(TRANSLATION ONLY)
Securities Code: 2651
May 8, 2012
To All Shareholders With Voting Rights
Takeshi Niinami
Representative Director
LAWSON, INC.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 37th ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 37th 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 28, 2012.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 28, 2012 after reading the attached document“Exercising Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 29, 2012
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 the 37th
Fiscal Term (from March 1, 2011 to February 29, 2012), and the Audit Reports Thereof
Matters to Be Resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Partial Amendments to the Articles of Incorporation
Proposal No. 3: Election of Seven (7) Directors
Proposal No. 4: Election of One (1) Corporate Auditor
Proposal No. 5: Presentation of Retirement Benefit to a Retiring Corporate Auditor, and Final Payment of Retirement
Benefit upon the Abolishment of the Retirement Benefit System for Corporate Auditors
Proposal No. 6: Revision of the Amount of Compensation for Corporate Auditors

If you attend in person, please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at the meeting.
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, such asa power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at the reception desk. (The qualified
proxy is limited to one shareholder having voting rights for this meeting as per the relevant provision in the Articles ofIncorporation.)[Concerning Disclosure on Websites]1.
In accordance with provisions of applicable laws and ordinances, as well as Article 14 of the Articles of Incorporation of theCompany, the following statements are posted on our website and are not included in this notice of the Ordinary General Meeting of
Shareholders. The referential documents attached to this notice are part of the documents audited by the corporate and accounting
auditors in the process of preparation of the Audit Reports.
(1) Notes to the consolidated financial statements(2) Notes to the non-consolidated financial statements
2.

If any modification to the contents of this notice is needed, the Company will post such modifications on its website. Also, theresults of the resolutions made at this Ordinary General Meeting of Shareholders will be posted on the Company’s website.
Website of LAWSON, INC.

http://www.lawson.co.jp/company/ir/index.html

1

(TRANSLATION ONLY)
BUSINESS REPORT(March 1, 2011 through February 29, 2012)
I. CURRENT STATUS OF THE CORPORATE GROUP
1. Summary of Operations(1) Business Developments and Results of Operations
During fiscal 2011, the year ended on February 29, 2012, the LAWSON Group (hereinafter, “the Group”) focused onachieving speedy recovery of stores and the product supply chain affected by the Great East Japan Earthquake in March2011 with the aim of realizing the Group’s corporate philosophy of “Creating Happiness and Harmony in Our
Communities.” With these efforts, we were appreciated by customers as a convenience store chain with a nationwide
network as well as “social infrastructure” that provides essential items at the local level.
In terms of operating results for the consolidated fiscal year under review, total operating revenues increased by 8.5%
from the previous fiscal year to ¥478,957 million. This was due to a ¥17.9 billion increase in franchise commission
from franchised stores owing to the positive effect of measures to expand customer bases comprising women andseniors and a rise in spending per customer resulting from a tax hike on tobacco. Selling, general and administrative
expenses increased by 7.5% to ¥260,941 million due to the active injection of advertising expenditures. As a result,operating income grew ¥6,229 million, or 11.2%, from the previous fiscal year to ¥61,769 million. Ordinary income
climbed ¥7,133 million, or 13.1%, from the previous fiscal year to ¥61,728 million. Net income decreased ¥501 million,
or 2.0%, from the previous fiscal year to ¥24,885 million, partly as a result of an increase of ¥7,317 million, or 71.9%,
in extraordinary loss, to ¥17,502 million, which reflects the posting of ¥8,292 million in loss on adjustment for changesof accounting standard for asset retirement obligations and ¥3,460 million in loss from the disaster caused by the Great
East Japan Earthquake.
Operating results by business segment were as follows:(Convenience Store Operations and Overseas Businesses)
Merchandise Strategy and Services
On the merchandise front, the Group developed menus catering to customer needs as follows by leveraging customer
purchase data acquired through the multi-partner loyalty program, Ponta, which the Group joined in March 2010. We also
strived to provide appealing products that offer value for money by enhancing added-value in the ingredients procurement
process, including bulk procurement of high-quality food materials, by employing a dedicated section.
In the rice category, we offered chilled lunch boxes, named “Lawson-Tei,” which incorporates the color, taste and texture
preferences of female customers, who have traditionally proven reluctant to purchase convenience store lunch boxes. The
favorable performance of Lawson-Tei helped us succeed in expanding the demand for lunch boxes, especially amongfemale customers.
In the over-the-counter fast food category, prepared foods such as croquettes and minced cutlets performed well, while newflavors for our Karaagekun and fried chicken also contributed to the category’s strong performance.
Our private brand, “Lawson select,” which is mainly comprised of prepared foods, processed foods, ad daily necessities,
was renewed significantly in October 2011. As a result of expansion in the number of items and strengthening of sales
promotion, robust sales growth was recorded.
In the dessert category, sales climbed year-on-year, driven by our Uchi Café SWEETS line including the Premium Roll
Cake Series.
In sales promotions, the Group focused on campaigns anticipated to bring a high return on investment (ROI), such as theSpring and Autumn Rilakkuma Fairs, Miffy Bowl/Plate Present Campaign, and Keion!! Fair II, which are centered on
tie-ups with popular characters. We also implemented the HAPPY 10,000 Champaign in celebration of reaching the 10,000
store milestone in Japan. Total Ponta members reached 39.12 million as of February 29, 2012, including members joining
through other participating companies. LAWSON provided loyalty points appealing to Ponta members in addition to2

expanding its membership base, which resulted in an increase in Ponta members’ sales ratio.
Store Operations
To improve store operations, we promoted retail spaces and merchandise assortments that matched customer needs specificto each neighborhood by utilizing our backbone IT system to analyze customer sales data collected from Ponta cards and touse the analyzed data in store-based order placements. This operational reform in the store operation method is dubbed
PRiSM. Through the promotion of PRiSM, we have strived to enhance accuracy in order placement in order to reduce
opportunity loss. Through these measures, we continued to work toward curtailing lost opportunities while aiming to create
stores that fully satisfy the desires of customers to purchase “whatever you want, whenever and wherever you need it.”Store Development, Store Format Strategy
In opening new stores, the Company focused on maximizing return on investment (ROI), strictly adhered to its proprietarygroup standards for opening stores, and prioritized profitability.
In terms of store format strategy, the Company leveraged the LAWSON, NATURAL LAWSON and LAWSON STORE100
formats to promote new store openings and store renovations that match customer needs in each neighborhood.
In an effort to reinforce stores that cater to healthcare needs, we expanded the number of stores that market over-the-counter(OTC) drugs to 41 as of February 29, 2012, partly as a result of increasing licensed sales personnel based on humanresources exchange with MatsumotoKiyoshi Holdings Co., Ltd. Starting from August 2010, the Group also launched
Pharmacy LAWSON, an integration of drug-dispensing pharmacies and NATURAL LAWSON stores, in partnership with
Qol Co., Ltd., which operates a chain of drug-dispensing pharmacies. As of February 29, 2012, we operate 7 Pharmacy
LAWSON stores.
Regarding fresh foods convenience stores, we have been converting our directly managed stores into franchised stores topromote our franchise-based store management. The number of fresh foods convenience stores, LAWSON STORE100,
operated by the Group’s consolidated subsidiary Ninety-nine Plus Inc., reached 1,172 as of February 29, 2012. In addition,
at our conventional LAWSON stores that enhance focus on perishable foods and foods delivered daily, we promoted astrategy of expanding our customer base by attracting elderly customers and homemakers. As of February 29, 2012, thenumber of these fresh food-type LAWSON stores totaled 3,913. Some of these stores sell fresh vegetables produced at 4
LAWSON Farms in Japan, which the Group partially funded.
The number of LAWSON chain stores operated by LAWSON Toyama, Inc., a consolidated subsidiary of LAWSON, INC.
(hereinafter, “the Company”), reached 73 as of February 29, 2012. The number of LAWSON chain stores operated by theCompany’s equity-method affiliate, LAWSON Okinawa, Inc., through the business alliance agreement with SAN-A CO.,LTD. totaled 147 as of February 29, 2012.
The Company agreed to conclude a franchise agreement with CVS Bay Area, Inc. as of January 25, 2012. Starting fromMarch 1, 2012, CVS Bay Area, Inc. is converting its convenience stores to LAWSON stores and launching their operations.
[Change in Total Number of Stores] (March 1, 2011 to February 29, 2012)
LAWSON(Stores)

NATURALLAWSON

Total stores as of February 28, 2011
Change during fiscal year

8,686
352

90
10

LAWSONSTORE100
1,077
95

Total stores as of February 29, 2012

9,038

100

1,172

3

Total
9,853
457
10,310Operations of Overseas Convenience Stores
Regarding our business in the People’s Republic of China (hereinafter, “China”), the Company raised its controlling stakein its Chinese equity-method affiliate, SHANGHAI HUALIAN LAWSON CO., LTD., to 85% in September 2011,
converting it into a consolidated subsidiary. Also, we opened our first store in Dalian in November 2011, in addition toadvancing into Shanghai and Chongqing. The number of LAWSON stores operated by SHANGHAI HUALIANLAWSON CO., LTD. totaled 314 as of February 29, 2012. CHONGQUING LAWSON CO., LTD., also a consolidated
subsidiary of the Company, was operating 38 LAWSON stores in Chongqing, China, as of February 29, 2012. DALIANLAWSON CO., LTD., the Company’s 95% subsidiary, was opening 3 LAWSON stores as of February 29, 2012.
In the regions outside of China, the Company established LAWSON ASIA PACIFIC HOLDINGS PTE. LTD. (LAP) in
May 2011 in the Republic of Singapore as its consolidated subsidiary, in order to control its subsidiaries and affiliates that
operate convenience stores outside Japan (excluding China). Also, the Company entered into a licensing agreement in June
2011 with PT MIDI UTAMA INDONESIA Tbk (MIDI), a member of the Alfa Group, which operates a large-scale retailbusiness in the Republic of Indonesia. Further, LAP acquired a 30% stake in MIDI in July 2011. As of February 29, 2012,
MIDI operates 523 stores in its own store format and 15 LAWSON stores in Jakarta and its outskirts.
Corporate Social Responsibility (CSR) Activities
In the CSR field, the CSR Promotion Office promoted environmental protection and social contribution activities, working
together with franchise owners and employees.
As part of our efforts to help create a low-carbon society, the Group set targets for reducing the CO2 generated by power
consumption at each store, and strived to actively install energy-saving devices, including LED lighting for signs and in
stores, not only at new stores but also at existing stores.
In a collaborative effort with customers to fight global warming, in April 2008 the Group launched a carbon offset program,which allows customers to contribute to reducing CO2 by purchasing carbon credits using their accumulated shopping
points or cash, or by purchasing products designated for carbon offset. As of February 29, 2012, approximately 16 thousand
tons of CO2 had been offset through this program. In addition, the LAWSON Green Fund, active since 1992, in
combination with donation drives for regions hit by the Great East Japan Earthquake, raised a total of approximately ¥1,737
million in fiscal 2011.
Furthermore, as part of its social contribution activities, the Group established a scholarship program dubbed “Support For
Dreams Fund” to help junior and senior high school students that were affected by the Great East Japan Earthquake, andbegan paying it out from October 2011.
Moving forward, working together with customers, the Company will continue its environmental protection and social
contribution activities.
[Total Operating Revenues in the Convenience Store Business]
Total Operating Revenues (¥ millions)
417,751

Year-over-Year (%)[Net Sales at All LAWSON Stores in the Convenience Store Business]
Product Group
Sales (¥ millions)Composition Ratio (%)
Processed foods
1,022,619
56.0
Fast foods
345,424
18.9
Daily delivered foods
263,179
14.4
Non-food products
194,586
10.7
Total
1,825,809
100.0

4

103.0

Year-over-Year (%)
114.0
107.3
99.6
97.6
108.5

(Other Businesses)
In addition to convenience store operations, the Group is involved in entertainment/e-commerce business, financial services,and other businesses.
We expanded the Group’s e-commerce business, leveraging the alliance with Yahoo JAPAN Corporation which
commenced in June 2011. Furthermore, we have been focusing on reinforcing the e-commerce business by providing pricecomparison and product search functions owned by Venture Republic Inc., an equity-method affiliated with which theCompany entered into a capital and business alliance in January 2011. By capitalizing on these alliances, the Group opened
its comprehensive online entertainment mall, LAWSON HOT STATION Lpaca, and its online shopping mall, Loppi, in
August and September 2011, respectively, thereby making a full-fledged start for its e-commerce business. Loppi has
expanded merchandise offering since November 2011 with particular emphasis on daily necessities and foods, and Lpaca
has increased the number of books, both in an effort to provide customers with “whatever you want, whenever andwherever you need it.”
The Company’s consolidated subsidiary, LAWSON HMV ENTERTAINMENT, INC., which was established on September
1, 2011 through the merging of LAWSON ENTERMEDIA, INC. and HMV Japan K.K., is also engaged inentertainment/e-commerce-related business. The merged company has shown steady recovery at a pace exceeding ouroriginal expectations despite the negative impact of the Great East Japan Earthquake which resulted in voluntarycancellation and postponement of some concerts and in the voluntary delay of new CD/DVD releases.
LAWSON ATM NETWORKS, INC., which operates a financial services-related business, has worked to increase thenumber of transactions in response to the increased number of ATMs installed nationwide in LAWSON stores. As of
February 29, 2012, the number of ATMs installed nationwide totaled 9,002.
In response to the misconduct that was uncovered in fiscal 2009 within the Company’s subsidiary LAWSONENTERMEDIA, INC. (currently LAWSON HMV ENTERTAINMENT, INC.), we have undertaken rigorous initiatives toprevent future misconduct within the Company and its Group companies. Specifically, the Company implemented
centralized management of its affiliates’ funds, examined the status of the distribution of authorities and risk management at
its affiliates, and provided stronger guidance to affiliates for improvement based on internal audits within the Group. In
addition, the Company revised and enforced its Affiliate Management Regulation to strengthen guidance to affiliates withrespect to risk management and establishment of internal control systems. We intend to continue to promote the measures
we are implementing.
[Total Operating Revenues in Other Businesses]
Total Operating Revenues (¥ millions)
65,529Year-over-Year (%)
165.2

5

(2) Capital Expenditures and Financing
Capital expenditures of the LAWSON Group during the year totaled ¥40,211 million, of which ¥32,387 million was
primarily for store facility investment in land and buildings, and ¥7,744 million was for the upgrading of information
systems.
The LAWSON Group’s own funds were used for all capital expenditures during the year ended February 29, 2012.
(3) Changes in Operating Results and Financial Position[1] Changes in Operating Results and Financial Position of the Corporate Group
Category/Fiscal Term

Fiscal 2008

Fiscal 2009

Fiscal 2010

Fiscal 2011

34th Term

35th Term

36th Term

37th Term

Total operating revenues

349,476

467,192

441,277

478,957

48,78749,44054,59461,72823,807

12,562

25,38624,885(¥ millions)
Ordinary profit(¥ millions)
Net income (¥ millions)
Net income per share (¥)

240.10126.67254.61

249.17

Total assets (¥ millions)

436,096

448,131476,036

531,453

Net assets (¥ millions)201,166

198,135

208,466

214,662

Net assets per share (¥)

1,968

1,935

2,037

2,114

Notes:
1. Net income and net income per share declined in the 35th term due to an extraordinary loss of ¥12,616 million recorded as a result of
misappropriation of funds by former directors of consolidated subsidiary LAWSON ENTERMEDIA, INC.
2. A ¥1,936 million loss on a prior period adjustment posted in the 35th term is reflected retrospectively in the operating results andfinancial position of the 34th and 35th terms.

[2] Changes in Operating Results and Financial Position of the Company
Category/Fiscal Term

Fiscal 2008th

34 Term
Total net sales of

Fiscal 2009

Fiscal 2010thth

35 Term

Fiscal 2011
37th Term

36 Term

1,506,312

1,472,415

1,502,754

1,621,328

279,739

271,513

263,209272,498

47,321

44,57749,312

56,11022,066

20,66524,643

22,462LAWSON storesincluding franchised
stores (¥ millions)
Total operating revenues(¥ millions)
Ordinary profit(¥ millions)
Net income (¥ millions)
Net income per share (¥)

222.54208.38247.15224.91

Total assets (¥ millions)402,117420,444444,821500,667

Net assets (¥ millions)

195,634

200,506

211,448

216,826

Net assets per share (¥)

1,969

2,018

2,113

2,166

6

(4) Pressing Issues
The LAWSON Group is promoting the following management measures with the aim of realizing its corporate
philosophy of "Creating Happiness and Harmony in Our Communities."
1) Create merchandise assortments that meet customer needs
In an effort to create stores that meet the needs of customers in the neighborhood, the Group will continue to use thePonta data to develop customer-centric merchandise assortment. We will enhance the level of PRiSM operational
reform based on our core IT system, and strive to improve ordering precision to reduce sales opportunity losses andproduct disposal losses. We will also step up our efforts to enhance product development capabilities by leveraging
the Ponta data.
2) Provide appealing services by leveraging the Ponta multi-partner shopping points program
The number of companies participating in the Ponta program is expected to increase in the days ahead, which willlead to more convenient services for customers. LAWSON will pursue broader marketing analysis and sales
promotion measures in collaboration with the other participating companies to provide customers with more
appealing services.
3) Promote the fresh foods convenience store businessWe will further expand our fresh foods convenience store business, which is a growth area, by opening new
LAWSON STORE100 and fresh foods convenience stores mainly in residential areas. By accelerating the
introduction of perishable foods at our stores and strengthening our private brand, “Lawson select,” which is mainlycomprised of prepared foods, processed foods, and daily necessities, we will strive to respond to the increasingneeds of customers desiring to prepare their meals at home, while further expanding our customer base by attracting
elderly and female customers in addition to male customers in their 20s and 30s, who have constituted the main
body of convenience store shoppers.
4) Respond to demand for OTC drugs and healthcare
LAWSON will expand OTC drug sales and help customers achieve the healthy and comfortable lifestyles they seek
by stepping up the development and marketing of health-oriented foods harnessing the know-how acquired throughoperation of NATURAL LAWSON stores. In addition to selling OTC drugs at our convenience stores, we intend topromote our healthcare business based on in-store drug-dispensing pharmacies. Based on the idea that “you arewhat you eat,” we will continue to help customers lead healthy and fulfilling lives.
5) Full-scale operation of entertainment/e-commerce businessIn our entertainment/e-commerce business, we aim to offer an entertainment-related merchandise assortment thatmeets diverse customer needs both online and offline. We also plan to provide new services in e-commerce byfurther promoting partnership with other companies.
6) Proactive development of overseas businessCurrently, the Group operates LAWSON stores in Shanghai, Chongqing, and Dalian in China, and Jakarta and its
outskirts in Indonesia. We will continue to look into the possibility of opening new stores in these countries, as wellas in other countries and regions where economic growth is expected, by analyzing their economic and politicalsituations. We will also proactively examine whether we can advance into Europe, the United States, and otherdeveloped countries, by finding opportunities to apply our business model.
7) Addressing operating risks
The Group will continue to address risks inherent in expanding its business formats and regions of operation. In
particular, we will strive to step up efforts to tackle risks related to large-scale disasters, including natural disasters,in order to mitigate their effects. In addition, the Group will improve its business continuity framework byaddressing risks concerning information security, including the handling of personal information, as well as risks
concerning legal regulations.
We look forward to the continued support and encouragement of our shareholders.

72. Current Status at the End of February 2012
(1) Major Business Operations and Principal Offices(Convenience Store Operations and Overseas Businesses)[1] LAWSON, INC.
Major Business:
LAWSON, INC. operates the LAWSON-brand franchise system and Company-operated
stores as the headquarters of LAWSON and NATURAL LAWSON convenience store
chainsHead Office:Shinagawa-ku, Tokyo
Principal Offices:
Hokkaido LAWSON Branch (Chuo-ku, Sapporo), Tohoku LAWSON Branch (Aoba-ku,
Sendai), Kanto LAWSON Branch (Shinagawa-ku, Tokyo), Chubu LAWSON Branch(Naka-ku, Nagoya), Kinki LAWSON Branch (Suita, Osaka), Chugoku & Shikoku
LAWSON Branch (Kita-ku, Okayama) and Kyushu LAWSON Branch (Hakata-ku,
Fukuoka)Note: In addition to the above sites, the Company has 95 offices throughout Japan, including
Branches.

[2] Ninety-nine Plus Inc.
Major Business:

Head Office:Ninety-nine Plus Inc. operates Company-operated and franchise system stores as theheadquarters of the LAWSON STORE100 fresh foods convenience store chains.
The 1,172 LAWSON STORE100 stores operated by Ninety-nine Plus are included in thetable on the next page.
Shinjuku-ku, Tokyo[3] LAWSON Toyama, Inc.
Major Business:
LAWSON Toyama, Inc. operates the LAWSON-brand franchise system as theheadquarters of some LAWSON convenience store chains in Toyama prefecture.

Head Office:The 73 LAWSON stores operated by LAWSON Toyama, Inc. are included in the tableon the next page.
Toyama-shi, Toyama
Note: LAWSON Toyama, Inc. became LAWSON’s consolidated subsidiary effective from thecurrent fiscal year.

[4] SHANGHAI HUALIAN LAWSON CO., LTD.
Major Business:
SHANGHAI HUALIAN LAWSON CO., LTD. operates the Company-operated andfranchise system stores of the LAWSON convenience store chains.

Head Office:The 314 LAWSON stores operated by HUALIAN LAWSON CO., LTD. are included in
the table on the next page.
Shanghai, China
Note: The Company raised its controlling stake in its Chinese equity-method affiliate, SHANGHAIHUALIAN LAWSON CO., LTD., to 85% in September 2011, converting it into a consolidated
subsidiary.

8[5] CHONGQING LAWSON CO., LTD.
Major Business:
CHONGQING LAWSON CO., LTD. operates Company-operated stores.

Head Office:The 38 LAWSON stores operated by CHONGQING LAWSON CO., LTD are includedin the table below.
Chongqing, China[6] DALIAN LAWSON CO., LTD.
Major Business:
DALIAN LAWSON CO., LTD. operates the Company-operated stores of the LAWSON
convenience store chains.

Head Office:The 3 LAWSON stores operated by DALIAN LAWSON CO., LTD. are included in thetable below.
Dalian, China
Note: DALIAN LAWSON CO., LTD. was established as the Company’s 95% subsidiary in
September 2011 and subsequently became the Company’s consolidated subsidiary.

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

Number ofStores
550
173
158
153
193
64
91
108
111
71
425
367
Number ofStores314

Prefecture
IbarakiTokyo
Kanagawa
Shizuoka
Yamanashi
Nagano
Aichi
Gifu
Mie
Ishikawa
ToyamaFukui
RegionChongqingNumber ofStores
117
1,384
738
190
81
135
492
125
99
91

Prefecture
Kyoto
Shiga
Nara
Wakayama
Osaka
Hyogo
Okayama
Hiroshima
Yamaguchi
Tottori

182
101
Number ofStores38

ShimaneKagawaRegionDalianNumber ofStores
261
128
100
115
985
572
122
146
112
93
92
99
Number ofStores3Prefecture
Ehime
Tokushima
Kochi
Fukuoka
Saga
Nagasaki
Oita
Kumamoto
MiyazakiKagoshima
Total
RegionOverseas
total

Number ofStores
160
103
60
375
63
90
143
98
85
109
10,310
Number ofStores355[7] LAWSON ASIA PACIFIC HOLDINGS PTE. LTD.
Major Business:
LAWSON ASIA PACIFIC HOLDINGS PTE. LTD. controls the Company’s
subsidiaries and affiliates that operate overseas businesses (excluding China).
Head Office:SingaporeNote: LAWSON ASIA PACIFIC HOLDINGS PTE. LTD. was established as the Company’s
100% subsidiary in May 2011.

9

(Other Business)
Company NameLAWSON HMVENTERTAINMENT, INC.

Head Office
Shinagawa-ku,
Tokyo

LAWSON ATM Networks,
Inc.
BestPractice Inc.

Shinagawa-ku,
Tokyo
Shinagawa-ku,
Tokyo

Cross Ocean Media, Inc.

Shibuya-ku,
Tokyo

Major BusinessEntertainment/e-commerce Sells tickets for various events andbusinessmusic/video software inside LAWSON
stores, etc.
Financial services–related
Installs jointly-operated ATMs inbusiness
LAWSON stores, etc.
Consulting businessConducts surveys of convenience
stores to give advice and makespecific proposals for the
improvement of LAWSON stores
Advertising business
Develops and operates digital signage
inside LAWSON stores.

Note: LAWSON HMV ENTERTAINMENT, INC. was established following the merging of HMV Japan K.K. by LAWSONENTERMEDIA, INC. in September 2011 and subsequent change of the trade name.

(2) Employees[1] Employees of the Corporate Group
Designation of Business Segment
Convenience store business
Overseas businessEntertainment/e-commerce business
Financial services-related business
Consulting business
Advertising business
Total

Number of Employees
4,776
754
751
21
144
4
6,450

YoY Change
78
660
24
(1)
(13)
(1)
747

Notes:
1. The number of employees increased by 747 from the previous fiscal year mainly due to the fact that the Company's equity-method
affiliate, SHANGHAI HUALIAN LAWSON CO., LTD., became the Company’s consolidated subsidiary effective from the current
fiscal year.
2. CHONGQING LAWSON CO., LTD., which had been included in the convenience store business as of the end of the previous fiscal
year, has been included in the overseas business effective from the current fiscal year. The number of employees as of the end of theprevious fiscal year was 94.

[2] Employees of the Company
Number of Employees
3,342

YoY Change

Average Age
37

38.9

10

Average Years of Service
12.5

(3) Status of Major Business Combinations[1] Important Subsidiaries
Company Name
Common Stock
Ninety-nine Plus Inc.
¥99 million
LAWSON Toyama, Inc.
¥50 million
SHANGHAI HUALIAN LAWSON
CNY165,898
CO., LTD.
ThousandCHONGQING LAWSON CO., LTD.
CNY77,660
Thousand
DALIAN LAWSON CO., LTD.
CNY22,000
ThousandLAWSON ASIA PACIFIC
S$64 million
HOLDINGS PTE. LTD.
LAWSON HMV¥100 million
ENTERTAINMENT, INC.
LAWSON ATM Networks, Inc.
¥3,000 million
BestPractice Inc.
¥10 million
Cross Ocean Media, Inc.
¥393 million

Shareholding (%)
100.0
100.0
85.0

Major BusinessConvenience store businessConvenience store business
Overseas business

100.0

Overseas business

95.0

Overseas business

100.0

Overseas business

100.0Entertainment/e-commerce business

70.9
100.0
42.0

Financial services-related business
Consulting business
Advertising businessNotes:
1. The Company raised its controlling stake in SHANGHAI HUALIAN LAWSON CO., LTD., which had been the Company’s
equity-method affiliate in the previous fiscal year, to 85% in September 2011, converting it into a consolidated subsidiary.
2. DALIAN LAWSON CO., LTD. was established as the Company’s 95% subsidiary in September 2011 and subsequently became theCompany’s consolidated subsidiary.
3. The Company established LAWSON ASIA PACIFIC HOLDINGS PTE. LTD. in May 2011 as its 100% subsidiary, in order tocontrol its subsidiaries and affiliates that operate overseas businesses (excluding China).
4. LAWSON HMV ENTERTAINMENT, INC. was established following the merging of HMV Japan K.K. by LAWSONENTERMEDIA, INC. in September 2011 and subsequent change of the trade name.

[2] Other Important Business Combinations
1) Important Affiliated Companies
Company Name
Common Stock
LAWSON Okinawa, Inc.
¥10 million
PT MIDI UTAMA INDONESIA Tbk
Rp. 288,235
million
Venture Republic Inc.
¥307 million

Shareholding (%)
49.0
30.0
41.1

Major BusinessConvenience store business
Overseas businessEntertainment/e-commerce businessNotes:
1. The Company acquired a 30% equity stake in PT MIDI UTAMA INDONESIA Tbk (MIDI) through LAWSON ASIA PACIFICHOLDINGS PTE. LTD. As a result, MIDI became the Company’s equity-method affiliate.
2. Although the Company concluded a capital and operational alliance agreement with Venture Republic Inc. on January 28, 2011, theCompany determined its acquisition date would be March 31, 2011 because the balance sheet date for Venture Republic Inc. isdifferent from the balance sheet date for the Company. Venture Republic Inc. has been included in the scope of application of theequity method effective from the current fiscal year.

2) Important Business Alliances
Mitsubishi Corporation holds 32.4% of the total voting rights (32,399 thousand shares) of the Company(including indirect holdings). Recognizing Mitsubishi Corporation as the most important strategic partner, theCompany has entered into an extensive business tie-up agreement with Mitsubishi Corporation for theenhancement of existing businesses and the development of new businesses.

11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 (Including 416,166 shares of treasury stock)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
37,300(5) Major Shareholders:
Investment in the Company
Shareholder’s Name

Number of shares held(Thousands)

Shareholding (%)

Mitsubishi Corporation

32,08932.1

Japan Trustee Services Bank, Ltd. (Trust account)

2,794

2.8

STATE STREET BANK AND TRUST COMPANY 505223

2,726

2.7

The Master Trust Bank of Japan, Ltd. (Trust account)

2,447

2.5

STATE STREET BANK AND TRUST COMPANY

2,348

2.4

NTT DOCOMO, INC.

2,092

2.1

STATE STREET BANK AND TRUST COMPANY 505225

1,787

1.8

The Chase Manhattan Bank NA, London SL, Omnibus Account

1,643

1.6

STATE STREET BANK AND TRUST COMPANY 502202

1,610

1.6

MELLON BANK N.A. AS AGENT FOR ITS CLIENT MELLON OMNIBUS US

1,451

1.5

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.

122. Status of stock acquisition rights
Stock Acquisition Rights Held by Corporate Officers of the Company as of February 29, 2012
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 person
3 persons
4 persons
4 personsoutside directors)(112 units)(137 units)(162 units)(239 units)
Outside directors
3 persons
3 persons
3 persons
3 persons(21 units)(18 units)(18 units)(25 units)
Common stock ofCommon stock ofCommon stock ofCommon stock ofClass and number of
LAWSON, INC.
LAWSON, INC.
LAWSON, INC.
LAWSON, INC.
shares subject to stock
26,40018,00015,50013,300acquisition rights
Value of property
invested in exercising
¥1
¥1
¥1
¥1
stock acquisition rights(per share)
January 17, 2009
September 6, 2007
October 27, 2006
Exercise period
October 13, 2005
through December
through August 20,
through May 26,
through May 31,
15, 2028
2027
2026
2025
Main exercise
Note 1
Note 2
Note 2
Note 2conditions
10th Stock
11th Stock
9th Stock
Acquisition Rights
Acquisition Rights
Acquisition Rights
Number of option holders and the number of stock acquisition rights (units)
Directors (Excluding
4 persons
4 persons
4 personsoutside directors)(194 units)(166 units)(247 units)
Outside directors
3 persons
3 persons
3 persons(21 units)(23 units)(23 units)
Common stock ofCommon stock ofCommon stock ofClass and number of
LAWSON, INC.
LAWSON, INC.
LAWSON, INC.
shares subject to stock
27,00018,90021,500acquisition rights
Value of property
invested in exercising¥1¥1¥1
stock acquisition rights(per share)
February 18, 2012
February 26, 2011
Exercise period
February 18, 2010
through February 10, through February 1,
through February 1,
2032
2031
2030
Main exercise
Note 2
Note 2
Note 2conditions
Notes:
1. A stock acquisition rights holder may exercise his or her rights only for a period of five (5) years from the day after losing his or her
position as a director of the Company.
2. A stock acquisition rights holder may exercise his or her rights within the exercise period only for a period of five (5) years from the
day after losing his or her position as either director and/or executive officer of the Company.
The total number of shares subject to stock acquisition rights that remain unexercised as of February 29, 2012 is 217,100 shares,
accounting for 0.2% of the total number of shares issued and outstanding.

13

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

Position

Assignments and Important Concurrent Positions
Note: Important concurrent positions of outside directors given later in (5) Outside Directors and Outside
Corporate Auditors

Takeshi Niinami
Yoshiyuki Yahagi
Manabu Asano
Toru Moriyama

Representative Director
Director
Director
Director

Hiroshi Tasaka
Reiko Yonezawa
Takehiko Kakiuchi
Munehiko Nakano

Director
Director
DirectorStanding Corporate
AuditorStanding Corporate
AuditorCorporate Auditor
Corporate Auditor

Atsuhiko Seki
Tetsuo Ozawa
Eiko Tsujiyama

President and CEO
Senior Executive Vice President and CFO
Executive Vice President and COO in charge of CSR
Executive Vice President, Group CEO, Living Essentials Group,
Mitsubishi Corporation

Notes:
1. Directors Hiroshi Tasaka, Reiko Yonezawa and Takehiko Kakiuchi are outside directors as stipulated in Article 2, Item 15, of theCompanies Act of Japan.
2. Standing Corporate Auditor Munehiko Nakano and Corporate Auditors Tetsuo Ozawa and Eiko Tsujiyama are outside corporate
auditors as stipulated in Article 2, Item 16, of the Companies Act.
3. Standing Corporate Auditor Munehiko Nakano has assumed responsible posts for many years in the accounting and administration
departments of Mitsubishi Corporation and therefore has considerable expertise in finance and accounting.
Corporate Auditor Tetsuo Ozawa, lawyer, has practiced law and advised on legal matters and risk management mainly in relation to
the legal affairs of companies and therefore has considerable expertise in finance and accounting.
Corporate Auditor Eiko Tsujiyama has long-term experience as a university professor in accounting and therefore has considerable
expertise in finance and accounting.
4. Changes in appointment, approved with resolutions by the 36th Ordinary General Meeting of Shareholders held on May 24, 2011 are
as follows:
Appointment

Corporate Auditor

Eiko Tsujiyama

Retirement from office

Corporate Auditor

Kazuyuki Masu

5. At its Board of Directors meeting, the Company appointed Director Hiroshi Tasaka, Director Reiko Yonezawa, Corporate Auditor
Tetsuo Ozawa and Corporate Auditor Eiko Tsujiyama as independent directors as specified in the rules set forth by the Tokyo Stock
Exchange, Inc. and the Osaka Stock Exchange Co., Ltd., and filed notifications to that effect with both exchanges.
6. Executive officers who are not directors are as follows:
Senior Executive Vice President

Genichi Tamatsuka

Senior Vice President

Ichiro Kijima

Senior Executive Vice President

Takatoshi Kawamura

Senior Vice President

Hisashi Yasuhira

Executive Vice President

Shuichi Imagawa

Senior Vice President

Masahiro Oyama

Executive Vice President

Masaharu Kamo

Senior Vice President

Tatsushi Sato

Senior Vice President

Norikazu Nishiguchi

Senior Vice President

Kei Murayama

Senior Vice President

Shigeaki Kawahara

Senior Vice President

Masayuki Sawada

Senior Vice President

Takaki Mizuno

Senior Vice President

Atsushi Maeda

Senior Vice President

Hajime Nakai

Senior Vice President

Kazuo Togasa

Senior Vice President

Jun Miyazaki14(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
Retirement
Basic
Stock Options(Millions of Yen)
BenefitCompensation
Directors(Including outside directors)(Outside directors)
Corporate Auditors(Including outside corporate
auditors)(Outside corporate auditors)
Total

Number of
Directors andCorporate
Auditors
Applicable

267

177

90

–

7

(37)

(29)

(7)

(–)

(3)

66

57

–

9

5

(45)
334

(39)
234

(–)
90

(6)
9

(4)
12

Notes:
1. As of February 29, 2012, the number of directors in office was 7 and that of corporate auditors was 4.
2. The above figures include remuneration paid to 1 corporate auditor who retired at the conclusion of the 36th Ordinary General
Meeting of Shareholders held on May 24, 2011.

2) Remuneration paid to representative directors
Name

Officer Category

Takeshi Niinami

Representative
Director
Chairman and
Director

Company Category

LAWSON, INC.

Consolidated
Total Compensation Paid by Type
Total Amount of
BasicStock Options
Compensation
Compensation¥80 million¥55 million¥148 million

Ninety-nine Plus Inc.

¥12 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 of operating
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 determined at theBoard 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:
Hiroshi Tasaka
Outside Director:
Reiko Yonezawa
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 andstock-price-linked compensation through the granting of stock options.

15[Basic compensation]
Basic compensation of directors is composed of fixed compensation with fixed monthly payments and variable
compensation, which fluctuates in response to the Company’s financial performance for each period.
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 pershare). Regarding non-executive directors, including Toru Moriyama, Hiroshi Tasaka, Reiko Yoneyama andTakehiko Kakiuchi, variable compensation is not applicable, as they are focused on their supervisory and advisory
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 of compensation paid
to directors, the Company has a system in which management shares with stockholders the benefits from a rise instock price as well as the risks associated with a price decline. The Company positions stock options ascompensation 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 isdetermined in accordance of 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 not allowed to exercise theirstock 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 year16(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 to reward eachcorporate auditor 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 corporate auditors
The amount of remuneration paid to corporate auditors is determined based on discussions among corporate
auditors, and is within the remuneration amount limit resolved at the General Meeting of Shareholders.
3) Details of remuneration paid to corporate auditors
Remuneration paid to the Company’s corporate auditors consists of basic compensation (fixed compensation) andretirement benefits payable at the time of retirement from office. The amount of fixed compensation is decided
based on discussions among corporate auditors, taking into consideration whether or not they are working on afull-time basis, and segregation of auditing duties. Regarding retirement benefits for corporate auditors, reasonableamounts are to be paid based on discussions among corporate auditors and pursuant to resolutions made at theGeneral Meeting of Shareholders and the standards stipulated by internal rules.
*Regarding “retirement benefits for corporate auditors,” the system itself will be abolished and retirement benefits
upon the abolishment of retirement benefits to corporate auditors will be paid out following resolution at the 37th
Ordinary General Meeting of Shareholders to be held on May 29, 2012.
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 the General
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 30, 1998: ¥60 million or less per year
*The amount will be increased to ¥80 million or less following the resolution at the 37th Ordinary General Meetingof Shareholders to be held on May 29, 2012.

17

(5) Outside Directors and Outside Corporate Auditors
1) Relationship between Major Positions Concurrently Held and the Company
Position in the

Name

Company
Director

Position

Details

Concurrently HeldHiroshi Tasaka

Graduate School ofRelationship between the Company andCompany Where Position Concurrently Held

Professor

Tama University
SophiaBank

President

LimitedSBI Holdings, Inc.

Director

The Japan Research

FellowInstitute, Limited
Director

Reiko Yonezawa

The R Co., Ltd.

President

The Company and The R Co., Ltd.
(President, Reiko Yonezawa) have a business
relationship consisting of reception services
for the Company’s head office provided by
the latter. The Company entrusted The R Co.,
Ltd. to provide services after receiving bids
from several suitable companies andverifying their economic efficiency.

Director

Takehiko Kakiuchi

Mitsubishi

Division COO,

The Company and Mitsubishi Corporation, of

Corporation

Foods

which Mr. Kakiuchi is an employee and(Commodity)

which is a large shareholder of the Company,

Div.

have a business relationship under an

Outside director

extensive business alliance agreement.

Kentucky Fried
Chicken Japan, Ltd.

Corporate auditor

Munehiko Nakano

Corporate auditor

Tetsuo Ozawa

Tokyo Fuji Law

LawyerOffice(Partner)

Monex Group, Inc.

Outside corporate
auditor

CEMEDINE CO.,Corporate auditor

Eiko Tsujiyama

Outside corporateLTD.

auditorWaseda University

Professor

Mitsubishi Corporation, for which Eiko

School of

Tsujiyama serves as an outside corporate

Commerce andauditor, is a large shareholder of the

Graduate School ofCompany and there is a business relationshipCommerce

between the two companies based on a

Mitsubishi

Outside corporate

comprehensive business alliance agreement.

Corporation

auditorNTT DOCOMO, INC., for which Eiko

ORIX Corporation

Outside director

Tsujiyama serves as an outside corporate

NTT DOCOMO,

Outside corporate

auditor, is a large shareholder of theINC.

auditorCompany and there is a business relationshipin the telecommunications field between thetwo companies based on a comprehensive
business alliance agreement.

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

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

Major Activities
Mr. Tasaka attended 7 of 13 Board meetings held during the year andappropriately questioned and/or remarked based on his abundant
experience and knowledge as a learned person and a management
executive. Mr. Tasaka is also a member of the Company’s
Compensation Committee.

Director

Reiko Yonezawa

Ms. Yonezawa attended 12 of 13 Board meetings held during theyear and appropriately questioned and/or remarked based on her
abundant experience and knowledge as a management executive. Ms.
Yonezawa is also a member of the Company’s Compensation
Committee.

Director

Takehiko Kakiuchi

Mr. Kakiuchi attended 10 of 13 Board 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 the Board of Directors as its
Chairman. Mr. Kakiuchi is also a member of the Company’s
Compensation Committee.

Corporate auditor

Munehiko Nakano

As a standing corporate auditor, Mr. Nakano examined financial
documents, and visited relevant establishments and business partners
to examine business operations and financial positions thereof. He
monitored and verified the execution of duties of directors and otherpersonnel including those relating to the improvement of internal
control systems, and was also responsible for smooth operations of
the Board of Corporate Auditors as its Chairman.
Mr. Nakano attended 13 of 13 Board of Directors’ meetings and 15
of 15 Board of Corporate Auditors’ meetings held during the year
and appropriately questioned and/or remarked based on his abundantoccupational experience in accounting and investment management.

Corporate auditor

Tetsuo Ozawa

Mr. Ozawa attended 13 of 13 Board of Directors’ meetings and 15 of
15 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 a memberof the Company’s Compensation Committee.

Corporate auditor

Eiko Tsujiyama

Ms. Tsujiyama attended all 11 Board of Directors meetings and all 11
Board of Corporate Auditors meetings held throughout the year
during her term in office and appropriately questioned and/or
remarked based on her deep knowledge as a university accounting
professor.

Note: At its Board of Directors meeting, the Company appointed Director Hiroshi Tasaka, Director Reiko Yonezawa, Corporate Auditor
Tetsuo Ozawa and Corporate Auditor Eiko Tsujiyama as independent directors as specified in the rules set forth by the Tokyo
Stock Exchange, Inc. and the Osaka Securities Exchange Co., Ltd., and filed notifications to that effect with both exchanges.

19(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 insuch business operations
Business partner groups that provide the Group with products and/or services and whose total amount of business
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 applicable corporations incases 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 non-executive 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.

20

4. Independent Auditor(1) Independent Auditor
Deloitte Touche Tohmatsu LLC(2) Amounts of Remunerations, etc., to Be Paid to the Independent Auditor
1) Remuneration to be paid by the Company to the Independent Auditor2) Sum of money and other property benefits to be paid by the Company and its
subsidiaries to the Independent Auditor¥81 million¥134 million

Note:
1. The audit agreement entered into by the Independent Auditor and the Company does not clearly distinguish the amount for the audit
under the Companies Act and that for the audit under the Financial Instruments and Exchange Act, and the two amounts cannot be
substantially distinguished from each other. Therefore, the amount in 1) above indicates the total for the two audits.
2. Four of the important subsidiaries of LAWSON overseas is subject to audit by an independent auditor other than LAWSON’s
independent auditor.

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

21

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 20, 2012, based on improvements and the operation of the preceding“2011 Basic Policy for Improvement of Internal Control Systems,” which was approved at the Board of Directors’ meeting
held on February 21, 2011, the Company passed a resolution called the “2012 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 (hereinafter, the “Compliance”), and receive status reports
thereof periodically.
2) The Board of Directors shall maintain and improve the supervising function regarding the execution of duties by the
Directors by electing outside Directors on an ongoing basis.
3) The Corporate Auditors shall independently audit the execution of duties by the Directors, including the statusconcerning the improvement of the internal control systems.
4) The Internal Audit Department, which is independent from the business-executing bodies, shall audit the statusconcerning the improvement of the internal control systems, and recommend improvements thereof, as required.
5) The Board of Directors shall maintain and raise the awareness of officers and employees regarding compliance bythoroughly disseminating the LAWSON Group Code of Conduct and the LAWSON Ethical Mission Statement bysuch measures as, including, but not limited to, appointing a Chief Compliance Officer (CCO), establishing adepartment to oversee compliance, assigning personnel in charge of compliance at each department, streamlining
the rules in relation to compliance, and providing periodic training on ethics and awareness surveys on compliance.
6) The Legal Affairs Department shall be reinforced to fortify foundations for complying with legal requirements byidentifying the laws and regulations applicable to the Company’s businesses and communicating the content thereof
to the relevant departments and sections.
7) The Company shall establish and upgrade normal reporting routes for reporting any violations of laws, regulations
or internal rules, and upgrade reporting and consulting systems (internal and outside contact points and agroup-wide consulting contact point) that fully protect those who report more positive. By establishing a consulting
contact point for employees and business counterparties for LAWSON’s franchised stores, the Company shall strive
for early detection of violations or possible violations of laws, regulations, etc. across the entire LAWSON chain.
8) The Company shall never become involved with antisocial forces or bodies that threaten the order and security ofsociety, and shall take a firm stance on, and deal with, improper demands by consulting with lawyers, the police andthe like.
(2) Systems to Preserve and Manage Information Pertaining to the Execution of Duties by Directors
1) The Company shall record, preserve and manage information relating to decision-making at important meetings
such as those of the Board of Directors and the Management Council, and authorizing documents, including those
approved by the President, as well as financial, clerical and risk- and compliance-related information (including
information contained in electromagnetic media). Moreover, the Company shall put in place a system allowing
relevant parties to inspect the above information.
2) The Company shall manage and monitor its information systems in a secure manner, in addition to maintaining thesystems, by sufficiently taking into account contingencies.
3) The Company shall establish and maintain rules regarding the management of documents (including
electromagnetic recording media), keep everyone informed about the responsibility and authority for document
management, document storage periods and management methods, and periodically monitor the status of document
storage and management.
4) The Company shall establish and maintain rules regarding the protection of personal information and the
management of trade secrets, and appropriately and safely store and manage personal information and important
trade secrets.

225) Through the close collaboration between the Risk Management Department and the IT Department, the Company
shall strive to establish a consolidated and unified information security governance system.
6) The Company shall establish and maintain rules regarding the disclosure of important Company information, andupgrade the system for disclosing information that must be disclosed according to the requirements of laws,
regulations and stock exchanges, in an appropriate, timely and fair manner.
(3) Rules and Other Systems Regarding Risk Management
1) The Company shall establish a department to oversee risk management, improve rules related to risk management,
and improve group-wide risk-prevention systems during normal operations. Moreover, the Company shall respondaccording 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 management by assigning risk
management staff to departments and associated companies and conducting risk management training.
3) The Company shall develop contingency systems and formulate policy for contingency-response bodies in advanceto prepare for the occurrence or possible occurrence of unanticipated situations or events, which might have adverse
effects on management of the Company, in order to provide a quick response to any actual occurrence thereof and to
take effective measures to prevent a reoccurrence. In particular, the Company shall formulate a Business Continuity
Plan (BCP) and a Business Continuity Management (BCM) system to minimize the business interruption in theevent 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 three times ayear 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 of duties
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 and employees,
the Company shall improve systems so that management guidelines and policies are disseminated to employees bycorporate officers, and important field information is properly communicated by employees to corporate officers ina timely manner.
(5) Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group Consisting of theCompany and Its Subsidiaries
1) The Company shall endeavor to maintain and enhance the LAWSON brand through close collaboration withsubsidiaries and affiliated companies (hereinafter, “Associated Companies”). However, with regards to affiliatedcompanies, the Company will work to appropriately establish and maintain systems through phased implementation,
taking into account such factors as relations with other leading shareholders, differences in laws, regulations andbusiness 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 Associated Companies fully
informed of the LAWSON Group Code of Conduct.
3) The Company shall appoint designated persons at major Associated Companies to be responsible for promoting
compliance and risk management and promote communications between the Company and major subsidiaries witha view to ensuring appropriate business operations across the entire LAWSON Group.

23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 and regulations andaccounting standards and disclosing the same after they have been discussed, examined and confirmed inaccordance with regulations governing information disclosure, in order to report financial information in a properand timely manner.
2) The Company shall establish a dedicated internal organization in order to properly implement the internal control
reporting system required by the Financial Instruments and Exchange Act, as an internal control for financial
reporting. Furthermore, the Company shall establish a system for self- and third-party evaluation and improvement
through the identification and recording of business processes at important business bases and the status ofCompany-wide internal controls. The results of these evaluations of, and improvements at, the Company andimportant subsidiaries shall be regularly reported to the Board of Directors.
(7) Matters Concerning Employees Where a Corporate Auditor Requests Employees to Assist with Duties
1) The Company shall assign appropriate personnel to the Auditors’ Office as employees exclusively to assist
Corporate Auditors in the execution of their duties (hereinafter, “Corporate Auditors’ Staff”).
2) Corporate Auditors’ Staff may serve concurrently as Corporate Auditors of Associated Companies.
3) Corporate Auditors’ Staff shall have the authority to conduct investigations necessary for audits by Corporate
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 to ensurethat Corporate Auditors’ Staff carry out their duties appropriately. Personnel changes require the prior consent of theStanding 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 business administration
matters, as well as the status and results of the execution of their duties, to Corporate Auditors so that the Corporate
Auditors can carry out their duties effectively. Such important matters include compliance- and 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 orloss, they shall immediately inform the Board of Corporate Auditors.
3) Reports to Corporate Auditors shall basically be made in good faith without fail, and shall be made promptly, if
required, in addition to periodic reports.
(10) Other Systems to Ensure Effective Audits by Corporate Auditors
1) The Representative Directors and Corporate Auditors shall have regular meetings to enhance smoothcommunications with each other.
2) Directors shall cooperate with the Corporate Auditors with regards to communications, the collection and exchange
of information and so on between the Corporate Auditors and the corporate directors and the like of AssociatedCompanies so that the Corporate Auditors can perform their duties appropriately.
3) Directors shall also cooperate in conducting surveys of significant business partners, which the Corporate Auditors
deem necessary.
4) Directors shall enable the Corporate Auditors to collaborate with outside experts such as lawyers and certified
public accountants, if any Corporate Auditor deems it necessary in executing his/her duties.
The above amounts and the number of shares in this Business Report are rounded down to the nearest unit and the ratios arerounded to the nearest whole number.

24

(TRANSLATION ONLY)
Consolidated Balance Sheet (As of February 29, 2012)(Millions of yen)
Assets
Account item
Current assets
Cash and bank deposits
Accounts receivable—due from
franchised stores
Marketable securities
Merchandise inventories
Prepaid expenses
Accounts receivable—other
Deferred tax assets
Other
Allowance for doubtful accounts

Amount160,157
79,074
19,521

Fixed assets
Property and store equipment
Buildings and structures
Furniture, fixtures, and equipment

371,295
183,835
107,061
14,013

4,999
8,075
8,110
32,645
4,800
3,080
(149)

Land

6,815

Lease assets

54,137

Construction in progress

1,806

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

38,977
19,288
8,263
10,871
553
148,483
7,702
32,138
7,988
83,665

Deferred tax assets

16,870Claims provable in bankruptcy,
claims provable in rehabilitation,and otherOther

15,136

Allowance for doubtful accounts(15,851)

Total Assets

531,453

832

Liabilities
Account item
Current liabilities
Accounts payable—trade
Accounts payable—due tofranchised stores
Current portion of long-term debt
Lease obligations
Accounts payable—other
Income taxes payable
Deposits received
Accrued employees’ bonuses
Provision for use of points granted
Asset retirement obligations
Other
Long-term liabilities
Long-term lease obligations
Allowance for employees’
retirement benefits
Allowance for retirement benefits
to executive officers and corporate
auditors
Deposits received from
franchisees and lessees
Allowance for impairment loss on
leased property
Asset retirement obligations
Other
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive
incomeNet unrealized loss onavailable-for-sale securities
Land revaluation difference

Foreign currency translation
adjustments
Stock acquisition rights
Minority interests
Total net assets
Total Liabilities and Total Net Assets

25

Amount217,978
88,262
1,390
500
11,223
17,541
15,30575,004
3,204
701
101
4,743
98,81237,902
8,745
308

35,735679
15,161
280
316,791

211,835
58,50647,707
107,249(1,627)
(680)
(11)
(567)

(101)
442
3,064
214,662
531,453

(TRANSLATION ONLY)
Consolidated Statement of Income(From March 1, 2011 to February 29, 2012)(Millions of yen)Account item

AmountOperating revenues
Franchise commissions from franchised stores
Other
Net sales
Net sales
Total operating revenues
Cost of goods sold
Gross profit on sales
Operating gross profit
Selling, general, and administrative expenses
Operating income
Nonoperating income
Interest received
Compensation income
Equity in earnings of affiliates
Other
Nonoperating expenses
Interest expense
Loss on cancellation of store lease contract
Other
Recurring profit
Extraordinary gains
Gain on step acquisitions
Gain on negative goodwill
Other
Extraordinary losses
Loss on sale of fixed assets
Loss on disposal of fixed assets
Loss on impairment of long-lived assets
Loss on disaster
Loss on adjustment for adoption of accounting for asset retirement
obligations
Other
Income before income taxes and minority interests
Income taxes – current
Income taxes – deferred
Income before minority interests
Minority interests in net income
Net income

26

215,573
55,320[208,063][156,245][51,817]

270,893
208,063
478,957
156,245
322,711
260,941
61,769

672
446
380
767
1,122
661
526

1,570
291
197

2,268

2,309
61,728

2,059

40
2,068
3,318
3,460
8,292
320
22,963(2,321)

17,502
46,285
20,64125,643758
24,885

(TRANSLATION ONLY)
Consolidated Statement of Changes in Net Assets(From March 1, 2011 to February 29, 2012)(Millions of yen)
Shareholders’ equity

Balance at the end of previous
periodCommonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’ equity

58,506

47,696

99,608(1,693)204,117

Accumulated other comprehensive income
Net
Total
Foreignunrealized
AccumulatLandcurrency
loss oned otherrevaluationtranslation
availablecomprehen
difference
adjustments
for-salesive income
securities

(4)

(634)

1

(638)

Stock
acquisitionrightsMinority
interests

Total net
assets405

4,581

208,466

Changes of items during theperiod(17,177)
24,885

Dividends from surplus
Net income
Purchase of treasury stock –at cost(3)

Reversal of revaluation
reserve for land

(67)

Exercise of stock acquisitionrights to shares (delivery oftreasury stock)10(17,177)
24,885(17,177)
24,885

(3)

(3)

(67)
69

Balance at the end of thecurrent period

67

–

80

Net changes of items otherthan shareholders’ equity –net
Total changes of items during
the period

67

80
(6)

(102)

(109)

37

(1,516)(1,588)

–

10

7,640

65

7,717

(6)

67

(102)

(42)

37

(1,516)

6,195

58,50647,707

107,249(1,627)

211,835

(11)

(567)

(101)

(680)

442

3,064

214,66227

(TRANSLATION ONLY)(Notes to the Consolidated Financial Statements)
1. Scope of consolidation(1) Number of Consolidated subsidiaries: 10(Domestic) LAWSON HMV Entertainment, Inc.
LAWSON ATM Networks, Inc.
BestPractice Inc.
Ninety-nine Plus Inc.
Cross Ocean Media, Inc.
LAWSON Toyama, Inc.
(Foreign)
CHONGQING LAWSON, Inc.
SHANGHAI HUALIAN LAWSON CO., LTD.
DALIAN LAWSON COMPANY LIMITEDLAWSON ASIA PACIFIC HOLDINGS PTE. LTD.
Among those listed above, DALIAN LAWSON COMPANY LIMITED and LAWSON ASIA PACIFICHOLDINGS PTE. LTD. were included in the scope of consolidation as those subsidiaries were newly
established in the consolidated fiscal year under review. Also, included in the scope of consolidation were
LAWSON Toyama, Inc., of which materiality has increased, and SHANGHAI HUALIAN LAWSON CO.,LTD. in which shareholding ratio by LAWSON, INC. (the "Company") has increased.
HMV Japan K.K. was excluded from the scope of consolidation as it was dissolved due to anabsorption-type merger effective September 1, 2011, in which LAWSON ENTERMEDIA INC., aconsolidated subsidiary of the Company, was the surviving company. LAWSON ENTERMEDIA INC.
changed its name to LAWSON HMV Entertainment, Inc.
(2) Names of major nonconsolidated subsidiaries, etc.
(Domestic) Radish LAWSON Supermarket, Inc.
Natural LAWSON Direct, LLC.
(Foreign)
LAWSON USA HAWAII, 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: 3(Domestic) LAWSON Okinawa, Inc.
Venture Republic Inc.
(Foreign)
PT MIDI UTAMA INDONESIA Tbk
Among those listed above, Venture Republic Inc. was included in the application of equity method fromthe acquisition date of the shares whereas PT MIDI UTAMA INDONESIA Tbk became an equity method
affiliate as a result of the acquisition of shares by the Company during the consolidated fiscal year underreview.
SHANGHAI HUALIAN LAWSON CO., LTD., which had been categorized as an equity method affiliate
in the previous consolidated fiscal year, was excluded from the application of the equity method andincluded in the scope of consolidation due to an increase in the shareholding ratio.
(2) Affiliated companies to which the equity method is not applied
The Company does not apply the equity method to Radish LAWSON Supermarket, Inc. and LAWSONUSA HAWAII, INC., both of which were categorized as nonconsolidated subsidiaries, as well as KOBE
HOT DELI Co., LTD.; Healthsiru Co., Ltd.; LAWSON Farm Chiba, Inc.; LAWSON Farm Kagoshima,Inc.; LAWSON Farm Tokachi, Inc.; and LAWSON Farm Oita, Inc., all of which were categorized as
nonequity method-applied affiliates, because the financial figures such as net income, retained earnings,
and others are negligibly insignificant in comparison with the Company’s consolidated financial
statements.
(3) Special notes concerning procedures for application of the equity method:
The closing date of Venture Republic Inc. and PT MIDI UTAMA INDONESIA Tbk is December 31.
When preparing the consolidated financial statements, the Company used these companies’ financial
information prepared as of such 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.
28

(TRANSLATION ONLY)

3. Fiscal year end of the consolidated subsidiaries
The balance sheet date of CHONGQING LAWSON, Inc..; SHANGHAI HUALIAN LAWSON CO., LTD.;and DALIAN LAWSON COMPANY LIMITED. is December 31. In order to prepare for the consolidated
financial statements, the Company used these companies’ financial information prepared as of such closing
date are used and significant transactions which occur between the balance sheet date and the consolidatedbalance sheet date are adjusted as required for consolidation. The fiscal year-end date for the otherconsolidated subsidiaries correspond 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 determined basedon the moving-average method.
Other: Stated at cost determined by the moving-average method.
Inventories:
Inventories at cost being determined by the retail method (the book value on the balance sheet is written
down based on any decline in profitability).
Merchandise of some consolidated subsidiaries is stated at cost determined by the specific identification
method (the book value on the balance sheet is written down based on any decline in profitability).
(2) Depreciation
Property and store equipment (except for leased 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 five to eight 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 five 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 zero.
Long-term prepaid expenses:
Amortization of long-term prepaid expenses is computed by the straight-line method.
(3) Accounting policies for important reserves
Allowance for Doubtful Accounts:
Allowance for doubtful accounts is provided at 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.

Accrued Employees’ Bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on theestimated amounts.
Provision for use of points granted:
The Company provides, mainly 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 points granted are recorded at the amountthat is expected to be used as of the balance sheet date.

29

(TRANSLATION ONLY)
Allowance for Employees’ Retirement Benefits:
Allowance for employees’ retirement benefits are provided at the amount calculated based on the
projected benefit obligations and plan assets at the balance sheet date. Actuarial differences aremainly amortized from the following fiscal year on a straight-line basis over a certain period (10years) 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.
Allowance for Retirement Benefits to Executive Officers and Corporate Auditors:
Allowance for retirement benefits to executive officers and corporate auditors and of the Company,
and to directors and corporate auditors of a consolidated subsidiary, are recorded as a liability at
100% of the amount that would be required if all corporate auditors, executive officers, and directors
terminated their services with the Company at the balance sheet date.
(4) Foreign Currency Translation and Foreign Currency Financial Statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains
and losses from translation are recognized in the consolidated statement of income. The balance sheet
accounts as well as revenue and expense accounts of foreign subsidiaries and affiliated companies aretranslated into Japanese yen at the current exchange rate as of the balance sheet date except forshareholders’ 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) Leases
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.
(6) Accounting for Consumption Tax
Consumption tax is excluded from income and expense.
(7) Change of Significant Accounting Policies
1) Application of “Accounting Standard for Asset Retirement Obligations”
Effective from the consolidated fiscal year under review, the Company has applied the “AccountingStandard for Asset Retirement Obligations” (ASBJ Statement No. 18, March 31, 2008) and the“Guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21, March
31, 2008).
As a result of this change, operating income and ordinary income declined ¥967 million, respectively,
and income before income taxes and minority interests decreased ¥9,157 million.

2) Application of “Accounting Standard for Equity Method of Accounting for Investments” and“Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using
the Equity Method”
Effective from the consolidated fiscal year under review, the Company has applied the “Revised
Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No. 16,
March 10, 2008) and the “Practical Solution on Unification of Accounting Policies Applied to
Associates Accounted for Using the Equity Method” (PITF No. 24, March 10, 2008). There is no
impact on operating income, Recurring profit and income before income taxes and minority interests.

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.

30

(TRANSLATION ONLY)(Changes in Method of Presentation)
1. Effective from the consolidated fiscal year under review, based on the “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22, December 26, 2008), the Company has applied the“Ordinance Partially Revising the Enforcement of the Companies Act, the Ordinance on Accounting ofCompanies, etc.” (Ordinance of the Ministry of Justice No. 7 of 2009, issued on March 27, 2009); and theitem of “Income before minority interests” is presented.
2. “Compensation received for removal” as presented in the previous consolidated fiscal year has been changed
to “Compensation income.”(Additional Information)
Effective from the consolidated fiscal year under review, the Company adopted the “Ordinance on Partial
Amendments to Accounting of Companies” (Ordinance of the Ministry of Justice No. 33 of 2010, issued on
September 30, 2010) based on the “Accounting Standard for Presentation of Comprehensive Income” (ASBJ
Statement No. 25, June 30, 2010). As a result, the item presented as “Valuation and translation adjustments”
as of February 28, 2011, has been changed to “Accumulated other comprehensive income.”(Notes to the Consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment: ¥180,425 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 balance sheet date was¥ 287 million.
(Notes to the Consolidated Statement of Income)1. Long-lived assets
The Company and the consolidated subsidiaries (together, the “Group”) identified each store as the smallest cash
generating unit.
The Group recognized an impairment loss on the following assets that declined in value due mainly tocontinuous operating losses. The carrying amount of those assets were written down to the recoverable amountand were recorded as extraordinary losses.
Category by use
Location
AssetsMillions of yen
Buildings and structures
Tokyo
546
Furniture, fixtures, equipment, and others
StoresOsaka
557
Others
2,213

Total
–
–
3,318
Category by fixed assets(Millions of yen)
Buildings and structures
2,101
Furniture, fixtures, and equipment
251
Lease assets
673
Land
155
Other
136
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 rateof 4.3% was applied.

31

(TRANSLATION ONLY)
2. Loss on disasters
Loss on disasters is attributable to the Great East Japan Earthquake, and the details are as described below:
Loss relating to support activities for franchisees¥1,793 million
Loss on fixed assets¥644 million
Other losses¥1,023 million
Total¥3,460 million

32

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

100,300–

Number of sharesat the end of theperiod(thousand shares)–

100,300

Treasury stock
Common stock (notes)

433
0
17
416
Notes:
1. Out of common stock, the increase of 0 thousand shares in treasury stock is attributable to purchase of stock
less than one share unit.
2. Out of common stock, the 17 thousand share decrease in treasury stock resulted from the 17 thousand-sharedecrease due to the exercise of stock option rights and a 0-thousand share purchase request of stock less than
one share unit.

2. Dividend(1) Dividend payment

Date of resolution
The General meetingof shareholders(May 24, 2011)
Meeting of Board of
Directors (October
13, 2011)

Class ofsharesAmount ofdividend payment(millions of yen)

Dividend pershare (yen)Date attributable
to dividend

Effective
date

Common
stock

8,488

85

As of February
28, 2011

As of May25, 2011

Common
stock

8,688

87

As of August
31, 2011

As ofNovember
10, 2011(2) Dividends for which the effective date is after the year-end balance sheet date, while dividends attributed tothis period.
Amount of
DateClass of Reserve of
Dividend per
Effective
Date of resolution
dividend payment
attributablesharesDividend
share (yen)date(millions of yen)
to dividend
As of
The General meeting
As of May
CommonRetained
9,289
93
Februaryof shareholders
30, 2012
stock
Earnings
29, 2012(May 29, 2012)

3. Kind and number of stock which can be exercised by outstanding stock acquisition rights(excluding those not yet in the exercisable period).
Common stock

217,100 shares

33

(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 other accounts receivable are exposed to credit risk from businesscounterparties.
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 collectibility of debt
due to deterioration in the financial conditions of the owners.
Marketable securities are government bonds which are financial instruments with low risk and highliquidity. Investment securities are primarily shares of companies with business relationships and listed
shares of which 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 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 long-term debt and lease obligations related to finance lease transactions issecuring the operating capital and funds required for capital investments, and their maximum redemption
dates are one year and seven years after the balance sheet date, respectively.
Deposits received from franchisees and lessees which are primarily operational deposits received from
franchised stores based 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 fund raising (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.

34

(TRANSLATION ONLY)

2. Matters relating to the fair values of financial instruments
The carrying amount, fair values, and difference as of February 29, 2012, 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 bank deposits(2) Accounts receivable—other
Allowance for doubtful accounts (*1)

Carrying amount
79,07432,645(48)
32,596

Fair value
79,074(Millions of yen)
Difference–

32,596

–

4,999
115

4,999
115

(0)
–

4,879

4,373

(505)

32,10864

75,661–(7,402)(3) Marketable securities andinvestment securities(i) Held-to-maturity debt securities(ii) Available-for-sale securities(iii) Investment in subsidiaries andaffiliated companies(4) Long-term loans receivable
Allowance for doubtful accounts (*1)

32,138(94)
32,044
83,665(601)
83,064
15,136(5) Lease deposits
Allowance for doubtful accounts (*1)(6) Claims provable in bankruptcy,
claims provable in rehabilitation, andother
Allowance for doubtful accounts (*1)

(15,100)
35
236,80988,262500
75,004
49,12635–
Total assets
228,965(7,843)(1) Accounts payable—trade88,262–(2) Current portion of long-term debt
5000(3) Deposits received
75,004–(4) Lease obligations (*2)
49,419293(5) Deposits received from franchisees
35,73532,484(3,250)and lessees
Total liabilities
248,628
245,671(2,957)(*1) Allowance for doubtful accounts related to accounts receivable—other, long-term loans receivable, leasedeposits and claims provable in bankruptcy, claims provable in rehabilitation and other, have been deducted.
(*2) Lease obligations are include liabilities maturing within one year.

35

(TRANSLATION ONLY)(Note 1) Method of calculating the fair values of financial instruments
Assets(1) Cash and bank deposits (2) Accounts receivable—other
The carrying fair values of cash and bank deposits and accounts receivable—other approximate fair value
because of their short maturities.
(3) Marketable securities and investment securities
The fair values of investment securities are measured at the quoted market price on the stock exchange forthe equity instruments, and at the quoted price obtained from the financial institution for certain debt
instruments.
(4) 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.
(5) Lease deposits
The fair values of lease deposits are determined by discounting future cash flows, which reflect thecollectibility, using the yield rate of government bonds for the remaining period.
(6) Claims provable in bankruptcy, claims provable in rehabilitation, and other
The fair values of claims in bankruptcy, claims provable in rehabilitation, and other are stated at bookvalue because the estimated amount of bad debt is calculated based on the collectibility, and fair values areclose to the amount which can be calculated by deducting the estimated amount of current bad debt fromthe carrying value on the consolidated balance sheet.
Liabilities(1) Accounts payable—trade (3) Deposits received
The carrying values of accounts payable—trade and deposits received approximate fair value because of
their short maturities.
(2) Current portion of long-term debt
The fair values of current portion of long-term debt are determined by discounting the cash flows related
to the debt at the Group’s assumed corporate discount rate.
(4) 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.
(5) Deposits received from franchisees and lessees
The fair values of deposits received from franchisees and lessees are determined by discounting future
cash flows based on the estimated repayment amount with the yield rate of government bonds during theremaining period.
(Note 2) Financial instruments whose fair values cannot be reliably determined
Category
Carrying amount (Million Yen)
Unlisted equity securities
272
Investments in subsidiaries and2,295
affiliated companies
Others139
Because financial instruments listed above do not have market prices and their fair values cannot be reliably
determined, they are not included in “(3) Marketable securities and investment securities.”

36

(TRANSLATION ONLY)(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
Allowance for employees’ retirement benefits
Allowance for doubtful accounts
Impairment loss
Tax loss carryforwards
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets

1,281
1,304
9,051
739
5,230
3,503
2,929
5,609
3,503
33,154(9,433)23,721

Investments in subsidiaries and affiliated companies(paid-in capital decrease)
Total deferred tax liabilities(2,050)

Deferred tax assets-net

21,670(2,050)2. Revision of deferred tax assets due to changes in effective tax rate
The “Act for Partial Revision of the Income Tax Act, etc., for the Purpose of Creating Taxation System
Responding to Changes in Economic and Social Structures” (Act No. 114 of 2011) and the “Act on Special
Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following
the Great East Japan Earthquake” (Act No. 117 of 2011) were promulgated on December 2, 2011. As a result,
the reduction of corporate tax rates and the Special Income Tax for Reconstruction are to be effective fromfiscal years beginning on or after April 1, 2012. Due to this implementation, the effective tax rate used to
calculate deferred income taxes related to the temporary differences that are expected to be recovered or
settled for the three consecutive fiscal years beginning on March 1, 2013, has been reduced from thepreviously applied rate of 40.7% to 38.0%, while 35.6% is applied to those temporary differences expected tobe covered or settled for fiscal years beginning on or after March 1, 2016.
As a result of this change, deferred tax assets (an amount after deducting deferred tax liabilities) decreased by¥1,586 million, and deferred income tax expense increased by ¥1,586 million.

37

(TRANSLATION ONLY)(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 coversubstantially all of their employees. The Company established a trust fund for its lump-sum severance indemnityplan.
In addition, the Company has a defined contribution plan for severance payments.
Projected benefit obligations
a. Projected benefit obligations
b. Plan assets
c. Projected benefit obligations in excess of plan assets (= a + b)
d. Unrecognized prior-service coste. Unrecognized actuarial differences
f. Allowance for employees’ retirement benefits (=c + d + e)

(Millions of yen)
(14,890)
5,577(9,312)351
216(8,745)

Net periodic benefit cost
(Millions of yen)a. Service cost
1,076
b. Interest cost265c. Amortization of prior-service cost173
d. Amortization of actuarial differences
92
e. Net periodic benefit cost (= a + b +c + d)
1,607
f. Contribution to defined contribution plan277
g. Total (= e + f)
1,884
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
2.0% (mainly)
b. Expected rate of return on plan assets
0%c. Allocation method of estimated total
Straight-line basis (a method to allocate
retirement benefits
estimated total retirement benefits
equally to the respective periods in theemployee’s whole service period)(Per-Share data)
1. Net assets per share
2. Net income per share

2,114.00 yen
249.17 yen

38

(TRANSLATION ONLY)
Nonconsolidated Balance Sheet (As of February 29, 2012)(Millions of yen)
Assets
Account item
Current assets
Cash and bank deposits
Accounts receivable—due from
franchised stores
Marketable securities

Amount137,840
75,38918,064Merchandise inventories
Prepaid expenses
Accounts receivable—other
Deferred tax assets
Other
Allowance for doubtful accounts

807
7,070
26,212
3,122
2,245
(73)

Fixed assets
Property and store equipment
Buildings
Structures
Furniture, fixtures, and equipment

362,826
162,075
86,686
11,126
11,884

4,999

Land

6,815

Lease assets

43,787

Construction in progress

1,776

Intangible assets
Software
Software development in progress
Goodwill
Other27,413
17,891
8,194
871
455

Investments and other
Investments in securities
Investments in subsidiaries andaffiliated companies
Investments in affiliated private
limited company
Long-term loans receivable
Long-term loans receivable fromsubsidiaries and affiliates
Long-term prepaid expenses

173,337460
27,288

Lease deposits
Deferred tax assets
Other

78,45014,475
1,502

Allowance for doubtful accounts(1,380)Total Assets

500,667

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

3,006

Legal reserve

32,075
9,907

Other retained earnings
General reserve

7,551

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

39

Amount196,405
72,752
1,006
15,8308,545
13,902
14,2591,046
1,757
63,587
3,012
556
147
87,43530,6998,188
289
35,718655
11,642
241
283,840
216,986
58,50647,707
47,696
10
112,400
727
50,00061,673(1,627)
(602)
(35)
(567)
442
216,826
500,667

(TRANSLATION ONLY)
Nonconsolidated Statement of Income(From March 1, 2011 to February 29, 2012)(Millions of yen)Account item

AmountOperating revenues
Franchise commissions from franchised stores
Other
Net sales
Net sales
Total operating revenues
Cost of goods sold
Gross profit on sales
Operating gross profit
Selling, general, and administrative expenses
Operating income
Nonoperating income
Interest and dividend income
Compensation income
Other
Nonoperating expenses
Interest expense
Loss on cancellation of store lease contract
Other
Recurring profit
Extraordinary gains
Gain on sales of fixed assets
Gain on reversal of subscription rights to shares
Other
Extraordinary losses
Loss on sale of fixed assets
Loss on disposal of fixed assets
Loss on impairment of long-lived assets
Loss on disaster
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Other
Income before income taxes
Income taxes – current
Income taxes – deferred
Net income

40

209,045
24,035[39,417][28,035][11,382]

233,080
39,417
272,498
28,035
244,462
188,199
56,263

837
348
452
850
579
361
50
44
2

1,638

1,791
56,110

97

40
1,888
2,764
3,229
6,823
328
21,216(2,545)

15,074
41,133
18,67022,462

(TRANSLATION ONLY)
Nonconsolidated Statement of Changes in Net Assets(From March 1, 2011 to February 29, 2012)(Millions of yen)
Capital surplus

Balance at the end of previous period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock – at cost
Reversal of revaluation reserve for
land
Exercise of subscription rights toshares (delivery of treasury stock)
Net changes of items other thanShareholders’ equity – net
Total changes of items during theperiodBalance at the end of the current
periodCommonstock

Additional
paid-in
capital58,506

47,696

Other
capitalsurplusTotal
capitalsurplus–47,696

Shareholders’ equity
Retained earnings
Other retained earnings
EarnedLegal
Generalsurplusreserve
reservebrought
forward727
50,00056,455(17,177)
22,462
(67)

10

10

Total
retainedearnings

Treasury
stock

Total
shareholders’equity107,182(1,693)211,692(3)(17,177)
22,462(3)(17,177)
22,462
(67)

(67)
69

80

–

–

10

10

–

–

5,217

5,217

65

5,294

58,506

47,696

10

47,707727

50,00061,673

112,400(1,627)

216,986

41

(TRANSLATION ONLY)(Millions of yen)
Valuation and translation adjustments

Balance at the end of previous period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock – at cost
Reversal of revaluation reserve for
land
Exercise of subscription rights toshares (delivery of treasury stock)
Net changes of items other thanshareholders’ equity – net
Total changes of items during theperiodBalance at the end of the current
periodNet unrealized
loss on availablefor-sale securities
(14)

Land
revaluation difference
(634)

Total
valuation and translation
adjustments
(648)

Stock
acquisition rights

Total
net assets

405

211,448(17,177)
22,462
(3)

67

67

–
80

(21)

(21)

37

15

(21)

67

45

37

5,377

(35)

(567)

(602)

442

216,826

42

(Notes to the Nonconsolidated Financial Statements)(TRANSLATION ONLY)(Significant Accounting Policies)

1. Valuation of Securities

Held-to-maturity debt securities: Carried at amortized cost (Straight-line method).
Available-for-sale securities:
Securities whose market value is readily determinable: Recorded at market value with net unrealized gains
and losses as a separate component of net assets. The cost of securities sold is determined based on themoving-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-averagemethod.

2. Valuation of Inventories
Merchandise inventories:
Inventories at cost being determined by the retail method (the book value on the balance sheet is written
down based on any 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 theassets. The ranges of useful lives are from 10 to 34 years for buildings and from five to eight years forfurniture, fixtures, and equipment.
Intangible assets (except for leased 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 five 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 ownershipof leased property, the Company applies the straight-line method using the lease term as the useful life and aresidual value of zero.
Long-term prepaid expenses:
Amortization of long-term prepaid expenses is computed by the straight-line method.

4. Accounting policies for important reserves
Allowance for Doubtful Accounts:
Allowance for doubtful accounts is provided at 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 forspecific doubtful receivables.
Accrued Employees’ Bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimatedamounts.
Provision for use of points granted:
The Company provides, mainly 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 subsequentpurchases from LAWSON stores. Provision for points granted are recorded to state the liability at the amountthat is expected to be used as of the balance sheet date.
Allowance for Employees’ Retirement Benefits:
Allowance for employees’ retirement benefits are provided at the amount calculated based on the projected
benefit obligations and plan assets at the balance sheet date. Actuarial differences are amortized from thefollowing fiscal year on a straight-line basis over a certain period (10 years) within the average remaining
service period of employees at the time of their occurrence. Prior-service cost is amortized, starting with thefiscal year when it was incurred, on a straight-line basis over a certain period (10 years) within the averageremaining service period of employees.
43

(TRANSLATION ONLY)
Allowance for Retirement Benefits to Executive Officers and Corporate Auditors:
Allowance for retirement benefits to executive officers and corporate auditors of the Company is recorded as
a liability at 100% of the amount that would be required if all corporate auditors and executive officers
terminated their services with the Company at the balance sheet date.

5. Leases
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

6. Accounting for consumption tax
Consumption tax is excluded from income and expense.

7. Change of Significant Accounting Policies
Application of “Accounting Standard for Asset Retirement Obligations”
Effective from the fiscal year under review, the Company has applied the “Accounting Standard for Asset
Retirement Obligations” (ASBJ Statement No. 18 March 31, 2008) and the “Guidance on AccountingStandard for Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31, 2008).
As a result of this change, operating income and ordinary income declined ¥625 million, respectively, andincome before income taxes decreased ¥7,472 million.

44

(TRANSLATION ONLY)(Changes in Method of Presentation)“Compensation received for removal” as presented in the previous fiscal year has been changed to “Compensation
income.”(Notes to the Nonconsolidated Balance Sheet)

1. Accumulated depreciation of property and store equipment:¥163,004 million

2. Contingent Liabilities

The Company is contingently liable for guarantees for accounts payable-trade of Ninety-nine
Plus Inc.
¥1,045 million

3. 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 loans receivable from subsidiaries and affiliated companies
Long-term payables due to subsidiaries and affiliated companies¥1,672 million¥17,572 million¥9,912 million¥184 million

4. 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 revaluationdifference.
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 the assessedvalue 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 ¥287
million.
(Notes to the Nonconsolidated Statement of Income)1. Transactions with subsidiaries and affiliated companies
Operating transactions
Operating revenues
Selling, general, and administrative expenses
Transactions other than operating transactions¥2,400 million¥5,401 million¥412 million

2. Long-lived assets
The Company identified mainly for 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 amount of those assets were written down to the recoverable amountand were recorded as extraordinary losses.
Category by use
Location
AssetsMillions of yen
Buildings and structures
Tokyo
465
Furniture, fixtures, equipment, and others
StoresOsaka

500
Others

1,798
Total
–
–
2,764
Category by fixed assets(Millions of yen)
Buildings
1,427
Structures
189
Furniture, fixtures, and equipment
201
Lease assets
664
Land
155
Other
125
Recoverable value of the impaired assets is calculated based on net selling price or value in use. Net selling priceof land was calculated based on the value appraised by the real estate appraiser or expected contract price, andthe value in use was calculated by discounting estimated future cash flows to which a discount rate of 4.3% wasapplied.

45

(TRANSLATION ONLY)

3. Loss on disasters

Loss on disasters is attributable to the Great East Japan Earthquake, and the details are as described below:
Loss relating to support activities for franchisees¥1,749 million
Loss on fixed assets¥546 million
Other losses¥932 million
Total¥3,229 million(Notes to the Nonconsolidated Statement of Changes in Net assets)
Number of shares and kind of treasury stock
Common stock
416,166 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
Allowance for employees’ retirement benefits
Allowance for doubtful accounts
Impairment loss
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets

1,166
1,225
1,787
7,822
673
5,002
502
2,717
1,549
22,445(2,797)
19,648Investments in subsidiaries and affiliated companies(paid-in capital decrease)
Total deferred tax liabilities(2,050)

Deferred tax assets-net

17,598(2,050)2. Revision of deferred tax assets due to changes in effective tax rate
The “Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating Taxation System
Responding to Changes in Economic and Social Structures” (Act No. 114 of 2011) and the “Act on Special
Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following theGreat East Japan Earthquake” (Act No. 117 of 2011) were promulgated on December 2, 2011. As a result, thereduction of corporate tax rates and the Special Income Tax for Reconstruction are to be effective from fiscal
years beginning on or after April 1, 2012. Due to this implementation, the effective tax rate used to calculatedeferred income taxes related to the temporary differences that are expected to be recovered or settled for thethree consecutive fiscal years beginning on March 1, 2013, has been reduced from the previously applied rate of
40.7% to 38.0%, while 35.6% is applied to those temporary differences expected to be covered or settled for fiscal
years beginning on or after March 1, 2016.
As a result of this change, deferred tax assets (an amount after deducting deferred tax liabilities) decreased by¥1,504 million, and deferred income tax expense increased by ¥1,504 million.
(Accounting for retirement benefits)
Summary of the retirement benefit plans:
The Company has defined benefit lump-sum severance indemnity plans which cover substantially all of theiremployees. The Company established a trust fund for its lump-sum severance indemnity plan.
In addition, the Company has a defined contribution plan for severance payments.

46

Projected benefit obligations
a. Projected benefit obligations
b. Plan assets
c. Projected benefit obligations in excess of plan assets (= a + b)
d. Unrecognized prior-service coste. Unrecognized actuarial differences
f. Allowance for employees’ retirement benefits (= c + d + e)

(TRANSLATION ONLY)(Millions of yen)
(14,316)
5,577(8,738)351
198(8,188)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)
955
263
175
88
1,482
277
1,760

Basis of calculation of projected benefit obligations
a. Discount rate
2.0%
b. Expected rate of return on plan assets
0%c. Allocation method of estimated total retirement Straight-line basis (a method to allocate estimated total
benefits
retirement benefits equally to the respective periods inthe employee’s whole service period)(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 as to acquisition cost, accumulated depreciation, and net leased property(Millions of yen)
Accumulated
Accumulated
Net leased
Acquisition costdepreciation
impairment loss
property
Furniture, fixtures,
18,06011,356727
5,977
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)
2,335
4,662
6,997
655

(3) Lease payments, transfer from allowance for impairment loss on leased property, depreciation expense, interest
expense, and impairment loss:(Millions of yen)
Lease payments
3,887
Transfer from allowance for impairment loss on leased property
280
Depreciation expense
3,870
Interest expense
232
Impairment loss
381(4) Computation method of depreciation expense
Depreciation expense which is not reflected in the accompanying statement of income is computed by thestraight-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 the interest,and interest expense is computed by the interest method.

47

(TRANSLATION ONLY)(Related-Party Transactions)
Subsidiaries and affiliates
Attribute

RelationshipDirector’sBusiness
posts held
Relationshipconcurrently

EquityBusiness line orownershipCompany nameprofession
percentage

Description oftransactions
Lending of funds

Directholding100.0%

Joint
purchasing,
joint productdevelopment

Yes

LAWSON
Financial
DirectATM
servicesholding
Networks, Inc. related business 70.9%

Placement ofATMs in the
LAWSON
storesNo

LAWSON
HMVEntertainment,
inc.

Sale of tickets
and software
for music andvideo

Ninety-nine
Plus Inc.

Subsidiary

Convenience
store businessEntertainment
Directandholding
eCommerce100%
related business

YesInterest on loans
Guarantees foraccounts
payable-trade(Note)
Borrowing offunds
Borrowinginterest
Borrowing offunds
Borrowinginterest

Transaction
amount(millions ofyen)Account item

Long-term loans
receivable
72
–
–

1,045

Endingbalance(millions of
yen)
6,300
–

–

–

Short-term loans
payable3––

Short-term loans
payable

1

–

–

7,800
–
7,500
–

Note: The Company is contingently liable for guarantees for accounts payable-trade of Ninety-nine Plus Inc.
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. Because it is difficult to obtain the details of transaction amounts, thebalance at end of year is disclosed in the notes.
2. The interest rates for loans and borrowings are determined rationally, taking into account market interest rates.

Subsidiaries of an affiliated company of the Company
Attribute

Company nameBusiness line
or profession

Mitsubishi
Sales of
Shokuhin Co., processed
Ltd.
foods

Subsidiaries ofFood Service
an affiliatedNetwork Co.,
company ofLtd.
the Company

SAN-ESU
INC.

Equityownership
percentage
ReverseHolds 0.3％
Ownership in
the company

Sales of fast
foods anddaily
deliveredfoods–

Confectionary
wholesalebusiness–

RelationshipDirector’s Description oftransactions
posts held
concurrently
Purchases for
the Companyoperated stores
VendorNo(purchases forthe franchised
stores)Purchases for
the Companyoperated stores
VendorNo(purchases forthe franchised
stores)Purchases for
the Companyoperated stores
VendorNo(purchases forthe franchised
stores)BusinessrelationshipTransaction
amount(millions ofyen)Account item

Endingbalance(millions of
yen)

3,268
(101,071)

Accounts
payabletrade

7,850

9,614
(267,302)

Accounts
payabletrade22,2791,171(34,812)

Accounts
payabletrade

3,282

Transaction conditions and the principles on the decision thereof:
The terms and conditions for purchase transactions are determined as the same as those for other general business
transactions, except that regarding the purchases made for the franchised stores, the Company acts as an alternative payer,
not as a direct party for the purchase.

(Per-Share data)
1. Net assets per share
2. Net income per share

2,166.35 yen
224.91 yen

48

(TRANSLATION ONLY)<Copy of the Independent Auditors’ Report>
INDEPENDENT AUDITORS' REPORT
April 5, 2012

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 29, 2012 of LAWSON, INC. (the “Company”), andthe related consolidated statements of income and changes in net assets, and the related notes for the 37 th fiscal year
from March 1, 2011 to February 29, 2012. These consolidated financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinion on these consolidated financial statements basedon 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the consolidated financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of the Company and consolidated subsidiaries as of February 29, 2012, and the results of theiroperations for the year then ended in conformity with accounting principles generally accepted in Japan.
Additional Information
As described under “Change of Significant Accounting Policies” in the “Significant Accounting Policies,” theCompany adopted the Accounting Standard for Asset Retirement Obligations and the Guidance on AccountingStandard for Asset Retirement Obligations effective from the fiscal year ended February 29, 2012. The financial
statements, therefore, were prepared in accordance with these accounting standards.
Our firm and the engagement partners do not have any financial interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Law.
The above represents a translation, for convenience only, of the original report issued in the Japanese language.

49

(TRANSLATION ONLY)<Copy of the Independent Auditors’ Report>
INDEPENDENT AUDITORS' REPORT
April 5, 2012

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 29, 2012 of LAWSON, INC. (the “Company”), and the related
statements of income and changes in net assets, and the related notes for the 37th fiscal year from March 1, 2011 to
February 29, 2012 and the accompanying supplemental schedules. These financial statements and theaccompanying supplemental schedules are the responsibility of the Company's management. 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 in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements and theaccompanying supplemental schedules are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements and the accompanying
supplemental schedules. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement and the accompanying supplemental
schedules presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the accompanying supplemental schedules referred to above present fairly,
in all material respects, the financial position of the Company as of February 29, 2012, and the results of its
operations for the year then ended in conformity with accounting principles generally accepted in Japan.
Additional Information
As described under “Change of Significant Accounting Policies” in the “Significant Accounting Policies,” theCompany adopted the Accounting Standard for Asset Retirement Obligations and the Guidance on AccountingStandard for Asset Retirement Obligations effective from the fiscal year ended February 29, 2012. The financial
statements, therefore, were prepared in accordance with these accounting standards.
Our firm and the engagement partners do not have any financial interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Law.
The above represents a translation, for convenience only, of the original report issued in the Japanese language and"the accompanying supplemental schedules" referred to in this report are not included in the attached financial
documents.

50

(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Corporate Auditors>
AUDIT REPORTRegarding the execution of duties by the Directors for the 37th business term from March 1, 2011 to February
29,2012, we have prepared this Audit Report, through due deliberations based on the audit reports prepared byeach 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 thereports from each Corporate Auditor regarding their execution of audits and results thereof, as well as reports
from the Directors, other relevant personnel, and the Accounting Auditor regarding the execution of their duties,
and asked for explanations 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 collectinformation and develop the audit environment, attended the Board of Directors meetings, the management
meetings, Compliance & Risk committee 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 their duties, asked for explanations
whenever necessary, reviewed important authorized documents and the like, and investigated the status ofoperations 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 established by 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 the Ordinance for
Enforcement of the Companies Act and the status of the development and operation of the system based on such
resolution (Internal Control System), as the system necessary to ensure that the execution of the duties by the
Directors complies with laws and regulations and the Articles of Incorporation and other system necessary toensure the properness of operations of a Stock Company. In connection with internal control over financial
reporting, we received reports from the Directors and other relevant personnel, and Deloitte Touche Tohmatsu
LLC regarding the status of evaluation and audit of such internal control respectively, and asked for
explanations whenever necessary. With respect to subsidiaries, we have communicated and exchanged
information with the Directors, Corporate Auditors and other relevant personnel of subsidiaries, requested thesubsidiaries to report on their business where necessary, and investigated their status of operations and assets.
Based on the above methods, we have examined the business report and supplementary schedules thereof forthis business term.

51

(TRANSLATION ONLY)

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 thestatus of the execution of its duties and, whenever necessary, asked for explanations. In addition, we havereceived 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 inaccordance 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 net assets, and notes to consolidated financial statements)” and “non-consolidated
financial statements (balance sheet, statement of income, non-consolidated statements of changes in net assets,
and notes to non-consolidated financial statements) and supplementary schedules thereof” for this term.
2. Result of Audit(1) Result of Audit of Business Report and Other Relevant Documents
1. We have found that business report and the supplementary schedules thereof fairly present the status of
the Company, in conformity with the applicable laws and regulations and the Articles of Incorporation.
2. Regarding the execution of duties by the Directors, we have found no misconduct or material matter that
violates applicable laws and regulations or the Articles of Incorporation.
3. We have found that the content of the resolution of the Board of Directors regarding the Internal Control
System is adequate. In addition, we have found no matters on which to give remarks in regard to therelevant 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 10, 2012
The Board of Corporate Auditors of LAWSON, INC.
Standing Corporate Auditor

Munehiko Nakano(Outside Corporate Auditor)
Standing Corporate Auditor

Atsuhiko Seki

Corporate Auditor

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

52

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 to long-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 initial listing 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:¥93 per share of the Company’s common stock to a total of ¥9,289,196,562
Note: The annual dividend per share will be ¥180, an increase of ¥10 from the previous period, including an interim
dividend per share of ¥87.
(2) Effective date of the dividends from surplus:
Wednesday, May 30, 2012

53

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

32nd Term

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

33rd Term

34th Term

35th Term

36th Term

37th Term

32nd Term

33rd Term

34th Term

35th Term

36th Term

37th Term(Current Period)

¥50

¥55

¥80

¥80

¥85

¥87

¥50

¥55

¥80

¥80

¥85

(Plan) ¥93

¥100

¥110

¥160

¥160

¥170

¥180

¥201.50¥214.69¥240.10¥126.67¥254.61¥249.17

49.6%

51.2%

66.6%

126.3%

66.8%(Plan) 72.2%

11.3%

11.6%

12.5%

6.5%

12.8%

12.0%

(Notes)
1. In the 37th term, ROE (consolidated return on equity) declined compared to the previous period as a result of an
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 prior period
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.

54

(TRANSLATION ONLY)
Proposal No. 2: Partial Amendments to the Articles of Incorporation
The Company proposes that the Articles of Incorporation be partially amended as follows.
1. Reasons for amendment
(1)

(i)

(ii)

(iii)
(2)

(3)

Based on the LAWSON Group’s corporate philosophy of “Creating Happiness and Harmony in Our
Communities,” the Company primarily focuses on the business of the franchise headquarters ofconvenience stores. Reflecting increasing competition across industries and diversification of customer
needs, we have initiated supply chain management reforms with the aim of becoming a business operator
that combines manufacturing and retail, covering upstream to downstream commercial distribution.
Specifically, we will strive to enhance customer satisfaction and increase revenue of franchised stores by
providing comprehensive services, from production of fresh foods such as vegetables and manufacturing ofself-planned products to sales thereof. For this purpose, we will add “manufacturing and processing” toitem 2 of Article 2 (Purpose) of the Company’s current Articles of Incorporation and include “agriculture
and production and processing of agricultural products” as the new item 3. In addition, we will add“dealing of second-hand articles” to item 2 of Article 2 (Purpose) of the current Articles of Incorporation,
as the Group has also focused on the E-commerce business mainly in the sales of various goods via theInternet, and is planning to expand dealing of second-hand articles, including music DVDs and videos.
The Group has always been environmentally aware when conducting its business activities in order toensure continued passage of the blessings of mother earth to future generations. The entire LAWSON
chain, including franchised stores, has been working on CO2 reduction and energy savings. At the sametime, concerns over power supply shortages and increased electricity prices have arisen since the Great
East Japan Earthquake last year, which resulted in a reduction in power supply from domestic nuclear
power plants. Amid these circumstances, the LAWSON Group is planning to generate and trade electricity
through utilization of its domestic store network from the viewpoint of environmental consciousness andreducing electricity expenses at its stores. Specifically, we are considering cost reductions at stores andtrading of electricity with electric utility operators through the utilization of so-called “FIT (feed-in tariff
for renewable energy),” to be introduced on July 1, 2012. For this purpose, we will add item 19 to Article 2(Purpose) of the current Articles of Incorporation to include “power generation, management and operation
thereof and trading of electricity.”At the same time, we will delete “real estate brokerage,” as we are not currently engaged in this business.
In order to flexibly secure venues for and facilitate the holding of General Meetings of Shareholders even in
the event of emergencies arising from natural disasters or other causes, we will delete item 2 of Article 11(Timing and venues for the General Meeting of Shareholders) of the existing Articles of Incorporation, which
limits the venues for the General Meeting of Shareholders.
In addition, various expressions and item numbers will be altered accordingly.

55

(TRANSLATION ONLY)
2.

Particulars of amendments
Particulars of proposed amendments are described below.
(Suggested amendments are underlined in the text.)
Proposed Amendments
ARTICLE 1: Trade Name
The Company shall be called KABUSHIKI KAISHALAWSON, and its English name shall be “Lawson, Inc.”

Current Provision of the Articles of Incorporation
ARTICLE 1: Trade Name
The Company shall be called KABUSHIKI KAISHALAWSON, and its English name shall be “LAWSON,
INC.”

ARTICLE 2: Purpose of Incorporation
The Company shall be organized for the purpose ofoperating the following businesses:
1. (No change)
2. To sell or act as a sales agent for products andservices through stores, mainly convenience stores,
the Internet and other means, to engage inmanufacturing and processing, and to operate
wholesaling, distribution, dealing of second-handarticles, lease, export and import of same.

ARTICLE 2: Purpose of Incorporation
The Company shall be organized for the purpose ofoperating the following businesses:
1. (Omitted)
2. To sell or act as a sales agent for products andservices through stores, mainly convenience stores,
the Internet and other means and to operate
wholesaling, distribution, lease, export and import ofsame.

(Newly added)

3. Agriculture and production and processing ofagricultural products

3.

～

～

4.

(Omitted)
11.
12. Real estate brokerage
13.
(Omitted)18.
(Newly added)(No change)
12.
(Deleted)

～

～

13.

(No change)

18.
19. Power generation, management and operation
thereof and electricity trading20.
(No change)
23.

～

～

19.

(Omitted)

22.
ARTICLE 11: Time and Place to Convene General
Meetings of Shareholders
1) The ordinary general meeting of shareholders of theCompany shall be convened in May every year.
Extraordinary general meetings of shareholders may be
convened at any time whenever necessary.
2) The general meetings of shareholders shall be convened
either in Osaka or any place within the Metropolis ofTokyo.

ARTICLE 11: Time to Convene General Meetings ofShareholders
The ordinary general meeting of shareholders of theCompany shall be convened in May every year.
Extraordinary general meetings of shareholders may be
convened at any time whenever necessary.
(Deleted)

56

(TRANSLATION ONLY)
Proposal No. 3: Election of Seven (7) Directors
The terms of office of seven (7) current directors expire at the conclusion of this 37th Ordinary General Meeting of
Shareholders. Accordingly, we propose that you elect seven (7) directors.
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
Joined Mitsubishi Corporation
8,400
June 1995
Representative Director, Sodex Corporation(Currently LEOC Co., Ltd.)
July 1999
General Manager, Restaurant Business Team,
Living Essentials Logistics Planning
Department, Mitsubishi Corporation
April 2000
General Manager, LAWSON Project
Takeshi Niinami
Integration Office; General Manager,(January 30, 1959)
Restaurant Business Office, Mitsubishi
Corporation
April 2001
Manager, LAWSON Business Unit; Manager,
Restaurant Business Unit, Consumer Business
Division, Mitsubishi Corporation
March 2002
Corporate Advisor, LAWSON, INC.
May 2002
President, Representative Director andExecutive Officer, LAWSON, INC.
March 2005
President, Representative Director and CEO,LAWSON, INC. (Current position)
April 2006
Outside Director, ACCESS, CO., LTD(Current position)
June 2010
Outside Director, ORIX Corporation (Current
position)
900
2
Joined Asahi Glass Co., Ltd.
[Candidate for New April 1985
Director]
July 1998
Joined IBM, Japan
December 1998
Joined Fast Retailing Co., Ltd.
November 2002
President, Representative Director and COO,
Fast Retailing Co., Ltd.
September 2005
Established Revamp Corporation
President, Representative Director and COO,
Revamp Corporation
November 2010
Corporate Advisor, LAWSON, INC.
Genichi Tamatsuka March 2011
Senior Executive Vice President and COO,
(May 23, 1962)
Group CEO, CVS Operating Group andDivision Director, Fast Food Division,
LAWSON, INC.
April 2012
Senior Exective Vice President and COO,
Group CEO, CVS Operating Group andDivision Director, CRM Promotion Office andMarketing Office, LAWSON, INC.
(Current position)

57

(TRANSLATION ONLY)
No.

Name
(Date of birth)3

Brief Personal History, Position, Assignment and Important
Concurrent Positions
April 1979
January 1999

October 2001

Yoshiyuki Yahagi(May 20, 1954)

July 2004
December 2006
March 2007
May 2007

March 2009

September 2009
April 2010
4

April 1977
April 2001
April 2004

September 2005
Toru Moriyama(August 9, 1954)

November 2005

March 2006

May 2006

April 2008
April 2009

Joined Mitsubishi Corporation
Team Leader, Investment Administration
Team No. 1, Risk Management Department,
Mitsubishi Corporation
Team Leader, Investment Administration
Team No. 1, Controller Office; and Leader,
PM Committee Secretariat, Mitsubishi
Corporation
Deputy General Manager, Audit Department,
Mitsubishi Corporation
Senior Vice President and Executive Assistantto CEO, LAWSON, INC.
Executive Vice President and CFO, in chargeof Corporate Planning Office, LAWSON, INC.
Director, Executive Vice President and CFO,in charge of Corporate Planning Office,Human Resources Office, LAWSON, INC.
Director, Senior Executive Vice President and
CFO; General Manager, Management Services
Office, LAWSON, INC.
Director, Senior Executive Vice President and
CFO, LAWSON, INC. (Current position)
Senior Vice President, Mitsubishi Corporation(Current position)
Joined Mitsubishi Corporation
General Manager, Marine Products Unit,
Mitsubishi Corporation
General Manager, Food Textiles & General
Merchandise Dept., Chubu Branch, Mitsubishi
Corporation
Senior Vice President; Executive Assistant toCEO, LAWSON, INC.
Executive Vice President; General Manager,
Merchandising & Logistics Division,
LAWSON, INC.
Senior Executive Vice President; General
Manager, Merchandising & Logistics Division,
LAWSON, INC.
Director, Senior Executive Vice President;
General Manager, Merchandising & Logistics
Division, LAWSON, INC.
Senior Vice President, Mitsubishi Corporation
Director, LAWSON, INC. (Current position)

58

Number of theCompany’s
Shares Held
700

1,500

April 2009

April 2010

April 2011

(TRANSLATION ONLY)
Senior Vice President, Senior Assistant toGroup CEO, Living Essentials Group,
concurrently General Manager, Next
Generation Business Development Unit,
Mitsubishi Corporation
Executive Vice President, Group COO, Living
Essentials Group, concurrently General
Manager, Next Generation Business Development
Unit, Mitsubishi Corporation
Executive Vice President, Group CEO, Living
Essentials Group, Mitsubishi Corporation,(Current position)

June 2011

Outside Director, RYOSHOKU LIMITED(Currently Mitsubishi Shokuhin Co., Ltd.)(Current position)

59

(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 Held0
April 1974
Joined Japan Airlines International Co., Ltd.
March 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 judgement 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 of experienceand 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 her supervision 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 a small number of service contracts relating to the reception services of the Company. Decisions forsuch transactions 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/Auditor with the Tokyo Stock Exchange, Inc. and the Osaka Securities Exchange Co.,
Ltd. pursuant to the rules specified by the exchanges.
[Term of Outside Director of LAWSON, INC.]
Ms. Yonezawa has served as Outside Director of the Company since 2002 and her term will be ten 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 13 meetings, Ms. Yonezawa attended 12. (Attendance rate: 92.3%)

60

(TRANSLATION ONLY)
No.

Name
(Date of Birth)

6[Candidate for
Outside Director]

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held0
April 1979
Joined Mitsubishi Corporation
April 2001

White Meat Unit Manager, concurrently Red
Meat Unit Manager, Foods (Commodity)
Division, Mitsubishi Corporation
April 2004
General Manager, Planning & Coordination,
Investment Administration & Credit, Living
Essentials Group CEO Office, Mitsubishi
Corporation
Outside Director, Kentucky Fried Chicken
Takehiko Kakiuchi February 2005
Japan, Ltd. (Current position)(July 31, 1955)
May 2005
Outside Director, LAWSON, INC. (Current
position)
April 2006
General Manager, Living Essentials GroupCEO Office, Mitsubishi Corporation
April 2008
Division COO, Foods (Commodity) Div.,
Mitsubishi Corporation
April 2010
Senior Vice President, Division COO, Foods(Commodity) Division, Mitsubishi
Corporation
April 2011
Senior Vice President, General Manager,
Living Essentials Group CEO Office, andDivision COO, Foods (Commodity) Division,
Mitsubishi Corporation (Current position)[Reasons for nomination as Outside Director and reasons behind our judgement 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 we would
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 the Compensation
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 seven 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 13 meetings, Mr. Kakiuchi attended 10. (Attendance rate: 76.9%)

61

(TRANSLATION ONLY)
No.

Name
(Date of Birth)7[Candidate for
New Director][Candidate for
Outside Director]

Emi Osono(August 8, 1965)

Brief Personal History, Position, Assignment and Important Number of theConcurrent Positions
Company's
Shares Held0
April 1988
Joined Sumitomo Bank (currently Sumitomo
Mitsui Banking Corporation)
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
June 2004
Outside Director, Nisshin Fire and Marine
Insurance, Co., Ltd.
June 2006
Outside Director, Resona Bank, Ltd.
April 2010

Professor, Graduate School of International
Corporate Strategy, Hitotsubashi University(Current position)
June 2011
Outside Director, Resona Holdings, Inc.
(Current position)[Reasons for nomination as Outside Director and reasons behind our judgement 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 a wealth ofacademic knowledge on global corporate management, operational strategies, andorganizational behavior.
While receiving her proactive opinions and suggestions regarding the Company’s management at the Board of
Directors’ meetings, in the future, we would also like to benefit from her supervision of the Company’s
management by leveraging her experiences.
We are also planning to register Ms. Osono as an Independent Director/Auditor with the Tokyo Stock
Exchange, Inc. and the Osaka Securities Exchange Co., Ltd. pursuant to the rules specified by the exchanges.
[Term of Outside Director of LAWSON, INC.]
There are no relevant items, as Ms. Osono is a candidate for a new 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. Osono is a candidate for a new 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 and Mr. Takehiko Kakiuchi. Under the liability limitationagreement concluded with the Company, Outside Directors assume liability for damages specified in Article 423,
Paragraph 1 of the Companies Act within the limit not exceeding the amount stipulated by laws and regulations,provided that they have performed duties which resulted in a cause of such liability in good faith without committing
acts of gross negligence. The Company is also planning to conclude a similar agreement with Ms. Osono.
2. The appointment of the Independent Directors/Auditors is based on “(6) Criteria for Independence” on page 22.
3. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 12,
2012.

62

(TRANSLATION ONLY)
Proposal No. 4: Election of One (1) Corporate Auditor
The term of office of Mr. Munehiko Nakano, Corporate Auditor, expires at the conclusion of this 37th Ordinary General
Meeting of Shareholders. Accordingly, we propose that you elect one (1) new Corporate Auditor.
The Board of Corporate Auditors has given prior consent to this proposal.
The nominee for corporate auditor is as follows.
Name
Brief Personal History, Position, and Important Concurrent Positions
Number of the(Date of Birth)Company's
Shares Held
Joined the Board of Audit of Japan
0[Candidate for New April 1975
Corporate Auditor]
July 1990
Supervisory Manager of 2nd Bureau, Board of[Candidate for
Audit of Japan
Outside Corporate
December 2002
Deputy Secretary General (in charge of 4th
Auditor]Bureau), Board of Audit of Japan
December 2005
Director General of 4th Bureau, Board of Audit
of JapanApril 2007
Chief Audit Commissioner, Gifu Prefecture
Government
July 2011
Rejoined the Board of Audit of Japan
March 2012Retired from the Board of Audit of Japan
Shinichi Hokari(March 18, 1949)[Reasons for nomination as Outside Corporate Auditor and reasons behind our judgement that the person would be
able to perform obligations of Outside Corporate Auditor appropriately]
Mr. Shinichi Hokari has been nominated as a candidate for Outside Corporate Auditor of the Company, as he has
held prominent positions including Director General of a Bureau at the Board of Audit of Japan, and has aconsiderable amount of knowledge on finance and accounting through examination of financial results andfinancial positions of government agencies and independent administrative corporations. We would like to benefit
from his audits and supervision of the Company’s management by leveraging his experience.
We are also planning to register Mr. Hokari as an Independent Director/Auditor with the Tokyo Stock Exchange,
Inc. and the Osaka Securities Exchange Co., Ltd. pursuant to the rules specified by the exchanges.
[Term of Outside Corporate Auditor of LAWSON, INC.]
There are no relevant items, as Mr. Hokari is a candidate for a new Outside Corporate Auditor 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 and Corporate Auditors’ Meetings]
There are no relevant items, as Mr. Hokari is a candidate for a new Outside Corporate Auditor position.
Notes:
1. In accordance with Article 32 of the current Articles of Incorporation, LAWSON, INC. is planning to conclude thefollowing liability limitation agreement with Mr. Shinichi Hokari. Under the liability limitation agreement
concluded with the Company, Outside Corporate Auditor assumes liability for damages specified in Article 423,
Paragraph 1 of the Companies Act within the limit not exceeding the amount stipulated by laws and regulations,provided that he has performed duties which resulted in a cause of such liability in good faith without committing
acts of gross negligence.
2. The appointment of the Independent Directors/Auditors is based on “(6) Criteria for Independence” on page 22.
3. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 12,
2012.

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Proposal No. 5: Presentation of Retirement Benefit to a Retiring Corporate Auditor, and Final Payment ofRetirement Benefit upon the Abolishment of Retirement Benefit System for Corporate Auditors
In appreciation of his excellent service, we wish to present retirement benefit of not more than ¥27 million to Mr.
Munehiko Nakano, who is to retire as a standing corporate auditor at the expiration of his term as of the conclusion of this37th Ordinary General Meeting of Shareholders.
We wish to leave the details of the exact amount, date and method of presentation to the discretion of the corporate
auditors.
At the Board of Directors meeting held in April 2005, the Company resolved the abolishment of the Retirement Benefit
System for directors. Consequently, we introduced a stock compensation type stock option plan as the compensation
scheme for directors in addition to cash payments. Regarding compensation for corporate auditors, we have continued toadopt the retirement benefit system without introducing the stock compensation type stock option plan, taking into
consideration the nature of their service.
However, with the aim of increasing compensation structure transparency for our shareholders, we decided to unify thecompensations for corporate auditors into a monthly payment system that is based on annual compensation, and resolved at
the Board of Directors meeting held on March 29, 2012 with the consent of the Board of Corporate Auditors, to abolishretirement benefits for corporate auditors.
As a result, we are proposing final payments of retirement benefit for the three corporate auditors currently remaining inservice (with the exception of Mr. Munehiko Nakano) corresponding to the respective periods of service up to theconclusion of this 37th Ordinary General Meeting of Shareholders, totaling not more than ¥31 million.
Payments will be made on the retirement date of each corporate auditor, respectively, and we would like to leave thedetails of the exact amount, date and method of payment to the discretion of the corporate auditors.
The following is a brief personal history of the retiring corporate auditor.
Name
Brief Personal History
Munehiko Nakano

May 2006

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

A brief personal history of the corporate auditors who qualify for the final payment of retirement benefit is shown below.
Name
Brief Personal History
Atsuhiko Seki

May 2010

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

Tetsuo Ozawa

May 2003

Corporate Auditor, LAWSON, INC. (Current position)

Eiko Tsujiyama

May 2011

Corporate Auditor, LAWSON, INC. (Current position)

Notes:
1. Messrs. Munehiko Nakano and Tetsuo Ozawa and Ms. Eiko Tsujiyama are outside corporate auditors.
2. The corporate auditors’ Brief Personal Histories are as of April 12, 2012.

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Proposal No. 6: Revision of the Amount of Compensation for Corporate Auditors
The amount of compensation for corporate auditors was approved at the 23rd Ordinary General Meeting of Shareholders
held on May 30, 1998 at up to ¥60 million annually, and this amount has been maintained to date. Taking into consideration
changes in the economic and social climate since then as well as the expanded scope of audits due to growth of the Group,
the proposed abolishment of the retirement benefit system for corporate auditors, and many other factors, we propose arevision in the amount of compensation for the corporate auditors to make it up to ¥80 million annually.
At present, the Company has four corporate auditors. If Proposal No. 4 is approved and adopted, the number of corporate
auditors will total four at the conclusion of this 37th Ordinary General Meeting of Shareholders.

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