(TRANSLATION ONLY)
Securities Code: 2651
May 2, 2014
To All Shareholders with Voting Rights
Takeshi Niinami
Representative Director
Lawson, Inc.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 39th ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 39th 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 26, 2014.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 26, 2014 after reading the attached document“Exercising Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 27, 2014
2. Venue: Tokyo International Forum, Hall C, 5-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
3. Objectives of the Meeting
Reports:
The Business Report, the Consolidated Financial Statements and the Non-Consolidated Financial Statements for the39th Fiscal Term (from March 1, 2013 to February 28, 2014), and the Audit Reports Thereof
Matters to Be Resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Nine (9) Directors
Proposal No. 3: Revision to the Amount and Substance of Stock Options for Directors


If you attend in person, please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at the meeting.
The reception desk will open at 9:00 a.m. Please arrive 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, suchas a power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at the reception desk. (Thequalified proxy is limited to one shareholder having voting rights for this meeting as per the relevant provision in the Articles ofIncorporation.)

1

(TRANSLATION ONLY)
BUSINESS REPORT(March 1, 2013 through February 28, 2014)
I. CURRENT STATUS OF THE CORPORATE GROUP
1. Summary of Operations(1) Business Developments and Results of Operations
During the consolidated fiscal year under review, or the fiscal 2013 ended February 28, 2014, the Lawson Group(hereinafter, the “Group”) implemented measures to reinforce its social infrastructure function that provides essential
items and services at the local level with the aim of realizing the Group’s corporate philosophy of “Creating
Happiness and Harmony in our Communities.” Based on its analysis of purchase data retrieved from themulti-partner loyalty program, Ponta, the Group focused on customer relationship management (CRM) *1 and supply
chain management (SCM) *2 in order to offer a merchandise assortment that meets the specific needs of customers ineach neighborhood.
In terms of operating results for the fiscal year under review, gross operating revenue decreased year on year by¥2,197 million to ¥485,247 million (down 0.5%). This was attributable to a decrease of ¥24,782 million in net sales
despite an increase of ¥22,584 million in operating revenue, resulting from an increase in the number of franchised
stores and a decrease in the number of Company-operated stores. Although cost of sales fell ¥18,247 million owing
to a decrease in the number of Company-operated stores, selling, general and administrative expenses climbed¥14,169 million to ¥290,483 million (up 5.1%) due to increases in rents and depreciation. As a result, operating
income grew ¥1,880 million to ¥68,126 million (up 2.8%), ordinary income rose ¥2,954 million to ¥68,880 million(up 4.5%), and net income increased ¥4,782 million to ¥37,965 million (up 14.4%).
*1

CRM: A marketing management method for providing merchandise and services that meet the specific needs of customers.

*2

SCM: A business administration method for comprehensively managing all stages of business, from procurement to sales,
to streamline and optimize the entire business process.

Operating results by business segment were as follows:[Domestic Convenience Store Business](Merchandise Strategy)
On the merchandise front, we strengthened our evening and nighttime merchandise assortment throughout theyear by expanding our lineup of ready-made meals, including carbohydrate-based foods such as lunch boxes, riceballs and sandwiches, and over-the-counter fast foods, in order to enhance satisfaction of customers visiting ourstores, especially in and after evening hours.
In our mainstay rice category, our Furusato-no-umai! line offering lunch boxes and rice balls was tremendously
popular for its high-value-added products using ingredients specific to different regions across Japan. We also
strengthened our merchandise assortment of fresh foods centered on precut vegetables and processed foods that
tend to be purchased in combination with fresh foods.
In the over-the-counter fast foods category, new products such as “Genkotsumenchi” (fried minced meat balls)
and “Ohgon-Chicken” (tender and juicy fried chicken with a golden crispy crust) were highly received, achievingrobust sales. In addition, we expanded the number of stores equipped with MACHI café, an in-store café firstlaunched in fiscal 2011 offering freshly ground and brewed coffee, to 7,776 as of the end of the fiscal year underreview, successfully increasing profitability while deepening communication with customers and improving
customer service. We have also steadily installed an in-store kitchen facility Machikado Chubo in more stores,
aiming to offer freshly prepared dishes such as “Katsu sandwiches.” The number of stores with Machikado Chubo
has reached 2,076 as of the end of the fiscal year under review, and they are becoming increasingly popularamong customers. In the dessert category, we launched pancakes and waffle-cone ice cream products under our
UCHI café SWEETS brand, as well as the Frozen Sweets series frozen cupped dessert served by thawing in the
microwave oven, all of which were extremely popular.
2

In May 2013, we strengthened product development with the aim of not only responding to customers’ healthconcerns, but also promoting health. Of note, bran*3 bread, a low-carbohydrate product we began to fully promote
this fiscal year ended February 2014, has been well received by many customers who are health conscious or needto limit their intake of carbohydrates. We have also expanded our merchandise assortment of pre cut vegetables
made with vegetables produced based on the Nakashima Farming Method*4, one of the most prominent mineralfarming methods in Japan. By thus highlighting health consciousness in our products and in-store presentation,
we have boosted Group’s corporate brand image as a health-promoting convenience store. Furthermore, we havebeen implementing rigorous initiatives to manage the health condition of our employees since last year as part ofour corporate drive to promote good health. Our focus on health will be further strengthened as an approach
adopted throughout the entire Lawson chain including franchised stores.
As of the end of February 2014, we are now operating 15 Lawson Farms. The farms were established with theaim of supplying the Group’s stores with fruits and vegetables as fresh food products on a stable basis as well as
providing produce for use as ingredients in Lawson’s original products. In sales promotions, we implemented apoint-reward campaign targeting Ponta members to encourage purchasing with the aim of increasing the rate of
repeat visits.
Total Ponta members reached 60 million as of the end of February 2014, including members that joined throughother participating companies. The sales ratio of Ponta members reached approximately 49%.
*3

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

Nakashima Farming Method: A cultivation method that supplies appropriate nutrients in accordance with the growth status ofcrops and the nutritional balance of the soil (mineral balance). Use techniques for developing healthy soil based on diagnosis of soil
conditions in conjunction with techniques to control the growth process of crops to maintain healthy growth. In August 2013,
Lawson, Inc. acquired a 70% stake in Eisai Co., Ltd. (currently, Seikaken Inc.), which owns soil condition diagnosis techniques andmanufactures and supplies soil fertilizers that optimize mineral balance in soil and crops.

(Store Operations)
In store operations, we continued to reinforce adherence to the Three Essential Practices, which emphasizes (1)serving customer courteously; (2) offering a merchandise assortment focused on basic items with high demand;and (3) keeping our store and communities clean, in addition to expanding our lineup of health-conscious productsthat are safe, reliable, and delicious. Notably, with the increasing number of stores equipped with MACHI café,
store employees are more capable of offering products and services in a caring manner through better
communication with customers. We strived to further improve the quality of stores by clarifying the customer
service goals to be pursued by store employees and fostering leaders among them.
In store operations, by using the store-by-store analysis reports formulated based on Ponta members’ data,
which we started distributing to franchised stores in March, we encouraged sharing of initiatives and knowledge
among all stores and continued striving to achieve merchandise assortment and store features tailored to eachstore.
Furthermore, we have also continued implementing measures to streamline our order placement procedures
and reduce lost opportunities. Going forward, we will further push forward with our efforts to achievemerchandise assortment that suits customers visiting each store by leveraging Ponta members’ data andimplementing shelf allocation tailored to the locational characteristics of each store.
(Store Development and Store Format Strategy)
In opening new stores, the Group prioritized profitability based on its proprietary return on investment(ROI)-focused store development standard. As a result, the total number of stores operated by the Group reached11,337 as of the end of the fiscal year under review. With regard to store format strategy, in addition to LAWSON
and NATURAL LAWSON, we opened our first LAWSON MART store in February 2014. Developed based on
LAWSON STORE 100, LAWSON MART is a convenience store tailored more closely to each locality. We will
make maximum use of these store formats and promote a store format strategy that responds specifically to theneeds of customers in each neighborhood.
3As of February 1, 2014, Lawson, Inc. (the Company) acquired Ninety-nine Plus, Inc., along with its store-related
assets including its franchise agreements with LAWSON STORE 100 fresh foods convenience stores. As a result,the Group centralized all Lawson chain store administrative functions, including store asset management andfranchise promotion, thus enabling it to further advance its efficient area-targeted strategies tailored more closely tothe needs of local customers. As of the same day, the operational functions of Ninety-nine Plus, Inc., including
store management and product development, were succeeded by Lawson Mart, Inc. based on an absorption-typecompany split. The functions that were succeeded will be further enhanced going forward.
In an effort to reinforce stores that cater to healthcare needs, we increased the number of Pharmacy LAWSON(pharmaceutical convenience stores), a store format that integrates drug-dispensing pharmacies operated by Qol
Co., Ltd. with LAWSON and NATURAL LAWSON, to 36, and the number of stores offering over-the-counter
pharmaceuticals to 87 as of the end of February 2014.
In May 2013, the Company established Lawson Minamikyushu, Inc. with the aim of reinforcing store operationsin Kagoshima Prefecture. The number of Lawson chain stores operated in Kagoshima Prefecture by Lawson
Minamikyushu, Inc. reached 82 as of the end of February 2014. Lawson Kumamoto, Inc. was also established in
May 2013, with the number of Lawson chain stores operated in Kumamoto Prefecture by the Company climbing
to 24 as of the end of February 2014. Lawson Kumamoto, Inc. is scheduled to be merged into the Company
effective March 1, 2014. The number of Lawson chain stores operated in Okinawa Prefecture by Lawson Okinawa,
Inc. as of the end of February 2014 totaled 163.
[Change in Total Number of Stores]

LAWSON
NATURAL LAWSONLAWSON STORE 100／LAWSON MART
Total

Total stores as ofFebruary 28, 2013
9,642
110

Change during fiscal
year
388
(5)

Total stores as ofFebruary 28, 2014
10,030
105

1,224

(22)

1,202

10,976361

11,337[Total Operating Revenues in the Domestic Convenience Store Business]
Total Operating Revenues (¥ millions)Year on Year (%)
410,323
97.9[Net Sales at all LAWSON Stores in the Convenience Store Business]
Fiscal period
Current fiscal year
March 1, 2013
to February 28, 2014
Sales
Percentage of total
Product group(Millions of yen)(%)
Processed foods
1,060,455
54.7
Fast foods
408,672
21.1
Daily delivered foods
275,437
14.2
Nonfood products
196,726
10.0
Total
1,937,292
100.0

4YOY percentagechange
(%)
99.7
109.6
101.3
98.1
101.7

[Other Businesses]
In addition to domestic convenience store business, the Group is involved in overseas business, Entertainmentand Home Convenience Business, Financial services related business, and other businesses.
With regards to overseas business, the Group’s operating companies, shown in the following table, opened
stores in Shanghai, Chongqing, Dalian, and Beijing in the People’s Republic of China.
In May 2013, we established Beijing Lawson, Inc. which opened two stores in August. In Indonesia, PT MIDIUTAMA INDONESIA Tbk, in which Lawson Asia Pacific Holdings Pte. Ltd. (hereinafter, LAP), our Asianumbrella subsidiary in Singapore, holds a 30% stake, operates Lawson stores.
In Thailand, Saha Lawson Co., Ltd., a joint venture between LAP and the SAHA Group, Thailand’s leading
distributor of consumer goods, operates stores under the store brand of LAWSON 108.
[Distribution of Lawson Brand Stores Overseas by Region (As of February 28, 2014)]
Number of
Changestoresduring fiscal
CompanyCountry/region(As of February
year
28, 2013)

Number ofstores(As of February
28, 2014)

Shanghai Hualian Lawson, Inc.

Shanghai, China

305

(16)

289

Chongqing Lawson, Inc.

Chongqing, China

49

28

77

Dalian Lawson, Inc.

Dalian, China

8

10

18

Beijing Lawson, Inc.

Beijing, China

–

5

5

Saha Lawson Co., Ltd.

Bangkok, Thailand

–

29

29

PT MIDI UTAMA INDONESIA
Tbk

Capital City ofJakarta and its
suburbs, Indonesia

83

(22)

61

Lawson USA Hawaii, Inc.

Hawaii, U.S.A.

2

2

4

447

36

483

Total

*1 Saha Lawson Co., Ltd. operates 219 stores under store brands other than LAWSON 108.
*2 PT MIDI UTAMA INDONESIA Tbk operates 670 stores under store brands other than Lawson.
In the Group’s entertainment/home convenience business, Lawson HMV Entertainment, Inc. posted a solid
performance led by an increase in ticket sales of concerts, events and leisure activities. Revenue from the entire
Group’s ticketing services continued to secure top position in the ticketing industry. The number of HMV storesthat sell music CDs and DVDs totaled 50 as of the end of February 2014. The Group also promoted its regularfood delivery service through Smart Kitchen, Inc., and undertook collaborative initiatives with Daichi Wo
Mamoru Kai, Co., Ltd. and Radishbo-ya Co., Ltd. through capital/business alliances.
Lawson ATM Networks, Inc., which operates a financial services-related business, posted a solid performanceowing to an increase in the number of ATMs installed, along with a rise in the number of transactions. We started
providing financial services for 7 new banks as their business partner, bringing the total number of our financial
institution partners to 65 nationwide, including online banks, and the number of ATMs installed nationwide to10,118 (up 446 year on year) as of the end of February 2014.
[Total Operating Revenues in Other Businesses]
Total Operating Revenues (¥ millions)
79,735

Year on Year (%)
109.2

5

[Environmental and Social Contribution Activities]
The Company’s Social Contribution Division promoted environmental protection and social contribution
activities, working together with franchise store owners and Group employees.
In response to the launch of the Feed-in Tariff Scheme for Renewable Energy, a measure taken by thegovernment against global warming, we started introducing solar power generation systems at our stores in
October 2012 as our own initiative to tackle domestic energy issues. The systems have been installed at a total of
1,581 stores as of the end of February 2014. Also, in February 2014, we opened a next-generation pilot
convenience store in Moriguchi-shi, Osaka, jointly with Panasonic Corporation. By harnessing Panasonic’s
technologies, the store aims to reduce its electricity consumption by 50% from the fiscal 2010 level, provide
convenient services based on Information and communication technology, and propose health-oriented products
and services. In addition, the Group introduced refrigerator/freezer systems using CO2 refrigerant, which has highheat transfer efficiency and uses less electricity, at 136 stores by the end of February 2014. As a result, thesestores not only consumed less electricity, but also achieved a 50% reduction in annual CO2 emissions per store
compared with stores that adopted conventional systems using alternatives to chlorofluorocarbons. In recognitionof these energy-saving and energy-generating initiatives that contribute to reducing CO2 emissions, the Group
received Japan’s 2013 Minister of the Environment Award for the Promotion of Measures to Cope with Global
Warming, its second consecutive award. We will strive to make improvements by verifying the outcome at thesestores, and apply our accumulated expertise and knowhow to Lawson stores nationwide. Furthermore, as part ofour initiative to reduce environmental impact on the entire supply chain, we started calculating CO2 emissions at
each stage of the supply chain ranging from procurement of ingredients to disposal of merchandise. We will
endeavor to save energy and resources not only at Lawson stores but also throughout the entire supply chain.
In our efforts to undertake social contribution activities at our stores, we have been hosting the Lawson Green
Fund, a donation project active since 1992; the Support for Dreams Fund, a scholarship program for students inthree Tohoku prefectures that were affected by the 2011 Great East Japan Earthquake; and the TOMODACHI
Fund, which aims to support education of students in Tohoku mainly through a US-Japan exchange endeavor. For
all these initiatives, we launched a group-wide fund-raising activity named Happiness in Communities in June
2013.
Starting from the fiscal year under review, the Group has combined its Annual Report and Corporate
Citizenship Report to issue the Lawson Integrated Report 2013 in September 2013, which incorporates bothfinancial and nonfinancial information for all stakeholders.
As a member of society, the Group will continue to make unified group-wide efforts to implement initiatives
that aim to address social and environmental issues together with its customers and business partners.
(2) Capital Expenditures and Financing
Capital expenditures of the Group during the year totaled ¥46,735 million, of which ¥39,552 million was
primarily for store facility investment in land and buildings, and ¥5,361 million was for the upgrading of
information systems.
Furthermore, capital expenditures required for facility investments and others carried out in the current period
are devoted from shareholders’ equity.
(3) Changes in Operating Results and Financial Position[1] Changes in Operating Results and Financial Position of the Corporate Group
Fiscal 2011
Fiscal 2012
Category/Fiscal Term
Fiscal 2010thth
37 Term
38th Term
36 Term
Total operating revenues
441,277
478,957
487,445(¥ millions)
Ordinary profit (¥ millions)
54,59461,72865,926
Net income (¥ millions)25,38624,88533,182
Net income per share (¥)
254.61
249.17332.20Total assets (¥ millions)
476,036
531,453
579,809
Net assets (¥ millions)
208,466
214,662
230,181
Net assets per share (¥)
2,037.50
2,144.00
2,267.17

6

Fiscal 2013
39th Term
485,247
68,88037,965380.04620,992
250,497
2,455.25

［2］Changes in Operating Results and Financial Position of the Company
Fiscal 2010
Fiscal 2011
Fiscal 2012
Category/Fiscal Term
36th Term
37th Term
38th Term
Total net sales of Lawson
stores, including franchised
1,502,754
1,621,328
1,693,435
stores (¥ millions)
Total operating revenues
263,209272,498
282,752(¥ millions)
Ordinary profit (¥ millions)
49,312
56,11059,459Net income (¥ millions)
24,643
22,46230,314
Net income per share (¥)
247.15224.91
303.49Total assets (¥ millions)
444,821500,667
532,619
Net assets (¥ millions)211,448
216,826
227,974
Net assets per share (¥)
2,113.24
2,166.35
2,277.90

7

Fiscal 2013
39th Term
1,758,656
298,778
62,171
33,625336.59589,793
240,648
2,403.21

(4) Pressing Issues
The Group is promoting the following management measures with the aim of realizing its corporate philosophyof “Creating Happiness and Harmony in Our Communities.”(i) Strengthen measures to promote healthIn response to changes in social structure brought about by an aging population and declining birth rates, theGroup will aim to offer convenience stores that support the lives of customers by expanding their assortment ofhealth-related products and sales of pharmaceuticals.
(ii) Reinforce offerings of fresh foods at stores located in residential areas
The need to enjoy home-cooked meals is high among customers in the neighborhoods of stores in residential
areas. To meet such needs, the Group will focus on creating stores that offer an extensive assortment of fruits andvegetables and other fresh foods packaged in small portions, daily delivered foods, and frozen foods. We will strive
to expand our senior and homemaker customer bases through this initiative.
(iii) Develop overseas businessNot being bound by Japanese-style business models or store formats, the Group will pursue hospitablecustomer service, a signature feature of Japanese convenience stores, while respecting local cultures with the aimof disseminating the Lawson brand in the countries it conducts business in.
(iv) Provide home delivery service to offer customers more convenience
The Group will offer customers the luxury of convenience store shopping from the comfort of their own homes
by expanding its home convenience service including home delivery and online shopping.
(v) Promote internal control systems and address operating risks
In order to ensure business continuity, it is imperative to foster the Group’s internal control in its entirety andaddress operating risks. In addition, we believe that taking a proactive approach to corporate governance will
provide us with a shortcut to enhancing corporate value. We will therefore continue to focus on promoting internal
control and addressing operating risks.
The Group will aim to increase its corporate value by striving to improve customer satisfaction on an ongoingbasis.
We look forward to the continued support and encouragement of our shareholders.
2. Current Status at the End of February 2014
(1) Major Business Operations and Principal Offices[Domestic Convenience Store Business][1] Lawson, Inc.
Major Business:
Lawson, Inc. primarily operates the Lawson-brand franchise system as well as
undertaking management of company-operated stores as the headquarter of
LAWSON, NATURAL LAWSON, LAWSON STORE 100 and LAWSON MART
convenience store chains
Head Office:Shinagawa-ku, Tokyo
Principal Offices:
Hokkaido Lawson Branch (Kita-ku, Sapporo), Tohoku Lawson Branch (Aoba-ku,
Sendai), North Kanto Lawson Branch (Shinagawa-ku, Tokyo), South 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 85 offices throughout Japan,
including branches.

8[2] Lawson Mart, Inc.
Major Business:
Head Office:Lawson Mart, Inc. operates LAWSON MART and LAWSON STORE 100 stores,
provides guidance to them, and engages in merchandise-related businesses.
Shinagawa-ku, Tokyo
Note: Lawson Mart, Inc. was established as a wholly owned subsidiary of theCompany in November.

[3] SCI, Inc.
Major Business:
Head Office:

SCI, Inc. operates the wholesale of meats, such as processed foods and frozen foods,
and packing materials.
Shinagawa-ku, Tokyo[Stores]Number ofstoresHokkaido
595
Aomori
199
Akita
179
Iwate
160
Miyagi215
Yamagata
69
Fukushima
93

Numberof stores
Tokyo
1,552
Kanagawa
826
Shizuoka213
Yamanashi
101
Nagano
149
Aichi
535
Gifu
141

Numberof stores
Nara99
Wakayama
114
Osaka
1,006
Hyogo
611
Okayama138
Hiroshima
167
Yamaguchi
118

Niigata

122

Mie

106

Tottori

105

Tochigi
Gunma
Saitama
Chiba
Ibaraki

134
89
488
451
134

Ishikawa
Toyama
Fukui
Kyoto
Shiga

100
182
104
268
140

ShimaneKagawaEhime
Tokushima
Kochi

110
113
176
115
67

Prefecture

Prefecture

Prefecture

9Prefecture
Fukuoka
Saga
Nagasaki
Oita
Kumamoto
MiyazakiKagoshima
Total(domestic)

Numberof stores
411
62
100
157
108
95
120
11,337

[Other Business](Overseas Business)[1] Lawson (China) Holdings, Inc.
Major Business:
Lawson (China) Holdings, Inc. controls companies that operate overseas businesses
in China.
Head Office:Shanghai, China[2] Shanghai Hualian Lawson, Inc.
Major Business:
Shanghai Hualian Lawson, Inc. operates Company-operated stores and franchise
stores of the LAWSON convenience store chains.
Head Office:Shanghai, China[3] Chongqing Lawson, Inc.
Major Business:
Chongqing Lawson, Inc. operates Company-operated stores.
Head Office:Chongqing, China[4] Dalian Lawson, Inc.
Major Business:
Dalian Lawson, Inc. operates Company-operated stores.
Head Office:Dalian, China[5] Lawson Asia Pacific Holdings Pte. Ltd.
Major Business:
Lawson Asia Pacific Holdings Pte. Ltd. controls the Company’s subsidiaries andaffiliates that operate overseas businesses (excluding China).
Head Office:Singapore[6] Saha Lawson, Co., Ltd.
Major Business:
Saha Lawson, Co., Ltd. operates stores under the store brand of LAWSON 108. and108SHOP.
Head Office:Bangkok, Thailand
Note: Saha Lawson Co., Ltd. was established as a joint venture of SAHA Group in
Thailand in November, 2012.
(Entertainment and Home Convenience Store Business)[1] Lawson HMV Entertainment, Inc.
Major Business:
Sells tickets for various events and music/video software inside LAWSON stores,
etc.
Head Office:Shinagawa-ku, Tokyo[2] Smart Kitchen, Inc.
Major Business:
Head Office:Operates a regular home delivery service for foods and daily necessities using theInternet
Shinagawa-ku, Tokyo(Financial services-related business)
Lawson ATM Networks, Inc.
Major Business:
Installs jointly operated ATMs in LAWSON stores, etc.
Head Office:Shinagawa-ku, Tokyo

10

(Consulting business)
BestPractice Inc.
Major Business:
Head Office:Conducts surveys of convenience stores to give advice and make specificproposals for the improvement of LAWSON stores
Shinagawa-ku, Tokyo(2) Employees[1] Employees of the Corporate Group
Designation of Business Segment
Domestic Convenience store business
Overseas businessEntertainment/Home convenience business
Financial services-related business
Consulting business
Total

Number of Employees
4,540
793
829
24
150
6,336

[2] Employees of the Company
Number of Employees
YoY Change
3,54462(3) Status of Major Business Combinations[1] Important Subsidiaries
Company Name
Common Stock
Lawson Mart, Inc.
¥99 million
SCI, Inc.
¥10 million
Lawson (China) Holdings, Inc.
CNY800
millionShanghai Hualian Lawson, Inc.
CNY353
millionChongqing Lawson, Inc.
CNY190
millionDalian Lawson, Inc.
CNY66
millionLawson Asia Pacific Holdings
S$82 million
Pte. Ltd.
Saha Lawson, Co., Ltd.
THB697 million
Lawson HMV Entertainment,¥100 million
Inc.
Smart Kitchen, Inc.
¥490 million

Average Age
39.5

YoY Change
(211)
133
12
0
(2)
(68)

Average Years of Service
12.9

Shareholding (%)
100.0
100.0
100.0

Major Business
Domestic Convenience store business
Domestic Convenience store business
Overseas business

94.0

Overseas business

100.0

Overseas business

98.3

Overseas business

100.0

Overseas business

49.0
100.0

Overseas businessEntertainment/Home conveniencebusiness
Entertainment/Home conveniencebusiness
Financial services-related business
Consulting business

100.0

Lawson ATM Networks, Inc.
¥3,000 million
76.5
BestPractice Inc.
¥10 million
100.0
Notes:
1. The shareholder percentage includes indirectly held shares.
2. Lawson Mart, Inc. was established in November 2013 as a wholly owned subsidiary of Ninety-nine Plus, Inc.,
the Company’s wholly owned subsidiary at the time, and was made the Company’s consolidated subsidiary.
Ninety-nine Plus, Inc., which was the Company’s consolidated subsidiary in the previous fiscal year, wasmerged into the Company in February 2014.
3. Saha Lawson, Co., Ltd. was made the Company’s consolidated subsidiary as a result of its increased monetaryimportance following its placement under the substantial control of Lawson Asia Pacific Holdings Pte. Ltd.,11

the Company’s wholly owned subsidiary.
[2] Other Important Business Combinations
1) Important Affiliated Companies
Company Name
Common Stock
Lawson Okinawa, Inc.
¥10 million
PT
MIDI
UTAMA
Rp. 288,235
INDONESIA Tbk
millionShareholding (%)
49.0
30.0

Major Business
Domestic Convenience store business
Overseas business2) Important Business Alliances
Mitsubishi Corporation holds 32.5% 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 has entered into an extensive business tie-up agreement with Mitsubishi Corporation for theenhancement of existing businesses and the development of new businesses.

12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: 100,300,000 shares
treasury shares)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
30,527(5) Major Shareholders:(Including 395,953 shares ofInvestment in the Company
Number of shares
Shareholding (%)
held (Thousands)
32,089
32.1
3,105
3.1
2,964
3.0
2,746
2.7
2,092
2.1
1,646
1.6
1,573
1.6
1,471
1.5
1,333
1.3

Shareholder’s Name

Mitsubishi Corporation
The Master Trust Bank of Japan, Ltd. (Trust account)
STATE STREET BANK AND TRUST COMPANY 505223
Japan Trustee Services Bank, Ltd. (Trust account)
NTT DOCOMO, INC.
National mutual Insurance Federation of Agricultural cooperatives
STATE STREET BANK AND TRUST COMPANY
Nomura Securities Co., Ltd.
BBH FOR MATTHEWS ASIAN GROWTH AND INCOME FUNDMELLON BANK, N.A. AS AGENT FOR ITS CLIENT MELLON
1,276
OMUNIBUS US PENSION
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.

13

1.3

2. Status of stock acquisition rights
Stock Acquisition Rights Held by Corporate Officers of the Company as of February 28, 2014
5th Stock
6th (a) Stock
7th (a) Stock
8th (a) Stock
Acquisition Rights
Acquisition Rights
Acquisition Rights
Acquisition Rights
Number of option holders and the number of stock acquisition rights (units)
Directors (Excluding
1 person1 persons
2 persons
2 personsoutside directors)(112 units)(99 units)(119 units)(171 units)
2 persons
2 persons
2 persons
2 personsOutside directors(10 units)(8 units)(8 units)(12 units)
Class and number ofCommon stock ofCommon stock ofCommon stock ofCommon stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
12,20010,70012,70018,300
Value of property
invested in exercising
¥1
¥1
¥1
¥1
stock acquisition rights(per share)
October 13, 2005
October 27, 2006
September 6, 2007
January 17, 2009
Exercise period
through May 31,
through May 26,
through August 20,
through December
2025
2026
2027
15, 2028
Main exercise
Note 1
Note 2
Note 2
Note 2conditions
9th Stock
10th Stock
11th Stock
12th (a) Stock
Acquisition Rights
Acquisition Rights
Acquisition Rights
Acquisition Rights
Number of option holders and the number of stock acquisition rights (units)
Directors (Excluding
2 persons
2 persons
2 persons
3 personsoutside directors)(163 units)(139 units)(210 units)(249 units)
2 persons
2 persons
2 persons
3 personsOutside directors(10 units)(10 units)(10 units)(15 units)
Class and number ofCommon stock ofCommon stock ofCommon stock ofCommon stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
17,30014,90022,00026,400
Value of property
invested in exercising
¥1
¥1
¥1
¥1
stock acquisition rights(per share)
February 18, 2010
February 26, 2011
February 18, 2012
April 12, 2013
Exercise period
through February 1,
through February
through February 1,
through March 26,
2030
10, 2031
2032
2033
Main exercise
Note 2
Note 2
Note 2
Note 2conditions
Notes:
1. A stock acquisition rights holder may exercise his or her rights only for a period of 5 years from the day afterlosing his or her position as a director of the Company.
2. A stock acquisition rights holder may exercise his or her rights within the exercise period only for a period of 5
years from the day after losing his or her position as either director and/or executive officer of the Company.
The total number of shares subject to stock acquisition rights that remain unexercised as of February 28, 2014,is 175,000 shares, accounting for 0.2% of the total number of shares issued and outstanding.

14

3. Directors and Corporate Auditors(1) Positions, Names and Assignments
Name
PositionTakeshi Niinami

Representative Director

Genichi Tamatsuka

Director

Assignments and Important Concurrent Positions
Note: Important concurrent positions of outside directors given laterin (5) Outside Directors and Outside Corporate Auditors
CEO, ORIX Corporation Outside Director and ACCESS
Corporation Outside Director
Representative Executive Officer COO, CVS Company President
and Overseas Company President
Representative Executive Officer CCO

Yoshiyuki Yahagi
Director
Reiko Yonezawa
Director
Takehiko Kakiuchi
Director
Emi Osono
Director
Yutaka Kyoya
Director
Atsuhiko Seki
Standing Corporate Auditor
Shinichi HokariStanding Corporate Auditor
Tetsuo Ozawa
Corporate Auditor
Eiko Tsujiyama
Corporate Auditor
Notes:
1. Directors Reiko Yonezawa, Takehiko Kakiuchi、Emi Osono and Yutaka Kyoya are outside directors as
stipulated in Article 2, Item 15, of the Companies Act of Japan (the “Companies Act”).
2. Standing Corporate Auditor Shinichi Hokari and Corporate Auditors Tetsuo Ozawa and Eiko Tsujiyama areoutside corporate auditors as stipulated in Article 2, Item 16, of the Companies Act.
3. Standing Corporate Auditor Shinichi Hokari has assumed responsible posts for many years on the Board ofAudit of Japan 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 andaccounting.
Corporate Auditor Eiko Tsujiyama has long-term experience as a university professor in accounting andtherefore has considerable expertise in finance and accounting.
4. Changes in appointment, approved with resolutions by the 38th Ordinary General Meeting of Shareholders heldon May 21, 2013 are as follows:
Appointment
Director
Yutaka Kyoya
Resignation from officeDirector
Toru Moriyama
5. Executive officers who are not directors are as follows:
Senior Executive Vice President Takatoshi Kawamura
Senior Vice President Tatsushi Sato
Executive Vice President
Masaharu Kamo
Senior Vice President Kenji Goto
Executive Vice President
Masahiro Oyama
Senior Vice President Masakatsu Gonai
Executive Vice President
Katsuyuki Imada
Senior Vice President Hajime Nakai
Senior Vice President
Masayuki Sawada
Senior Vice President Motonobu Miyake
Senior Vice President
Norikazu Nishiguchi
Senior Vice President Akira Ushijima
Senior Vice President
Shuichi Imagawa
Senior Vice President Kei Murayama
Senior Vice President
Takaki Mizuno
Senior Vice President Hajime Kawamura
Senior Vice President
Jun Miyazaki
Senior Vice President Yasuhiko Hirokane
Senior Vice President
Masaki Yamamoto
Senior Vice President Kazuo Togasa
Senior Vice President
Ichiro Kijima
Senior Vice President Shigeaki Kawahara
Senior Vice President
Tetsu Yamada
Senior Vice President Yuichi Wada
Senior Vice President
Kenichi Kato
Senior Vice President Hiroyuki Endo
Senior Vice President
Hisashi Yasuhira
Senior Vice President Atsushi Maeda
Senior Vice President Kazuya Nobe15

(2) Amounts of Remuneration, etc., Paid to Directors and Corporate Auditors
1) Remuneration paid to officers
Total Compensation Paid by Type
Total
(Millions of Yen)
Compensation
Category
Paid
Basic
Stock
Retirement(Millions ofCompensation
Options
BenefitYen)
Directors
365
217
148
–
(Including outside directors)(Outside directors)
(37)
(28)
(8)
(–)
Corporate Auditors(Including outside corporate
70
70
–
–
auditors)(Outside corporate auditors)
(46)
(46)
(–)
(–)
Total
436
287
148
–

Number of
Directors andCorporate
Auditors
Applicable
8
(4)
4
(3)
12

Notes:
1. As of February 28, 2014, the number of directors in office was 7 and that of corporate auditors was 4.
2. The above figures include remuneration paid to 1 directors and 1 corporate auditor who resigned at theconclusion of the 38th Ordinary General Meeting of Shareholders held on May 21, 2013.
2) Remuneration paid to representative directors
Name

Takeshi Niinami

Officer Category Company Category

Total Compensation Paid by
Type
Basic
Stock Options
Compensation

Consolidated
Total AmountofCompensation

Representative
Director¥113 million¥195 million

Lawson, Inc.

¥82 million(3) Policy on Decisions Concerning the Amount of Remuneration Paid to Directors
1) Basic policy on decisions concerning the amount of remuneration paid to directors
Regarding the amount of remuneration paid to directors, it is the Company’s basic policy to design the
remuneration system in close correlation with shareholder returns while ensuring that it will function
sufficiently as an incentive for the enhancement of corporate value, sustainable growth and improvement ofoperating performance, and reward each director with a sufficient and adequate amount of compensation
for the execution of their duties.
2) Decision-making process for the amount of remuneration paid to directors
In order to enhance management transparency, the amount of remuneration paid to directors is determinedat the board of directors meeting based on recommendations by the Company’s Compensation Committee,
which consists exclusively of outside officers (three outside directors and one outside corporate auditor).
Members of the Compensation Committee
Outside Director:
Takehiko Kakiuchi (chairperson)
Outside Director:
Reiko Yonezawa
Outside Director:
Emi Osono
Outside Corporate Auditor: Tetsuo Ozawa
3) Details of remuneration paid to directors
Remuneration paid to the Company’s directors is composed of basic compensation through cash payments
and stock price-linked compensation through the granting of stock options.
16[Basic compensation]
Basic compensation of directors is composed of fixed compensation with fixed monthly payments andvariable compensation, which fluctuates in response to the Company’s financial performance for eachperiod.
i) Fixed compensation
The amount of fixed compensation commensurate with the position is determined based on standards
stipulated by internal rules.
ii) Variable compensation
In order to link the remuneration of directors with shareholder returns, the Company has adopted acompensation system that is linked to the Company’s financial performance.
Variable compensation is paid in accordance with earnings indicators such as EPS (consolidated net
income per share). Regarding nonexecutive directors, including Reiko Yoneyama, Takehiko Kakiuchi
Emi Osono andYutaka Kyoya variable compensation is not applicable as they are focused on their supervisory andadvisory roles as the Company’s representative directors and in the board of directors meetings.
[Stock price-linked compensation]
Stock options as stock-based compensation
By incorporating stock options as stock-based compensation linked with stock prices as part ofcompensation paid to directors, the Company has a system in which management shares with stockholders
the benefits from a rise in stock price as well as the risks associated with a price decline. The Company
positions stock options as compensation that is linked to medium to long-term improvement of its corporate
value.
Exercise price on stock options as stock-based compensation is ¥1 per share and the amount of units
granted is determined in accordance with the position of directors. In addition, stock options as stock-based
compensation can be exercised only during designated periods after retirement from office; directors are notallowed to exercise their stock option rights during their term in office.
4) Limit on the amount of remuneration paid to directors
The limit on the amount of remuneration paid to the Company’s directors is determined at the general
meeting of shareholders in accordance with laws and regulations.
i) Amount of remuneration paid to directors
Resolutions at the general meeting of shareholders as of May 24, 2001: ¥400 million or less per yearii) Amount of stock options granted to directors
Resolutions at the general meeting of shareholders as of May 26, 2006: ¥200 million or less per year
(4) Policy on Decisions Concerning the Amount of Remuneration Paid to Corporate Auditors
1) Basic policy on decisions concerning the amount of remuneration paid to corporate auditors
Regarding the amount of remuneration paid to corporate auditors, it is the Company’s basic policy toreward each corporate auditor with a sufficient and adequate amount of compensation for the executionof their duties.
2) Decision-making process for the amount of remuneration paid to corporate auditors
The amount of remuneration paid to corporate auditors is determined based on discussions amongcorporate auditors and is within the remuneration amount limit resolved at the general meeting ofshareholders.

173) Details of remuneration paid to corporate auditors
The Company’s corporate auditors receive basic compensation (fixed compensation) in cash.
The amount of basic compensation is decided based on discussions among corporate auditors, taking into
consideration whether or not they are working on a full-time basis, and segregation of auditing duties.
Regarding retirement benefits, the system itself was abolished.
4) Limit of the amount of remuneration paid to corporate auditors
The limit of the amount of remuneration paid to the Company’s corporate auditors is determined at thegeneral meeting of shareholders in accordance with laws and regulations.
Amount of remuneration paid to corporate auditors
Resolutions at the general meeting of shareholders as of May 29, 2012: ¥80 million or less per year18

(5) Outside Directors and Outside Corporate Auditors
1) Relationship between Major Positions Concurrently Held and the Company
Relationship between the Company
Position in
Name
Position
Detailsand Company Where Position
the Company
Concurrently Held
Concurrently Held
The Company and The R Co., Ltd.
(President Reiko Yonezawa), have abusiness relationship consisting ofreception services for the Company’shead office provided by the latter. The
Director
Reiko Yonezawa
The R Co., Ltd.
President
Company entrusted The R Co., Ltd. toprovide services after receiving bids
from several suitable companies andverifying their economic efficiency.
Executive Vice The Company and Mitsubishi
Corporation, of which Mr. Kakiuchi is
President,
Mitsubishi
an employee and which is a large
Group CEO,shareholder of the Company, have a
Corporation
Livingbusiness relationship under an
Essentials
Takehiko
Director
extensive business alliance agreement.
Group,
KakiuchiOutsidedirector

Mitsubishi ShokuhinCo., Ltd

Director

Emi Osono

Director

Yutaka Kyoya

Corporate
auditorShinichi Hokari

Corporate
auditor

Hitotsubashi
University
Graduate School ofInternational
Corporate Strategy
Resona Holdings,
Inc.

Professor

Outsidedirector

Mitsubishi
Corporation

Division COO,
Foods
(Commodity)
Div.

Tokyo Fuji Law
OfficeLawyer(Partner)

CEMEDINE CO.,LTD.

Outsidecorporate
auditor

Tetsuo Ozawa

19

The Company and Mitsubishi
Corporation, of which Mr. Kyoya is an
employee and which is a large
shareholder of the Company, have abusiness relationship under an
extensive business alliance agreement.

Waseda University
SchoolofCommerce
andGraduate School ofCommerce

Mitsubishi Corporation, for which
Eiko Tsujiyama serves as an outside
Professor
corporate auditor, is a large
shareholder of the Company and there
is a business relationship between thetwocompanies
based
on
a
OutsideMitsubishi
comprehensive
businessalliance
corporate
Corporationagreement.
auditorCorporate
Eiko Tsujiyama
NTT DOCOMO, INC., for which Eiko
Outsideauditor
ORIX Corporation
Tsujiyama serves as an outside
director
corporate auditor, is a large
OutsideNTT DOCOMO,
shareholder of the Company and there
corporate
INC.
is a business relationship in theauditortelecommunications field between theOutsidetwo
companies
based
on
a
Shiseido Company,
corporatecomprehensive
businessalliance
Limitedauditoragreement.
Note: Where nothing is written in the column Relationship between the Company and company Where Position
Concurrently Held, it means that the Company has no important business or other relationship with thatcompany.

202) Major Activities during the Year
Position in the
Name
Company

Director

Director

Director

Reiko Yonezawa(Independent
director)

Takehiko Kakiuchi

Emi Osono(Independent
director)

Director

Yutaka Kyoya

Corporate auditor

Shinichi Hokari(Independent
corporate auditor)

Corporate auditor

Corporate auditor

Tetsuo Ozawa(Independent
corporate auditor)

Eiko Tsujiyama(Independent
corporate auditor)

Major Activities
Ms. Yonezawa attended 14 of 15 board of directors’ meetings
held during the year and appropriately questioned and/or
remarked based on her abundant experience and knowledge as amanagement executive. Ms. Yonezawa is also a member of theCompany’s Compensation Committee.
Mr. Kakiuchi attended 13 of 15 board of directors’ meetings held
during the year and appropriately questioned and/or remarked
based on his deep knowledge about the consumer lifestyles
industry and was also responsible for smooth operations of theboard of directors as its Chairman. Mr. Kakiuchi is also amember of the Company’s Compensation Committee.
Ms. Osono attended 13 of 15 board of directors’ meetings held
throughout the year during her term in office and, as an
academic, appropriately questioned and/or remarked based onher abundant knowledge of global corporate management,
corporate strategy and organizational behavior, etc. Ms. Osono isalso a member of the Company’s Compensation Committee.
Mr. Kyoya attended all 11 board of directors’ meetings held
throughout the year during his term in office, and appropriately
questioned and/or remarked based on his abundant knowledge offields related to the daily lives of consumers.
As a standing corporate auditor, Mr. Hokari examined financial
documents and visited relevant establishments and business
partners to examine their business operations and financial
situation. Mr. Hokari monitored and verified the execution ofduties of directors and other personnel including those relating to
the improvement of internal control systems. Mr. Hokari
attended all 15 board of directors’ meetings and all 16 board ofcorporate auditors’ meetings held throughout the year during his
term in office and appropriately questioned and/or remarked
based on his deep knowledge finance and accounting and using
his experience of assuming responsible posts for many years on
the board of audit of Japan.
Mr. Ozawa attended 14 of 15 board of directors’ meetings and all
16 board of corporate auditors’ meetings held during the year andappropriately questioned and/or remarked based on his abundant
experience and knowledge as a lawyer. Mr. Ozawa is also amember of the Company’s Compensation Committee.
Ms. Tsujiyama attended 14 of 15 board of directors’ meetings
and all 16 board of corporate auditors’ meetings held during theyear and appropriately questioned and/or remarked based on her
deep knowledge of accounting as a university professor in thisfield.

21

(6) Judgment Criteria Concerning IndependenceWith the aim of enhancing corporate governance, the Company has specified the following judgment
criteria regarding independent directors and has appointed outside directors and/or outside corporate auditors
who do not meet the judgment criteria as independent directors as specified in the rules set forth by the Tokyo
Stock Exchange, Inc. and the Osaka Stock Exchange Co., Ltd.
1) Those who are engaged in business operations of the Company’s parent company
2) Those who are engaged in business operations of the Company’s sister companies
3) Those who conduct business transactions with the Group as a major business partner or those who are
engaged in such business operations
Business partner groups that provide the Group with products and/or services and whose total amount ofbusiness transactions with the Group during the latest fiscal year account for 2% or more of their consolidated
net sales
4) The Group’s major business partners or those who are engaged in such business operations
Business partner groups to which the Group provides its products and/or services and for which the Group’s
total amount of business transactions during the latest fiscal year accounted for 2% or more of the Company’s
consolidated net sales (total operating revenues)5) Consultants, accounting professionals, and legal professionals who have received any monetary or property
benefits from the Group other than remuneration paid to officers
Consultants, accounting professionals such as certified accountants, and legal professionals such as lawyers
who have received any monetary or property benefits from the Group other than remuneration paid to officers
and who have received remuneration totaling ¥5 million or more per year6) The Company’s major shareholders (those who are engaged in business operations of applicablecorporations in cases where major shareholders are corporations)7) Those with close family members who are engaged in business operations of the Group8) Those with close family members who are nonexecutive directors or accounting advisors of the Company(in cases where independent directors are outside corporate auditors)(7) 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 Companies Act,
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 Companies Act.

22

4. Independent Auditor(1) Independent Auditor
Deloitte Touche Tohmatsu LLC(2) Amounts of Remunerations, etc., to be Paid to the Independent Auditor¥84 million
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¥133 million
subsidiaries to the independent auditor
Note:
1. The audit agreement entered into by the independent auditor and the Company does not clearly distinguishthe amount for the audit under the Companies Act and for the audit under the Financial Instruments andExchange Act, and the two amounts cannot be substantially distinguished from each other. Therefore, theamount in 1) above indicates the total for the two audits.
2. Five of the important subsidiaries of Lawson overseas are subject to audit by an independent auditor otherthan Lawson’s independent auditor.
(3) Nonaudit 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 Act (nonaudit services), to the independent auditor:
Advice and guidance on the preparation of documents translated into English for earnings reports and various
other financial documents.
(4) Policy on Decisions Concerning Dismissal or Nonreappointment of the Independent Auditor
If the independent auditor violates or infringes the Companies Act, the Certified Public Accountant Act, orother laws or regulations, or the Company considers it necessary to do so, the board of directors shall, after
obtaining the agreement of the Board of Corporate Auditors, submit a proposal for dismissal or
nonreappointment of the independent auditor to a general meeting of shareholders. In addition, the board ofcorporate 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 theCompanies Act.

23

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 18, 2014, based on improvements and the operation of thepreceding “2013 Basic Policy for Improvement of Internal Control Systems,” which was approved at the board of
directors’ meeting held on February 18, 2014, the Company passed a resolution called the “2014 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 andRegulations 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 (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 thestatus concerning 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 complianceby thoroughly disseminating the Group Code of Conduct and the Lawson Ethical Mission Statement by suchmeasures as, including, but not limited to, appointing a Chief Compliance Officer, establishing a department
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 on compliance.
6) The Legal Affairs Department shall be reinforced to fortify foundations for complying with legal requirementsby identifying the laws and regulations applicable to the Company’s businesses and communicating thecontent thereof to the relevant departments and sections.
7) With the aim to strive for the early detection of violations or possible violations of laws, regulations, etc.
across the Group and the entire chain, the Company shall establish and upgrade normal reporting routes forreporting any violations of laws, regulations or internal rules. It shall establish reporting and consulting
systems (internal consulting contact points, group-wide outside consulting contact points and consulting
contact points for employees and business counterparties for Lawson’s franchised stores) that fully protect
those who make such reports.
8) The Company shall never become involved with antisocial forces or bodies that threaten the order andsecurity of society, and shall take a firm stance on, and deal with, improper demands by consulting withlawyers 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 inplace 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 tomaintaining 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.
24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 andimportant trade secrets.
5) The Company shall establish and maintain an information security system for the Group by putting in place a
Chief Information Security Officer and a division that oversees information security with the aim ofpromoting information security in a consolidated and unified manner in view of both risk management andsystem technology security.
6) The Company shall establish and maintain rules regarding the disclosure of important Company
information, and upgrade the system for disclosing information that must be disclosed according to therequirements 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, theCompany shall respond according to the characteristics of risks by identifying risks that might have adverse
effects on the Company’s management in connection with its business purposes in each department, analyzing
the probability of such risk factors materializing and their impact, and evaluating whether intensive
countermeasures should be taken.
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 managementby 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, whichmight 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 system to minimize thebusiness 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) In order to be prepared for major earthquakes, the Company shall conduct disaster prevention drills threetimes a year while working to improve effectiveness of the “Disaster Countermeasure Manuals” and the“BCP” system.
(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 disseminatedto employees by corporate officers and important field information is properly communicated by employees
to corporate officers in a timely manner.
(5) Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group Consistingof the Company and its Subsidiaries
1) The Company shall endeavor to maintain and enhance the Lawson brand through close collaboration withsubsidiaries and affiliated companies (“Associated Companies”). However, with regard to affiliatedcompanies, the Company will work to appropriately establish and maintain systems through phased25implementation, taking into account such factors as relations with other leading shareholders differences inlaws, 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
for the management of Associated Companies and management policies thereof, and keep the AssociatedCompanies fully informed of the Group Code of Conduct.
3) The Company shall appoint designated persons at major Associated Companies to be responsible forpromoting compliance and risk management and promote communications between the Company and major
subsidiaries with a view to ensuring appropriate business operations across the entire Group.
4) 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, 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 aproper and 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 evaluation and third-party
evaluation and improvement through the identification and recording of business processes at importantbusiness bases and the status of Company-wide internal controls. The results of these evaluations of, andimprovements 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 (“Corporate Auditors’ Staff”) as
employees exclusively to assist corporate auditors in the execution of their duties.
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
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 complianceand risk-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
or loss, 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 smooth26

communications 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 theratios are rounded to the nearest whole number.

27

(TRANSLATION ONLY)
Consolidated Balance Sheet(Millions of yen)
Assets
Account item
Current assets
Cash and deposits
Accounts receivable-due
from franchised stores
Merchandise
Prepaid expenses
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful
accounts

Liabilities
As of
As of
February 28,
February 28,
As of
As of
2013
February
Account item
2013
February(for28, 2014(for28, 2014
reference)reference)
180,296
195,784 Current liabilities
239,794
246,706
84,77076,763
Accounts payable—trade
11,169
9,726
Accounts payable—trade for
76,01879,44425,37432,186
franchised stores
8,963
9,596
Due to franchised stores
1,403
1,405
8,793
10,716
Short-term loans payable
1,431
680
46,00854,193
Lease obligations
14,48916,585
4,656
4,481
Accounts payable—other
26,10529,344
3,011
10,240
Income taxes payable
14,474
14,330(1,281)(2,393)

Deposits received

87,52987,585

2,544

2,372

215

132

4,412
109,833

5,100
123,788

Property and store equipment
Buildings and structures
Furniture, fixtures, andequipment
Land

209,138
118,372

Provision for bonuses
Provision for point card
425,208
certificates
233,436
Other
128,835 Non-current liabilities

14,761

12,083Long-term loans payable

148

—

8,295

8,773

47,207

61,666

Lease assets

65,79980,767

9,898

11,082

Construction in progress

1,910

2,977

332

408

Intangible assets

34,08928,48034,80432,252

Software
Software in progress
Goodwill
Other
Investments and other assets
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Guarantee deposits

22,255
1,659
9,683
491
156,285
10,09834,5809,130
86,10914,902
3,360
9,719
497
163,291
12,82133,7278,260
86,15016,682
758
349,627

17,874502
370,494

225,785
58,50647,718
121,154(1,593)242,832
58,50647,741138,141(1,556)

Deferred tax assets

16,215

21,627

690

2,456

Other

1,368

1,669

Lease obligations
Provision for retirement
benefits
Provision for retirement
benefits to executive officers
and audits & supervisoryboard members
Long-term guarantee
deposited
Asset retirement obligations
Other
Total liabilities
Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities

78

(93)

Allowance for doubtful
accounts(1,217)

(965)

(567)

(567)

Non-current assets

399,513

Revaluation reserve for land

Foreign currency translation
1,179
adjustment
Subscription rights to shares
427
Minority interests
3,279
Total net assets
230,181
Total Assets
579,809620,992 Total Liabilities and Net Assets
579,809
Note: Figures as of February 28, 2013, are included in the table above for comparative purposes only.

28

3,118
557
4,650
250,497
620,992

(TRANSLATION ONLY)
Consolidated Statement of Income(Millions of yen)Account item

From March 1, 2012 toFebruary 28, 2013
(for reference)

From March 1, 2013 to
February 28, 2014

Operating revenue
Income from franchised stores
230,002242,078
Other operating revenue
64,500294,503
75,009317,088
Net sales
Net sales(192,942)
192,942
168,159（168,159)
Gross operating revenue
487,445
485,247
Cost of sales(144,885)
144,885
126,637（126,637)
Gross profit(48,056)（41,521)
Operating gross profit
342,560
358,610
Selling, general and administrative expenses
276,313
290,483
Operating income
66,246
68,126
Non-operating income
Interest income
756
860
Compensation income
161
794
Share of profit of entities accounted for using equity
394
393
method
Other
898
2,211
1,147
3,195
Non-operating expenses
Interest expenses
1,231
1,294
Loss on cancellation of store lease contract
534
570
Other
765
2,531
577
2,442
Ordinary income
65,926
68,880Extraordinary income
Gain on sales of non-current assets
051
Gain on sales of investment securities
145
403
Gain on bargain purchase
153－
Compensation income
71
－
Other
10
381
11
466
Extraordinary losses
Loss on retirement of non-current assets
1,641
2,648
Impairment loss
2,929
5,744
Other
2,146
6,717
1,168
9,560
Income before income taxes and minority interests
59,58959,785
Income taxes-current
25,34526,758
Income taxes-deferred
748
26,094(5,136)
21,622
Income before minority interests
33,494
38,163
Minority interests in income
311
197
Net income
33,18237,965
Note: Figures from March 1, 2012 to February 28, 2013, are included in the table above for comparative purposes
only.

29

(TRANSLATION ONLY)
Consolidated Statement of Changes in Equity(From March 1, 2013 to February 28, 2014)(Millions of yen)
Shareholders’ equity

Balance at beginning ofcurrent period

Accumulated other comprehensive income
Valuationdifference
Totalonshareholders’availableequity
for-salesecurities

Capitalstock

CapitalsurplusRetainedearnings

Treasuryshares58,50647,718

121,154(1,593)

225,785

78

Revaluation
reserve for
land

(567)

Total
Foreignaccumulated
currency
othertranslation
comprehensive
adjustment
income1,179

690

Subscription
rights tosharesMinority
interests

Total net
assets427

3,279

230,181

Changes of items during
periodDividends of surplus(20,978)(20,978)(20,978)

Net income
Purchase of treasury
shares37,96537,96537,965

(11)

(11)

(11)

Disposal of treasury
shares00

00Exercise of subscription
rights to shares (deliveryof treasury shares)

22

48

70

70

Net changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of current
period

(171)

1,938

1,766

130

1,371

3,268

–

22

16,98737

17,047

(171)

–

1,938

1,766

130

1,371

20,31558,50647,741138,141(1,556)

242,832

(93)

(567)

3,118

2,456

557

4,650

250,497

30

(TRANSLATION ONLY)(Notes to the Consolidated Financial Statements)
1. Scope of consolidation(1) Number of Consolidated subsidiaries: 12(Domestic) Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
BestPractice, Inc.
Smart Kitchen, Inc.
SCI, Inc.
Lawson Mart, Inc(Foreign)
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.
Dalian Lawson, Inc.
Lawson (China) Holdings, Inc.
Lawson Asia Pacific Holdings Pte. Ltd.
Saha Lawson, Co., Ltd.
Among companies mentioned above, Lawson Mart, Inc., which was established during the fiscal year
under review, has been included in the scope of consolidation. Saha Lawson, Co., Ltd. has also been
included in the scope of consolidation as a result of its increased financial materiality following its
placement under the substantial control of Lawson Asia Pacific Holdings Pte. Ltd., the Company’s
wholly owned subsidiary.
Ninety-nine Plus, Inc. was excluded from the scope of consolidation because it was dissolved after anabsorption-type merger on February 1, 2014, with the Company as the surviving company.
(2) Names of major nonconsolidated subsidiaries, etc.
(Domestic) LAWSONWILL, Inc.
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Lawson Minami Kyushu, Inc.
Lawson Kumamoto, Inc.
Seikaken, Inc.
(Foreign)

Lawson USA Hawaii, Inc.
Shanghai Le Song Trading Co., Ltd.
Hangzhou Lawson, Inc.
Beijing Lawson, Inc.

Nonconsolidated subsidiaries were excluded from the scope of consolidation because they have anegligible impact on total assets, total operating revenues, net income, retained earnings, etc., and do notinterfere with reasonable judgments of the Corporate Group’s financial condition and business results.
2. Application of the equity method(1) Number of unconsolidated subsidiaries and affiliated companies to which the equity method isapplied: 2(Domestic) Lawson Okinawa, Inc.
(Foreign)
PT MIDI UTAMA INDONESIA Tbk(2) Affiliated companies to which the equity method is not applied
The Company excluded from the scope of the equity-method affiliate nonconsolidated subsidiaries
LAWSONWILL, Inc.; HATS UNLIMITED CO., LTD.; Food Marketing Japan, Inc.; Lawon
Minamikyushu, Inc.; Lawson Kumamoto, Inc.; Seikaken Inc.; Lawson USA Hawaii, Inc.; Shang Hai Le
Song Trading Co., Ltd.; Hangzhou Lawson, Inc.; Beijing Lawson, Inc. and affiliated companies
Herushiru, Inc.; Double Culture Partners Co., Ltd.; Daichi Wo Mamoru Kai, Co., Ltd.;
Shang Hai Gong Hui Trading Co., Ltd.; Lawson Farm and others because net income/loss (corresponding
to equity interest) and retained earnings (corresponding to equity interest) of these nonconsolidated
subsidiaries and affiliated companies have minimal influence on the consolidated financial statements andare negligible even in aggregate.

31

(TRANSLATION ONLY)(3) Special notes concerning procedures for application of the equity method:
The closing date of PT MIDI UTAMA INDONESIA Tbk is December 31. When preparing theconsolidated financial statements, the Company used this company’s financial information prepared as ofsuch closing date, and as required, made certain adjustments for significant transactions that subsequently
occurred in the intervening period up to the end of the consolidated fiscal year.
3.

Fiscal year end of the consolidated subsidiaries
The balance sheet date of Chongqing Lawson, Inc.; Shanghai Hualian Lawson, Inc.; Dalian Lawson, Inc.;
Lawson (China) Holdings, Inc. and Saha Lawson, Co., Ltd. is December 31. In order to prepare for the
consolidated financial statements, the Company used these companies’ financial information prepared as ofsuch closing date and significant transactions which occur between the balance sheet date and theconsolidated balance sheet date, are adjusted as required for consolidation. The fiscal year end date for theother consolidated subsidiaries corresponds with the consolidated balance sheet date.

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 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.
Merchandise inventories:
Inventories are stated at cost determined mainly by the retail method (the book value in the balance
sheet is written down based on the decline in profitability).
Merchandise of some consolidated subsidiaries is stated at cost determined by the gross-averagemethod (the book value in the balance sheet is written down based on the decline in profitability).
(2) Depreciation
Property and store equipment (except for lease assets):
Depreciation is mainly computed using the declining balance method at rates based on estimateduseful lives of the assets. The ranges of useful lives are from 10 to 34 years for buildings andstructures 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 isthe estimated useful life.
Lease assets:
In terms of the depreciation method for leased assets related to finance leases that do not transfer
ownership of leased property, the Company applies the straight-line method using the lease term as
the useful life and a residual value of \0.
Finance leases without ownership transfer of the leased property to the lessee and for which the lease
inception was before February 28, 2009, are accounted for as operating lease transactions.
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 the 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.

32

(TRANSLATION ONLY)
Provision for Bonuses:
Provision for bonuses is provided for payments of employees’ bonuses based on the estimatedamounts.
Provision for Point Card Certificates:
The Company provides to MY LAWSON POINT holders and LAWSON PASS holders whenpurchasing goods an entitlement to certain points that the holder can redeem for a discount on
subsequent purchases from LAWSON stores. Provision for point card certificates is recorded at theamount that is expected to be used as of the consolidated balance sheet date.
Provision for Retirement Benefits:
Provision for retirement benefits is provided at the amount calculated based on the projected benefit
obligations and plan assets at the consolidated balance sheet date. Actuarial differences are mainly
amortized from the following fiscal year on a straight-line basis over a certain period (10 years)
within the average remaining service period of employees at the time of their occurrence. Prior
service cost is mainly amortized, starting with the fiscal year when it was incurred, on a straight-line
basis over a certain period (10 years) within the average remaining service period of employees.
Provision for Retirement Benefits to Executive Officers and Audits & Supervisory Board
Members:
Provision for retirement benefits to executive officers of the Company and audits & supervisoryboard members of a consolidated subsidiary is recorded as a liability at 100% of the amount thatwould be required if all audits & supervisory board members, executive officers, and directors
terminated their services with the Company at the consolidated 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 consolidated balance sheet date. The foreignexchange gains and losses from translation are recognized in the consolidated statement of income. The
consolidated balance sheet accounts as well as revenue and expense accounts of foreign subsidiaries andaffiliated companies are translated into Japanese yen at the current exchange rate as of the consolidatedbalance sheet date except for shareholders’ equity, which is translated at the historical rate. Differences
arising from such translation are shown as “foreign currency translation adjustments” a separate
component of net assets.
(5) Amortization of Goodwill
Goodwill is amortized on a straight-line basis over the relevant years, depending on the reason for theoccurrence of goodwill, with a maximum of 20 years.
(6) Accounting for Consumption Tax
Consumption tax is excluded from income and expense.
5. Changes in Accounting Method(Change of accounting policy which is not easily distinguished from change of accounting estimation)
The Company and its domestic consolidated subsidiaries have changed their depreciation method forproperty and store equipment acquired on or after March 1, 2013 to the method stipulated under the revised
corporate tax law from this fiscal year as a result of the revision of Japanese corporate tax law. The effects ofthis change on operating income, ordinary income and income before income taxes and minority interests
were immaterial.
(Changes in Method of Presentation)
1. In the “Current liabilities” section, “Asset retirement obligations” were separately listed in the consolidatedbalance sheet before. Due to a decline in financial materiality, “Asset retirement obligations” (¥10 million for
the fiscal year under review) are included in “Other” for the fiscal year under review.
2. In the “Non-operating income” section, “Compensation income” (¥161 million for the previous fiscal year)
was included in “Other” before. Due to an increase in financial materiality, “Compensation income” (¥794
million for the fiscal year under review) is separately presented for the fiscal year under review.
3. In the “Non-operating income” section, “Penalty income” was separately listed in the consolidated statement
33

(TRANSLATION ONLY)
of income before. Due to a decline in financial materiality, “Penalty income” (¥142 million for the fiscal year
under review) is included in “Other” for the fiscal year under review.
4. In the “Extraordinary income” section, “Gain on sales of non-current assets” (¥0 million for the previous
fiscal year) was included in “Other” before. Due to an increase in financial materiality, “Gain on sales of
noncurrent assets” (¥51 million for the fiscal year under review) is separately presented for the fiscal year
under review.
5. In the “Extraordinary losses” section, “Provision of allowance for doubtful accounts” was separately listed in
the consolidated statement of income before. Due to a decline in financial materiality, “Provision ofallowance for doubtful accounts” (¥840 million for the fiscal year under review) is included in “Other” for the
fiscal year under review.
(Notes to the Consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:¥236,268 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 notified prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance Implementing the Law Concerning
Revaluation of Land (Government Ordinance No. 119, March 31, 1998) and theassessed 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 consolidated balance
sheet date was ¥319 million.
(Notes to the Consolidated Statement of Income)Long-lived assets
The Company and the consolidated subsidiaries (together, the “Group”) identified mainly for each store as thesmallest cash- generating unit.
The Group recognized an impairment loss on the following assets that declined in value mainly due tocontinuous operating losses. The carrying amounts of those assets were written down to the recoverable
amount and were recorded as extraordinary losses.
Category by use
Location
AssetsMillions of yen
Buildings and structures
Tokyo
729
Furniture, fixtures, equipment, and others
Buildings and structures
StoresOsaka
598
Furniture, fixtures, equipment, and others
Buildings and structures
Others2,565
Furniture, fixtures, equipment, and others
Buildings and structures–
607
Furniture, fixtures, equipment, and others
Other–
Software
1,236
Other
7
Total
–
–
5,744
Category by fixed assets(Millions of yen)
Buildings and structures
2,868
Furniture, fixtures, and equipment
359
Lease assets
1,251
Software
1,236
Other
29
The recoverable value of the impaired assets is calculated based on the net selling price or value in use. Net
selling price of land was calculated based on the value appraised by the real estate appraiser or expected
contract price and the value in use was calculated by discounting estimated future cash flows to which a
discount rate of 4.3% mainly was applied.

34

(TRANSLATION ONLY)(Notes to the Consolidated Statement of Changes in Equity)
1. Number of issued shares and treasury shares.
Number of shares
Increase during the Decrease during
at the end of
periodthe periodprevious period(thousand shares) (thousand shares)(thousand shares)
Issued shares
Common stock

Number of sharesat the end of theperiod(thousand shares)

100,300––

100,300

406

1

12

395

Treasury shares
Common stock (notes)

Notes:
1. Of common stock, the increase of 1 thousand shares in treasury shares is attributable to purchase of stock
less than one share unit.
2. Of common stock, the 12 thousand share decrease in treasury shares resulted from the 12 thousand-sharedecrease due to the exercise of stock option rights and a 0-thousand share purchase request of stock lessthan one share unit.
2. Dividend(1) Dividend payment
Date of resolution
The General Meetingof Shareholders(May 21, 2013)
Meeting of Board of
Directors (October 8,
2013)

Class ofsharesAmount ofdividend payment(millions of yen)

Dividend
per share
(yen)

Date
attributable todividend

Effective dateCommon
stock

9,989

100

As of February
28, 2013

As of May22, 2013

Commonstock

10,988110

As of August
31, 2013

As of November
11, 2013(2) Dividends for which the effective date is after the year-end consolidated balance sheet date, while
dividends were attributed to this period.
Amount of
DateClass of Reserve of
Dividend per
Effective
Date of resolution
dividend payment
attributablesharesDividend
share (yen)date(millions of yen)
to dividend
The General Meeting
As of
CommonRetained
As of Mayof Shareholders
10,989110Februarystock
Earnings
28, 2014(May 27, 2014)
28, 2014
3. Kind and number of stock which can be exercised by outstanding subscription rights to shares(excluding those not yet in the exercisable period).
Common stock
175,000 shares

35

(TRANSLATION ONLY)(Notes regarding financial instruments)
1. Matters relating to the status of financial instruments(1) Policy for financial instruments
The LAWSON Group primarily uses short-term deposits, etc., to manage its funds and raises funds asnecessary through borrowings from financial institutions and leasing according to the financing plan.
(2) Nature, extent of risk, and risk management system for financial instruments
Trade receivables, such as accounts receivable-due from franchised stores and accounts receivable-otherare exposed to credit risk from business counterparties.
Long-term loans receivable (primarily referring to construction cooperation funds which are loaned to theland owners when a store opens and loans to franchised stores) and lease deposits are exposed to credit
risk from the land owners, etc. The responsible department monitors these risks on receivables on a daily
basis with the aim of early detection and reduction of concerns associated with the collectability of debt
due to deterioration in the financial conditions of the owners.
Investment securities are primarily shares of companies with business relationships and listed shares ofwhich are exposed to the risk of market price fluctuations. With regard to this risk, the Company
monitors the financial conditions of business counterparties on a regular basis.
Among trade payables, most of the accounts payable-trade and accounts payable-trade for franchised
stores and deposits held as a result of bill settlement services have payment due dates within one month,while most deposits held as a result of ticket sales transactions have payment due dates within six months.
The primary purpose of lease obligations related to finance lease transactions is securing the funds
required for capital investments and the maximum redemption dates is 10 years after the consolidatedbalance sheet date, respectively.
Long-term guarantee deposited which are primarily operational deposits received from franchised storesbased on franchise contracts are returned to franchised stores after the expiry of the franchise contract
term (contract term is 10 years in principle).
With regard to the liquidity risk associated with fundraising (risk that payments cannot be executed on thepayment due dates), the Company prepares and updates financial plans on a timely basis and manages
liquidity risk by measures including maintaining adequate liquidity on hand.
(3) Fair values of financial instruments
Fair values of financial instruments are based on the quoted price in active markets. If quoted price is notavailable, other rational valuation techniques are used instead. Since estimation of the fair values
considers multiple factors, the results of the estimation might differ if other valuation techniques were
used.

36

(TRANSLATION ONLY)
2. Matters relating to the fair values of financial instruments
The carrying amount, fair values, and difference as of February 28, 2014, are as follows: (Financial
instruments whose fair value cannot be reliably determined are not included as described in “(Note 2)
Financial instruments whose fair values cannot be reliably determined.”)(1) Cash and deposits(2) Accounts receivable—due from
franchised stores
Allowance for doubtful accounts(*1)

Fair value
76,76332,102

32,102–

51,922

51,922

–

916
3,875

916
3,880

–
5

(3) Accounts receivable—other
Allowance for doubtful accounts(*1)(4) Investment securities(i) Available-for-sale securities(ii) Investment in subsidiaries andaffiliated companies(5) Long-term loans receivable
Allowance for doubtful accounts(*1)(Millions of yen)
Difference

Carrying amount
76,76332,186(83)–

54,193(2,270)33,727(67)
33,66086,150(451)
85,699284,940

33,70141(6) Guarantee deposits
Allowance for doubtful accounts(*1)
81,026(4,673)
Total assets
280,314(4,626)(1) Accounts payable—trade andAccounts payable—trade for89,171
89,171–
franchised stores(2) Deposits received
87,58587,585–(3) Lease obligations (*2)
78,25278,579326(4) Long-term guarantee deposited
32,25230,435(1,817)
Total liabilities
287,262
285,771(1,490)(*1) Allowance for doubtful accounts related to accounts receivable—due from franchised stores, accounts
receivable—other, long-term loans receivable and guarantee deposits have been deducted.
(*2) Lease obligations include liabilities maturing within one year.

37

(TRANSLATION ONLY)(Note 1) Method of calculating the fair values of financial instruments
Assets(1) Cash and deposits (2) Accounts receivable—due from franchised stores (3) Accounts receivable—other
The carrying values of cash and deposits and accounts receivable—other approximate fair value becauseof their short maturities.
(4) Investment securities
The fair values of investment securities are measured at the quoted market price on the stock exchange
for the equity instruments.
(5) Long-term loans receivable
The fair values of long-term loans receivable are determined by discounting the cash flows related to theloans at the interest rate deemed to be applied for similar loans.
(6) Guarantee deposits
The fair values of guarantee deposits are determined by discounting future cash flows, which reflect thecollectability, using the yield rate of government bonds for the remaining period.
Liabilities(1) Accounts payable—trade and Accounts payable—trade for franchised stores (2) Deposits received
The carrying values of accounts payable—trade and deposits received approximate fair value because of
their short maturities.
(3) Lease obligations
The fair values of lease obligations are determined by discounting the cash flows related to the
obligations at the Group’s assumed corporate discount rate.
(4) Long-term guarantee deposited
The fair values of long-term guarantee deposited are determined by discounting future cash flows basedon the estimated repayment amount with the yield rate of government bonds during the remaining period.
(Note 2) Financial instruments whose fair values cannot be reliably determined
Carrying amount
Category(Millions of Yen)
Unlisted equity securities
971
Investments in subsidiaries and6,669
affiliated companies
Others388
Because financial instruments listed above do not have market prices and their fair values cannot be reliably
determined, they are not included in “(4) Investment securities.”(Accounting for income taxes)
1. Components of deferred tax assets and liabilities were as follows:(Millions of yen)Enterprise taxes payable
Accrued employees’ bonuses
Excess of depreciation
Excess of amortization of software
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss
Tax loss carry forwards
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets
Deferred tax assets-net

1,253
880
12,163
808
6,018
1,055
3,071
7,260
3,189
35,702(9,593)
26,108
26,10838

(TRANSLATION ONLY)
2. Change of corporate tax rates after the consolidated balance sheet date
On March 31, 2014, a tax reform law was enacted in Japan by which the Special Income Tax for
Reconstruction became less effective from fiscal years beginning on or after April 1, 2014. As a result, thenormal effective statutory tax rate to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences in the fiscal years beginning on or after March 1, 2015, changed from38.01% to 35.64%.
The effect of this change is immaterial.
(Accounting for retirement benefits)
Summary of the retirement benefit plans:
The Company and a 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. Provision for retirement benefits (=c + d + e)

(Millions of yen)
(17,416)
5,588(11,827)744(11,082)

Net periodic benefit cost
(Millions of yen)a. Service cost
1,382
b. Interest cost
199c. Amortization of prior-service cost
178
d. Amortization of actuarial differences
136
e. Net periodic benefit cost (= a + b +c + d)
1,898
f. Contribution to defined contribution plan294
g. Total (= e + f)
2,192
Note: Net periodic benefit cost in the consolidated subsidiary, which adopted the simplified method, isincluded in “a. Service cost.”
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

1.2% (mainly)
0%
Straight-line basis (a method to allocate
estimated total retirement benefits equally tothe respective periods in the employee’s wholeservice period)
2,455.25 yen
380.04 yen

39

(TRANSLATION ONLY)(Notes to Business Combinations, etc.)
Common control transactions, etc.
(1) Absorption-type company split of Ninety-nine Plus, Inc. with Lawson Mart, Inc. as the successor
company(1) Outline of transaction(i) Name of the absorbed business and its outline
Name of business: A part of fresh foods convenience store businessBusiness outline: Store operation, merchandising function, product supply, etc. of "LAWSON MART"and "LAWSON STORE 100".
(ii) Date of business combination
February 1, 2014(iii) Legal form of business combination
Absorption-type company split with Ninety-nine Plus, Inc. as the split company and Lawson Mart, Inc. as
the successor company (spin-off type)(iv) Name of company after the business combination
Lawson Mart, Inc.
(v) Other matters concerning the transaction
The operational functions of Ninety-nine Plus, Inc., including store management and productdevelopment, were succeeded by Lawson Mart, Inc., and will be further enhanced to lead the Group’s fresh
foods business.
(2) Outline of the accounting process applied
The business combination was processed as a common control transaction pursuant to the AccountingStandard for Business Combinations (Accounting Standards Board of Japan (“ASBJ”) Statement No. 21 ofDecember 26, 2008) and Revised Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures (ASBJ Guidance No. 10 of December 26, 2008).
(2) Absorption-type merger between Ninety-nine Plus, Inc. and the Company(1) Outline of transaction(i) Name of the merged company and its line of business
Name of the business combination: Lawson, Inc.
Business outline: Convenience store business
Name of combined company: Ninety-nine Plus, Inc.
Business outline: Fresh foods convenience store business(ii) Date of business combination
February 1, 2014(iii) Legal form of business combination
Absorption-type merger with Lawson, Inc. as the surviving company(iv) Name of the company after the business combination
Lawson, Inc.
(v) Other matters concerning the transaction
By allowing the Company to acquire store-related assets including the franchise agreements of LAWSONSTORE 100 and centralizing all Lawson chain store administrative functions including store asset
management and franchise promotion, the business combination aims to enable the Group to implement
efficient area-targeted strategies.
(2) Outline of the accounting process applied
The business combination was processed as a common control transaction pursuant to the AccountingStandard for Business Combinations (ASBJ Statement No. 21 of December 26, 2008) and Revised Guidanceon Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures(ASBJ Guidance No. 10 of December 26, 2008).

40

(TRANSLATION ONLY)
Nonconsolidated Balance Sheet(Millions of yen)
AssetsLiabilities

As of
As of
February 28, As of
February
Account item
Account item
2013
February28, 2013(for(for
28, 2014
reference)reference)
Current assets
137,523
154,456 Current liabilities
205,548
Cash and deposits
67,42061,026
Accounts payable—trade
1,443
Accounts receivable—due fromAccounts payable—trade for
23,54433,27371,283
franchised stores
franchised stores
Merchandise763
852
Due to franchised stores
1,062
Short-term loans payable to23,550Prepaid expenses
7,761
10,278subsidiaries and associates
Short-term loans receivable
2,039
7,446
Lease obligations
11,526
Accounts receivable—other
30,61335,743
Accounts payable—other
12,758Deferred tax assets
3,097
3,644
Income taxes payable
13,614
Other
2,369
2,849
Accrued expenses
1,665
Allowance for doubtful accounts
(85)
(658)
Deposits received
65,443
Provision for bonuses
2,365
Provision for point card
Non-current assets
395,096435,337215
certificates
Property and store equipment
187,341
225,091
Other
619
Buildings
96,686112,115 Non-current liabilities
99,097Structures
12,51415,019Lease obligations
41,026
Furniture, fixtures, and12,312
10,543
Provision for retirement benefits
9,108
equipment
Provision for retirement benefits
Land
8,295
8,773
298
to executive officers
Lease assets
55,70575,754Long-term guarantee deposited
34,958Construction in progress
1,826
2,885
Asset retirement obligations
12,999Intangible assets
24,546
21,565
Other
705
Software20,934
13,441 Total liabilities
304,645
Software in progress
1,072
1,627 Net assets
Goodwill
2,076
6,027 Shareholders’ equity
228,068
Other
463
469
Capital stock
58,506
Investments and other assets
183,208
188,679
Capital surplus
47,718Investments securities
2,620
2,275
Legal capital surplus
47,696
Shares of subsidiaries and28,14026,146
Other capital surplus
21
associates
Investments in capital of
9,203
11,936
Retained earnings
123,437
subsidiaries and associates
Long-term loans receivable
37,27733,725
Legal retained earnings
727
Long-term prepaid expenses
8,705
7,763
Other retained earnings
Guarantee deposits
81,29985,264General reserve
50,000Retained earnings brought
72,709Deferred tax assets
15,84521,313
forward
Other
1,275
1,218
Treasury shares(1,593)
Valuation and translation(520)
Allowance for doubtful accounts(1,159)(963)
adjustments
Valuation difference on
46
available-for-sale securities
Revaluation reserve for land
(567)
Subscription rights to shares
427
Total net assets
227,974
Total Assets
532,619589,793 Total Liabilities and Net Assets
532,619
Note: Figures as of February 28, 2013, are included in the table above for comparative purposes only.

41

As of
February28, 2014
228,549
1,566
83,889
1,007
23,27015,14015,232
12,0931,800
70,566
2,122
132
1,727
120,595
59,755
10,090365
32,43017,476477
349,144240,775
58,50647,74147,69644
136,084
727
50,00085,356(1,556)
(684)
(116)
(567)
557
240,648589,793

(TRANSLATION ONLY)
Nonconsolidated Statement of Income(Millions of yen)Account item

From March 1, 2012 toFebruary 28, 2013
(for reference)

From March 1, 2013 to
February 28, 2014

Operating revenue
Income from franchised stores
221,442
234,454
Other operating revenue
26,645
248,087
31,568266,023
Net sales
Net sales(34,665)
34,665(32,755)
32,755Gross operating revenue
282,752
298,778
Cost of sales(24,691)
24,691(23,336)
23,336Gross profit(9,974)(9,418)Operating gross profit
258,061
275,441
Selling, general and administrative expenses
198,730
213,998
Operating income
59,331
61,443Non-operating income
Interest and dividend income
1,164
1,114
Compensation income
161
594
Foreign exchange gains
182
276
Other
593
2,101
729
2,714
Non-operating expenses
Interest expenses
907
1,042
Loss on cancellation of store lease contract
523
542
Other
542
1,973
401
1,986
Ordinary income
59,45962,171
Extraordinary income
Gain on sales of investments in capital of586－
subsidiaries and associates
Gain on sales of investment securities
403
－
Other
323
323
157
1,148
Extraordinary losses
Loss on retirement of non-current assets
1,547
2,494
Impairment loss
2,382
5,212
Loss on debt waiver of subsidiaries and associates
160
2,400
Loss on valuation of shares of
129499
subsidiaries and associates
Loss on valuation of bonds of203－
subsidiaries and associates
Provision of allowance for doubtful accounts for600－
subsidiaries and associates
Other
1,905
6,125
101
11,511
Income before income taxes
53,65851,807
Income taxes – current
23,74023,553
Income taxes – deferred(396)
23,343(5,370)18,182
Net income
30,31433,625
Note: Figures from March 1, 2012 to February 28, 2013, are included in the table above for comparative purposes
only.

42

(TRANSLATION ONLY)
Nonconsolidated Statement of Changes in Equity(From March 1, 2013 to February 28, 2014)(Millions of yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Legal
Retainedretained
Generalearnings
earnings
reservebrought
forwardCapital surplus
Capitalstock
Balance at beginning of current
periodChanges of items during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Exercise of subscription rights toshares (delivery of treasury shares)
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current periodLegalretainedearnings

58,506

Other
capitalsurplus47,696

Total
capitalsurplus21

47,718727

50,000Total
retainedearnings

TreasurysharesTotalshareholders’equity72,709123,437(1,593)228,068(20,978)
33,625(20,978)
33,625

0

0

(11)
0

(20,978)
33,625
(11)
0

22

22

48

70

–

–

22

22

–

–

12,646

12,64637

12,70758,506

47,69644

47,741727

50,00085,356

136,084(1,556)

240,775

43

(TRANSLATION ONLY)(Millions of yen)
Valuation and translation adjustments
Valuation difference on
Total
Revaluation reserve foravailablevaluation and translation
land
for-sale securities
adjustments
Balance at beginning of current
periodChanges of items during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Exercise of subscription rights toshares (delivery of treasury shares)
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period

46

(567)

(520)

Subscription rights toshares427

Total
net assets
227,974(20,978)
33,625
(11)
0
70

(163)

(163)

130

(33)

(163)

–

(163)

130

12,673

(116)

(567)

(684)

557

240,648

44

(TRANSLATION ONLY)
Notes to the Nonconsolidated Financial Statements(Significant Accounting Policies)
1. Valuation of Securities
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 market value with net unrealized
gains and losses as a separate component of net assets. The cost of securities sold is determined basedon the moving-average method.
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:
Inventories are stated at cost determined mainly by the retail method (the book value in the balance sheet
is written down based on the 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 forfurniture, 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 theestimated useful life.
Lease assets:
In terms of the depreciation method for leased assets related to finance leases that do not transfer
ownership of leased property, the Company applies the straight-line method using the lease term as theuseful life and a residual value of ¥0.
Finance leases without ownership transfer of the leased property to the lessee and for which the lease
inception was before February 28, 2009, are accounted for as operating lease transactions.
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 the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
Provision for Bonuses:
Provision for bonuses is provided for payments of employees’ bonuses based on the estimated amounts.
Provision for Point Card Certificates:
The Company provides to MY LAWSON POINT holders and LAWSON PASS holders when purchasing
goods, an entitlement to certain points that the holder can redeem for a discount on subsequent purchasesfrom LAWSON stores. Provision for point card certificates is recorded to state the liability at the amountthat is expected to be used as of the balance sheet date.
Provision for Retirement Benefits:
Provision for retirement benefits is 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 the average remaining
service period of employees at the time of their occurrence. Prior-service cost is amortized, starting with
45

(TRANSLATION ONLY)
the fiscal year when it was incurred, on a straight-line basis over a certain period (10 years) within the
average remaining service period of employees.
Provision for Retirement Benefits to Executive Officers:
Provision for retirement benefits to executive officers of the Company is recorded as a liability at 100%of the amount that would be required if all executive officers terminated their services with the Company
at the balance sheet date.
5. Accounting for Consumption Tax
Consumption tax is excluded from income and expense.
6. Changes in Accounting Method(Change of accounting policy which is not easily distinguished from change of accounting estimation)
The Company has changed its depreciation method for property and store equipment acquired on or after
March 1, 2013 to the method stipulated under the revised corporate tax law from fiscal year as a result of therevision of Japanese corporate tax law. The effects of this change on operating income, ordinary income andincome before income taxes were immaterial.
(Changes in Method of Presentation)
1. In the “Current assets” section, “Short-term loan receivable” (¥2,039 million for the previous fiscal year) was
included in “Other” before. Due to an increase in financial materiality, “Short-term loan receivable” (¥7,446
million for the fiscal year under review) is separately presented for the fiscal year under review.
2. In the “Non-operating income” section, “Compensation income” (¥161 million for the previous fiscal year)
was included in “Other” before. Due to an increase in financial materiality, “Compensation income” (¥594
million for the fiscal year under review) is separately presented for the fiscal year under review.
3. In the “Non-operating income” section, “Foreign exchange gains” (¥182 million for the previous fiscal year)
was included in “Other” before. Due to an increase in financial materiality, “Foreign exchange gains” (¥276
million for the fiscal year under review) is separately presented for the fiscal year under review.
4. In the “Non-operating income” section, “Penalty income” was separately listed in the balance sheet before.
Due to a decline in financial materiality, “Penalty income” (¥142 million for the fiscal year under review) is
included in “Other” for the fiscal year under review.
5. In the “Extraordinary income” section, “Gain on extinguishment of tie-in shares” was separately listed in thebalance sheet before. Due to a decline in financial materiality, “Gain on extinguishment of tie-in shares” (¥95
million for the fiscal year under review) is included in “Other” for the fiscal year under review.
6. In the “Extraordinary loss” section, “Loss on debt waiver of subsidiaries and associates” (¥160 million for theprevious fiscal year) was included in “Other” before. Due to an increase in financial materiality, “Loss on Debt
waiver of subsidiaries and affiliates” (¥2,400 million for the fiscal year under review) is separately presented
for the fiscal year under review.
7. In the “Extraordinary loss” section, “Loss on valuation of shares of subsidiaries and associates” (¥129 million
for the previous fiscal year) was included in “Other” before. Due to an increase in financial materiality, “Losson valuation of stocks of subsidiaries and affiliates” (¥499 million for the fiscal year under review) is
separately presented for the fiscal year under review.
8. In the “Extraordinary loss” section, “Loss on valuation of investments in capital of subsidiaries and associates”
was separately listed on the balance sheet before. Due to a decline in financial materiality, “Loss on valuationof investments in capital of subsidiaries and associates” (¥52 million for the fiscal year under review) is
included in “Other” for the fiscal year under review.

46

(TRANSLATION ONLY)(Notes to the Nonconsolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:
2. Due from/to subsidiaries and affiliated companies
Short-term receivables due from subsidiaries and affiliated companies
Short-term payables due to subsidiaries and affiliated companies
Long-term payables due to subsidiaries and affiliated companies¥227,065 million¥9,743 million¥5,133 million¥242 million

3. Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation of Land
(Law No. 34, March 31, 1998). The resulting revaluation difference has been included in net assets as land
revaluation difference.
Revaluation method: The value of land is determined based on the notified prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance Implementing the Law Concerning
Revaluation of Land (Government Ordinance No. 119, March 31, 1998) and theassessed 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¥319 million.
(Notes to the Nonconsolidated Statement of Income)1. Transactions with subsidiaries and affiliated companies
Operating transactions
Operating revenues
Goods purchased
Selling, general and administrative expenses
Transactions other than operating transactions¥4,689 million¥2,254 million¥14,327 million¥358 million

2. Long-lived assets
The Company identified each store as the smallest cash-generating unit.
The Company recognized an impairment loss on the following assets that declined in value due mainly tocontinuous operating losses. The carrying amounts of those assets were written down to the recoverable
amount and were recorded as extraordinary losses.
Category by use
Location
AssetsMillions of yen
Buildings and structures
Tokyo
516
Furniture, fixtures, equipment, and others
Buildings and structures
StoresOsaka
536
Furniture, fixtures, equipment, and others
Buildings and structures
Others
1,785
Furniture, fixtures, equipment, and others
Buildings and structures–
605
Furniture, fixtures, equipment, and others
Other–
Software
1,219–
Goodwill
550
Total
–
–
5,212
Category by fixed assets(Millions of yen)
Buildings
1,986
Structures
107
Furniture, fixtures, and equipment
240
Lease assets
1,092
Software
1,219
Goodwill
550
Other
16
The recoverable value of the impaired assets is calculated based on net selling price or value in use. Net
selling price of land was calculated based on the value appraised by the real estate appraiser or expected
contract price and the value in use was calculated by discounting estimated future cash flows to which a
discount rate of 4.3% was applied.

47

(TRANSLATION ONLY)(Notes to the Nonconsolidated Statement of Changes in Equity)
Number of treasury shares
Common stock

395,953 shares(Accounting for income taxes)
1. 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
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets

1,073
806
1,106
11,405
757
5,628
467
3,071
2,743
27,061(2,103)
24,957

Deferred tax assets-net

24,957

2. Change of corporate tax rates after the balance sheet date
On March 31, 2014, a tax reform law was enacted in Japan by which the Special Income Tax for Reconstruction
became less effective from fiscal years beginning on or after April 1, 2014. As a result, the normal effective
statutory tax rate to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences in the fiscal years beginning on or after March 1, 2015, changed from 38.01% to 35.64%.
The effect of this change is immaterial.
(Accounting for retirement benefits)
Summary of the retirement benefit plans:
The Company has defined benefit lump-sum severance indemnity plans. The Company established a trust fund forits 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. Provision for retirement benefits (=c + d + e)

(Millions of yen)
(16,421)
5,588(10,832)741(10,090)

Net periodic benefit costa. 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)

(Millions of yen)
1,126
190
175
129
1,621
294
1,916

Basis of calculation of projected benefit obligations
a. Discount rate
1.2%
b. Expected rate of return on plan assets
0%c. Allocation method of estimated total Straight-line basis (a method to allocate estimatedretirement benefits
total retirement benefits equally to the respective
periods in the employee’s whole service period)48

(TRANSLATION ONLY)(Leases)
Finance leases without ownership transfer of the leased property to the lessee and for which the lease inception
was before February 28, 2009:(1) Pro forma information related to acquisition cost, accumulated depreciation, and net leased property(Millions of yen)
Accumulated
Accumulated
Net leased property
Acquisition costdepreciation
impairment loss
Furniture, fixtures,
13,767
11,489672
1,605
and equipment(2) Obligations under finance leases
Due within one year
Due after one year
Total
Allowance for impairment loss on leased property(Millions of yen)
1,791
627
2,418
374

(3) Lease payments, transfer from allowance for impairment loss on leased property, depreciation expense,
interest expense, and impairment loss:(Millions of yen)
Lease payments
2,280
Transfer from allowance for impairment loss on leased property
177
Depreciation expense
2,097Interest expense
92
Impairment loss
32(4) Computation method of depreciation expense
Depreciation expense which is not reflected in the accompanying nonconsolidated statement of income iscomputed by the straight-line method, assuming the lease period as the useful life and no residual value.
(5) Computation method of interest expense
The difference between the total lease contract amount and the acquisition cost is assumed to be theinterest, and interest expense is computed by the interest method.
(Related-Party Transactions)
Subsidiaries and affiliates
EndingTransaction
Relationship
EquityDescription
Business line
balanceamountDirector’sownership BusinessofAccount item
Attribute Company name(millionsor profession(millions of
posts held
percentage Relationshiptransactionsof yen)yen)
concurrently
Repayment
10,600of funds
Domestic
DirectShort-term
Borrowing
Convenience holding
SCI Inc.
SCM
Yes
500
11,100loans payableof funds
store business 100.0%
Borrowing0
interest
Repayment
3,00
of funds
Financial
Placement of
DirectLawson ATM
servicesATMs in the
Short-term
BorrowingholdingNo13,8004,200
Subsidiary Networks, Inc.
loans payable
relatedLAWSON
of funds
76.5%
businessstoresBorrowing
5
interest
Repayment
18,000
Sale ofof funds
Entertainment/
Lawson HMV
Directtickets andBorrowing
Home
Short-termEntertainment,
holding software for
12,700Yes
7,700loans payableof funds
convenience
Inc.
100%
music andbusiness
Borrowing
video
5
interest

Transaction conditions and the policies for determining those conditions:
1. The Company manages the funds of some subsidiaries centrally and there are lending and borrowing
transactions between the Company and its subsidiaries.
2. The interest rates for loans and borrowings are determined rationally taking into account market interest rates.
49

(TRANSLATION ONLY)
Subsidiaries of an affiliated company of the Company
Attribute

Subsidiaries
of anaffiliatedcompany oftheCompany

Relationship
EquityDescription
Company Business line
Director’sownership Businessof
nameor profession
posts held
percentage relationshiptransactions
concurrently
Purchases
for theReverseCompanyMitsubishi
Sales of Holds 0.3％
operated
Shokuhinprocessed ownership
VendorNo
storesCo., Ltd.
foods(purchasesin thefor thecompany
franchised
stores)Transaction
amount(millions ofyen)

11,695(490,648)

Account
item

Endingbalance(millionsof yen)Accounts
payabletrade886

Accounts
payabletrade for
franchised
stores

43,074

Transaction conditions and the principles on the decision thereof:
The terms and conditions for purchase transactions are determined to be same as those for other generalbusiness transactions. Except for purchases made for the franchised stores, the Company acts as an alternative
payer, not as a direct party for the purchase.
(Per-Share data)
1. Net assets per share
2. Net income per share

2,403.21 yen
336.59 yen

The above figures and the number of shares in these balance sheets, statements of income and related
notes are rounded down to the nearest unit and the ratios are rounded to the nearest whole number.

50

(TRANSLATION ONLY)<Copy of the Independent Auditors’ Report>
INDEPENDENT AUDITORS' REPORT
April 3, 2014
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: Junichi Fujii
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, 2014 of Lawson, Inc. (the “Company”) andconsolidated subsidiaries, and the related consolidated statements of income and changes in net assets for the
fiscal year from March 1, 2013 to February 28, 2014, and the related notes.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
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. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparationand fair presentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of Lawson, Inc. and its consolidated subsidiaries as of February 28, 2014, and the results of theiroperations for the year then ended in accordance with accounting principles generally accepted in Japan.
51

(TRANSLATION ONLY)Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required
under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese languageand “the accompanying supplemental schedules” referred to in this report are not included in the attachedfinancial documents.

52

(TRANSLATION ONLY)<Copy of the Independent Auditors’ Report>
INDEPENDENT AUDITORS' REPORT
April 3, 2014
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: Junichi Fujii
Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited the financial
statements, namely, the balance sheet as of February 28, 2014 of Lawson, Inc. (the “Company”), and the related
statements of income and changes in net assets for the 39th fiscal year from March 1, 2013 to February 28, 2014,
and the related notes and the accompanying supplemental schedules.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements and theaccompanying supplemental schedules in accordance with accounting principles generally accepted in Japan, andfor such internal control as management determines is necessary to enable the preparation of financial statements
and the accompanying supplemental schedules that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements and the accompanying supplemental
schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements and the accompanying supplemental schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the accompanying supplemental schedules. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements andthe accompanying supplemental schedules, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements and the accompanying supplemental schedules in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements and the accompanying supplemental schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the financial statements and the accompanying supplemental schedules referred to above present
fairly, in all material respects, the financial position of Lawson, Inc. as of February 28, 2014, and the results of its
53

(TRANSLATION ONLY)
operations for the year then ended in accordance with accounting principles generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required
under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese languageand "the accompanying supplemental schedules" referred to in this report are not included in the attached financial
documents.

54

(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Corporate Auditors>
AUDIT REPORTRegarding the execution of duties by the Directors for the 39th business term from March 1, 2013 to
February 28,2014, 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 asreports from the Directors, other relevant personnel, and the Accounting Auditor regarding the execution of
their duties, and asked for explanations as necessary.
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, CEO meetings, Compliance & Risk management meetings, Internal Control over Financial
Reporting committee meetings and the like, and other important meetings, received reports from the
Directors, officers, internal audit department and other relevant employees regarding the execution of theirduties, 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 regarding internal control system establishedby the Board of the Corporate Auditors, we have monitored and verified the resolution of the Board of
Directors, described in business report, regarding the organization of the system as prescribed by item (vi)of paragraph 4, Article 362 of the Companies Act and paragraph 1 and paragraph 3, Article 100 of theOrdinance for Enforcement of the Companies Act and the status of the development and operation of thesystem based on such resolution (Internal Control System), as the system necessary to ensure that theexecution of the duties by the Directors complies with laws and regulations and the Articles ofIncorporation and other system necessary to ensure the properness of operations of a Stock Company.

In

connection with internal control over financial reporting, we received reports from the Directors and otherrelevant personnel, and Deloitte Touche Tohmatsu LLC regarding the status of evaluation and audit of suchinternal control respectively, and asked for explanations whenever necessary. With respect to subsidiaries,
we have communicated and exchanged information with the Directors, Corporate Auditors and otherrelevant personnel of subsidiaries, requested the subsidiaries to report on their business where necessary,and investigated their status of operations and assets.

Based on the above methods, we have examined thebusiness report and supplementary schedules thereof for this business term.

55

Furthermore, we have monitored and verified whether Accounting Auditor maintained its independent
position and implemented 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” (Business Accounting Council,
October 28, 2005) and the like, and, when necessary, asked for explanations.

Based on the above 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 statements of 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 statusof the Company, in conformity with the applicable laws and regulations and the Articles ofIncorporation.
2. Regarding the execution of duties by the Directors, we have found no misconduct or material matterthat 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 is adequate. In addition, we have found no matters on which to give remarks inregard to the relevant description in the business report and execution of duties by the Directors
concerning Internal Control System.
(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 09, 2014
The Board of Corporate Auditors of Lawson, Inc.
Standing Corporate Auditor

Atsuhiko Seki

Standing Corporate Auditor

Shinichi Hokari(Outside Corporate Auditor)
Corporate Auditor

Tetsuo Ozawa(Outside Corporate Auditor)
Corporate Auditor(Outside Corporate Auditor)
56

Eiko Tsujiyama

(TRANSLATION ONLY)REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and References
Proposal No. 1: Appropriation of Surplus
The Company regards the ROE (consolidated return on equity) as a significant management indicator and has been
conducting business activities with the aim of achieving an ROE of 20% from a medium-term perspective. In addition,
one of our key measures for shareholder returns has been the continuous and steady payment of dividends while
securing internal reserves necessary for future business development during the course of sustainable growth of the
LAWSON Group. Based on this policy, we have been increasing dividends on a continuous basis since the initiallisting of the Company in July 2000.
It is our policy to continue to work actively on the distribution of profit to shareholders into the future.
We will endeavor to raise the Company’s corporate value by appropriating internal reserves for necessary business
investments such as opening new stores, renovating existing stores and new business development.
Year-end dividends:(1) The assignment of the dividend property to shareholders and total amount thereof:¥110 per share of the Company’s common stock to a total of ¥10,989,445,170
Note: The annual dividend per share will be ¥220, an increase of ¥20 from the previous period, including aninterimdividend per share of ¥110.
(2) Effective date of the dividends from surplus:
Wednesday, May 28, 2014

57

(TRANSLATION ONLY)[Reference: Changes in Dividends and Consolidated Dividend Payment Ratio]
Year-end dividend per share (Yen)Interim dividend per share (Yen)Dividend per share (Yen)Consolidated dividend payment ratio (%)

Consolidated dividend payment ratio (%)(Plan)(Plan)

34th Term

35th Term

36th Term

37th Term

38th Term

39th Term(Year ended
Feb. 2009)(Year ended
Feb. 2010)(Year ended
Feb. 2011)(Year ended
Feb. 2012)(Year ended
Feb. 2013)(Year ended
Feb. 2014)

Interim dividend
per share
Year-end dividend
per share
Annual dividend
per share
Consolidated net
income per share
Consolidated
dividend payment
ratio
ROE

34th Term

35th Term

36th Term

37th Term

38th Term

39th Term(Current Period)

¥80

¥80

¥85

¥87

¥100

¥110

¥80

¥80

¥85

¥93

¥100

(Plan) ¥110

¥160

¥160

¥170

¥180

¥200

(Plan) ¥220

¥240.10¥126.67¥254.61¥249.17¥332.20¥380.04

66.6%

126.3%

66.8%

72.2%

60.2%

(Plan) 57.9%

12.5%

6.5%

12.8%

12.0%

15.2%

16.1%

(Notes)
1. In the 37th term, ROE (consolidated return on equity) declined compared to the previous period as a result ofan extraordinary loss of ¥11,753 million, which included loss due to the Great East Japan Earthquake and loss
on adjustment for changes in accounting standards for asset retirement obligations. ROE excluding these
extraordinary factors is 15.1%.
2. The amounts of the 34th and 35th terms are the retroactively adjusted amounts reflecting the loss on the priorperiod adjustment of ¥1, 936 million recognized in the 35th term.
3. Consolidated dividend payment ratio is calculated based on annual dividend per share divided by consolidated
net income per share.

58

(TRANSLATION ONLY)
Proposal No. 2: Election of Nine (9) Directors
The terms of office of seven (7) current directors expire at the conclusion of this 39th Ordinary General Meeting of
Shareholders. Accordingly, we propose that you elect nine (9) directors, including two (2) additional seats, tostrengthen our business management structure.
If this proposal is approved and passed, there will be nine (9) directors of the Company after the meeting ofshareholders, of which five (5) will be outside directors, including three (3) “independent directors/auditor”.
The nominees for directors are as follows
No. Name
Brief Personal History, Position, Assignment and Important
Number of the(Date of birth)
Concurrent Positions
Company’s
Shares Held1

April 1981
June 1995
July 1999

April 2000
Takeshi Niinami(January 30, 1959)

April 2001

March 2002
May 2002
March 2005
April 2006
June 2010
May 2013

Joined Mitsubishi Corporation
Representative Director, Sodex Corporation(Currently LEOC Co., Ltd.)
General Manager, Restaurant Business Team,
Living Essentials Logistics Planning
Department, Mitsubishi Corporation
General Manager, LAWSON Project Integration
Office; General Manager, Restaurant Business
Office, Mitsubishi Corporation
Manager, LAWSON Business Unit; Manager,
Restaurant Business Unit, Consumer Business
Division, Mitsubishi Corporation
Corporate Advisor, Lawson, Inc.
President, Representative Director andExecutive Officer, Lawson, Inc.
President, Representative Director and CEO,Lawson, Inc.
Outside Director, ACCESS, CO., LTD (Current
position)
Outside Director, ORIX Corporation (Current
position)
Representative Director and CEO,Lawson, Inc. (Current position)

59

9,900

(TRANSLATION ONLY)
No.

Name
(Date of birth)2

Brief Personal History, Position, Assignment and Important
Concurrent Positions
April 1985
July 1998
December 1998
November 2002
September 2005

Genichi Tamatsuka(May 23, 1962)

November 2010
March 2011

April 2012

May 2012

May 2013

April 2014

Joined Asahi Glass Co., Ltd.
Joined IBM, Japan
Joined Fast Retailing Co., Ltd.
President, Representative Director and COO,
Fast Retailing Co., Ltd.
Established Revamp Corporation
President, Representative Director and COO,
Revamp Corporation
Corporate Advisor, Lawson, Inc.
Senior Executive Vice President and COO,
Group CEO, CVS Operating Group andDivision Director, Fast Food Division, Lawson,
Inc.
Senior Executive Vice President and COO,
Group CEO, CVS Operating Group andDivision Director, CRM Promotion Office andMarketing Office, Lawson, Inc.
Member of the Board, Senior Executive Vice
President, COO, and Group CEO, CVS
Operating Group and Division Director, CRM
Promotion Office and Marketing Office,Lawson, Inc.
Member of the Board, Representative Executive
Officer, COO, and President of CVS Company
and Overseas Operations Company, Lawson,
Inc.
Member of the Board, Representative Executive
Officer, COO, and President of CVS Company,
Lawson, Inc. (Current position)

60

Number of theCompany’s
Shares Held
3,300

(TRANSLATION ONLY)
No.

Name
(Date of birth)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

3[Candidate for New
Director]

April 1993
June 2002
April 2005
April 2010

June 2010
Sadanobu Takemasu(August 12, 1969)

4[Candidate for
New Director]

April 1980
March 1998
September 2001
October 2002
June 2005

Masakatsu Gonai(May 24, 1961)

September 2007
March 2010
March 2012
May 2012
March 2014
April 2014

Number of theCompany’s
Shares Held

Joined Mitsubishi Corporation
Transferred to Indiana Packers Corporation
Indiana, U.S.A.
Corporate Communications Department,
Mitsubishi Corporation
Executive Assistant to Senior Executive Vice
President, Corporate Administration
Department and Corporate Strategy &Planning Department, Mitsubishi Corporation
Executive Assistant to President & Chief
Executive Officer, Corporate Administration
Department and Corporate Strategy &Planning Department, Mitsubishi Corporation(Current position)

0

Joined Lawson, Inc.
General Manager, Third Kanto Department,
Operations Division, Lawson, Inc.
General Manager, Sales Support Section,
Operations Division, Lawson, Inc.
General Manager of Sales Planning Dept.,
Marketing Division, Lawson, Inc.
Division Director of Marketing Division, andGeneral Manager of Advertising and Sales
Promotion Dept., Lawson, Inc.
Region Director, Kanto LAWSON Office,Deputy Senior Vice President, Lawson, Inc.
Division Director, Natural Health Care
Business Division, Deputy Senior Vice
President, Lawson, Inc.
Executive Officer, Assistant to Chief
Compliance Officer (CCO), Lawson, Inc.
Executive Officer, CCO in charge of CSR
Division, Director of Compliance & Risk
Management Office, Lawson, Inc.
Executive Officer, Compliance and Risk,
Lawson, Inc.
Senior Vice President, Compliance and Risk,
Lawson, Inc. (Current position)

1,100

61

(TRANSLATION ONLY)
No.

Name
(Date of Birth)5[Candidate for
Outside Director]

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)

Reiko Yonezawa(April 3, 1950)[Reasons for nomination as Outside Director and reasons behind our judgment that the person would be
able to perform obligations of Outside Director appropriately]
Ms. Reiko Yonezawa has been nominated as a candidate for Outside Director, as she has a wealth ofexperience and knowledge regarding corporate management, human resources and labor-related matters,
having served as President of The R Co., Ltd., a human resources education and temporary staffing
company. At the Board of Directors’ meetings she attended, Ms. Yonezawa proactively expressed her
opinions and suggestions on the Company’s management, and we would like to continue to benefit from hersupervision on the Company’s management by leveraging her experiences.
Ms. Yonezawa also serves as a member of the Company’s Compensation Committee, which consists
exclusively of Outside Directors and Outside Corporate Auditors. The Company and The R Co., Ltd. haveexecuted service contracts relating to the reception services of the Company. However, the transaction value
under the contracts is negligible at less than 0.1% of the consolidated net sales (gross operating revenue) of
the Group, demonstrating no particular conflicts of interest between the two companies. Decisions for suchtransactions have been made upon tenders participated by several companies and confirmation that
economic rationality can be ensured sufficiently. In addition, Ms. Yonezawa has been registered as an
Independent Director/Corporate Auditor with the Tokyo Stock Exchange, Inc. pursuant to the rules specified
by the exchange.
[Term of Outside Director of Lawson, Inc.]
Ms. Yonezawa has served as Outside Director of the Company since 2002 and her term will be twelve years
as of the end of this General Meeting of Shareholders.
[Particular conflicts of interest between the Candidate and Lawson, Inc.]
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
[Attendance at Board of Directors’ Meetings]
Out of a total of 15 meetings, Ms. Yonezawa attended 14. (Attendance rate: 93.3%)

62

(TRANSLATION ONLY)
No.

Name
(Date of Birth)

6[Candidate for
Outside Director]

Takehiko Kakiuchi(July 31, 1955)

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held200
April 1979
Joined Mitsubishi Corporation
April 2001
Unit Manager, Foods (Commodity) Division,
Mitsubishi Corporation
May 2005
Outside Director, Lawson, Inc. (Current
position)
April 2006
General Manager, Living Essentials GroupCEO Office, Mitsubishi Corporation
April 2008
Division COO, Foods (Commodity) Division,
Mitsubishi Corporation
April 2010
Senior Vice President, Division COO, Foods(Commodity) Division, Mitsubishi
Corporation
April 2013

Executive Vice President, Group CEO,
LivingEssentials
Group,
Mitsubishi
Corporation (Current position)
June 2013
Outside Director, Mitsubishi Shokuhin Co.,
Ltd. (Current position)[Reasons for nomination as Outside Director and reasons behind our judgment that the person would be
able to perform obligations of Outside Director appropriately]
Mr. Takehiko Kakiuchi has been nominated as a candidate for Outside Director of the Company, as he has
deep knowledge regarding the living essentials field with a focus on foods through his duties at Mitsubishi
Corporation, one of the Company’s key business partners. At the Board of Directors’ meetings he attended,
Mr. Kakiuchi proactively expressed his opinions and suggestions on the Company’s management, and wewould like to continue to benefit from his supervision of the Company’s management by leveraging his
experiences.
Mr. Kakiuchi also serves as Chairperson of the Company’s Board of Directors Meetings and theCompensation Committee, which consists exclusively of Outside Directors and Outside Corporate Auditors.
[Term of Outside Director of Lawson, Inc.]
Mr. Kakiuchi has served as Outside Director of the Company since 2005 and his term will be nine years asof the end of this General Meeting of Shareholders.
[Particular conflicts of interest between the Candidate and Lawson, Inc.]
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
[Attendance at Board of Directors’ Meetings]
Out of a total of 15 meetings, Mr. Kakiuchi attended 13. (Attendance rate: 86.7%)

63

(TRANSLATION ONLY)
No.
7

Name
(Date of Birth)

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held100
April 1988
Joined Sumitomo Bank (currently Sumitomo[Candidate for
Mitsui Banking Corporation)
Outside Director]
April 1998
Assistant Professor, Institute of Asia-PacificStudies, Waseda University
April 2000
Assistant Professor, Graduate School ofInternational Corporate Strategy, Hitotsubashi
University
October 2002
Associate Professor, Graduate School ofInternational Corporate Strategy, Hitotsubashi
University
Emi Osono
April 2010
Professor, Graduate School of International(August 8, 1965)
Corporate Strategy, Hitotsubashi University(Current position)
June 2011
Outside Director, Resona Holdings, Inc.
(Current position)
May 2012
Outside Director, Lawson, Inc. (Current
position)[Reasons for nomination as Outside Director and reasons behind our judgment that the person would be
able to perform obligations of Outside Director appropriately]
Ms. Emi Osono has been nominated as a candidate for Outside Director of the Company, as she has awealth of academic knowledge on global corporate management, operational strategies, and organizational
behavior. We have been receiving her proactive opinions and suggestions regarding the Company’s
management at the Board of Directors’ meetings, and we would like to continue benefitting from hersupervision of the Company’s management by leveraging her experiences.
Ms. Osono serves as a member of the Company’s Compensation Committee, which consists exclusively of
Outside Directors and Outside Corporate Auditors. She has also been registered as an Independent Director/
Corporate Auditor with the Tokyo Stock Exchange, Inc. pursuant to the rules specified by the exchange.
[Term of Outside Director of Lawson, Inc.]
Ms. Osono has served as Outside Director of the Company since 2012 and her term will be two years as ofthe end of this General Meeting of Shareholders.
[Particular conflicts of interest between the Candidate and Lawson, Inc.]
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
[Attendance at Board of Directors’ Meetings]
Out of a total of 15 meetings, Ms. Osono attended 13. (Attendance rate: 86.7%)

64

(TRANSLATION ONLY)
No.
8

Name
(Date of Birth)

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held0
April 1984
Joined Mitsubishi Corporation[Candidate for
Outside Director]
April 2008
General Manager, Grain Unit, Foods(Commodity) Div., Mitsubishi Corporation
April 2011
Deputy General Manager, Living Essentials
Group CEO Office, Mitsubishi Corporation
April 2012
General Manager, Global Consumer Business
Development Unit, Mitsubishi Corporation
April 2013
Division COO, Foods (Commodity) Div.,
Mitsubishi Corporation
May 2013
Outside Director, Lawson, Inc. (Current
Yutaka Kyoya
position)(January 7, 1962)
April 2014
Senior Vice President, Division COO, Living
Essential Resources Division, Mitsubishi
Corporation (Current position)[Reasons for nomination as Outside Director and reasons behind our judgment that the person would be
able to perform obligations of Outside Director appropriately]
Mr. Yutaka Kyoya has been nominated as a candidate for Outside Director because he possesses a deep
knowledge of consumer goods industries centering on food through his work at Mitsubishi Corporation, oneof the Company’s important business partners. We have been receiving his proactive opinions andsuggestions regarding the Company’s management at the Board of Directors’ meetings, and we would liketo continue benefitting from his supervision of the Company’s management by leveraging his experiences.
[Term of Outside Director of Lawson, Inc.]
Mr. Kyoya has served as Outside Director of the Company since 2013 and his term will be one year as ofthe end of this General Meeting of Shareholders.
[Particular conflicts of interest between the Candidate and Lawson, Inc.]
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
[Attendance at Board of Directors’ Meetings]
Out of a total of 11 meetings, Mr. Kyoya attended 11. (Attendance rate: 100%)

65

(TRANSLATION ONLY)
No.

Name
(Date of Birth)9[Candidate for
New Director][Candidate for
Outside Director]

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held0
April 1987
Joined Arthur Andersen & Co.
April 1994
Founded Saki Corporation and assumed theposition of Representative Director and CEO(Current position)
January 2013
Member of the Fiscal System Committee,
Fiscal System Council, Ministry of Finance(Current position)
January 2013
Private-sector Member of the Industrial
Competitiveness Council, Headquarters forJapan’s Economic Revitalization (Current
position)

Sakie Akiyama(December 1, 1962)[Reasons for nomination as Outside Director and reasons behind our judgment that the person would be
able to perform obligations of Outside Director appropriately]
Following her career at a foreign consultant firm, Ms. Sakie Akiyama founded Saki Corporation, whichdevelops, manufactures, and sells automated optical inspection (AOI) machines for printed circuit boards
and X-Ray automated inspection machines. As the CEO of the company, she has extensive experience andexpertise in corporate management, based on which she has assumed a wide range of important roles
including serving as a private-sector member of the Industrial Competitiveness Council of the Headquarters
for Japan’s Economic Revitalization. She has been nominated as a candidate for Outside Director of theCompany, as we would like to receive her proactive opinions and suggestions regarding the Company’s
management at the Board of Directors’ meetings, and benefit from her supervision of the Company’s
management by leveraging her experiences.
Ms. Akiyama will be appointed as a member of the Company’s Compensation Committee, which consists
exclusively of Outside Directors and Outside Corporate Auditors. In addition, the Company has reported to
the Tokyo Stock Exchange, Inc. that she will be appointed as an Independent Director/ Corporate Auditor
pursuant to the rules specified by the exchange.
[Term of Outside Director of Lawson, Inc.]
There are no relevant items, as Ms. Akiyama is a candidate for a new Outside Director position.
[Particular conflicts of interest between the Candidate and Lawson, Inc.]
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
[Attendance at Board of Directors’ Meetings]
There are no relevant items, as Ms. Akiyama is a candidate for a new Outside Director position.
Notes:
1. In accordance with Article 24 of the current Articles of Incorporation, Lawson, Inc. has concluded the following
liability limitation agreements with Ms. Reiko Yonezawa, Mr. Takehiko Kakiuchi, Ms. Emi Osono, and Mr. Yutaka
Kyoya. Under the liability limitation agreement concluded with the Company, Outside Directors assume liability fordamages specified in Article 423, Paragraph 1 of the Companies Act within the limit not exceeding the amountstipulated by laws and regulations, provided that they have performed duties which resulted in a cause of suchliability in good faith without committing acts of gross negligence. The Company is also planning to conclude asimilar agreement with Ms. Sakie Akiyama.
2. The appointment of the Independent Directors/Auditors is based on “(6) Criteria for Independence” on page 23.
3. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 10,
2014.

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Proposal No. 3: Revision to the Amount and Substance of Stock Options for Directors
At the 31st Ordinary General Meeting of Shareholders on May 26, 2006, it was approved that the upper limit of annual
stock option remuneration to directors of the Company (including outside directors) should be ¥200 million under aseparate framework from the maximum total annual remuneration of ¥400 million to directors approved at the 26th
Ordinary General Meeting of Shareholders on May 24, 2001.
For the purpose of allowing directors to share with shareholders not only the merits of a higher stock price of theCompany’s stock but also the risks that might arise from a declining stock price and enhancing the directors’
motivation and morale toward a higher stock price and further improvement in operating performance, the Company
abolished the conventional retirement benefit system for directors in 2005, and instead introduced stock options (stock
options of which the amount to be paid per share (hereinafter referred to as the “Exercise Price”) for shares to beissued upon exercising such rights is ¥1; hereinafter referred to as “Stock Compensation-Type Stock Option”) thatallow qualified persons to which the rights are granted to receive economic value similar to that of the former
retirement benefits.
Furthermore, effective from the 26th term (2000), the Company has issued another kind of stock option (hereinafterreferred to as “Ordinary Stock Options”) of which the Exercise Price is, in principle, the fair market value of theCompany’s stock at the time of the options being granted to enhance the motivation and morale of directors to further
improve operating performance while emphasizing shareholders’ interests.
We propose to revise the stock option remuneration system for directors by abolishing the Ordinary Stock Options
system (number of shares subject to stock options: 50,000 shares; total number of stock options: 500 units) andexclusively offering Stock Compensation-Type Stock Option. If Proposal No. 2 is approved and passes in its originalform, the number of directors will be increased from seven (7) (of which four (4) are outside directors) to nine (9) (ofwhich five (5) are outside directors). In addition, remuneration to directors may increase as a result of ongoing
improvement in financial performance. In view of these circumstances, and for the purpose of further improving
operating performance while emphasizing shareholders’ interests, we request that the upper limit of annual stock
option remuneration to directors should be revised to ¥300 million (of which annual stock option remuneration tooutside directors will be within ¥30 million).
Along with the said revision in the amount of remuneration, we request that the details of the stock options to be
granted as Stock Compensation-Type Stock Option, which were approved and passed at the 31st Ordinary General
Meeting of Shareholders held on May 26, 2006, should be as follows. Specifically, we request that: (1) the number ofshares subject to stock options be revised from 27,000 shares to 50,000 shares (of which 5,000 shares are for outside
directors); and (2) the total number of stock options be revised from 270 units to 500 units (of which 50 units are foroutside directors).
Stock Compensation-Type Stock Option(1) Class and number of the shares subject to stock options
The upper limit of shares for which issuance will be available to qualified directors by exercising their stock options to
be issued within one (1) year following the date of the ordinary general meeting of shareholders pertaining to eachbusiness year shall be 50,000 shares of the Company’s common stock (of which 5,000 shares shall be for outside
directors). In case it is considered appropriate to change the number of shares as the Company conducts a stock split(including gratis allocation of shares; hereinafter the same regarding a “stock split”), a reverse stock split or areduction of capital stock, the Company shall make adjustments as deemed necessary.
(2) Total number of stock options
The upper limit of stock options to be issued within one (1) year following the date of the ordinary general meeting ofshareholders pertaining to each business year shall be 500 units (of which 50 units shall be for outside directors). The
number of shares subject to each stock option shall be 100 shares.
In case it is considered appropriate to change the number of shares as the Company conducts a stock split, a reverse
stock split or a reduction of capital stock, the Company shall make adjustments as deemed necessary.
(3) Value to be invested upon the exercise of stock options
The value to be invested in exercising each stock option shall be determined as a product of the Exercise Price (¥1)
multiplied by the number of shares subject to each stock option.
(4) Exercisable period of the stock options
The exercisable period of the stock options shall be 20 years computed from the day following the date when the stock
options are granted (hereinafter referred to as the “Date for Granting”).
(5) Restriction on the acquisition of the stock options via transfer
The acquisition of stock options via transfer shall require the approval of the Board of Directors.
(6) Exercise conditions of the stock options
Regardless of the preceding item (4), a stock option holder may exercise his/her stock options on and after the day
following the date when he or she steps down from a director’s position. Other applicable conditions shall be asprescribed by the Board of Directors, when it determines the guidelines for offering of the stock options.

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