deliberations based on the audit reports prepared by each Corporate
Auditor, and hereby report as follows:1.

Auditing Methods Employed by the Corporate Auditors and Board of Corporate Auditors and Details of Such Methods
We have established audit policies, audit programs and other guidelines for the current term, and received the reports

from each Corporate Auditor regarding their execution of audits and results thereof, as well as reports from the Directors,
other relevant personnel, and the Accounting Auditor regarding the execution of their duties, and asked for explanations asnecessary.
Each Corporate Auditor, pursuant to the auditing standards of Corporate Auditors established by the Board of Corporate
Auditors, has followed the audit policies and audit programs for the current term, communicated with the Directors, officers,internal audit department and other relevant employees, endeavored to collect information and develop the audit
environment, attended the Board of Directors meetings, the management meetings, Internal Control over Financial
Reporting committee meetings, Compliance & Risk committee meetings, and the like, and other important meetings,
received reports from the Directors, officers, internal audit department and other relevant employees regarding theexecution of their duties, asked for explanations whenever necessary, reviewed important authorized documents and the like,and investigated the status of operations and assets at the head office, branches, and other principal offices and stores.
In addition, pursuant to the audit items and audit methods established by the Board of the Corporate Auditors, we havemonitored and verified the resolution of the Board of Directors regarding the organization of the system as prescribed byitem (vi) of paragraph 4, Article 362 of the Companies Act and paragraph 1 and paragraph 3, Article 100 of the Ordinancefor Enforcement of the Companies Act and the status of the development and operation of the system based on such
resolution (Internal Control System), as the system necessary to ensure that the execution of the duties by the Directors
complies with laws and regulations and the Articles of Incorporation and other system necessary to ensure the properness ofoperations of a Stock Company. In connection with internal control over financial reporting, we received reports from the
Directors and other relevant personnel, and Deloitte Touche Tohmatsu LLC regarding the status of evaluation and audit ofsuch internal control respectively, and asked for explanations whenever necessary. With respect to subsidiaries, we havecommunicated and exchanged information with the Directors, Corporate Auditors and other relevant personnel ofsubsidiaries, requested the subsidiaries to report on their business where necessary, and investigated their status ofoperations and assets. Based on the above methods, we have examined the business report and supplementary schedules
thereof for this business term.

Furthermore, we have monitored and verified whether Accounting Auditor maintained its independent position andimplemented appropriate audit, and we received reports from Accounting Auditor regarding the status of the execution of its
duties and, whenever necessary, asked for explanations. In addition, we have received the notice from the Accounting
Auditor that “System for ensuring that the duties are performed properly” (matters set forth in each item of Article 131 of
the Company Accounting Regulations) is organized in accordance with the “Quality Control Standards for Audits”

45

(Business Accounting Council, October 28, 2005) and the like, and, when necessary, asked for explanations. Based on theabove methods, we have examined the “consolidated financial statements (consolidated balance sheet, consolidated
statement of income, consolidated statements of changes in stockholder’s equity, and notes to consolidated financial
statements)” and “non-consolidated financial statements (balance sheet, statement of income, non-consolidated statementsof changes in stockholder’s equity, and notes to non-consolidated financial statements) and supplementary schedules
thereof” for this term.

2.

Result of Audit(1) Result of Audit of Business Report and Other Relevant Documents
1. We have found that business report and the supplementary schedules thereof fairly present the status of theCompany, in conformity with the applicable laws and regulations and the Articles of Incorporation.
2. Regarding the execution of duties by the Directors, we have found no misconduct or material matter that violates
applicable laws and regulations or the Articles of Incorporation.
3. We have found that the content of the resolution of the Board of Directors regarding the Internal Control System isadequate. In addition, we have found no matters on which to give remarks in regard to the execution of duties by the
Directors concerning Internal Control System. In this connection, as stated in the business report, the Company has
booked the large amount of losses resulting from the misappropriation of money by former directors at aconsolidated subsidiary. We have found that the Directors have been implementing the measures to enhance theinternal control of the Company and governance over subsidiaries.
(2) Result of Audit of Consolidated Financial Statements
We have found that methods and the result of the audit by the Accounting Auditor, Deloitte
Touche Tohmatsu LLC, are adequate.
(3) Result of Audit of Non-consolidated Financial Statements and Supplementary Schedules thereof.
We have found that methods and the result of the audit by the Accounting Auditor, Deloitte
Touche Tohmatsu LLC, are adequate.

April 13, 2010
The Board of Corporate Auditors of Lawson, Inc.
Standing Corporate Auditor

Munehiko Nakano(Outside Corporate Auditor)
Standing Corporate Auditor

Kenji Yamakawa

Corporate Auditor

Tetsuo Ozawa(Outside Corporate Auditor)
Corporate Auditor(Outside Corporate Auditor)

46

Hiroshi Kuwata

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and references
Proposal No. 1: Appropriation of Surplus
The Company intends to pay year-end dividends as specified below after comprehensively considering its financial position,
earnings, dividend payout ratio and other factors while ensuring sufficient funds are retained to conduct future businessdevelopment.
We will endeavor to raise the Company’s corporate value by appropriating internal reserves for necessary business
investments such as new store openings, existing store renovations and new business development.
Year-end dividends:(1) The assignment of the dividend property to shareholders and total amount thereof¥80 per share of the Company’s common stock for a total of ¥7,933,424,800
Note: The annual dividend per share will be ¥160, the same as for the previous period, including an interim dividend pershare of ¥80.
(2) Effective date of the dividends from surplus
Wednesday, May 26, 201047

Proposal No. 2: Election of Seven (7) Directors
The terms of office of seven (7) current directors expire at the conclusion of this 35th Ordinary General Meeting of
Shareholders. Accordingly, we propose that you elect seven (7) directors.
The nominees for directors are as follows
Brief Personal History, Position, Assignment and Important
Number of the
No. Name(Date of birth)
Concurrent Positions
Company’s
Shares Held1
Takeshi Niinami
April 1981
Joined Mitsubishi Corporation
6,000(January 30, 1959)
June 1995
Representative Director, Sodex Corporation
July 1999
General Manager, Restaurant Business Team,
Living Essentials Logistics Planning
Department, Mitsubishi Corporation
April 2000
General Manager, LAWSON Project
Integration Office; General Manager,
Restaurant Business Office, Mitsubishi
Corporation
April 2001
Manager, LAWSON Business Unit; Manager,
Restaurant Business Unit, Consumer Business
Division, Mitsubishi Corporation
March 2002
Corporate Advisor, LAWSON, INC.
May 2002
President, Representative Director andExecutive Officer, LAWSON, INC.
May 2004
Outside Director, LAWSON TICKET, INC(Currently LAWSON ENTERMEDIA, INC.)
March 2005
President, Representative Director and CEO,LAWSON, INC. (Current position)
April 2006
Outside Director, ACCESS, CO., LTD(Current position)
October 2007
Outside Director, Chairman, LAWSONTICKET, INC, (Currently LAWSONENTERMEDIA, INC; Current position)
June 2009
Director, Chairman, Ninety-nine Plus Inc.
(Current position)
2
Yoshiyuki Yahagi
April 1979
Joined Mitsubishi Corporation
200(May 20, 1954)
January 1999
Team Leader, Investment Administration
Team No. 1, Risk Management Department,
Mitsubishi Corporation
October 2001
Team Leader, Investment Administration
Team No. 1, Controller Office; and Leader,
PM Committee Secretariat, Mitsubishi
Corporation
July 2004
Deputy General Manager, Audit Department,
Mitsubishi Corporation
December 2006
Senior Vice President and Executive Assistantto CEO, LAWSON, INC.
March 2007
Executive Vice President and CFO, in chargeof Corporate Planning Office, LAWSON, INC.
May 2007
Director, Executive Vice President and CFO,in charge of Corporate Planning Office,Human Resources Office, LAWSON, INC.

48

March 2009

September 2009
April 2010
3

Manabu Asano(October 1, 1949)

September 1977
September 1980
March 1989

March 1992
March 1988

January 2002
September 2005
May 2006

April 2008

September 2008
February 2010
March 2010

Director, Senior Executive Vice President and
CFO; General Manager, Management Services
Office, LAWSON, INC.
Director, Senior Executive Vice President and
CFO (Current position)
Senior Vice President, Mitsubishi Corporation(Current position)
Joined LAWSON, INC.
General Manager, Human Resources
Development Department, LAWSON, INC.
General Manager, Development Planning
Department, Sales Planning Division,
LAWSON, INC.
Recruit Manager, Daiichi Region,
Development Division, LAWSON, INC.
General Manager, Higashi-Nippon-Daiichi
Region, Development Division, LAWSON,
INC.
Senior Vice President; General Manager, Store
Development Division, LAWSON, INC.
Senior Vice President and Deputy CRO,LAWSON, INC.
Director, Senior Vice President and CCO, in
Charge of General Affairs and Internal Audit,
LAWSON, INC.
Director, Executive Vice President and CCO,
in charge of General Affairs and Internal
Audit, LAWSON, INC.
Director, Executive Vice President and CCO(Current position)
General Manager, Management Headquarters,
LAWSON ENTERMEDIA, INC.
General Manager, Headquarters, LAWSONENTERMEDIA, INC. (Current position)

49

3,300

No.

Name
(Date of birth)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

4

Toru Moriyama(August 9, 1954)

April 1977
April 2001
April 2004

September 2005
November 2005

March 2006

May 2006

April 2008
April 2009
April 2009

April 2010

5

Hiroshi Tasaka(April 17, 1951)

March 1990
June 1996
April 2000
April 2000
May 2000
June 2000
June 2005

Joined Mitsubishi Corporation
General Manager, Marine Products Unit,
Mitsubishi Corporation
General Manager, Food Textiles & General
Merchandise Dept., Nagoya Branch,
Mitsubishi Corporation
Senior Vice President; Executive Assistant toCEO, LAWSON, INC.
Executive Vice President; General Manager,
Merchandising & Logistics Division,
LAWSON, INC.
Senior Executive Vice President; General
Manager, Merchandising & Logistics Division,
LAWSON, INC.
Director, Senior Executive Vice President;
General Manager, Merchandising & Logistics
Division, LAWSON, INC.
Senior Vice President, Mitsubishi Corporation
Director, LAWSON, INC. (Current position)
Senior Vice President, Senior Assistant toGroup CEO, Living Essentials Group,
concurrently General Manager, Next
Generation Business Development Unit,
Mitsubishi Corporation
Executive Vice President, Group COO, Living
Essentials Group, Mitsubishi Corporation(Current position)
Joined The Japan Research Institute, Limited
Director, The Japan Research Institute,
LimitedFellow, The Japan Research Institute, Limited(Current position)
Professor, Graduate School of Tama
University (Current position)
Outside Director, LAWSON, INC. (Current
position)
President, SophiaBank Limited (Current
position)
Director, Softbank Investment Corporation(Currently SBI Holdings, Inc.) (Current
position)

50

Number of theCompany’s
Shares Held
900

0

No.

Name
(Date of Birth)

6

Reiko Yonezawa(April 3, 1950)

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held
April 1974
Joined Japan Airlines International Co., Ltd.
0March 1982

President, The R Co., Ltd. (Current position)

May 2002

Outside Director, LAWSON, INC. (Current
position)
Director, Culture Convenience Club Co., Ltd.
(Current position)
Joined Mitsubishi Corporation

June 2007
7

Takehiko Kakiuchi(July 31, 1955)

April 1979
April 2001

April 2004

February 2005
May 2005
April 2006
April 2008
June 2008
June 2009
April 2010

0

White Meat Unit Manager, concurrently Red
Meat Unit Manager, Foods (Commodity)
Division, Mitsubishi Corporation
General Manager, Planning & Coordination,
Investment Administration & Credit, Living
Essentials Group CEO Office, Mitsubishi
Corporation
Outside Director, Kentucky Fried Chicken
Japan, Ltd. (Current position)
Outside Director, LAWSON, INC. (Current
position)
General Manager, Living Essentials GroupCEO Office, Mitsubishi Corporation
Division COO, Foods (Commodity) Div.,
Mitsubishi Corporation
Outside Director, The Nisshin OilliO Group,Ltd. (Current position)
Outside Director, MARUICHI Co., Ltd.
(Current Position)
Senior Vice President, Division COO, Foods(Commodity) Division, Mitsubishi
Corporation (Current position)

Notes:
1.

The three nominees, Hiroshi Tasaka, Reiko Yonezawa and Takehiko Kakiuchi are candidates for outside directors as set forth in
Article 2, Paragraph 3, Item 7 of Ordinance for Enforcement of the Companies Act.

2.

Reason for Selection of the Nominees Above for Outside Directors and Terms of Office as Outside Directors of the Company.
1)

Hiroshi Tasaka

He has been nominated as a candidate because he possesses abundant experience and knowledge as a learned person and amanagement executive, and the Company expects him to continue to adequately fulfill his role as an outside director, because he iscurrently providing appropriate supervision of the Company's management.
He has been an outside director of the Company since May 2000, and will have held this position for 10 years as of the conclusionof this 35th Ordinary General Meeting of Shareholders. The Company has also find a notification of independent director with theTokyo Stock Exchange naming Mr. Tasaka as an independent director.
2)

Reiko Yonezawa

She has been nominated as a candidate because she possesses abundant experience and knowledge as a management executive, andthe Company expects her to continue to adequately fulfill her role as an outside director, because she is currently providing
appropriate supervision of the Company's management.

51

She has been an outside director of the Company since May 2002, and will have held this position for 8 years as of the conclusionof the 35th Ordinary General Meeting of Shareholders.
3)

Takehiko Kakiuchi

He has been nominated as a candidate because he possesses deep knowledge concerning consumer goods industries through hiswork at Mitsubishi Corporation, which is an important business partner of the Company, and the Company expects him to continue
to adequately fulfill his role as an outside director, because he is currently providing appropriate supervision of the Company's
management.
He has been an outside director of the Company since May 2005, and will have held this position for 5 years as of the conclusion of
the 35th Ordinary General Meeting of Shareholders.
3.

Agreement to Limit Liability With the Nominees
Pursuant to Article 24 of the current Articles of Incorporation, the Company has entered into agreements with the nominees Hiroshi
Tasaka, Reiko Yonezawa and Takehiko Kakiuchi to limit their liability with regard to the damages set out under Article 423,
Paragraph 1 of the Companies Act, to within the sum of the amounts set forth in the relevant laws and regulations as far as they havebeen in good faith without gross negligence in executing the duties that were ascribed as the cause of the claim for damage
concerned.

4.

The R Co., Ltd., for which Reiko Yonezawa, one of the nominees, serves as president, and the Company have an
outsourcing-outsourced business relationship with regard to reception services.

5.

The nominees other than the above do not have any special interest in the Company.

6.

The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 14, 2010.

52

Proposal No. 3: Election of Two (2) Corporate Auditors
The terms of office of the current corporate auditors Kenji Yamakawa and Hiroshi Kuwata expire at the conclusion of this
35th Ordinary General Meeting of Shareholders. Accordingly, we propose that shareholders elect two (2) corporate auditors.
The Board of Corporate Auditors has given prior consent to this proposal.
The nominees for corporate auditors are as follows.
No. Name
Brief Personal History, Position, and Important Concurrent Positions
Number of the(Date of Birth)Company's
Shares Held
1
Atsuhiko Seki
April 1977
Joined The Daiei, Inc.
1,100
(October 4, 1954)
July 1999
Joined LAWSON, INC.
April 2000
January 2002
March 2004
September 2007
March 2010

2

Kazuyuki Masu
(February 19, 1959)

General Manager, General Affairs Dept., Officeof Business Planning, LAWSON, INC.
Deputy General Manager, General Affairs
Office, LAWSON, INC.
General Manager, General Affairs Office,
LAWSON, INC.
Executive Officer (Other), General Manager,
Line Support Division, LAWSON, INC.
Corporate Auditors Office, LAWSON, INC.
(Current position)

April 1982

Joined Mitsubishi Corporation

April 2004

Energy Business Group Controller, Mitsubishi
Corporation
General Manager, BPI and Internal Control
Department, Mitsubishi Corporation
General Manager, Administration Dept. of
Corporate Section, Mitsubishi Corporation(Current position)

March 2008
April 20100Notes:
1.

The nominee Kazuyuki Masu is a nominee for outside corporate auditor as set out in Article 2, Paragraph 3, Item 8 of theCompanies Act.

2.

Reason for Selection of Nominee for Outside Corporate Auditor
Mr. Kazuyuki Masu has been selected as a nominee because he possesses abundant work experience and knowledge concerning
accounting and administrative operations through his work at Mitsubishi Corporation, which is an important business partner of theCompany, and because the Company expects him to adequately fulfill his role as a corporate auditor.

3.

Agreement to Limit Liability With Nominee
Pursuant to Article 32 of the current Articles of Incorporation, the Company will enter into an agreement with Kazuyuki Masu tolimit his liability with regard to the damages set out under Article 423, Paragraph 1 of the Companies Act, to within the total sum of
the amounts set forth in the relevant laws and regulations as far as he has been in good faith without gross negligence in executing
duties that were ascribed as the cause of the claim for damage concerned.

4.
5.

The nominees do not have any special interest in the Company.
The nominee Atsuhiko Seki has been selected as a substitute for Kenji Yamakawa and the nominee Kazuyuki Masu has been
selected as a substitute for Hiroshi Kuwata. The nominees’ terms of office will finish at the expiration of their predecessors’ terms ofoffice.

6.

Both Atsuhiko Seki and Kazuyuki Masu are new nominees for corporate auditor.

7.

The nominees’ Brief Personal History, Position, and Important Concurrent Positions are as of April 14, 2010.

53

Proposal No. 4: Presentation of Retirement Benefits to Retiring Corporate Auditors
The current corporate auditors Kenji Yamakawa and Hiroshi Kuwata will retire from office as of the conclusion of this 35th
Ordinary General Meeting of Shareholders. As a reward for their services in office, we propose to present them withretirement benefits of up to a total of ¥31 million.
We would like to leave the details of the exact amount and the date and method of the presentation to the discretion of thecorporate auditors.
The following is a brief personal history of the retiring corporate auditors.
Name
Brief Personal History
Kenji Yamakawa

May 2004

Standing Corporate Auditor, LAWSON, INC. (Current position)

Hiroshi Kuwata

May 2005

Corporate Auditor, LAWSON, INC. (Current position)

Note:
The corporate auditors’ Brief Personal Histories are current as of April 14, 2010.

54