(TRANSLATION ONLY)
Securities Code: 2651
May 2, 2017
To All Shareholders with Voting Rights
Sadanobu Takemasu
President, Representative Director
Lawson, Inc.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 42nd ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 42nd 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 29, 2017.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 29, 2017 after reading the attached document“Exercising Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 30, 2017
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
42nd Fiscal Term (from March 1, 2016 to February 28, 2017), and the Audit Reports Thereof
Matters to Be Resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Eight (8) Directors
Proposal No. 3: 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/her proxy,such as a power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at the reception desk.
(The qualified proxy is limited to one shareholder having voting rights for this meeting as per the relevant provision in the
Articles of Incorporation.)

1

(TRANSLATION ONLY)

BUSINESS REPORT(March 1, 2016 through February 28, 2017)
I. CURRENT STATUS OF THE CORPORATE GROUP
1. Summary of Operations(1) Business Developments and Results of Operations
During the fiscal year under review, or fiscal 2016 ended February 28, 2017, we have launched our“1000-Day Action Plan” and focused our business activities on building Lawson’s next-generation
convenience store model. The convenience store industry is now undergoing drastic transformation. This is
attributable to changes in community needs resulting from an aging population and the prevalence of thenuclear family, among others, which have triggered a reorganization of the industry. Deeming the next three
years as a crucial turning point for the Lawson Group (hereinafter, the “Group”) under the “1000-Day Action
Plan,” we have made efforts to evolve our business model as a manufacturing retailer targeting small
catchment areas and to raise our store productivity to an unprecedented level toward the goal of fulfilling ourcustomers’ needs in everyday life by serving as an essential part of their communities.
In terms of operating results for the fiscal year, gross operating revenue increased to 631,288 million yen (up8.2% from previous fiscal year,) operating income increased to 73,772 million yen (up 1.7% from previous
fiscal year,) ordinary income increased to 73,014 million (up 4.9% from previous fiscal year,) and profit
attributable to owners of parent increased to 36,400 million yen (up 16.0% from previous fiscal year.)Furthermore, Lawson became a consolidated subsidiary of Mitsubishi Corporation (hereinafter,“Mitsubishi”) as of February 15, 2017 as Mitsubishi newly acquired a majority of voting rights in Lawson
following the completion of a tender offer for our common stock. Mitsubishi intends to strengthen
collaboration with Lawson while continuing to maintain its share listing on the First Section of the Tokyo
Stock Exchange and management autonomy. We will aim to establish a framework that enables themaintenance of appropriate corporate governance as an independent listed company and that maximizes effects
of synergy with Mitsubishi Group companies.
We have also focused on promoting internal control and addressing operating risks across the entire Group
based on the 2016 Basic Policy for Maintaining Internal Control Systems and we will continue promotinginternal control going forward.
Operating results by business segment were as follows:(Domestic Convenience Store Business)
In our convenience store business, in our effort to attract customers by serving as stores for everyday use,
we strengthened our product lineup of our private brand, “Lawson Select,” renovated existing stores, invested
aggressively in advertising and sales promotions, and expanded and improved merchandise selection.
[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, and we strengthened our merchandise
assortment of ready-made dishes, frozen food items, and seasonings by taking strong steps to renovate
existing stores, including installing more refrigerators and freezer flatbeds as well as raising the heights ofproduct display shelves and putting in more shelves.
[Merchandising and Service Strategies]
On the merchandise side, we expanded our merchandise assortment under our “Lawson Select” brand,
focusing on products purchased for everyday life, such as Japanese ready-made dishes and salads in the daily
delivered food category. We are focused on selling products that contribute to the health of customers. For
example, the “Green Smoothie,” a NATURAL LAWSON brand product, has been in high demand, mainly
from female and highly health-conscious customers, while the “Niku Yasai Itame Bento” (stir-fried meat andvegetables lunch box), which includes one half of a person’s daily vegetable requirement, has also gainedwide popularity. In the counter fast food section, the “Deka Yakitori” (grilled chicken), which weighs 20%
more than the previous yakitori offering and is the largest in Lawson’s history, has been well received bymany customers since its launch in January 2017.
There are currently 23 Lawson Farms throughout the country. The farms assume the role of supplying safeand fresh fruits and vegetables to the Group’s stores and factories that produce LAWSON’s original products.
With the aim of establishing an appropriate farm management system for Lawson Farms, Lawson has beenendeavoring to obtain certification for Japan Good Agricultural Practice (JGAP), a set of agricultural
production process management techniques. In July 2016, Lawson and the Presidents and CEOs of Lawson
Farms were awarded the “GAP Initiative Award 2016” hosted by the Asia GAP Research Institute inrecognition of their unrivalled contribution to the dissemination of Good Agricultural Practice (GAP) *1. The

2

(TRANSLATION ONLY)Group will continue its efforts to deliver safe and secure products through such initiatives.
In addition to thus strengthening our merchandise lineup, we also enhanced our service offerings, one ofwhich is our “Gift Cards” *2, whose transaction value continued to remain solid.
We started accepting “Alipay”, the world’s largest mobile payment service, and “LINE Pay”, theremittance and payment service through the communication app, LINE, at all of our outlets in January 2017,a first in the industry.
On our sales promotion side, as part of our effort to increase the number of purchased items per customer,
we rolled out a monthly promotional “Lawson Tokuichi!” campaign, where a 10% discount was offered on“Lawson Select” chilled/frozen foods as well as some items offered in our counter cases. Furthermore,measures to effectively attract customers were launched, including a “100-yen rice ball sale”, a “speed
lottery” themed on “E-girls” and “Sandaime J Soul Brothers from EXILE TRIBE,” which demonstrated ourstrength in the entertainment field, and rewarding Ponta Card members with five times the points onpurchases in evenings and at night.
*1 GAP: Good Agricultural Practice (A set of agricultural production process management techniques).
*2 Gift Cards: Collective term for prepaid cards that can be used for online transactions.
[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
1,073,044
52.5
103.8
Fast foods

481,267

23.6

103.8

Daily delivered foods

294,141

14.4

106.2

Nonfood products

194,833

9.5

104.5

Total
2,043,287
100.0
104.2
Note: These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.
[Store Development]
In opening new stores, the Group continued to prioritize developing profitable stores.
With regard to our partnership initiatives with other chain retailers, based on a mega-franchise agreement
concluded with Save On Corp., we remodeled 54 Save On stores, which operated in Yamagata, Fukushima
and Ibaraki Prefectures, into LAWSON stores in a phased manner during fiscal 2016. In the fourth quarter,
we also concluded mega-franchise agreements in Gunma, Tochigi, Niigata, Saitama, and Chiba Prefectures.
From around summer 2017 to the end of 2018, 503 Save On stores in these prefectures (as of end of
December; includes 2 stores in Nagano Prefecture) are scheduled to be remodeled into LAWSON stores.
Furthermore, under our partnership with Three F Co., Ltd., 23 Three F stores were remodeled to become
LAWSON stores by February 2017. Also, L･TF Co., Ltd., a joint venture established in September 2016,
operates (as of the end of February) 89 LAWSON Three F stores that were formerly Three F stores.
Under our partnership with POPLAR Co., Ltd., Lawson Sanin, Inc., a joint venture between Lawson, Inc.
and POPLAR Co., Ltd., commenced operation of a regional franchise business in the Tottori and Shimane
region. The joint venture has consolidated all existing POPLAR-brand convenience stores in the region that
had wished to shift to a joint LAWSON POPLAR brand and all stores run by Lawson’s Tottori and Shimane
branch offices. As of the end of February 2017, it operates a total of 287 stores (of which 56 are LAWSONPOPLAR stores).
Furthermore, by building partnerships with dispensing pharmacy and drug store chains, we offer not only
OTC pharmaceuticals, cosmetics, and daily necessities, but also offer a more numerous assortment ofmerchandise than conventional LAWSON stores. The number of stores offering OTC pharmaceuticals hasreached 157 stores (includes 41 pharmacy LAWSON stores equipped with drug-dispensing pharmacies) as ofthe end of February 2017. Furthermore, with the addition of Lawson Kure Hironagahama store, the first store
serving as a nursing care hub center in Hiroshima Prefecture, which opened in July 2016, the number ofstores offering nursing care consultation services has reached 9 as of the end of February 2017. We willcontinue to engage in establishing convenience store models that address and deal with social changes such as
the aging population and increased health awareness.
With respect to LAWSON STORE100, we continued to increase the product composition ratio of 100-yen
items (excluding tax) by scaling down product portions to respond to customer needs for value, andstrengthened our popular fruit and vegetable lineup. As a result, existing-store sales for fiscal 2016 exceeded
those for the previous fiscal year.
Consequently, the total number of LAWSON, NATURAL LAWSON, and LAWSON STORE100 stores
opened and closed during the current fiscal year stood at 1,108 and 413 stores, respectively, with the total
number of stores in Japan reaching 12,575 as of the end of February 2017. *3

3

(TRANSLATION ONLY)
In addition, the equity method affiliates Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson
Okinawa, Inc. operate 135 LAWSON chain stores in Kochi Prefecture, 191 LAWSON chain stores in
Kagoshima Prefecture and 210 LAWSON chain stores in Okinawa Prefecture, respectively, as of the end of
February 2017.
*3 The numbers of store openings and closings and total number of stores in Japan include stores operated
by both Lawson, Inc. and Lawson Sanin, Inc.
[Change in Total Number of Domestic Stores]
Total stores as ofFebruary 29, 2016
LAWSON

Change during fiscal
year

Total stores as ofFebruary 28, 201710,937699

11,636

NATURAL LAWSON

134

7

141

LAWSON STORE100

809

(11)

798

11,880695

12,575Total

Note: These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.
[Other]With regards to our efforts in home convenience, we will strive to enhance customer convenience byadditionally partnering with other companies to establish an “Open Platform” based on the networks of
LAWSON stores that offer a range of services encompassing ordering, collection, and home delivery.
With respect to distribution, from March 2016, we commenced operation of our distribution center, athree-temperature-zone distribution center offering an integrated environment for chilled, frozen andambient-temperature foods. Through independent operation of the distribution center, we aim at further
streamlining the entire supply chain and improving store productivity.
At the LAWSON Panasonic-Mae store, our experimental “Next-generation Convenience Store” inMoriguchi-shi, Osaka, we started testing the industry’s first fully automated cash register, “Regi Robo○R ,”using radio-frequency identification (RFID.) We will promote productivity enhancements with the aim of
improving our customers’ convenience and the efficiency of increasingly complicated store operations byeliminating scanning at the time of payment to speed up the payment process in the future.
As a result, Domestic Convenience Store Business posted gross operating revenue of 424,608 million yen(up 6.5% from previous fiscal year) and segment profit of 59,865 million yen (down 0.2% from previous fiscal
year.)(Seijo Ishii Business)
The number of directly operated Seijo Ishii stores, a high-end supermarket chain offering quality foods,
reached 132 as of the end of February 2017. Sales remained robust, and in April 2016, the first Seijo Ishii store
combining “Le Bar a Vin 52” was opened in Atre Ebisu West. With respect to merchandise, a new private
brand dubbed “desica” was launched, which achieved strong sales. Collaborations between Seijo Ishii Businessand our Domestic Convenience Store Business were promoted, such as expanding Seijo Ishii’s selection ofwine offered at NATURAL LAWSON stores, jointly importing confectionery, and rolling out jointly
developed products including nuts and cup soup. We will continue to improve the brand strength and corporate
value of SEIJO ISHII CO., LTD., which marked its 90th anniversary in February 2017, while absorbing thecompany’s product development expertise, knowhow acquired as a manufacturing retailer, and sales methods,
to strengthen our Domestic Convenience Store Business.
As a result, Seijo Ishii Business posted gross operating revenue of 85,824 million yen (up 24.4% fromprevious fiscal year) and segment profit of 6,911 million yen (up 37.2% from previous fiscal year). Regarding
SEIJO ISHII CO., LTD, its balance sheet date was changed therefore segment profit represented a 14-month
period.
(Entertainment-related Business)
With regards to Entertainment-related Business, Lawson HMV Entertainment, which forms the core ofentertainment related business, continued to secure top position in the ticketing industry. Regarding HMV
stores that combine selling music CDs and DVDs, the second “HMV Record Shop,” a used analog record and
CD store, was opened in Shinjuku, and was well received. The number of HMV stores that sell music CDs and4

(TRANSLATION ONLY)
DVDs totaled 55 as of the end of February 2017. We will strive to offer an even wider selection of products
and services to better respond to customer needs, for example, by expanding our entertainment business. In
April 2016, United Cinemas Co., Ltd. opened the “Premium Dining Cinema” in Fukuoka-shi, Kyushu, as thefirst cinema in Japan where moviegoers can dine while enjoying a film. Furthermore, United Cinemas Co., Ltd.
operates a total of 38 sites with 340 screens (includes those under management contract) at its cinemas
nationwide as of the end of February 2017.
As a result, Entertainment-related Business posted gross operating revenue of 72,936 million yen (down
2.8% from previous fiscal year) and segment profit of 3,988 million yen (down 2.1% from previous fiscal
year.)(Other Business)
In addition to the aforementioned businesses, the Group is also involved in the Overseas Business and the
Financial Services-related Business.
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the
People’s Republic of China, Thailand, Indonesia, the Philippines, and the United States of America (Hawaii).
In China, we marked our 20th anniversary in July 2016 since we became the first Japanese convenience
store to advance into Shanghai. We made inroads into Wuhan in China’s Hubei Province in May 2016. In
February 2017, the total number of stores in China exceeded the 1,000 mark.
[Distribution of Lawson Brand Stores Overseas by Region]
Number of stores(as of February 29,
2016)

Change during
fiscal year

Number of stores(as of February 28,
2017)

China Shanghai and surrounding area

458

207

665

China Chongqing

110

26

136

China Dalian

53

29

82

China Beijing

34

14

48

China Wuhan

－

72

72

Thailand

47

38

85

Indonesia

38

(2)

36

Philippines

16

14

30

2

－

2

758

398

1,156

Country/Region

United States of America

Hawaii

Total

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. We strengthened partnerships
with new financial institutions bringing the total number of our financial institution partners to 87 nationwide(up 7 from previous fiscal year), including online banks, and the number of ATMs installed nationwide to11,912 (up 711 from previous fiscal year) as of the end of February 2017.
In November 2016, we established Lawson Bank Preparatory Company, Inc., which aims to establish abank leveraging Lawson’s previous experience in financial services, and meet necessary preconditions for
obtaining approval from the relevant authorities.
As a result, Other Business posted gross operating revenue of 55,147 million yen (up 17.5% from previous
fiscal year) and segment profit of 2,999 million yen (down 12.5% from previous fiscal year.)(Environmental and Social Contribution Activities)
As part of our initiative to reduce our environmental impact, we will endeavor to save energy and resources
as well as 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(CO2 refrigerant) refrigerator/freezer system with the aim of reducing electricity consumption at our stores.
As of the end of February 2017, the system had been installed in approximately 2,000 stores. Compared toconventional equipment used in our stores, the new system can reduce electricity consumption per store byaround 12%. By putting into practical use an energy-saving package model centered on this system, theGroup will aim to achieve its target of using 20% less electricity per store by fiscal 2020 compared to the5(TRANSLATION ONLY)
fiscal 2010 level. In February, we opened a pilot store focusing on environmental friendliness that aims tobecome a “Smart Energy Store” in Kodaira-shi, Tokyo. This store is the first convenience store to be selectedby the Japanese Ministry of Economy, Trade and Industry as a “Virtual Power Plant (VPP) Construction and
Demonstration Project.” Through remote control of devices and energy saving using Internet of Things (IoT),
the store is a demonstration project seeking innovative new ways to achieve energy conservation.
With regard to reducing waste, we are making efforts to improve order-receiving accuracy by introducing asemi-automatic ordering system for ordering products. Moreover, we are recycling unsold food and waste
cooking oil from stores, which are being reused as feed and fertilizer, and biodiesel fuel, respectively. In
Tottori Prefecture, in particular, unsold food from stores in Sakai Minato-shi is processed into compost,
which is used at the Lawson Farm Tottori to produce daikon radish used in our popular Oden (Japanese-stylestew).
We continued to pursue business activities with the aim of realizing the Group’s corporate philosophy of“Creating Happiness and Harmony in Our Communities,” and also carried out fund-raising activities fordisasters including the Kumamoto Earthquake, 2016 Typhoon No.10, and the catastrophic fire in Itoigawa-shi,
Niigata Prefecture.
As a member of society, we will continue to make unified group-wide efforts to implement initiatives that
aim to address social and environmental issues together with our franchised stores, customers and business
partners.
(2) Capital Expenditures and Financing
Capital expenditures of the Group during the fiscal year totaled 75,554 million yen, of which 55,089
million yen was primarily for store facility investment in buildings, and 19,261 million yen was for the
upgrading of information systems.
Furthermore, funding for capital expenditures required for facility investments and others carried out in thecurrent period was from shareholders’ equity.
(3) Changes in Operating Results and Financial Position① Changes in Operating Results and Financial Position of the Corporate Group
Fiscal 2013
Fiscal 2014
Fiscal 2015
Category/Fiscal Term
39th Term
40th Term
41st Term
Gross operating revenue
485,247
497,913583,452(millions of yen)
Ordinary income (millions of yen)
68,88071,714
69,622
Profit attributable to owners of parent
37,96532,686
31,381(millions of yen)
Profit per share (yen)380.04327.08313.81

Fiscal 2016
42nd Term
631,288
73,01436,400363.96

Total assets (millions of yen)

620,992

764,614803,212866,577

Net assets (millions of yen)

250,497263,797

272,997

285,995

Net assets per share (yen)2,455.25

2,561.25

2,643.97

2,748.39

Fiscal 2015
41st Term

Fiscal 2016
42nd Term

1,960,266

2,027,504

333,855

356,186

54,98256,459② Changes in Operating Results and Financial Position of the Company
Fiscal 2013
Fiscal 2014
Category/Fiscal Term
39th Term
40th Term
Net sales of all convenience stores
1,758,656
1,932,798(millions of yen)
Gross operating revenue
298,778
316,340(millions of yen)
Ordinary income (millions of yen)
62,171
61,649Profit (millions of yen)

33,625

26,20021,802

19,088

Profit per share (yen)336.59262.18218.02190.86

Total assets (millions of yen)

589,793

693,811714,875

767,986

Net assets (millions of yen)

240,648

243,420

243,576

237,409

Net assets per share (yen)2,403.21

2,432.00

2,432.73

2,370.59

6

(TRANSLATION ONLY)(4) Priority Issues of the Group① Provide customers with enhanced support in their daily lives
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 Make the most of digital technology and improve store productivity through distribution reforms
In today’s aging society with a low birth rate, various human resources, such as housewives, older workers,
and foreign nationals, are being utilized for store operations. By reviewing complicated work processes,
making maximum use of digital technology and re-examining our distribution system, we are making efforts
to improve productivity and create efficient and fulfilling work environments for a diverse workforce.
④ 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 inour domestic convenience store business, the core business of the Group, but also in various other fields suchas Seijo Ishii Business, Entertainment-related Business, Overseas Business, Financial Services-related
Business. We will also work hard to make maximum use of each Group company’s distinctive features togenerate synergistic effects.
⑤ 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.
Lawson became a consolidated subsidiary of Mitsubishi in February 2017, which has resulted in aparent-subsidiary listing. The Group plans to appoint several independent officers, who have no conflict ofinterest with general shareholders, as directors. In addition, the Nomination and Compensation Advisory
Committee, consisting solely of non-executive directors and corporate auditors, has been formed on a
voluntary basis. The Committee offers advice and makes proposals to the Board of Directors on directors’compensation and suitable candidates for representative directors and directors, so as to ensure transparencyof management and fair judgment.
We conducts business activities under its corporate philosophy, “Creating Happiness and Harmony in Our
Communities”. Furthermore, under the “1000 Days Action Plan”, which was newly launched from the current
fiscal year, we are united in working and making efforts to “master the basics”, “respond to changes” and“meet the challenge of achieving 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 2017
(1) Major Business Segments of the Corporate Group 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),
Chushikoku area office (Kita-ku, Okayama) and Kyushu area office (Hakata-ku,
Fukuoka)Note: In addition to the above sites, the Company has 96 offices throughout Japan,
including branches.
② Lawson Sanin, Inc.
Major Business:
Operates LAWSON stores in the Sanin area.
Head Office:Yonago city, Tottori③ Lawson Store100, Inc.
Major Business:
Operates LAWSON STORE100 stores, provides guidance, and engages inmerchandise-related businesses.
Head Office:Shinagawa-ku, Tokyo
Note: In March, 2016, Lawson Mart, Inc. changed its corporate name to Lawson
Store100, Inc.
④ SCI, Inc.
Major Business:
Food wholesaler, including processed meats and frozen foods, and wholesaler ofpacking materials.
Head Office:Shinagawa-ku, Tokyo[Stores]Number ofstores637

IbarakiNumber ofstores193

Kyoto

Number ofstores328

Aomori

234

Tokyo

1,588

Shiga

154

Tokushima

134

Akita

188

Kanagawa

872

Nara

128

Fukuoka

473

Iwate

169

Shizuoka256

Wakayama

137

Saga

68

Miyagi227

Yamanashi

122

Osaka

1,048

Nagasaki

106

Yamagata

105

Nagano

173

Hyogo

663

Oita

176

Fukushima

130

Aichi

629

Okayama172

Kumamoto

145

Niigata

148

Gifu

164

Hiroshima

199

Miyazaki104

Tochigi

157

Mie

131

Yamaguchi

122

Gunma

115

Ishikawa

104

Tottori

137

Saitama599

Toyama186

Shimane149

Prefecture
Hokkaido

Chiba

Prefecture

Prefecture

Prefecture
Ehime

550 Fukui
110 Kagawa
131
Total (domestic)
Note: These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.

8

Number ofstores214

12,575

(TRANSLATION ONLY)(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:Setagaya-ku, Tokyo(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, Tokyo② 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 Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Shanghai, China
Note: In February, 2017, Shanghai Hualian Lawson, Inc. changed its corporatename to Shanghai Lawson, Inc.
③ 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 Beijing Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Beijing, China⑨ BEIJING LUOSONG Co., Ltd.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Beijing, China⑩ 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

Domestic Convenience Store Business

4,989

399

951

56

Entertainment-related Business

1,039

57

Other Business

2,424

514

Total

9,403

1,026

Seijo Ishii BusinessYear-on-Year Change② Employees of the Company
Number of Employees

Year on Year Change

4,217

371

Average Age

Average Years of Service
39.7

12.3

(3) Major Lenders
Lenders

Amount Borrowed (millions of yen)

Syndicate loan

50,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

30,000Mizuho Bank, Ltd.

7,278

(4) Parent Company and Significant Subsidiaries and Equity-method Associates① Parent Company
Capital Stock
Shareholding
Parent Company
Major Business(millions of yen)(%)
Global environment and infrastructurebusiness, industrial finance, logistics
Mitsubishi Corporation
204,44650.2
and development, energy business,metals, machinery, chemicals, andliving essentials, etc.
Note: Mitsubishi Corporation acquired 16,649 thousand shares of the Company’s common stock via atender offer for shares of the Company’s common stock during the period from December 22, 2016
to February 9, 2017, and thereby became the Company’s parent company on February 15, 2017.

10

(TRANSLATION ONLY)② Significant Subsidiaries
Company Name

Capital Stock

Shareholding

Major Business
Domestic Convenience Store70.2 %
Business
Domestic Convenience Store
100.0 %
Business
Domestic Convenience Store
100.0 %
Business

Lawson Sanin, Inc.

5

million yen

Lawson Store100, Inc.

99

million yen

SCI, Inc.

10

million yen

SEIJO ISHII CO., LTD.

100

million yen

100.0 %

Lawson HMV Entertainment, Inc.

100

million yen

100.0 %

Lawson HMV Entertainment United
Cinema Holdings, Inc.

100

million yen

100.0 %

United Entertainment Holdings Co., Ltd.

100

million yen

100.0 %

United Cinemas Co., Ltd.

100

million yen

100.0 %

Lawson (China) Holdings, Inc.

930 million Chinese yuan

100.0 %

Overseas BusinessShanghai Lawson, Inc.

353 million Chinese yuan

100.0 %

Overseas BusinessShanghai Le Song Trading Co., Ltd.

0.1 million Chinese yuan

100.0 %

Overseas BusinessShang Hai Gong Hui Trading Co., Ltd.

0.3 million Chinese yuan

85.0 %

Overseas Business

Zhejiang Lawson, Inc.

10 million Chinese yuan

100.0 %

Overseas Business

Chongqing Lawson, Inc.

190 million Chinese yuan

100.0 %

Overseas Business

Dalian Lawson, Inc.

66 million Chinese yuan

98.3 %

Overseas Business

Beijing Lawson, Inc.

184 million Chinese yuan

100.0 %

Overseas Business

BEIJING LUOSONG Co., Ltd.

0.1 million Chinese yuan

100.0 %

Overseas Business

Seijo Ishii BusinessEntertainment-related
Business
Entertainment-related
Business
Entertainment-related
Business
Entertainment-related
Business

Saha Lawson Co., Ltd.

1,087

million baht

49.0 %

Overseas Business

Lawson ATM Networks, Inc.

3,000

million yen

76.3 %

Financial Services-related
Business

10

million yen

100.0 %

Consulting Business

BestPractice, Inc.

Notes:
1. Shareholding includes indirectly held shares.
2. Lawson Sanin, Inc. has been newly included in scope of consolidation since its establishment in
September, 2016.
3. In March, 2016, Lawson Mart, Inc. changed its corporate name to Lawson Store100, Inc.
4. In February, 2017, Shanghai Hualian Lawson, Inc. changed its corporate name to Shanghai Lawson, Inc.
③ Significant Equity-method Associates
Capital Stock
Company Name(millions of yen)
Lawson Okinawa, Inc.
10
Lawson Minamikyushu, Inc.
100
Lawson Kochi, Inc.

50

Shareholding
(%)
49.0
49.0
49.0

11

Major Business
Domestic Convenience Store Business
Domestic Convenience Store Business
Domestic Convenience Store Business

(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 285,191 shares of treasury shares)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
28,971(5) Top 10 Major Shareholders:
Investment in the Company
Shareholder’s Name

Number of Shares Held(thousand shares)

Shareholding(%)

Mitsubishi Corporation

50,15050.1

Japan Trustee Services Bank, Ltd. (Trust account)

2,657

2.7

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

2,360

2.4

NTT DOCOMO, INC.

2,092

2.1

STATE STREET BANK WEST CLIENT － TREATY 505234

1,394

1.4

National Mutual Insurance Federation of Agricultural Cooperatives

1,001

1.0

Merrill Lynch Japan Securities Co., Ltd.

933

0.9

Japan Trustee Services Bank, Ltd. (Trust account 7)

816

0.8

Lawson Employee Stock Holding Partnership

754

0.8

Japan Trustee Services Bank, Ltd. (Trust account 1)

733

0.7

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.

12

(TRANSLATION ONLY)
2. Status of Stock Acquisition Rights
Stock Acquisition Rights Held by Corporate Officers of the Company as of February 28, 201712th Stock
13th Stock
14th Stock
Acquisition
Acquisition
Acquisition
RightsRightsRightsNumber of option holders and the number of stock acquisition rights (units)
Directors (excluding
1 person
2 persons
4 personsOutside Directors)(65 units)(58 units)(104 units)
1 person1 person
2 personsOutside Directors(5 units)(5 units)(10 units)
Class and number ofCommon stock of Common stock of Common stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
7,000
6,300
11,400
Amount of property
contributed upon theexercise of the share
1 yen
1 yen
1 yen
subscription rights (pershare)
April 12, 2013
April 10, 2014
April 10, 2015
Exercise period
through March 26, through March 23, through March 24,
2033
2034
2035
Main exercise
Note
Note
Note
conditions

15th Stock
Acquisition
Rights1 person(11 units)
0 person(0 unit)Common stock of
Lawson, Inc.
1,100
1 yen
June 10, 2015
through May 25,
2035
Note

16th Stock
Acquisition
RightsNumber of option holders and the number ofstock acquisition rights (units)
Directors (excluding
4 personsOutside Directors)(131 units)
2 personsOutside Directors(10 units)
Class and number ofCommon stock ofshares subject to stock
Lawson, Inc.
acquisition rights
14,100
Amount of property
contributed upon theexercise of the share
1 yen
subscription rights (pershare)
May 2, 2016
Exercise period
through April 13,
2036
Main exercise
Noteconditions
Note: 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 28,
2017, is 66,100 shares, accounting for 0.1% of the total number of shares issued and outstanding.

13

(TRANSLATION ONLY)
3. Members of the Board and Corporate Auditors(1) Positions, Names and Assignments (As of February 28, 2017)
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
Chairman of the Board and CHO
CEO, Representative Director
Sadanobu Takemasu
President and COO,
Representative Director
Masakatsu Gonai
Executive Vice President,―Compliance & Risk Management, ―Human
Member of the Board
Resources, ―BPR and Franchisee Business Support
Division Director
Emi OsonoMember of the Board
Yutaka Kyoya

Member of the Board

Sakie Akiyama

Member of the Board

Keiko Hayashi

Member of the Board

Kazunori Nishio

Member of the Board

Atsuhiko Seki

Standing Corporate Auditor

Toshio Takahashi

Standing Corporate Auditor

Tetsuo Ozawa

Corporate Auditor

Eiko Tsujiyama

Corporate Auditor

Executive Vice President, Group CEO, Living
Essentials Group, Mitsubishi Corporation
Member of the Board, Mitsubishi Shokuhin Co., Ltd
Member of the Board, Olam International Limited

Senior Vice President, Division COO, Retail Div.,
Mitsubishi Corporation

Notes:
1. Three directors (Emi Osono, Sakie Akiyama and Keiko Hayashi) are outside directors as stipulated in
Article 2, Item 15, of the Companies Act of Japan (the “Companies Act”).
2. Three auditors (Toshio Takahashi, Standing Corporate Auditor, Tetsuo Ozawa, Corporate Auditor andEiko Tsujiyama, Corporate Auditor) are outside corporate auditors as stipulated in Article 2, Item 16, of
the Companies Act.
3. Toshio Takahashi, Standing Corporate Auditor, has considerable expertise in finance and accounting,
serving at city banks engaged in treasury, risk management and internal audits, as well as serving as afull-time auditor at the Japanese subsidiary of a major foreign IT firm.
Tetsuo Ozawa, Corporate Auditor, is a lawyer who has practiced law and advised on legal matters andrisk management mainly in relation to the legal affairs of companies and therefore has considerable
expertise in finance and accounting.
Eiko Tsujiyama, Corporate Auditor, has long-term experience as a university professor in accounting andtherefore has considerable expertise in finance and accounting.
4. The following personnel changes were approved at the board of corporate auditors’ meeting and the 41st
general meeting of shareholders held on May 24, 2016.
Member of the Board
Keiko Hayashi
Appointment
Member of the Board
Kazunori Nishio
Standing Corporate Auditor
Toshio Takahashi
Resignation
Member of the Board
Reiko Yonezawa
Member of the Board
Takehiko Kakiuchi
Standing Corporate Auditor

14

Shinichi Hokari

(TRANSLATION ONLY)[Reference] Members of the Boards and Senior Vice Presidents(Excluding Non-Executive Directors) (As of March 1, 2017)
Name
Genichi Tamatsuka

Shuichi Imagawa
Jun Miyazaki

Chairman of the Board,
Representative Director
President,
Representative Director
Senior Executive Vice
President
Senior Executive Vice
President
Executive Vice President,
Member of the Board
Executive Vice President
Executive Vice President

Satoshi Nakaniwa
Yuichi Wada

Senior Vice President
Senior Vice President

Motonobu Miyake

Senior Vice President

Norikazu Nishiguchi

Senior Vice President

Akihito Watanabe

Senior Vice President

Yasuhiko Hirokane
Tatsushi Sato
Keita Kamoi
Zhang Joshua
Hajime Kawamura
Atsushi Maeda
Yasuhiro Iseki

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

Takuya Shiraishi

Senior Vice President

Naotaka Honda

Senior Vice President

Kazuhiro Wakui
Masayuki Sawada

Senior Vice President
Senior Vice President

Sadanobu Takemasu
Masahiro Oyama
Katsuyuki Imada
Masakatsu Gonai

Position and Major Title
CHO
Marketing Division Director―Merchandising andGroup Innovation Officer, Merchandising Group
Corporate Strategy and Planning Division Director―Compliance & Risk Management and ―Human Resources
Corporate Communications Division Director,
Human Resources and Executive Assistant to CHO
CFO―Management Owner Promotion andStore Operations Division Director
International Business Division Director andLawson (China) Holdings, Inc. General Manager
Executive Assistant to CEO (―Public Relations and Property
Management)
Entertainment and Consumer Service Business Division
Director, United Cinemas Co., Ltd. and Lawson Travel, Inc.
President and Representative Director
Healthcare Business Division Director
Operations Management and IT Systems Division Director
Financial Services Division Director
Shanghai Lawson, Inc. General Manager
Franchisee Business Support Division Deputy Director
Merchandising Division Deputy Director
SEIJO ISHII CO., LTD. Member of the Board,
Senior Executive Vice President (Temporary Transfer)
Operations Management and IT Systems Division Deputy
Director, Corporate Strategy and Planning Division Deputy
Director and Lawson Digital Innovation Inc. President andRepresentative Director
Operations Management and
IT Systems Division Deputy Director
Merchandising Division Deputy Director
International Business Division

15

(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
289
195
94
(Including Outside Directors)(Outside Directors)
63
47
15
Corporate Auditors(Including Outside Corporate
69
69－
Auditors)(Outside Corporate Auditors)
45
45
－
Total
359
264
94

Number of
Directors andCorporate Auditors
Applicable
10
7
5
4
15

(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 non-executive directors and corporate auditors (five out of six are independent
directors).
Members of the Nomination and Compensation Committee:
Outside Director
Emi Osono
Director
Yutaka Kyoya(Vice Committee Chairperson)
Outside Director
Sakie Akiyama
Outside Director
Keiko Hayashi
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 five non-executive directors, Emi Osono, Yutaka Kyoya, Sakie Akiyama,
Keiko Hayashi, and Kazunori Nishio, 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.
16

(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 yen 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 yen 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 yen 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 yen or less per year

17

(TRANSLATION ONLY)(6) Outside Directors and Outside Corporate Auditors① Relationship between Major Positions Concurrently Held and the Company
Relationship between
the Company andPosition in the
Name
Position Concurrently Held
Details
Company Where
Company
Position Concurrently
Held
Graduate School ofInternational Corporate
OutsideProfessor
Director
Emi Osono Strategy, Hitotsubashi－
University(Independent)
OutsideDirector(Independent)

OutsideDirector(Independent)

Corporate
Auditor(Independent)

Sakie
AkiyamaKeikoHayashiToshioTakahashi

Resona Holdings, Inc.

Outside director

Saki Corporation

Representative
Director and CEO

DoCLASSE the Store, Co.,Ltd.
DoCLASSE Co., Ltd.

TetsuoOzawa

fitfit Co., Ltd.

President and CEO

IMA People Co., Ltd.

President and CEO

CEMEDINE CO., LTD.
Sekisui Chemical Co., Ltd.
United Urban Investment
Corporation
Faculty of Commerce,
Waseda University School

OutsideCorporate
Auditor(Independent)

President and CEO
President and CEO

Tokyo Fuji Law OfficeOutsideCorporate
Auditor(Independent)

President and CEO

IMA Holdings

－

－

－

－

Lawyer(Representative
Partner)
Outsidecorporate auditor
Outsidecorporate auditor
Corporate
auditor－

Professor

ORIX Corporation

Outside director

NTT DOCOMO, INC.

Outsidecorporate auditor

Shiseido Company, Limited

Outsidecorporate auditor

Eiko
Tsujiyama－

NTT DOCOMO, INC.,
for which Eiko
Tsujiyama serves as an
outside corporate
auditor, is a large
shareholder of theCompany, and has abusiness relationshipwith the Company inthe telecommunications
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.

18

(TRANSLATION ONLY)② Major Activities during the Year

Position in the
Company

Name

Outside Director(Independent)

Emi Osono

Outside Director(Independent)

Sakie Akiyama

Outside Director(Independent)

Keiko Hayashi

Corporate Auditor(Independent)

Toshio Takahashi

OutsideCorporate Auditor(Independent)

Tetsuo Ozawa

OutsideCorporate Auditor(Independent)

Eiko Tsujiyama

Major Activities
Ms. Osono attended 13 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.
Ms. Akiyama attended 12 of 14 board of directors’ meetings held
throughout the year during the year and, as a management executive,
appropriately questioned and/or remarked based on her abundant
knowledge. Ms. Akiyama is also a member of the Company’s
Nomination and Compensation Committee.
Ms. Hayashi attended all 12 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. Hayashi is also a member of theCompany’s Nomination and Compensation Committee.
As a standing corporate auditor, Mr. Takahashi examined financial
documents and visited relevant establishments and business partners
to examine their business operations and financial situation. Mr.
Takahashi monitored and verified the execution of duties of directors
and other personnel including those relating to the improvement ofinternal control systems. Mr. Takahashi attended all 12 board of
directors’ meetings and all 11 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 12 of 14 board of directors’ meetings and all 15
board of corporate auditors’ meetings held during the year andappropriately questioned and/or remarked based on his abundant
experience and knowledge as a lawyer. Mr. Ozawa is also achairperson of the Company’s Nomination and Compensation
Committee.
Ms. Tsujiyama attended all 14 board of directors’ meetings and all 15
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.

19

(TRANSLATION ONLY)
4. Independent Auditor(1) Independent Auditor
Deloitte Touche Tohmatsu LLC(2) Amounts of Remunerations, etc., to be Paid to the Independent Auditor
1)

Remuneration to be paid by the Company to the independent auditor

109 million yen

2) Sum of money and other property benefits to be paid by the Company and its
190 million yen
subsidiaries to the independent auditor
Notes:
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 from eachother. 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. as wellas the progress of discussions with accounting auditors, etc. in light of the Practical Guidance on
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. Ten 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 such as 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.

20

(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 “2015 Basic Policy for Improvement of Internal
Control Systems,” which was approved at the board of directors’ meeting held on February 16, 2016, theCompany passed a resolution called the “2016 Basic Policy for Improvement of Internal Control Systems,” asindicated below.
(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 and representative director, as well as financial, clerical andrisk- and compliance-related information (including information contained in electromagnetic media).
Moreover, the Company shall put in place a system allowing relevant parties to inspect the above
information.
② The Company shall manage and monitor its information systems in a secure manner, in addition 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.
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.

21

(TRANSLATION ONLY)(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.
④ The Company shall formulate a Business Continuity Plan (BCP) and a Business Continuity Management(BCM) system to minimize the business interruption in the event of the occurrence of situations or events
inflicting substantial damage on the Company such as a large-scale natural disaster or an epidemic of a
new-type influenza. In order to be prepared for major earthquakes, the Company shall conduct disasterprevention drills three times 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 System for reporting to the Company on matters pertaining to the execution of duties by the subsidiary’s
directors, etc., and system for ensuring that the subsidiary’s directors, etc., carry out their duties efficiently
・ 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.
・ 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.
② Regulations and other systems for risk management by the subsidiary, and system for ensuring that thesubsidiary’s directors, etc., and employees execute their duties in conformity with laws, ordinances, andthe articles of incorporation
・ 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.
・ 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 totheir companies.
・ 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.

22

(TRANSLATION ONLY)(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.
④ 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.
(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.

23

(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 thehandbook to all employees in an effort to thoroughly disseminate its content with the aim of ensuring the
propriety of 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 ―Compliance & Risk
Management is appointed as the chief officer in charge of compliance and risk management, and theposition of CRO is established for each head office and region. CROs attend the Compliance & Risk
management meetings organized by the ―Compliance & Risk Management, thoroughly disseminate
measures determined at the meetings, and monitor the progress of such measures in an effort to preventthe occurrence of risk events.
④ With respect to whistleblowing reports, there are internal consultation and reporting contact points alongwith the Group Independent Whistleblower Hotline as well as a consultation contact point for theCompany’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 Group.
(2) Preparations against and Responses to Risks① In normal times, the Compliance & Risk management meetings and four 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. On
July 29, 2016, we acquired business resilience certification as a company that contributes to national
disaster resilience, for the first time as a convenience store. Considering that acquiring this certification isa valuable opportunity, we will further promote Business Continuity Management (BCM).

24

(TRANSLATION ONLY)(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 theaudits.
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.

25

(TRANSLATION ONLY)

Consolidated Balance Sheet(Millions of yen)
Assets
Account item
Current assets
Cash and deposits
Accounts receivable-due from
franchised stores
Lease receivables
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
Trademark right
Other
Investment and other assets
Investment securities
Long-term loans receivable

Liabilities
As of February
29, 2016(for reference)

As ofFebruary 28,
2017

224,209
69,797249,278
68,115Current liabilities
Accounts payable-trade319,607112,225

356,783
110,834

30,54739,982

Short-term loans payable

1,990

31,180575

575

23,89857,2148,500
101,908
3,832
9,462
210,607
57,562
88,060－28,012
59,734
9,876
103,156
3,427
9,985
223,798
56,70399,983
957

413

332

12,186
24,66427,719530,215

13,083
26,95825,779580,581259,532
58,506
47,697
154,608(1,280)271,541
58,50649,083
165,162(1,210)

4,860

3,338

801

274

(566)

(618)

5,531

4,610

(906)

(927)

307
8,296
272,997803,212314
10,800285,995
866,577

5,905
17,97667,736
4,524
27,729(8)579,002
302,761
167,098
16,307
9,794
101,546
7,870
143
84,59526,37746,30911,381
527
191,645
22,32540,886

Guarantee deposits

92,495

Deferred tax assets

22,016

Other

14,782

Allowance for doubtful accounts

Total assets(860)

803,212

Account item

Current portion of long-termloans payable
Lease obligations
18,130Accounts payable-other78,363
Income taxes payable
3,907
Deposits received
28,493
Provision for bonuses
(50)
Other
617,299
324,510 Non-current liabilities
Long-term loans payable
183,747
18,581
Lease obligations
9,701
Deferred tax liabilities
Provision for retirement
benefits to executive officers
110,472
and audits and supervisoryboard members
Net defined benefit liability
1,742
Asset retirement obligations
265
Other
94,800Total liabilities
37,56746,041
Net assets
10,691 Shareholders’ equity
499
Capital stock
197,988
Capital surplus
22,283Retained earnings
44,495
Treasury shares
Accumulated other
95,594comprehensive income
Valuation difference on
23,138available-for-sale securities
13,444
Revaluation reserve for land
Foreign currency translation(968)
adjustment
Remeasurements of defined
benefit plans
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets
866,577
12,33626

As of February
As of29, 2016
February 28,(for reference)
2017

(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
Gain on valuation of derivatives
Other
Non-operating expenses
Interest expenses
Loss on cancellation of leases
Loss on disaster
Other
Ordinary income
Extraordinary income
Gain on change in equity
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Other
Profit before income taxes
Income taxes-current
Income taxes-deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

From March 1, 2015 toFebruary 29, 2016
(for reference)

From March 1, 2016 to
February 28, 2017

261,681
94,165

275,312
101,806(227,606)(155,949)(71,656)

355,846
227,606
583,452
155,949(254,169)(174,255)(79,914)427,503354,961
72,541
725
524

292

602

－
1,155

409
1,820

1,903
1,953
－
1,916

892

5,772
69,622
892

228
4,342
10,542－
19,2334,031

27

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

254,169
631,288
174,255
457,033
383,260
73,772

759
646

2,853

377,119

1,919
1,274
772
873

－
294
3,554
9,535
1,174
18,928
2,453

4,081

4,839
73,014－

14,55858,456
21,381
37,074674
36,400(TRANSLATION ONLY)

Consolidated Statement of Changes in Equity(From March 1, 2016 to February 28, 2017)(Millions of yen)
Shareholders’ equity

Balance at beginning of current
periodAccumulated other comprehensive income

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’equity58,506

47,697

154,608

ሺ1,280)259,532

Valuationdifference on
available-forsale securities

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

801

(566)

5,531

Remeasurementsof defined benefit
plans

(906)

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares

Noncontrollinginterests

Total net
assets

4,860

307

8,296

272,997

Changes of items during period
Change in ownership interestof parent due to transactions
with non-controllingshareholders

1,387

1,387

1,387

Dividends of surplus(24,751)(24,751)(24,751)

Change of scope of
consolidation(1,130)(1,130)(1,130)

Profit attributable to ownersof parent

36,40036,40036,400

(3)

(3)

52

52

54

54

Purchase of treasury shares(3)

Reversal of revaluation
reserve for land

52

Exercise of subscription
rights to shares(Delivery of treasury shares)

(0)

(17)

72

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

(527)

(52)

(920)

(21)

(1,521)

7

2,503

989

－

1,386

10,55369

12,009

(527)

(52)

(920)

(21)

(1,521)

7

2,503

12,99858,50649,083

165,162(1,210)271,541

274

(618)

4,610

(927)

3,338

314

10,800285,995

28

(TRANSLATION ONLY)(Notes to Consolidated Financial Statements)(Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 20
Lawson HMV Entertainment, Inc.
(Domestic)
Lawson ATM Networks, Inc.
BestPractice, Inc.
SCI, Inc.
Lawson Store100, Inc.
Lawson HMV Entertainment United Cinemas Holdings, Inc.
United Entertainment Holdings Co., Ltd.
United Cinemas Co., Ltd.
SEIJO ISHII CO., LTD.
Lawson Sanin, Inc.
Chongqing Lawson, Inc.
(Foreign)
Shanghai Lawson, Inc.
Dalian Lawson, Inc.
Lawson (China) Holdings, Inc.
Saha Lawson Co., Ltd.
Shanghai Le Song Trading Co., Ltd.
Shang Hai Gong Hui Trading Co., Ltd.
Zhejiang Lawson, Inc.
Beijing Lawson, Inc.
BEIJING LUOSONG Co., Ltd.
Among the companies mentioned above, Lawson Sanin, Inc. has been newly included in scope of
consolidation since its establishment during the current fiscal year.
On March 1, 2016, Lawson Mart, Inc. changed its corporate name to Lawson Store100, Inc.
On February 27, 2017, Shanghai Hualian Lawson, Inc. changed its corporate name to Shanghai
Lawson, Inc.
(2) Names of non-consolidated subsidiaries and others
LAWSONWILL, Inc.
(Domestic)
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Seikaken, Inc.
Lawson Syuhan, Inc.
TOKYO EUROPE TRADE CO., LTD.
SG Lawson, Inc.
Lawson Travel, Inc.
Lawson Digital Innovation Inc.
Lawson Bank Preparatory Company, Inc.
(Foreign)
Lawson USA Hawaii, Inc.
(Reasons for exclusion from the scope of consolidation)
The above non-consolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, profit or loss (corresponding to equity interest)
and retained earnings (corresponding to equity interest) and others have no material influence on the
consolidated financial statements.
2. Application of the equity method(1) Equity-method associates: 3(Domestic)
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.

29

(TRANSLATION ONLY)(2) Non-consolidated subsidiaries and entities excluded from the scope of the equity-method application
Non-consolidated subsidiaries excluded from the scope of the equity-method application(LAWSONWILL, Inc., HATS UNLIMITED CO., LTD., Food Marketing Japan, Inc., Seikaken, Inc.,
Lawson Syuhan, Inc., TOKYO EUROPE TRADE CO., LTD., SG Lawson, Inc., Lawson Travel, Inc.,
Lawson Digital Innovation Inc., Lawson Bank Preparatory Company, Inc. and Lawson USA Hawaii,Inc.) and entities excluded from the scope of the equity-method application (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, L・TF Co., Ltd., StageAround
TOKYO Production Committee, PG Lawson Company, Inc., Lawson Farm Chiba and others) were
excluded from the scope of the equity-method application because their profit or loss (corresponding toequity interest) and retained earnings (corresponding to equity interest) of these entities is not significant
either individually or in aggregate to the consolidated financial statements.
3.

Fiscal year end of the consolidated subsidiaries
The balance sheet date of Chongqing Lawson, Inc., Shanghai Lawson, Inc., Dalian Lawson, Inc.,
Lawson (China) Holdings, Inc., Saha Lawson Co., Ltd., Shanghai Le Song Trading Co., Ltd., Shang Hai
Gong Hui Trading Co., Ltd., Zhejiang Lawson, Inc., Beijing Lawson, Inc. and BEIJING LUOSONG Co.,
Ltd. is December 31. In order to prepare the consolidated financial statements, the Company used thesecompanies’ financial information prepared as of such balance sheet date and significant transactions
which occur between the balance sheet date and the consolidated balance sheet date are adjusted as
required for consolidation.
From the current fiscal year, the balance sheet date of SEIJO ISHII CO., LTD. was changed from theend of December to the end February to be consistent with the consolidated balance sheet date (fiscal
years beginning March 1 and ending on the final day of February of the following year), which aims to
improve the efficiency of management and business management, such as budget compilation andperformance management of the Group. Thus, its accounting period was 14 months for the current fiscal
year. Furthermore, during the two-month period from January 1, 2017 to February 28, 2017, it reported
gross operating revenue of 12,133 million yen, operating income of 1,114 million yen, ordinary income of
1,101 million yen, and profit before income taxes of 1,034 million yen.
The fiscal year end date for the other consolidated subsidiaries corresponds with the consolidatedbalance sheet date.

4. Summary of Significant Accounting Policies(1) Valuation basis and method for significant 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 Derivatives:
Accounted for using the market value method.
③ 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 significant 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.
30

(TRANSLATION ONLY)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 zero.
(3) Accounting standard for significant 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 is recorded under internal regulations.
(4) Accounting method for retirement benefits① Method of attributing the estimated amount of retirement benefits to periods
In calculating the retirement benefit obligation, the benefit formula method is used to attribute theestimated amount of retirement benefits to periods up to the end of the current fiscal year.
② Accounting treatment for actuarial differences 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 ofrecognition.
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 ofrecognition.
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) Significant 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 “non-controlling 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.

31

(TRANSLATION ONLY)(Changes in accounting policies)
The Company and its domestic consolidated subsidiaries are applying “Accounting Standard forBusiness Combinations” (Accounting Standards Board of Japan (ASBJ)) Statement No. 21, revised
September 13, 2013; hereinafter, “Business Combination Accounting Standard”), “Accounting Standard
for Consolidated Financial Statements” (ASBJ Statement No. 22, revised September 13, 2013;
hereinafter, “Consolidated Accounting Standard”) and “Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, revised September 13, 2013; hereinafter, “Business Divestiture AccountingStandard”), etc., from the fiscal year ended February 28, 2017. Under these revised accounting standards,
any differences arising from changes in a parent’s ownership interests in subsidiaries when the parent
retains control are recognized in capital surplus and acquisition-related costs are expensed in the fiscal
year in which they were incurred. Furthermore, the Company applies a method in which any adjustments
to the allocation of acquisition costs arising from the finalization of provisional accounting treatment arereflected in the consolidated financial statements for the period in which the business combination occurs.
In addition, the presentation of profit, etc., was changed and “Minority interests” was changed to“Non-controlling interests.” The consolidated financial statements for the previous fiscal year have been
reclassified to reflect this change in presentation.
The Company has applied the transitional treatment prescribed in Article 58-2 (4) of the Business
Combination Accounting Standard, Article 44-5 (4) of the Consolidated Accounting Standard, and Article
57-4 (4) of the Business Divestiture Accounting Standard from the beginning of the fiscal year ended
February 28, 2017. Meanwhile, the Company follows the transitional treatment set forth in Article 58-2
(1) of the Business Combination Accounting Standard in reviewing the allocation of acquisition-related
costs resulting from the finalization of provisional accounting treatment for business combinations thattake effect from the beginning of the fiscal year ended February 28, 2017.
As a result of this change, capital surplus at the end of the current fiscal year increased by 1,387
million yen. In addition, profit before income taxes for the current fiscal year decreased by 2,583 million
yen. The year-end balance of capital surplus in the consolidated statement of changes in equity for thecurrent fiscal year increased by 1,387 million yen.
(Changes in Presentation)
1. In the “Current assets” section, “Lease receivables” (5,905 million yen for the previous fiscal year)
which was included in “Other” in the consolidated balance sheet before is now separately presented as“Lease receivables” (12,336 million yen for the current fiscal year) from the current fiscal year due toan increase in financial materiality.
2. In the “Non-operating income” section, “Store equipment related income” (175 million yen for thecurrent 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.
3. In the “Non-operating losses” section, “Foreign exchange losses” (53 million yen 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.

32

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

294,350 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“Revaluation reserve for land.”
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 247 million yen.
3. Pledged assets and secured liabilities
Assets pledged as collateral and liabilities collateralized are as follows.
Millions of yen
Cash and deposits

2,601

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

16,614

Secured liabilities are as follows.
Millions of yen
Current portion of long-term loans payable575

Long-term loans payable

6,703

Total

7,278

33

(TRANSLATION ONLY)(Notes to Consolidated Statement of Income)Impairment loss
The Company and its consolidated subsidiaries (collectively, the “Group”) identify each store as thesmallest cash generating unit.
The carrying value of asset groups whose profitability has significantly decreased was written down to therecoverable amount, with the difference recognized as impairment loss under extraordinary losses.
Category by use

Stores

Total

Impairment loss
(millions of yen)

Location

AssetsTokyo

Buildings; Tools, furniture and fixtures; and others

1,702

Osaka

"

1,442

Others

"

6,390

―

―

9,535

Category by non-current assets
Buildings and structures
Tools, furniture and fixtures
Land
Leased assets
Other

5,833
529
353
2,786
32

million yen""""

The recoverable amount of the asset groups is the higher of net selling price or value in use. The 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 mainly using a discount rate of 4.3%.

34

(TRANSLATION ONLY)(Notes to Consolidated Statement of Changes in Equity)
1. Number of outstanding 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)
Outstanding shares
100,300－－
100,300
Common stock
Treasury shares
Common stock301
017
Notes:
1. The increase in treasury shares resulted from purchases of stock of less than one share unit.
2. The decrease in treasury shares resulted from decreases due to exercise of stock options.

285

2. Dividend(1) Dividend payment
Date of resolution

Class ofsharesDividend payment(millions of yen)

Dividend
per share(yen)

Record date

Effective date

General meeting ofshareholders(May 24, 2016)

Commonstock

12,249122.50

As of
February 29, 2016

As of
May 25, 2016

Directors’ meeting(October 12, 2016)

Commonstock

12,501125.00As of
August 31, 2016

As ofNovember 10,
2016(2) Dividends for which the record date is in the current period and the effective date is after the
year-end consolidated balance sheet date
Dividend
Dividend
Class of Source ofRecordEffective
Date of resolution
payment
per sharesharesdividenddate
date(millions of yen)
(yen)
General meeting of
As of
As of
Common Retained
shareholders
12,501125.00February
May 31,stock
earnings(May 30, 2017)28, 2017
2017
3. Number of stock that can be exercised by outstanding subscription rights to shares (excluding those
not yet in the exercisable period)
66,100 shares

35

(TRANSLATION ONLY)(Notes to Financial Instruments)
1. Matters relating to the status of financial instruments(1) Policy for financial instruments
The Group primarily uses short-term deposits, etc., to manage its funds and raises funds as necessary
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 landlords, 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 a borrower’s 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
3 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 a quoted price is
not available, other rational valuation techniques are used instead. Since multiple factors are considered in
the estimation of fair value, the results of the estimation might differ if other valuation techniques were
used.

36

(TRANSLATION ONLY)
2. Matters relating to the fair values of financial instruments
The carrying amount, fair values, and difference as of February 28, 2017, 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
amount68,11578,363(47)
78,316(1) Cash and deposits(2) Accounts receivable-other
Allowance for doubtful accounts (*1)
(3) Investment securities
Available-for-sale securities

6,523

Fair value

Difference

68,115－78,316

－

6,523

－

44,495(34)
44,46144,444(16)
95,594(5) Guarantee deposits(413)
Allowance for doubtful accounts (*1)
95,18094,607(572)
292,597
292,007(589)
Total assets
110,834
110,834－(1) Accounts payable-trade
59,73459,734－(2) Accounts payable-other103,156
103,156－(3) Deposits received
57,27857,278－(4) Long-term loans payable (*2)
127,996
123,577(4,418)(5) Lease obligations (*2)
459,000
454,582(4,418)
Total liabilities(*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.
(4) Long-term loans receivable
Allowance for doubtful accounts (*1)

(Note 1) Method of calculating the fair values of financial instruments
Assets(1) Cash and deposits and (2) Accounts receivable-other
These instruments are stated at their carrying values, because they are short-term and their carrying
values are approximately the same as their fair values.
(3) Investment securities
The fair values of investment securities are stated at the quoted market price on the stock exchange forthe equity instruments.
(4) Long-term loans receivable
The fair values of long-term loans receivable are determined based on the present value, derived bydiscounting the total amount of principal and interest at the expected rate of interest to be applied forsimilar loans.
(5) Guarantee deposits
Guarantee deposits are determined by discounting future cash flows, which reflect the collectability,
using the yield rate of government bonds over the remaining period.
Liabilities(1) Accounts payable-trade, (2) Accounts payable-other and (3) Deposits received
These instruments are stated at their carrying values, because they are short-term and their carrying
values are approximately the same as their fair values.
(4) Long-term loans payable (including current portion of long-term loans payable)
These instruments are stated at their carrying values, because they are determined using floatinginterest rates that reflect market rates in a short-time and their carrying values are approximately the sameas their fair values.
(5) Lease obligations (including current portion of lease obligations)
The fair values of lease obligations are determined by discounting the cash flows related to the
obligations at the expected rate of interest to be applied for similar lease transactions.

37

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

Carrying amount (millions of yen)

945
Unlisted equity securities
13,502
Investments in subsidiaries and affiliated companies
1,312
Other
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. Profit per share

2,748.39 yen
363.96 yen(Notes to Significant Subsequent Events)
Not applicable.

38

(TRANSLATION ONLY)

Non-consolidated Balance Sheet(Millions of yen)
Assets
Account item
Current assets
Cash and deposits
Accounts receivable-due from
franchised stores
Lease receivables
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
Long-term loans receivable
Long-term loans receivable fromsubsidiaries and associates
Long-term prepaid expenses
Guarantee deposits

Liabilities
As of February
29, 2016(for reference)

As ofFebruary28, 2017

147,670
48,453

182,00951,283

29,63638,301

5,905

20,276952
12,17940,895
3,141
6,513
(8)
567,204
281,753
136,941
22,346
13,7701,426
13,741
46,705
2,718
7,563
(6)
585,976
292,400
144,619
26,147
14,760

9,741

9,648

91,137
7,816
27,34818,2698,589
489
258,102
9,892

95,632
1,591
40,18629,852
9,831
501
253,390
8,781

62,95863,37539,951

43,564

20,482

16,823

9,352
85,111Other retained earnings
General reserve
Retained earnings brought
21,599forwardTreasury shares
2,111
Valuation and translation(962)
adjustments
Valuation difference on
available-for-sale securities
Revaluation reserve for land
Subscription rights to shares
Total net assets
767,986
Total liabilities and net assets

Deferred tax assets

20,883

Other

10,328

Allowance for doubtful accounts

Total assets(857)

714,875

As of February
29, 2016(for reference)

As ofFebruary28, 2017

Current liabilities
Accounts payable-trade279,880
97,005

326,070
100,160

Short-term loans payable－

30,00037,88047,28021,431
24,966
6,175
2,028
81,015
3,047
6,331
191,418
50,00082,425
9,417

25,385
21,4258,349
2,157
84,3802,586
4,345
204,506
50,00093,337
10,098341

242

21,702
27,532471,298

23,654
27,173
530,576

243,016
58,506
47,697
47,696

237,439
58,506
47,696
47,6960－

138,093

132,447

727

727

50,00050,00087,36581,719(1,280)(1,210)

252

(344)

818

274

(566)
307
243,576
714,875(618)
314
237,409
767,986

Account item

Short-term loans payable tosubsidiaries and associates
Lease obligations
Accounts payable-other
Income taxes payable
Accrued expenses
Deposits received
Provision for bonuses
Other
Non-current liabilities
Long-term loans payable
Lease obligations
Provision for retirement benefits
Provision for retirement benefits
to executive officers
Asset retirement obligations
Other
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings

10,31387,78339

(TRANSLATION ONLY)

Non-consolidated Statement of Income(Millions of yen)
From March 1, 2015 toFebruary 29, 2016
(for reference)

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
Dividend income
Compensation income
Gain on valuation of derivatives
Other
Non-operating expenses
Interest expenses
Loss on cancellation of leases
Foreign exchange losses
Loss on disaster
Other
Ordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Loss on valuation of investments in capital of subsidiaries
and associates
Other
Income before income taxes
Income taxes – current
Income taxes – deferred
Profit40

263,067
35,774(35,013)(24,966)(10,047)

298,841
35,013
333,855
24,966

From March 1, 2016 to
February 28, 2017273,945
39,876(42,365)(30,470)(11,894)308,889
251,641
57,247
879
327
645
－
911

2,763

1,540
1,881
980
－
626

5,028
54,982

780
516
524
409
939
1,569
1,243
481
422
412

294
3,388
9,034

773

8,603

15,6801,772

15,72739,255
17,45321,80242,365356,186
30,470325,716
268,296
57,419

170
4,172
9,155

1,455

313,821387
14,749
912

3,170

4,130
56,45921,71034,74915,661
19,088

(TRANSLATION ONLY)

Non-consolidated Statement of Changes in Equity(From March 1, 2016 to February 28, 2017)(Millions of yen)
Capital surplus

Shareholders’ equity
Retained earnings
Other retained earnings
Legal
Retainedretained
Generalearnings
earnings
reservebrought
forwardTotal
retainedearnings

TreasurysharesTotalshareholders’equity87,365138,093(1,280)243,016

Dividends of surplus(24,751)(24,751)(24,751)

Profit19,08819,08819,088

Balance at the beginning of current
periodCapital
stock

Legal
retainedearnings

58,506

47,696

Other
capitalsurplusTotal
capitalsurplus047,697727

50,000Changes of items during period

Purchase of treasury shares(3)

Reversal of revaluation reserve for
land
Exercise of subscription rights toshares (Delivery of treasury shares)

(0)

(0)

Decrease due to corporate division

52

52

(17)

(17)

(17)

(17)

(3)
52

72

54
(17)

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period

－

－

(0)

(0)

－

－

(5,645)(5,645)69(5,577)58,506

47,696－

47,696727

50,00081,719132,447(1,210)237,439

41

(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
periodChanges of items during period

818

(566)

252

Subscription rights toshares307

Total
net assets
243,576

Dividends of surplus(24,751)

Profit19,088Purchase of treasury shares(3)

Reversal of revaluation reserve for
land

52

Exercise of subscription rights toshares (Delivery of treasury shares)

54

Decrease due to corporate division(17)

Net changes of items other thanshareholders' equity

(544)

(52)

(596)

7

(589)

Total changes of items during period

(544)

(52)

(596)

7

(6,166)

Balance at end of current period

274

(618)

(344)

314

237,409

42

(TRANSLATION ONLY)(Notes to the Non-consolidated Financial Statements)(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) Derivatives:
Accounted for using the market value method.
(3) 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 zero.
(4) Long-term prepaid expenses:
Computed by the straight-line method.

3. Accounting standard for significant 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 Method of attributing the estimated amount of retirement benefits to periods
In calculating the retirement benefit obligation, the benefit formula method is used to attribute theestimated amount of retirement benefits to periods up to the end of the current fiscal year.
② Accounting treatment for actuarial differences 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 recognition.
Treatment of unrecognized actuarial differences and unrecognized prior services cost in the
non-consolidated balance sheet differs from the consolidated balance sheet.
43

(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 is applying “Accounting Standard for Business Combinations” (Accounting Standards
Board of Japan (ASBJ)) Statement No. 21, revised September 13, 2013; hereinafter, “Business
Combination Accounting Standard”), and “Accounting Standard for Business Divestitures” (ASBJ
Statement No. 7, revised September 13, 2013; hereinafter, “Business Divestiture Accounting Standard”),
etc., from the fiscal year ended February 28, 2017. Under these revised accounting standards, from thecurrent fiscal year, acquisition-related costs are recognized as expenses in the fiscal year in which they
were incurred. Furthermore, the Company applies a method in which any adjustments to the allocationof acquisition costs arising from the finalization of provisional accounting treatment are reflected in the
non-consolidated financial statements for the period in which the business combination occurs.
The Company has applied the transitional treatment prescribed in Article 58-2 (4) of the Business
Combination Accounting Standard and Article 57-4 (4) of the Business Divestiture AccountingStandard from the beginning of the fiscal year ended February 28, 2017.
The impact of this change on non-consolidated financial statements for the current fiscal year isimmaterial.
(Changes in Presentation)
1. In the “Current assets” section, “Lease receivables” (5,905 million yen for the previous fiscal year)
which was included in “Other” in the non-consolidated balance sheet before is now separately presented
as “Lease receivables” (20,276 million yen for the current fiscal year) from the current fiscal year due
to an increase in financial materiality.
2. In the “Investments and other assets” section, “Investments in capital of subsidiaries and associates” (33million yen for the current fiscal year) which was separately presented in the non-consolidated balance
sheet before is now included in “Other” from the current fiscal year due to a decline in financial
materiality.
3. In the “Non-operating income” section, “Store equipment related income” (175 million yen for thecurrent fiscal year) which was separately presented in the non-consolidated statement of income before
is now included in “Other” from the current fiscal year due to a decline in financial materiality.
4. In the “Extraordinary losses” section, “Loss on valuation of investments in capital of subsidiaries andassociates” (773 million yen for the previous fiscal year) which was included in “Other” in the
non-consolidated statement of income before is now separately presented as “Loss on valuation of
investments in capital of subsidiaries and associates” (8,603 million yen for the current fiscal year) fromthe current fiscal year due to an increase in financial materiality.

44

(TRANSLATION ONLY)(Notes to the Non-consolidated 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

255,226 million yen
26,094
157
5,175
368

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“Revaluation reserve for land.”
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 non-consolidatedbalance sheet date was 247 million yen.

4.

Guarantee obligations
We guarantee the accounts payable-trade and deposit liabilities of the following subsidiaries
Lawson HMV Entertainment, Inc.
454 million yen
SCI, Inc.
426"(Notes to the Non-consolidated Statement of Income)Transaction amount with affiliated companies
Operating transactions
Operating revenue
Goods purchased
Selling, general and administrative expenses
Transactions other than operating transactions

26,978500
31,271
1,050

million yen"""(Notes to the Non-consolidated Statement of Changes in Equity)
Number of treasury shares

285,191 shares(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

732 million yen
798
"
5,115
"
8,741
"
371
"
"
4,808
"
298
"
5,224
"
4,311
30,403 million yen(6,085)"24,317 million yen
24,317 million yen

Deferred tax assets-net

45

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

Subsidiary

RelationshipTransaction
EndingEquityDescription
Business line
amountbalance
Directors’Company nameownership BusinessofAccount itemor profession(millions of(millionsposts held
percentage relationshiptransactions
yen)of yen)concurrently
Lease
8,196
Managementtransactions
Domestic
DirectLawson Sanin,of
Lease
Convenience holding
No
7,940
Lease
Inc.
convenience
receivables
Store Business 70.2%
payments
256
store
received
Repayment
29,600of funds
Domestic
DirectShort-term
Borrowing
SCI, Inc.
Convenience holding
SCM
No
7,200
31,700loans payableof funds
Store Business 100.0%
Borrowing0
interest
Repayment
700
of funds
Financial
Placement of
DirectLawson ATM
ServicesBorrowing
ATMs in the
Short-term
3,700
holdingNo
21,100
Networks, Inc.
Relatedof funds
LAWSONloans payable
76.3%
BusinessstoresBorrowing
4
interest
Repayment
29,200
Sale ofof funds
Lawson HMV Entertainment- Direct
tickets andBorrowing
Short-term
32,900Entertainment,
Relatedholding software forYes
16,000of funds
loans payable
Inc.
Business
100.0%
music andBorrowing
video
4
interest
Loaning of
3,122 Long-term
funds
loans
11,086
DirectControl ofreceivable
Lawson (China)
Overseas
Collection
holding business inYes－
Holdings, Inc.
Businessof funds
100.0%
China
Accrued183
Loaning
interest
95
interest

Transaction conditions and the policies for determining those conditions:
1. The Company leases store facilities to certain subsidiaries and affiliates.
2. Lease payments are charged at the amounts of the actual expenses incurred.
3. The Company manages the funds of some subsidiaries centrally and there are lending and borrowing
transactions between the Company and its subsidiaries.
4. The interest rates for loans and borrowings are determined rationally taking into account market interest
rates.
Subsidiaries of an affiliated companies under common control
Attribute

Subsidiaryof the parent
company

Relationship
EquityDescription
Company Business line
Directors’
ownership 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)15,251(639,550)

Accounts
payabletrade54,256

Transaction conditions and the principles on the decision thereof:
1. The terms and conditions for goods purchased transactions are determined to be same as those for othergeneral business transactions. Furthermore, regarding purchases for the franchised stores, the Company
acts as an alternative payer but not as a direct party for the purchase.
2. The transaction amount does not include consumption taxes. However, the ending balance includes
consumption taxes.

46

(TRANSLATION ONLY)(Notes to Per-Share Data)
1. Net assets per share
2. Profit per share

2,370.59 yen
190.86 yen(Notes to Significant Subsequent Events)
Not applicable.
The figures included in the consolidated and non-consolidated balance sheets, statements of income,statements of changes in equity and related notes are rounded down to the nearest unit and the ratios are rounded
to the nearest whole number.

47

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 6, 2017
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 28, 2017 of Lawson, Inc. (the"Company") and its consolidated subsidiaries, and the related consolidated statements of income andchanges in equity for the fiscal year from March 1, 2016 to February 28, 2017, 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.

48

(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 28, 2017,
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.

49

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 6, 2017
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 28, 2017 of Lawson, Inc. (the "Company"),
and the related statements of income and changes in equity for the 42nd fiscal year from March 1, 2016 to
February 28, 2017, 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.

50

(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 28, 2017, and the 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 is required
under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese languageand "the accompanying supplemental schedules" referred to in this report are not included in the attachedfinancial documents.

51

(TRANSLATION ONLY)(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Corporate Auditors>
AUDIT REPORTWith respect to the directors’ performance of their duties during the 42nd business term from March 1,
2016 to February 28, 2017, we have prepared this Audit Report, through due deliberations based on theaudit 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 Contentsof Such Methods(1) We have established audit policies and audit plans for the current term, and received the reports
from each Corporate Auditor regarding their execution of audits and results thereof, as well asreports from the Directors, other relevant personnel, and the Accounting Auditor regarding theexecution 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 plans 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 committee meetings, Internal Control over Financial Reporting committee
meetings and the like, and other important meetings, received reports from the Directors,
officers, internal audit department and other relevant employees regarding the execution of
their duties, asked for explanations whenever necessary, reviewed important approval
documents and the like, and investigated the status of operations and assets at the head office,area office, and other principal offices and stores. With respect to subsidiaries, we havecommunicated and exchanged information with the Directors, Corporate Auditors and otherrelevant personnel of subsidiaries, requested the subsidiaries to report on their business where
necessary, and investigated their status of operations and assets.
(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 development 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.
(iii) We have monitored and verified whether Accounting Auditor maintained its independence and52

(TRANSLATION ONLY)
properly conducted its audit, and we received reports from Accounting Auditor regarding thestatus of the execution of its duties and, whenever necessary, asked for explanations. In
addition, we have received the notice from the Accounting Auditor that “System for ensuring
proper execution of duties” (matters set forth in each item of Article 131 of the Company
Accounting Regulations) is organized in accordance with the “Quality Control Standards for
Audits” (Business Accounting Council, October 28, 2005) and the like, and, when necessary,
asked for explanations.

Based on the above methods, we have examined the “business report and the supplementary schedules
thereof,” the “consolidated financial statements (consolidated balance sheet, consolidated statement ofincome, consolidated statements of changes in net assets, and notes to consolidated financial statements)”
and “financial statements (balance sheet, statement of income, statements of changes in net assets, and notes
to 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 Financial Statements and Supplementary Schedules thereof.
We have found that methods and the result of the audit by the Accounting Auditor, Deloitte
Touche Tohmatsu LLC, are adequate.
April 10 2017
The Board of Corporate Auditors of Lawson, Inc.
Standing Corporate Auditor
Atsuhiko Seki
Standing Corporate Auditor
Toshio Takahashi(Outside Corporate Auditor)
Corporate Auditor
Tetsuo Ozawa(Outside Corporate Auditor)
Corporate Auditor
Eiko Tsujiyama(Outside Corporate Auditor)

53

(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. In addition, one of our key measures for shareholder returns has been the continuousand steady payment of dividends while securing internal reserves necessary for future business development during thecourse of sustainable growth of the Lawson Group.
We intend to increase year-end dividends for the current fiscal term by ¥2.50 per share, from ¥122.50 per share in
the previous term to ¥125 per share. Accordingly, full-year dividends including interim dividends of ¥125 per sharewill be ¥250 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:¥125 per share of the Company’s common stock to a total of ¥12,501,851,125(2) Effective date of the dividends from surplus:
Wednesday, May 31, 2017

54

(TRANSLATION ONLY)[Reference: Changes in Dividends and Consolidated Dividend Payment Ratio]

Consolidated dividend payment ratio (%)

Consolidated dividend payment ratio (%)

Interim dividend per share (Yen)

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

37th Term

38th Term

39th Term

40th Term

41st Term

42nd Term(Year ended
Feb. 2012)(Year ended
Feb. 2013)(Year ended
Feb. 2014)(Year ended
Feb. 2015)(Year ended
Feb. 2016)(Year ended
Feb. 2017)

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

37th Term

38th Term

39th Term

40th Term

41st Term

42nd Term(Current Period)

¥87

¥100

¥110

¥120

¥122.50

¥125

¥93

¥100

¥110

¥120

¥122.50(Plan) ¥125

¥180

¥200

¥220

¥240

¥245

(Plan) ¥250

¥249.17¥332.20¥380.04¥327.08¥313.81¥363.96

72.2%

60.2%

57.9%

73.4%

78.1%

(Plan) 68.7%

12.0%

15.2%

16.1%

13.0%

12.0%

13.5%

Notes：
1. In the 37th term, ROE (Return on Equity) was 12.0% as a result of an extraordinary loss of ¥11,753 million,
which included loss due to the Great East Japan Earthquake and loss on adjustment for changes in accounting
standards for asset retirement obligations. ROE excluding these extraordinary factors is 15.1%.
2. Consolidated dividend payment ratio is calculated based on annual dividend per share divided by consolidated
net income per share.

55

(TRANSLATION ONLY)
Proposal No. 2: Election of Eight (8) Directors
The terms of office of all eight (8) current Directors expire at the conclusion of this 42nd 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 three (3) will be Outside Directors. All of the Outside Directors are “independent
directors/auditors.”
The candidates for directors are as stated in the following table. Please refer to pages 35 to 42 for the brief personal
histories of the indicated candidates.
Furthermore, please refer to page 44 for the policy and procedures of the Company’s Board of Directors fornominating candidates for Directors.

No.

Name

Position at the Company, etc.

1

Sadanobu Takemasu

2Katsuyuki Imada

3

Satoshi Nakaniwa

4

Emi OsonoMember of the Board

5

Yutaka Kyoya

Member of the Board

6

Sakie Akiyama

Member of the Board

7

Keiko Hayashi

Member of the Board

President,
Representative Director
Senior Executive Vice
President,
Division Director of
Corporate Strategy andPlanning Division
Senior Vice President,
CFO

8
Kazunori Nishio
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 12, 2017.

56

Board ofDirectors’
meeting
attendance
rate

Reappointment

100%

New appointment–

New appointment–

Reappointment, outside,
independent
Reappointment
Reappointment, outside,
independent
Reappointment, outside,
independent
Reappointment

92.9%
92.9%
85.7%
100%
91.7%

(TRANSLATION ONLY)
No.
1

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Sadanobu Takemasu

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 Division, and―Lawson Mart, Lawson, Inc.

March 2016

Senior Executive Vice President, Representative Director,―Corporate Staff Divisions, ―SEIJO ISHII, Natural
Lawson and Lawson Store100 Business, ―Overseas
Business, and ―Entertainment and Consumer Service
Business, and Division Director of Corporate Sales and Store
Development Division, Lawson, Inc.

June 2016

President and COO, Representative Director, Lawson, Inc.

March 2017

President, Representative Director, and Division Director ofMarketing Division, Lawson, Inc. (Current position)(August 12, 1969)
Reappointment■Number of the Company’s
shares held:

700■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Years in office

3 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 Lawson, Inc.’s business performance and corporate
value over the past three years by leading the domestic convenience store business aswell as overall corporate management including the overall corporate divisions,overseas business, the SEIJO ISHII, Natural Lawson and Lawson Store100 business,and the Entertainment and Consumer Service business as President, Representative
Director of Lawson, Inc. We would like to continue to benefit from his management
and supervision 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.

57

(TRANSLATION ONLY)No.
2

Brief Personal History, Position, Assignment and Important
Concurrent Positions
April 1985

Joined Mitsubishi Corporation

March 2002

General Manager of Corporate Planning Office, Lawson,
Inc.

March 2004

Senior Vice President and Division Director of Corporate
Strategy and Planning Division, Lawson, Inc.

March 2007

Senior Vice President and Division Director of Corporate
Strategy and Planning Division, Lawson, Inc.

Katsuyuki ImadaMay 2008

Unit Manager, Retail Division, Living Essentials Group,
Mitsubishi Corporation(January 22, 1963)

October 2012

Senior Vice President and Division Director of Corporate
Strategy and Planning Division, Lawson, Inc.

September 2013

Executive Vice President, acting CCO, CFO, and Division
Director of Corporate Strategy and Planning Division,Lawson, Inc.

September 2016

Executive Vice President, Division Director of Corporate
Strategy and Planning Division, Division Director of Next
Generation CVS Division, Lawson, Inc.

March 2017

Senior Executive Vice President and Division Director of
Corporate Strategy and Planning Division, Lawson, Inc.
(Current position)

New appointment■Number of the Company’s
shares held:
1,600

Reasons for nomination as Director
Mr. Katsuyuki Imada has been nominated as a candidate for Director, as he has
contributed to the generation of synergistic effects for the Lawson Group, as well as
promoted health and productivity management previously as the CFO, Division
Director of Corporate Strategy and Planning Division, and Division Director of Next
Generation CVS Division, among others, over the past nine years, and currently as
Senior Executive Vice President and Division Director of Corporate Strategy andPlanning Division in charge of overall corporate strategy including corporate
governance and the development of next generation CVS. We would like to benefit
from his management and supervision 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.

58

(TRANSLATION ONLY)No.
3

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Satoshi Nakaniwa

April 1993

Joined Mitsubishi Corporation

March 1994

Investment & Credit Department, Mitsubishi Corporation

May 1999

Living Essentials Group Administration Department,
Mitsubishi Corporation

April 2005

Senior Vice President, Assistant to CFO, Meidi-Ya
Corporation (currently Mitsubishi Shokuhin Co., Ltd.)

December 2008

General Manager, Mitsubishi International Corporation

September 2013

Team Leader, Chemicals Group Administration Department,
Mitsubishi Corporation

October 2015

Deputy General Manager, Chemicals Group Administration
Department, Mitsubishi Corporation

February 2017

General Manager, Finance and Accounting Division,Lawson, Inc.

March 2017

Senior Vice President and CFO, Lawson, Inc. (Current
position)(May 20, 1969)
New appointment■Number of the Company’s
shares held:
0

Reasons for nomination as Director
Mr. Satoshi Nakaniwa has been nominated as a candidate for Director, as he has awealth of knowledge on finance and accounting, business investment and credit
through his duties at Mitsubishi Corporation, the parent company of Lawson, Inc. He
is currently in charge of the overall finance and accounting of Lawson, Inc., as SeniorVice President and CFO. He also has extensive expertise on the food field throughhis duties at a food wholesaler to which he had been seconded from Mitsubishi
Corporation, and we would like to benefit from his management and supervision of
the Company by leveraging his experience.

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

59

(TRANSLATION ONLY)
No.
4

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Emi Osono

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)

May 2012

Outside Director, Lawson, Inc. (Current position)(August 8, 1965)
Reappointment, outside,
independent■Number of the Company’s
shares held:

300■Attendance at Board of
Directors’ meetings

13 out of 14 (92.9%)■Years in office

5 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Outside Director
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 non-executive
directors and 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.

60

(TRANSLATION ONLY)
No.
5

Brief Personal History, Position, Assignment and Important
Concurrent Positions
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

Member of the Board, Lawson, Inc. (Current position)

April 2014

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

November 2015

Member of the Board, Olam International Limited (Current
position)

Reappointment

April 2016

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

June 2016

Member of the Board, Mitsubishi Shokuhin Co., Ltd.
(Current position)

Yutaka Kyoya(January 7, 1962)

0■Attendance at Board of
Directors’ meetings

13 out of 14 (92.9%)■Years in office

4 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Yutaka Kyoya has been nominated as a candidate for Director, as he has awealth of knowledge on the life industry field, mainly in food, through his duties at
Mitsubishi Corporation, the parent company of Lawson, Inc. We have been
receiving his proactive opinions and suggestions regarding the Company’s
management at the Board of Directors’ meetings, and we would like to continue tobenefit from his supervision of the Company’s management by leveraging his
experiences.
Mr. Kyoya serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of non-executive directors andauditors.

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

61

(TRANSLATION ONLY)No.
6

Brief Personal History, Position, Assignment and Important
Concurrent Positions
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:

300■Attendance at Board of
Directors’ meetings

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 non-executive directors andauditors. She has also been registered as an Independent Director/Auditor with theTokyo Stock Exchange, Inc. pursuant to the rules specified by the exchange.

12 out of 14 (85.7%)■Years in office

3 years (as of theconclusion of the meetingof shareholders)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)
No.
7

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Keiko Hayashi

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

June 2006

Founded I･M･A Co., Ltd. (currently DoCLASSE the Store
Co., Ltd.) and assumed the position of President and CEO(Current position)

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)

May 2016

Outside Director, Lawson, Inc. (Current position)(March 16, 1959)
Reappointment, outside,
independent■Number of the Company’s
shares held:

0■Attendance at Board of
Directors’ meetings

12 out of 12 (100%)■Years in office

1 year (as of theconclusion of the meetingof shareholders)

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. Ms. Hayashi 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 experience.
Ms. Hayashi serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of non-executive directors andauditors. 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.
Ms. Keiko Hayashi’s legal name is Keiko Hama.

63

(TRANSLATION ONLY)No.
8Brief Personal History, Position, Assignment and Important
Concurrent Positions

Kazunori Nishio(July 13, 1961)

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)

May 2016

Member of the Board, Lawson, Inc. (Current position)

Reappointment■Number of the Company’s
shares held:

0■Attendance at Board of
Directors’ meetings

11 out of 12 (91.7%)

Reasons for nomination as Director
Mr. Kazunori Nishio has been nominated as a candidate for Director, as he has awealth of knowledge on the life industry field, mainly in retail, through his duties at
Mitsubishi Corporation, the parent company of Lawson, Inc., as well as at a retailer
to which he has been seconded. We have been receiving his proactive opinions andsuggestions regarding the Company’s management at the Board of Directors’
meetings, and we would like to continue to benefit from his supervision of theCompany’s management by leveraging his experience.

■Years in office

1 year (as of theconclusion of the meetingof shareholders)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, Ms. Sakie Akiyama, Ms. Keiko Hayashi,
and Mr. Kazunori Nishio. 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 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 12,
2017.

64

(TRANSLATION ONLY)
Proposal No. 3: Election of One (1) Corporate Auditor
The term of office of Mr. Atsuhiko Seki, Corporate Auditor, expires at the conclusion of this 42nd 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 44 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

Masakatsu Gonai

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 and ―CSR, Division Director ofCompliance & 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, Lawson, Inc.

September 2014

Member of the Board, Executive Vice President,―Compliance & Risk Management, Human Resources,
Lawson, Inc.

September 2016

Member of the Board, Executive Vice President,―Compliance & Risk Management, ―Human Resources,―BPR, Division Director of Franchisee Business Support
Division, Lawson, Inc.

March 2017

Member of the Board, Executive Vice President, Lawson,
Inc. (Current position)(May 24, 1961)
New appointment■Number of the Company’s
shares held:

1,400■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)

Reasons for nomination as Corporate Auditor
Mr. Masakatsu Gonai has been nominated as a candidate for Corporate Auditor, as hehas contributed to the reduction and prevention of risk for the Lawson Group, as wellas promoted the active participation of women and personnel development
previously as an officer in charge of store operations and marketing and region
director, and subsequently as an officer in charge of compliance and risk
management and human resources. Mr. Gonai also has abundant expertise in theconvenience store business and franchise business, and we would like to benefit fromhis auditing and supervision of the Company by leveraging his experience.

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 32 of the current Articles of Incorporation, Lawson, Inc. is planning to conclude thefollowing liability limitation agreement with Mr. Masakatsu Gonai. 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 gross negligence.
2. The nominee’s Brief Personal History, Position and Important Concurrent Positions are as of April 12, 2017.

65

(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, candidates for representative
directors, and posts to the Board of Directors, we have voluntarily established a Nomination and Compensation
Advisory Committee. All six members of the committee are non-executive directors or auditors, with five being
independent directors/auditors. The committee is designed to recommend candidates for directors, candidates forrepresentative directors, and posts to the Board of Directors with 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 Independence(1) A 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 or
more(2) A 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
(3) A 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 years(4) A 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 Group(6) (A close relative is) A non-executive director or accounting advisor (if the independent director/auditor is an
outside corporate auditor) of the Lawson Group

66