(TRANSLATION ONLY)
Securities Code: 2651
May 1, 2018
To All Shareholders with Voting Rights
Sadanobu Takemasu
President, Representative Director
Lawson, Inc.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 43rd ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 43rd 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 21, 2018.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 21, 2018 after reading the attached document“Exercising Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 22, 2018
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
43rd Fiscal Term (from March 1, 2017 to February 28, 2018), and the Audit Reports Thereof
Matters to Be Resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Partial Amendment to the Articles of Incorporation
Proposal No. 3: Election of Eight (8) Directors••

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, 2017 through February 28, 2018)
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 2017 ended February 28, 2018, we have advanced andaccelerated our “1000-Day Action Plan”, which is in its second year, and focused our business activities onbuilding Lawson’s next-generation convenience store model. The convenience store industry is now
undergoing a period of drastic transformation. This is attributable to changes in community needs resulting
from an aging population and the prevalence of the nuclear family, among others, which have triggered a
reorganization of the industry. 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 ourongoing goal of fulfilling our customers’ needs in everyday life by serving as an essential part of theircommunities.
In terms of operating results for the fiscal year, while gross operating revenue grew to 657,324 million yen(up 4.1%) due to an increase in the number of stores, operating income and ordinary income decreased to65,820 million yen (down 10.8%) and 65,141 million yen (down 10.8%), respectively, owing to a rise in system
investment for the next generation and an increase in the cost for supporting franchise stores due to partiallybearing their disposal loss and electricity costs. Profit attributable to owners of parent decreased to 26,828
million yen (down 26.3%), partly due to the posting of an extraordinary loss resulting from system-related
investment.
We have also focused on addressing operating risks across the entire Group based on the 2017 Basic Policy
for Maintaining Internal Control Systems and we will continue promoting internal control going forward.
Operating results by business segment were as follows:(Domestic Convenience Store Business)
In our convenience store business, we expanded our merchandise assortment offered in the evening andnighttime hours, strengthened our mainstay products including counter fast food items, rice balls, and bento
boxed lunches, and revamped our lineup of healthy food items including bran bread *1 and salads. We alsoendeavored to enhance store productivity by such measures as introducing tablet terminals to be used by store
staff at LAWSON stores nationwide to further facilitate sales management of counter fast food items.
Furthermore, new point-of-sale (POS) cash registers (for sales information management) equipped with anautomatic change dispenser function have been introduced in phases with the aim of achieving higher
cash-handling efficiency at stores, including expediting cash register transactions.
*1 Bran: The external layer of wheat. It contains abundant nutrition including dietary fiber, iron, calcium,magnesium, zinc, and copper. The food is noted for its low level of carbohydrates.
[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. Furthermore, we also actively promoted
not only existing stores but also new stores by strengthening our product lineup, and improving operations andfranchise support by headquarters.
Furthermore, in October 2017, we opened a laboratory at the Lawson Open Innovation Center to verify how
next-generation IT technologies can be put to practical use at our stores. A plan is underway to commence a
pilot trial of unmanned cash registers at several stores in the Tokyo metropolitan area by around spring of2018 with the aim of saving manpower during nighttime hours. We will continue harnessing diverse
technologies to create a model for our next-generation convenience store.
[Merchandising and Service Strategies]
On the merchandise side, we strengthened our merchandise assortment under our “Lawson Select” brandfocused on daily delivered food and frozen food, as well as in our readymade dish lineup including salad items.
In our lineup of regular items including rice balls and bento boxed lunches, we revamped the entire lineup of“Onigiriya,” our original rice ball brand, which resulted in strong sales. In addition, our regular bento in our“Korega” (meaning, “This is”) bento series adopting new ingredients and production methods and our“Motto! Yasai” (meaning, “More vegetables!”) series items proposing a healthier diet recorded robust sales
and popularity, demonstrated the success of our new initiatives.
In the dessert range, seven products were launched in five phases from the “Uchi Café SWEETS XGODIVA” series produced in collaboration with Godiva with well-selected ingredients and a special
production method, which remained popular especially among female customers.

2

(TRANSLATION ONLY)
In the counter fast food range, the savory “Deka Yakitori” (large grilled chicken) with enhanced aroma and“L-Chiki” (fried chicken) with increased volume remained popular. At our MACHI café, which serves freshly
brewed coffee in store, new coffee brewing machines are being introduced. The new machines can brew
coffee in approximately 25 seconds, shorter than the 40 seconds required by previous machines, allowing us
to offer an expanded selection of items on the menu. We are planning to replace around 14,000 machines with
the new models to provide coffee of higher quality in a shorter period of time.
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.
On our sales promotion side, as our effort to increase the number of purchased items per customer, werolled out a promotional “Lawson Tokuichi!” campaign, where a 10% discount was offered on “Lawson
Select” chilled/frozen foods as well as some items offered in the counter cases. Furthermore, effective
measures to attract customers were launched, including a “speed lottery” themed on “GENERATIONS from
EXILE TRIBE,” which demonstrated our strength in the entertainment field, and through the application ofsocial media.
*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
1,138,966
52.7
106.1
Fast foods

509,415

23.6

105.8

Daily delivered foods

314,481

14.5

106.9

Nonfood products

197,821

9.2

101.5

Total

2,160,684

100.0

105.7

Note: These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
[Store Development]
In opening new stores, the Group continued to focus on developing profitable stores.
Regarding the entire Lawson Group, the total number of LAWSON, NATURAL LAWSON, and
LAWSON STORE100 stores opened and closed during the current fiscal year stood at 1,250 and 369 stores,
respectively, with the total number of stores in Japan reaching 13,992 as of the end of February 2018. *3
With regard to our partnership initiatives with other chain retailers in Japan, based on business integrationagreements, we are remodeling THREE F stores operated by Three F Co., Ltd. into LAWSON THREE F
stores, and SAVE ON stores operated by Save On Corp. into LAWSON stores.
With regard to THREE F stores, 195 stores were remodeled into LAWSON THREE F stores as of the endof February 2018. The remodeling of THREE F stores into LAWSON THREE F stores will be continued instages in and after March 2018. Meanwhile, a total of 125 SAVE ON stores have been remodeled into
LAWSON stores as of the end of February 2018. The remodeling of SAVE ON stores into LAWSON stores
will be completed by the end of the next fiscal year ending February 2019.
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 non-prescription drugs hasreached 176 stores (includes 47 pharmacy LAWSON stores equipped with drug-dispensing pharmacies) as ofthe end of February 2018. Furthermore, the number of stores offering nursing care consultation services hasreached 16 as of the end of February 2018. We will continue 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 will continue to increase the product composition ratio of
100-yen items (excluding tax) by scaling down product portions to respond to customer needs for value.
*3 The numbers of store openings and closings and total number of stores in Japan include stores operatedby Lawson, Inc., subsidiary Lawson Sanin, Inc. and three equity-method affiliates, Lawson Kochi, Inc.,
Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc.

3

(TRANSLATION ONLY)[Change in Total Number of Domestic Stores]
Total stores as ofFebruary 28, 2017
LAWSON

Change during fiscal
year

Total stores as ofFebruary 28, 201812,172872

13,044

NATURAL LAWSON

141

2

143

LAWSON STORE100

798

7

805

13,111881

13,992Total

Note: These figures include stores operated by Lawson, Inc., subsidiary Lawson Sanin, Inc. and threeequity-method affiliates, Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc.
[Other]We continued to work on enhancing customer convenience by additionally partnering with othercompanies to establish an “Open Platform” based on the networks of LAWSON stores that offer a range ofservices encompassing ordering, collection, and home delivery.
Led by the Japanese Ministry of Economy, Trade and Industry, Lawson, Inc. and other domestic
convenience store operators jointly issued the Declaration of Plan to Introduce 100 Billion Electronic Tags for
Products in Convenience Stores. By using electronic tags, we aim to enhance store operating efficiency andcontinue to respond quickly to changing customer expectations.
As a result, Domestic Convenience Store Business posted gross operating revenue of 442,684 million yen(up 4.3% from previous fiscal year) and segment profit of 53,648 million yen (down 10.4% from previous
fiscal year.)(Seijo Ishii Business)
The number of directly operated Seijo Ishii high-end supermarket chain stores offering quality foods
reached 140 as of the end of February 2018, and sales were also strong. In September 2017, we opened our
first “grocerant,” a new store format that combines a supermarket and a restaurant, in Chofu-shi, Tokyo. The
grocerant offers a selection of items on its menu, all of which use Seijo Ishii’s well-selected products in season,
attracting a broad range of customers. We remain committed to enhancing the brand image and corporate
value of Seijo Ishii, while absorbing the company’s product development expertise, know-how acquired as amanufacturing retailer, and sales methods, to strengthen our domestic convenience store business.
As a result, Seijo Ishii Business posted gross operating revenue of 81,957 million yen (down 4.5% fromprevious fiscal year) and segment profit of 6,854 million yen (down 0.8% from previous fiscal year).
(Entertainment-related Business)
With regards to our entertainment-related business, Lawson HMV Entertainment, Inc., which forms thecore of the business, continued to secure top-class ticket transaction value in the ticketing industry. HMV,
which sells music CDs and DVDs, also operates the HMV Record Shop specializing in second-hand analog
records and CDs. Including the HMV Record Shop, the number of HMV stores totaled 54 as of the end of
February 2018. We will strive to offer an even wider selection of products and services to better respond to
customer needs by, for example, expanding the scope of our entertainment business. As of the end of February
2018, United Cinemas Co., Ltd. operates cinemas at 40 sites, offering 351 screens nationwide including those
operated on commission.
As a result, Entertainment-related Business posted gross operating revenue of 75,380 million yen (up 3.4%
from previous fiscal year) and segment profit of 3,853 million yen (down 3.4% 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 the People’s Republic of China, after being the first Japanese convenience store operator to advance into
Shanghai, we made inroads into Chongqing, Dalian, Beijing, Wuhan, and Nanjing. The number of LAWSON
stores in the entire country reached 1,423 as of the end of the fiscal year under review. Furthermore, we arescheduled to open our first store in Hefei, Anhui Province in spring 2018.

4

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

Number of stores(as of February 28,
2017)
665

Change during
fiscal year
200

Number of stores(as of February 28,
2018)
865

China

Shanghai and surrounding area

China

Chongqing

136

29

165

China

Dalian

82

40

122

China

Beijing

48

25

73

China

Wuhan

72

126

198

Thailand

85

16

101

Indonesia

36

1

37

Philippines

30

3

33

2

－

2

1,156

440

1,596

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 90
nationwide (up 3 from previous fiscal year), including online banks, and the number of ATMs installed
nationwide to 12,733 (up 821 from previous fiscal year) as of the end of February 2018.
As a result, Other Business posted gross operating revenue of 65,442 million yen (up 18.7% from previous
fiscal year) and segment profit of 1,464 million yen (down 51.2% from previous fiscal year).
Through Lawson Bank Preparatory Company, Inc. (hereafter, the “Preparatory Company”), founded in
November 2016, Lawson, Inc. has been preparing to establish a bank by leveraging its past experience infinancial services. In March 2018, the Preparatory Company decided to apply for preliminary screening by the
Financial Services Agency of Japan to obtain a banking license.
(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 2018, the system had been installed in approximately 2,700 stores, approximately
700 stores more than a year earlier. Compared to conventional equipment used in our stores, the new system
can reduce electricity consumption per store by around 12%. By putting into practical use an energy-saving
package model centered on this system, the Group will aim to achieve its target of using 20% less electricity
per store by fiscal 2020 compared to the fiscal 2010 level. In January, we opened a pilot store focusing on
environmental friendliness that aims to become a “Smart Energy Store” in Tatebayashi-shi, Gunma. For thisstore, we use cross laminated timber (CLT) made of Japanese cedar grown in Japan and other domestically
produced wood for the structure and interior to enhance the building’s heat insulation, reduce electricity
consumption and save energy, and decrease CO2 emissions during the construction process.
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.
As part of our social contribution activities, we established a scholarship program for children fromsingle-parent families to support their education, and started accepting donations at stores in July 2017
through the “Happiness in Communities” fundraising boxes installed in all stores. Following a strict screening
process, 400 recipients were selected and received their first installment of scholarship funds in December
2017. In addition, money was also raised for victims of the heavy rain disaster in northern Kyushu.
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.

5

(TRANSLATION ONLY)(2) Capital Expenditures
Capital expenditures of the Group during the fiscal year totaled 87,283 million yen, of which 63,409 million
yen was primarily for store facility investment in buildings, and 18,615 million yen was for the upgrading of
information systems.

(3) Changes in Operating Results and Financial Position① Changes in Operating Results and Financial Position of the Corporate Group
Fiscal 2014
Fiscal 2015
Fiscal 2016
Category/Fiscal Term
40th Term
41st Term
42nd Term
Gross operating revenue
497,913583,452
631,288(millions of yen)
Ordinary income (millions of yen)
71,714
69,62273,014
Profit attributable to owners of parent(millions of yen)
Profit per share (yen)Fiscal 2017
43rd Term
657,324
65,141

32,686

31,381

36,40026,828327.08313.81363.96268.16

Total assets (millions of yen)

764,614803,212866,577

900,256

Net assets (millions of yen)

263,797

272,997

285,995

281,446

Net assets per share (yen)2,561.25

2,643.97

2,748.39

2,755.06

Fiscal 2016
42nd Term

Fiscal 2017
43rd Term

2,027,504

2,110,454

356,186

372,891

56,45950,508② Changes in Operating Results and Financial Position of the Company
Fiscal 2014
Fiscal 2015
Category/Fiscal Term
40th Term
41st Term
Net sales of all convenience stores
1,932,798
1,960,266(millions of yen)
Gross operating revenue
316,340
333,855(millions of yen)
Ordinary income (millions of yen)
61,64954,982
Profit (millions of yen)

26,20021,802

19,08819,417

Profit per share (yen)262.18218.02190.86

194.09Total assets (millions of yen)

693,811714,875

767,986

798,603

Net assets (millions of yen)

243,420

243,576

237,409

233,489

Net assets per share (yen)2,432.00

2,432.73

2,370.59

2,331.65

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 offered in the evening and nighttime hours, 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 Improve store productivity by making maximum use of digital technology
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 introducing tablet terminals and new point-of-sale (POS) cash
registers (for sales information management) equipped with an automatic change dispenser function, we aremaking 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 such as
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 to generatesynergistic 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 andaddress operating risks. In addition, we believe that taking a proactive approach to corporate governance is 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 part-time outside 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 transparency ofmanagement and fair judgment.
We conduct business activities under our corporate philosophy, “Creating Happiness and Harmony in Our
Communities”. We continue to work under our “1000 Days Action Plan”, making companywide efforts to“master the basics”, “respond to changes” and “meet the challenge of further growth.”
We look forward to the continued support and encouragement of our shareholders.

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(TRANSLATION ONLY)
2. Current Status at the End of February 2018
(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 104 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, Tokyo④ SCI, Inc.
Major Business:
Food wholesaler, including processed meats and frozen foods, and wholesaler ofpacking materials.
Head Office:Shinagawa-ku, Tokyo[Stores]Number ofstores654

Number ofstores210

Kyoto

Number ofstores338

Ibaraki

Aomori

246

Tokyo

1,687

Shiga

157

Tokushima

134

Akita

190

Kanagawa

1,061

Nara

138

Kochi

139

Iwate

172

Shizuoka

268

Wakayama

145

Fukuoka493

Miyagi

240

Yamanashi

128

Osaka

1,128

Saga

72

Yamagata

108

Nagano

176

Hyogo

677

Nagasaki

105

Fukushima

142

Aichi

683

Okayama

188

Oita

182

Niigata

159

Gifu

176

Hiroshima

211

Kumamoto

153

Tochigi

196

Mie

139

Yamaguchi

118

Miyazaki

106

Gunma

122

Ishikawa

103

Tottori

143

Kagoshima

194

Saitama674

Toyama190

Shimane146

Okinawa

224

Chiba

610

Fukui

114

Kagawa134

Total (domestic)

Prefecture
Hokkaido

Prefecture

Prefecture

Prefecture
Ehime

Number ofstores219

13,992

Note: These figures include stores operated by Lawson, Inc., subsidiary Lawson Sanin, Inc. and three equity-method
affiliates, Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc.

8

(TRANSLATION ONLY)(Seijo Ishii Business)
SEIJO ISHII CO., LTD.
Major Business:
Operates a chain of small supermarkets that seeks to develop andmanufacture high-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:
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, China③ Shanghai Le Song Trading Co., Ltd.
Major Business:
Operates Company-operated convenience 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.
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 Business① Lawson Bank Preparatory Company, Inc.
Major Business:
Engages in preparation activities to commence banking
business operations. Head Office:Shinagawa-ku, Tokyo② 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:
Conducts surveys of convenience stores to give advice and make specific proposals
for the improvement of LAWSON stores.
Head Office:Shinagawa-ku, Tokyo

9

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

Number of Employees

Year-on-Year Change

Domestic Convenience Store Business

5,196

207

Seijo Ishii Business

1,001

50

Entertainment-related Business

1,073

34

Other Business

2,758

334

Total

10,028625

Note: Number of employees is full-time employees.
② Employees of the Company

Number of Employees

Year-on-Year Change

4,444

227

Average Age

Average Years of Service
39.9

12.4

Note: Number of employees is full-time employees.
(3) Major Lenders
Lenders

Amount Borrowed (millions of yen)

Syndicated loan

50,000Mizuho Bank, Ltd.

21,044The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(currently, MUFG Bank, Ltd.)

10,000Sumitomo Mitsui Banking Corporation

10,000(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.

10

(TRANSLATION ONLY)② Significant Subsidiaries

Company Name

Capital Stock

Shareholding

Major Business
Domestic Convenience Store
70.0 %
Business
Domestic Convenience Store
100.0 %
Business
Domestic Convenience Store
100.0 %
Business

Lawson Sanin, Inc.

25

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
Overseas Business

Saha Lawson Co., Ltd.
Lawson Bank Preparatory Company, Inc.
Lawson ATM Networks, Inc.

1,087

million baht

49.0 %

500

million yen

95.0 %

3,000

million yen

95.0 %

10

million yen

100.0 %

BestPractice, Inc.

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

Financial Services-related
Business
Financial Services-related
Business
Consulting BusinessNotes:
1. Shareholding includes indirectly held shares.
2. Lawson Bank Preparatory Company, Inc. was included in the scope of consolidated subsidiaries from thefiscal year under review due to its increased significance as a subsidiary.
③ Significant Equity-method Associates

Company Name
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.

Capital Stock(millions of yen)
10
100
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 244,849 shares of treasury shares)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
36,536(5) Top 10 Major Shareholders:Number of Shares Held(thousand shares)

Shareholding(%)

Mitsubishi Corporation

50,15050.1

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

3,338

3.3

Japan Trustee Services Bank, Ltd. (Trust account)

2,994

3.0

NTT DOCOMO, INC.

2,092

2.1

STATE STREET BANK WEST CLIENT － TREATY 505234

1,567

1.6

THE BANK OF NEW YORK 133972

1,250

1.3

JP MORGAN CHASE BANK 380655

1,204

1.2

National Mutual Insurance Federation of Agricultural Cooperatives

1,001

1.0

Japan Trustee Services Bank, Ltd. (Trust account 5)

952

1.0

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

923

0.9

Shareholder’s Name

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(1) Stock Acquisition Rights Held by Corporate Officers of the Company as of February 28, 2018
12th Stock
13th Stock
14th Stock
16th Stock
Acquisition
Acquisition
Acquisition
Acquisition
RightsRightsRightsRightsNumber of option holders and the number of stock acquisition rights (units)
Directors (excluding
0 person1 person
2 persons
2 persons(0 unit)(5 units)(32 units)(43 units)
Outside Directors)
1 person1 person
2 persons
2 personsOutside Directors(5 units)(5 units)(10 units)(10 units)
Class and number ofCommon stock of Common stock of Common stock of Common stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
500
1,000
4,200
5,300
Amount of property
contributed upon the
1 yen
1 yen
1 yen
1 yen
exercise of the sharesubscription rights (pershare)
April 12, 2013
April 10, 2014
April 10, 2015
May 2, 2016
Exercise period
through March 26, through March 23, through March 24, through April 13,
2033
2034
2035
2036
Main exercise
Note 1
Note 1
Note 1
Note 1
conditions
17th Stock
Acquisition
RightsNumber of option holders and the number ofstock acquisition rights (units)
Directors (excluding
3 personsOutside Directors)(72 units)
3 personsOutside Directors(15 units)
Class and number ofCommon stock ofshares subject to stock
Lawson, Inc.
acquisition rights
8,700
Amount of property
contributed upon the
1 yen
exercise of the sharesubscription rights (pershare)
May 1, 2017
Exercise period
through April 11,
2037
Main exercise
Note 1
conditions

13

(TRANSLATION ONLY)(2) Stock Acquisition Rights Issued during the Fiscal Year to Senior Vice Presidents of the Company as
Compensation for Performing Their Duties
18th Stock
Acquisition
RightsNumber of SVPs andthe number of stock acquisition rights
12 persons
Senior Vice Presidents(51 units)
Class and number ofCommon stock ofshares subject to stock
Lawson, Inc.
acquisition rights
5,100
Amount of property
contributed upon the
1 yen
exercise of the sharesubscription rights (pershare)
July 21, 2017
Exercise period
through July 4,2037
Main exercise
Note 1
conditions
Notes:
1. A stock acquisition rights holder may exercise his or her rights within the exercise period only for aperiod of 10 days from the day after losing his or her position as either director and/or executive
officer of the Company.
2. “Senior Vice Presidents” exclude those who concurrently serve as a member of the board.
The total number of shares subject to stock acquisition rights that remain unexercised as of February 28,
2018, is 42,500 shares, accounting for 0.04% of the total number of shares issued and outstanding.

14

(TRANSLATION ONLY)
3. Members of the Board and Corporate Auditors(1) Positions, Names and Assignments (As of February 28, 2018)
Position, Assignments and Important Concurrent Positions
Name
Note: Important concurrent positions of Outside Directors given later in (6) Outside
Directors and Outside Corporate Auditors
Sadanobu Takemasu President and CEO,CHO and Entertainment Business Division Director
Representative Director,
Chairman of the Board
Katsuyuki Imada
Senior Executive Managing
Corporate Strategy and Planning Division Director
Officer, Member of the Board
Satoshi Nakaniwa
Executive Vice President,
CFO
Member of the Board
Emi OsonoMember of the Board
Yutaka Kyoya
Member of the Board
Executive Vice President, Group CEO, Living
Essentials Group, Mitsubishi Corporation; Member ofthe Board, Mitsubishi Shokuhin Co., Ltd; and Memberof the Board, Olam International Limited
Sakie Akiyama
Member of the Board
Keiko Hayashi
Member of the Board
Kazunori Nishio
Member of the Board
Senior Vice President, Division COO, Retail Div.,
Mitsubishi Corporation
Toshio Takahashi
Audit and Supervisory Board
Member (full-time)
Masakatsu Gonai
Audit and Supervisory Board
Member (full-time)
Tetsuo Ozawa
Audit and Supervisory Board
MemberEiko Tsujiyama
Audit and Supervisory Board
MemberNotes:
1. Three Member of the Board (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, Audit and Supervisory Board Member (full-time), Tetsuo Ozawa, Audit
and Supervisory Board Member and Eiko Tsujiyama, Audit and Supervisory Board Member) are outside
corporate auditors as stipulated in Article 2, Item 16, of the Companies Act.
3. Toshio Takahashi, Audit and Supervisory Board Member (full-time), has considerable expertise infinance and accounting, serving at city banks engaged in treasury, risk management and internal audits,
as well as serving as a full-time auditor at the Japanese subsidiary of a major foreign IT firm.
Tetsuo Ozawa, Audit and Supervisory Board Member, is a lawyer who has practiced law and advised on
legal matters and risk management mainly in relation to the legal affairs of companies and therefore has
considerable expertise in finance and accounting.
Eiko Tsujiyama, Audit and Supervisory Board Member, has long-term experience as a university professorin accounting and therefore has considerable expertise in finance and accounting.
4. The following personnel changes were approved at the board of corporate auditors’ meeting and the 42nd
general meeting of shareholders held on May 30, 2017.
Appointment
Member of the Board
Katsuyuki Imada
Member of the Board
Satoshi Nakaniwa
Audit and Supervisory Board
Masakatsu Gonai
Member (full-time)
Resignation
Representative Director
Genichi Tamatsuka
Member of the Board
Masakatsu Gonai
Audit & Supervisory Board
Atsuhiko Seki
Member（full-time）

15

(TRANSLATION ONLY)[Reference] Members of the Boards and Senior Vice Presidents(Excluding Non-Executive Directors) (As of March 1, 2018)
Name
Sadanobu Takemasu

Shuichi Imagawa
Yuichi Wada
Motonobu Miyake

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

Akihito Watanabe

Executive Vice President

Tatsushi Sato
Kazuya Nobe
Hitoshi Fujii
Kazuhiro Wakui
Yasuhiko Hirokane
Keita Kamoi
Zhang Joshua
Toshihiko Chihiro
Hajime Kawamura
Yasuhiro Iseki

Executive Vice President
Executive Vice President
Executive Vice President
Executive Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President

Naotaka Honda

Senior Vice President

Masayuki Sawada

Senior Vice President

Katsuyuki Imada
Satoshi Nakaniwa
Jun Miyazaki

Position and Major Title
CHO and Entertainment Business Division Director

Corporate Strategy and Planning Division Director
CFO and Shared Services Division Director
Corporate Communications Division Director and ―Human
Resources and Executive Assistant to CHO―Compliance & Risk Management and ―Human Resources
Store Operations Division Director
China Business Division Director and Lawson (China) Holdings,
Inc. General Manager
Lawson HMV Entertainment, Inc., United Cinemas Co., Ltd. and
Lawson Travel, Inc. President and Representative Director
Operations Management and IT Systems Division Director
Marketing Division Director
Merchandising Division Director
Merchandising Division Deputy Director
Executive Assistant to President
Financial Services Division Director
Shanghai Lawson, Inc. General Manager
Corporate Sales and Store Development Division Director
Franchisee Business Support 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
PG LAWSON COMPANY, INC. Director, COO and Asia
Pacific Business Division Deputy Director

16

(TRANSLATION ONLY)(2) Outline of Liability Limitation Agreements
The Company has entered into agreements with its directors (excluding persons who are executive directors,etc.) and corporate auditors to limit their liability with regard to the damages outlined under Article 423,
Paragraph 1 of the Companies Act, whereby their liability shall be, at a maximum, the total sum of theamounts 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
Compensationyen)
Directors(Including Outside Directors)(Outside Directors)
Corporate Auditors(Including Outside Corporate
Auditors)(Outside Corporate Auditors)
Total

Number of
Corresponding
Directors andCorporate Auditors

277

169

107

10

38

30

8

3

71

71

－

5

47
348

47
241

－
107

3
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 audit & supervisory board members (part-time)(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.

17

(TRANSLATION ONLY)[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 each period.
• 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.
[Stock price-linked compensation]
Stock options as stock-based compensation
By incorporating stock options as stock-based compensation linked with stock prices as part ofcompensation paid to directors, the Company has a system in which management shares with stockholders thebenefits from a rise in stock price as well as the risks associated with a price decline. The Company positions
stock options as compensation that is linked to medium to long-term improvement of its corporate value.
Exercise price on stock options as stock-based compensation is 1 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 ofshareholders 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 to reward
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 among corporate
auditors and is within the remuneration amount limit resolved at the general meeting of shareholders.
③ Details of remuneration paid to corporate auditors
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 the general
meeting of shareholders in accordance with laws and regulations.
Amount of remuneration paid to corporate auditors
Resolutions at the general meeting of shareholders as of May 29, 2012: 80 million yen or less per year

18

(TRANSLATION ONLY)(6) Outside Directors and Outside Corporate Auditors① Relationship between Major Positions Concurrently Held and the Company
Position in the
Company

Name

Position Concurrently Held

Details

Relationship between
the Company andCompany Where
Position Concurrently
Held

Professor－

Representative Director
and CEO－

President and CEO
President and CEO
President and CEO
President and CEO
President and CEO

－

－

－

Outside Director(Independent)

Emi Osono

Graduate School ofInternational Corporate
Strategy, Hitotsubashi
University

Outside Director(Independent)

Sakie
Akiyama

Saki Corporation

Outside Director(Independent)

KeikoHayashiCorporate Auditor
Toshio(Independent)
Takahashi

Outside Corporate
Auditor(Independent)

TetsuoOzawa

DoCLASSE the Store, Co., Ltd.
DoCLASSE Co., Ltd.
IMA Holdings
fitfit Co., Ltd.
IMA People Co., Ltd.

－Tokyo Fuji Law Office

Lawyer (Representative
Partner)

Sekisui Chemical Co., Ltd.

Outside corporate auditor

United Urban Investment
Corporation

Corporate auditor

Faculty of Commerce, Waseda
University School

Outside Corporate
Eiko
AuditorTsujiyama(Independent)

ORIX Corporation

NTT DOCOMO, INC.

Shiseido Company, Limited－

NTT DOCOMO, INC., forwhich Eiko Tsujiyama
serves as an outside
corporate auditor, is a
Outside director
large shareholder of theCompany, and has abusiness relationship with
Outside corporate auditor the Company in thetelecommunications fieldunder an extensive
Outside corporate auditor business allianceagreement.
Professor

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.

19

(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 12 of 13 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 13 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 12 of 13 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 the Company’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 13 board of
directors’ meetings and all 17 board of corporate auditors’ meetings
held during the year and appropriately questioned and/or remarked
based on his deep knowledge finance and accounting and using his
experience of assuming responsible posts for many years on the boardof audit of Japan.
Mr. Ozawa attended 12 of 13 board of directors’ meetings and all 17
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 13 board of directors’ meetings and 16 of
17 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.

20

(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

116 million yen
Sum of money and other property benefits to be paid by the Company and its
2)
201 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 and actual
remuneration paid in the past, and the basis for calculating remuneration estimates, etc. as well as 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) 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 the Companies
Act.

21

(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 “2016 Basic Policy for Improvement of Internal
Control Systems,” which was approved at the board of directors’ meeting held on February 20, 2017, theCompany passed a resolution called the “2017 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 there of periodically.
② The board of directors shall maintain and improve the supervising function regarding the execution of duties
by the directors by electing outside Directors on an ongoing basis.
③ The corporate auditors shall independently audit the execution of duties by the directors, including the statusconcerning the improvement of the internal control systems.
④ The Internal Audit Department, which is independent from the business-executing bodies, shall audit thestatus concerning the improvement of the internal control systems and recommend improvements thereof,
as required.
⑤ The board of directors shall maintain and raise the awareness of officers and employees regarding complianceby thoroughly disseminating the Group Code of Conduct and the Lawson Ethical Mission
Statement by 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 and risk
and compliance-related information (including information contained in electromagnetic media). Moreover,
the Company shall put in place a system allowing relevant parties to inspect the above information.
② The Company shall manage and monitor its information systems in a secure manner, in addition 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 aim ofpromoting information security in a consolidated and unified manner in view of both risk management andsystem technology security.
⑥ The Company shall establish and maintain rules regarding the disclosure of important Company information,and upgrade the system for disclosing information that must be disclosed according to therequirements of laws, regulations and stock exchanges, in an appropriate, timely and fair manner.

22

(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 have adverse
effects on the Company’s management in connection with its business purposes in each department,
analyzing the probability of such risk factors materializing and their impact, and evaluating whether
intensive countermeasures should be taken.
② To ensure the effectiveness of risk management, the Company shall establish a specialist committee(“Compliance & Risk Management Committee”) and clarify the authority and responsibilityof 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 and maintain the lifeline function of convenience storesin the event of the occurrence of situations or events inflicting substantial damage on the Company such as alarge-scale natural disaster or an epidemic of a new-type influenza. In order to be prepared for major
earthquakes, the Company shall conduct disaster prevention drills three times a year while working to secure
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 theorganization and making appropriate use of IT.
③ In order to promote the proper communication of information and communications between officers andemployees, the Company shall improve systems so that management guidelines and policies are
disseminated to employees by corporate officers and important field information is properly communicatedby employees to corporate officers in a timely manner.
(5) Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group Consistingof the Company, Its Parent 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, and thearticles of incorporation• While respecting the independence of Associated Companies, in view of the purpose of the Company’s
equity participation in Associated Companies, the Company shall strive to ensure that the Group Code of
Conduct is widely disseminated among Associated Companies.
• 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 to theircompanies.
• The Internal Audit Department shall cooperate in auditing the status of establishment of internal control

23

(TRANSLATION ONLY)
systems at Associated Companies and promote improvements based on the results of audits.
③ The Company shall develop a system in which the parent company is immediately notified in the event any
facts that may cause material damage to the Company and its associated companies have been identified.
(6) Necessary Systems to Ensure Proper Financial Reporting by the Company and Its Group of Companies① 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 by corporate
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 made promptly,
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 like of
Associated Companies so that the corporate auditors can perform their duties appropriately.
③ Directors shall also cooperate in conducting surveys of significant business partners, which the corporate
auditors deem necessary.
④ Directors shall enable the corporate auditors to collaborate with outside experts such as lawyers and certified
public accountants, if any corporate auditor deems it necessary in executing his/her duties.
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.

24

(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 and withintegrity and thoughtfulness by implementing the PDCA (Plan-Do-Check-Action) cycle while integrating
its code of conduct, education and training, and monitoring 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,” anddistributed 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 further improve its ethical awareness andability 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 the position of CRO is
established for each head office and region. CROs attend the Compliance & Risk management meetingsorganized by the ―Compliance & Risk Management, thoroughly disseminate measures determined at themeetings, and monitor the progress of such measures in an effort to prevent the occurrence of risk events.
④ With respect to whistleblowing reports, there are internal consultation and reporting contact points alongwith the Group Independent Whistleblower Hotline as well as a consultation contact point for theCompany’s business counterparties. The Company shall seek to strengthen self-rectification within theorganization by treating instances of whistleblowing appropriately, reviewing the system to prevent a
recurrence, and introducing specific cases at meetings and training programs.
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. In addition, through the operational audits conducted on associated companies by
the Company’s Internal Audit Department and the liaison meetings for the Group’s corporate auditorsorganized by the Company’s corporate auditors, etc., guidance and advice have been offered to improve
compliance and risk 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 toassess 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 Company carries out checks
such as evaluation of the vulnerability of information systems and information security audits by theInternal Audit Department.
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, theCompany has been working to conclude agreements on the procurement of goods and support for stranded
commuters during a large-scale disaster event with the aim of engaging in mutual cooperation withmunicipal governments in disaster stricken areas and fulfilling a lifeline function. On July 1, 2017, wewere named a designated public institution assigned by the Prime Minister pursuant to the Basic Act on
Disaster Control Measures. As a designated public institution, we will carry out disaster prevention
measures in normal times, such as preparing and amending emergency action plans, carrying out disaster

25

(TRANSLATION ONLY)
prevention drills, and stockpiling goods and materials, and emergency response measures in the event of adisaster(3)

System to Ensure the Propriety of Business Operations Conducted by the Corporate GroupThrough a system that has been established for the reporting of any risks that occur at an associated company to
the Company, information on risk cases at the Company or its associated companies is appropriately reported tothe parent company on a timely basis.

(4) 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 and theratios are rounded to the nearest whole number.

26

(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
28, 2017(for reference)

As ofFebruary 28,
2018249,278
68,115

231,860
30,124Current liabilities
Accounts payable-trade356,783
110,834

379,222
118,174

39,982

46,599

Short-term loans payable

31,18036,340575

575

28,012
59,734
9,876
103,156
3,427
9,985
223,798
56,70399,983957

33,06360,7416,880
109,629
3,767
10,051
239,587
55,469113,617
2,616

332

271

13,083
26,95825,779580,581

13,781
29,062
24,767
618,809271,541
58,50649,083
165,162(1,210)270,280
58,506
46,689166,124(1,040)

3,338

5,377

274

2,084

(618)

(575)

4,610

4,595

(927)

(726)

314
10,800285,995
866,577

195
5,593
281,446
900,256

12,33618,13078,363
3,907
28,493(50)
617,299
324,510
183,747
18,581
9,701
110,472
1,742
265
94,80037,56746,041
10,691
499
197,988
22,28344,495

Guarantee deposits

95,594

Deferred tax assets

23,138Other

13,444

Allowance for doubtful accounts

Total assets(968)

866,577

Account item

Current portion of long-termloans payable
Lease obligations
18,913
Accounts payable-other
82,633
Income taxes payable
3,411
Deposits received
33,779Provision for bonuses
(28)
Other
668,395
349,935 Non-current liabilities
Long-term loans payable
197,979
16,355
Lease obligations
9,582
Deferred tax liabilities
Provision for retirement
benefits to executive officers
123,940
and audits and supervisoryboard members
Net defined benefit liability
1,800
Asset retirement obligations
277
Other
100,197
41,602
Total liabilities
47,947
Net assets
10,074 Shareholders’ equity
573
Capital stock
Capital surplus
218,262
27,271Retained earnings
47,425
Treasury shares
Accumulated other
100,686
comprehensive income
Valuation difference on
24,406
available-for-sale securities
19,568
Revaluation reserve for land
Foreign currency translation(1,095)adjustment
Remeasurements of defined
benefit plans
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets
900,256
16,42627

As of February
As of28, 2017
February 28,(for reference)
2018

(TRANSLATION ONLY)

Consolidated Statement of Income(Millions of yen)Account item

From March 1, 2016 to
February 28, 2017
(for reference)

From March 1, 2017 to
February 28, 2018

275,312289,232

Operating revenue
Income from franchised stores

101,806

377,119

103,357

392,589(254,169)

254,169(264,734)

264,734(174,255)

631,288
174,255(181,374)

657,324
181,374

Other operating revenue
Net sales
Net sales
Gross operating revenue
Cost of sales(79,914)Gross profit
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Share of profit of entities accounted for using equity
methodCompensation income
Gain on valuation of derivatives(83,360)
457,033
383,260

475,950
410,12973,77265,820

725

799

602

693

524
409

897

Other
Non-operating expenses
Interest expenses

1,919

2,099

Loss on cancellation of leases
Loss on disaster

1,274
772

1,304

873

Other

4,081

－
1,444

1,820

4,839

－
1,110

73,014

Ordinary income
Extraordinary income－

Gain on sales of shares of subsidiaries and associates

－

3,835

4,514
65,141

302

302

Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

294
3,554

368
3,115

Impairment loss

9,535
1,174

17,533Other

14,558836

58,456

Profit before income taxes
Income taxes-current

18,9282,453

Income taxes-deferred
Profit28

43,59014,19021,381
37,074674
36,400

Profit attributable to non-controlling interests
Profit attributable to owners of parent

21,853

2,538

16,72926,861
32
26,828

(TRANSLATION ONLY)

Consolidated Statement of Changes in Equity(From March 1, 2017 to February 28, 2018)(Millions of yen)
Shareholders’ equity

Balance at beginning of current
periodAccumulated other comprehensive income

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’equity58,50649,083

165,162(1,210)271,541

Valuationdifference on
available-forsale securities

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares

Noncontrollinginterests

Total net
assets

274

(618)

4,610

(927)

3,338

314

10,800285,995

Changes of items during period
Change in ownership interestof parent due to transactions
with non-controllingshareholders(2,454)(2,454)(2,454)

Dividends of surplus(25,258)(25,258)(25,258)

Change of scope of
consolidation

(564)

(564)

(564)

26,82826,82826,828

(3)

(3)

(3)

0

0

0

(42)

(42)

233

233

Profit attributable to ownersof parent
Purchase of treasury shares
Disposal of treasury shares

0

Reversal of revaluation
reserve for land

(42)

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

60

172

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

1,809

42

(15)

201

2,038

(119)

(5,207)(3,288)－(2,393)962

169(1,261)

1,809

42

(15)

201

2,038

(119)

(5,207)(4,549)58,506

46,689166,124(1,040)270,280

2,084

(575)

4,595

(726)

5,377

195

5,593

281,446

29

(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: 21
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.
Lawson Bank Preparatory Company, 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.
Of the above subsidiaries, Lawson Bank Preparatory Company, Inc. was included in the scope of
consolidated subsidiaries from the fiscal year under review due to its increased significance as a subsidiary.
(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 Urban Works, Inc.
(Foreign)
Lawson USA Hawaii, Inc.
(Reasons for exclusion from the scope of consolidation)
The above nonconsolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, profit or loss (corresponding to equity interest) andretained 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.

30

(TRANSLATION ONLY)(2) Non-consolidated subsidiaries and entities excluded from the scope of the equity-method application
Nonconsolidated 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 Urban Works, Inc. and Lawson USA Hawaii, Inc.) and entities
excluded from the scope of the equity-method application (Double Culture Partners Co., Ltd., Loyalty
Marketing, Inc., MC Retail Energy Co., Ltd., Lawson Staff, Inc., AUGUSARENA CORPORATION.,
Lawson System Labo LLP, LTF Co., Ltd., StageAround TOKYO Production Committee, Jiangsu Jiazhijia
Food Co., Ltd., Jiangyin Hualian Guzhitian Food Co., Ltd., PG Lawson Company, Inc., Lawson Farm
Chiba and others) were excluded from the scope of the equity-method application because their profit orloss (corresponding to equity 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 forconsolidation.
The balance sheet date of Lawson Bank Preparatory Company, Inc. is March 31. In formulating theconsolidated financial statements, the Company used this subsidiary’s provisional settlement of accounts asof the consolidated balance sheet date.
The fiscal year end date for the other consolidated subsidiaries corresponds with the consolidated balance
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): Mainlycomputed 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 is theestimated useful life. Furthermore, for right of trademark, amortization is mainly computed using thestraight-line method over 20 years.

31

(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 Period attributable method of estimated amount of retirement benefits
In calculating retirement benefit obligation, in order to attribute estimated amount of retirement
benefits in the period up to the end of the current fiscal year, it is based on the benefit formula basis.
② Cost treatment method of actuarial difference and prior service cost
Prior service cost is amortized starting the fiscal year incurred mainly on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theirrecognition.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis overa certain period (10 years) within an average remaining service period of employees at the time of
their recognition.
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
are translated into Japanese yen at the exchange rates at the consolidated balance sheet date. The
foreign exchange gains and losses from translation are recognized in the consolidated statement ofincome. The consolidated balance sheet accounts as well as revenue and expense accounts offoreign subsidiaries 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 historical rate. Differences arising from such translation are shown as “foreign currencytranslation 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.
(Additional Information)
The Company and its domestic consolidated subsidiaries are applying “Implementation Guidance on
Recoverability of Deferred Tax Assets” (Accounting Standards Board of Japan (ASBJ)) Statement No. 26,
revised March 28, 2016 from the fiscal year ended February 28, 2018.

32

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

317,966 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 177 million yen.
3. Pledged assets and secured liabilities
Assets pledged as collateral and liabilities collateralized are as follows.
Millions of yen
Cash and deposits

4,212

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

5,469

Total

6,044

33

(TRANSLATION ONLY)(Notes to Consolidated Statement of Income)Impairment loss
The Company and its consolidated subsidiaries (collectively, the “Group”) identify each store as the smallest
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

Other

Total

Impairment loss
(millions of yen)

Location

AssetsTokyo

Buildings; Tools, furniture and fixtures; and others

1,306

Osaka

"

1,390

Others

"

8,720

―

Land

70

―

Software

6,033―

Goodwill

12――

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

5,967
811
183
4,485
6,033
12
40

17,533

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 4.4%.

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

Common stock－

100,300

Treasury shares
Common stock
285
0
40
244
Notes:
1. The increase in treasury shares of 0 thousand shares resulted from purchases of stock of less than one
share unit.
2. The decrease in treasury shares of 40 thousand shares resulted from decreases of 40 thousand shares dueto the exercise of stock option right and 0 thousand shares due to requests for additional purchases ofstock of less than one share unit.
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 30, 2017)

Commonstock

12,501125.00February 28, 2017

May 31, 2017

Directors’ meeting(October 11, 2017)

Commonstock

12,757127.50August 31, 2017

November 11, 2017

(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
payment
per share
Date of resolution
sharesdividenddate
date(millions of yen)
(yen)
General meeting ofMay
Common Retained
Februaryshareholders
12,757127.50stock
earnings
28, 2018
23, 2018(May 22, 2018)
3. Number of stock that can be exercised by outstanding subscription rights to shares (excluding those notyet in the exercisable period)
42,500 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 - due from franchised stores, lease receivables andaccounts receivable-other, are exposed to credit risk from business counterparties.
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.
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.
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 have payment due
dates within one month, while most deposits received held as a result of ticket sales transactions havepayment due dates within 6 months.
Long-term loans payable are mainly for the purpose of funding necessary for M&A, and are due within 2
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 notavailable, other rational valuation techniques are used instead. Since multiple factors are considered in theestimation of fair value, the results of the estimation might differ if other valuation techniques were used.

36

(TRANSLATION ONLY)
2. Matters relating to the fair values of financial instruments
The carrying amount, fair values, and difference as of February 28, 2018, 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)

(1) Accounts receivable-due from franchised stores(2) Lease receivables(3) Accounts receivable-other
Allowance for doubtful accounts (*1)(4) Investment securities
Available-for-sale securities

Carrying
amount46,59916,426
82,633(28)
82,605
11,695

Fair value

Difference

46,59915,550－(876)

82,605－

11,695－47,425(5) Long-term loans receivable
Allowance for doubtful accounts (*1)(58)
47,351(15)

Total assets(1) Accounts payable-trade47,366100,686(475)
100,210
304,903
118,174

99,659303,460
118,174(550)(1,442)－(2) Accounts payable-other

60,74160,741－(3) Deposits received(4) Long-term loans payable (*2)

109,62956,044

109,62956,044－－(5) Lease obligations (*2)

146,681

141,633(5,047)(6) Guarantee deposits
Allowance for doubtful accounts (*1)

491,271486,223(5,047)
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.
(Note 1) Method of calculating the fair values of financial instruments
Assets(1) Accounts receivable-due from franchised stores and (3) 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.
(2) Lease receivables
The fair values of lease receivables are calculated by discounting future cash flows using the yield rate ofgovernment bonds for the remaining period.
(4) Investment securities
The fair values of investment securities are stated at the quoted market price on the stock exchange forthe equity instruments.
(5) 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 for similarloans.
(6) 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.

37

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

Carrying amount (millions of yen)329

Unlisted equity securities

13,895Investments in subsidiaries and affiliated companies

1,350
Other
Because financial instruments listed above do not have market prices and their fair values cannot be
reliably determined, they are not included in “(4) Investment securities.”(Notes to Per-Share Data)
1. Net assets per share
2. Profit per share

2,755.06 yen
268.16 yen(Notes to Significant Subsequent Events)
Borrowing of funds
Lawson Bank Preparatory Company, Inc. (“LBP”), a consolidated subsidiary of Lawson, Inc., resolved toconclude a syndicated loan agreement as described below at the Board of Directors’ Meeting held on March 26,
2018, and entered into the agreement on March 30, 2018. The agreement is subject to the acquirement of a banking
license as a prerequisite for the execution of the loan.
1. Reason for borrowing of funds
The Lawson Group has been providing a limited selection of financial services by operating an ATM business.
In order to enhance the convenience of our financial services, we have decided to apply for a preliminary
examination to acquire a banking business license. Accordingly, based on the assumption that the license will beobtained, LBP will finance the working capital for its banking business through the syndicated loan.
2. Outline of the syndicated loan agreement(1)

Date of agreement

March 30, 2018(2)

Arranger

The Bank of Tokyo-Mitsubishi UFJ, Ltd. (currently, MUFG Bank, Ltd.)(3)

Co-Arrangers

Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation(4)

BorrowerLawson Bank Preparatory Company, Inc.

(5)

Executable period

From September 28, 2018 to October 31, 2018

(6)

Repayment method

Lump-sum repayment(7)

Amounts

50,000 million yen

80,000 million yen(8)Loan periods

Three years

Five years(9)Interest rate

Floating rate

Floating rate

(10)

Guarantee

Lawson, Inc. jointly guarantees the loan.

(11)

Financial covenants

Financial covenants of Lawson Bank, Inc. (note) and Lawson, Inc., theguarantor of the loani) Covenants related to the recording of losses in consecutive periods.
ii) Covenants related to the amount of net assets.

iii) Covenants related to collateral provided.
Note: Lawson Bank Preparatory Company, Inc. will change its trade name to Lawson Bank, Inc. prior to the
execution of the loan.

38

(TRANSLATION ONLY)(Business Combinations, etc.)
Business combination due to acquisition(1) Outline of business combination① Name of the acquired company and business description
Name of company: Three F Co., Ltd. (hereinafter, “Three F”)
Business description: Convenience store business② Main reason for business combination
Under the terms of the business integration contract signed by the Company and Three F on April 13, 2016,
the two companies established a new joint-venture LTF Co., Ltd., which started converting 89 THREE F storesoperated in Chiba and Saitama Prefectures into “LAWSON THREE F” double-brand stores in September 2016.
As the collaboration proved to be effective, the two companies decided to also transform THREE F stores inTokyo and Kanagawa Prefecture, and part of Chiba Prefecture into “LAWSON THREE F” double-brand stores.
The business combination is a pre-arranged company split designed to transfer a portion of the rights andobligations relating to Three F’s convenience store operations.
③ Date of business combination
June 1, 2017
④ Legal form of business combination
Absorption-type company split whereby Three F is the split company and Lawson is the succeedingcompany⑤ Main grounds for determining the Company to be the acquiring company
The Company acquired Three F’s business for a cash consideration.
(2) Acquisition cost for acquiring the business and breakdown by type of consideration(Millions of yen)Type of consideration

Cash and deposits

10,996

Acquisition cost

10,996(3) Details and amount of major acquisition-related expenses
Advisory compensation and fees, etc.
78 million yen(4) Amount, cause, and amortization method and period of goodwill generated① Amount of goodwill generated
5,688 million yen② Cause of generation of goodwill
Mainly excess earnings power anticipated through business development③ Method and period of amortization
Straight-line method over 9 years(5) Amounts and major breakdown of assets acquired and liabilities assumed on the date of business combination(Millions of yen)
Non-current assets

5,308

Total assets

5,308

39

(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
28, 2017(for reference)

As ofFebruary28, 2018

182,00951,283

164,391
8,483

38,301

44,22920,27624,237

1,426
13,741
46,705
2,718
7,563
(6)
585,976
292,400
144,619
26,147
14,7601,460
15,83450,5862,234
17,324－
634,212
312,924
156,067
28,634
11,873

9,648

9,529

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

105,120
1,699
44,07429,494
14,092487
277,212
13,32463,37571,72043,56446,512

16,823

13,236

10,31387,783

Other retained earnings
General reserve
Retained earnings brought
23,094
forwardTreasury shares
1,571
Valuation and translation(1,092)
adjustments
Valuation difference on
available-for-sale securities
Revaluation reserve for land
Subscription rights to shares
Total net assets
798,603
Total liabilities and net assets

Deferred tax assets

21,599

Other

2,111

Allowance for doubtful accounts(962)

Total assets

767,986

As of February
28, 2017(for reference)

As ofFebruary28, 2018

Current liabilities
Accounts payable-trade

326,070
100,160

348,392
106,137

Short-term loans payable

30,00035,00047,28051,62025,385
21,4258,349
2,157
84,3802,586
4,345
204,506
50,00093,337
10,09829,48821,756
3,817
2,191
91,891
2,704
3,784
216,72250,000104,638
10,913242

176

23,654
27,173
530,576

25,68925,304565,114

237,439
58,506
47,696
47,696

231,785
58,50647,757
47,696－60

132,447

126,563727

727

50,00050,00081,71975,835(1,210)(1,040)

(344)

1,508

274

2,083

(618)
314
237,409
767,986(575)
195
233,489
798,603

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

16,37992,46640

(TRANSLATION ONLY)

Non-consolidated Statement of Income(Millions of yen)
From March 1, 2016 to
February 28, 2017
(for reference)

Account item

From March 1, 2017 to
February 28, 2018

Operating revenue
273,945

Income from franchised stores

282,075

Other operating revenue
Net sales

39,876

313,82139,766

321,842

Net sales
Gross operating revenue(42,365)

42,365356,186(51,048)

51,048372,891(30,470)

30,470(37,098)

37,098

Cost of sales(11,894)

Gross profit
Operating gross profit(13,949)
325,716

335,792

Selling, general and administrative expenses

268,296284,771

Operating income
Non-operating income

57,41951,021

Interest income

780

753

Dividend income
Compensation income

516
524
409

582
892

Gain on valuation of derivatives

3,170

－
1,037

Other
Non-operating expenses

939

Interest expenses

1,569

1,629

Loss on cancellation of leases
Foreign exchange losses

1,243
481

1,235

Loss on valuation of derivatives
Loss on disaster

－
422

Other

412

－
409
4,130

－
505

56,459Ordinary income
Extraordinary income－

Gain on sales of shares of subsidiaries and associates
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

－

302
366
2,936
16,854

8,603－
21,7101,410

34,749

Income before income taxes
Income taxes – current

14,749912

Income taxes – deferred

41

302

21,56829,243

9,105
15,661
19,088

Profit3,779
50,508

294
3,388
9,034

387

3,266

720

9,825
19,417

(TRANSLATION ONLY)

Non-consolidated Statement of Changes in Equity(From March 1, 2017 to February 28, 2018)(Millions of yen)

Shareholders’Capital surplus

Retained earnings
Other retained earnings
Retained
Generalearnings
reservebrought
forwardTotal
retainedearnings

TreasurysharesTotalshareholders’equity81,719132,447(1,210)237,439

Dividends of surplus(25,258)(25,258)(25,258)

Profit19,417

19,417

19,417

Balance at the beginning of current
periodCapital
stock

Legal
retainedearnings

Other
capitalsurplusTotal
capitalsurplusLegalretainedearnings

58,506

47,696－

47,696727

50,000Changes of items during period

Purchase of treasury shares
Disposal of treasury shares

00Reversal of revaluation reserve for
land

(42)

Exercise of subscription rights toshares (Delivery of treasury shares)

60

60

(3)

(3)

0

0

(42)

(42)
172

233

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

－

－

60

60

－

－

(5,883)(5,883)169(5,653)58,506

47,69660

47,757727

50,00075,835

126,563(1,040)231,785

42

(TRANSLATION ONLY)(Millions of yen)

Valuation and translation adjustments
Valuation difference
Total valuation and
Revaluation reserveon availabletranslation adjustments
for landfor-sale securities
Balance at the beginning of current
periodChanges of items during period

274

(618)

(344)

Subscription rights
to shares
314

Total net assets

237,409

Dividends of surplus(25,258)

Profit19,417Purchase of treasury shares(3)

Disposal of treasury shares

0

Reversal of revaluation reserve for
land

(42)

Exercise of subscription rights toshares (Delivery of treasury shares)

233

Net changes of items other thanshareholders' equity

1,809

42

1,852

(119)

1,732

Total changes of items during period

1,809

42

1,852

(119)

(3,920)

Balance at end of current period

2,083

(575)

1,508

195

233,489

43

(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 is written
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 overa certain period (10 years) within an average remaining service period of employees at the time ofrecognition.
Treatment of unrecognized actuarial differences and unrecognized prior services cost in the
non-consolidated balance sheet differs from the consolidated balance sheet.
44

(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 thecurrent 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.

(Additional Information)
The Company and its domestic consolidated subsidiaries are applying “Implementation Guidance on Recoverabilityof Deferred Tax Assets” (Accounting Standards Board of Japan (ASBJ)) Statement No. 26, revised March 28, 2016
from the fiscal year ended February 28, 2018.
(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

3.

277,902 million yen

38,676
192
7,171
326

million yen"""

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-consolidated balance
sheet date was 177 million yen.

45

(TRANSLATION ONLY)
4.

Guarantee obligations
We guarantee the accounts payable-trade and deposit liabilities of the following subsidiaries
Shanghai Lawson, Inc.
848 million yen"
Lawson HMV Entertainment, Inc.
449"
SCI, Inc.
396(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

38,406527
35,651
2,035

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

244,849 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

510 million yen
834
"
5,434
"
8,635
"
305
"
"
5,054
"
337
"
5,985
"
4,695
31,793 million yen(6,464)"25,328 million yen
25,328 million yen

Deferred tax assets-net

46

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

RelationshipTransaction
EndingEquityDescription
Business line
amountbalance
Directors’
ownership BusinessofCompany nameAccount itemor profession(millions of(millionspercentage relationship posts held transactions
yen)of yen)concurrently

SCI, Inc.

Domestic
Convenience
Store Business

Lawson HMV EntertainmentRelated
Entertainment,
Business
Inc.

Subsidiary

Lawson (China)
Holdings, Inc.

Overseas
Business

Directholding100.0%

Directholding100.0%

Directholding100.0%Yes

SCM

Sale oftickets andsoftware formusic andvideo

Control ofbusiness in
China

Lawson Bank
Preparatory
Company, Inc.

Financial
ServicesRelated
Business

Prepare for
Directholding establishmentof a bank95.0%

Lawson ATM
Networks, Inc.

Financial
ServicesRelated
Business

Placement ofATMs in the
LAWSON
storesDirectholding
95.0%

Yes

Yes

Yes

No

Repaymentof funds
Borrowingof funds
Borrowinginterest
Repaymentof funds
Borrowingof funds
Borrowinginterest
Loaning offunds
Collectionof funds
Loaning
interest
Loaning offunds
Collectionof funds
Loaning
interest
Repaymentof funds
Borrowingof funds
Borrowinginterest

36,30038,3000

Short-termloans payable
Accruedinterest

9,200
020,800

Short-termloans payable
21,000Accruedinterest
1

1,100
－
120

16,2000Long-term
loans
receivable
Accruedinterest

12,599311

9,100

Short-termloans payable－
Accruedinterest
6

9,100
1

300

Short-termloans payable
2,600
Accruedinterest
2

23,400－Transaction conditions and the policies for determining those conditions:
1. The Company manages the funds of some subsidiaries centrally and there are lending and borrowing
transactions between the Company and its subsidiaries.
2. The interest rates for loans and borrowings are determined rationally taking into account market interest rates.
Subsidiaries of an affiliated companies under common control
Attribute

Subsidiaryof the parent
company

RelationshipTransaction
EquityDescription
Company Business line
amountAccount
Directors’
ownership Businessof
nameor profession(millions of
item
percentage relationship posts heldtransactions
yen)concurrently
Purchases
for thecompanyMitsubishi
Sales ofoperated
Accounts
17,849－VendorYes
Shokuhinprocessed
storespayable(689,952)
Co., Ltd.
foods(purchases
trade
for thefranchised
stores)Endingbalance(millionsof yen)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.

47

57,252

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

2,331.65 yen
194.09 yen(Notes to Significant Subsequent Events)
Guarantor on borrowings of funds
Lawson Bank Preparatory Company, Inc., a consolidated subsidiary of Lawson, Inc., resolved to conclude a
syndicated loan agreement as described the Board of Directors’ Meeting held on March 26, 2018, and entered into
the agreement on March 30, 2018. The Company jointly guaranteed said agreement based on the resolution of theBoard of Directors on March 26, 2018.
Please refer to (Significant Subsequent Events) of the Notes to Consolidated Financial Statements for details of
the syndicated loan agreement.
The figures included in the consolidated and non-consolidated balance sheets, statements of income, statementsof changes in equity and related notes are rounded down to the nearest unit and the ratios are rounded to the nearest
whole number.

48

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 4, 2018
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:Kazuaki Furuuchi

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, 2018 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, 2017 to February 28, 2018, 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. Those standards
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
the assessment 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 the entity's
preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness 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.
49

(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, 2018, andthe 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.

50

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 4, 2018
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:Kazuaki Furuuchi
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, 2018 of Lawson, Inc. (the "Company"),
and the related statements of income and changes in equity for the 43rd fiscal year from March 1, 2017 to
February 28, 2018, and the related notes and the accompanying supplemental schedules.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements and theaccompanying supplemental schedules in accordance with accounting principles generally accepted in Japan,
and for such internal control as management determines is necessary to enable the preparation of financial
statements and the accompanying supplemental schedules that are free from material misstatement, whether
due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements and the accompanying
supplemental schedules based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and the accompanying supplemental schedules are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements and the accompanying supplemental schedules. The procedures selected depend on
the auditor'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.
51

(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, 2018, and theresults of its operations for the year then ended in accordance with accounting principles generally accepted inJapan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese
language and "the accompanying supplemental schedules" referred to in this report are not included in theattached financial documents.

52

(TRANSLATION ONLY)(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Audit & Supervisory Board>
AUDIT REPORTWith respect to the directors’ performance of their duties during the 43rd business term from March 1,
2017 to February 28, 2018, we have prepared this Audit Report, through due deliberations based on theaudit reports prepared by each Audit & Supervisory Board Member, and hereby report as follows:
1. Auditing Methods Employed by the Audit & Supervisory Board Members and Audit & Supervisory
Board and Contents of Such Methods(1) We have established audit policies and audit plans for the current term, and received the reports
from each Audit & Supervisory Board Member regarding their execution of audits and results
thereof, as well as reports from the Directors, other relevant personnel, and the Accounting Auditor
regarding the execution of their duties, and asked for explanations as necessary.
(2) Each Audit & Supervisory Board Member, pursuant to the auditing standards of Audit &Supervisory Board Members established by the Audit & Supervisory Board , 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 theaudit 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, Audit & Supervisory Board
Members and other relevant 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 Audit & Supervisory Board , we have monitored and verified the resolution of the Boardof 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 100 of theOrdinance 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 andproperly conducted its audit, and we received reports from Accounting Auditor regarding the53

(TRANSLATION ONLY)
status of the execution of its duties and, whenever necessary, asked for explanations. In

addition, we have received the notice from the Accounting Auditor that “System for ensuring
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 2018
The Audit & Supervisory Board of Lawson, Inc.
Outside Audit & Supervisory Board Member Toshio Takahashi(full-time)
Audit & Supervisory Board Member
Masakatsu Gonai(full-time)
Outside Audit & Supervisory Board Member
Tetsuo Ozawa
Outside Audit & Supervisory Board Member
Eiko Tsujiyama

54

(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 ¥125 per share in theprevious term to ¥127.50 per share. Accordingly, full-year dividends including interim dividends of ¥127.50 per sharewill be ¥255 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:¥127.50 per share of the Company’s common stock to a total of ¥12,757,032,816(2) Effective date of the dividends from surplus:
Wednesday, May 23, 2018

55

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

Consolidated dividend payment ratio (%)

Interim dividend per share (Yen)Dividend per share (Yen)

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

38th Term

39th Term

40th Term

41st Term

42nd Term

43rd Term(Year ended
Feb. 2013)(Year ended
Feb. 2014)(Year ended
Feb. 2015)(Year ended
Feb. 2016)(Year ended
Feb. 2017)(Year ended
Feb. 2018)

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

38th Term

39th Term

40th Term

41st Term

42nd Term

43rd Term(Current Period)

¥100

¥110

¥120

¥122.50¥125¥127.50

¥100

¥110

¥120

¥122.50¥125(Plan)¥127.50

¥200

¥220

¥240

¥245

¥250

(Plan) ¥255

¥332.20¥380.04¥327.08¥313.81¥363.96¥268.16

60.2%

57.9%

73.4%

78.1%

68.7%

(Plan) 95.1%

15.2%

16.1%

13.0%

12.0%

13.5%

9.7%

Note：
Consolidated dividend payment ratio is calculated based on annual dividend per share divided by consolidated net
income per share.

56

(TRANSLATION ONLY)
Proposal No. 2: Partial Amendment to the Articles of Incorporation
1. Reasons for proposal
The Company proposes that the Articles of Incorporation be partially amended as follows.
Based on the Group’s corporate philosophy of “Creating Happiness and Harmony in Our Communities,” while
focusing on our businesses as the headquarters of the convenience store franchise, Lawson is continuously evolving as
an “essential part of our communities” through providing multiple functions within society beyond the functions ofconventional convenience stores as retail outlet, including supporting the elderly, contributing to local communities,
and supplying goods in times of disaster.
In the Financial Services-related Business, Lawson has been providing a limited selection of financial services tothe society by operating ATM business under Lawson ATM Networks, Inc. In order to enhance the convenience of our
financial services and to strengthen the functions to support the daily lives of our customers by leveraging our previous
experiences and the foundation of our business, we have decided to establish Lawson Bank, Inc. To clarify theGroup’s business purposes, we propose that “Banking business” be added to Article 2 (Purpose of Incorporation), item
15 of the current Articles of Incorporation.
2. Particulars of amendment
Particulars of proposed amendment are described below.
(Suggested amendments are underlined in the text.)
Proposed Amendment

Current Provision of the Articles of Incorporation
Article 2: Purpose of Incorporation
The Company shall be organized for the purpose of operating the following
businesses:

Article 2: Purpose of Incorporation
The Company shall be organized for the purpose of operating the following
businesses:

1.
～ (Omitted)
14.

1.
～ (No change)
14.

15. Bank agency business and financial instruments intermediaryservices

15. Banking business, bank agency business and financial instrumentsintermediary services

16.
～ (Omitted)
23.

16～ (No change)
23.

57

(TRANSLATION ONLY)
Proposal No. 3: Election of Eight (8) Directors
The term of office of all eight (8) Directors expires at the conclusion of this 43rd Ordinary General Meeting of
Shareholders. Accordingly, we propose that you elect eight (8) Directors, including one (1) newly appointed Director.
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/Audit & Supervisory Board members.”
The candidates for directors are as stated in the following table. Please refer to pages 36 to 43 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

Keiko Hayashi

Member of the Board

7

Kazunori Nishio

Member of the Board

8

Miki Iwamura–

President,
Representative Director
Member of the Board,
Senior Executive
Managing Officer
Member of the Board,
Executive Vice
President

Notes:
1. Ms. Keiko Hayashi’s legal name is Keiko Hama.
2. Ms. Miki Iwamura’s legal name is Miki Oku.
3. Positions at the Company, etc. are as of April 11, 2018.

58

Board ofDirectors’
meeting
attendance
rate

Reappointment

100%

Reappointment

100%

Reappointment

100%

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

92.3%
84.6%
92.3%
84.6%
–

(TRANSLATION ONLY)
No.
1

Brief Personal History, Position, Assignment and Important
Concurrent Positions
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 ― 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; andEntertainment and Consumer Service Business, andDivision 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.

September 2017

President and CEO, Representative Director, Chairman of theBoard, CHO, and Division Director of Entertainment
Business Division, Lawson, Inc. (current position)

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

1,700■Attendance at Board of
Directors’ meetings

13 out of 13 (100%)■Years in office

4 years (as of theconclusion of themeeting ofshareholders)

Reasons for nomination as Director
Mr. Sadanobu Takemasu has been nominated as a candidate for Director of theCompany as he has led the entire Group centered around the domestic convenience
store business as the overall supervisor of the 1,000-Day Action Plan, acompany-wide project, as well as contributed to the improvement of corporate valueas President and CEO, Representative Director, Chairman of the Board of Lawson,
Inc. We would like to continue to benefit from his management and supervision of theCompany 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.
2

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Katsuyuki Imada(January 22, 1963)

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

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

May 2008

Unit Manager, Retail Division, Living Essentials Group,
Mitsubishi Corporation

October 2012

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

Reappointment

September 2013
■Number of the Company’s
shares held:
1,700

Executive Managing Officer, acting CCO, CFO, andDivision Director of Corporate Strategy and Planning
Division, Lawson, Inc.

September 2016

■Attendance at Board of
Directors’ meetings

Executive Managing Officer, Division Director of Corporate
Strategy and Planning Division, Division Director of Next
Generation CVS Division, Lawson, Inc.

March 2017

Senior Executive Managing Officer and Division Director of
Corporate Strategy and Planning Division, Lawson, Inc.

May 2017

Member of the Board, Senior Executive Managing Officer
and Division Director of Corporate Strategy and Planning
Division, Lawson, Inc. (current position)

April 2018

Senior Vice President, Mitsubishi Corporation (current
position)

11 out of 11 (100%)■Years in office

1 year (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Katsuyuki Imada has been nominated as a candidate for Director, as he has
contributed to the promotion of health and productivity management and workstylereforms as Member of the Board and Senior Executive Managing Officer andDivision Director of Corporate Strategy and Planning Division of Lawson, Inc. incharge of overall corporate strategy including corporate governance and thedevelopment of next generation CVS. We would like to continue 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.

60

(TRANSLATION ONLY)No.
3

Brief Personal History, Position, Assignment and Important
Concurrent Positions
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■Number of the Company’s
shares held:
0

February 2017

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

March 2017

Executive Vice President and CFO, Lawson, Inc.

■Attendance at Board of
Directors’ meetings

May 2017

Member of the Board, Executive Vice President, and CFO,
Lawson, Inc.

11 out of 11 (100%)

March 2018

Member of the Board, Executive Vice President, CFO, andDivision Director of Shared Services Division, Lawson, Inc.
(current position)

Satoshi Nakaniwa(May 20, 1969)
Reappointment■Years in office

1 year (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Satoshi Nakaniwa has been nominated as a candidate for Director, as he has
contributed to the improvement of business efficiency and cost reduction as Division
Director of the Shared Services Division in charge of purchasing management of theLawson Group since March. He is also in charge of overall finance and accounting aswell as business risk management as Member of the Board, Executive Vice
President, and CFO of Lawson, Inc. We would like to continue 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.

61

(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)

May 2012

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

500■Attendance at Board of
Directors’ meetings

12 out of 13 (92.3%)■Years in office

6 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 outside Audit & Supervisory Board members (part-time). She has also
been registered as an Independent Director/Audit & Supervisory Board member 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.

62

(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

■Number of the Company’s
shares held:

Executive Vice President, Group CEO, Living Essentials
Group, Mitsubishi Corporation (Current position)

June 2016

Member of the Board, Mitsubishi Shokuhin Co., Ltd.
(Current position)
Note: Scheduled to resign in June 2018

Yutaka Kyoya(January 7, 1962)

0■Attendance at Board of
Directors’ meetings

11 out of 13 (84.6%)■Years in office

5 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 andoutside Audit & Supervisory Board members (part-time).

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

63

(TRANSLATION ONLY)No.
6

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:

300■Attendance at Board of
Directors’ meetings

12 out of 13 (92.3%)■Years in office

2 years (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 andoutside Audit & Supervisory Board members (part-time). She has also beenregistered as an Independent Director/Auditor with the Tokyo Stock Exchange, Inc.,
pursuant to the rules specified by the exchange.

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

64

(TRANSLATION ONLY)
No.
7

Brief 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 13 (84.6%)■Years in office

2 years (as of theconclusion of the meetingof shareholders)

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.

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

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(TRANSLATION ONLY)No.
8Brief Personal History, Position, Assignment and Important
Concurrent Positions
April 1988

Joined Dentsu Inc.

October 1995

Joined Booz Allen Hamilton Inc.

April 2000

Board Member, Director of Internet Business Division,
Digipri Inc.

October 2001

Associate Professor (Management Strategy, Marketing
Strategy), Nihon University

April 2002

General Manager, Media & Marketing, Richemont Japan
K.K

July 2003

Brand CEO of Mimiso NY, Richemont Japan K.K.

January 2007

Head of Marketing, Google Japan Inc. (currently Google
Japan G.K.)

July 2007

Chief Marketing Officer, Google Japan Inc. (currently
Google Japan G.K.)

November 2013

Brand Director, Google APAC

May 2015

Managing Director, APAC Brand & Marketing, CMO
Japan, Google G.K. (current position)

Miki Iwamura(October 24, 1965)
New appointment, outside,
independent■Number of the Company’s
shares held:
0

Reasons for nomination as Outside Director
As Managing Director, APAC Brand & Marketing, CMO Japan, Google G.K., Ms.
Miki Iwamura has deep insight into management, marketing, and brandreinforcement using digital big data through business execution at Google Japan G.K.
In addition, she has been proactively making suggestions and disseminating
information on workstyle reforms and the promotion of women’s advancement in theworkplace. She has been nominated as a candidate for Outside Director, as we would
like to receive her proactive opinions and suggestions regarding the Company’s
management at the Board of Directors’ meetings, and benefit from her supervision of
the Company’s management by leveraging her experience.
The Company has notified the Tokyo Stock Exchange, Inc., that she will be
registered as an Independent Director or Independent Audit & Supervisory Board
Member 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. Miki Iwamura’s legal name is Miki Oku.

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. 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 that they have performed
duties which resulted in a cause of such liability in good faith without committing acts of gross negligence. The
Company plans to conclude the same contract with Ms. Miki Iwamura.
2. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 11, 2018.

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(TRANSLATION ONLY)[Reference] Policy and procedures of the Company’s Board of Directors for nominating candidates
for Directors and Audit & Supervisory Board members
Lawson, Inc. has established the Director/Audit & Supervisory Board Member Election Standard as the basis fornominating candidates for directors and Audit & Supervisory Board members. Those with different expertise andexperience are nominated as candidates for directors to ensure diversity of the Board of Directors as a whole and tocarry out appropriate decision making and supervision. Furthermore, in addition to the independence standard specified
by the Tokyo Stock Exchange, Inc., we have established our own criteria concerning independence in order to appoint
two or more independent directors and independent Audit & Supervisory Board members who are unlikely to have aconflict of interest with general shareholders in an effort to ensure transparency and fairness of management.
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 Audit & Supervisory Board members(part-time), with five being independent directors/Audit & Supervisory Board members. The committee is designed torecommend candidates for directors, candidates for representative directors, and posts to the Board of Directors with ahigh level of independence.
As for candidates for Audit & Supervisory Board members, those with knowledge and expertise in finance,accounting, risk management and law, which are necessary for auditing operations, are nominated as candidates for
Audit & Supervisory Board members upon obtaining the consent of the Audit & Supervisory Board.

1.

Director/Audit & Supervisory Board Member Election Standard(1) A person who can deeply relate to the Lawson Group’s corporate philosophy of “Creating Happiness and Harmony
in Our Communities”(2) A person who has the capability to contribute to the sustainable growth and corporate value improvement of theLawson 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, impeccable ethics, and a law-abiding spirit(5) A person who has objective decision-making abilities and is gifted with both foresight and insight(6) A person who has a wealth of experience and knowledge on corporate management and an area of expertise(7) A person who is able to secure enough time to do the job(8) A person who does not fall under the criteria for disqualification provided by the Companies Act(9) For independent directors/ or independent Audit & Supervisory Board members, a person who does not conflict with
the Criteria concerning Independence as specified by the Company

2.

Criteria concerning Independence

Besides the independence standard specified by the Tokyo Stock Exchange, Inc., we have established our own
Criteria concerning Independence. Outside directors or outside Audit & Supervisory Board members who do notconflict with either of them are appointed as independent directors or independent Audit & Supervisory Board members.
(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 the Lawson
Group in the most recent business year amounting to 2% of the supplier 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 the Lawson
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 the Lawson
Group other than as director/Audit & Supervisory Board member remuneration. A consultant, accounting expert suchas a certified public accountant, or a legal expert such as a lawyer, who receives substantial monies or other property
from the Lawson Group other than as director/Audit & Supervisory Board member remuneration, and who hasreceived 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 or independent Audit& Supervisory Board member is an outside Audit & Supervisory Board member) of the Lawson Group(7) A person whose total term of office at the time of re-appointment exceeds eight years for outside director and 12
years for outside Audit & Supervisory Board member
Even if the person falls under any of the above, said person can be elected as a candidate for an independent outside
director/Audit & Supervisory Board member if the Board of Directors deems said person to have substantial
independence. In such case, the reason will be explained and disclosed at the time of his/her election as outside
director/Audit & Supervisory Board member.

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