Flash Report on the Consolidated Financial Results
for the Third Quarter of the Fiscal Year Ending February 28, 2017
January 11, 2017
Listed Company Name: Lawson, Inc.
Tokyo Stock Exchange (First Section)
Code No.: 2651
(URL http://www.lawson.jp/en/ir)
Company Representative: Sadanobu Takemasu, President and COO, Representative Director
Contact: Tomoki Takanishi, Deputy Senior Vice President, Finance and Accounting Division Director
Tel.: +81-3-5435-2773
Scheduled date for submission of quarterly securities report: January 13, 2017
Scheduled date for payment of dividend: －Supplementary materials for quarterly financial results: Yes
Holding of presentation of quarterly results: None
(Amounts less than one million yen are truncated)
1. Consolidated operating results for the third quarter ended November 30, 2016 (from March 1, 2016 toNovember 30, 2016)(1) Consolidated operating results (cumulative)
Note: Percentages represent increases (decreases) compared with the corresponding period of the previous fiscal
year.

For the third quarter ended
November 30, 2016
November 30, 2015
Note: Comprehensive income:Gross operating
revenue

Operating income

Ordinary income

Millionsof yen461,955
435,534

Millionsof yen57,68562,058Millionsof yen56,906
60,677

%
6.1
20.2

%
(7.0)
3.8

%
(6.2)
1.6

Profitattributable toowners of parent
Millions%of yen33,855
7.6
31,472(4.5)

For the third quarter ended November 30, 2016
31,529 million yen
For the third quarter ended November 30, 2015
33,055 million yen
Profit per share
Diluted profit per share
For the third quarter ended
November 30, 2016
November 30, 2015

Yen
338.51
314.73(4.6)%(2.9)%

Yen
338.26314.48(2) Consolidated financial position
Total assets

Net assets

November 30, 2016

Millions of yen
853,939

Millions of yen
281,931

Shareholders’ equity
ratio
%
31.7

February 29, 2016

803,212272,997

32.9

As of

Reference: Shareholders’ equity:
As of November 30, 2016
As of February 29, 2016

270,967 million yen
264,392 million yen

2. Dividends

2015 fiscal year

1Q
Yen
－

1H
Yen
122.502016 fiscal year－

125.00

Annual dividends per share
3Q
Year-end
Yen
Yen－
122.502016 fiscal year (forecast)
Note: Revision of the most recent dividends forecast: None

Total
Yen
245.00－125.00250.003. Forecast of consolidated operating results for the 2016 fiscal year ending February 28, 2017 (from March 1,
2016 to February 28, 2017)
Note: Percentages represent increases (decreases) compared with the corresponding period of the previous fiscal
year.
Gross operating
Operating income Ordinary income
revenue
Millions
Millions
Millions%%%of yenof yenof yen2016 fiscal year
642,000 10.0
76,0004.8
73,0004.9
Note: Revision of the most recent consolidated operating results forecast: None

Profit attributable
Profitto owners ofper share
parentMillions%Yenof yen35,500 13.1 354.95

4. Notes(1) Change in significant subsidiaries during the quarterly consolidated period (Changes in certain specified
subsidiaries resulting in changes in scope of consolidation): None
Added: None

Excluded: None

(2) Adoptions of specific accounting methods for preparing quarterly financial statements: None
(3) Changes in accounting policies, changes in accounting estimates or restatements
1. Changes in accounting policies associated with revision in accounting standards: Yes
2. Changes in accounting policies other than 1. above: None
3. Changes in accounting estimates: None
4. Retrospective restatements: None
(4) Number of shares outstanding (common stock)
1. Number of shares outstanding at the end of period (including treasury shares)
As of November 30, 2016:
100,300,000
As of February 29, 2016:
2. Number of treasury shares at the end of period
As of November 30, 2016:
288,014

As of February 29, 2016:

3. Average number of shares during the period (cumulative nine months)
As of November 30, 2016:
100,009,087
As of November 30, 2015:

100,300,000

301,897

99,998,426

Note: Implementation status of audit proceduresThis flash report is exempt from quarterly review procedures under the Financial Instruments andExchange Act. As of the time of disclosure of this report, audit procedures for the financial statements havenot been completed.
Note: Descriptions on appropriate use of financial performance forecasts and other special notes
Forward-looking statements presented herein such as financial forecasts are based on currently available
information and certain presumptions deemed to be reasonable as of the date of announcement. The
achievement of said forecasts cannot be guaranteed. Actual results may be materially different from those in
the forecast as a result of various factors. For preconditions of these financial forecasts and notes concerning
their use, please refer to “1. Qualitative Information Regarding Quarterly Financial Results, (3) Explanation
Regarding Forward-looking Statements” on page 8.

Contents

1．Qualitative Information Regarding Quarterly Financial Results ···························································

2(1) Explanation Regarding Consolidated Operating Results ······································································

2(2) Explanation Regarding Consolidated Financial Position ·····································································

8(3) Explanation Regarding Forward-looking Statements ···········································································

8

2．Matters Related to Summary Information (Notes)···················································································

9(1) Change in Significant Subsidiaries during the Quarterly Consolidated Period (Changes in Certain
Specified Subsidiaries Resulting in Changes in Scope of Consolidation) ·············································

9(2) Adoptions of Specific Accounting Methods for Preparing Quarterly Financial Statements ···················

9(3) Changes in Accounting Policies, Changes in Accounting Estimates or Restatements ···························

9

3. Consolidated Financial Statements ···········································································································

10(1) Consolidated Balance Sheet ···············································································································

10(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ·················

12

Consolidated Statement of Income ······································································································

12

Consolidated Statement of Comprehensive Income ·············································································

13(3) Notes to Consolidated Financial Statements ························································································

14(Going Concern Assumption) ·············································································································

14(Notes to Significant Changes in the Amount of Shareholders’ Equity ·················································

141

1．Qualitative Information Regarding Quarterly Financial Results(1) Explanation Regarding Consolidated Operating Results
During the third quarter of fiscal 2016, nine months from March 1 to November 30, 2016, we have launched
our “1000-Day Action Plan” and focused our business activities on building Lawson’s next-generation
convenience store model. The convenience store industry is now undergoing a period of drastic transformation.
This is attributable to changes in community needs resulting from an aging population and the prevalence ofthe nuclear family, among others, which have triggered a reorganization of the industry. Deeming the next three
years as a crucial turning point for the Group, under the “1000-Day Action Plan,” we have made efforts to
evolve our business model as a manufacturing retailer targeting small catchment areas and to raise our store
productivity to an unprecedented level toward the goal of fulfilling our customers’ needs in everyday life byserving as an essential part of their communities.
As a result, for the third quarter of fiscal 2016 on a consolidated basis, gross operating revenue increased to461,955 million yen (up 6.1% from previous fiscal year), operating income decreased to 57,685 million yen(down 7.0% from previous fiscal year), and ordinary income decreased to 56,906 million yen (down 6.2% fromprevious fiscal year). Profit attributable to owners of parent increased to 33,855 million yen (up 7.6% fromprevious fiscal year).
Furthermore, we also focused on promoting internal control and addressing operating risks across the entire
Group based on the 2016 Basic Policy for Improvement of Internal Control Systems. We will continue promotinginternal control across the board including companies that newly joined the Group.
Operating results by business segment were as follows:(Domestic Convenience Store Business)
In our convenience store business, in our effort to attract customers by serving as stores for everyday use,
we strengthened our product lineup of our private brand, “Lawson Select,” renovated existing stores, invested
aggressively in advertising and sales promotions, and expanded and improved merchandise selection.
[Store Operations]
In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, whichemphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic itemswith high demand; and (3) keeping our stores and communities clean, and we strengthened our merchandise
assortment of ready-made dishes, frozen food items, and seasonings by taking strong steps to renovate existing
stores, including installing more refrigerators and freezer flatbeds as well as raising the heights of productdisplay shelves and putting in more shelves.
[Merchandising and Service Strategies]
On the merchandise side, we expanded our merchandise assortment under our “Lawson Select” brand,
focusing on products purchased for everyday life, such as Japanese ready-made dishes and salads in the daily
delivered food category. In addition, we expanded our soup menu lineup in response to the increased demand
for a greater variety of vegetables from health-conscious customers, and it has been well received, mainly byfemale customers. To celebrate the 30th anniversary of our “Kara-age Kun” fried chicken in April 2016, we

2divided Japan into 12 areas wherein we launched “Local Kara-age Kun,” and held an event entitled “Local
Kara-age Kun Grand Prix.”
There are currently 23 Lawson Farms throughout the country. The farms assume the role of supplying safeand fresh fruits and vegetables to the Group’s stores and factories that produce LAWSON’s original products.
With the aim of establishing an appropriate farm management system for Lawson Farms, Lawson has beenendeavoring to obtain certification for Japan Good Agricultural Practice (JGAP), a set of agricultural
production process management techniques. In July 2016, Lawson and the Presidents and CEOs of Lawson
Farms were awarded the “GAP Initiative Award 2016” hosted by the Asia GAP Research Institute in recognitionof their unrivalled contribution to the dissemination of Good Agricultural Practice (GAP) *1. The Group willcontinue its efforts to deliver safe and secure products through such initiatives.
In addition to thus strengthening our merchandise lineup, we also enhanced our service offerings, one ofwhich is our “Gift Cards” *2, whose transaction value continued to remain solid.
On our sales promotion side, as our effort to increase the number of purchased items per customer, we rolled
out a monthly promotional “Lawson Tokuichi!” campaign, where a 10% discount was offered on “Lawson
Select” chilled/frozen foods as well as some items offered in the counter cases. Furthermore, measures toeffectively attract customers were launched, including a “100-yen rice ball sale” for periods during which
increases in sales are expected, a “speed lottery” themed on “Sandaime J Soul Brothers from EXILE TRIBE,”
which demonstrated our strength in the entertainment field, and rewarding Ponta Card members with five times
the points on purchases in evenings and at night.
*1 GAP: Good Agricultural Practice (A set of agricultural production process management techniques).
*2 Gift Cards: Collective term for prepaid cards that can be used for online transactions.
[Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business]
Fiscal period

Product categories
Processed foods

Previous 3rd Quarter
From March 1, 2015
to November 30, 2015
Net sales
Percentage of(Millions of yen)
total (%)
785,018
52.9

Current 3rd Quarter
From March 1, 2016
to November 30, 2016
Net sales
Percentage of(Millions of yen)
total (%)
812,155
52.6

Fast foods

351,34823.7

364,641

23.6

Daily delivered foods

209,657

14.1

222,472

14.4

Non-food products

138,9439.3

145,0279.4

1,484,968

100.0

1,544,297

100.0

Total
[Store Development]

In opening new stores, the Group continued to focus on developing profitable stores.
With regard to our partnership initiatives with other chain retailers, based on a mega-franchise agreement
concluded with Save On Corp., we remodeled 54 Save On stores into LAWSON stores which operated in
Yamagata, Fukushima and Ibaraki Prefectures in a phased manner during the first half of fiscal 2016.
Furthermore, under our partnership with Three F Co., Ltd., 22 Three F stores were remodeled to become
LAWSON stores by November 2016. Also, L･TF Co., Ltd., a joint venture established in September 2016,
operates (as of the end of November) 89 LAWSON Three F stores that were formerly Three F stores. Under3

our partnership with Poplar Co., Ltd., Lawson Sanin, Inc., a joint venture between Lawson and Poplar,commenced operation of a regional franchise business in the Tottori and Shimane region. The joint venture has
consolidated all existing POPLAR-brand convenience stores in the region that had wished to shift to a joint
LAWSON POPLAR brand and all stores run by Lawson’s Tottori and Shimane branch offices. As of the endof November 2016, it operates a total of 271 stores (of which 40 are LAWSON POPLAR stores).
Furthermore, by building partnerships with dispensing pharmacy and drug store chains, we offer not only
OTC pharmaceuticals, cosmetics, and daily necessities, but also offer a more numerous assortment ofmerchandise than conventional LAWSON stores. The number of stores offering non-prescription drugs hasreached 149 stores (includes 40 pharmacy LAWSON stores equipped with drug-dispensing pharmacies) as ofthe end of November 2016. Furthermore, with the addition of Lawson Kure Hironagahama store, the first store
serving as a nursing care hub center in Hiroshima Prefecture, which opened in July 2016, the number of stores
offering nursing care consultation services has reached 7 as of the end of November 2016. We will continue toengage in establishing convenience store models that address and deal with social changes such as the aging
population and increased health awareness.
With respect to LAWSON STORE100, we continued to increase the product composition ratio of 100-yen
items (excluding tax) by scaling down product portions to respond to customer needs for value, andstrengthened our popular fruit and vegetable lineup. As a result, existing-store sales for the period exceeded
those for the same period of the previous fiscal year.
Consequently, the total number of LAWSON, NATURAL LAWSON, and LAWSON STORE100 stores
opened and closed during current fiscal year stood at 743 and 311 stores, respectively, with the total number ofstores in Japan reaching 12,312 as of the end of November 2016. *3
In addition, equity method affiliates Lawson Kochi, Inc. operates 133 LAWSON chain stores in Kochi
Prefecture, Lawson Minamikyushu, Inc. operates 190 LAWSON chain stores in Kagoshima Prefecture andLawson Okinawa, Inc. operates 204 LAWSON chain stores in Okinawa Prefecture as of the end of November
2016.
*3 The numbers of store openings and closings and total number of stores in Japan include stores operated
by both Lawson, Inc. and Lawson Sanin, Inc.
[Change in the Total Number of Domestic Stores]
Total stores as ofFebruary 29, 2016

Change during
fiscal year

Total stores as ofNovember 30, 2016

10,937437

11,374

NATURAL LAWSON

134

5

139

LAWSON STORE100

809

(10)

799

11,880432

12,312LAWSON

Total(Note) These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.

4

[Number of LAWSON stores by prefecture (As of November 30, 2016)]
Prefecture

Numberof stores

Hokkaido

637

Ibaraki

186

Kyoto

326

Ehime

210

Aomori

229

Tokyo

1,568

Shiga

155

Tokushima

136

Akita

186

Kanagawa

852

Nara

126

Fukuoka

467

Iwate

166

Shizuoka249

Wakayama

136

Saga

68

Miyagi

219

Yamanashi

122

Osaka

1,020

Nagasaki103

Yamagata

103

Nagano

169

Hyogo

650

Oita

172

Fukushima

125

Aichi

607

Okayama165

Kumamoto

143

Niigata

145

Gifu

157

Hiroshima

194

Miyazaki103

Tochigi

156

Mie

125

Yamaguchi

122

Total
(domestic)

12,312

Gunma

107

Ishikawa

105

Tottori

134

Saitama574

Toyama186

Shimane

137

Chiba

535

Fukui

106

Kagawa131

Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture

Numberof stores(Note) These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
Furthermore, LAWSON Three F and LAWSON POPLAR brand stores are also included.
[Other]With regards to our efforts in home convenience, we will strive to enhance customer convenience byadditionally partnering with other companies to establish an “Open Platform” based on the networks of
LAWSON stores that offer a range of services encompassing ordering, collection, and home delivery.
With respect to distribution, from March 2016, we commenced operation of our distribution center, a threetemperature-zone distribution center offering an integrated environment for chilled, frozen and ambienttemperature foods. Through independent operation of the distribution center, we aim at further streamlining theentire supply chain and improving store productivity.

As a result, Domestic Convenience Store Business posted gross operating revenue of 321,441 million yen(up 6.5% from previous fiscal year) and segment profit of 48,500 million yen (down 8.4% from previous fiscal
year).

(Seijo Ishii Business)
The number of directly operated Seijo Ishii stores, a high-end supermarket chain offering quality foods, reached
130 as of the end of November 2016. Sales remained robust, and in April 2016, the first Seijo Ishii store combining“Le Bar a Vin 52” was opened in Atre Ebisu West. With respect to merchandise, a new private brand dubbed“desica” was launched, which achieved strong sales. Collaborations between SEIJO ISHII and our Domestic
Convenience Store Business were promoted, such as expanding Seijo Ishii’s selection of wine offered at
NATURAL LAWSON stores, jointly importing confectionery, and rolling out jointly developed products
including nuts and cup soup. We will continue to enhance the brand image and corporate value of SEIJO ISHII
Co., Ltd., while absorbing the company’s product development expertise, knowhow acquired as a manufacturing5

retailer, and sales methods, to strengthen our Domestic Convenience Store Business.

As a result, Seijo Ishii Business posted gross operating revenue of 53,364 million yen (up 7.5% from previous
fiscal year) and segment profit of 3,852 million yen (up 17.7% from previous fiscal year).

(Entertainment-related Business)
With regards to Entertainment-related Business, Lawson HMV Entertainment, which forms the core ofentertainment related business, posted a solid performance led by an increase in ticket sales and continued tosecure top position in the ticketing industry. Regarding HMV stores that combine selling music CDs and DVDs,
the second “HMV Record Shop,” a used analog record and CD store, was opened in Shinjuku, and was wellreceived. The number of HMV stores that sell music CDs and DVDs totaled 55 as of the end of November 2016.
We will strive to offer an even wider selection of products and services to better respond to customer needs, forexample, by expanding our entertainment business. In April 2016, United Cinemas Co., Ltd. opened the “Premium
Dining Cinema” in Fukuoka-shi, Kyushu, as the first cinema in Japan where moviegoers can dine while enjoying
a film. Furthermore, United Cinemas Co., Ltd. operates a total of 38 sites with 340 screens (includes those undermanagement contract) at its cinemas nationwide as of the end of November 2016.
As a result, Entertainment-related Business posted gross operating revenue of 54,231 million yen (up 0.7%
from previous fiscal year) and segment profit of 3,084 million yen (down 14.6% from previous fiscal year).
(Other Business)
In addition to the aforementioned businesses, the Group is also involved in the Overseas Business and the
Financial Services-related Business.
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the People’s
Republic of China, Thailand, Indonesia, the Philippines, and the United States of America (Hawaii), and in
October 2016, the total number of stores overseas exceeded the 1,000 mark.
In China, we mark our 20th anniversary in July 2016 since we became the first Japanese convenience store toadvance into Shanghai. We made inroads into Wuhan in China’s Hubei Province in May 2016.

6

[Distribution of LAWSON Brand Stores Overseas by Region]

Country/Region

Number of stores

ChangeNumber of stores(As of February 29,

during fiscal(As of November 30,

2016)

year

2016)

China

Shanghai and surrounding area

458

145

603

China

Chongqing

110

19

129

China

Dalian

53

22

75

China

Beijing

34

10

44

China

Wuhan

－

39

39

Thailand

47

32

79

Indonesia

38

(2)

36

Philippines

16

10

26

2

－

2

758

275

1,033

United States of America

Hawaii

Total

Lawson ATM Networks, Inc., which operates a Financial Services-related Business, continued contributing
to consolidated results owing to an increase in the number of ATMs installed. We strengthened partnerships
with new financial institutions bringing the total number of our financial institution partners to 85 nationwide(up 5 from previous fiscal year), including online banks, and the number of ATMs installed nationwide to
11,634 (up 433 from previous fiscal year) as of the end of November 2016.
In November 2016, we established Lawson Bank Preparatory Company, Inc., which aims to establish a bankleveraging Lawson’s previous experience in financial services, and meet necessary preconditions for obtaining
approval from the relevant authorities.
As a result, Other Business posted gross operating revenue of 38,285 million yen (up 10.0% from previous
fiscal year) and segment profit of 2,242 million yen (down 0.0% from previous fiscal year).

7(2) Explanation Regarding Consolidated Financial Position
Current assets increased by 16,173 million yen from the end of the previous fiscal year to 240,382 million
yen, mainly reflecting an increase of 14,008 million yen in accounts receivable-other. Non-current assets
increased by 34,553 million yen from the end of the previous fiscal year to 613,556 million yen, mainlyreflecting an increase of 23,960 million yen in property and store equipment. Consequently, total assets
increased by 50,727 million yen from the end of the previous fiscal year to 853,939 million yen.
Current liabilities increased by 32,248 million yen from the end of the previous fiscal year to 351,855
million yen, mainly reflecting an increase of 11,791 million yen in accounts payable-trade, an increase of
5,680 million yen in accounts payable-other and an increase of 16,141 million yen in deposits received. Noncurrent liabilities increased by 9,544 million yen from the end of the previous fiscal year to 220,152 million
yen, mainly reflecting an increase of 9,792 million yen in lease obligations. Consequently, total liabilities
increased by 41,792 million yen from the end of the previous fiscal year to 572,008 million yen.
Net assets increased by 8,934 million yen from the end of the previous fiscal year to 281,931 million yen,mainly reflecting an increase of 7,960 million yen in retained earnings. Consequently, shareholders’ equity
ratio was 31.7%, down from 32.9% as of the end of the previous fiscal year.

(3) Explanation Regarding Forward-looking Statements
The financial forecasts remain unchanged from those announced on October 12, 2016.
At the Board of Directors meeting held on December 21, 2016, the Company reaffirmed its resolution that
it would support the tender offer for shares of the Company’s common stock by Mitsubishi Corporation, given
the fact that all conditions have been fulfilled, including the completion of procedures required by competition
laws in Japan and overseas.
Furthermore, on February 9, 2017, if the tender offer is commenced and the maximum number of sharesin the tender offer is reached, the Company will become a consolidated subsidiary of Mitsubishi Corporation,
which will then hold more than 50% of its outstanding shares. However, Mitsubishi Corporation plans tomaintain the listing of Lawson shares after completion of the tender offer.

8

2．Matters Related to Summary Information (Notes)(1) Change in Significant Subsidiaries during the Quarterly Consolidated Period (Changes in Certain
Specified Subsidiaries Resulting in Changes in Scope of Consolidation)
Not Applicable.
(2) Adoptions of Specific Accounting Methods for Preparing Quarterly Financial Statements
Not Applicable.
(3) Changes in Accounting Policies, Changes in Accounting Estimates or Restatements(Changes in Accounting Policies)
The Company and its domestic consolidated subsidiaries are applying “Accounting Standard for Business
Combinations” (Accounting Standards Board of Japan (ASBJ)) Statement No. 21, revised September 13, 2013;
hereinafter, “Business Combination Accounting Standard”), “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, revised September 13, 2013; hereinafter, “Consolidated AccountingStandard”) and “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, revised September 13,
2013; hereinafter, “Business Divestiture Accounting Standard”), etc., from the first quarter of the fiscal year
ending February 28, 2017. Under these revised accounting standards, any differences arising from changes in aparent’s ownership interests in subsidiaries when the parent retains control are recognized in capital surplus andacquisition-related costs are expensed in the fiscal year in which they were incurred. For business combinations
completed from the beginning of the first quarter, the Company applies a method in which any adjustments tothe allocation of acquisition costs arising from the finalization of provisional accounting treatment are reflectedin the consolidated financial statements for the period in which the business combination occurs. In addition, thepresentation of quarterly profit, etc., was changed and “Minority interests” was changed to “Non-controllinginterests.” The quarterly consolidated financial statements and the consolidated financial statements for theprevious third quarter and the previous fiscal year have been reclassified to reflect this change in presentation.
The Company has applied the transitional treatment prescribed in Article 58-2 (4) of the Business
Combination Accounting Standard, Article 44-5 (4) of the Consolidated Accounting Standard, and Article 57-4
(4) of the Business Divestiture Accounting Standard from the beginning of the first quarter of the fiscal year
ending February 28, 2017. Meanwhile, the Company will be following the transition procedures set forth in
Article 58-2 (1) of the Business Combination Accounting Standard, Article 28-13 of the Accounting Standard
for Quarterly Financial Statements, and Article 81-7 of the Implementation Guidance on Accounting Standard
for Quarterly Financial Statements in reviewing the allocation of acquisition-related costs resulting from thefinalization of provisional accounting treatment for business combinations that take effect from the beginning of
the first quarter of the fiscal year ending February 28, 2017.
As a result, profit before income taxes of the third quarter of the consolidated fiscal year decreased by 2,583
million yen. Furthermore, capital surplus at the end of the third quarter of the consolidated fiscal year increased
by 1,387 million yen.

9

3. Consolidated Financial Statements(1) Consolidated Balance Sheet
As of February 29, 2016 and November 30, 2016
(Millions of yen)

AssetsCurrent assets:
Cash and deposits
Accounts receivable-due from franchised stores
Merchandise
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and store equipment:
Buildings and structures, net
Tools, furniture and fixtures, net
Leased assets, net
Other, net
Total property and store equipment
Intangible assets:
Software
Goodwill
Trademark right
Other
Total intangible assets
Investments and other assets:Long-term loans receivable
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

10Previous fiscal year
As of
February 29, 2016

Current 3rd Quarter
As ofNovember 30, 2016

69,79730,547
17,97667,736
4,524
33,635(8)
224,209

62,00840,465
18,61581,744
3,012
34,561(24)
240,382

167,098
16,307
101,546
17,808
302,761

182,704
18,414
112,540
13,062
326,722

26,37746,30911,381
527
84,59534,63747,561
10,948503
93,65040,88692,49522,016
37,107(860)
191,645579,002803,21242,52995,396
20,49635,627(866)
193,183
613,556
853,939

(Millions of yen)

Liabilities
Current liabilities:
Accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Accounts payable-other
Income taxes payable
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities:
Long-term loans payable
Lease obligations
Provision for retirement benefits to executive officers
and audit and supervisory board members
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity:
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

11

Previous fiscal year
As of
February 29, 2016

Current 3rd Quarter
As ofNovember 30, 2016

112,225
1,990
575
23,89857,2148,500
101,908
3,832
9,462
319,607

124,016
1,210
575
27,07662,895
5,556
118,050
2,030
10,444
351,855

57,562
88,06056,99997,852413

434

12,186
24,66427,719210,607530,215

12,783
26,22525,857220,152
572,00858,506
47,697
154,608(1,280)259,532

58,50649,083
162,569(1,221)
268,938

801
(566)
5,531
(906)
4,860
307
8,296
272,997803,212

136
(566)
3,301
(842)
2,029
323
10,641
281,931853,939

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
For the third quarter of the fiscal year ended February 29, 2016 and the third quarter of the fiscal year ending
February 28, 2017
(Millions of yen)

Gross operating revenue
Net sales
Cost of sales
Gross profit
Operating revenue:
Income from franchised stores
Other operating revenue
Total operating revenue
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses:
Interest expenses
Loss on cancellation of leases
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on change in equity
Total extraordinary income
Extraordinary losses:
Loss on retirement of non-current assets
Impairment loss
Other
Total extraordinary losses
Profit before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

12

Previous 3rd Quarter
From March 1,2015
to November 30, 2015
435,534
166,592
114,248
52,343Current 3rd Quarter
From March 1,2016
to November 30, 2016
461,955
176,718
121,516
55,201

198,681
70,260268,942
321,286
259,227
62,058208,907
76,329285,237
340,439282,754
57,685

569

542

320

494

1,417
2,307

1,960
2,997

1,390
1,466
831
3,688
60,677

1,434
1,000
1,341
3,776
56,906

892
892

－
－

2,821
5,125
－
7,947
53,622
15,6195,959
21,57832,043571
31,472

2,420
686
284
3,391
53,514
13,944
5,098
19,042
34,472617
33,855

Consolidated Statement of Comprehensive Income
For the third quarter of the fiscal year ended February 29, 2016 and the third quarter of the fiscal year ending
February 28, 2017
(Millions of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of parent
Non-controlling interests

13

Previous 3rd Quarter
From March 1,2015
to November 30, 2015
32,043Current 3rd Quarter
From March 1,2016
to November 30, 2016
34,472

1,048
(72)
35
1,012
33,055(665)(2,341)63(2,942)
31,52932,276779

31,023505

(3) Notes to Consolidated Financial Statements(Going Concern Assumption)
Not Applicable.

(Notes to Significant Changes in the Amount of Shareholders’ Equity)
Not Applicable.

14