(TRANSLATION ONLY)
Securities Code: 2651
May 2, 2016
To All Shareholders with Voting Rights
Genichi Tamatsuka
President and CEO, Representative Director
Lawson, Inc.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 41st ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 41st 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 23, 2016.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 23, 2016 after reading the attacheddocument “Exercising Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 24, 2016
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 Nonconsolidated Financial Statements
for the 41st Fiscal Term (from March 1, 2015 to February 29, 2016), 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 Eight (8) Directors
Proposal No. 4: Election of One (1) Corporate Auditor

If you attend in person, please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at themeeting. You do not need to enter your approval or disapproval in the Voting Rights Exercise Form if you will attend.
The reception desk will open at 9:00 a.m. Please arrive a little early because the reception desk can be congested
immediately before the meeting begins.
If you wish to exercise your voting rights by proxy, your proxy is requested to present a document evidencing his/herproxy, such as a power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at thereception desk. (The qualified proxy is limited to one shareholder having voting rights for this meeting as per the
relevant provision in the Articles of Incorporation.)

1

(TRANSLATION ONLY)

BUSINESS REPORT(March 1, 2015, through February 29, 2016)
I. CURRENT STATUS OF THE CORPORATE GROUP
1. Summary of Operations(1) Business Developments and Results of Operations
During the consolidated fiscal year under review, or fiscal 2015 ended February 29, 2016, the Lawson
Group (hereinafter, the “Group”) implemented business activities with the aim of realizing the Group’s
corporate philosophy of “Creating Happiness and Harmony in Our Communities.” In particular, we reinforced
the foundation of our convenience store business, for example, by enhancing our retail space, merchandise
assortment, and relationship with franchise store owners. In addition, while addressing changes in eachneighborhood such as an increase in the number of working women, the declining birth rate and the aging
population, we also focused on areas unique to Lawson, including over-the-counter fast food, health-oriented
products, home convenience, and entertainment.
In terms of operating results for the fiscal year, gross operating revenue increased to ¥583,452 million (up17.2% from last year), operating income increased to ¥72,541 million (up 2.9% from last year), and ordinary
income decreased to ¥69,622 million (down 2.9% from last year). Net income decreased to ¥31,381 million(down 4.0% from last year).
Furthermore, we also focused on promoting internal control and addressing operating risks across the entire
Group based on the 2015 Basic Policy for Improvement of Internal Control Systems. We will continue
promoting internal control across the board including companies that newly joined the Group.
Operating results by business segment were as follows:(Domestic Convenience Store Business)[Merchandising and Service Strategies]
On the merchandise front, in June 2015, we launched commemorative items focusing in mainstay category
to celebrate LAWSON 40th anniversary. Furthermore, we launched “Honkide Oishii Project (delicious inearnest project)” in serious pursuit of palatability in order to review our product development process and paid
increased attention to ingredients, production methods and taste. Under this project, we introduced and kept
selling products that was made carefully with special ingredients and a special recipe such as “Sockeye Salmon
Lunchbox with Niigata Koshihikari Rice”, and they were all received well by customers. Furthermore, we havestarted selling “Doughnuts” over the counter since April, and have expanded it in around 9,700 stores by theend of February 2016. Furthermore, with the aim of supporting customers’ overall daily life, we worked on
expanding our merchandise assortment of ready-made dishes and frozen products under our “Lawson Select”
private brand.
Moreover, as a “Health Station in Town,” we also placed emphasis on selling health-oriented products. In
particular, the “Green Smoothie” sold under the NATURAL LAWSON brand and made with a full meal’sworth of vegetables was well received by female customer and health-conscious customers. Its series has
become hit products as total sales has reached over 27 million units sale in 10 months. In additional, there are
currently 23 Lawson Farms in which Lawson, Inc. holds equity stakes. The farms assume the role of supplying
safe and fresh fruits and vegetables to the Group’s stores and factories that produce LAWSON’s original
products.
In addition to thus strengthening our product lineup, in September 2015, we began to accept China
UnionPay cards for payment at our stores and, in November 2015, we launched our prepaid Ponta card service
dubbed “Osaifu (wallet) Ponta.” Furthermore, starting December 2015, functions offered by “d Point Card”
and “WAON” will be partially integrated in an effort to offer more convenience to our customers.
On the sales promotion front, we rolled out some highly effective measures for attracting customers,
including a “100-yen rice ball sale,” and a “speed lottery” themed on “Sandaime J Soul Brothers from EXILE
TRIBE”, which demonstrated our strength in the entertainment field.
[Store Operations]
In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, whichemphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic itemswith high demand; and (3) keeping our stores and communities clean, strengthened guidance to franchise store
owners and revised order placement methods as a way of reforming operations in order to create stores that
could grasp customers’ satisfactions and supports. We have put semi-automated ordering system for our
ready-made meal category in most of all stores. In addition, we also have concluded new franchise agreementswith existing stores ahead of schedule to offer enhanced support to franchise store owners. Thus, it isbeginning to appear good effects such as increase of sales in those stores which applied well these initiatives.
We will keep striving to create retail spaces that stimulate potential demand from customers and offer what
they need at any time.

2

(TRANSLATION ONLY)[Store Development]
In opening new stores, the Group continued to focus on developing profitable store.
In November 2015, we remodeled two Poplar stores operated by Poplar Co., Ltd. into Lawson Poplar storesbased on our capital and business alliance agreement. In February 2016, a mega-franchise agreement was
concluded with Save On Corp. Under the agreement, around 50 of the Save On convenience stores operated in
Yamagata, Fukushima and Ibaraki Prefectures will be remodeled into LAWSON stores in and after April 2016.
Furthermore, by building partnerships such as with dispensing pharmacy and drug store chains, in addition ofhealthcare items including OTC pharmaceuticals, cosmetics, and daily necessities, the stores offer amerchandise assortment of around 5,500 items, twice as many as conventional LAWSON stores. The numberof stores offering non-prescription drugs has reached 136 stores (included 38 pharmacy LAWSON stores
equipped with drug-dispensing pharmacies) as of the end of February 2016. Moreover, we also engage inestablishing next-generation convenience store models that address social changes such as the ageing
population and increased health awareness. The number of LAWSON stores housing a nursing care hub center
offering nursing care consultation services and a lounge space, which we began rolling out from the fiscal year,
has increased to 5 as of the end of the fiscal year.
Regarding to LAWSON STORE100, we promoted to close unprofitable stores under the business
revitalization plan. During current fiscal 2015, 345 LAWSON STORE100 (included stores which weretransformed into LAWSON stores) stores were closed. With regard to the remaining 809 stores, we increased
the product composition ratio of 100-yen items (excluding tax) by scaling down product portions to respond to
customer needs for value, and strengthened our popular fruit and vegetable lineup. As a result, sales at thesestores gradually improved, with existing-store sales for current fiscal 2015 exceeding those for the same periodof the previous fiscal year.
As a result, the total number of LAWSON, NATURAL LAWSON, and LAWSON STORE100 stores opened
and closed during current fiscal year stood at 967 and 859 stores, respectively, with the total number of storesin Japan reaching 11,880 as of the end of February 2016. In addition to the above, Lawson Kochi, Inc. operates
132 LAWSON chain stores in Kochi prefecture, Lawson Minamikyushu, Inc. operates 192 LAWSON chain
stores in Kagoshima prefecture and Lawson Okinawa, Inc. operates 191 LAWSON chain stores in Okinawa
prefecture as of the end of February 2016.
[Other]With regards to our efforts in Home Convenience, in June 2015, Lawson, Inc. jointly established an
operating company with SG Holdings Co., Ltd., which owns Sagawa Express Co., Ltd. as the core operatingcompany, and started to offer delivery and order-taking service with LAWSON stores serving as hubs.
Furthermore, we started “Convenience Store Pick-up Service” for items purchased at “Rakuten Ichiba”, anInternet shopping mall in September 2015. We will strive to enhance customer convenience by additionallypartnering with other companies to establish an “Open Platform” based on the networks of LAWSON storesthat offer a range of services encompassing ordering, collection, and home delivery.
As a result, Domestic Convenience Store Business posted gross operating revenue of 398,637 million yen(up 0.8% year on year) and segment profit of 59,993 million yen (down 6.1%).
[Change in Total Number of Domestic Stores]
Total stores as ofFebruary 28, 2015
LAWSON

Change during fiscal
year

Total stores as ofFebruary 29, 2016

10,633304

10,937

NATURAL LAWSON

116

18

134

LAWSON STORE100／LAWSON MART

1,151

(342)

809

11,900(20)

11,880Total

Note: For change during fiscal year, it includes a decrease of 128 stores which were transferred into
Lawson Kochi, Inc. from Lawson, Inc. on April 1, 2015.

3

(TRANSLATION ONLY)[Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business]
Sales
Percentage of total
Year on Year
Product group(millions of yen)(%)(%)
Processed foods
1,033,448
52.7
99.9
Fast foods

463,431

23.7

108.0

Daily delivered foods

276,886

14.1

99.9

Nonfood products

186,499

9.5

97.1

Total

1,960,266

100.0

101.4

(Seijo Ishii Business)
The number of directly operated Seijo Ishii stores, a high-end supermarket chain offering quality foods,
reached 120 as of the end of February 2016. Performance was strong, driven by sales of coconut oil and chia
seed that became popular after their positive health effects were introduced on television and other media.
Collaborations between SEIJO ISHII and our Domestic Convenience Store Business were promoted, such as
expanding Seijo Ishii’s selection of wine offered at NATURAL LAWSON stores, jointly importing
confectionery, and rolling out jointly developed products including nuts and cup soup. We will continue toenhance the brand image and corporate value of SEIJO ISHII Co., Ltd., while absorbing the company’s
product development expertise, knowhow acquired as a manufacturing retailer, and sales methods, tostrengthen our Domestic Convenience Store Business.
As a result, Seijo Ishii Business posted gross operating revenue of 68,993 million yen (up 285.9% year onyear) and segment profit of 5,037 million yen (up 270.9%).
(Entertainment-related Business)
With regards to Entertainment-related Business, Lawson HMV Entertainment, which forms the core ofentertainment related business, posted a solid performance led by an increase in ticket sales and continued tosecure top position in the ticketing industry. Besides HMV’s largest entertainment complex store,“HMV&BOOKS TOKYO”, that combines selling music and books, was opened in November 2015 in
Shibuya, the number of HMV stores that sell music CDs and DVDs totaled 53 as of the end of February 2016.
We will strive to offer an even wider selection of products and services to better respond to customer needs, forexample, by expanding our ticketing business. Furthermore, United Cinemas Co., Ltd. operates a total of 38
sites with 342 screens (includes management contract) at its cinemas nationwide.
As a result, Entertainment-related business posted gross operating revenue of 75,040 million yen (up 44.0%
year on year) and segment profit of 4,076 million yen (up 57.5%).
(Other Business)
In addition to Domestic Convenience Store Business, Seijo Ishii Business, Entertainment-related Business,
the Group also involved in Overseas Business, Financial Services-related Business and others.
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the
People’s Republic of China, Thailand, Indonesia, United States of America (Hawaii). In addition, we haveinvested in Puregold Price Club, Inc., a major retailer in Philippines, and PG Lawson Company, Inc., a merged
company, and started open stores in Philippines since March 2015.

4

(TRANSLATION ONLY)[Distribution of Lawson Brand Stores Overseas by Region]
Country/Region

Number of stores(as of February 28,
2015)

Change during fiscal
year

Number of stores(as of February 29,
2016)

China Shanghai and surroundingarea
China Chongqing

354

104

458

104

6

110

China Dalian

30

23

53

China Beijing

19

15

34

Thailand

32

15

47

Indonesia

48

(10)

38

Philippines

－

16

16

3

(1)

2

590

168

758

United States of America
Total

Hawaii

Lawson ATM Networks, Inc., which operates a Financial Services-related Business, continued contributing
to consolidated results owing to an increase in the number of ATMs installed. In this fiscal 2015, starting in
September 2015, we sequentially installed new ATM that is capable of withdrawing Japanese Yen by China
UnionPay cards. Now, All LAWSON stores accept payments by China UnionPay cards. Moreover, we
strengthened partnership with new financial institution bringing the total number of our financial institution
partners to 80 nationwide (up 9 year on year), including online banks, and the number of ATMs installed
nationwide to 11,201 (up 434 year on year) as of the end of February 2016.
As a result, other businesses posted gross operating revenue of 46,921 million yen (up 23.3% year on year)
and segment profit of 3,427 million yen (up 28.7%).
(Environmental and Social Contribution Activities)
As part of our initiative to reduce environmental impact on the entire supply chain, we will endeavor to saveenergy, resources and promote waste reduction not only at LAWSON stores but also throughout the entire
supply chain.
In particular, we promoted the introduction of a state-of-the-art energy-saving chlorofluorocarbon-free (CO2refrigerant) refrigerator/freezer system with the aim of reducing electricity consumption at our stores. As of theend of February 2016, the system was installed in approximately 1,300 stores. Compared to conventional
equipment used in our stores, the new system reduces annual CO2 emissions per store by around 50%, andelectricity consumption per store by around 12%. By putting into practical use an energy-saving packagemodel centered on this system, the Group will aim to achieve target of using 20% less electricity per store by
fiscal 2020 compared to the fiscal 2010 level. We received the 2015 Environment Minister’s Award for Global
Warming Prevention Activities in recognition of our initiative in Indonesia to save energy by leveraging
cutting-edge technologies. Furthermore, in February 2016, we opened a pilot store focusing on environmental
friendliness in Himeji-shi, Hyogo Prefecture. This is the first convenience store to adopt a biomass power
generation system.
In our efforts to undertake social contribution activities at our stores, we continued activity named“Happiness in Communities”, and also supported through fund-raising activities for disasters that occurred indomestic and foreign countries such as typhoon 18 and earthquake in Nepal.
In addition, the Group issues the Lawson Integrated Report, which incorporates both financial andnon-financial information for all stakeholders, while also making efforts to disclose on its website anincreasingly wider scope of information in the social and environmental fields.
As a member of society, the Group will continue to make unified group-wide efforts to implement initiatives
that aim to address social and environmental issues together with franchised stores, its customers and business
partners.
(2) Capital Expenditures and Financing
Capital expenditures of the Group during the fiscal year totaled ¥64,535 million, of which ¥47,495 million
was primarily for store facility investment in land and buildings, and ¥15,882 million was for the upgradingof information systems.
Furthermore, capital expenditures required for facility investments and others carried out in the current
period are devoted from shareholders’ equity.

5

(TRANSLATION ONLY)(3) Changes in Operating Results and Financial Position① Changes in Operating Results and Financial Position of the Corporate Group
Fiscal 2012
Fiscal 2013
Fiscal 2014
Fiscal 2015
Category/Fiscal Term
38th Term
39th Term
40th Term
41st Term
Gross operating revenue
487,445
485,247
497,913583,452(millions of yen)
Ordinary income (millions of yen)
65,926
68,88071,714
69,622
Net income (millions of yen)

33,18237,96532,686

31,381

Net income per share (yen)332.20380.04327.08313.81

Total assets (millions of yen)

579,809620,992

764,614803,212

Net assets (millions of yen)

230,181

250,497263,797

272,997

Net assets per share (yen)2,267.17

2,455.25

2,561.25

2,643.97

Fiscal 2014
40th Term

Fiscal 2015
41st Term

1,932,798

1,960,266

316,340

333,855

61,64954,982② Changes in Operating Results and Financial Position of the Company
Fiscal 2012
Fiscal 2013
Category/Fiscal Term
38th Term
39th Term
Net sales of all convenience stores
1,693,435
1,758,656(millions of yen)
Gross operating revenue
282,752
298,778(millions of yen)
Ordinary income (millions of yen)
59,45962,171
Net income (millions of yen)

30,31433,625

26,20021,802

Net income per share (yen)303.49336.59262.18218.02

Total assets (millions of yen)

532,619589,793

693,811714,875

Net assets (millions of yen)

227,974

240,648

243,420

243,576

Net assets per share (yen)2,277.90

2,403.21

2,432.00

2,432.73(4) Pressing Issues① Provide customers with enhanced support in their daily life
In an effort to become an indispensable part of customers’ lives in local communities, we will strive tofurther expand our merchandise assortment to include a wider variety of daily necessities and ready-madedishes in addition to products and services offered by conventional convenience stores.
② Evolve into a manufacturing retailer targeting small catchment areas
By evolving into a manufacturing retailer deeply engaged in activities across the entire value chain, fromprocurement of raw materials and ingredients to manufacturing, logistics and sales, we will strive to achieve
cost reduction and quality improvement in our products to further strengthen our product appeal.
③ Take on challenges in future growth areas
We will continue to take on challenges to establish new business models in future growth areas not only in
our Domestic Convenience Store Business, the core business of the Group, but also in various other fields
such as Seijo Ishii Business, Entertainment-related Business, Overseas Business, Financial-related Business.
We will also work hard to make maximum use of each Group company’s distinctive features to generatesynergistic effects.
④ Promote internal control systems and address operating risks
In order to ensure business continuity, it is imperative to foster the Group’s internal control in its entirety
and address operating risks. In addition, we believe that taking a proactive approach to corporate governanceis not only strongly desired by all the stakeholders of the Group, but also the right way to enhance corporate
value. We will therefore continue to focus on promoting internal control and addressing operating risks.

6

(TRANSLATION ONLY)
The Company operates business activities under its corporate philosophy “Creating Happiness andHarmony in Our Communities”. From fiscal 2016, under corporate philosophy, the Company set a new visionin order to clarify goal image and orient all business activities toward its goal image. At the same time, tosucceed this vision, the Company also has revised code of conducts to clarify the actions required for theindividual and to move forward with everyone united. Furthermore, from fiscal 2016, the Company will work
together under new project “1000 Days Action Plan” and strive to “master the basics” “respond to changes”
and “challenge to further growth”.
We look forward to the continued support and encouragement of our shareholders.

7

(TRANSLATION ONLY)
2. Current Status at the End of February 2016
(1) Major Business Operations and Principal Offices(Domestic Convenience Store Business)① Lawson, Inc.
Major Business:
Primarily operates the Lawson-brand franchise system and undertakes management ofcompany-operated stores as the head office of LAWSON, NATURAL LAWSON and
LAWSON STORE100 convenience store chains.
Head Office:Shinagawa-ku, Tokyo
Principal Offices:
Hokkaido area office (Kita-ku, Sapporo), Tohoku area office (Aoba-ku, Sendai),
Chubu area office (Naka-ku, Nagoya), Kinki area office (Suita city, Osaka), Chugoku
area office (Kita-ku, Okayama) and Kyushu area office (Hakata-ku, Fukuoka)
Note: In addition to the above sites, the Company has 94 offices throughout Japan,
including branches.
② Lawson Mart, Inc.
Major Business:
Head Office:③ SCI, Inc.
Major Business:
Head Office:Operates LAWSON STORE100 stores, provides guidance, and engages inmerchandise-related businesses.
Shinagawa-ku, Tokyo
Note: Lawson Mart, Inc. has changed its name to Lawson Store100, Inc. since March2016.

Operates the wholesale of meats, such as processed foods and frozen foods, andpacking materials.
Shinagawa-ku, Tokyo[Stores]Number ofstores628

IbarakiNumber ofstores158

Kyoto

Number ofstores322

Aomori

219

Tokyo

1,535

Shiga

154

Tokushima

134

Akita

184

Kanagawa

835

Nara

128

Fukuoka

447

Iwate

165

Shizuoka

236

Wakayama

134

Saga

66

Miyagi

208

Yamanashi

119

Osaka

1,010

Nagasaki

105

Yamagata

81

Nagano

171

Hyogo

640

Oita

169

Fukushima

107

Aichi

581

Okayama155

Kumamoto

140

Niigata

139

Gifu

156

Hiroshima

186

Miyazaki103

Tochigi

147

Mie

121

Yamaguchi

123

Gunma

101

Ishikawa

104

Tottori

115

Saitama532

Toyama189

Shimane

120

Chiba

464

Fukui

106

Kagawa131

Prefecture
Hokkaido

Prefecture

Prefecture

Prefecture
Ehime

Total (domestic)

Number ofstores212

11,880(Seijo Ishii Business)
SEIJO ISHII CO., LTD.
Major Business:
Operates a chain of small supermarkets that seeks to develop and manufacturehigh-value-added products.
Head Office:Nishi-ku Yokohama city, Kanagawa(Entertainment-related Business)① Lawson HMV Entertainment, Inc.
Major Business:
Sells tickets for various events and music/video software inside LAWSON stores andothers.
Head Office:Shinagawa-ku, Tokyo

8

(TRANSLATION ONLY)② United Cinemas Co., Ltd.
Major Business:
Constructs and manages multiplex movie theaters
Head Office:Shinagawa-ku, Tokyo(Other Business)
・Overseas Business① Lawson (China) Holdings, Inc.
Major Business:
Controls companies that operate overseas business in China.
Head Office:Shanghai, China② Shanghai Hualian Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Shanghai, China③ Shanghai Le Song Trading Co., Ltd.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Shanghai, China④ Shang Hai Gong Hui Trading Co., Ltd
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Shanghai, China⑤ Zhejiang Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Hangzhou, China⑥ Chongqing Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Chongqing, China⑦ Dalian Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Dalian, China⑧ Saha Lawson Co., Ltd.
Major Business:
Operates stores under the store brand of LAWSON 108 and 108SHOP.
Head Office:Bangkok, Thailand
・Financial Services-related Business
Lawson ATM Networks, Inc.
Major Business:
Installs jointly operated ATMs in LAWSON stores and others.
Head Office:Shinagawa-ku, Tokyo
・Consulting Business
BestPractice, Inc.
Major Business:
Head Office:Conducts surveys of convenience stores to give advice and make specific proposals
for the improvement of LAWSON stores.
Shinagawa-ku, Tokyo

9

(TRANSLATION ONLY)(2) Employees① Employees of the Corporate Group
Name of Business Segment

Number of Employees

Year on Year Change

Domestic Convenience Store Business

4,590

(35)

Seijo Ishii Business

812

(35)

Entertainment-related Business

982

11

Other Business

1,910

747

Total

8,294

688

② Employees of the Company
Number of Employees

Year on Year Change

Average Age

Average Years of Service

3,846

167

40.0

13.0

(3) Major Lenders
Lenders

Amount Borrowed (millions of yen)

Syndicate loan

50,000Mizuho Bank, Ltd.

9,137

10

(TRANSLATION ONLY)(3) Status of Major Business Combinations① Important Subsidiaries
Company Name
Common Stock

Shareholding

Major Business
Domestic Convenience StoreBusiness
Domestic Convenience StoreBusiness

Lawson Mart, Inc.

¥99 million

100.0 %

SCI, Inc.

¥10 million

100.0 %

¥5,250 million

100.0 %

Seijo Ishii Business

Lawson HMV Entertainment, Inc.

¥100 million

100.0 %

Entertainment-related Business

Lawson HMV Entertainment United
Cinema Holdings, Inc.

¥100 million

100.0 %

Entertainment-related Business

United Entertainment Holdings Co., Ltd.

¥100 million

100.0 %

Entertainment-related Business

United Cinemas Co., Ltd.

¥100 million

100.0 %

Entertainment-related Business

Lawson (China) Holdings, Inc.

CNY930 million

100.0 %

Overseas BusinessShanghai Hualian Lawson, Inc.

CNY353 million

94.0 %

Overseas BusinessShanghai Le Song Trading Co., Ltd.

CNY0.1 million

94.0 %

Overseas BusinessShang Hai Gong Hui Trading Co., Ltd.

CNY0.3 million

79.9 %

Overseas Business

Zhejiang Lawson, Inc.

CNY10 million

95.0 %

Overseas Business

Chongqing Lawson, Inc.

CNY190 million

100.0 %

Overseas Business

Dalian Lawson, Inc.

CNY66 million

98.3 %

Overseas Business

S$34 million

100.0 %

Overseas Business

THB937 million

49.0 %

Overseas Business¥3,000 million

76.5 %

Financial Services-related
Business¥10 million

100.0 %

Consulting Business

SEIJO ISHII CO., LTD.

Lawson Asia Pacific Holdings Pte, Ltd.
Saha Lawson Co., Ltd.
Lawson ATM Networks, Inc.
BestPractice, Inc.

Notes:
1. The shareholder percentage includes indirectly held shares.
2. Shanghai Le Song Trading Co., Ltd., Shang Hai Gong Hui Trading Co., Ltd. and Zhejiang Lawson, Inc.
have been included in the scope of consolidation starting from the current consolidated fiscal year due toincreasing materiality.
② Important Affiliated Companies
Company Name
Common Stock

Shareholding

Major Business

Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.

¥10 million¥100 million

49.0 %
49.0 %

Domestic Convenience Store Business
Domestic Convenience Store Business

Lawson Kochi, Inc.

¥50 million

49.0 %

Domestic Convenience Store BusinessNote: Lawson Kochi, Inc. has been included within the scope of equity method affiliates starting from thecurrent consolidated fiscal year as the Company owns 49% of its shares.
③ Important Business Alliances
Mitsubishi Corporation holds 33.5% of the total voting rights (33,500 thousand shares) of the Company.
Recognizing Mitsubishi Corporation as the most important strategic partner, the Company has entered into an
extensive business tie-up agreement with Mitsubishi Corporation for the enhancement of existing businesses
and the development of new businesses.

11

(TRANSLATION ONLY)
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 301,897 shares of treasury shares)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
25,934(5) Top 10 Major Shareholders:
Investment in the Company
Number of Shares
Shareholding (%)
Held (thousands)

Shareholder’s Name
Mitsubishi Corporation

33,50033.5

Japan Trustee Services Bank, Ltd. (Trust account)

4,134

4.1

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

3,457

3.5

Nomura Securities Co., Ltd.

2,150

2.2

NTT DOCOMO, INC.

2,092

2.1

STATE STREET BANK WEST CLIENT － TREATY 505234

1,675

1.7

STATE STREET BANK AND TRUST, BOSTON AS TRUSTEEFOR MAWER INVESTMENT MANAGEMENT LTD.

1,564

1.6

National Mutual
Cooperatives

1,001

1.0

905

0.9

THE BANK OF NEW YORK MELLON SA/NV 10905
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 shares.

0.9

Insurance

Federationof

Agricultural

HSBC BANK PLC STATE OF KUWAIT INVESTMENTAUTHORITY, KUWAIT INVESTMENT OFFICE

12

(TRANSLATION ONLY)
2. Status of Stock Acquisition Rights
Stock Acquisition Rights Held by Corporate Officers of the Company as of February 29, 2016
5th Stock
6th (a) Stock
7th (a) Stock
8th (a) Stock
Acquisition
Acquisition Rights Acquisition Rights Acquisition Rights
RightsNumber of option holders and the number of stock acquisition rights (units)
Directors (excluding
0 person0 persons
0 persons
0 personsOutside Directors)(0 units)(0 units)(0 units)(0 units)
2 persons
2 persons
2 persons
2 personsOutside Directors(10 units)(8 units)(8 units)(12 units)
Class and number ofCommon stock
Common stock ofCommon stock ofCommon stock ofshares subject to stockof Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
1,000
800
800
1,200
Value of property
invested in exercising
¥1
¥1
¥1
¥1
stock acquisition rights(per share)
October 13,
October 27, 2006
September 6, 2007
January 17, 2009
Exercise period
2005 throughthrough May 26,
through Augustthrough December
May 31, 2025
2026
20, 2027
15, 2028
Main exercise
Note 1
Note 2
Note 2
Note 2conditions
9th Stock
10th Stock
11th Stock
Acquisition
Acquisition Rights Acquisition Rights
RightsNumber of option holders and the number of stock acquisition rights (units)
Directors (excluding
0 persons
0 persons
0 personsOutside Directors)(0 units)(0 units)(0 units)
2 persons
2 persons
2 personsOutside Directors(10 units)(10 units)(10 units)
Class and number ofCommon stock
Common stock ofCommon stock ofshares subject to stockof Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
1,000
1,000
1,000
Value of property
invested in exercising¥1¥1¥1
stock acquisition rights(per share)
February 18,
February 26, 2011 February 18, 2012
Exercise period
2010 throughthrough February
through February
February 1, 2030
10, 2031
1, 2032
Main exercise
Note 2
Note 2
Note 2conditions

13

12th Stock
Acquisition Rights
1 persons(65 units)
3 persons(15 units)
Common stock of
Lawson, Inc.
8,000
¥1
April 12, 2013
through March 26,2033
Note 3

(TRANSLATION ONLY)
13th Stock
14th Stock
15th Stock
Acquisition
Acquisition
Acquisition
RightsRightsRightsNumber of option holders and the number of stock acquisition rights (units)
Directors (excluding
1 persons
3 persons
1 personsOutside Directors)(53 units)(99 units)(11 units)
4 persons
5 persons
0 personsOutside Directors(20 units)(25 units)(0 units)
Class and number ofCommon stock of Common stock of Common stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
7,300
12,400
1,100
Value of property
invested in exercising¥1¥1¥1
stock acquisition rights(per share)
April 10, 2014
April 10, 2015
June 10, 2015
Exercise period
through March 23, through March 24, through May 25,
2034
2035
2035
Main exercise
Note 3Note 3Note 3
conditions
Notes:
1. A stock acquisition rights holder may exercise his or her rights only for a period of 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 periodof 5 years from the day after losing his or her position as either director and/or executive officer of theCompany.
3. A stock acquisition rights holder may exercise his or her rights within the exercise period only for a periodof 10 days from the day after losing his or her position as either director and/or executive officer of theCompany.

The total number of shares subject to stock acquisition rights that remain unexercised as of February 29,
2016, is 78,100 shares, accounting for 0.1% of the total number of shares issued and outstanding.

14

(TRANSLATION ONLY)
3. Members of the Board and Corporate Auditors(1) Positions, Names and Assignments (As of February 29, 2016)
Position, Assignments and Important Concurrent Positions
Name
Note: Important concurrent positions of Outside Directors given later in (6) Outside
Directors and Outside Corporate Auditors
Genichi Tamatsuka
President and CEO,CHO
Representative Director
Sadanobu Takemasu
Senior Executive Vice President,―Corporate Staff Divisions, ―SEIJO ISHII and
Representative Director
Lawson Store100 Business, ―Overseas Business,―Entertainment and Consumer Service Business,
Corporate Sales and Store Development Division
Director
Masakatsu Gonai
Executive Vice President,―Compliance & Risk Management, ―Store
Member of the Board
Operations,―Human Resources and Franchisee
Business Support Division Director
Reiko Yonezawa
Member of the Board
Takehiko Kakiuchi

Member of the Board

Emi OsonoMember of the Board

Yutaka Kyoya

Member of the Board

Sakie Akiyama

Member of the Board

Atsuhiko Seki

Standing Corporate Auditor

Shinichi HokariStanding Corporate Auditor

Tetsuo Ozawa

Corporate Auditor

Eiko Tsujiyama

Corporate Auditor

Notes:
1. Five directors (Reiko Yonezawa, Takehiko Kakiuchi, Emi Osono, Yutaka Kyoya and Sakie Akiyama) areoutside directors as stipulated in Article 2, Item 15, of the Companies Act of Japan (the “CompaniesAct”).
2. Three auditors (standing corporate auditor Shinichi Hokari, corporate auditor Tetsuo Ozawa and corporate
auditor Eiko Tsujiyama) are outside corporate auditors as stipulated in Article 2, Item 16, of theCompanies Act.
3. Standing corporate auditor Shinichi Hokari has assumed responsible posts for many years on the Board ofAudit of Japan and therefore has considerable expertise in finance and accounting.
Corporate auditor Tetsuo Ozawa, lawyer, has practiced law and advised on legal matters and risk
management mainly in relation to the legal affairs of companies and therefore has considerable expertisein finance and accounting.
Corporate auditor Eiko Tsujiyama has long-term experience as a university professor in accounting andtherefore has considerable expertise in finance and accounting.

15

(TRANSLATION ONLY)[Reference] Members of the Boards and Senior Vice Presidents(Exclude Outside Corporate Auditors) (As of March 1, 2016)
Name
Genichi Tamatsuka
Sadanobu Takemasu

Masahiro Oyama
Masaharu Kamo
Masakatsu Gonai

Position and Major Title
President and CEO,
Representative Director
Senior Executive Vice
President,
Representative Director
Senior Executive Vice
President
Senior Executive Vice
President

Yutaka Yoshitake
Katsuyuki Imada
Jun Miyazaki

Executive Vice President,
Member of the Board
Executive Vice President
Executive Vice President
Executive Vice President

Norikazu Nishiguchi

Senior Vice President

Yuichi Wada
Tetsu Yamada
Shuichi Imagawa
Takaki Mizuno
Shigeaki Kawahara

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

Ken Sakamoto

Senior Vice President

Yasuhiko Hirokane
Kazuya Nobe

Senior Vice President
Senior Vice President

Tatsushi Sato
Hajime Kawamura

Senior Vice President
Senior Vice President

Motonobu Miyake

Senior Vice President

Atsushi Maeda

Senior Vice President

Akihito Watanabe

Senior Vice President

Yasuhiro Iseki

Senior Vice President

Taiki Hasegawa

Senior Vice President

Takuya Shiraishi

Senior Vice President

CHO―Corporate Staff Divisions, ―SEIJO ISHII, Natural Lawson andLawson Store100 Business, ―Overseas Business,―Entertainment/Service Business, Corporate Sales and Store
Development Division Director―Merchandising and Merchandising Group Innovation Officer―Strategy of Information Systems, ―Home CVS Business,
Operations Management and IT Systems Division Director,
Corporate Strategy and Planning Division Deputy Director―Compliance & Risk Management, ―Human Resources andFranchisee Business Support Division Director
CFO
Corporate Strategy and Planning Division Director
Corporate Communications Division Director, Human Resources
and Executive Assistant to CHO
Executive Assistant to CEO(―Public Relations and Corporate
Sales), Operations Management and IT Systems Division Deputy
Director, Franchisee Business Support Division Deputy Director
Merchandising Division Director
International Business Division Director
Sales Strategy and Marketing Division Director
Executive Assistant to CEO (―Western Japan)
SEIJO ISHII, Natural Lawson and Lawson Store100 Business
Division Director, Lawson Store100, Inc. President andRepresentative Director
Entertainment and Consumer Service Business Division Director,
Lawson HMV Entertainment, Inc. President and Representative
Director
Healthcare Business Division Director
Home CVS Business Division Director and SG Lawson, Inc.
President and Representative Director
Operations Management and IT Systems Division Deputy Director
Franchisee Business Support Division Deputy Director
International Business Division Deputy Director, Lawson (China)
Holdings, Inc. General Manager
Merchandising Division Deputy Director
Entertainment and Consumer Service Business Division Deputy
Director and United Cinemas Co., Ltd. President andRepresentative Director
SEIJO ISHII CO., LTD. Director, Senior Executive Vice President(Temporary Transfer)Entertainment and Consumer Service Business Division Deputy
Director and Sales Strategy and Marketing Division Deputy
Director
Operations Management and IT Systems Division Deputy Directorand Lawson Digital Innovation Inc. President and Representative
Director

16

(TRANSLATION ONLY)(2) Outline of Liability Limitation Agreements
The Company has entered into agreements with its directors (excluding persons who are executive
directors, etc.) and 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 sumof the amounts set forth in the respective relevant items of Article 425, Paragraph 1 of the Companies Act.
The aforementioned liability limitation is valid only in cases where the said director or corporate auditor has
performed duties which resulted in a cause of such liability in good faith without committing acts of grossnegligence.
(3) Amounts of Remuneration Paid to Directors and Corporate Auditors
Remuneration paid to officers
Total
Total Compensation Paid by Type
Compensation(Millions of Yen)
CategoryPaid
Basic(millions ofStock Options
Compensation
Yen)
Directors
261
176
84
(Including Outside Directors)(Outside Directors)
55
39
15
Corporate Auditors(Including Outside Corporate
70
70–
Auditors)(Outside Corporate Auditors)
46
46
–
Total
331
247
84

Number of
Directors andCorporate Auditors
Applicable
8
5
4
3
12

(4) Policy on Decisions Concerning the Amount of Remuneration Paid to Directors① Basic policy on decisions concerning the amount of remuneration paid to directors
Regarding the amount of remuneration paid to directors, it is the Company’s basic policy to design the
remuneration system in close correlation with shareholder returns while ensuring that it will function
sufficiently as an incentive for the enhancement of corporate value, sustainable growth and improvement ofoperating performance, and reward each director with a sufficient and adequate amount of compensation for
the execution of their duties.
② Decision-making process for the amount of remuneration paid to directors
In order to enhance management transparency, the amount of remuneration paid to directors is determinedat the board of directors meeting based on recommendations by the Company’s Compensation Committee,
which consists exclusively of outside officers (four outside directors and two outside corporate auditor).
Members of the Nomination and Compensation Committee:
Outside Director
Reiko Yonezawa
Outside Director
Takehiko Kakiuchi
Outside Director
Emi Osono
Outside Director
Sakie Akiyama(Vice Committee Chairperson)
Outside Corporate Tetsuo Ozawa
Outside Corporate
Eiko Tsujiyama
Auditor(Committee Chairperson)
Auditor③ Details of remuneration paid to directors
Remuneration paid to the Company’s directors is composed of basic compensation through cash
payments and stock price-linked compensation through the granting of stock options.
[Basic compensation]
Basic compensation of directors is composed of fixed compensation with fixed monthly payments andvariable compensation, which fluctuates in response to the Company’s financial performance for eachperiod.
・ Fixed compensation
The amount of fixed compensation commensurate with the position is determined based on standards
stipulated by internal rules.
・ Variable compensation
In order to link the remuneration of directors with shareholder returns, the Company has adopted acompensation system that is linked to the Company’s financial performance.
Variable compensation is paid in accordance with earnings indicators such as EPS (consolidated net
income per share). Regarding 5 nonexecutive directors, Reiko Yonezawa, Takehiko Kakiuchi, Emi Osono,
Yutaka Kyoya and Sakie Akiyama, variable compensation is not applicable as they are focused on theirsupervisory and advisory roles as the Company’s representative directors and in the board of directors
meetings.

17

(TRANSLATION ONLY)[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 arise in stock 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
is determined in accordance with the position of directors. In addition, stock options as stock-based
compensation can be exercised only during designated periods after retirement from office; directors are notallowed to exercise their stock option rights during their term in office.
④ Limit on the amount of remuneration paid to directors
The limit on the amount of remuneration paid to the Company’s directors is determined at the general
meeting of shareholders in accordance with laws and regulations.
・ Amount of remuneration paid to directors
Resolutions at the general meeting of shareholders as of May 24, 2001: ¥400 million or less per year
・ Amount of stock options granted to directors
Resolutions at the general meeting of shareholders as of May 27, 2014: ¥300 million or less per year
(5) Policy on Decisions Concerning the Amount of Remuneration Paid to Corporate Auditors① Basic policy on decisions concerning the amount of remuneration paid to corporate auditors
Regarding the amount of remuneration paid to corporate auditors, it is the Company’s basic policy toreward each corporate auditor with a sufficient and adequate amount of compensation for the 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 amongcorporate auditors and is within the remuneration amount limit resolved at the general meeting ofshareholders.
③ Details of remuneration paid to corporate auditors
The Company’s corporate auditors receive basic compensation (fixed compensation) in cash.
The amount of basic compensation is decided based on discussions among corporate auditors, taking into
consideration whether or not they are working on a full-time basis, and segregation of auditing duties.
Regarding retirement benefits, the system itself was abolished.
④ Limit of the amount of remuneration paid to corporate auditors
The limit of the amount of remuneration paid to the Company’s corporate auditors is determined at thegeneral meeting of shareholders in accordance with laws and regulations.
Amount of remuneration paid to corporate auditors
Resolutions at the general meeting of shareholders as of May 29, 2012:¥80 million or less per year

18

(TRANSLATION ONLY)(6) Outside Directors and Outside Corporate Auditors① Relationship between Major Positions Concurrently Held and the Company
Relationship between the
Position in the
Name
Position
Details
Company and Company
Company
Concurrently Held
Where Position Concurrently
Held
The Company and The R Co.,
Ltd., for which Reiko
Yonezawa serves aschairperson, have a business
relationship between the twocompanies consisting of
The R Co., Ltd.
Chairperson
reception services for theOutside
Reiko
Company’s head officeDirector
Credit Saison Co.,
Outside director
Yonezawa
provided by the latter. The(Independent)
Ltd.
Company entrusted The R Co.,
Ltd. to provide services after
receiving bids from several
suitable companies andverifying their economic
efficiency.
Mitsubishi Corporation, forwhich Takehiko Kakiuchi
Executive Vice
Mitsubishi
President, Group CEO, serves as an executive vicepresident, is a large
Corporation
Living Essentials
shareholder of the Company,
Group
has a business relationshipwith the Company under an
OutsideTakehikoextensive business allianceDirector
Kakiuchiagreement.
The Company and Mitsubishi
Shokuhin Co., Ltd, for which
Mitsubishi
Outside director
Takehiko Kakiuchi serves as
Shokuhin Co., Ltdan outside director, have abusiness relationship between
the two companies in purchaseof merchandise.
Hitotsubashi
University
Graduate SchoolofProfessor
OutsideDirector
Emi Osono International－
Corporate(Independent)
Strategy
Resona Holdings,
Outside director
Inc.
Mitsubishi
Division COO, Foods Mitsubishi Corporation, forwhich Yutaka Kyoya serves as
Corporation(Commodity) Div.
a senior vice president, is a
Rokko Butter Co.,large shareholder of theOutside director
LTD
Company, and has a businessOutsideYutakarelationship with the Company
Thai Union Group
Director
Kyoya
under an extensive business
Public Company
Outside director
alliance agreement.
Ltd.
Olam
Outside director
International Ltd.
OutsideSakie
Saki Corporation
CEO and FounderDirector－
Akiyama(Independent)

19

(TRANSLATION ONLY)
Position in the
Company
OutsideCorporate
Auditor(Independent)

Name

Shinichi
Hokari

Position
Concurrently
Held

Details－－
Lawyer(Representative
Partner)
Outsidecorporate
auditorOutsidecorporate
auditorCorporate
auditorTokyo Fuji Law
OfficeOutsideCorporate
Auditor(Independent)

OutsideCorporate
Auditor(Independent)

CEMEDINE
CO., LTD.
Tetsuo Ozawa

Eiko
Tsujiyama

Sekisui
Chemical Co.,
Ltd.
United Urban
Investment
Corporation.
WasedaUniversity
School ofCommerce andGraduate Schoolof Commerce

Professor

ORIX
CorporationNTT
DOCOMO,
INC.

Outsidecorporate
auditorOutsidedirector
Outsidecorporate
auditorShiseido
Company,
LimitedOutsidecorporate
auditor

Mitsubishi
Corporation

Relationship between the Company
and Company Where Position
Concurrently Held－－

Mitsubishi Corporation, for which
Eiko Tsujiyama serves as an
outside corporate auditor, is a large
shareholder of the Company, andhas a business relationship with theCompany under an extensive
business alliance agreement.
NTT DOCOMO, INC., for which
Eiko Tsujiyama serves as an
outside corporate auditor, is a large
shareholder of the Company, andhas a business relationship with theCompany in thetelecommunications field under an
extensive business allianceagreement.

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

20

(TRANSLATION ONLY)② Major Activities during the Year

Position in the
Company

Name

Outside Director(Independent)

Reiko Yonezawa

Outside Director

Takehiko Kakiuchi

Outside Director(Independent)

Emi Osono

Outside Director

Yutaka Kyoya

Outside Director(Independent)

Sakie Akiyama

OutsideCorporate Auditor(Independent)

Shinichi Hokari

OutsideCorporate Auditor(Independent)

Tetsuo Ozawa

OutsideCorporate Auditor(Independent)

Eiko Tsujiyama

Major Activities
Ms. Yonezawa attended 13 of 14 board of directors’ meetings held
during the year and appropriately questioned and/or remarked basedon her abundant experience and knowledge as a management
executive. Ms. Yonezawa is also a member of the Company’s
Nomination and Compensation Committee.
Mr. Kakiuchi attended 11 of 14 board of directors’ meetings held
during the year and appropriately questioned and/or remarked basedon his deep knowledge about the consumer lifestyles industry. Mr.
Kakiuchi is also a member of the Company’s Nomination andCompensation Committee.
Ms. Osono attended 12 of 14 board of directors’ meetings held
during the year, and as an academic, appropriately questioned and/or
remarked based on her abundant knowledge of global corporate
management, corporate strategy and organizational behavior, etc. Ms.
Osono is also a vice chairperson of the Company’s Nomination andCompensation Committee.
Mr. Kyoya attended 13 of 14 board of directors’ meetings held
during the year, and appropriately questioned and/or remarked basedon his abundant knowledge of fields related to the daily lives ofconsumers.
Ms. Akiyama attended 13 of 14 board of directors’ meetings held
throughout the year during her term in office and, as a management
executive, appropriately questioned and/or remarked based on her
abundant knowledge. Ms. Akiyama is also a member of theCompany’s Nomination and Compensation Committee.
As a standing corporate auditor, Mr. Hokari examined financial
documents and visited relevant establishments and business partners
to examine their business operations and financial situation. Mr.
Hokari monitored and verified the execution of duties of directors
and other personnel including those relating to the improvement ofinternal control systems. Mr. Hokari attended all 14 board of
directors’ meetings and all 16 board of corporate auditors’ meetings
held throughout the year during his term in office and appropriately
questioned and/or remarked based on his deep knowledge financeand accounting and using his experience of assuming responsible
posts for many years on the board of audit of Japan.
Mr. Ozawa attended 13 of 14 board of directors’ meetings and all 16
board of corporate auditors’ meetings held during the year andappropriately questioned and/or remarked based on his abundant
experience and knowledge as a lawyer. Mr. Ozawa is also achairperson of the Company’s Nomination and Compensation
Committee.
Ms. Tsujiyama attended 12 of 14 board of directors’ meetings and all
16 board of corporate auditors’ meetings held during the year andappropriately questioned and/or remarked based on her deep
knowledge of accounting as a university professor in this field. Ms.
Tsujiyama is also a member of the Company’s Nomination andCompensation Committee.

21

(TRANSLATION ONLY)
4. Independent Auditor(1) Independent Auditor
Deloitte Touche Tohmatsu LLC(2) Amounts of Remunerations, etc., to be Paid to the Independent Auditor
94 million yen
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
157 million yen
subsidiaries to the independent auditor
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 for the audit under the Financial
Instruments and Exchange Act, and the two amounts cannot be substantially distinguished fromeach other. Therefore, the amount in 1) above indicates the total for the two audits.
2. As a result of confirmation and consideration of the content of the audit plan, former audits andactual remuneration paid in the past, and the basis for calculating remuneration estimates, etc. aswell as the progress of discussions with accounting auditors, etc. in light of the Practical Guidanceon Collaboration with Accounting Auditors issued by the Japan Audit & Supervisory Board
Members Association, the Board of Corporate Auditors gave its consent with regard to the
remuneration of accounting auditors pursuant to Article 399, Paragraph 1 of the Companies Act.
3. Nine of the important subsidiaries of Lawson overseas are subject to audit by an independent auditor
other than Lawson’s independent auditor.
(3) Nonaudit Services
The Company entrusts the following services, which do not come under the services set forth in Article 2,
Paragraph 1, of the Certified Public Accountant Act (nonaudit services), to the independent auditor:
・Advice and guidance on the preparation of documents translated into English for earnings reports andvarious other financial documents.
(4) Policy on Decisions Concerning Dismissal or Nonreappointment of the Independent Auditor
If the independent auditor violates or infringes the Companies Act, the Certified Public Accountant Act, orother laws or regulations, or the Company considers it necessary to do so, the board of directors shall, after
obtaining the agreement of the Board of Corporate Auditors, submit a proposal for dismissal or
nonreappointment of the independent auditor to a general meeting of shareholders. In addition, the board ofcorporate auditors can dismiss the independent auditor with a unanimous resolution if it determines that any
act or circumstance of the independent auditor falls under any items of Article 340, Paragraph 1, of theCompanies Act.

22

(TRANSLATION ONLY)
III. SYSTEMS AND POLICIES OF THE COMPANY
1. Determination of Resolution of Systems to Ensure the Propriety of Business Operations
Based on improvements and the operation of the preceding “2014 Basic Policy for Improvement of Internal
Control Systems,” which was approved at the board of directors’ meeting held on April 9, 2015, the Company
passed a resolution called the “2015 Basic Policy for Improvement of Internal Control Systems,” as indicatedbelow.
(1) Systems to Ensure Compliance of the Execution of Duties by Directors and Employees with Laws andRegulations and the Articles of Incorporation① The board of directors shall determine the improvement policies and plans for internal control systems,
including those for compliance with laws, regulations and the like (the “Compliance”), and receive status
reports thereof periodically.
② The board of directors shall maintain and improve the supervising function regarding the execution ofduties 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 thestatus concerning the improvement of the internal control systems.
④ The Internal Audit Department, which is independent from the business-executing bodies, shall audit thestatus concerning the improvement of the internal control systems and recommend improvements thereof,
as required.
⑤ The board of directors shall maintain and raise the awareness of officers and employees regarding
compliance by thoroughly disseminating the Group Code of Conduct and the Lawson Ethical Mission
Statement by such measures as, including, but not limited to, appointing a Chief Compliance Officer,
establishing a department to oversee compliance, assigning personnel in charge of compliance at eachdepartment, streamlining the rules in relation to compliance, and providing periodic training on ethics andawareness surveys on compliance.
⑥ The Legal Affairs Department shall be reinforced to fortify foundations for complying with legal
requirements by identifying the laws and regulations applicable to the Company’s businesses andcommunicating the content thereof to the relevant departments and sections.
⑦ With the aim to strive for the early detection of violations or possible violations of laws, regulations, etc.
across the Group and the entire chain, the Company shall establish and upgrade normal reporting routes forreporting any violations of laws, regulations or internal rules. It shall establish reporting and consulting
systems (internal consulting contact points, group-wide outside consulting contact points and consulting
contact points for employees and business counterparties for Lawson’s franchised stores) that fully protect
those who make such reports.
⑧ The Company shall never become involved with antisocial forces or bodies that threaten the order andsecurity of society, and shall take a firm stance on, and deal with, improper demands by consulting withlawyers the police and the like.
(2) Systems to Preserve and Manage Information Pertaining to the Execution of Duties by Directors① 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 shallput 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 tomaintaining the systems, by sufficiently taking into account contingencies.
③ The Company shall establish and maintain rules regarding the management of documents (including
electromagnetic recording media), keep everyone informed about the responsibility and authority for
document management, document storage periods and management methods, and periodically monitor the
status of document storage and management.

23

(TRANSLATION ONLY)④ The Company shall establish and maintain rules regarding the protection of personal information and the

management of trade secrets, and appropriately and safely store and manage personal information andimportant trade secrets.
⑤ The Company shall establish and maintain an information security system for the Group by putting inplace a Chief Information Security Officer and a division that oversees information security with the aimof promoting information security in a consolidated and unified manner in view of both risk management
and system technology security.
⑥ The Company shall establish and maintain rules regarding the disclosure of important Company
information, and upgrade the system for disclosing information that must be disclosed according to therequirements of laws, regulations and stock exchanges, in an appropriate, timely and fair manner.
(3) Rules and Other Systems Regarding Risk Management① The Company shall establish a department to oversee risk management, improve rules related to risk
management, and improve group-wide risk prevention systems during normal operations. Moreover, theCompany shall respond according to the characteristics of risks by identifying risks that might haveadverse effects on the Company’s management in connection with its business purposes in eachdepartment, 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 thecommittee and its chairperson. Furthermore, the Company shall endeavor to increase awareness about risk
management by assigning risk management staff to departments and associated companies and conducting
risk management training.
③ The Company shall develop contingency systems and formulate policy for contingency response bodies inadvance to prepare for the occurrence or possible occurrence of unanticipated situations or events, whichmight have adverse effects on management of the Company, in order to provide a quick response to any
actual occurrence thereof and to take effective measures to prevent a reoccurrence. In particular, theCompany shall formulate a Business Continuity Plan (BCP) and a Business Continuity Management
system to minimize the business interruption in the event of the occurrence of situations or events
inflicting substantial damage on the Company such as a large-scale natural disaster or an epidemic of a
new-type influenza.
④ In order to be prepared for major earthquakes, the Company shall conduct disaster prevention drills threetimes a year while working to improve effectiveness of the “Disaster Countermeasure Manuals” and the“BCP” system.
(4)

Systems to Ensure the Efficient Execution of Duties by Directors① 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 thedivision of duties to ensure and encourage more appropriate division of duties and collaboration amongorganizational bodies.
② The Company shall work to raise operational efficiency by simplifying business processes, streamlining
the organization and making appropriate use of IT.
③ In order to promote the proper communication of information and communications between officers andemployees, the Company shall improve systems so that management guidelines and policies are
disseminated to employees by corporate officers and important field information is properly
communicated by employees to corporate officers in a timely manner.
(5) Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group
Consisting of the Company and its Subsidiaries① The Company shall endeavor to maintain and enhance the Lawson brand through close collaboration withsubsidiaries and affiliated companies (“Associated Companies”). However, with regard to affiliatedcompanies, the Company will work to appropriately establish and maintain systems through phased
implementation, taking into account such factors as relations with other leading shareholders differencesin laws, regulations and business customs and the like of foreign countries.
② While respecting the independence of Associated Companies, in view of the purpose of the Company’s
equity participation in Associated Companies, the Company shall establish Group regulations such as
basic policies for the management of Associated Companies and management policies thereof, and keep
the Associated Companies fully informed of the Group Code of Conduct.
③ The Company shall appoint designated persons at major Associated Companies to be responsible forpromoting compliance and risk management and promote communications between the Company andmajor subsidiaries with a view to ensuring appropriate business operations across the entire Group.
④ The Company shall develop a system in which immediate reporting is made by compliance managers of
associated companies in the event that they have identified any facts that may cause material damage to24

(TRANSLATION ONLY)
their companies.
⑤ The Company shall develop a system in which the contents of consultations sought or reports made to the
Independent Whistleblower Hotline across the Group are reported to corporate auditors on a timely basis.
⑥ 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 ofCompanies① The Company shall enhance systems for preparing financial statements according to laws, regulations, andaccounting standards and disclosing the same after they have been discussed, examined, and confirmed inaccordance with regulations governing information disclosure in order to report financial information in aproper and timely manner.
② The Company shall establish a dedicated internal organization in order to properly implement the internal
control reporting system required by the Financial Instruments and Exchange Act as an internal control for
financial reporting. Furthermore, the Company shall establish a system for self-evaluation and third-party
evaluation and improvement through the identification and recording of business processes at importantbusiness bases and the status of Company-wide internal controls. The results of these evaluations of, andimprovements at, the Company and important subsidiaries shall be regularly reported to the board of
directors.
(7) Matters Concerning Employees Where a Corporate Auditor Requests Employees to Assist with Duties① The Company shall assign appropriate personnel to the auditors’ office (“Corporate Auditors’ Staff”) as
employees exclusively to assist corporate auditors in the execution of their duties.
② Corporate Auditors’ Staff may serve concurrently as corporate auditors of Associated Companies.
③ Corporate Auditors’ Staff shall have the authority to conduct investigations necessary for audits bycorporate auditors following the instructions of corporate auditors.
(8) Independence of Employees from Directors in the Preceding Item
Performance reviews of Corporate Auditors’ Staff shall be conducted by the standing corporate auditors toensure that Corporate Auditors’ Staff carry out their duties appropriately. Personnel changes require the priorconsent of the standing corporate auditors.
(9) Systems for Directors and Employees to Report to Corporate Auditors and Other Reporting Systems
to the Corporate Auditors① Directors and employees of the Company shall report important corporate management and businessadministration matters, as well as the status and results of the execution of their duties, to corporate
auditors 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 or loss, they shall immediately inform the board of corporate auditors.
③ Reports to corporate auditors shall basically be made in good faith without fail, and shall be madepromptly, if required, in addition to periodic reports.
(10) Other Systems to Ensure Effective Audits by Corporate Auditors① The representative directors and corporate auditors shall have regular meetings to enhance smoothcommunications with each other.
② Directors shall cooperate with the corporate auditors with regards to communications, the collection andexchange of information and so on between the corporate auditors and the corporate directors and the likeof Associated Companies so that the corporate auditors can perform their duties appropriately.
③ Directors shall also cooperate in conducting surveys of significant business partners, which the corporate
auditors deem necessary.
④ Directors shall enable the corporate auditors to collaborate with outside experts such as lawyers andcertified public accountants, if any corporate auditor deems it necessary in executing his/her duties.
⑤ The Legal Affairs, Risk Management, Internal Audit, and Finance and Accounting departments of theCompany shall assist in conducting necessary surveys for audits when requested by any corporate auditor.

25

(TRANSLATION ONLY)
2. Outline of Operational Status of Systems to Ensure the Propriety of Business Operations
The Company operates internal control systems in accordance with the aforementioned basic policy. Their
operational status is as outlined below.
(1) Compliance and Risk Management Systems① The Company strives to be a good corporate citizen able to act according to high ethical standards andwith integrity and thoughtfulness by integrating its code of conduct, education and training, andmonitoring activities in an organic manner.
② The Company has established the Lawson Ethical Mission Statement and the Group Code of Conduct as
its code of conduct, published them in the Lawson Group C&R Handbook, and distributed the handbook
to all employees in an effort to thoroughly disseminate its content with the aim of ensuring the proprietyof business operations across the Group.
③ On the education and training front, the Company endeavors to maintain and improve its ethicalawareness and ability to withstand crises through compliance and risk management training targeting all
employees, training provided upon joining the Group and upon promotion to a managerial position,
training by job types, and training for company management. In addition, a CR Director is appointed as
the chief officer in charge of compliance and risk management, and the position of CRO is establishedfor each head office and region. CROs attend the Compliance & Risk management meetings organizedby the CR Director, thoroughly disseminate measures determined at the meetings, and monitor the
progress of such measures in an effort to prevent the occurrence of risk events.
④ With respect to whistleblowing reports, there are internal consultation and reporting contact points alongwith the Lawson Group Independent Whistleblower Hotline as well as a consultation contact point for
the Company’s business counterparties.
⑤ In terms of monitoring activities, the Company conducts questionnaire surveys targeting all employees
and business counterparties and reviews its compliance and risk management systems based on the
results of audits conducted by the Internal Audit Department.
⑥ At major associated companies, compliance and risk management managers are also appointed and thesemanagers attend compliance managers’ meetings for associated companies. Associated companies also
implement code of conducts, conduct training, and carry out questionnaire surveys for employees andbusiness counterparties. Through the operational audits conducted on associated companies by theCompany’s Audit Department and the liaison meetings for the Group’s corporate auditors organized by
the Company’s corporate auditors, etc., efforts have been made to develop and improve compliance andrisk management systems for the Lawson Group.
(2) Preparations against and Responses to Risks① In normal times, the Compliance & Risk management meetings and five sub-committees are organized
to assess risks and formulate and promote risk prevention measures with the aim of preventing theoccurrence of risk events. In the event of significant risk events, the Emergency Risk Management
Committee is convened in an effort to swiftly solve issues and minimize damage.
② With regard to the information security system, employees regularly check the implementation of
information security rules. When outsourcing the retention, etc. of personal information, the Company
examines the information security system of such contractors in advance and conducts on-site
inspections once a year. In handling the personal information of customers, a system has been establishedto specify collection and retention methods, retention period, administration manager, etc. and obtain
internal approval prior to execution. Information on errors that can happen in stores and specificcountermeasures have been disseminated via the store manual. Moreover, the Internal Audit Department
carries out information security audits and specialized external companies conduct spot checks on officesecurity to evaluate the vulnerability of information systems, etc.
③ Even in the case of significant damage due to a large-scale disaster, etc., the Company aims to avoid adecline in customer satisfaction and corporate value, etc. by avoiding interruption of its key business
operations. In an effort to enhance its ability to respond to crises across the Group, the Company has
been constantly reviewing and improving both “hard” aspects such as office buildings and lifelines and“soft” aspects such as the BCP and manuals as well as the skills of employees and franchisees. In
addition, the Company has been working to conclude agreements on the procurement of goods andsupport for stranded commuters during a large-scale disaster event with the aim of engaging in mutual
cooperation with municipal governments in disaster stricken areas and fulfilling a lifeline function.
(3) Securing Effectiveness of Performance of Corporate Auditors① Corporate Auditors’ Staff are assigned to the auditors’ office to provide exclusive assistance to corporate
auditors in the execution of their duties. Corporate Auditors’ Staff have the authority to conduct
investigations necessary for audits by corporate auditors. In addition, relevant departments assist in
conducting necessary investigations for audits by corporate auditors in accordance with the content of the26

(TRANSLATION ONLY)
audits.
② With regard to reporting to corporate auditors, matters that should be reported to corporate auditors havebeen reported to corporate auditors in a timely and appropriate manner.
The above amounts and the number of shares in this Business Report are rounded down to the nearest unit andthe ratios are rounded to the nearest whole number.

27

(TRANSLATION ONLY)

Consolidated Balance Sheet(Millions of yen)
Assets
Account item
Current assets
Cash and deposits
Accounts receivable-due from
franchised stores
Merchandise
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Non-current assets
Property and store equipment
Buildings and structures
Tools, furniture and fixtures
Land
Leased assets
Construction in progress
Other
Intangible assets
Software
Goodwill
Right of trademark
Other
Investment and other assets
Investment securities
Long-term loans receivable

Liabilities
As of February
28, 2015(for reference)

As ofFebruary 29,
2016

223,642
76,758224,209
69,797

Current liabilities
Accounts payable-trade

301,069
103,458

319,607112,225

37,05230,547

Short-term loans payable

1,740

1,990

575

575

19,94843,51813,301
103,634
2,976
11,916
199,746
58,42576,17423,89857,2148,500
101,908
3,832
9,462
210,607
57,562
88,060367

413

12,95821,53030,290500,816

12,186
24,66427,719530,215

252,10758,506
47,696
147,177(1,272)259,532
58,506
47,697
154,608(1,280)

4,014

4,860

(393)

801

(566)

(566)

5,492

5,531

(518)

(906)

223
7,452
263,797764,614307
8,296
272,997803,212

17,04458,666
5,299
31,400(2,578)
540,971
274,436
153,375
14,825
9,640
91,6614,810
123
79,53018,80048,18911,989550
187,004
18,11837,232

Guarantee deposits

93,205

Deferred tax assets

26,251

Other

13,316

Allowance for doubtful accounts(1,121)

Total Assets

764,614

Account item

Current portion of long-termloans payable
Lease obligations
67,736
Accounts payable-other
4,524
Income taxes payable
33,635
Deposits received(8)
Provision for bonuses
579,002
Other
302,761
167,098 Non-current liabilities
Long-term loans payable
16,307
9,794
Lease obligations
Provision for retirement
benefits to executive officers
101,546
and audits & supervisory board
members
Net defined benefit liability
7,870
Asset retirement obligations
143
Other
84,595
Total liabilities
26,37746,309Net assets
11,381 Shareholders’ equity
527
Capital stock
191,645
Capital surplus
22,325Retained earnings
40,886
Treasury shares
Accumulated other92,495comprehensive income
Valuation difference on
22,016
available-for-sale securities
14,782
Revaluation reserve for land
Foreign currency translation(860)
adjustment
Remeasurements of defined
benefit plans
Subscription rights to shares
Minority interests
Total net assets
Total Liabilities and Net Assets
803,212

As of February
As of28, 2015
February 29,(for reference)
2016

17,976

Note: Figures as of February 28, 2015, are included in the table above for comparative purposes only.

28

(TRANSLATION ONLY)

Consolidated Statement of Income(Millions of yen)Account item
Operating revenue
Income from franchised stores
Other operating revenue
Net sales
Net sales
Gross operating revenue
Cost of sales
Gross profit
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Compensation income
Share of profit of entities accounted for using
equity method
Store equipment related income
Foreign exchange gains
Other
Non-operating expenses
Interest expenses
Loss on cancellation of leases
Foreign exchange losses
Other
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on change in equity
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Loss on liquidation of business
Other
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Income before minority interests
Minority interests in income
Net income

From March 1, 2014 to
February 28, 2015
(for reference)

From March 1, 2015 toFebruary 29, 2016

247,681
76,188261,681
94,165(174,044)(128,116)(45,928)

323,869
174,044497,913
128,116(227,606)(155,949)(71,656)

369,797299,315
70,482
759
646

365

292

118
1,585
1,481

318
－
837

1,520
1,168
－
825

369
756
249
2,966
8,263
1,519
1,469
24,938312

3,514
71,714

1,126

14,46958,37025,25033,120433
32,686

227,606
583,452
155,949
427,503354,961
72,541

830
365

4,746

355,846

1,903
1,953
914
1,002

－
892
228
4,342
10,542－－
19,233
4,031

2,853

5,772
69,622892

15,11255,402
23,26532,136755
31,381

Note: Figures from March 1, 2014 to February 28, 2015, are included in the table above for comparative
purposes only.

29

(TRANSLATION ONLY)

Consolidated Statement of Changes in Equity(From March 1, 2015 to February 29, 2016)(Millions of yen)
Shareholders’ equity

Balance at beginning of current
periodCapitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’equity58,506

47,696

147,177(1,272)

252,107

Cumulative effects of changes
in accounting policies
Restated balance

Accumulated other comprehensive income

1,411
58,506

47,696

148,588

Valuationdifference on
availablefor-salesecurities

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
incomeSubscription
rights tosharesMinority
interests

Total net
assets

(393)

(566)

5,492

(518)

4,014

223

7,452

263,797

1,411(1,272)

1,411

253,519

(393)

(566)

5,492

(518)

4,014

223

7,452

265,209

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

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

Net income

31,381

31,381

31,381

(8)

(8)

(8)

0

1

1

Purchase of treasury shares
Disposal of treasury shares0

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current period

1,195

－

38

(387)

845

84

844

1,774

－

0

6,020

(7)

6,013

1,195

－

38

(387)

845

84

844

7,788

58,506

47,697

154,608(1,280)259,532

801

(566)

5,531

(906)

4,860

307

8,296

272,997

30

(TRANSLATION ONLY)(Notes to the Consolidated Financial Statements)(Basis of Presentation the Consolidated Financial Statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 18(Domestic)
Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
BestPractice, Inc.
SCI, Inc.
Lawson Mart, Inc.
Lawson HMV Entertainment United Cinemas Holdings, Inc.
United Entertainment Holdings Co., Ltd.
United Cinemas Co., Ltd.
SEIJO ISHII CO., LTD.
(Foreign)
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.
Dalian Lawson, Inc.
Lawson (China) Holdings, Inc.
Lawson Asia Pacific Holdings Pte. Ltd.
Saha Lawson Co., Ltd.
Shanghai Le Song Trading Co., Ltd.
Shang Hai Gong Hui Trading Co., Ltd.
Zhejiang Lawson, Inc.
Among the companies mentioned above, Shanghai Le Song Trading Co., Ltd., Shang Hai Gong Hui
Trading Co., Ltd. and Zhejiang Lawson, Inc. have been included in the scope of consolidation startingfrom the current consolidated fiscal year due to increasing materiality.
(2) Names of nonconsolidated subsidiaries and others(Domestic)
LAWSONWILL, Inc.
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Seikaken, Inc.
Lawson Syuhan, Inc.
TOKYO EUROPE TRADE CO., LTD.
SG Lawson, Inc.
Success Tours, Inc.
Lawson Digital Innovation Inc.
(Foreign)
Lawson USA Hawaii, Inc.
Beijing Lawson, Inc.
BEIJING LUOSONG Co., Ltd(Reasons for exclusion from the scope of consolidation)
The above nonconsolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, net income/loss (corresponding to equity
interest) and retained earnings (corresponding to equity interest) and others have no material impact ofeffect on the consolidated financial statements.
2. Application of the equity method(1) Number of affiliated companies to which the equity method is applied: 3(Domestic)
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.
Lawson Kochi, Inc., which was established during the current fiscal year and held 49% shares by theCompany, has been newly included in the scope of the equity method.

31

(TRANSLATION ONLY)(2) Nonconsolidated subsidiaries and affiliated companies to which the equity method is not applied
Nonconsolidated subsidiaries LAWSONWILL, Inc., HATS UNLIMITED CO., LTD., Food Marketing
Japan, Inc., Seikaken, Inc., Lawson Syuhan, Inc., TOKYO EUROPE TRADE CO., LTD., SG Lawson,
Inc., Success Tours, Inc., Lawson Digital Innovation Inc. and Lawson USA Hawaii, Inc., Beijing Lawson,
Inc., and BEIJING LUOSONG Co., Ltd. and affiliated companies Double Culture Partners Co., Ltd.,
Daichi Wo Mamoru Kai, Co., Ltd., Loyalty Marketing, Inc., MC Retail Energy Co., Ltd., Lawson Staff,
Inc., AUGUSARENA CORPORATION., Lawson System Labo LLP, Theatre VR LLP, PG Lawson
Company, Inc., Lawson Farm Chiba and others were excluded from the scope of the equity-method
affiliate because net income/loss (corresponding to equity interest) and retained earnings (corresponding
to equity interest) of these nonconsolidated subsidiaries and affiliated companies have minimal influenceon the consolidated financial statements and are negligible even in aggregate.
3. Summary of significant accounting policies(1) Valuation basis and method for important assets① Securities:
Marketable securities and investments in securities:
Available-for-sale securities:
Securities whose market value is readily determinable:
Recorded at market value with net unrealized gains and losses as a separate component of net
assets. The cost of securities sold is determined based on the moving-average method.
Other:
Stated at cost determined by the moving-average method.
② Merchandise inventories:
Merchandise:Stated at cost determined mainly by the retail method (the book value in the balance sheet iswritten down based on the decline in profitability) and by the gross-average method (the bookvalue in the balance sheet is written down based on the decline in profitability).
(2) Depreciation method for important depreciable assets① Property and store equipment (except for leased assets):
Mainly computed by the straight-line method.
The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8
years for tools, furniture and fixtures.
② Intangible assets (except for leased assets):
Computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which isthe estimated useful life. Furthermore, for right of trademark, amortization is mainly computed
using the straight-line method over 20 years.
③ Leased assets:
Leased assets related to finance leases that do not transfer ownership of leased property
The Company applies the straight-line method using the lease term as the useful life and a residual
value of 0 yen.
(3) Accounting standard for important reserves① Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
② Provision for bonuses:
Provision for bonuses is provided for payments of employees’ bonuses based on the estimatedamounts.
③ Provision for retirement benefits to executive officers and audit & supervisory board members:
Provision for retirement benefits to executive officers of the Company and audit & supervisory board
members of consolidated subsidiaries prepared for required payments at the end of the current fiscal
year is recorded under internal regulations.
(4) Accounting method for retirement benefits① Period attributable method of estimated amount of retirement benefits
In order to attribute estimated amount of retirement benefits in the period up to the end of the current
fiscal year, retirement benefit obligation is calculated based on the benefit formula basis.

32

(TRANSLATION ONLY)② Cost treatment method of actuarial difference and prior service cost
Prior service cost is amortized starting the fiscal year incurred mainly on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theiroccurrence.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theiroccurrence.
Certain consolidated subsidiaries apply the simplified method to estimate the amount required forvoluntary resignations at the end of the fiscal year as the retirement benefit liability, in order tocalculate net defined benefit liability and retirement benefit expenses.
(5) Important foreign currency transactions and foreign currency financial statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the consolidated balance sheet date. The foreignexchange gains and losses from translation are recognized in the consolidated statement of income.
The consolidated balance sheet accounts as well as revenue and expense accounts of foreignsubsidiaries and affiliated companies are translated into Japanese yen at the current exchange rate as of
the consolidated balance sheet date except for shareholders’ equity, which is translated at the historicalrate. Differences arising from such translation are shown as “foreign currency translation adjustments”
and “minority interests,” a separate component of net assets.
(6) Amortization method and period of goodwill
Goodwill is amortized on a straight-line basis over the relevant years, depending on the reason for theoccurrence of goodwill, with a maximum of 20 years.
(7) Accounting for consumption tax
Consumption tax and local consumption tax are accounted for using the tax exclusion method.
5. Changes in accounting policies
The Company adopted “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 issued
on May 17, 2012, hereinafter “Accounting Standard Retirement Benefits”) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25 issued on March 26, 2015, hereinafter“Guidance Retirement Benefits”) from this consolidated fiscal year included stipulations stated in themain clause of paragraph 35 of Accounting Standard Retirement Benefits, and the main clause ofparagraph 67 of Guidance Retirement Benefits. The Company reviewed the calculation method ofretirement benefit liabilities and service cost, changed the standard of payment period of retirement
benefits estimated amounts from period straight-line basis recorded to benefit formula basis. The method
for calculating the discount rate was changed from the method in which bond duration, a base used for
calculating the discount rate, was decided based on the number of years that approximates the averageremaining service period of the employees, to the method in which multiple discount rates are calculated
in accordance with the expected payment period of retirement benefits.
The application of such accounting standards for retirement benefits has followed the transitional
treatment stipulated in paragraph 37 of Accounting Standard Retirement Benefits, and the impact due tochange of calculation method of retirement benefit liabilities and service cost was charged to retained
earnings at the beginning of this consolidated fiscal year.
As a result, net defined benefit liability as of the beginning of this consolidated fiscal year decreased¥2,130 million, while retained earnings increased ¥1,411 million. The impact of this change on operating
income, ordinary income, and income before income taxes and minority interests for this consolidated
fiscal year is immaterial.

33

(TRANSLATION ONLY)(Changes in Presentation)
1. In the “Current assets” section, “Prepaid expenses” (¥13,841 million for the current fiscal year) which
was separately presented in the consolidated balance sheet before is now included in “Other” from thecurrent fiscal year in order to increase clarity of consolidated financial statements.
2. In the “Intangible assets” section, “Software in progress” (¥11,044 million for the current fiscal year),which was presented separately in the consolidated balance sheet before is now included in “Software”
from the current fiscal year in order to increase clarity of consolidated financial statements.
3. In the “Investments and other assets” section, “Long-term prepaid expenses” (¥9,707 million for thecurrent fiscal year) was presented separately in the consolidated balance sheet before is now included in“Other” from the current fiscal year due to a decline in financial materiality.
4. In the “Current liabilities” section, “Accounts payable-trade for franchised stores” (¥92,264 million forthe current fiscal year) which was separately presented in the consolidated balance sheet before is now
included in “Accounts payable-trade” from the current fiscal year in order to increase clarity ofconsolidated financial statements.
5. In the “Current liabilities” section, “Due to franchised stores” (¥1,998 million for the current fiscal
year) which was separately presented in the consolidated balance sheet before is now included in“Other” from the current fiscal year in order to increase clarity of consolidated financial statements.
6. In the “Non-current liabilities” section, “Long-term guarantee deposited” (¥27,525 million for thecurrent fiscal year) which was separately presented in the consolidated balance sheet before is now
included in “Other” from the current fiscal year due to a decline in financial materiality.
7. In the “Non-operating income” section, “Compensation income” (¥365 million for the previous fiscal
year) which was included in “Other” in the consolidated statement of income before is now separately
presented as “Compensation income” (¥646 million for the current fiscal year) from the current fiscal
year due to an increase in financial materiality.
8. In the “Non-operating income” section, “Share of profit of entities accounted for using equity method”(¥365 million for the previous fiscal year) which was included in “Other” in the consolidated statementof income before is now separately presented as “Share of profit of entities accounted for using equity
method” (¥292 million for the current fiscal year) from the current fiscal year due to an increase infinancial materiality.
9. In the “Non-operating income” section, “Store equipment related income” (¥118 million for theprevious fiscal year) which was included in “Other” in the consolidated statement of income before is
now separately presented as “Store equipment related income” (¥318 million for the current fiscal year)
from the current fiscal year due to an increase in financial materiality.
10. In the “Non-operating income” section, “Penalty income” (¥206 million for the current fiscal year)
which was separately presented in the consolidated statement of income before is now included in“Other” from the current fiscal year due to a decline in financial materiality.
11. In the “Extraordinary losses” section, “Loss on sales of non-current assets” (¥249 million for theprevious fiscal year) which was included in “Other” in the consolidated statement of income before is
now separately presented as “Loss on sales of non-current assets” (¥228 million for the current fiscal
year) from the current fiscal year due to an increase in financial materiality.

34

(TRANSLATION ONLY)(Notes to Consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:

291,655 million yen

2. Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation of Land
(Law No. 34, March 31, 1998). The resulting revaluation difference has been included in net assets as land
revaluation difference.
Revaluation method: The value of land is determined based on the notified prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance Implementing the Law Concerning
Revaluation of Land (Government Ordinance No. 119, March 31, 1998) and theassessed value as stipulated in Article 2, Item 5 of the same ordinance.
Date of revaluation: February 28, 2002
The difference between book value and market value of the revalued land as of the consolidated balance
sheet date was 308 million yen.
3. Collateral assets and liabilities collateralized
Assets pledged as collateral and liabilities collateralized are as follows
Millions of yen
Cash and deposits

2,399

In addition to the above, consolidated subsidiary shares to be pledged as collateral are as follows.
Millions of yen
Shares of consolidated subsidiaries(Amount before elimination)

14,364

Collateralized liabilities are as follows
Millions of yen
Short-term loans payable

1,000

Current portion of long-term loans payable575

Long-term loans payable

7,562

Total

9,137

35

(TRANSLATION ONLY)(Notes to Consolidated Statement of Income)Impairment loss
The Company and the consolidated subsidiaries (together, the “Group”) recognized an impairment loss
mainly for each store as the smallest category having cash flows.
The carrying value of asset groups with significantly decreased profitability was written down to arecoverable amount, with the decreased amount recognized as extraordinary loss. In view of the increasingly
rapid changes occurring in the business environment, we have clarified in detail the judgement of thedecrease in profitability for the fiscal year.
Category by use

LocationTokyo

AssetsBuildings; Tools, furniture and fixtures; and others

Millions of yen
1,904StoresOsaka

Buildings; Tools, furniture and fixtures; and others

1,621

OthersBuildings; Tools, furniture and fixtures; and others

6,508

Others―Software

507

Total

―

―

10,542Category by non-current assets
Buildings and structures
Tools, furniture and fixtures
Land
Leased assets
SoftwareOther

5,976 million yen
607 million yen
57 million yen
3,131 million yen
680 million yen
88 million yen

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

36

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

100,300－－

100,300

Treasury shares
Common stock (notes)
301
0
0
301
Notes:
1. The 0 thousand share increase in treasury shares resulted from purchases of stock of less than one
share unit.
2. The 0 thousand share decrease in treasury shares resulted from requests for additional purchases ofstock of less than one share unit.
2. Dividend(1) Dividend payment
Date of resolution

Class ofsharesAmount ofdividend payment(millions of yen)

Dividend
per share(yen)

The general meetingof shareholders(May 26, 2015)

Commonstock

11,999120.00

Directors’ meeting(October 7, 2015)

Commonstock

12,249122.50Record date
As ofFebruary 28,
2015
As of
August 31,
2015

Effective date
As of
May 27, 2015
As ofNovember 10,
2015(2) Dividends for which the record date is in the current period and the effective date is after the
year-end consolidated balance sheet dateAmount ofReserve
Class ofdividend
Dividend per
Effective
Date of resolution
ofRecord datesharespayment
share (yen)datedividend(millions of yen)
The general meeting
As of
As of
Common Retainedof shareholders
12,249122.50February
May 25,stock
earnings(May 24, 2016)
29, 2016
2016
3. Number of stock that can be exercised by outstanding subscription rights to shares (excluding those
not yet in the exercisable period)
78,100 shares

37

(TRANSLATION ONLY)(Notes to Financial Instruments)
1. Matters relating to the status of financial instruments(1) Policy for financial instruments
LAWSON Group primarily uses short-term deposits, etc., to manage its funds and raises funds asnecessary through borrowings from financial institutions and leasing according to the financing plan.
(2) Nature, extent of risk, and risk management system for financial instruments
Trade receivables, such as accounts receivable-other are exposed to credit risk from businesscounterparties.
Long-term loans receivable (mainly construction cooperation payments and merchant loan) andguarantee deposits are exposed to credit risks of borrowers and landlord, etc. With regard to this risk, theCompany manages credit on a daily basis at the relevant division and seeks early acknowledgement andminimization of collection concerns due to deterioration in the financial situation, etc.
Investment securities are primarily shares of companies with business relationships and listed shares
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, accounts payable-trade for franchised
stores, accounts payable-other and deposits received held as a result of bill settlement services havepayment due dates within one month, while most deposits received held as a result of ticket sales
transactions have payment due dates within 6 months.
Long-term loans payable are mainly for the purpose of funding necessary for M&A, and are due within
4 years.
The primary purpose of lease obligations related to finance lease transactions is securing the funds
required for capital investments and the maximum redemption period is 15 years after the consolidatedbalance sheet date.
With regard to the liquidity risk associated with fundraising (risk that payments cannot be executed on
the payment 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 quoted prices in active markets. If quoted price is notavailable, other rational valuation techniques are used instead. Since multiple factors are considered in theestimation of fair value, the results of the estimation might differ if other valuation techniques were used.

38

(TRANSLATION ONLY)
2. Matters relating to the fair values of financial instruments
The carrying amount, fair values, and difference as of February 29, 2016, 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.”)(Millions of yen)
Carrying
amount69,79767,736(4)
67,731(1) Cash and deposits(2) Accounts receivable-other
Allowance for doubtful accounts (*1)
(3) Investment securities
Available-for-sale securities

7,315
40,886(55)
40,83092,495(373)
92,121
277,797(4) Long-term loans receivable
Allowance for doubtful accounts (*1)(5) Guarantee deposits
Allowance for doubtful accounts (*1)

Fair value

Difference

69,797－67,731

－

7,315

－

40,817(13)

89,375(2,745)
Total assets
275,037(2,759)(1) Accounts payable-trade and112,225
112,225－
accounts payable-trade for franchised stores(2) Accounts payable-other
57,21457,214－(3) Deposits received
101,908
101,908－(4) Long-term loans payable (*2)
58,137
58,137－(5) Lease obligations (*2)
111,958
112,573615
Total liabilities
441,444442,059615(*1) Allowance for doubtful accounts related to accounts receivable-other, long-term loans receivable andguarantee deposits have been deducted.
(*2) Long-term loans payable and lease obligations include liabilities maturing within one year.
(Note 1) Method of calculating the fair values of financial instruments
Assets(1) Cash and deposits and (2) Accounts receivable-other
The carrying values of cash and deposits and accounts receivable-other approximate fair value becauseof their short maturities.
(3) Investment securities
The fair values of investment securities are measured at the quoted market price on the stock exchange
for the equity instruments.
(4) Long-term loans receivable
The fair values of long-term loans receivable are determined by discounting the cash flows related tothe obligations at the Group’s assumed corporate discount rate.
(5) Guarantee deposits
The fair values of guarantee deposits are determined by discounting future cash flows, which reflect thecollectability, using the yield rate of government bonds for the remaining period.
Liabilities(1) Accounts payable-trade (2) Accounts payable-other and (3) Deposits received
The carrying values of accounts payable-trade and deposits received approximate fair value because of
their short maturities.
(4) Long-term loans payable (include current portion of long-term loans payable)
The current price of long-term loans payable is calculated from the current value, derived bydiscounting the total amount of principal and interest by the expected rate of interest if a similar new loan
is made.
(5) Lease obligations (include current portion of 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.

39

(TRANSLATION ONLY)(Note 2) Financial instruments whose fair values cannot be reliably determined
Category

Carrying amount (millions of yen)

Unlisted equity securities
1,412
Investments in subsidiaries and affiliated companies
12,205
Other
1,391
Because financial instruments listed above do not have market prices and their fair values cannot be
reliably determined, they are not included in “(3) Investment securities.”(Notes to Per-Share Data)
1. Net assets per share
2. Net income per share

2,643.97 yen
313.81 yen(Notes to Significant Subsequent Events)
Not applicable.

40

(TRANSLATION ONLY)

Nonconsolidated Balance Sheet(Millions of yen)
AssetsLiabilities
As of February
28, 2015(for reference)

As ofFebruary29, 2016

267,71788,752279,880
97,00530,88037,88017,912
23,641
11,377
1,829
85,304
2,166
5,853
182,673
50,00072,655
10,837

21,431
24,966
6,175
2,028
81,015
3,047
6,331
191,418
50,00082,425
9,417

309

341

18,64930,221
450,390

21,702
27,532471,298

244,172
58,506
47,696
47,696

243,016
58,506
47,697
47,696－0

139,241

138,093

727

727

General reserve
50,000Retained earnings brought
Guarantee deposits
88,514
85,111
86,513
forwardTreasury shares
Deferred tax assets
20,883(1,272)
23,106
Valuation and translation
Other
(975)
1,677
1,739
adjustments
Valuation difference on
Allowance for doubtful accounts
(408)
(857)
(899)
available-for-sale securities
Revaluation reserve for land
(566)
Subscription rights to shares
233
Total net assets
243,420
Total Assets
693,811714,875
Total Liabilities and Net Assets
693,811
Note: Figures as of February 28, 2015, are included in the table above for comparative purposes only.

50,000Account item
Current assets
Cash and deposits
Accounts receivable-due from
franchised stores
Merchandise
Prepaid expenses
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Non-current assets
Property and store equipment
Buildings
Structures
Tools, furniture and fixtures
Land
Leased assets
Construction in progress
Intangible assets
Software
Goodwill
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Investments in capital ofsubsidiaries and associates
Long-term loans receivable
Long-term loans receivable fromsubsidiaries and affiliates
Long-term prepaid expenses

As of February
28, 2015(for reference)

As ofFebruary29, 2016

155,079
50,760147,670
48,453

Account item

84,361
4,788
23,33914,054
8,788
496
258,959
8,205

Current liabilities
Accounts payable-trade
Short-term loans payable to29,636
subsidiaries and associates
Lease obligations
952
Accounts payable-other
12,179
Income taxes payable
40,895
Accrued expenses
3,141
Deposits received
12,419Provision for bonuses
(8)
Other
567,204
281,753 Non-current liabilities
Long-term loans payable
136,941
Lease obligations
22,346
Provision for retirement benefits
13,770
Provision for retirement benefits
9,741
to executive officers
Asset retirement obligations
91,137
Other
7,816
Total liabilities
27,348
Net assets
18,2698,589 Shareholders’ equity
Capital stock
489
Capital surplus
258,102
Legal capital surplus
9,892

61,90362,958

9,377

8,651

36,47739,951

Legal retained earnings

22,992

20,482Other retained earnings

37,831864
11,03638,822
3,843
11,957(36)
538,731
256,432
125,784
19,491
12,419
9,587

9,542

Other capital surplus
Retained earnings

9,352

41

87,365(1,280)
252
818
(566)
307
243,576
714,875

(TRANSLATION ONLY)

Nonconsolidated Statement of Income(Millions of yen)
From March 1, 2014 to
February 28, 2015
(for reference)

Account item

From March 1, 2015 toFebruary 29, 2016

Operating revenue
Income from franchised stores
253,241
263,067
Other operating revenue
31,600284,841
35,774
298,841
Net sales
Net sales(31,498)
31,498(35,013)35,013Gross operating revenue
316,340
333,855
Cost of sales(22,401)
22,401(24,966)
24,966Gross profit(9,096)(10,047)
Operating gross profit
293,938
308,889
Selling, general and administrative expenses
232,972
251,641
Operating income
60,96657,247
Non-operating income
Interest income
802879
Dividend income
300
327
Compensation income
351
645
Foreign exchange gains
1,671－Store equipment related income
118
318
Other
888
4,132
593
2,763
Non-operating expenses
Interest expenses
1,312
1,540
Loss on cancellation of leases
1,163
1,881
Foreign exchange losses－
980
Loss on debt waiver of subsidiaries and affiliates
576
－
Other
396
3,449
626
5,028
Ordinary income
61,64954,982Extraordinary income
Gain on extinguishment of tie-in shares
94－
Gain on liquidation of subsidiaries and affiliates
156
250
－
－
Extraordinary losses
Loss on sales of non-current assets－
170
Loss on retirement of non-current assets
2,508
4,172
Impairment loss
5,831
9,155
Other
5,584
13,924
2,229
15,727
Income before income taxes
47,97539,255
Income taxes – current
21,84015,680
Income taxes – deferred(65)
21,775
1,722
17,453
Net income
26,20021,802
Note: Figures from March 1, 2014 to February 28, 2015, are included in the table above for comparative
purposes only.

42

(TRANSLATION ONLY)

Nonconsolidated Statement of Changes in Equity(From March 1, 2015 to February 29, 2016)(Millions of yen)

Shareholders’ equity
Retained earnings
Other retained earnings
Legal
Retainedretained
Generalearnings
earnings
reservebrought
forwardCapital surplus

Total
retainedearnings

TreasurysharesTotalshareholders’equity88,514

139,241(1,272)

244,172

1,298

1,298

89,812

140,540

Dividends of surplus(24,249)(24,249)(24,249)

Net income

21,80221,80221,802

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

Capital
stock

Legal
retainedearnings

Other
capitalsurplusTotal
capitalsurplus58,506

47,696－

47,69658,506

47,696－

47,696727

727

50,00050,0001,298(1,272)

245,471

Changes of items during period

Purchase of treasury shares
Disposal of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance at end of current period

0

0

(8)

(8)

0

1

－

－

0

0

－

－

(2,447)(2,447)(7)(2,454)58,506

47,696

047,697727

50,00087,365138,093(1,280)243,016

43

(TRANSLATION ONLY)(Millions of yen)
Valuation and translation adjustments
Valuation difference
Total
Revaluation reserveon availablevaluation and translation
for landfor-sale securities
adjustments
Balance at the beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

(408)

(566)

(975)

Subscription rights toshares223

Total
net assets
243,420
1,298

(408)

(566)

(975)

223

244,719

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

Net income

21,802

Purchase of treasury shares(8)

Disposal of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during period

1Balance at end of current period

1,227

－

1,227

84

1,311

1,227

－

1,227

84

(1,142)

818

(566)

252

307

243,576

44

(TRANSLATION ONLY)(Notes to the Nonconsolidated Financial Statement)(Significant Accounting Policies)
1. Valuation basis and method for assets(1) Marketable securities and investments in securities:① Investments in subsidiaries and affiliated companies
Stated at cost determined by the moving-average method.
② Available-for-sale securities
Securities whose market value is readily determinable:
Recorded at market value with net unrealized gains and losses as a separate component of net
assets. The cost of securities sold is determined based on the moving-average method.
Other:
Stated at cost determined by the moving-average method.
(2) Merchandise inventories:
Merchandise:Stated at cost determined mainly by the retail method (the book value in the balance sheet iswritten down based on the decline in profitability).

2. Depreciation method of depreciable assets(1) Property and store equipment (except for leased assets):
Computed by the straight-line method.
The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8
years for tools, furniture and fixtures.
(2) Intangible assets (except for leased assets):
Computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which isthe estimated useful life.
(3) Leased assets:
Leased assets related to finance leases that do not transfer ownership of leased property
The Company applies the straight-line method using the lease term as the useful life and a residual
value of 0 yen.
(4) Long-term prepaid expenses:
Computed by the straight-line method.

3. Accounting policies for important reserves(1) Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
(2) Provision for bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimatedamounts.
(3) Provision for retirement benefits:
Provision for retirement benefits is provided at the amount calculated based on the retirement benefit
liability and pension assets at the consolidated balance sheet date.
① Period attributable method of estimated amount of retirement benefits
In order to attribute the estimated amount of retirement benefits in the period up to the end of thecurrent fiscal year, retirement benefit obligation is calculated based on the benefit formula basis.
② Cost treatment method of actuarial difference and prior service cost
Prior service cost is mainly amortized, starting the fiscal year incurred, on a straight-line basis over acertain period (10 years) within an average remaining service period of employees.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis
over a certain period (10 years) within an average remaining service period of employees at the timeof their occurrence.
Treatment of unrecognized actuarial difference and unrecognized prior services cost in
nonconsolidated balance sheet differs from consolidated balance sheet.

45

(TRANSLATION ONLY)(4) Provision for retirement benefits to executive officers:
Provision for retirement benefits to executive officers prepared for required payments at the end of
the current fiscal year is recorded under internal regulations.
4. Accounting for consumption tax
Consumption tax and local consumption tax are accounted for using the tax exclusion method.
(Changes in Accounting Policies)
The Company adopted “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 issued
on May 17, 2012, hereinafter “Accounting Standard Retirement Benefits”) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25 issued on March 26, 2015) from this current
fiscal year. The Company reviewed the calculation method of retirement benefit liabilities and service
cost, changed the standard of payment period of retirement benefits estimated amounts from period
straight-line basis recorded to benefit formula basis. The method for calculating the discount rate waschanged from the method in which bond duration, a base used for calculating the discount rate, wasdecided based on the number of years that approximates the average remaining service period of theemployees, to the method in which multiple discount rates are calculated in accordance with the expected
payment period of retirement benefits.
The application of such accounting standards for retirement benefits has followed the transitional
treatment stipulated in paragraph 37 of Accounting Standard Retirement Benefits, and the impact due tochange of calculation method of retirement benefit liabilities and service cost was charged to retained
earnings at the beginning of this current fiscal year.
As a result, net defined benefit liability as of the beginning of this current fiscal year decreased by¥2,017 million, while retained earnings increased by ¥1,298 million. The impact of this change on
operating income, ordinary income, and income before income taxes and minority interests for thiscurrent fiscal year was immaterial.

46

(TRANSLATION ONLY)(Changes in Presentation)
1. In the “Current assets” section, “Short-term loans receivable” (¥3,603 million for the current fiscal
year) which was separately presented in the nonconsolidated balance sheet before is now included in“Other” from the current fiscal year in order to increase clarity of nonconsolidated financial
statements.
2. In the “Intangible assets” section, “Software in progress” (¥5,495 million for the current fiscal year)
was presented separately in the nonconsolidated balance sheet before is now included in “Software”
from the current fiscal year in order to increase clarity of nonconsolidated financial statements.
3. In the “Current liabilities” section, “Accounts payable-trade for franchised stores” (¥94,891 million forthe current fiscal year) which was separately presented in the nonconsolidated balance sheet before is
now included in “Accounts payable-trade” from the current fiscal year in order to increase clarity ofnonconsolidated financial statements.
4. In the “Current liabilities” section, “Due to franchised stores” (¥1,633 million for the current fiscal
year) which was separately presented in the nonconsolidated balance sheet before is now included in“Other” from the current fiscal year in order to increase clarity of nonconsolidated financial
statements.
5. In the “Non-current liabilities” section, “Long-term guarantee deposited” (¥27,339 million for thecurrent fiscal year) which was separately presented in the nonconsolidated balance sheet before is now
included in “Other” from the current fiscal year due to a decline in financial materiality.
6. In the “Non-operating income” section, “Interest income” (¥802 million for the previous fiscal year)and “Dividend income” (¥300 million for the previous fiscal year) which were presented as “Interestand dividend income” in the nonconsolidated statement of income before are now separately presented
as “Interest income” (¥879 million for the current fiscal year) and “Dividend income” (¥327 million
for the current fiscal year) from the current fiscal year in order to increase clarity of nonconsolidated
financial statements.
7. In the “Non-operating income” section, “Compensation income” (¥351 million for the previous fiscal
year) which was included in “Other” in the nonconsolidated statement of income before is now
separately presented as “Compensation income” (¥645 million for the current fiscal year) from thecurrent fiscal year due to an increase in financial materiality.
8. In the “Non-operating income” section, “Store related equipment income” (¥118 million for theprevious fiscal year) which was included in “Other” in the nonconsolidated statement of income
before is now separately presented as “Store related equipment income” (¥318 million for the current
fiscal year) from the current fiscal year due to an increase in financial materiality.
9. In the “Non-operating income” section, “Penalty income” (¥206 million for the current fiscal year)
which was separately presented in the nonconsolidated statement of income before is now included in“Other” from the current fiscal year due to a decline in financial materiality.
10. In the “Extraordinary loss” section, “Loss on valuation of investments in capital of subsidiaries andaffiliates” (¥773 million for the current fiscal year) was separately presented in the nonconsolidated
statement of income before is now included in “Other” from the current fiscal year due to a decline infinancial materiality.

47

(TRANSLATION ONLY)(Notes to the Nonconsolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:
2.

Due from/to subsidiaries and affiliated companies
Short-term receivables due from subsidiaries and affiliated companies
Long-term receivables due from subsidiaries and affiliated companies
Short-term payables due to subsidiaries and affiliated companies
Long-term payables due to subsidiaries and affiliated companies

259,981 million yen
9,484 million yen
272 million yen
8,430 million yen
231 million yen

3.

Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation of Land
(Law No. 34, March 31, 1998). The resulting revaluation difference has been included in net assets as land
revaluation difference.
Revaluation method: The value of land is determined based on the notified prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance Implementing the Law Concerning
Revaluation of Land (Government Ordinance No. 119, March 31, 1998) and theassessed value as stipulated in Article 2, Item 5 of the same Ordinance.
Date of revaluation: February 28, 2002
The difference between book value and market value of the revalued land as of the nonconsolidated balance
sheet date was 308 million yen.

4.

Guarantee obligations
We guarantee the accounts payable-trade and deposit liabilities of the following subsidiaries
Lawson HMV Entertainment, Inc.
567 million yen
SCI, Inc.
197 million yen(Notes to the Nonconsolidated Statement of Income)Operating transactions
Operating revenues
Goods purchased
Selling, general and administrative expenses
Transactions other than operating transactions

22,639 million yen
2,803 million yen
27,148 million yen
858 million yen(Notes to the Nonconsolidated Statement of Changes in Equity)
Number of treasury shares

301,897 shares

48

(TRANSLATION ONLY)(Notes to Accounting for Income Taxes)
Components of deferred tax assets and liabilities
Enterprise taxes payable
Accrued employees’ bonuses
Loss on write-down of investments in affiliated companies
Excess of depreciation
Excess of amortization of software
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets
Deferred tax assets-net

509 million yen
1,007 million yen
3,067 million yen
10,635 million yen
489 million yen
4,850 million yen
274 million yen
4,114 million yen
3,066 million yen
28,014 million yen(3,990) million yen
24,024 million yen
24,024 million yen

49

(TRANSLATION ONLY)(Notes to Related-Party Transactions)
Subsidiaries and affiliates
RelationshipTransaction
EndingEquityDescription
Business line
amountbalance
Director’s
Attribute Company nameownership BusinessofAccount itemor profession(millions of(millionsposts held
percentage relationshiptransactions
yen)of yen)concurrently
Repayment
33,800of funds
Domestic
DirectBorrowing
Short-term
SCI, Inc.
Convenience holding
SCM
No
35,1005,100
of funds
loans payable
Store Business 100.0%
Borrowing
1
interest
Repayment
800
of funds
Placement of
Financial
DirectShort-term
Lawson ATM
ATMs in the
Borrowing
Services-Relat holding
No
18,1002,700
loans payable
Networks, Inc.
LAWSON
of funds
ed Business
76.5%
storesBorrowing
8
interest
Repayment
17,700
Sale ofof funds
Lawson HMV Entertainment- Direct
tickets andBorrowing
Short-term
20,500Entertainment,
Relatedholding software forYes
12,300of funds
loans payable
Inc.
Business
100%
music
and
Subsidiary
Borrowing
video
10
interest
Loaning of－ Long-term
funds
loans
11,500
DirectreceivableCollection
SEIJO ISHII
Seijo Ishii
Operation of
7,500
holdingNoof funds
CO., LTD.
Businesssupermarkets
100%
Accrued5
Loaning
interest
100
interest
Loaning of
5,212 Long-term
funds
loans
8,345
DirectControl ofreceivable
Lawson (China)
Overseas
Collection
holding business inYes－
Holdings, Inc.
Businessof funds
100%
China
Accrued92
Loaning
interest
81
interest

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

50

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

Subsidiaries
of anaffiliatedcompany oftheCompany

Relationship
EquityDescription
Company Business line
Director’sownership Businessof
nameor profession
posts held
percentage relationshiptransactions
concurrently
Purchases
for thecompanyMitsubishi
Sales ofoperated
Shokuhinprocessed
VendorYes
stores－Co., Ltd.
foods(purchases
for thefranchised
stores)Transaction
amount(millions ofYen)

Account
item

Endingbalance(millionsof yen)12,454(601,997)

Accounts
payabletrade50,021

Transaction conditions and the principles on the decision thereof:
1. The terms and conditions for purchase transactions are determined to be same as those for other generalbusiness transactions. Except for purchases made for the franchised stores, the Company acts as analternative payer, not as a direct party for the purchase.
2. The transaction amount does not include consumption taxes. However, the ending balance includes
consumption taxes.
(Notes to Per-Share Data)
1. Net assets per share
2. Net income per share

2,432.73 yen
218.02 yen(Significant Subsequent Events)
Not applicable.
The above figures and the number of shares in these balance sheets, statements of income, statements ofchanges in equity and related notes are rounded down to the nearest unit and the ratios are rounded to the nearest
whole number.

51

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 7, 2016
To the Board of Directors of
Lawson, Inc.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Shigeo Kawashima
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, 2016 of Lawson, Inc. (the"Company") and its consolidated subsidiaries, and the related consolidated statements of income andchanges in net assets for the fiscal year from March 1, 2015 to February 29, 2016, and the related notes.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity's preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

52

(TRANSLATION ONLY)
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Lawson, Inc. and its consolidated subsidiaries as of February 29, 2016,
and the results of their operations for the year then ended in accordance with accounting principles
generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese
language.

53

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 7, 2016
To the Board of Directors of
Lawson, Inc.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Shigeo Kawashima

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 thefinancial statements, namely, the balance sheet as of February 29, 2016 of Lawson, Inc. (the "Company"),
and the related statements of income and changes in net assets for the 41st fiscal year from March 1, 2015
to February 29, 2016, and the related notes and the accompanying supplemental schedules.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements and theaccompanying supplemental schedules in accordance with accounting principles generally accepted inJapan, and for such internal control as management determines is necessary to enable the preparation offinancial statements and the accompanying supplemental schedules that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements and the accompanying
supplemental schedules based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements and the accompanying supplemental
schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the accompanying supplemental schedules. The procedures selected depend on theauditor's judgment, including the assessment of the risks of material misstatement of the financial
statements and the accompanying supplemental schedules, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity's preparation and fairpresentation of the financial statements and the accompanying supplemental schedules in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements and the accompanying supplemental
schedules.

54

(TRANSLATION ONLY)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Audit Opinion
In our opinion, the financial statements and the accompanying supplemental schedules referred to above
present fairly, in all material respects, the financial position of Lawson, Inc. as of February 29, 2016, andthe results of its operations for the year then ended in accordance with accounting principles generally
accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese
language and "the accompanying supplemental schedules" referred to in this report are not included in theattached financial documents.

55

(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Corporate Auditors>
AUDIT REPORTRegarding the execution of duties by the Directors for the 41st business term from March 1, 2015 toFebruary 29, 2016, we have prepared this Audit Report, through due deliberations based on the audit reports
prepared by each Corporate Auditor, and hereby report as follows:
1. Auditing Methods Employed by the Corporate Auditors and Board of Corporate Auditors and Details of
Such Methods(1) We have established audit policies, audit programs and other guidelines for the current term, andreceived the reports from each Corporate Auditor regarding their execution of audits and results
thereof, as well as reports from the Directors, other relevant personnel, and the Accounting Auditor
regarding the execution of their duties, and asked for explanations as necessary.
(2) Each Corporate Auditor, pursuant to the auditing standards of Corporate Auditors established by the
Board of Corporate Auditors, has followed the audit policies and audit programs for the current
term, communicated with the Directors, officers, internal audit department and other relevant
employees, endeavored to collect information and develop the audit environment, and performed
the audit using the following methods:(i)

We have attended the Board of Directors meetings, the management meetings, Compliance &Risk management meetings, Internal Control over Financial Reporting committee meetings
and the like, and other important meetings, received reports from the Directors, officers,internal audit department and other relevant employees regarding the execution of their duties,
asked for explanations whenever necessary, reviewed important approval documents and thelike, and investigated the status of operations and assets at the head office, area office, andother principal offices and stores. With respect to subsidiaries, we have communicated andexchanged information with the Directors, Corporate Auditors and other relevant personnel ofsubsidiaries, requested the subsidiaries to report on their business where necessary, andinvestigated their status of operations and assets.

(ii) 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 theBoard of Directors 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 100of the Ordinance for Enforcement of the Companies Act and the status of the development andoperation 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, described in business
report, complies with laws and regulations and the Articles of Incorporation and other system
necessary to ensure the properness of operations of a Stock Company and corporate groupconsisting of its subsidiaries. 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.
56

(iii) We have monitored and verified whether Accounting Auditor maintained its independent
position and implemented appropriate audit, and we received reports from Accounting Auditor
regarding the status of the execution of its duties and, whenever necessary, asked for
explanations. In addition, we have received the notice from the Accounting Auditor that
“System for ensuring that the duties are performed properly” (matters set forth in each item of
Article 131 of the Company Accounting Regulations) is organized in accordance with the“Quality Control Standards for Audits” (Business Accounting Council, October 28, 2005) andthe like, and, when necessary, asked for explanations.
Based on the above methods, we have examined the “business report and the supplementary schedules
thereof,” the “consolidated financial statements (consolidated balance sheet, consolidated statement ofincome, consolidated statements of changes in equity, and notes to consolidated financial statements)” and“nonconsolidated financial statements (balance sheet, statement of income, nonconsolidated statements ofchanges in equity, and notes to nonconsolidated financial statements) and supplementary schedules thereof”
for this term.
2. Result of Audit(1) Result of Audit of Business Report and Other Relevant Documents(i)

We have found that business report and the supplementary schedules thereof fairly present thestatus of the Company, in conformity with the applicable laws and regulations and the
Articles of Incorporation.

(ii)

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.

(iii)

We have found that the content of the resolution of the Board of Directors regarding theInternal Control System is adequate. In addition, we have found no matters on which to give
remarks in regard to the relevant description in the business report and execution of duties by
the Directors concerning Internal Control System.

(2)

Result of Audit of Consolidated Financial Statements
We have found that methods and the result of the audit by the Accounting Auditor, Deloitte
Touche Tohmatsu LLC, are adequate.

(3)

Result of Audit of Nonconsolidated 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 12, 2016
The Board of Corporate Auditors of Lawson, Inc.
Standing Corporate Auditor

Atsuhiko Seki

Standing Corporate Auditor

Shinichi Hokari(Outside Corporate Auditor)
Corporate Auditor

Tetsuo Ozawa(Outside Corporate Auditor)
Corporate Auditor(Outside Corporate Auditor)
57

Eiko Tsujiyama

(TRANSLATION ONLY)REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and References
Proposal No. 1: Appropriation of Surplus
The Company regards the ROE (consolidated return on equity) as a significant management indicator and has been
conducting business activities with the aim of achieving an ROE of 20% from a medium-term perspective. In addition,
one of our key measures for shareholder returns has been the continuous and steady payment of dividends while
securing internal reserves necessary for future business development during the course of sustainable growth of theLawson Group. Based on this policy, we have been increasing dividends on a continuous basis since the initial listingof the Company in July 2000.
We intend to increase year-end dividends for the current fiscal term by ¥2.50 per share, from ¥120 per share in theprevious term to ¥122.50 per share. Accordingly, full-year dividends including interim dividends of ¥122.50 per sharewill be ¥245 per share, an increase of ¥5 per share from the previous fiscal term.
We intend to continue to place emphasis 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:¥122.50 per share of the Company’s common stock to a total of ¥12,249,768,707(2) Effective date of the dividends from surplus:
Wednesday, May 25, 2016

58

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

Consolidated dividend payment ratio (%)

Year-end dividend per share (Yen)Dividend per share (Yen)(Plan)(Plan)

36th Term

37th Term

38th Term

39th Term

40th Term

41st Term(Year ended
Feb. 2011)(Year ended
Feb. 2012)(Year ended
Feb. 2013)(Year ended
Feb. 2014)(Year ended
Feb. 2015)(Year ended
Feb. 2016)

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

36th Term

37th Term

38th Term

39th Term

40th Term

41st Term(Current Period)

¥85

¥87

¥100

¥110

¥120

¥122.50

¥85

¥93

¥100

¥110

¥120

(Plan) ¥122.50

¥170

¥180

¥200

¥220

¥240

(Plan) ¥245

¥254.61¥249.17¥332.20¥380.04¥327.08¥313.81

66.8%

72.2%

60.2%

57.9%

73.4%

(Plan) 78.1%

12.8%

12.0%

15.2%

16.1%

13.0%

12.0%

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

59

(TRANSLATION ONLY)
Proposal No. 2: Partial Amendment to the Articles of Incorporation
1. Reason for the amendment
In order to further clarify the management responsibilities of directors, establish a management system that canswiftly respond to changes in the business environment, and increase opportunities for gaining confidence fromour shareholders, we propose that the term of office of directors provided in Article 19 (Term of Office of
Directors) of the current Articles of Incorporation be shortened from two years to one year. In addition, we
propose that paragraph 2 of Article 19, which concerns the adjustment of term of office, be deleted.
2.

Particulars of amendments
Particulars of proposed amendments are described below.
(Suggested amendments are underlined in the text.)
Current Provision of the Articles of Incorporation
Proposed Amendment
Article 19: Term of Office of Directors
Article 19: Term of Office of Directors
The term of office of directors of the Company shall
The term of office of directors of the Company shall
expire at the conclusion of the ordinary general meeting expire at the conclusion of the ordinary general meetingof shareholders pertaining to the latest business yearof shareholders pertaining to the latest business year
ending within two (2) years following their election.
ending within one (1) year following their election.
(Delete)② The term of office of directors of the Company
who are elected to increase the number of
directors or fill vacancies of directors who retired
before the expiry of their term of office shall
expire at the end of the remaining term of officeof other directors already in office.

60

(TRANSLATION ONLY)
Proposal No. 3: Election of Eight (8) Directors
The terms of office of all eight (8) current Directors expire at the conclusion of this 41st Ordinary General Meetingof Shareholders. Accordingly, we propose that you elect eight (8) Directors.
If this proposal is approved and passed, there will be eight (8) Directors of the Company after the meeting ofshareholders, of which five (5) will be Outside Directors, including three (3) “independent directors/auditors.”
The candidates for directors are as stated in the following table. Please refer to pages 40 to 47 for the brief personal
histories of the indicated candidates.
Furthermore, please refer to page 49 for the policy and procedures of the Company’s Board of Directors fornominating candidates for Directors.

No.

Name

Position at the Company, etc.

1

Genichi Tamatsuka

2

Sadanobu Takemasu

3Masakatsu Gonai

4

Emi OsonoMember of the Board

5

Yutaka Kyoya

Member of the Board

6

Sakie Akiyama

Member of the Board

7

Keiko Hayashi–

8

Kazunori Nishio–

President and CEO,
Representative Director
Senior Executive Vice
President,
Representative Director
Executive Vice
President,
Member of the Board

Notes:
1. Ms. Keiko Hayashi’s legal name is Keiko Hama.
2. Positions at the Company, etc. are as of April 13, 2016.

61

Board ofDirectors’
meeting
attendance
rate

Reappointment

100%

Reappointment

100%

Reappointment

100%

Reappointment, outside,
independent
Reappointment, outside
Reappointment, outside,
independent
New appointment,
outside, independent
New appointment,
outside

85.7%
92.9%
92.9%
–
–

(TRANSLATION ONLY)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
1

Genichi Tamatsuka(May 23, 1962)
Reappointment

April 1985

Joined Asahi Glass Co., Ltd.

July 1998

Joined IBM Japan, Ltd.

December 1998

Joined Fast Retailing Co., Ltd.

November 2002

President, Representative Director and COO, Fast RetailingCo., Ltd.

September 2005

Established Revamp Corporation
President, Representative Director and COO, Revamp
Corporation

March 2011

Senior Executive Vice President and COO, Group CEO, CVS
Operating Group and Division Director, Fast Food Division,Lawson, Inc.

May 2012

Member of the Board, Senior Executive Vice President,
COO, and Group CEO, CVS Operating Group and Division
Director, CRM Promotion Office and Marketing Office,Lawson, Inc.

May 2013

Member of the Board, Representative Executive Officer,
COO, and President of CVS Company and Overseas
Operations Company, Lawson, Inc.

May 2014

President and CEO, Representative Director, and President of
CVS Company, Lawson, Inc.

October 2015

President and CEO, Representative Director, and CHO,
Lawson, Inc. (Current position)■Number of the Company’s
shares held:

3,700■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Years in office

4 years (as of theconclusion of themeeting of shareholders)

Reasons for nomination as Director
Mr. Genichi Tamatsuka has been nominated as a candidate for Director, as he has
deep knowledge and a wealth of experience regarding overall management, having
served as representative director in several companies. In addition, he has contributed
to the improvement of the Lawson Group’s business performance and corporate value
over the past two years as President and CEO, Representative Director of theCompany, and we would like to continue to benefit from his management andsupervision of the Company by leveraging his experiences.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

62

(TRANSLATION ONLY)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
2

April 1993

Joined Mitsubishi Corporation

June 2010

Executive Assistant to President & Chief Executive Officer,
Corporate Administration Department and Corporate Strategy& Planning Department, Mitsubishi Corporation

May 2014

Senior Executive Vice President, Representative Director,
Division Director of Corporate Sales, and in charge of
Lawson Mart, Lawson, Inc.

November 2014

Senior Executive Vice President, Representative Director,
Corporate Staff Divisions, LM/Lawson Store100 Business,and Division Director of Corporate Sales, Lawson, Inc.

March 2016

Senior Executive Vice President, Representative Director,
Corporate Staff Divisions, SEIJO ISHII, Natural Lawson andLawson Store100 Business, Overseas Business, andEntertainment and Consumer Service Business, and Division
Director of Corporate Sales and Store Development, Lawson,
Inc. (Current position)

Sadanobu Takemasu(August 12, 1969)
Reappointment■Number of the Company’s
shares held:

400■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Years in office

2 years (as of theconclusion of themeeting ofshareholders)

Reasons for nomination as Director
Mr. Sadanobu Takemasu has been nominated as a candidate for Director, as he has
contributed to the improvement of the Lawson Group’s business performance andcorporate value by achieving a recovery in the performance of Lawson Store100
through his supervision of the overall corporate divisions, overseas business, theSEIJO ISHII, Natural Lawson and Lawson Store100 business, and the Entertainment
and Consumer Service business as Senior Executive Vice President, Representative
Director, as well as his position in charge of overall store development as Division
Director. We would like to continue to benefit from his management and supervisionof the Company by leveraging his experiences.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

63

(TRANSLATION ONLY)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
3

Masakatsu Gonai(May 24, 1961)
Reappointment■Number of the Company’s
shares held:

1,300■Attendance at Board of
Directors’ meetings

April 1980

Joined Lawson, Inc.

March 1998

General Manager, Third Kanto Department, StoreOperations Division, Lawson, Inc.

June 2005

Division Director of Marketing Division, and General
Manager of Advertising and Sales Promotion Dept.,
Lawson, Inc.

September 2007

Region Director, Kanto LAWSON Office, Deputy SeniorVice President, Lawson, Inc.

March 2012

Executive Officer, Assistant to Chief Compliance Officer(CCO), Lawson, Inc.

May 2012

Executive Officer, CCO in charge of CSR Division, Directorof Compliance & Risk Management Office, Lawson, Inc.

April 2014

Senior Vice President, Compliance and Risk, Lawson, Inc.

May 2014

Member of the Board, Senior Vice President, Compliance &Risk Management

September 2014

Member of the Board, Executive Vice President,
Compliance & Risk Management, Human Resources

March 2015

Member of the Board, Executive Vice President,
Compliance & Risk Management, Human Resources, andDivision Director of Franchisee Business Support (Current
position)

14 out of 14 (100%)■Years in office

2 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Masakatsu Gonai has been nominated as a candidate for Director, as he has
contributed to the reduction and prevention of risk for the Lawson Group, as well as
promoted the active participation of women and personnel development—previously
as an officer in charge of store operations and marketing and region director, andcurrently as an officer in charge of compliance and risk management and humanresources. We would like to continue to benefit from his management andsupervision of the Company by leveraging his experiences.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

64

(TRANSLATION ONLY)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
4

April 1988

Joined Sumitomo Bank (currently Sumitomo Mitsui Banking
Corporation)

April 1998

Assistant Professor, Institute of Asia-Pacific Studies, Waseda
University

April 2000

Assistant Professor, Graduate School of International
Corporate Strategy, Hitotsubashi University

October 2002

Associate Professor, Graduate School of International
Corporate Strategy, Hitotsubashi University

April 2010

Professor, Graduate School of International Corporate
Strategy, Hitotsubashi University (Current position)

June 2011

Outside Director, Resona Holdings, Inc. (Current position)

Reappointment, outside,
independent

May 2012

Outside Director, Lawson, Inc. (Current position)■Number of the Company’s
shares held:

Reasons for nomination as Outside Director

Emi Osono(August 8, 1965)

200■Attendance at Board of
Directors’ meetings

12 out of 14 (85.7%)■Years in office

4 years (as of theconclusion of the meetingof shareholders)

Ms. Emi Osono has been nominated as a candidate for Outside Director, as she has awealth of academic knowledge on global corporate management, operational
strategies, and organizational behavior. We have been receiving her proactive
opinions and suggestions regarding the Company’s management at the Board of
Directors’ meetings, and we would like to continue to benefit from her supervision of
the Company’s management by leveraging her experiences.
Ms. Osono serves as Vice-Chairperson of the Company’s Nomination andCompensation Advisory Committee, which consists exclusively of Outside Directors
and Outside Corporate Auditors. She has also been registered as an Independent
Director/Auditor with the Tokyo Stock Exchange, Inc. pursuant to the rules specified
by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

65

(TRANSLATION ONLY)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
5

Yutaka Kyoya

April 1984

Joined Mitsubishi Corporation

April 2008

General Manager, Grain Unit, Foods (Commodity) Div.,
Mitsubishi Corporation

April 2013

Division COO, Foods (Commodity) Div., Mitsubishi
Corporation

May 2013

Outside Director, Lawson, Inc. (Current position)

April 2014

Senior Vice President, Division COO, Living Essential
Resources Division, Mitsubishi Corporation

September 2015

Outside Director, Thai Union Group Public Company Ltd.
(Current position)

November 2015

Outside Director, Olam International Ltd. (Current position)

April 2016

Executive Vice President, Group CEO, Living Essentials
Group, Mitsubishi Corporation (Current position)(January 7, 1962)
Reappointment, outside■Number of the Company’s
shares held:

0■Attendance at Board of
Directors’ meetings

13 out of 14 (92.9%)■Years in office

3 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Outside Director
Mr. Yutaka Kyoya has been nominated as a candidate for Outside Director, as hehas a wealth of knowledge on the life industry field, mainly in food, through his
duties at Mitsubishi Corporation, an important business partner of the Company. We
have been receiving his proactive opinions and suggestions regarding theCompany’s management at the Board of Directors’ meetings, and we would like tocontinue to benefit from his supervision of the Company’s management byleveraging his experiences.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

66

(TRANSLATION ONLY)

Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
6

April 1987

Joined Arthur Andersen & Co.

April 1994

Founded Saki Corporation and assumed the position ofRepresentative Director and CEO (Current position)

May 2014

Outside Director, Lawson, Inc. (Current position)

Reasons for nomination as Outside Director

Sakie Akiyama(December 1, 1962)
Reappointment, outside,
independent■Number of the Company’s
shares held:

200■Attendance at Board of
Directors’ meetings

13 out of 14 (92.9%)■Years in office

2 years (as of theconclusion of the meetingof shareholders)

Following her career at a foreign consulting firm, Ms. Sakie Akiyama founded Saki
Corporation, which develops, manufactures, and sells automated optical inspection(AOI) machines for printed circuit boards and X-Ray automated inspection
machines. As CEO of the company, she has extensive experience and expertise incorporate management. She has been nominated as a candidate for Outside Director,
as we have been receiving her proactive opinions and suggestions regarding theCompany’s management at the Board of Directors’ meetings, and we would like tocontinue to benefit from her supervision of the Company’s management byleveraging her experiences.
Ms. Akiyama serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of Outside Directors and Outside
Auditors. She has also been registered as an Independent Director/Auditor with theTokyo Stock Exchange, Inc. pursuant to the rules specified by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

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Brief Personal History, Position, Assignment and Important
Concurrent PositionsNo.
7

Keiko Hayashi(March 16, 1959)
New appointment, outside,
independent■Number of the Company’s
shares held:

June 1983

Joined SHIMIZU CONSTRUCTION CO., LTD, Los
Angeles, USA

November 1992

Dog Food Trade Strategy, Sales Technology Manager,
Master Foods Japan Ltd.

August 1993

Marketing Director, Member of Management Decision
Committee, Master Foods Japan Ltd.

August 1995

Marketing Director, Member of Management Committee,
Mattel Japan Ltd.

February 1998

Country Manager, VICTORIA’S SECRET Catalog,
LIMITED Group

October 1998

Merchandising Director, Disney Store Japan

December 1999

President and Representative Director, Lands’ End Japan
KK

September 2005

Outside Director, Nikko Asset Management Co., Ltd.

September 2007

Founded DoCLASSE Co., Ltd. and assumed the position of
President and CEO (Current position)

February 2011

Founded IMA Holdings and assumed the position of
President and CEO (Current position)

March 2011

Founded fitfit Co., Ltd. and assumed the position of
President and CEO (Current position)

December 2011

Founded IMA People Co., Ltd. and assumed the position of
President and CEO (Current position)

January 2013

Director, Kirin Co., Ltd.

March 2014

Outside Director, Kirin Co., Ltd.

0

Reasons for nomination as Outside Director
Following her career in product development and marketing-related work at anadvertising agency, foreign consulting firm, and Disney Store Japan, among others,
Ms. Keiko Hayashi founded DoCLASSE Co., Ltd., which handles the planning,
manufacturing, sales and delivery of clothes, fashion goods and jewelry. As thepresident of the company, she has extensive experience and expertise in corporate
management. She has been nominated as a candidate for Outside Director, as wewould like to receive her proactive opinions and suggestions regarding theCompany’s management at the Board of Directors’ meetings, and benefit from hersupervision of the Company’s management by leveraging her experiences.
Ms. Hayashi has also been registered as a person to be appointed as an Independent
Director/Auditor with the Tokyo Stock Exchange, Inc. pursuant to the rules
specified by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
Ms. Keiko Hayashi’s legal name is Keiko Hama.

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Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
8

April 1984

Joined Mitsubishi Corporation

July 2010

Seconded to CGC Japan Co., Ltd.

May 2011

Senior Managing Director, CGC Japan Co., Ltd.

October 2013

Acting General Manager, Living Essentials Group CEO
Office, Mitsubishi Corporation

April 2014

Division COO, Retail Div., Mitsubishi Corporation

April 2016

Senior Vice President, Division COO, Retail Div.,
Mitsubishi Corporation (Current position)

Kazunori Nishio(July 13, 1961)
New appointment, outside■Number of the Company’s
shares held:

0

Reasons for nomination as Outside Director
Mr. Kazunori Nishio has been nominated as a candidate for Outside Director, as hehas a wealth of knowledge on the life industry field, mainly in retail, through his
duties at Mitsubishi Corporation, an important business partner of the Company, as
well as at a retailer to which he has been seconded. We would like to receive his
proactive opinions and suggestions regarding the Company’s management at theBoard of Directors’ meetings, and benefit from his supervision of the Company’s
management by leveraging his experiences.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

Notes:
1. In accordance with Article 24 of the current Articles of Incorporation, Lawson, Inc. has concluded the following
liability limitation agreements with Ms. Emi Osono, Mr. Yutaka Kyoya, and Ms. Sakie Akiyama. Under the liability
limitation agreement concluded with the Company, Directors (excluding those who are executive directors, etc.)
assume liability for damages specified in Article 423, Paragraph 1 of the Companies Act within the limit notexceeding the amount stipulated by laws and regulations, provided that they have performed duties which resulted ina cause of such liability in good faith without committing acts of gross negligence. The Company is also planning toconclude a similar agreement with Ms. Keiko Hayashi and Mr. Kazunori Nishio.
2. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 13,
2016.

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(TRANSLATION ONLY)
Proposal No. 4: Election of One (1) Corporate Auditor
The term of office of Mr. Shinichi Hokari, Corporate Auditor, expires at the conclusion of this 41st Ordinary
General Meeting of Shareholders. Accordingly, we propose that you elect one (1) Corporate Auditor.
The Board of Corporate Auditors has given prior consent for this proposal.
The nominee for corporate auditor is as follows.
Furthermore, please refer to page 49 for the policy and procedures of the Company’s Board of Directors fornominating candidates for Corporate Auditor.

Brief Personal History, Position and Important Concurrent Positions

Toshio Takahashi

April 1981

Joined Tokai Bank (currently Bank of Tokyo-Mitsubishi UFJ, Ltd.)

April 1991

Manager, Treasury Division (London), Tokai Bank

January 1999

Chief Assistant, Risk Management Division (London), Chief
Assistant, Investment Banking Planning Division, Deputy General
Manager of London Branch, Tokai Bank

October 2002

Deputy General Manager, Internal Audit Department, UFJ Holdings(currently Mitsubishi UFJ Financial Group)

October 2004

Deputy General Manager, Internal Audit Planning Office, UFJ
Bank, Ltd. (currently Bank of Tokyo-Mitsubishi UFJ, Ltd.)

January 2006

Senior Manager, Planning Department of Internal Audit & Credit
Examination Division, Bank of Tokyo-Mitsubishi UFJ, Ltd.

May 2008

Retired from Bank of Tokyo-Mitsubishi UFJ, Ltd.

June 2008

Joined SAP Japan Co., Ltd.

June 2011

Standing Corporate Auditor, SAP Japan Co., Ltd. (Current position)(Expected to retire in May 2016)(June 29, 1958)
New appointment, outside,
independent■Number of the Company’s
shares held:

0

Reasons for nomination as Outside Corporate Auditor
Mr. Toshio Takahashi has been nominated as a candidate for Outside Corporate Auditor, as
he has abundant expertise in finance and accounting, serving at city banks engaged intreasury, risk management and internal audits, as well as serving as full-time auditor at theJapanese subsidiary of a major foreign IT firm. We would like to benefit from his audit andsupervision of the Company by leveraging his experiences.
Mr. Takahashi has also been registered as a person to be appointed as an Independent
Director/Auditor with the Tokyo Stock Exchange, Inc. pursuant to the rules specified by theexchange.

Particular conflicts of interest between the Candidate and Lawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
Although there is regular business conducted between the Company and Bank ofTokyo-Mitsubishi UFJ, Ltd., where Mr. Takahashi previously worked, no borrowing fromthe bank is undertaken, including syndicate loans. In addition, the bank will not be involvedin the management or decision-making of the Company.

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. Toshio Takahashi. Under the liability limitation agreement
concluded with the Company, Corporate Auditors assume liability for damages specified in Article 423, Paragraph 1of the Companies Act within the limit not exceeding the amount stipulated by laws and regulations, provided thatthey have performed duties which resulted in a cause of such liability in good faith without committing acts of grossnegligence.
2. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 13,
2016.

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(TRANSLATION ONLY)[Reference] Policy and procedures of the Company’s Board of Directors for nominating candidates
for Directors and Corporate Auditors
Lawson, Inc. has established Director/Auditor Election Standard as the basis for nominating candidates for
directors and corporate auditors. As for outside directors/auditors, our policy is to invite personnel with a wealthof experience and knowledge on corporate management and particular areas of expertise, and who can securesufficient time to perform their duties as director or corporate auditor. Furthermore, for independent
directors/auditors, we have established Criteria concerning Independence in order to appoint outside directors or
outside corporate auditors who are unlikely to have a conflict of interest with general shareholders as independent
directors/auditors.
In addition, as an advisory organ that recommends candidates for directors to the Board of Directors, we havevoluntarily established a Nomination and Compensation Advisory Committee. All six members of the committee
are outside directors/auditors, with five being independent directors/auditors. The committee is designed torecommend candidates for directors to the Board of Directors under a high level of independence.
As for candidates for corporate auditors, those with knowledge and expertise in finance, accounting, risk
management and law, which are necessary for auditing operations, are nominated as candidates for corporate
auditors upon obtaining the consent of the Board of Auditors.

1.

Director/Auditor Election Standard(1) A person who can deeply relate to the Lawson Group’s corporate philosophy of “Creating Happiness andHarmony in Our Communities”(2) A person who has the capability to contribute to the sustainable growth and corporate value improvement of
the Lawson Group(3) A person who has no hindrance in health, both physically and mentally, in the performance of his/her duties(4) A person who is popular, possesses dignity and a high sense of ethics(5) A person who has a law-abiding spirit(6) A person who has the ability to make objective judgments on management, has foresight and insight(7) A person who has no conflict of interest or business relationship that would have a serious effect on theperformance of his/her duties(8) A person who does not fall under the criteria for disqualification provided by the Companies Act(9) For outside directors/auditors, a person who fulfills the standard provided in 2.

2.

Outside Director/Auditor Election Standard(1) A person who has a wealth of experience and knowledge on corporate management and an area of expertise(2) A person who can secure sufficient time to perform his/her duties as director or corporate auditor
In order to improve corporate governance, Lawson, Inc. has established criteria concerning independence asfollows, and appoints outside directors or outside corporate auditors who do not conflict with the said criteria as
independent directors/auditors as specified by the Tokyo Stock Exchange, Inc.

3.

Criteria concerning Independence①A person for whom the Lawson Group is a key business partner, or an executive officer thereof
A supplier group who provides products or services to the Lawson Group, with the amount of sales to theLawson Group in the most recent business year amounting to 2% of the client group’s consolidated net sales ormore②A key business partner of the Lawson Group, or an executive officer thereof
A client group to whom the Lawson Group provides products or services, with the amount of sales of theLawson Group to the client group in the most recent business year amounting to 2% of the Lawson Group’s
consolidated net sales (gross operating revenues) or more
③A consultant, accounting expert or legal expert who receives substantial monies or other property from Lawson,
Inc. other than as director/auditor compensation
A consultant, accounting expert such as a certified public accountant, or a legal expert such as a lawyer, whoreceives substantial monies or other property from Lawson, Inc. other than as director/auditor remuneration,
and who has received compensation of 5 million yen per year or more over the past two years④A major shareholder of Lawson, Inc. (if the major shareholder is a corporation, an executive officer of thecorporation)⑤(A close relative is) An executive officer of the Lawson Group⑥(A close relative is) A non-executive director or accounting advisor (if the independent director/auditor is an
outside corporate auditor) of the Lawson Group71