Flash Report on the Consolidated result for the year ended February 29, 2012
Listed Company Name : LAWSON, INC.
Code No.: 2651
(URL http://www.lawson.co.jp/company/ir/index.html )Listing: Tokyo Stock Exchange and Osaka Securities Exchange
Location of Head Office: Metropolis of Tokyo
Company Representative: Takeshi Niinami, Representative Director, President & CEO
Contact: Tomoki Takanishi, Financial & Accounting Office General Manager
Tel.: (03) 5435-2773
Scheduled date for the ordinary general meeting of shareholders: May 29, 2012
Scheduled date for payment of dividend: May 30, 2012
Scheduled date for submission of annual report: May 30, 2012
Supplementary Documents fiscal year results: Yes
Presentation of annual results: Yes (for institutional investors and analysts)
1. Consolidated Performance for the 2011 fiscal year (from March 1, 2011, to February 29, 2012)(1) Consolidated operating results
Notes: ①Amounts below one million yen are truncated.
Notes: ②Percentages for total operating revenues, operating income, recurring profit and net profit show increase(decrease) from previous year.
Total operating revenues
Operating profit
Recurring profit¥ Million%¥ Million%¥ Million%
2011 fiscal year
478,957
8.5
61,76911.2
61,72813.1
2010 fiscal year
441,277(5.5)
55,540
10.5
54,594
10.4

Net profit¥ Million
24,88525,3862011 fiscal year
2010 fiscal year

%
(2.0)
102.1

Net profit per
share

Fully
dilutedprofit per
share¥
249.17254.61¥248.80254.31

Ratio of
Return on recurring
equityprofit tototal assets
%
12.0
12.8

%
12.3
11.8

Ratio ofoperatingprofit tototal
operatingrevenues
%
12.9
12.6

Notes: Comprehensive income:2011 fiscal year:¥25,603million （1.9%)
2010 fiscal year:¥26,106million －%Equity in net income (loss) of affiliates:2011 fiscal year:¥380million
2010 fiscal year:¥311million(2) Consolidated financial position
shareholder's equity
Total assets
Net assets
Net assets per shareratio¥ Million¥ Million%¥
2011 fiscal year
531,453214,66239.7
2,114.00
2010 fiscal year
476,036
208,46642.7
2,037.50
Note: Equity capital:
2011 fiscal year: ¥211,154million
2010 fiscal year: ¥203,479million(3) Consolidated cash flows2011 fiscal year
2010 fiscal year

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities¥ Million
86,356
72,210¥ Million(52,912)(30,522)¥ Million(27,544)(28,798)

Cash and cash
equivalents at theend of the year
¥ Million
73,67067,712

2. Dividends status
Annual dividends per share2010 fiscal year
2011 fiscal year
2012 fiscal year
(Forecast)

1Q

2Q

3Q

¥
―

¥
85

¥
―

Year-end
dividend
¥
85

―

87

―

93

180

―

95

―

95

190

1

Total
¥
170

Total
dividends
for theyear¥ Million
16,977
17,977―%
66.8

Ratio ofdividends toshareholders’ equity
%
8.6

72.2
56.8

8.7
―

Payoutratio

3. Forecast Consolidated Performance for 2012 fiscal year（from March 1, 2012 to February 28, 2013）
Total operating revenues
Operating profit
Recurring profit
Net profit¥ Million%¥ Million%¥ Million%¥ Million%
2012 2Q
251,000
4.6
34,0004.4
33,6003.1
16,70086.4(accumulated)
503,000
5.0
66,0006.8
65,1005.5
33,40034.2
2012 fiscal year
Reference: Forecast net profit per share for the 2012 half year: 167.19yen
Forecast net profit per share for the 2012 fiscal year: 334.38yen
4.Other(1) Change in important subsidiaries during the period: None
(Note) This indicates any changes in specified subsidiaries during the fiscal year resulting from a revision of the scope of
consolidation.
(2) Changes in accounting principles, procedures, presentation methods, etc., pertaining to preparation of consolidated
financial statementsi) Changes associated with revision in accounting standards: Yesii) Other changes: None
(3) Number of issued sharesi) The number of shares issued at the end of term
February, 2012: 100,300,000
February, 2011: 100,300,000ii) The number of treasury shares in the end of term
February, 2012: 416,166
February, 2011: 433,040
iii) Average number of shares during the term
February, 2012: 99,871,558
February, 2011: 99,705,265

2

[Reference]
1.Non-consolidated Performance for the 2011 Fiscal Year (from March 1, 2011, to February 29,2012)(1)Operating results
Notes: ①Amounts below one million yen are truncatedNotes: ②Percentages for total operating revenues (Total net sales of Lawson stores), operating income, recurring profit
and net profit show increase (decrease) from previous year.
Total operating revenues

Operating profit

Recurring profit¥ Million
272,498%

2011 fiscal year

3.5

¥ Million
56,263%
12.1¥ Million
56,110%13.8

2010 fiscal year

263,209(3.1)

50,21011.6

49,312

10.6

2011 fiscal year

¥ Million
22,462%(8.8)

Net profit
per share¥
224.91

2010 fiscal year

24,64319.2

247.15

Net profit

Fully diluted
profit per
share¥
224.58246.85(2) Financial position

2011 fiscal year
2010 fiscal year
Note: Equity capital:
2011 fiscal year:

Total assets

Net assets¥ Million
500,667
444,821¥ Million
216,826
211,448

shareholder's equity
ratio
%
43.2
47.4

2010 fiscal year:¥211,043 million¥216,383 million

Net assets per share¥
2,166.35
2,113.24

2.Forecast Non-consolidated Performance for 2012 fiscal Year（from March 1, 2012, to February 28, 2013)2012 2Q(accumulated)2012 fiscal year

Total operating
revenues

Operating profit¥ Million %¥ Million

Recurring profit%¥ Million%

Net profit per
share

Net profit¥ Million%¥ Million

144,000

5.3

30,5003.030,5002.9

15,80072.2

158.18287,000

5.3

60,000

6.6

59,4005.9

31,50040.2

315.36

Note: Disclosure of progress of review procedures
At the time of disclosure of this fiscal flash report, review procedures for fiscal earnings reports based on the Financial
Instruments and Exchange Act had not been completed.
Note: The above-mentioned forecast is based on the information, which is able to get hand at present, and including a
potential risk and uncertainty. Therefore, actual achievements may differ from these forecasts due to many factors. In
addition, please refer to 9th page of appending data about matters, such as precondition of the above-mentioned forecast.

3

1. Operating Results
1. Review of Operation(1) Analysis of Consolidated Operating Results
During fiscal 2011, ended on February 29, 2012, the LAWSON Group (hereinafter, “the Group”)
focused on achieving a speedy recovery of stores and the product supply chain affected by the Great
East Japan Earthquake in March 2011 with the aim of realizing the Group’s corporate philosophy of“Happiness and Harmony in Our Community.” With these efforts, we were appreciated by customers as
a convenience store chain with a nationwide network as well as social infrastructure that provides
essential items at the local level.
(Convenience Store Operations and Overseas Businesses)
The status of merchandise strategy and services, store operations, store development and other aspects ofConvenience Store Operations in the fiscal year under review is outlined as follows:[Merchandise Strategy and Services]
On the merchandise front, the Group developed menus catering to customer needs as follows by
leveraging customer purchase data acquired through the multi-partner loyalty program, Ponta, which theGroup joined in March 2010. We also strived to provide appealing products that offer value for money byenhancing added-value in the ingredients procurement process, including bulk procurement ofhigh-quality food materials, by employing a dedicated section.
In the rice category, we offered chilled lunch boxes, named “Lawson-Tei,” which incorporates the color,taste and texture preferences of female customers, who have traditionally proven reluctant to purchaseconvenience store lunch boxes. The favorable performance of Lawson-Tei helped us succeed in
expanding the demand for lunch boxes, especially among female customers.
In the over-the-counter fast food category, prepared foods such as croquettes and minced cutlets
performed well, while new flavors for our Karaagekun and fried chicken also contributed to thecategory’s strong performance.
Our private brand, “Lawson select,” which is mainly comprised of prepared foods, processed foods, anddaily necessities, was renewed significantly in October 2011. As a result of expansion in the number of
items and strengthening of sales promotion, robust sales growth was recorded.
In the dessert category, sales climbed year on year, driven by our Uchi Café SWEETS line including thePremium Roll Cake Series.
In sales promotions, the Group focused on campaigns anticipated to bring a high return on investment(ROI), such as the Spring and Autumn Rilakkuma Fairs, Miffy Bowl/Plate Present Campaign, andKeion!! Fair II, which are centered on tie-ups with popular characters. We also implemented the HAPPY
10,000 Campaign in celebration of reaching the 10,000 store milestone in Japan. Total Ponta members
reached 39 million as of February 29, 2012, including members joining through other participatingcompanies. LAWSON provided loyalty points appealing to Ponta members in addition to expanding its
membership base, which resulted in an increase in Ponta members’ sales ratio.

Breakdown of sales at chain stores by merchandise categories
Fiscal period
Previous fiscal year
Current fiscal year
March 1, 2010
March 1, 2011
YOY Percentage
to February 28,2011
to February 29,2012changeSales
Ratio to total
Sales
Ratio to total(%)
Product group(Millions of(%)(Millions of
(%)
yen)
yen)
Processed foods
897,42653.3
1,022,619
56.0
114.0
Fast foods
321,865
19.1
345,424
18.9
107.3
Daily
264,169
15.7
263,179
14.4
99.6
delivered foods
Nonfood products
199,350
11.9
194,586
10.7
97.6
Total
1,682,812
100.0
1,825,809
100.0
108.5

4

Store Operations
To improve store operations, we promoted retail spaces and merchandise assortments that matchedcustomer needs specific to each neighborhood by utilizing our backbone IT system to analyze customer
sales data collected from Ponta cards and to use the analyzed data in store-based order placements. This
operational reform in the store operation method is dubbed PRiSM. Through the promotion of PRiSM, wehave strived to enhance accuracy in order placement in order to reduce opportunity loss. Through thesemeasures, we will continue to work toward creating stores that fully satisfy the desires of customers topurchase “whatever you want, whenever and wherever you need it.”Store Development
In opening new stores, the Group focused on maximizing return on investment (ROI), strictly adhered toits proprietary group standards for opening stores, and prioritized profitability.
In an effort to reinforce stores that cater to healthcare needs, we expanded the number of stores thatmarket over-the-counter (OTC) drugs to 41 as of February 29, 2012, partly as a result of increasing
licensed sales personnel based on human resources exchange with MatsumotoKiyoshi Holdings Co., Ltd.
Starting from August 2010, the Group also launched Pharmacy LAWSON, an integration of
drug-dispensing pharmacies and NATURAL LAWSON stores, in partnership with Qol Co., Ltd., which
operates a chain of drug-dispensing pharmacies. As of February 29, 2012, we operate 7 Pharmacy
LAWSON stores.
Regarding fresh foods convenience stores, we have been converting our directly managed stores into
franchised stores to promote our franchise-based store management. The number of fresh foods
convenience stores, LAWSON STORE100, operated by the Group’s consolidated subsidiary Ninety-nine
Plus Inc., reached 1,172 as of February 29, 2012. In addition, at our conventional LAWSON stores thatenhance focus on perishable foods and foods delivered daily, we promoted a strategy of expanding ourcustomer base by attracting elderly customers and homemakers. As of February 29, 2012, the number ofthese fresh food-type LAWSON stores totaled 3,913. Some of these stores sell fresh vegetables produced
at 4 LAWSON Farms in Japan, which the Group partially funded.
[Change in Total Number of Stores](Stores)

LAWSON
Total stores as ofFebruary 28 2011
Change during fiscal
year
Total stores as ofFebruary 29, 2012

NATURALLAWSONLAWSONSTORE100

Total

8,686

90

1,077

9,853

352

10

95

457

9,038

100

1,172

10,310The number of LAWSON chain stores operated by LAWSON Toyama, Inc., a consolidated subsidiary of
LAWSON, Inc. (hereinafter, “the Company”), reached 73 as of February 29, 2012.
The number of LAWSON chain stores operated by the Company’s equity-method affiliate, LAWSON
Okinawa, Inc., through the business alliance agreement with SAN-A CO., LTD. totaled 147 as ofFebruary 29, 2012.
The Company agreed to conclude a franchise agreement with CVS Bay Area, Inc. as of January 25, 2012.
Starting from March 1, 2012, CVS Bay Area, Inc. is converting its convenience stores to LAWSON storesand launching their operations.
[Overseas operations]Regarding our business in the People’s Republic of China (hereinafter, “China”), the Company raised its
controlling stake in its Chinese equity-method affiliate, SHANGHAI HUALIAN LAWSON CO., LTD.,
to 85% in September 2011, converting it into a consolidated subsidiary. Also, we opened our first store in
Dalian in November 2011, in addition to advancing into Shanghai and Chongqing.

5The number of LAWSON stores operated by SHANGHAI HUALIAN LAWSON CO., LTD. totaled 314
as of February 29, 2012.
CHONGQING LAWSON CO., LTD., also a consolidated subsidiary of the Company, was operating 38
LAWSON stores in Chongqing, China, as of February 29, 2012.
DALIAN LAWSON CO., LTD., the Company’s 95% subsidiary, was operating 3 LAWSON stores as ofFebruary 29, 2012.
In regions outside of China, the Company established LAWSON ASIA PACIFIC HOLDINGS PTE. LTD.
(LAP) in May 2011 in the Republic of Singapore as its consolidated subsidiary, in order to control its
subsidiaries and affiliates that operate convenience stores outside Japan (excluding China). Also, theCompany entered into a licensing agreement in June 2011 with PT MIDI UTAMA INDONESIA Tbk(MIDI), a member of the Alfa Group, which operates a large-scale retail business in the Republic ofIndonesia.
Furthermore, LAP acquired a 30% equity stake in MIDI in July 2011. As of February 29, 2012, MIDI
operates 523 stores in its own store format and 15 LAWSON stores in Jakarta and its outskirts.

Number of LAWSON stores by prefecture (February 29, 2012)
Prefecture

Number ofstoresPrefecture

Hokkaido

550

Tokyo

Aomori173

Kanagawa

Akita

158

Iwate

Number ofstoresPrefecture

1,384

Number ofstoresPrefecture

Number ofstoresNara

100

Fukuoka375

738

Wakayama

115

Saga

63

Shizuoka

190

Osaka

985

Nagasaki

90

153

Yamanashi

81

Hyogo

572

Oita

143

Miyagi

193

Nagano135

Okayama122

Kumamoto

98

Yamagata

64

Aichi

492

Hiroshima

146

Miyazaki

85

Fukushima

91

Gifu

125

Yamaguchi

112

Kagoshima

109

Niigata

108

Mie

99

Tottori

93

Total(domestic)

10,310Tochigi

111

Ishikawa

91

Shimane92

Shanghai

314

Gunma

71

Toyama182

Kagawa99

Zhongqing

38

Saitama

425

Fukui

101

Ehime

160

Dalian

3

Chiba

367

Kyoto

261

Tokushima

103

Total(foreign)

Ibaraki

117

Shiga

128

Kochi

60

355

Corporate Social Responsibility (CSR) Activities
In the CSR field, the CSR Promotion Office promoted environmental protection and social contribution
activities, working together with franchise owners and employees.
As part of our efforts to help create a low-carbon society, the Group set targets for reducing the CO2
generated by power consumption at each store, and strived to actively install energy-saving devices,
including LED lighting for signs and in stores, not only at new stores but also at existing stores.
In a collaborative effort with customers to fight global warming, in April 2008 the Group launched acarbon offset program, which allows customers to contribute to reducing CO2 by purchasing carbon
credits using their accumulated shopping points or cash, or by purchasing products designated for carbon
offset. As of February 29, 2012, approximately 16 thousand tons of CO2 had been offset through thisprogram. In addition, the LAWSON Green Fund, active since 1992, in combination with donation drives
for regions hit by the Great East Japan Earthquake, raised a total of approximately ¥1,737 million in fiscal
2011.

6

Furthermore, as part of its social contribution activities, the Group established a scholarship program
dubbed “Support For Dreams Fund” to help junior and senior high school students that were affected by
the Great East Japan Earthquake, and began paying it out from October 2011.
Moving forward, working together with customers, the Company will continue its environmental
protection and social contribution activities.

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

(2) Profit and Loss
In terms of operating results for the consolidated fiscal year under review, total operating revenues
increased by 8.5% from the previous fiscal year to ¥478,957 million. This was due to a ¥17.9 billion
increase in franchise commission from franchised stores owing to the positive effect of measures toexpand customer bases comprising women and seniors and a rise in spending per customer resulting
from a tax hike on tobacco.
As a result, operating income grew ¥6,229 million, or 11.2%, from the previous fiscal year to ¥61,769
million.
Recurring profit climbed ¥7,133 million, or 13.1%, from the previous fiscal year to ¥61,728 million.
Net income decreased ¥501 million, or 2.0%, from the previous fiscal year to ¥24,885 million, partly as aresult of an increase of ¥7,317 million in extraordinary loss, which reflects the posting of ¥8,292 million
in loss on adjustment for changes of accounting standard for asset retirement obligations and ¥3,460
million in loss from the disaster caused by the Great East Japan Earthquake. And net income per sharestood at ¥249.17.

7

(3) Outlook for Fiscal 2012
The LAWSON Group is promoting the following management measures with the aim of realizing its
corporate philosophy of "Happiness and Harmony in Our Community."
1) Create merchandise assortments that meet customer needs
In an effort to create stores that meet the needs of customers in the neighborhood, the Group will continue
to use the Ponta data to develop customer-centric merchandise assortment. We will enhance the level of
PRiSM operational reform based on our core IT system, and strive to improve ordering precision to
reduce sales opportunity losses and product disposal losses. We will also step up our efforts to enhance
product development capabilities by leveraging the Ponta data.
2) Provide appealing services by leveraging the Ponta multi-partner shopping points program
The number of companies participating in the Ponta program is expected to increase in the days ahead,
which will lead to more convenient services for customers. LAWSON will pursue broader marketing
analysis and sales promotion measures in collaboration with the other participating companies to provide
customers with more appealing services.
3) Promote the fresh foods convenience store businessWe will further expand our fresh foods convenience store business, which is a growth area, by opening
new LAWSON STORE100 and fresh foods convenience stores mainly in residential areas. By
accelerating the introduction of perishable foods at our stores and strengthening our private brand,“Lawson select,” which is mainly comprised of prepared foods, processed foods, and daily necessities,
we will strive to respond to the increasing needs of customers desiring to prepare their meals at home,while further expanding our customer base by attracting elderly and female customers in addition to malecustomers in their 20s and 30s, who have constituted the main body of convenience store shoppers.
4) Respond to demand for OTC drugs and healthcare
LAWSON will expand OTC drug sales and help customers achieve the healthy and comfortable lifestyles
they seek by stepping up the development and marketing of health-oriented foods harnessing theknowhow acquired through operation of NATURAL LAWSON stores. In addition to selling OTC
drugs at our convenience stores, we intend to promote our healthcare business based onin-store drug-dispensing pharmacies. Based on the idea that “you are what you eat,” we willcontinue to help customers lead healthy and fulfilling lives.
5) Full-scale operation of entertainment/e-commerce businessIn our entertainment/e-commerce business, we aim to offer an entertainment-related merchandise
assortment that meets diverse customer needs both online and offline. We also plan to provide newservices in e-commerce by further promoting partnership with other companies.

6) Proactive development of overseas businessCurrently, the Group operates LAWSON stores in Shanghai, Chongqing, and Dalian in China, andJakarta and its outskirts in Indonesia. We will continue to look into the possibility of opening newstores in these countries, as well as in other countries and regions where economic growth isexpected, by analyzing their economic and political situations. We will also proactively examine
whether we can advance into Europe, the United States, and other developed countries, by finding
opportunities to apply our business model.
7) Addressing operating risks
The Group will continue to address risks inherent in expanding its business formats and regions ofoperation. In particular, we will strive to step up efforts to tackle risks related to large-scale disasters,
including natural disasters, in order to mitigate their effects. In addition, the Group will improve its
business continuity framework by addressing risks concerning information security, including thehandling of personal information, as well as risks concerning legal regulations.

8

We kindly ask our shareholders to provide us with continued guidance and support in the years
ahead.
By consistently implementing the aforementioned management measures to enhance customer
satisfaction and expand our customer base, we are aiming to improve corporate earnings by expanding
the number of customers, increase the earnings of franchised stores, and in turn, enhance our corporate
value.
For fiscal 2012, we project an recurring profit of ¥65.1 billion, up 5.5% year on year, an net income of¥33.4 billion, up 34.2% on a consolidated basis, and an recurring profit of ¥59.4 billion up, 5.9% year on
year, an net income ¥31.5 billion, up 40.2% on an unconsolidated basis.

(4) Analysis of Financial Position[Total assets, Total liabilities, Total net assets analysis]
Total assets increased by ¥55,416 million year on year to ¥531,453 million, mainly due to a ¥25,001
million increase in net property and store equipment.
Total liabilities stood at ¥316,791 million, a year-on-year increase of ¥49,221 million. This mainlyreflected a ¥12,663 million increase in deposits payable, and a ¥15,263 million increase in asset
retirement obligations.
Net assets increased by ¥6,195 million year on year to ¥214,662 million. This was primarily due to theincrease of retained earnings by ¥7,640 million, although decrease of 1,516 million in minority interests.
[Cash flow analysis]
Net cash provided by operating activities amounted to ¥86,356 million, ¥14,146 million higher year on
year, due to a ¥16,216 million increase in deposits payable.
Investing activities used net cash of ¥52,912 million, ¥22,390 million higher year on year, mainly due to a¥5,983 million increase in purchase of property and store equipment.
Financing activities used net cash of ¥27,544 million, ¥1,254 million less year on year, mainly reflectinga ¥3,506 million decrease in payments for purchase of treasury stock.

(5) Basic Policy on Profit Distribution, and the Reporting Term’s & Next Term’s Dividend Payment
The Company places a high priority on profit distribution to shareholders, and follows a policy of paying
appropriate dividends with due regard for sufficient earnings retention required for future businessdevelopment, in accordance with the Company’s financial position, profitability level and payout ratio.
In compliance with this policy, the Company paid an interim dividend of ¥87 per share for the first-halfperiod, and plans to pay a year-end dividend of ¥93 for a total dividend of ¥180 per share annually.
Retained earnings not distributed to shareholders will be allocated to improving the value of theCompany by the reinvestment of such funds in new store openings and the renovation of existing stores,
as well as the encouragement of new business development.
Furthermore, based on the high priority it gives to returning profits to shareholders, LAWSON plans to
pay an annual dividend per share of ¥190 applicable to the fiscal year ending February 28, 2013 despite
expectations of a difficult operating environment.
In addition to paying dividends, the Company reserves the right to respond flexibly to market
circumstances by acquiring or retiring treasury stock as a strategy to improve shareholder profit.
(6) Operating Risks
The principal categories of risk that may have a material effect on the business performance or financial
position of the LAWSON Group are listed below. The Group is fully aware of the potential for such risks
to materialize, and intends to implement risk management accordingly, while taking optimal
countermeasures as necessary. These risks faced by the Group include, but are not limited to, thefollowing:(i) Risks involving change in the Group’s operating environment
In view of the fact that LAWSON Group is principally involved in the convenience store business,

9changes in the economic, market and societal structure of Japan or other countries in which the Group
operates, or any usual weather conditions, insofar as they may affect consumer behavior, may exert asignificant effect on the Group’s business. Other factors that are likely to affect the Group’s businessperformance and financial position include competition with other convenience store operators or withcompanies operating other business formats within the retail sector.
(ii) Risks involving food safety and hygiene
The Group sells food products to customers in its core convenience store business. In cooperation with its
business partners, the Group rigorously enforces a system of quality control from the initial foodprocessing stage to food item sales at its stores, ensuring appropriate labeling of "best by" and expiration
dates, product origins, and ingredients. The Group also ensures strict hygiene control and sales data
management within its stores. However, in the unlikely event of a serious incident such as food poisoning,the discovery of foreign matter within a food product, or mislabeling of food products, this could damage
the Group’s reputation for trustworthiness in the eyes of its customers, resulting in an adverse impact on
the Group’s business performance and financial position.
In such an event, the Group’s policy is to do its utmost to promptly provide full disclosure of information
about the situation through the news media, with the aim of minimizing the effect on the reputation of its
stores among consumers.
(iii) Risks involving the handling of personal information
In the course of conducting its business operations, the Group comes into the possession of, and handles,
various items of personal information relating to customers, shareholders, business partners, andfranchised store owners (the franchisees). Management recognizes as serious risks the leak of personal
information to third parties, and unauthorized access to such information. In addition to information
security measures, the Group has created a Personal Information Protection Policy, and all employees
have been acquainted with it in detail. However, in the unlikely event of a leak of confidential personal
information, the Group’s business performance and financial position could be adversely affected.
(iv) Legal risk
The Group operates stores in all 47 prefectures of Japan, as well as a number of stores in Shanghai,Chongqing, and Dalian in China, and Jakarta and its outskirts in Indonesia, most of which are open 24
hours a day. For this reason, the Group is forced to carefully observe a number of national and local laws
and regulations in Japan, China (Shanghai, Chongqing, and Dalian), and Indonesia (Jakarta and its
outskirts), pertaining to store opening locations, store operations, hygiene standards, merchandiseprocurement transactions, and environmental protection, and is required to obtain various permits andlicenses from the competent authorities.
For these reasons, in the event of unforeseeable changes in such laws or regulations, or in law
enforcement methods going forward, the Group may incur additional expenses needed to conform to the
new laws, and so forth, and this may have a material effect on its business performance and financial
position.
(v) Risks involving franchise operations
In its principal business line of convenience store operations, the Group employs a franchise system
under which the owner of the store signs a franchise contract with the Group, enabling him or her to use
the Group's proprietary brand name and logo. Consequently, an illegal or improper action or actions taken
by one franchise store, as a contractual counterparty, could damage the image of the LAWSON chain as awhole, possibly adversely affecting the Group’s business performance and financial position.
Furthermore, as its franchise system is designed to encourage the improvement of business performancefor both the franchise store and the Group, on the basis of a relationship of mutual trust between the twocontracted parties, in the event that the said relationship of trust between the Group and its franchisee is
weakened, and as a consequence, that a large number of franchise contracts are dissolved, this would
adversely affect the Group’s business performance and financial position.
(vi) Risks involving disasters
The Group operates a truly national chain of stores with outlets located in all of Japan’s 47 prefectures,
and additionally operates stores in Shanghai, Chongqing, and Dalian in China, and Jakarta and its
outskirts in Indonesia. Therefore, in the event that natural phenomena such as a major earthquake,tsunami, or typhoon cause physical damage to the Group’s stores, its vendors’ plants, logistics centers, orother facilities, the Group’s business performance and financial position could be adversely affected.

10The Group's principal convenience store business plays an important social role. Therefore, even in theevent of a natural disaster or a major epidemic of a new influenza or other illness, we will continue tooperate stores under a business continuity plan. However, in the unlikely event that stores are temporarilyclosed, the Group’s business performance and financial position could be adversely affected.
(vii) Risks involving damage to IT systems
Operation of the Group’s IT system may be impeded by a computer virus, or obstructed by natural causessuch as an earthquake, which could disrupt the information network system, creating delays in thedelivery of products to stores and causing the suspension of store services. Such developments could
adversely affect the Group’s business performance and financial position.
(viii) Risks involving a surge in raw material prices
When raw material prices rise due to a surge in crude oil prices, abnormal weather, or other unpredictableproblems, the Group’s business performance and financial position may be affected.

11

2. Corporate GroupThe business segments in which the Company operates are as follows:
Convenience store business• The Company serves as the headquarters for its own and franchised stores in the LAWSON and
NATURAL LAWSON chains.
• A subsidiary, Ninety-nine Plus Inc., operates the price-point store “LAWSON STORE 100” and otherstores either by direct management or under the franchise system.
• A subsidiary, SHANGHAI HUALIAN LAWSON CO., LTD., engages in the Company’s chain-store
development operations in Shanghai, China.
• A subsidiary, CHONGQING LAWSON CO., LTD., operates LAWSON stores in Chongqing, China.
• A subsidiary, DALIAN LAWSON CO., LTD operates LAWSON stores in DALIAN LAWSON CO.,LTD, China.
• A subsidiary, LAWSON Toyama, Inc. engages in the Company’s chain-store development operations inToyama Prefecture.
• LAWSON ASIA PACIFIC HOLDINGS PTE. LTD. is investment company in Singapore.
• An affiliate, LAWSON Okinawa, Inc. engages in the Company’s chain-store development operations in
Okinawa Prefecture. This affiliate is a joint venture with SAN-A CO., LTD.
Entertainment/e-commerce business• A subsidiary, LAWSON HMV ENTERTAINMENT, INC. sells tickets for concerts, sporting events,
movies, etc. mainly through the Loppi multimedia terminals in LAWSON stores, and imports and markets
music/video products such as CDs and DVDs.
• Venture Republic Inc. has been undertaked various marketing and the sales promotion enterprise using
the purchase support enterprise and the Internet for the consumers who led management of the pricecomparison Web site.
Financial service business• A subsidiary, LAWSON ATM Networks, Inc installs, maintains and operates bank ATMs located mainly
in LAWSON stores and conducts clerical procedures for depositing and withdrawing money as well as
money transfers via the ATM network in question for alliance partners on a consignment basis.
Consulting business• A subsidiary, BestPractice Inc., mainly conducts surveys of convenience store operation performance.
Based on the survey results, it then gives advice and specific proposals to LAWSON stores on
improvement of store operations.
Advertising business• A subsidiary, Cross Ocean Media, Inc., engages in electronic advertising business.

12

The following chart shows the relationship among LAWSON Group companies and affiliates.

[entertainment/e-commercebusiness business]
Consolidated subsidiary
Lawson HMVEntertainment, Inc<Domestic>

Management
services<Domestic>

Alliance

Affiliate accounted forby the equity method
Venture Republic Inc.,.

Areafranchise

Consolidated
subsidiary
BestPractice Inc.

[Advertising business]

Consolidated
subsidiary
Cross Ocean Media, Inc.

General Trading Company

Management
ServicesArea
franchise

LAWSON, INC.

[Consulting business]

Cooperation inestablishingshared ATMs

Consolidated subsidiary
Lawson Toyama, Inc.

Management
servicesManagement
services

Affiliateaccounted
for by the equity
methodLawson Okinawa, Inc.

Management <Overseas>
services
Consolidated
subsidiary
Chongqing Lawson,
Inc.
Management
services

Alliance ofdigital signate
installation
Management
services

Business tie-up

Consolidated
subsidiary
Ninety-nine Plus, Inc.

Franchised chain stores[Financial service business]
Consolidated subsidiary
LAWSON ATM Networks,
Inc[Convenience store business]

Commissioned
sales of various
tickets

Licensingagreement

Other affiliate
Mitsubishi Corporation

Consolidated
subsidiary
Shanghai
HualianLawson, Inc.

Consolidated
subsidiary
Dalian Lawson, Inc.

Affiliate accounted
for by the equity
methodPT MIDI UTAMAINDONESIA Tbk

Transaction
Consolidated
subsidiary
Lawson Asia Pacific
Holdings PTE.LTD.

Capitalrelationship13Management
services3. Management Policy(1) Basic Management Policy(i) Corporate Philosophy and Code of Conduct
The Company’s corporate philosophy "Happiness and Harmony in Our Communities" reflects its
belief that its social significance derives from relationships with all its stakeholders.
Under this concept, the Company has established a Code of Conduct based on three principles
governing its day-to-day corporate activities:
1) Act with utmost consideration for others,2) Tackle challenges with innovative ideas and actions, and
3) See objectives through to the very end.
(ii) Vision
The Company is taking various steps to realize "Happiness and Harmony in Our Communities."
Central to this effort is “Neighborhood Hot Station (Machi No Hotto Station in Japanese)," anickname for the Company’s stores, which communicates the idea of "hot" new merchandise,information and services that take into account local preferences and aims to be a place where
customers can relax (“hotto” suru in Japanese).
(2) Performance Indicators (Target)
From the perspective of medium-and-long-term management strategy, the Company believes thatinvesting in businesses with high return on investment (ROI) will maximize the efficiency in the useof shareholders’ equity, which will in turn enhance shareholder value. The Company regards returnon equity (ROE) as the best measure of optimal utilization of shareholders’ equity. Accordingly,
the Company is targeting a ROE 20% on a consolidated basis over the medium term.
(3) Medium-and-Long-Term Management Strategies
The business environment facing convenience stores is defined by several factors, including:population decline arising from Japan’s declining birthrate and aging society; deflation; and stronger
environmental awareness. Never before has the convenience store industry experienced such anenvironment. Against this backdrop, the Company recognizes the following as priority issues ahead.
The Company believes that its core business strategies must address these priority issues.
(4) Priority Issues of the Company(i) Growing Need to Broaden Customer Segments
Faced with a declining birthrate and aging society, the Company must expand its customer base andincrease customer numbers by targeting not only men in their 20s and 30s, its traditional corecustomers, but also women, the middle-aged and seniors. It must therefore continue to develop
merchandise and services suited to the needs of each customer segment.
(ii) Responding to diversification of consumption patterns and deregulation
Amid growing regional disparity, the Company faces changes in its operating environment definedby deregulation following the amendment of the Pharmaceutical Affairs Act and other legislation,and intensifying competition from other industries and retail segments. In response, the Company
must revamp nationwide and standardized store management practices, take a fresh look at its
merchandise assortments and continue to improve the level of convenience in an effort to reinvent its
stores to better suit the customer.
(iii) Increasing public interest in CSR
The Company recognizes the societal duties the convenience store sector bears and, as a publicly
listed corporation, it must not only seek profit, but also remain fully aware of CSR priorities in thecourse of business operations.
Key to the measures necessary to address the above issues is the Company’s mid- to long-term basic
strategy of “creating stores to suit the needs of each and every customer in the area.” While focusedon this strategy, the Company is working to raise the customer satisfaction of each individual in
every location. The Company continues to provide total support to franchised store owners(franchisees) so that they can focus on building stores with more emphasis on customers, to improve14

earnings. To ensure the effectiveness of this support, the Company is focusing on the following
concrete initiatives.

Initiatives to Address Priority Issues(i) Improving New Merchandise Development Capabilities
While strengthening its ability to develop safe and reliable original merchandise, the Company willproactively develop merchandise suited to regional preferences by focusing on such aspects as taste
and price. In this process, the Company aims to raise its original added value and develop
merchandise that garners a strong customer response.
(ii) Improving Store Operation Capabilities
The Company will continue its efforts to improve customer satisfaction through promoting the Three
Challenge Practices. They are (1) ensuring merchandise assortments are matched to individual
locations, (2) keeping stores and surrounding areas clean, and (3) serving customers courteously.
When selecting store merchandise, the Company will focus on ensuring the merchandise assortment
suits local customers, by creating individually tailored stores. At the same time, the Company will
strive to create attractive stores where the customer feels comfortable shopping and makes return
visits by ensuring that stores and their surrounding neighborhoods are kept clean and that customers
are truly made to feel welcome.
(iii) Reinforcing Store-Development Capabilities
The Company’s store-development policy prioritizes customer convenience and profitability for bothfranchise store owners and headquarters. The Company seeks to establish high-ROI (return on
income) stores by avoiding a standardized, nationwide approach to decision-making and choosing
new store locations based on detailed regional and location characteristics.
(iv) Tailoring Store Formats to Suit Local Characteristics
Conscious that market needs are becoming increasingly complex and diversified, the Company
provides store formats that offer retail spaces and merchandise assortments to suit the location. As
for the Company’s store development strategy, regular LAWSON stores will be opened to target
customers seeking new merchandise, famous brand goods and convenient services; NATURALLAWSON stores will be opened to target customers seeking beauty, health and amenity. The
LAWSON STORE 100 will be opened to target customers seeking perishables packaged in small
quantities and low standardized prices.
(v) Enhancing Convenience by Opening Stores in Special Locations and Expanding Financial
Services
To enhance customer convenience, the Company develops initiatives based on new ideas rather thanon established practices. In tie-ups with other corporations, the Company opens stores in special
locations (captive commercial spaces providing high profitability due to the absence of competingstores). In its financial services, the Company aims to increase convenience for customers by
expanding the Ponta card programs and offering various services via the “Loppi” multimedia
terminals, and in-store ATMs.
(vi) Accelerating Business Reform through Capital and Business Alliances
The Company continues to effectively respond to the rapidly changing social environment and theneeds of customers through capital and business alliances that enable it to improve profitability on
an individual store basis

15

4. Consolidated Financial Statements etc.
(1) Consolidated Balance Sheets (Unaudited)
As of February 28, 2011 and February 29, 2012

（Millions of yen）
February 28, 2011
February 29, 2012

Current assets:
Cash and bank deposits
Accounts receivable—due from franchised stores
Marketable securities
Merchandise inventories
Prepaid expenses
Accounts receivable—other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Fixed assets:
Property and store equipment;
Buildings and structures
Accumulated depreciation
Buildings and structures－net
Vehicles, tools, furniture and fixtures
Accumulated depreciation
Vehicles, tools, furniture and fixtures－net
Land
Lease assets
Accumulated depreciation
Lease assets－net
Construction in progress
Subtotal
Intangible fixed assets;
Software
Software in progress
Goodwill
Other
Subtotal
Investments and Other;
Investments in Securities
Long-term loans receivable
Long-term prepaid expenses
Lease deposits
Deferred tax assets
Claims provable in bankruptcy, claims provable in rehabilitation and other
Other
Allowance for doubtful accounts
Subtotal
Total fixed assets
Total assets

16

74,816
16,159
2,999
7,011
7,424
29,285
4,943
2,466
(97)
145,009

79,074
19,521
4,999
8,075
8,110
32,645
4,800
3,080
(149)
160,157

192,865(96,463)
96,401
61,156(47,914)
13,241
6,609
51,055(9,120)41,934646

219,536(112,475)
107,061
63,563(49,549)
14,013
6,815
72,538(18,400)
54,137
1,806

158,833

183,835

23,182
4,719
7,717
477
36,096

19,288
8,263
10,871
553
38,977

3,116
31,825
5,736
81,654
13,253
15,372
1,184(16,047)
136,096
331,026
476,036

7,702
32,138
7,988
83,665
16,87015,136832(15,851)
148,483
371,295
531,453

Consolidated Balance Sheets (Unaudited) - Continued

February 28, 2011

（Millions ofyen）
February 29, 2012

13,014
68,384
1,179
－
7,953
18,101138
10,6732,894
2,610
62,340
3,768
1,287
－
248
192,595

13,761
74,501
1,390
500
11,223
17,419122
15,305
1,508
2,912
75,004
3,204
701
101
322
217,978500
28,253
7,529
234－
37,902
8,745
308

37,139667－
650
74,97435,735679
15,161
280
98,812

Total Liabilities
Shareholders’ equity;
Common stock
Capital surplus
Retained earnings
Treasury stock

267,570

316,791

58,506
47,696
99,608(1,693)58,50647,707
107,249(1,627)

Total Shareholders’ equity

204,117

211,835

(4)
(634)
1
(638)

(11)
(567)
(101)
(680)

405
4,581
208,466
476,036442
3,064
214,662
531,453

Current liabilities:
Accounts payable —trade
Accounts payable —trade for franchised stores
Accounts payable — due to franchised stores
Current portion of long-term loans payable
Lease obligations
Accounts payable — otherAccounts payable — other for franchised stores
Income taxes payable
Consumption taxes payable
Accrued expenses
Deposits received
Accrued employees’ bonuses
Provision for use of points granted
Asset retirement obligations
Other
Total Current liabilities
Long-term Liabilities;
Long-term debt
Long-term lease obligations
Allowance for employees’ retirement benefits
Allowance for retirement benefits to executive officers
and corporate auditors
Deposits received from franchisees and lessees
Accumulated impairment loss on long-term leased assets
Asset retirement obligations
Other
Total Long-term Liabilities

Accumulated other comprehensive income;Net unrealized gain on available-for-sale securities
Land revaluation difference
Foreign currency translation adjustments
Total Accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total Liabilities and net assets

17

(2) Consolidated Statements of Income (Unaudited)
For the fiscal year ended February 28, 2011 and February 29, 2012
（Millions of yen）
February 28, 2011
February 29, 2012
Total operating revenues
Net sales
Cost of goods sold

441,277
192,329
143,101

478,957
208,063
156,245

Gross profit on sales

49,22851,817

Operating revenues:
Franchise commission from franchised stores
Other
Operating gross profit
Selling, general and administrative expenses

197,673
51,274
298,176
242,635

215,573
55,320322,711
260,941

Operating profit

55,54061,769Non – operating income and expenses:
Non – operating income;Interest received
Compensation income for damage
Compensation income for removal
Equity in earnings of affiliates
Other
Non – operating expenses;
Interest expense
Loss on cancellation of store lease
Other
Recurring profit

1,718
661
64
207
311
473
2,665
983
1,224
457
54,594

2,268
672
44
446
380
723
2,309
1,122
661
526
61,7281－
1－－
10,184
3,017
1,303
4,989
－
－
873
44,411

2,059
1,570
－
291
197
17,502
2,068
40
3,318
3,460
8,292
320
46,285

16,551
1,668－

22,963(2,321)25,643803

758

25,38624,885Extraordinary gains and losses:
Extraordinary gains;
Gain on step acquisitions
Gain on sales of investment securities
Gain on negative goodwill
Other
Extraordinary losses;
Loss on disposal of fixed assets
Loss on sales of fixed assets
Loss on impairment of long-lived assets
Loss on disaster
Impropriety-related loss
Other
Income before income taxes and minority interests
Income taxes:
Income taxes - current
Deferred income taxes
Income before minority interests
Minority interests in income
Net profit18

(3) Consolidated Statements of Comprehensive Income (Unaudited)
For the fiscal year ended February 29, 2012
（Millions of yen）
February 28, 2011
February 29, 2012
Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Land valuation difference
Foreign currency translation adjustment
Share of other comprehensive income of associates accounted
for using equity
Total other comprehensive income－

25,643

－
－
－
－

(6)
67
(116)
16

－

(39)

Comprehensive income－

25,603Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests－－

24,843760

19

(4) Consolidated Statements of Changes in Net Assets (Unaudited)（Millions of yen）
February 28, 2011

February 29, 2012

58,50658,506－－58,50658,506

Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Exercise of subscription rights to shares(Issuarance of treasury stock)Total changes during the current period

41,52047,696

6,176
－

－
10

6,176

10

Balance at the end of the current period

47,69647,707

Shareholders’ equity:
Common stock and preferred stock
Balance at the end of the previous period
Changes during the current period
Total changes during the current period
Balance at the end of the current period
Capital surplus

Retained earnings
Balance at the end of the previous period
Changes during the current period
Cash dividends paid
Net income
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation differences, net of tax
Total changes during the current period

94,171

99,608(16,422)
25,386(0)(3,528)－5,436(17,177)
24,885
－
－
(67)
7,640

Balance at the end of the current period

99,608107,249(1,713)(1,693)(3,510)
－

(3)
69

1
3,528
19

－
－
65

(1,693)(1,627)

Treasury stock
Balance at the end of the previous period
Changes during the current period
Purchase of treasury stock
Exercise of subscription rights to shares(Issuarance of treasury stock)
Disposal of treasury stock
Retirement of treasury stock
Total changes during the current period
Balance at the end of the current period
Total Shareholders’ equity
Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Cash dividends paid
Net profit
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation differences, net of tax
Total changes during the current period

192,485

204,117

6,176(16,422)
25,386(3,510)
1－
11,632－(17,177)
24,885
(3)
－
(67)
7,717

Balance at the end of the current period

204,117

211,83520

Consolidated Statements of Changes in Net Assets (Unaudited) - Continued（Millions of yen）
February 28, 2011
Accumulated other comprehensive income:Unrealized holding gains on securities, net of tax
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Land revaluation difference, net of tax
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Foreign currency translation adjustments
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Total Accumulated other comprehensive income
Balance at the end of the previous period
Reversal of land revaluation difference, net of tax
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Stock acquisition rights
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Minority interests
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Total net assets
Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Cash dividends paid
Net profit
Purchase of treasury stock

Exercise of subscription rights to shares(Issuarance of treasury stock)
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period

21

February 29, 2012

14

(4)

(19)
(19)
(4)

(6)
(6)
(11)

(634)

(634)

－
－
(634)

67
67
(567)

65

1

(64)
(64)
1

(102)
(102)
(101)

(554)
－

(638)
67

(83)
(83)
(638)

(109)
(42)
(638)

346

405

59
59
405

37
37
442

5,858

4,581

(1,276)(1,276)
4,581(1,516)(1,516)
3,064

198,135

208,466

6,176(16,422)
25,386(3,510)－－(17,177)
24,885(3)80

1(1,301)
10,331－(1,588)
6,195

208,466

214,662(5) Consolidated Statements of Cash Flows (Unaudited) - Continued
For the fiscal year ended February 28, 2011 and February 29, 2012
(Millions of yen)February 28, 2011
February 29, 2012
Operating activities:
Income before income taxes
Depreciation of property and store equipment
Loss from disposal of fixed assets
Loss from disposal of intangible fixed assets
Loss on impairment of long-lived assets
Loss (gain) on sales of fixed assets
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Loss on disaster
Gain on step acquisitions
Increase in provision for allowance for retirement benefits to employees
Increase in allowance for doubtful accounts
Equity in earnings (losses) of an affiliates
Interest received
Interest expense
Other-net
Decrease (increase) in accounts receivable due from franchised stores
Decrease (increase) in merchandise inventories
Decrease (increase) in accounts receivable－other
Decrease (increase) in claims provable in bankruptcy, claims
provable in rehabilitation
Increase (decrease) in accounts payable—trade and due tofranchised stores
Increase (decrease) in accounts payable—other
Increase (decrease) in deposits received
Increase (decrease) in lease deposits from franchisee and lessees
Other-net
SubtotalInterest received
Interest expenses paid
Income taxes paid
Loss on disaster paid
Net cash provided by operating activities

22

44,411
33,083
1,468
267
4,989
1,303

46,28537,845
2,064

－

8,292

－
－

941
1,352
(311)
(661)
983
1,115
4,631
57
(1,237)(1,788)3,460(1,570)
1,215
(384)
(290)
(672)
1,122
407
(1,348)(920)(1,444)
236

5,248

3,053

(5,126)(3,560)(1,571)
2,612(1,341)
12,656(1,596)(1,804)
108,583673(1,122)(18,405)(3,372)86,356

88,208661(982)(15,676)－
72,210－3,318－

Consolidated Statements of Cash Flows (Unaudited) - Continued(Millions of yen)February 28, 2011
February 29, 2012
Investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Proceeds from redemption of marketable securities
Increase (decrease) in long-term loans receivable – net
Purchase of stocks of subsidiaries and affiliates
Proceeds from sales of stocks of subsidiaries and affiliates
Purchase of investments in subsidiaries resulting in change in scopeof consolidation
Proceeds from purchase of investments in subsidiaries resulting fromchange of scope of consolidation
Payments for transfer of business
Payment for acquisition of property and store equipment
Payment for acquisition of intangible fixed assets
Increase (decrease) in lease deposit –net
Increase (decrease) in long-term prepaid expenses
Other – net(26,304)
25,3742,500(2,069)
(650)
225
(809)

(20,404)
20,104－(297)(6,335)
－
(982)

455

－

－
(22,883)(7,511)
2,299(1,045)(102)(30,522)(3,415)(28,866)(7,449)(1,932)(3,511)
177(52,912)(8,785)(16,422)(3,510)(80)(28,798)(10,382)(17,177)－14(27,544)(20)

812,868Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
54,843
Increase (decrease) in cash and cash equivalents resulting from change of scope －of consolidation
Cash and cash equivalents at end of period
67,712

5,908
67,71249

Net cash used in investing activities
Financing activities:
Repayments of lease obligations
Cash dividends paid
Purchase of treasury stock
Other –net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents

23

73,670《Notes Concerning Going Concern Assumption》
None《Basis of Presenting the Consolidated Financial Statements》
1. Scope of consolidation
Consolidated subsidiaries: 10
Lawson HMV Entertainment, Inc..
Lawson ATM Networks, Inc.
BestPractice Inc.
Ninety-nine Plus Inc.
Cross Ocean Media, Inc
Lawson Toyama, Inc.
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.
Dalian Lawson, Inc.
Lawson Asia Pacific Holdings Pte.Ltd.
Dalian Lawson, Inc, and Lawson Asia Pacific Holdings Pte.Ltd, which was established on 2012, became
LAWSON’s consolidated subsidiary.
LAWSON Toyama, Inc. became LAWSON’s consolidated subsidiary because of its importance.
Shanghai Hualian Lawson, Inc. became LAWSON’s consolidated subsidiary because of increase of theownership.
LAWSON HMV ENTERTAINMENT, INC., which was established on September 1, 2011 through themerging of LAWSON ENTERMEDIA, INC. and HMV Japan K.K., is also engaged in entertainment/ecommerce-related business.
Radish Lawson Supermarket, Inc. categorized as a non-consolidated subsidiary, has been excluded fromthe application of the equity method because it has a negligible impact on total assets, net sales, net
income, retained earnings, etc., and does not interfere with reasonable judgment of the corporate group’s
financial condition and business results.

2. Application of the equity method
Affiliated companies to which the equity method is applied: 2(Japan)LAWSON Okinawa, Inc.
Venture Republic Inc.
(Other)PT MIDI UTAMA INDONESIA Tbk
Venture Republic Inc. has been included the equity method because the acquisition date has arrived.
The Company does not apply the equity method to one affiliated company (KOBE HOT DELI Co., LTD.
and Herushirru, Inc. and LAWSON Farm Chiba, Inc. and LAWSON Farm Kagoshima, Inc. and
LAWSON Farm Tokachi, Inc. and LAWSON Farm Oita, Inc.) and Radish Lawson Supermarket, Inc. and
LAWSON USA HAWAII ,INC. categorized as a non-consolidated subsidiary, because the financial
figures such as net income, retained earnings, and others are negligibly insignificant in comparison with
the Company’s consolidated financial statements.
Venture Republic Inc. has been included the equity method because the acquisition date has arrived.
24

Among share method application companies, it is December 31 on the settling day of Venture Republic
Inc. and PT MIDI UTAMA INDONESIA Tbk.. When creating the consolidated balance sheets, theCompany used balance sheets created by provisional settlement based on the financial data at the end of
the most recently settled fiscal quarter and, as required, made adjustments on a consolidated basis to take
into account significant transactions that subsequently occurred in the interval until the end of theconsolidated term.
3. Closing day for settlement of accounts of consolidated subsidiaries
The balance sheet date of Shanghai Hualian Lawson, Inc. and Chongqing Lawson, Inc.. and Dalian
Lawson, Inc. are December 31. In order to prepare for the consolidated financial statements, temporary
financial statements based on the latest quarterly financial statements are used and significant transactions
which occur between the latest quarterly balance sheet date and the consolidated balance sheet date areadjusted as required for consolidation. The fiscal year end date for the other consolidated subsidiaries
correspond with the consolidated balance sheet date.
4. Summary of Significant Accounting Policies(1) Valuation basis and method for important assets
Marketable securities and investments in securities:
Held-to-maturity debt securities: Carried at amortized cost.
Available-for-sale securities:
Securities whose market value is readily determinable: Reported at market value, with unrealized
gains and losses, net of applicable taxes, reported in 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.
Inventories:
About the product, have adopted the retail cost method.
(For balance sheet is calculated by the method according to the book value write-down based on the
reduction of profitability)
Certain consolidated subsidiaries have adopted the cost method individually.
(For balance sheet is determined by the method according to the book value write-down based on the
reduction of profitability)(2) Depreciation method of depreciable assets
Property and store equipment (except for lease assets):
Depreciation is mainly computed by the declining-balance method at rates based on the estimateduseful lives of the assets. The range of useful lives is from 10 to 34 years for buildings and from 5 to 8
years for furniture, fixtures and equipment.
Intangible fixed assets (except for lease assets):
Amortization of intangible assets is computed by the straight-line method.
Software costs of software for internal use are amortized by the straight-line method over 5 years,
which is the internal useful life.
Lease assets:
Previously, these leases were accounted for as rental transactions. Furthermore, in terms of thedepreciation method for leased assets related to finance leases that do not transfer ownership of leased
property, the Company applies the straight-line method using the lease term as the useful life and aresidual value of zero.
However, the Company has continued to treat as rental transactions finance leases that do not transfer
ownership of leased property and that commenced before the first fiscal year in which the new
accounting standard was applied.
Long - term prepaid expense
25

Amortization of long-term prepaid expense is computed by the straight - line method.
(3) Accounting standard for important reserves
Allowance for Doubtful Accounts:
Allowance for doubtful accounts is provided at an amount of possible losses from uncollectable
receivables based on the actual rate of losses from bad debt for ordinary receivables, and on estimatedrecoverability for specific doubtful receivables.
Accrued Employees’ Bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimatedamounts.
Provision for use of points granted:
The Company provides mainly MY LAWSON POINT holders and LAWSON PASS holders whenpurchasing goods, an entitlement to certain points that the holder can redeem for a discount on
subsequent purchases from LAWSON stores.
Allowance for Employees’ Retirement Benefits:
Allowance for employees’ retirement benefits is provided at the amount accrued based on the projected
benefit obligations and plan assets at the balance sheet date. Actuarial differences will be mainly
amortized from the following fiscal year on a straight-line basis over a certain period (10 years) within
an average remaining service period of employees at the time of their occurrence. Prior service cost is
mainly amortized, starting the fiscal year incurred, on a straight-line basis over a certain period (10years) within an average remaining service period of employees.
(Changes in accounting treatment)
Effective from the fiscal year ended March 31, 2011, the Company adopted the Partial Amendments to
Accounting Standard for Retirement Benefits (Part 3) (ASBJ Statement No. 19, issued on July 31,2008).
This change had no effect on operating income, ordinary income and income before income taxes andminority interests.
Allowance for Retirement Benefits to Directors and Corporate Auditors:
Allowance for retirement benefits to corporate auditors and executive officers of The Company, and todirectors and corporate auditors of the certain consolidated subsidiary are calculated to state theliability at 100% of the amount that would be required if all corporate auditors, executive officers anddirectors resigned their services with the Company at the balance sheet date.
(4) Foreign Currency Transactions and Foreign Currency Financial Statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange
gains and losses from translation are recognized in the consolidated statements of income. The balance
sheet accounts as well as revenue and expense accounts of foreign affiliated companies are translated
into Japanese yen at the current exchange rate as of the balance sheet date except for shareholders’equity, which is translated at the historical rate. Differences arising from such translation are shown as“foreign currency translation adjustments” in a separate component of net assets.
(5) Accounting for Consumption Tax
Consumption tax is accounted for using the tax exclusion method.
5. Valuation of assets and liabilities of consolidated subsidiaries
The assets and liabilities of consolidated subsidiaries, including the portion attributable to minority interests,
are valued at their fair values at the respective dates when the subsidiaries were initially consolidated.
6. Amortization of Goodwill
Concerning goodwill, the amount is amortized on a straight-line basis over a maximum of 20 years, dependingon the reason for the occurrence of goodwill.

26

7. Cash and cash equivalents in the consolidated statements of cash flows
Cash and cash equivalents in the consolidated statements of cash flows include cash on hand, demand deposits
and short-term investments due within 3 months from the acquired date, which are easily convertible into cashwith little risk of value fluctuation.
《Important change in accounting method》(Application of Accounting Standards etc. for Asset Retirement Obligations)
Effective from the current fiscal year, the Company has adopted the Accounting Standards for Asset
Retirement Obligations (ASBJ Statement No. 18, March 31, 2008) and the Implementation Guidance on
Accounting Standards for Asset Retirement Obligations (ASBJ Guidance No. 21, March 31, 2008).
As a result, operating profit and recurring profit decreased ¥967 million respectively, and income before
income taxes declined ¥9,157 million.
(Accounting standards for equity method and Approach to adopt on Unification of affiliated companies
accounted for under the equity method accounting)
Effective from the current fiscal year, the Company has adopted the Accounting standards for equity
method (ASBJ Statement No. 16, March 10, 2008) and Approach to adopt on Unification of affiliatedcompanies accounted for under the equity method accounting (Practical Solution No. 24, March 10,2008).There is no impact.
(Application of Accounting Standard for Presentation of Comprehensive Income）
The Company is applying the Accounting Standard for Presentation of Comprehensive Income (ASBJ
Statement No.25, June 30, 2010). To "Accumulated other comprehensive income" and "Accumulated
other comprehensive income" in the previous fiscal year are presented in the amount of "total valuationand translation adjustments" and "valuation and translation adjustments" in the previous year.

《Notes to Consolidated Financial Statements》
27

Notes to the Consolidated Balance Sheets
As of February 28, 2011

As of February 29, 2012

1.Investment in affiliated companies
1.Investment in affiliated companies
Investments in¥2,474 million
Investments in securities¥7,175 million
securities (stock)(stock)Investment amount for¥100 million
Investment amount for¥100 million
jointly-controlled
jointly-controlled
companies
companies
Other (other equity¥ 468 million
Other (other equity¥ 96 million
investments)
investments)
2.Accounts receivable due from franchised stores, 2.Same as in the left
accounts payable due to franchised stores-theamounts of credits and debts incurred for the deal
with franchised stores.
3.Accounts payable-trade for franchised stores－the 3.Same as in the left
amounts payable to vendors for merchandisepurchased by franchised stores.
4.Accounts payable-other due for franchised stores 4.Same as in the left－the amounts payable for supplies purchased by
franchised stores.
5.Deposits received from franchise and lessees-the 5.Same as in the left
amounts received from mainly franchised stores.
6. Revaluation of land used for business
6. Revaluation of land used for businessLand used for business was revalued on the basis
Land used for business was revalued on the basisprescribed by the Law Concerning Revaluation ofprescribed by the Law Concerning Revaluation ofLand (Law No. 34, March 31, 1998). The resulting Land (Law No. 34, March 31, 1998). The resulting
revaluation difference has been included in net
revaluation difference has been included in net
assets as land revaluation difference.
assets as land revaluation difference.

Revaluation method:
The value of land is determined based on the roadbased prices adjusted reasonably as stipulated in
Article 2, Item 4 of the Ordinance Implementing
the Law Concerning Revaluation of Land
(Government Ordinance No. 119, March 31, 1998)
and the assessed value as stipulated in Article 2,
Item 5 of the same Ordinance.
Date of revaluation:
February 28, 2002
The difference between book value andmarket value of the revalued land as of balance
sheet date.
¥269 million

28

Revaluation method:
The value of land is determined based on theroad-based prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance
Implementing the Law Concerning Revaluation ofLand (Government Ordinance No. 119, March 31,
1998) and the assessed value as stipulated in
Article 2, Item 5 of the same Ordinance.
Date of revaluation:
February 28, 2002
The difference between book value andmarket value of the revalued land as of balance
sheet date.
¥287 million

Notes to Consolidated Statements of Income(Millions of yen)
From March 1, 2009 to February 29, 2012
1.Same as in the left

From March 1, 2009 to February 28, 2011
1.Net sales, cost of goods sold, operating
gross profit-the amounts from mainlycompany operated stores.
2.Main account of selling, general and2.Main account of selling, general andadministrative expenses
administrative expenses
Sales promotion and advertising
10,905
Sales promotion and advertising
14,146
Doubtful debt account182
Doubtful debt account8
Salary43,403
Salary45,399Provision for accrued employees’
3,770
Provision for accrued employees’
3,880
bonusesbonuses
Retirement benefit costs
1,810
Retirement benefit costs
1,884
Provision for allowance for retirement
83
Provision for allowance for retirement88
benefits to directors and corporate
benefits to directors and corporate
auditors
auditors
Rent account73,231
Rent account78483
Depreciation of fixed assets
24,529Depreciation of fixed assets
28,007
3.Distribution of loss on disposal of fixed assets
3.Distribution of loss on disposal of fixed assets
1,422
Buildings and structures
2,012 Buildings and structures
Furniture, fixtures and equipment
743 Furniture, fixtures and equipment541
Software153 Leased property
100
Software development in progress
84 Software
2
Other
24 Other
1
4.Distribution of loss on sales of fixed assets
4.Distribution of loss on sales of fixed assets
Buildings and Structures
1,228 Buildings and Structures
28
Furniture, fixtures and equipment
11 Furniture, fixtures and equipment
2
Land
61
Land
10
Other
1
Other
0

29

5. Loss on impairment of long-lived assets
5. Loss on impairment of long-lived assets
The Group recognized an impairment loss mainly for The Group recognized an impairment loss mainly foreach stores as the smallest category bear cash flows.
each stores as the smallest category bear cash flows.
The carrying amount of those assets was written down The carrying amount of those assets was written down
to the recoverable amount. The Group recognized to the recoverable amount. The Group recognizedimpairment loss as special losses on following assets impairment loss as special losses on following assets
due to a decline in value of the related asset categories due to a decline in value of the related asset categories
due mainly to a continuous operating losses.
due mainly to a continuous operating losses.
Category
by uselocation

Tokyo
StoresOthersTotal

Osaka
Others―――AssetsBuildings andstructure furniture,
fixtures andequipment and others〃〃
Software
Others―Category by fixed assets
Buildings and Structure
Furniture, fixtures and equipment
Leased property
SoftwareOther

millionof yen1,223

location

Tokyo
Stores

192
2,128
1,438
6
4,989

Total

Osaka
Others――――――――――

Buildings andstructure furniture,
fixtures andequipment and others
〃
〃
―

546
557
2,213
3,318

2,101
251
673
155
136

Recoverable value of the assets of the Group is thehigher amount of net selling price or value in use. Not
selling price of land was calculated based on appraisedvalue by real estate appraiser or contract price, and thevalue in use was calculated by discounting estimatedfuture cash flows to which the 4.3% discount rate wasmainly applied.
6. Loss on disaster
Loss of franchise support
Loss of fixed assets
Other
Total

30

millionof yenAssetsCategory by fixed assets
Buildings and Structure
Furniture, fixtures and equipment
Leased property
Land
Other

2,043
380
1,094
1,438
31

Recoverable value of the assets of the Group is thehigher amount of net selling price or value in use. Not
selling price of land was calculated based on appraisedvalue by real estate appraiser or contract price, and thevalue in use was calculated by discounting estimatedfuture cash flows to which the 3.3% discount rate wasmainly applied.
6.

Category
by use1,793mil
644mil
1,023mil
3,460mil(Notes to the Consolidated Statements of Income of Comprehensive Income)For the fiscal year ended February 29,2012
Comprehensive income of previous year
Comprehensive income attributable to owner of the parent
Comprehensive income attributable to minority interests
Total(Millions of yen)
25,303803
26,106

Other comprehensive income of previous year
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of associates accounted for using equity
Total(Millions of yen)
(19)
(20)
(44)
(83)

31

(Notes to the Consolidated Statements of Changes in Net assets)
Previous period (From March 1, 2010 to February 28, 2011)
1. Number of shares of outstanding stock and treasury stock.
Number of shares at
Increase during the Decrease during the Number of shares atthe end of previous
periodperiodthe end of the period
period(thousand shares)(thousand shares)(thousand shares)(thousand shares)
Outstanding stock
Common stock (*1)
99,6001,602
902
100,300
Treasury stock
Common stock (*2)

432

903

902

433

(*1) The 1,602,000 increase in shares outstanding resulted from the 1,314,000 increase in shares outstanding due to the shareexchange between the Company and Ninety-nine Plus Inc., effective as of July 1, 2010, and the 287,000 increase in shares
outstanding due to the share exchange between the Company and LAWSON ENTERMEDIA, INC., effective as of July 1,
2010.The 902,000 decrease in shares outstanding resulted from the retirement of treasury stock.
(*2) The 903,000 share increase in treasury stock resulted from the 902,000 share increase due to acquisition of treasury stock inaccordance with a Board of Directors' resolution and the 1,000 share increase due to purchase of stock less than one shareunit.
The 902,000 share decrease in treasury stock resulted from the 902,000 share decrease due to retirement of treasury stockand the 0 thousand shares decrease due to requests for additional purchase of stock less than one share unit.

2. Stock acquisition rights and treasury stock acquisition rights
Class and number of shares subject to stock acquisitionrightsTerms ofstock
Number(shares)Classificationacquisition
End
of
the
Increase
Decrease End of theClassrightsprevious during the during theperiodperiodperiodperiodStock
Submitting
acquisitionrightscompany—————(Parent(ordinarycompany)stock
options)
Total
—
—
—
—
—

Balance at
end of thecurrent
period(Millionsof yen)405

405

3. Dividend(1) Dividend payment
Date of resolution
The General
meeting ofshareholders(May 25, 2010)
Directors’ meeting(October 12, 2010)

Class ofsharesAmounts ofdividend payment(Millions of yen)

Dividend
per shares(yen)

Date recorded for
dividend

Effective dateCommon
stock

7,933

80

As of February, 28,2010

As of May, 26,
2010

Common
stock

8,488

85

As of August 31,
2010

As of November,
10, 2010(2) Dividends for which effective date is after Balance sheet date of year-ended, among dividends attributed in the
Current period.
Amounts ofdividend
Date ofClass of Reserve of
Dividend per Date recorded for
payment
Effective date
resolution
sharesDividend
shares (yen)dividend(Millions ofyen)
The General
meeting ofCommon Retained
As of February, 28,
shareholders
8,488
85
As of May, 25, 2011stock
Earnings
2011(May 24,
2011)
32

Current period (From March 1, 2011 to February 29, 2012)
1. Number of shares of outstanding stock and treasury stock.
Number of shares at
Increase during the Decrease during the Number of shares atthe end of previous
periodperiodthe end of the period
period(thousand shares)(thousand shares)(thousand shares)(thousand shares)
Outstanding stock
Common stock
100,300——
100,300
Treasury stock
Common stock (*)

433

0

17

416

(*) The 0 thousand shares increase in treasury stock resulted from the 0 thousand shares increase due to purchase of stock lessthan one share unit.
The 17,000 share decrease in treasury stock resulted from the 17,000 share decrease due to exercise of a right for stockacquisition and the 0 thousand shares decrease due to requests for additional purchase of stock less than one share unit.

2. Stock acquisition rights and treasury stock acquisition rights
Class and number of shares subject to stock acquisitionrightsTerms ofstock
Number(shares)Classificationacquisition
End
of
the
Increase
Decrease End of theClassrightsprevious during the during theperiodperiodperiodperiodStock
Submitting
acquisitionrightscompany—————(Parent(ordinarycompany)stock
options)
Total
—
—
—
—
—

Balance at
end of thecurrent
period(Millionsof yen)442

442

3. Dividend(1) Dividend payment
Date of resolution
The General
meeting ofshareholders(May 25, 2011)
Directors’ meeting(October 13, 2011)

Class ofsharesAmounts ofdividend payment(Millions of yen)

Dividend
per shares(yen)

Date recorded for
dividend

Effective dateCommon
stock

8,488

85

As of February, 28,
2011

As of May, 26,
2011

Common
stock

8,688

87

As of August 31,
2011

As of November,
10, 2011(2) Dividends for which effective date is after Balance sheet date of year-ended, among dividends attributed in the
Current period.
Amounts ofdividend
Date ofClass of Reserve of
Dividend per Date recorded for
payment
Effective date
Dividend
shares (yen)dividend
resolution
shares(Millions ofyen)
The General
meeting ofCommon Retained
As of February, 29,
shareholders
9,289
93
As of May, 30, 2012stock
Earnings
2012(May 24,2011)

33

Notes to the Consolidated Statements of Cash Flows
1. Relations between the year-end balance of cash and cash equivalents and the accounts listed in the consolidatedbalance sheets(Millions of yen)
As of February 28, 2011
Cash and bank deposits
79,074Marketable securities
4,999
Time deposits, etc., for which the deposit period exceeds(10,104)
three months
Cash and cash equivalents
73,6702. Description of significant non-fund transactions
Assets and liabilities related to finance lease transactions newly recognized for the year ended February 29,
2012 were 21,969 million yen respectively.
3. Details of assets and liabilities of companies that have been newly consolidated through the acquisition ofsharesAssets and liabilities of the transfer of business at the time when it was newly consolidated through theadditional acquisition of Investments in capital by the Company, as well as the acquisition price of shares in
SHANGHAI HUALIAN LAWSON CO., LTD. and payment for acquisition were as follows:(Millions of yen)
Current assets
1,241
Fixed assets
590
Goodwill
2,675
Current liabilities(1,226)
Fixed liabilities(36)
Foreign currency translation adjustments
29
Minority interests(85)
Acquisition price of Investments in capital in newly consolidated
3,188
company
Gain on step acquisitions(1,570)Book amount before consolidated(278)
Foreign currency translation adjustments
15
Cash and cash equivalents held by newly consolidated company(368)
Actual cost of acquisition of shares in newly consolidated company(982)
5. Details of assets and liabilities of companies that have been newly acquisited through the transfer of business
Assets and liabilities of the transfer of business when it was newly acquisited through the transfer of businessby the Company, as well as the acquisition price of the transfer of business and payment for the transfer ofbusiness were as follows:(Millions of yen)
Current assets
281
Fixed assets
2,665
Goodwill
1,545
Current liabilities(359)
Fixed liabilities(526)
Acquisition price of the transfer of businesss
3,607
Cash and cash equivalents held by the business(191)
Actual payment of acquisition of the business
3,415

34

Notes to Lease Contracts
1. Finance lease transactions (lessees)
Non-ownership-transferred finance lease transactions(i) Details of leased assets
Mainly store furniture (including fixtures and fittings) used in the convenience store business(ii) Depreciation method for leased assets
As stated in the Basis of Presentation of the Consolidated Financial Statements under “4.Accounting
standards (2) Depreciation methods for important depreciable assets.”
With regard to non-ownership-transferred finance lease transactions whose effective date of lease transaction
precedes February 28, 2009, the Company applies the accounting method that it uses to account for ordinary
lease transactions. Details of the transaction are summarized below.
(1) The assumed data as to acquisition cost, accumulated depreciation and net leased property(Millions of yen)
As of February 28, 2011 As of February 29, 2012
Furniture, fixtures and equipment
Acquisition cost
44,12830,181
Accumulated depreciation
27,88021,057
Accumulated impairment loss
1,128
754
Leased property
15,1198,368(2) Obligations under finance leases
Furniture, fixtures and equipment
Due within one year
Due after one year
Total
Allowance for impairment loss on leased property

6,970
10,076
17,047760(3) Lease payments, depreciation expense, interest expense and impairment loss
Lease payments
9,290
Transfer from allowance for impairment loss on leased property
553
Depreciation expense
8,973Interest expense
631
Impairment loss
861

4,324
5,411
9,735
760

6,940
444
6,627
389
388

(4) Computation method of depreciation expense
Depreciation expense is computed by the straight-line method, assuming the lease period as the useful lifeand no residual value.
(5) Computation method of interest expense
The difference between the total lease contract amount and the acquisition cost is assumed to be interest,and interest expense is computed by the interest method.

2. Operating lease contracts
Obligations under operation leases(Millions of yen)
As of February 28, 2011 As of February 29, 2012
785
910
1,320
1,526
2,106
2,437

Due within one year
Due after one year
Total

35

Notes to Market Value Information of Securities(As of February 28, 2011)
1.
Information regarding marketable held-to-maturity debt securities as of February 28, 2011, was as follows:(Millions of yen)Book value per
Unrealized gain
Market value
Description
Type
consolidated(loss)
balance sheets
Securities with market Government and－－－value exceeding book municipal bonds, etc.
value per consolidated Corporate Bonds－－－
balance sheets
Other
－
－
－
Subtotal－－－
Securities with book
Government and
2,999
2,999
(0)
value per consolidated municipal bonds, etc.
balance sheets
Corporate Bonds－－－
exceeding market value Other
－
－
－
(0)
Subtotal
2,999
2,999
Total
2,999
2,999
(0)
2.

Information regarding marketable available-for-sale securities as of February 28, 2011, was as follows:(Millions of yen)Book value per
Unrealized gain
Description
Type
consolidated
Cost(loss)
balance sheets
Equity－－－Securities with costexceeding book value Bond certificate－－－
per consolidated
Other
－
－
－
balance sheets
Stock
Subtotal－－－
Securities with book
144
166
Equity(21)
value per consolidated
Bond certificate－－－
balance sheets
Other
－
－
－
exceeding cost
Stock
Subtotal
144
166
(21)
144

Total

166

3. Information regarding available-for-sale securities sold during the year was as follows:(Millions of yen)
Proceeds from the sale Total gain from the sale Total loss from the
sale
54
1
13

36

(21)

(As of February 29, 2012)
1.
Information regarding marketable held-to-maturity debt securities as of February 29, 2012, was as follows:(Millions of yen)Book value per
Unrealized gain
Description
Type
consolidated
Market value(loss)
balance sheets
Securities with market Government and－－－value exceeding book municipal bonds, etc.
value per consolidated Corporate Bonds－－－
balance sheets
Other
－
－
－
Subtotal－－－
Securities with book
Government and
4,999
4,999
(0)
value per consolidated municipal bonds, etc.
balance sheets
Corporate Bonds－－－
exceeding market value Other
－
－
－
(0)
Subtotal
4,999
4,999
Total
4,999
4,999
(0)
2.

Information regarding marketable available-for-sale securities as of February 29, 2012, was as follows:(Millions of yen)Book value per
Unrealized gain
Description
Type
consolidated
Cost(loss)
balance sheets
5
Equity3
1Securities with costexceeding book value Bond certificate－－－
per consolidated
－
Other
－
－
balance sheets
5
Stock
Subtotal
3
1
109
Securities with book
166
Equity(56)
value per consolidated－
Bond certificate－－
balance sheets
－
Other
－
－
exceeding cost
Stock
109
Subtotal
166
(56)
Total

115

169

3. Information regarding available-for-sale securities sold during the year was as follows:
none

Note to Derivative Transactions(As of February 28, 2011)
None of disclosure is required because The Lawson group made no derivative transactions.
(As of February 29, 2012)
None of disclosure is required because of its small effect for the Lawson group.

37

(54)

Note to Retirement Benefits
From March 1, 2010 to February 28, 2011
1. Summary of the retirement benefit plans adopted
The Company and certain domestic subsidiary have defined benefit - lump - sum severance indemnity
plans which cover substantially all of their employees.
The Company established a trust fund for its lump - sum severance indemnity plan. In addition, theCompany has a defined Contribution plan for severance payments.
2. Projected benefit obligations(Millions of yen)a
Projected benefit obligations(13,676)bPlan assets
5,577
cProjected benefit obligation in excess of(8,099)plan assets (a + b)d
Unrecognized prior service cost527eUnrecognized actuarial differences
42f
Reported amount on the consolidated(7,529)balance sheets, net (c + d + e )Notes: Consolidated subsidiaries adopted the simplified method to calculate the projected benefit obligation.
3. Net periodic benefit cost
(Millions of yen)
1,028
a Service cost249
b Interest cost
174
c Amortization of prior service cost85d Amortization of actuarial differences
1,537
e Net periodic benefit cost(a+b+c+d)271
f Contribution to defined contribution plan
1,809
g Total (= e + f)
Notes: Net periodic benefit cost for consolidated subsidiaries, which adopted the simplified method, areincluded in “a. Service cost.”
4. Basis of calculation of projected benefit
obligationsaDiscount rateb
Expected rate of return on plan assetsc
Allocation method of estimated total
retirement benefits

d

e

2.0 ％
0 ％
Straight-line basis (a method to allocate
estimated total retirement benefits equally torespective periods in employee's wholeservice period)
Amortization period of prior service cost
10 years
Prior service cost is amortized, starting the fiscal year incurred, on a straight-line basis over acertain period within an average remaining service period of employees.
Recognition of actuarial differences
10 years
Actuarial differences will be amortized from the following fiscal year on a straight-line basis
over a certain period within an average remaining service period of employees at the time of
their occurrence.

38

From March 1, 2011 to February 29, 2012
1. Summary of the retirement benefit plans adopted
The Company and certain domestic subsidiary have defined benefit - lump - sum severance indemnity
plans which cover substantially all of their employees.
The Company established a trust fund for its lump - sum severance indemnity plan. In addition, theCompany has a defined Contribution plan for severance payments.
2. Projected benefit obligations(Millions of yen)a
Projected benefit obligations(14,890)bPlan assets
5,577
cProjected benefit obligation in excess of(9,312)plan assets (a + b)d
Unrecognized prior service cost351
eUnrecognized actuarial differences
216
f
Reported amount on the consolidated(8,745)balance sheets, net (c + d + e )Notes: Consolidated subsidiaries adopted the simplified method to calculate the projected benefit obligation.
3. Net periodic benefit cost
(Millions of yen)
1,076
a Service cost
Interest
cost
265
b
173
c Amortization of prior service cost92
d Amortization of actuarial differences
1,607
e Net periodic benefit cost(a+b+c+d)277
f Contribution to defined contribution plan
1,884
g Total (= e + f)
Notes: Net periodic benefit cost for consolidated subsidiaries, which adopted the simplified method, areincluded in “a. Service cost.”
4. Basis of calculation of projected benefit
obligationsaDiscount rateb
Expected rate of return on plan assetsc
Allocation method of estimated total
retirement benefits

d

e

2.0 ％
0 ％
Straight-line basis (a method to allocate
estimated total retirement benefits equally torespective periods in employee's wholeservice period)
10 years
Amortization period of prior service cost
Prior service cost is amortized, starting the fiscal year incurred, on a straight-line basis over acertain period within an average remaining service period of employees.
Recognition of actuarial differences
10 years
Actuarial differences will be amortized from the following fiscal year on a straight-line basis
over a certain period within an average remaining service period of employees at the time of
their occurrence.

39

Notes to Accounting for income taxes
1. Deferred tax assets and liabilities were described as follows:
As of February 28, 2011
Deferred tax assets
Enterprise taxes payable
Accrued employees' bonuses
Excess of depreciation
Excess of amortization ofsoftware
Allowance for employees’
retirement benefits
Allowance for doubtful accounts
Impairment loss
Tax loss carryforward
Loss on replacement ofcomputer system
Other
Subtotal of deferred tax assets
Valuation allowances
Total deferred tax assets
Affiliates’ stock (paid-in capitaldecrease)
Total deferred tax liabilities
Deferred tax assets-net(Millions of yen)
As of February 29, 2012

935
1,562
6,832
788

1,281
1,304
9,051
739

5,333

5,230

3,377
3,288
5,421
－

3,503
2,929
5,609
－

3,302
30,842(10,304)
20,537

3,503
33,154(9,433)23,721(2,340)(2,050)(2,340)(2,050)18,197

21,6702. The difference between the normal effective statutory tax rate and the actual effective tax rate for previous
fiscal year is reconciled as follows:(As of February 28, 2011)
The reconciliation between the statutory tax rate and the effective tax rate for previous and current fiscal year
has not been disclosed because the difference is less than 5% of the statutory tax rate.
(As of February 29, 2012)
The reconciliation between the statutory tax rate
(Adjustments)
Increase of Valuation allowances
Tax loss carryforward
Residents’ tax
Permanent difference in entertainment expenses
Decrease in deferred tax assets due to tax rate changes
Otherthe effective tax rate for previous and current fiscal year

40.7%
(1.4%)
0.2%
0.7%
0.5%
3.1%
0.8%
44.6%

3. Fix the amount of deferred tax assets due to changes in statutory tax rate
Implementing measures for the reconstruction from effects of the Great East Japan Earthquake and the law torevise the part of the income tax, etc. in order to build a tax system in response to changes in the structure of
the economy and society "(Law No. 114) of the corporate tax rate from fiscal year will be promulgated on
December 2, 2011 special Measures Law "(No. 117) concerning the assurance of the financial resources
needed to, beginning on or after April 1, 2012 became that special corporate income tax cuts andreconstruction is carried out.
As a result, the statutory tax rate used to calculate the deferred tax assets and deferred tax liabilities for40

fiscal years beginning on March 1, 2015 for fiscal years beginning on March 1, 2013 from 40.7% ofconventional temporary differences are expected to eliminate 38.0% to, eliminate temporary differences are
expected for fiscal years beginning on or after March 1, Heisei 28 will be 35.6%.
The effect of this tax rate change (net of the amount of deferred tax liabilities) the amount of deferred tax
assets decreased by ¥ 1,586 million and income taxes will have increased by 1,586 million yen.

41

Segment Information
From March 1, 2010 to February 28, 2011
1. Business segment information(From March 1, 2010 to February 28, 2011)
The Company operates mainly the franchised store business and total operating revenue,
operating income and total assets of the franchised store business account for more than
90% of the respective consolidated totals at all segments for both current and previous fiscal
years, therefore information by industry segment is excluded.
2. Geographic segment information(From March 1, 2010 to February 28, 2011)
Net sales in Japan account for more than 90% of total net sales at all segments for current fiscal years,
therefore geographical segment information is excluded.
3. Overseas sales(From March 1, 2010 to February 28, 2011)
Overseas sales account for less than 10% of consolidated sales at all segments for both current and previous
fiscal years, therefore, overseas sales information is excluded.
From March 1, 2011 to February 29, 2012i) Outline of reporting segments
The Company’s financial information is provided separately by reporting segment and is subject to regularreview by the board of directors with regard to the allocation of managerial resources and performance
evaluation.The Group’s primary business is the operation of convenience stores, which is undertaken by theincorporation of related businesses.
Therefore, the Group has made the convenience store unit its main reporting segment, based on
consideration of financial characteristics and the nature of the services provided.
LAWSON, 99plus and LAWSON Toyama running the LAWSON, NATURAL LAWSON, LAWSONSTORE 100 and other chains, the convenience store unit operates a franchise system as well as undertaking
the direct management of stores in Japan.
ii) Information related to the amount of sales, profit and loss by segmentfrom March 1, 2010, to February 28, 2011)(Millions of yen)
Convenience
Store business

Others (Note 1)

Total

Adjusted
amountAmount posted on theConsolidated profit andloss statement (Note 2)

Total operating
revenues
Sales to external403,647
37,630441,277－
customers
Internal sales or
1,651
2,073
3,724
(3,724)transfers between
segments
Total
405,298
39,703445,002(3,724)
Segment profit
51,395
4,107
55,50336
Segment asset
459,902
30,637490,540(14,503)
Other
depriciation
30,7001,684
32,384－
Goodwill
557
175
733
(34)
depreciation
Invest for
1,724
1,724
－
－
affiliates
Increase of
29,853
540
30,394－fixed assets(Note)
1. The “others” category refers to business segments that do not fall under the main reporting segment andincludes the entertainment/e-commerce segment and overseas segment.
42441,277－

441,277
55,540476,036
32,384698
1,724
30,394

2. The segment profit is adjusted against the operating profits consolidated.

from March 1, 2011, to February 29, 2012)(Millions of yen)
Convenience
Store business

Others(Note 1)

Total

Adjusted
amountAmount posted on theConsolidated profit andloss statement (Note 2)

Total operating
revenues
Sales to external
413,899
65,057478,957－
customers
Internal sales or
1,975
2,129
4,105
(4,105)transfers between
segments
Total
415,875
67,187
483,062(4,105)
Segment profit
57,371
4,445
61,816(46)
Segment asset
520,992
46,607567,599(36,146)
Other
depriciation
34,3762,520
36,896－
Goodwill
676
306
983
(34)
depreciation
Invest for
2,786
4,241
7,027
－
affiliates
Increase of
35,2881,027
36,315－fixed assets(Note)
1. The “others” category refers to business segments that do not fall under the main reporting segment andincludes the entertainment/e-commerce segment and overseas segment.
2. The segment profit is adjusted against the operating profits consolidated.

478,957－

478,957
61,769531,453
36,896948
7,027
36,315(Additional Information)
Effective from this fiscal period, the "Accounting Standards for Disclosure of Segment
Information, Etc." (ASBJ Statement No. 17, March 27,2009) and the "Guidance for Application of the
Accounting Standards for Disclosure of Segment Information, Etc."(ASBJ Guidance No. 20, March 21, 2008)
shall apply here to.

43Related Party Transactions(As of February 28, 2011)
Companies with the Same Parent as the Company Submitting Consolidated Financial Statements and Other
Subsidiaries of Affiliates of the Company Submitting Consolidated Financial Statements

Attribute

Relationship with theCompany
CapitalTransaction
Business
Description
Company
stock
Equity ownershipamountLocationline orof
Director's'
name(Millionspercentage(Millions ofBusiness
profession
transactions
posts heldyen)of yen)relationshipconcurrently

Affiliated RYOSHOK Ota-ku,
companies U
Tokyo
LIMITED

10,630 Sales ofprocessed
foods－(Ownership)
Direct 0.3%

VendorIndirect ―FoodService
Network
Co.,Ltd

Chuo
-ku,
Tokyo

2,000

－

Sales of fast (Ownership)
foods and Direct ―daily
deliveredIndirect ―foods

Vendor

Account
item

Endingbalance(Millions ofyen)

Purchases
for theCompanyoperated
stores3,285

Accounts
payabletrade

210(Purchases
for thefranchised
stores)(74,708) Accounts
payabletrade for
franchised
stores

5,348

Purchases
for theCompanyoperated
stores

10,229Accounts
payabletrade732(Purchases
for thefranchised
stores)(227,351) Accounts
payabletrade for
franchised
stores19,387

Transaction conditions and the principles on the decision thereof：
The terms and conditions for purchase transactions are determined as the same as those for other generalbusiness transactions, except that regarding the purchases made for the franchised stores, the Company acts
as an alternative payer, not as direct party of purchase.
Companies with the Same Parent as the Company Submitting Consolidated Financial Statements and Other
Subsidiaries of Affiliates of the Company Submitting Consolidated Financial Statements

Attribute

Relationship with theCompany
CapitalTransaction
Business
Description
Company
Equity ownershipstock
amountLocationline orof
Director's'
name(Millionspercentage(Millions ofBusiness
profession
transactions
posts
held
of yen)yen)
relationshipconcurrently

Affiliated RYOSHOK Ota-ku,
companies U
Tokyo
LIMITED

10,630 Sales ofprocessed
foods―(Ownership)
Direct 0.3%
Indirect ―Vendor

Account
item

Purchases
for theCompanyoperated
stores49,976

Accounts
payabletrade

3,760(Purchases
for thefranchised
stores)(9,347)

Accounts
payabletrade for
franchised
stores1,241

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

44

Endingbalance(Millions ofyen)(As of February 29, 2012)
Companies with the Same Parent as the Company Submitting Consolidated Financial Statements and Other
Subsidiaries of Affiliates of the Company Submitting Consolidated Financial Statements

Attribute

Relationship with theCompany
CapitalTransaction
Business
Description
Company
stock
Equity ownershipamountLocationline orof
Director's'
name(Millionspercentage(Millions ofBusiness
profession
transactions
posts heldof yen)yen)
relationshipconcurrently

Affiliated RYOSHOK Ota-ku,
companies U
Tokyo
LIMITED

10,630 Sales ofprocessed
foods－(Ownership)
Direct 0.3%

VendorIndirect ―Purchases
for theCompanyoperated
stores(Purchases
for thefranchised
stores)Food
Service
Network
Co.,Ltd

Chuo
-ku,
Tokyo

2,000

－

Sales of fast (Ownership)
foods and Direct ―daily
deliveredIndirect ―foods

VendorPurchases
for theCompanyoperated
stores(Purchases
for thefranchised
stores)3,268

Account
item

Endingbalance(Millions ofyen)Accounts
payabletrade210(101,071) Accounts
payabletrade for
franchised
stores

5,348

9,614

Accounts
payabletrade732(267,302) Accounts
payabletrade for
franchised
stores19,387

Transaction conditions and the principles on the decision thereof：
The terms and conditions for purchase transactions are determined as the same as those for other generalbusiness transactions, except that regarding the purchases made for the franchised stores, the Company acts
as an alternative payer, not as direct party of purchase.
Companies with the Same Parent as the Company Submitting Consolidated Financial Statements and Other
Subsidiaries of Affiliates of the Company Submitting Consolidated Financial Statements

Attribute

Relationship with theCompany
CapitalTransaction
Business
Description
Company
Equity ownershipstock
amountLocationline orof
Director's'
name(Millionspercentage(Millions ofBusiness
profession
transactions
posts heldyen)of yen)relationshipconcurrently

Affiliated RYOSHOK Ota-ku,
companies U
Tokyo
LIMITED

10,630 Sales ofprocessed
foods―(Ownership)
Direct 0.3%
Indirect ―Vendor

Account
item

Purchases
for theCompanyoperated
stores50,838

Accounts
payabletrade

4,147(Purchases
for thefranchised
stores)(21,620)

Accounts
payabletrade for
franchised
stores

1,811Transaction conditions and the principles on the decision thereof：
The terms and conditions for purchase transactions are determined as the same as those for other generalbusiness transactions, except that regarding the purchases made for the franchised stores, consolidated
subsidiary acts as an alternative payer, not as direct party of purchase.

45

Endingbalance(Millions ofyen)Notes regarding significant subsequent events
Previous period (From March 1, 2010 to February 28, 2011)
As a result of the earthquake off the pacific coast of Tohoku, which occurred on March 11, 2011, some of the
LAWSON Group stores in the Tohoku region and the Kanto region including Ibaragi Prefecture have been
affected. Some of their merchandise and fittings fell, tipped over or broke and buildings have been damaged or
suffered from power outages. Some of the stores, mainly in Iwate and Miyagi Prefectures, remained closed or
opening hours were shortened. In addition, due to the influence of the planned power outages mainly in the Kanto
region, opening hours have been shortened for some stores and there has been a delay in the delivery of goods.
The extent of the damage to the Company caused by this earthquake is currently being studied. The influence on
the Company’s operational activities, etc., the outlook for recovery and the amount of damage including the costof repairs are not yet clear.
Present period (From March 1, 2011to February 29, 2012)
None

46

5. Non-Consolidated Financial Statements etc.
(1) Non-Consolidated Balance Sheets (Unaudited)
As of February 28, 2011 and February 29, 2012
February 28, 2011
Current assets:
Cash and bank deposits
68,743
Accounts receivable—due from franchised stores
15,661Marketable securities
2,999
Merchandise inventories
862
Prepaid expenses
6,599
Accounts receivable—other
23,641
Deferred tax assets
3,344
Other
1,459
(77)
Allowance for doubtful accounts
Total current assets
123,234
Fixed assets:
Property and store equipment;
Buildings
146,815
Accumulated depreciation(68,710)
78,104
Buildings－net
Structures
33,709
Accumulated depreciation(22,492)
11,216Structures－net
53,619Vehicles, tools, furniture and fixtures(42,656)
Accumulated depreciation
10,962
Vehicles, tools, furniture and fixtures－net
6,609
Land
41,140
Lease assets(7,063)
Accumulated depreciation
34,076
Lease assets－net
643
Construction in progress
Subtotal
141,614
Intangible fixed assets;
Goodwill
1,163
Right of leasehold
84
Right of trademark
85
Right of telephone
288
Software
21,627
Software in progress
4,674
Other
2
Subtotal
27,925Investments and Other;
Investments in Securities
438
Stocks of subsidiaries and affiliates
16,656
Investments in affiliated limited
924
Long-term loans receivable
31,756Long-term loans receivable from subsidiaries and affiliates
8,100
Long-term prepaid expenses
5,252
Lease deposits
77,164
Deferred tax assets
11,693Other
1,662(1,601)
Allowance for doubtful accounts
Subtotal
152,046
Total fixed assets
321,586
Total assets
444,821

47（Millions of yen）
February 29, 2012
75,38918,064
4,999
807
7,070
26,212
3,122
2,245
(73)
137,840

166,654(79,968)
86,68635,825(24,699)
11,12656,049(44,164)
11,884
6,815
57,959(14,171)
43,787
1,776
162,075
871
84
82
287
17,8918,194
127,413460
27,2883,006
32,075
9,907
7,551
78,45014,475
1,502(1,380)173,337
362,826
500,667

Non-Consolidated Balance Sheets (Unaudited) - Continued
February 28, 2011

（Millions of yen）
February 29, 2012

1,907
65,725
1,171
5,870
5,893
13,396
138
9,738
2,635
1,821
52,5483,610925
14165,398

1,796
70,955
1,006
15,8308,545
13,780122
14,2591,046
1,757
63,587
3,012
556
147
196,405

22,612
7,036
212

30,6998,188
289

37,240562－
310
67,97435,718655
11,642
241
87,435

233,372

283,840

58,50658,506

47,696－
47,696

47,696
10
47,707727

727

50,00056,455
107,182(1,693)211,692

50,00061,673
112,400(1,627)
216,986

Valuation and translation adjustments;
Net unrealized gain on available-for-sale securities
Land revaluation difference
Valuation and translation adjustments

(14)
(634)
(648)

(35)
(567)
(602)

Stock acquisition rights

405

442

211,448444,821

216,826
500,667

Current liabilities:
Accounts payable —trade
Accounts payable —trade for franchised stores
Accounts payable — due to franchised stores
Short-term loans payable to subsidiaries and affiliates
Lease obligations
Accounts payable — otherAccounts payable — other for franchised stores
Income taxes payable
Consumption taxes payable
Accrued expenses
Deposits received
Accrued employees’ bonuses
Provision for use of points granted
Other
Total Current liabilities
Long-term Liabilities;
Long-term lease obligations
Allowance for employees’ retirement benefits
Allowance for retirement benefits to executive officers
and corporate auditors
Deposits received from franchisees and lessees
Accumulated impairment loss on long-term leased assets
Asset retirement obligations
Other
Total Long-term Liabilities
Total Liabilities
Shareholders’ equity;
Common stock
Capital surplus
Additional paid-in capital
Other
Total capital surplus
Retained earnings
Legal reserve
Other legal reserve
General reserve
Earned surplus brought forward
Total retained earnings
Treasury stock
Total Shareholders’ equity

Total net assets
Total Liabilities and net assets
48

(2) Non-Consolidated Statements of Income (Unaudited)
For the fiscal year ended February 28, 2011 and February 29, 2012
February 28, 2011
Total operating revenues
Net sales
Cost of goods soldInventory at beginning of year
Purchase amount
Total
Inventory at end of year
Cost of goods sold
Gross profit on sales（Millions of yen）
February 29, 2012

263,20946,641

272,498
39,417

1,063
32,852
33,915862
33,053
13,587862
27,98028,843807
28,035
11,382

Operating revenues:
Franchise commission from franchised stores
Other
Operating gross profit
Selling, general and administrative expenses

193,746
22,821
230,156
179,945

209,045
24,035
244,462
188,199

Operating profit

50,21056,263

Non – operating income and expenses:
Non – operating income;Interest received
Compensation income for damage
Compensation income for removal
Other
Non – operating expenses;
Interest expense
Loss on cancellation of store lease
Other
Recurring profit

1,297
679
64
177
376
2,195
768
1,075
351
49,312

1,638
725
－
348
564
1,791
850
579
361
56,110

75
－
1
73
－
－
7,180
2,926
1,303
2,410
－
－

97
50
－
－
44
2
15,074
1,888
－
2,764
3,229
6,823

540
42,206369
41,133

14,984
2,579
24,643

21,216(2,545)
22,462Extraordinary gains and losses:
Extraordinary gains;
Gain on sales of fixed assets
Gain on sales of investment securities
Gain on sales of subsidiaries and affiliates’ stock
Gain on reversal of subscription rights to shares
Other
Extraordinary losses;
Loss on disposal of fixed assets
Loss on sales of fixed assets
Loss on impairment of long-lived assets
Loss on disaster
Loss on adjustment for changes of accounting standard
for asset retirement obligations
Other
Income before income taxes and minority interests
Income taxes:
Income taxes - current
Deferred income taxes
Net profit49

(3) Non-Consolidated Statements of Changes in Net Asset

Shareholders’ equity:
Common stock and preferred stock
Balance at the end of the previous period
Changes during the current period
Total changes during the current period
Balance at the end of the current period
Capital surplus common stock and preferred stock
Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Total changes during the current period
Balance at the end of the current period
Other capital surplus
Balance at the end of the previous period
Changes during the current period
Exercise of subscription rights to shares(Issuance of treasury stock)Total changes during the current period
Balance at the end of the current period
Total capital surplus
Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Exercise of subscription rights to shares(Issuance of treasury stock)Total changes during the current period
Balance at the end of the current period
Retained earnings
Legal earnings reserve
Balance at the end of the previous period
Changes during the current period
Total changes during the current period
Balance at the end of the current period
Other earned surplus
Special reserve fund
Balance at the end of the previous period
Changes during the current period
Total changes during the current period
Balance at the end of the current period
Earned surplus carried forward
Balance at the end of the previous period
Changes during the current period
Cash dividends paid
Net profit
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation differences, net of tax
Total changes during the current period
Balance at the end of the current period
Total retained earnings
Balance at the end of the previous period
Changes during the current period
Cash dividends paid
Net profit
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation differences, net of tax
Total changes during the current period
Balance at the end of the current period
50

February 28, 2011

（Millions of yen）
February 29, 2012

58,50658,506－58,506－58,506

41,52047,696

6,176
6,176
47,696－－
47,696

－

－

－

10

－
－

10
10

41,52047,696

6,176
－

－
10

6,176
47,696

10
47,707

727

727

－
727

－
727

50,00050,000－50,000－50,00051,76256,455(16,422)
24,643(0)(3,528)－4,692
56,455(17,177)
22,462
－
－
(67)
5,217
61,673

102,490

107,182(16,422)
24,643(0)(3,528)－
4,692
107,182(17,177)
22,462
－
－
(67)
5,217
112,400

Non-Consolidated Statements of Changes in Net Assets - Continued（Millions of yen）
February 28, 2011

February 29, 2012

(1,713)(1,693)(3,510)
1
3,528
－

(3)
－
－
69

19

65

(1,693)(1,627)200,803

211,692

6,176(16,422)
24,643(3,510)1－－－(17,177)
22,462
(3)
－
(67)
80

10,8885,294

211,692

216,986

(8)

(14)

(5)
(5)
(14)

(21)
(21)
(35)

(634)

(634)

－
－
－
(634)

67
－
67
(567)

(643)

(648)

－
(5)
(5)
(648)

67
(21)
45
(602)

346

405

59
59
405

37
37
442

Treasury stock
Balance at the end of the previous period
Changes during the current period
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Exercise of subscription rights to shares(Issuance of treasury stock)Total changes during the current period
Balance at the end of the current period
Total shareholders’ equity
Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Cash dividends paid
Net profit
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation differences, net of tax
Exercise of subscription rights to shares(Issuance of treasury stock)Total changes during the current period
Balance at the end of the current period
Valuation and translation adjustments:
Unrealized holding gains on securities, net of tax
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Land revaluation difference, net of tax
Balance at the end of the previous period
Changes during the current period
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Total valuation and translation adjustments
Balance at the end of the previous period
Changes during the current period
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Stock acquisition rights
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period51

Total net assets
Balance at the end of the previous period
Changes during the current period
Increase by share exchanges
Cash dividends paid
Net profit
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land
Exercise of subscription rights to shares(Issuance of treasury stock)
Net changes of items other than shareholder’s equity
Total changes during the current period
Balance at the end of the current period

52

200,506

211,448

6,176(16,422)
24,643(3,510)1－－－(17,177)
22,462
(3)
－
－
80

53
10,942
211,448

15
5,377
216,826

《Notes Concerning Going Concern Assumption》
None《Summary of Significant Accounting Policies》
1. Marketable Securities and investments in securities:
Held-to-maturity debt securities: Carried at amortized cost.
Investments in subsidiaries and affiliated companies: Stated at cost determined by the moving-averagemethod.
Available-for-sale securities:
Securities whose market value is readily determinable: Reported at market value, with unrealized
gains and losses, net of applicable taxes, reported in 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. Inventories:
About the product, have adopted the retail cost method.
(For balance sheet is calculated by the method according to the book value write-down based on the
reduction of profitability)
3. Depreciation method of depreciable assets
Property and store equipment(except lease assets):
Depreciation is computed by the declining-balance method at rates based on the estimated useful livesof the assets. The range of useful lives is from 10 to 34 years for buildings and from 5 to 8 years forfurniture, fixtures and equipment.
Intangible fixed assets:(except lease assets):
Amortization of intangible assets is computed by the straight-line method.
Software costs of software for internal use are amortized by the straight-line method over 5 years,
which is the internal useful life.
Lease assets:
Previously, these leases were accounted for as rental transactions. Furthermore, in terms of thedepreciation method for leased assets related to finance leases that do not transfer ownership of leased
property, the Company applies the straight-line method using the lease term as the useful life and aresidual value of zero.
However, the Company has continued to treat as rental transactions finance leases that do not transfer
ownership of leased property and that commenced before the first fiscal year in which the new
accounting standard was applied.
Long - term prepaid expense
Amortization of long-term prepaid expense is computed by the straight - line method.
4. Accounting standard for important reserves
Allowance for Doubtful Accounts:
Allowance for doubtful accounts is provided at an amount of possible losses from uncollectable
receivables based on the actual rate of losses from bad debt for ordinary receivables, and on estimatedrecoverability for specific doubtful receivables.
Accrued Employees’ Bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimatedamounts.
Provision for use of points granted:
The Company provides mainly MY LAWSON POINT holders and LAWSON PASS holders whenpurchasing goods, an entitlement to certain points that the holder can redeem for a discount on
subsequent purchases from LAWSON stores.
Allowance for Employees’ Retirement Benefits:
Allowance for employees’ retirement benefits is provided at the amount accrued based on the projected
benefit obligations and plan assets at the balance sheet date. Actuarial differences will be amortizedfrom the following fiscal year on a straight-line basis over a certain period (10 years) within an averageremaining service period of employees at the time of their occurrence. Prior service cost is amortized,
53

starting the fiscal year incurred, on a straight-line basis over a certain period (10 years) within an
average remaining service period of employees.
Allowance for retirement benefits to directors and corporate auditors:
Allowance for retirement benefits to corporate auditors and executive officers of the Company iscalculated to state the liability at 100% of the amount that would be required if all corporate auditors,
executive officers resigned their services with the Company at the balance sheet date.
5. Accounting for consumption tax
Consumption tax is accounted for using the tax exclusion method.
《Important change in accounting method》
Application of Accounting Standards etc. for Asset Retirement Obligations
Effective from the current fiscal year, the Company has adopted the Accounting Standards for Asset
Retirement Obligations (ASBJ Statement No. 18, March 31, 2008) and the Implementation Guidanceon Accounting Standards for Asset Retirement Obligations (ASBJ Guidance No. 21, March 31, 2008).
As a result, operating income and ordinary income decreased ¥625 million respectively, and income
before income taxes declined ¥7,472 million.

54

《Notes to Non-consolidated Financial Statements》
Notes to the Non-consolidated Balance Sheets
As of February 28, 2011

As of February 29, 2012

1.Accounts receivable due from franchised stores,
1.Same as in the left
accounts payable due to franchised stores-theamounts of credits and debts incurred for the deal
with franchised stores.
2.Accounts payable-trade for franchised stores－the 2.Same as in the left
amounts payable to vendors for merchandisepurchased by franchised stores.
3.Accounts payable-other due for franchised stores 3.Same as in the left－the amounts payable for supplies purchased by
franchised stores.
4.Deposits received from franchise and lessees-the 4.Same as in the left
amounts received from mainly franchised stores.
5. Contingent liabilities
5.─
we provide guaranteed payable for thefollowing affiliated companies,
Ninety-nine Plus Inc.
¥1,045mil
6..Revaluation of land used for business
6. Revaluation of land used for businessLand used for business was revalued on theLand used for business was revalued on thebasis prescribed by the Law Concerningbasis prescribed by the Law Concerning
Revaluation of Land (Law No. 34, March 31,
Revaluation of Land (Law No. 34, March 31,
1998). Revaluation difference resulted has been1998). The resulting revaluation difference has
included in net assets as land revaluation
been included in net assets as land revaluationdifference, net of the related tax which isdifference.
included in deferred tax assets for land
revaluation.
Revaluation method:
The value of land is determined based on theroad-based prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance
Implementing the Law Concerning Revaluationof Land (Government Ordinance No. 119,March 31, 1998) and the assessed 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 balance sheet
date.
¥269million

55

Revaluation method:
The value of land is determined based on theroad-based prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance
Implementing the Law Concerning Revaluationof Land (Government Ordinance No. 119,March 31, 1998) and the assessed 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 balance sheet
date.
¥287 million

Notes to Non-consolidated Statements of Income
From March 1, 2010 to February 28, 2011
1.Net sales, cost of goods sold, operating
gross profit-the amounts from mainlycompany operated stores.
2.Main account of selling, general andadministrative expenses
Sales promotion and advertising
SalaryProvision for accrued employees’
bonuses
Retirement benefit costs
Provision for allowance for retirement
benefits to directors and corporate
auditors
Rent accountDepreciation of fixed assets(Millions of yen)
From March 1, 2011to February 29, 2012
1.Same as in the left

8,961
23,125
3,610
1,738
51

66,621
21,3122.Main account of selling, general andadministrative expenses
Sales promotion and advertising
SalaryProvision for accrued employees’
bonuses
Retirement benefit costs
Provision for allowance for retirement
benefits to directors and corporate
auditors
Rent accountDepreciation of fixed assets

11,14423,447
3,012
1,760
77

69,73824,191

3.Distribution of loss on disposal of fixed assets
Buildings
1,731
Structures
228
Furniture, fixtures and equipment
720
Software146
Software development in progress
84
Others15

3.Distribution of loss on disposal of fixed assets
Buildings
1,140
Structures
130
Furniture, fixtures and equipment
520
Software96

4.Distribution of loss on sales of fixed assets

4.Distribution of loss on sales of fixed
assetsBuildings
structures
Furniture, fixtures and equipment
Land
Telephone subscription rights

Buildings
structures
Furniture, fixtures and equipment
Telephone subscription rights

1,227
0
11
61
1

56

22
5
2
10
0

5. Loss on impairment of long-lived assets
The Group recognized an impairment loss mainlyfor each stores as the smallest category bear cash
flows.
The carrying amount of those assets was written
down to the recoverable amount. The Group
recognized impairment loss as special losses onfollowing assets due to a decline in value of therelated asset categories due mainly to a continuous
operating losses
Category
by useStoresOsaka
OthersOthersTotalmillionof yenlocation Assets
Tokyo

―
―

5. Loss on impairment of long-lived assets
The Group recognized an impairment loss mainlyfor each stores as the smallest category bear cash
flows.
The carrying amount of those assets was written
down to the recoverable amount. The Group
recognized impairment loss as special losses onfollowing assets due to a decline in value of therelated asset categories due mainly to a continuous
operating losses

Buildings andstructure
furniture,
fixtures andequipment andothers〃〃Software―Category
by use

Tokyo

Osaka
OthersBuildings andstructure
furniture,
fixtures andequipment andothers
〃
〃

―

―

468
Stores
85
1,790
66
2,410

Total

Category by fixed assets(Millions of yen)
Buildings
1,435
Structure
179
Furniture, fixtures and equipment
211
Land
492
Leased property
66
Other
25
Recoverable value of the assets of the Group is thehigher amount of net selling price or value in use.
Not selling price of land was calculated based on
appraised value by real estate appraiser or contract
price, and the value in use was calculated bydiscounting estimated future cash flows to which
the 4.9% discount rate was applied.

57

millionof yenlocation Assets

465

500
1,798
2,764

Category by fixed assets(Millions of yen)
Buildings
1,427
Structure
189
Furniture, fixtures and equipment
201
Leased property
664
Land
155
Other
125
Recoverable value of the assets of the Group is thehigher amount of net selling price or value in use.
Not selling price of land was calculated based on
appraised value by real estate appraiser or contract
price, and the value in use was calculated bydiscounting estimated future cash flows to which the
3.3% discount rate was applied.
6. Loss on disaster
Loss of franchise support
1,749milLoss of fixed assets
546milOther
932milTotal
3,229milNotes to the Non - consolidated Statements of Changes in Net assets
Previous period (From March 1, 2010 to February 28, 2011)
Number of shares of treasury stock
Number of shares at Increase during the Decrease during the Number of shares atthe end of previous
current period
current period
the end of theperiod(thousand shares)(thousand shares)
current period(thousand shares)(thousand shares)
Common stock
432
903
902
433
Note: The 903,000 share increase in treasury stock resulted from the 902,000 share increase due to acquisition oftreasury stock in accordance with a Board of Directors' resolution and the 1,000 share increase due topurchase of stock less than one share unit.
The 902,000 share decrease in treasury stock resulted from the 902,000 share decrease due to retirement oftreasury stock and the 0 thousand shares decrease due to requests for additional purchase of stock less than
one share unit.

.
Current period (From March 1, 2011 to February 29, 2012)
Number of shares of treasury stock
Number of shares at Increase during the Decrease during the Number of shares atthe end of previous
current period
current period
the end of theperiod(thousand shares)(thousand shares)
current period(thousand shares)(thousand shares)
Common stock
433
0
17
416
Note: The 0 thousand shares increase in treasury stock resulted from the 0 thousand shares increase due to purchase of stock
less than one share unit.
The 17,000 share decrease in treasury stock resulted from the 17,000 share decrease due to exercise of a right for stockacquisition and the 0 thousand shares decrease due to requests for additional purchase of stock less than one share unit.

58

Notes to Lease Contracts
1. Finance lease transactions (lessees)
Non-ownership-transferred finance lease transactions(i) Details of leased assets
Mainly store furniture (including fixtures and fittings) used in the convenience store business(ii) Depreciation method for leased assets
As stated in Summary of Significant Accounting Policies under “Accounting standard for important reserves
3.Depreciation method of depreciable assets.”
With regard to non-ownership-transferred finance lease transactions whose effective date of lease transaction
precedes February 28, 2009, the Company applies the accounting method that it uses to account for ordinary
lease transactions. Details of the transaction are summarized below.
(1) The assumed data as to acquisition cost, accumulated depreciation and net leased property(Millions of yen)
As of February 28,
As of February 29, 20122011
Furniture, fixtures and equipment
Acquisition cost
27,31318,060
Accumulated depreciation
16,65911,356
Accumulated impairment loss
964
727
Leased property
9,689
5,977
(2) Obligations under finance leases(Millions of yen)
As of February 28, 2011 As of February 29, 2012

Furniture, fixtures and equipment
Due within one year
Due after one year
Total
Allowance for impairment loss on leased property

3,906
7,108
11,014
562

2,335
4,662
6,997
655

(3) Lease payments, depreciation expense, interest expense and impairment loss
As of February 28, 2011 As of February 29, 2012
Lease payments
5,463
3,887
Transfer from allowance for impairment loss on
382
280
leased property
Depreciation expense
5,430
3,870
Interest expense
351
232
Impairment loss
492
388(4) Computation method of depreciation expense
Depreciation expense is computed by the straight-line method, assuming the lease period as the useful lifeand no residual value.
(5) Computation method of interest expense
The difference between the total lease contract amount and the acquisition cost is assumed to be interest,and interest expense is computed by the interest method.
2. Operating lease contracts
Obligations under operation leases

Due within one year
Due after one year
Total

As of February 28,
2011
435
330
766

59

(Millions of yen)
As of February 29,
2012
909
1,526
2,436

Notes to Marketable Securities and Investments in Securities（February 28,2011）
Investment in subsidiaries and affiliated companies whose fair value is readily determinable as of February 28,
2011 were as follows:(Millions of yen)Book value per
non-consolidated balance
Fair value
Difference
sheetsInvestment in subsidiary
599
449
(149)
（February 29,2012）
Investment in subsidiaries and affiliated companies whose fair value is readily determinable as of February 29,
2012 were as follows:(Millions of yen)Book value per
Fair value
Difference
non-consolidated balance
sheetsInvestment in affiliated
599
591
(7)
company60

Notes to Accounting for income taxes
1. Deferred tax assets and liabilities were described as follows:
As of February 28, 2011*
Deferred tax assets
Enterprise taxes payable
Accrued employees' bonuses
Reversal of write-off investments
in securities
Excess of depreciation
Excess of amortization of software
Allowance for employees’
retirement benefits
Allowance for doubtful accounts
Impairment loss
Other
Total deferred tax assets(Millions of yen)
As of February 29, 2012

832
1,498
1,946

1,166
1,225
1,787

5,456
747
5,132

7,822
673
5,002

437
2,470
1,661
20,183

502
2,717
1,549
22,445

Valuation allowances
Deferred tax assets-net(2,805)
17,378(2,797)
19,648Available-for-sale securities
Total deferred tax liabilities(2,340)(2,340)(2,050)(2,050)

Deferred tax assets-net

15,037

17,598*With regard to the deferred tax liability related to the 1,002 million yen of affiliates’ shares which was assumed
through the share exchange method specified in the Companies Act under Article 796 (3), the amount has not beenrecognized based on the “Guidance on Accounting Standard for Business Combinations and Accounting Standard
for Business Divestitures” (ASBJ Guidance No.10 announced on December 26, 2008).

2. The difference between the normal effective statutory tax rate and the actual effective tax rate is reconciled
as follows:(As of February 28, 2011)
The reconciliation between the statutory tax rate and the effective tax rate for previous and current fiscal year
has not been disclosed because the difference is less than 5% of the statutory tax rate.
(As of February 29, 2012)
The reconciliation between the statutory tax rate
(Adjustments)
Increase of Valuation allowances
Permanent difference in entertainment expenses
Permanent difference in dividends income
Residents’ tax
Decrease in deferred tax assets due to tax rate changes
Othersthe effective tax rate for previous and current fiscal year

40.7%
0.4%
0.6%
0.3%
0.4%
3.7%
(0.3%)
45.4%

Fix the amount of deferred tax assets due to changes in statutory tax rate
Implementing measures for the reconstruction from effects of the Great East Japan Earthquake and thelaw to revise the part of the income tax, etc. in order to build a tax system in response to changes
in the structure of the economy and society "(Law No. 114) of the corporate tax rate from fiscal
year will be promulgated on December 2, 2011 special Measures Law "(No. 117) concerning theassurance of the financial resources needed to, beginning on or after April 1, 2012 became thatspecial corporate income tax cuts and reconstruction is carried out.
As a result, the statutory tax rate used to calculate the deferred tax assets and deferred tax
61liabilities for fiscal years beginning on March 1, 2015 for fiscal years beginning on March 1,
2013 from 40.7% of conventional temporary differences are expected to eliminate 38.0% to,eliminate temporary differences are expected for fiscal years beginning on or after March 1,
Heisei 28 will be 35.6%.
The effect of this tax rate change (net of the amount of deferred tax liabilities) the amount ofdeferred tax assets decreased by ¥ 1,504 million and income taxes will have increased by 1,504
million yen.
〈〈Personnel changes (effective May 29, 2012)〉〉[Changes in directors]＜New director candidates＞
Name
Genichi Tamatsuka
Emi Osono＜Retiring directors＞
Name
Manabu Asano
Hiroshi Tasaka

Current Position
Senior Executive Vice President, Chief Operating Officer
and Group CEO of CVS Operating Group
Professor, International Business Strategy,
Hitotsubashi University's Graduate School

Current Position
Director, Executive Vice President and CCO in charge of CSR
Director of Compliance and Risk Management OfficeDirector (Outside)
Professor, Graduate School of Tama University[Changes in auditors]＜New auditor candidate＞
Name
Shinichi Hokari

Current Position
Retired from the Board of Audit of Japan in March 2012

＜Retiring auditor＞
Name
Munehiko Nakano

Current Position
Standing Corporate Auditor

62