Flash Report on the Consolidated Result
for the First Half Ended February 28, 2013
October 3, 2012
Listed Company Name: Lawson, Inc.
Code No.: 2651
(URL http://www.lawson.co.jp/company/ir/index.html)
Company Representative: Takeshi Niinami, Representative Director, President & CEO
Contact:Tomoki Takanishi , Financial & Accounting Office General Manager
Tel.: (03) 5435-2773
Scheduled date for submission of quarterly earnings report: October 15, 2012
Scheduled date for payment of dividend: November 9, 2012
Supplementary Documents quarterly results: Yes
Presentation of quarterly results: Yes
1. Consolidated Performance for the current first half of the current period (from March 1, 2012, to August 31, 2012)(1) Consolidated operating results
Note: Amounts below one million yen are truncated.
Total operating revenues¥ Million%
Current 1st Half
248,963
3.7
Previous 1st Half
240,020
8.5

Operating profit¥ Million%
34,554
6.1
32,5698.0

Recurring profit¥ Million%
34,2605.1
32,601
9.8

Net profit
Net income per share
Fully diluted income per share¥ Million%¥¥
Current 1st Half
17,861
99.3
178.82178.54Previous 1st Half
8,960
(27.1)
89.72
89.61
Notes: Comprehensive income August, 2012 17,548 million(86.4%) August, 2011 9,416 million( - %)(2) Consolidated financial position
Total assets¥ Million
At August 31,2012
563,270
Last fiscal year
531,453
Notes: Capital adequacy August, 2012 219,317 million

Net assets¥ Million
222,814214,662
February, 2012 211,154 million

Capital adequacy ratio
%
38.9
39.7

2. Dividends status
Annual dividends per share
1Q

2Q

¥
―

Year-end
dividend¥
93.00¥
180.00―100.00200.003Q¥¥
2011 fiscal year―
87.00
2012 fiscal year
100.002012 fiscal year
(Forecast)
Notes: Revision of forecast for dividends in the first half: Yes

1

Total

3. Forecast Consolidated Performance for 2012 fiscal year （from March 1, 2012, to February 28, 2013）
Operating profit
Recurring profit
Net profit
Total operating revenues¥ Million%¥ Million%¥ Million%¥ Million%
2012 fiscal year
501,000
4.6
66,0006.8
65,1005.5
33,40034.2
Reference: Forecast net profit per share for the 2012 fiscal year: 334.37yen
Note: Revision of forecasts for consolidated performance during the first half: Yes
4. Other(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting in revised
scope of consolidation): Yes
Lawson (China) Holdings, Inc.

(2) Adoptions of special accounting methods in presentation of quarterly financial statements: No(3) Changes in accounting policies, changes in accounting estimation, retrospective restatement
1. Changes of accounting policies associated with revision in accounting standards: None
2. Other changes: None
3. Changes in accounting estimation: None
4. Retrospective restatement: None
(4) Number of issued shares:i) The number of the stocks issued in the end of term
August, 2012: 100,300,000 February, 2012: 100,300,000ii) The number of treasury shares in the end of term
August, 2012: 410,993
February, 2012: 416,166
iii) Average number of shares during the term
August, 2012: 99,885,014 August, 2011: 99,866,694
Note: Disclosure of progress of quarterly review procedures
At the time of disclosure of this quarterly flash report, review procedures for quarterly 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.

2

1．
．Review of Operations(1) Review of Operating Results
During the first six months of fiscal 2012, the period from March 1 to August 31, 2012, the Lawson
Group (hereinafter, the “Group”) implemented measures to reinforce its social infrastructure function thatprovides essential items at the local level with the aim of realizing the Group’s corporate philosophy of“Creating Happiness and Harmony in our Communities.” By promoting operational reform, PRiSM, thatis based on analysis of card data from the multi-partner loyalty program, Ponta, the Group focused on
customer relationship management (CRM)*1 and supply chain management (SCM)*2 in order to offer amerchandise assortment that meets the specific needs of customers in each neighborhood.
*1

Customer relationship management (CRM)

A marketing management method for providing merchandise and services that meet the specific needs of customers*2

Supply chain management (SCM)

A business administration method for comprehensively managing all stages of business, from procurement to sales, tostreamline and optimize the entire business process.

As a result, for the first six months of fiscal 2012 on a consolidated basis, total operating revenues
increased by 3.7% from the corresponding period of the previous fiscal year to ¥248,963 million.
Consequently, operating profit increased by 6.1%, year on year to ¥34,554 million. Recurring profit grew
5.1%, from the same period of the previous fiscal year to ¥34,260 million. At the same time, extraordinary
loss declined by ¥12,117 million, or 77.2%, year on year to ¥3,570 million due to asset retirement
obligations and losses stemming from the Great East Japan Earthquake disaster which were recognized in
the previous fiscal year. As a result, net profit rose ¥8,900 million, or 99.3%, to ¥17,861 million.

Operating results by business segment are as follows.
（Convenience Store Operations）
The status of merchandising strategy and services, store operations, store development and other aspectsof Convenience Store Operations and Overseas Businesses for the first six months of fiscal 2012 isoutlined as follows.

[Merchandising Strategy and Services]
On the merchandising front, the Group developed original products that cater to customer needs such as
ready-made meals (ex. lunch boxes, over-the-counter fast foods, and others) and items from our private
brand, “Lawson select,” which is mainly comprised of prepared food and delicatessen items, processed
foods, daily necessities, and beverages, by leveraging customer purchase data acquired through the Ponta
program that the Group joined in March 2010. We also managed to provide appealing products that offer
value for money as a result of the enhancement of added-value in the ingredients procurement process,3

including bulk procurement of high-quality food materials via a dedicated section, which resulted in an
improvement of gross profit margin ratio.
In an effort to expand our customer base, we strengthened our lineup of pre-cut vegetables and other fresh
food items, while also striving to encourage multi-item purchasing by expanding our lineup of processed
foods such as seasonings for cooking and eating at home.
In addition, we continued to fortify our fast food category to improve store profitability. Specifically, we
promoted sales of prepared fast foods such as fried chicken, and increased the number of stores equippedwith MACHI café, which totaled 1,681 stores as of August 31, 2012. MACHI café, which offers freshly
ground drip coffee, is well-received by our customers and we intend to continue introducing the café tomore stores.
In the dessert category, we launched “Ankoya,” an authentic Japanese dessert series from our Uchi CaféSWEETS line. Pure Fresh Cream Daifuku (Japanese rice cake) and other premium dessert items offeredfrom the series were especially popular among female and elderly customers.

[Breakdown of sales at chain stores by merchandise category]
Fiscal period

Previous 1st Half

Current 1st Half

March 1, 2011 to August 31, March 1, 2012 to August 31,
2011

Product group

2012

Sales

Percentage of

Sales

Percentage of(Millions of

Total (%)

(Millions of

Total (%)

yen)

yen)

Processed foods

507,53555.4

543,056

55.9

Fast foods

172,570

18.8

188,396

19.5

Daily delivered foods

140,70815.4

141,211

14.5

Nonfood products

95,382

10.4

98,292

10.1

916,197100.0

970,956

100.0

Total

In sales promotions, the Group implemented programs centered on tie-ups with popular characters/events
such as the Spring Rilakkuma Fair with the aim of achieving a high return on investment (ROI). In
addition, we implemented a number of loyalty point programs that target Ponta members in order toencourage customers to visit our stores in the evening and night time. Furthermore, we proactively
implemented promotional campaigns based on social networking services (SNS). Total Ponta members
reached 44.12 million as of August 31, 2012, including members that joined through other participatingcompanies. In addition to expanding its Ponta membership base, the Group provided loyalty points
exclusively to Ponta members, which resulted in an increase in the sales ratio of Ponta members toapproximately 43.6%.

4

[Store Operations]
In store operations, we leveraged PRiSM, which was introduced with the aim of reforming our orderplacement system by adding enhanced accuracy, to reduce sales opportunity loss and product disposal loss.
In addition, we strived to enhance our productivity in providing guidance to franchise stores by newly
adopting the use of tablet devices as a tool.

[Store Development and Store Format Strategy]
In opening new stores, the Group has focused on maximizing return on investment (ROI) and has strictly
adhered to its proprietary standards for opening stores, in addition to prioritizing profitability.
Regarding the format strategy, we promoted store openings and refurbishment to meet the needs ofcustomers specific to each neighborhood through LAWSON, NATURAL LAWSON and LAWSONSTORE100.

[Change in the Total Number of Stores] (March 1, 2012 – August 31, 2012)
LAWSON
Total stores as ofMarch 1, 2012
Change during fiscal
year
Total stores as ofAugust 31, 2012

NATURALLAWSONLAWSONSTORE100

Total

9,038

100

1,172

10,310

425

5

19

449

9,463

105

1,191

10,759[Distribution of Stores in Japan by Region (As of August 31, 2012)]
NumberPrefecture

NumberPrefectureof stores

NumberPrefectureof stores

NumberPrefectureof stores

NumberPrefectureof storesof stores

Hokkaido

570

Saitama

449

Mie

100

Okayama

129

Saga

63

Aomori

180

Chiba

429

Ishikawa

93

Hiroshima

152

Nagasaki

91

Akita

163

Ibaraki122

Toyama192

Yamaguchi

117

Oita

145

Iwate

157

Tokyo

1,513

Fukui

102

Tottori

95

Kumamoto

101

Miyagi

196

Kanagawa

773

Kyoto

262

Shimane96

Miyazaki86

Yamagata

67

Shizuoka

198

Shiga

132

Kagawa102

Kagoshima

113

Fukushima

91

Yamanashi

87

Nara

100

Ehime

166

Total

Niigata114

Nagano139

Wakayama

116

Tokushima106

Tochigi

121

Aichi

506

Osaka

995

Kochi

63

Gunma

73

Gifu

128

Hyogo

584

Fukuoka382

The number of LAWSON STORE100 fresh foods convenience stores, operated by the Group’s
consolidated subsidiary Ninety-nine Plus Inc., reached 1,191 as of August 31, 2012. We have been
converting company operated stores into franchised stores to promote our franchise-based store
510,759management, which is one of the Group’s strengths. In addition, at our fresh food-type LAWSON stores,
which are enhanced conventional LAWSON stores with a stronger assortment of perishable foods anddaily delivered foods, we promoted a strategy to expand our customer base by attracting elderly
customers and housewives. As of August 31, 2012, the number of these fresh food-type LAWSON stores
totaled 4,601. With the aim of supplying high-quality products on a steady basis, we are operating 7
Lawson Farms in Japan, which are partially funded by the Group, and are selling fresh vegetables
produced at these farms primarily at fresh food-type convenience stores.
The number of LAWSON chain stores operated by Lawson Toyama, Inc., a consolidated subsidiary of
Lawson, Inc. (hereinafter, “the Company”), reached 73 as of August 31, 2012. The number of LAWSON
chain stores operated by the Company’s equity-method affiliate, Lawson Okinawa, Inc. through abusiness alliance agreement with SAN-A CO., LTD. totaled 153 as of August 31, 2012.
The number of LAWSON stores operated by CVS Bay Area, Inc., with which the Company concluded afranchise agreement during fiscal 2011 ended February 28, 2012, reached 132 as of August 31, 2012.
On August 29, 2012, the Company acquired five percent of the total number of shares issued by Qol Co.,
Ltd. with which the Company concluded a business alliance contract in 2008. The capital alliance aims tofurther strengthen the business alliance between the two companies and accelerate development of theirbusiness operations. The number of Pharmacy LAWSON (pharmaceutical convenience stores) operated
by Qol totaled 16 as of August 31, 2012.
【Overseas Operations】
Regarding our business in the People’s Republic of China (hereinafter, “China”), the Company
established Lawson (China) Holdings, Inc. (hereinafter, “Lawson China”) in Shanghai, China in May
2012, as a holding company (investment company) that controls business investment, license
management, and administrative management functions within China. The Company’s subsidiaries inShanghai, Chongqing and Dalian will be controlled by Lawson China in the future. The number of
LAWSON stores operated by Shanghai Hualian Lawson, Inc., the Company’s 85% subsidiary, totaled 330
as of August 31, 2012. Chongqing Lawson, Inc., the Company’s 100% subsidiary, was operating 56
LAWSON stores as of August 31, 2012 while Dalian Lawson, Inc., the Company’s 95% subsidiary, wasoperating 7 LAWSON stores as of August 31, 2012.
Outside of China, within the Republic of Indonesia, Pt Midi Utama Indonesia Tbk (hereinafter, “MIDI”),
in which the Company’s wholly-owned consolidated subsidiary Lawson Asia Pacific Holdings Ptd. Ltd.
has a 30% equity stake, operates 574 stores in its own store format and 66 LAWSON stores in Jakarta andits outskirts as well as in Bali Island as of August 31, 2012.
In preparation for opening stores in the United States, the third overseas country to be entered after China
and Indonesia, on January 13, 2012, the Company established Lawson USA Hawaii, Inc. in Honolulu,
Hawaii. On July 7, 2012, two stores were opened in Honolulu as the Company’s first stores in the UnitedStates.
6（Other Businesses）
In addition to convenience store operations, the Group is involved in the entertainment/e-commercebusiness, and other businesses.
We continued to leverage our alliance with Yahoo JAPAN Corporation and expanded e-commercebusiness with a primary focus on the Group’s online shopping mall, Loppi.
In April, we launched “LAWSON Wi-Fi,” an unlimited wireless LAN access for smart phones that can beused to connect free of charge to any websites 24 hours a day (excluding maintenance hours after
midnight). This service has been introduced to almost all LAWSON stores, excluding some stores locatedwithin hospitals. By enabling customers with Ponta cards to connect to the Internet using theirsmartphones provided by major mobile phone service operators KDDI, NTT DoCoMo and Softbank
Mobile, this service has enhanced their motivation to visit our stores.
The Company’s consolidated subsidiary Lawson HMV Entertainment, Inc., which is engaged inentertainment/e-commerce-related business, posted an increase in operating profit due to strong sales oftickets for large-scale shows and performances.
Lawson ATM Networks, Inc., which operates a financial services-related business, posted a rise inoperating profit as a result of an increase in the number of ATMs installed nationwide in LAWSON stores,
along with an increase in the number of transactions. As of August 31, 2012, the number of ATMs
installed nationwide totaled 9,459.
(2) Qualitative Information Regarding Changes in Consolidated Financial Indicators(A) Financial Position at the First Half end
Total Assets, Total Liabilities and Net Assets at First Half-End“Assets”
At August 31, 2012, total assets stood at ¥563,270 million, an increase of ¥31,816 million from February 29,
2012. This mainly reflected a ¥11,439 million increase in cash and bank deposits.
“Liabilities”.
Total liabilities increased ¥23,664 million from February 29, 2012 to ¥340,455 million at August 31, 2012. This
mainly reflected a ¥17,433 million increase in accounts payable-trade because of an increase in newly opened
stores.
“Net assets”
Net assets stood at ¥222,814 million, an increase of ¥8,152 million from February 29, 2012. This mainly due tothe payment of ¥9,289 million in dividends although quarterly net profit of ¥17,861 million.
(B) Cash Flows During First Half
Cash and cash equivalents at August 31, 2012 were ¥83,309 million, up ¥9,639 million compared with
February 29, 2012.
Operating activities provided net cash of ¥53,321 million, a decrease of ¥14,569 million from thecorresponding period of the previous first half, mainly due to decrease in an increase in deposits received.

7

Investing activities used net cash of ¥28,957 million, an increase of ¥458 million from the corresponding
period of the previous first half, mainly due to an increase in payment for acquisition of property and store
equipment.
Financing activities used net cash of ¥14,736 million, an increase of ¥1,452 million over the corresponding
period of the previous first half, mainly due to repayments of lease obligations.

2．
．Other(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting
in revised scope of consolidation): Yes
Lawson (China) Holdings, Inc.
(2) Adoptions of accounting methods particular to presentation of quarterly financial statements: None
(3) Changes in accounting policies, changes in accounting estimation, retrospective restatement: None8

3. Consolidated Financial Statements etc.
(1)Consolidated Balance Sheets (Unaudited)（Millions of yen）

As of August 31, 2012 and February 29, 2012
February 29, 2012

August 31, 2012

Cash and bank deposits

79,07490,514

Accounts receivable—due from franchised stores

19,521

19,116Merchandise inventories

8,075

8,220

Accounts receivable—other

32,64538,321

Deferred tax assets

4,800

3,497

Other

16,19018,319Allowance for doubtful accounts

(149)

(199)

160,157

177,790

219,536

231,753

Accumulated depreciation(112,475)(118,330)

Buildings and structures-net

107,061

113,422

Vehicles, tools, furniture and fixtures

63,56365,828

Accumulated depreciation(49,549)(50,879)

Vehicles, tools, furniture and fixtures-net

14,013

14,94972,53882,808

Accumulated depreciation(18,400)(24,075)

Lease assets-net

54,13758,732

Other

8,622

9,783

Subtotal

183,835

196,888

Software27,551

25,496

Goodwill

10,871

10,400

Other

553

559

Subtotal

38,97736,457Long-term loans receivable

32,13833,664

Lease deposits

83,66585,099Deferred tax assets

16,87017,197

Claims provable in bankruptcy, claims provable

15,136660

Other

16,523

16,815

Allowance for doubtful accounts(15,851)(1,303)

Subtotal

148,483

152,134

Total

371,295

385,479

Total assets

531,453

563,270

Current assets:

Total
Fixed assets:
Property and store equipment
Buildings and structures

Lease assets

Intangible fixed assets;

Investments and Other;in rehabilitation and other8

（Millions of yen）
February 29, 2012

August 31, 2012

Accounts payable —trade88,262

105,696

Accounts payable— due to franchised stores

1,390

1,864

Lease obligations

11,223

12,882

Income taxes payable

15,305

12,526

Deposits received

75,00476,368

Accrued employees’ bonuses

3,204

2,014

701

353

22,88625,040217,978

236,746

Lease obligations

37,902

41,626

Allowance for employees’ retirement benefits

8,745

9,329

308

290

Deposits received from franchisees and lessees

35,73535,497

Asset retirement obligations

15,161

16,082

960

882

Total

98,812

103,709

Total Liabilities

316,791

340,455

Common stock

58,50658,506

Capital surplus

47,70747,707Retained earnings

107,249

115,821

Treasury stock(1,627)(1,608)211,835

220,429

Net unrealized gain on available-for-sale securities

(11)

41

Land revaluation difference

(567)

(567)

Foreign currency translation adjustments

(101)

(584)

Valuation and translation adjustments(680)(1,111)

Stock acquisition rights

442

429

Minority interests

3,064

3,067

Total net assets

214,662

222,814

Total Liabilities and net assets

531,453

563,270

Current liabilities:

Provision for use of points granted
Other
Total
Long-term Liabilities;

Allowance for retirement benefits to executive officers and corporate auditors

Other

Shareholders’ equity;

Total Shareholders’ equity
Valuation and translation adjustments;9(2) Consolidated Statements of Income (Unaudited)
For the 1st Half of the fiscal year (From March 1, 2011 to August 31, 2011) (From March 1, 2012 to August 31, 2012)（Millions of yen）
August 31, 2011

August 31, 2012

Total operating revenues

240,020

248,963

Net sales

104,882

100,843

78,72275,58026,15925,263

Franchise commission from franchised stores

108,217

117,183

Other

26,15930,936

Operating revenues

135,138

148,119

Operating gross profit

161,298

173,382

128,728

138,828

32,56934,5541,165

925

Interest received

326

360

Other

838

564

1,133

1,219

Interest expense

541

602

Other

591

616

32,601

34,260

237

309

-

145

Gain on negative goodwill

184

153

Other

53

10

Extraordinary losses;

15,6883,570

Impairment loss

2,574

2,700

Loss on disaster

3,392

-

Loss on adjustment for changes of accounting standard

8,292

-

1,428

870

(17,150)

30,998

7,719

13,024

Income taxes - current

11,07512,085

Deferred income taxes(3,355)939

Income before minority interests

9,431

17,974

Minority interests in net income

470

112

8,960

17,861

Cost of goods sold
Gross Profit

Selling, general and administrative expenses
Operating profit
Non – operating income and expenses;
Non – operating income;Non – operating expenses;

Recurring profit
Extraordinary income and losses;
Extraordinary income;Gain on sales of investment securities

for asset retirement obligations
Other
Income before income taxes and minority interests
Income taxes;

Net profit

10Consolidated Statements of Comprehensive Income (Unaudited)
For the 1st Half of the fiscal year (From March 1, 2011 to August 31, 2011) (From March 1, 2012 to August 31, 2012)（Millions of yen）
August 31, 2011
Income before minority interests

August 31, 2012

9,431

17,974

Valuation difference on available-for-sale securities

(16)

52

Foreign currency translation adjustment

(4)

(179)

Share of other comprehensive income of associates accounted

6

(299)

Total other comprehensive income

(15)

(425)

Comprehensive income

9,416

17,548Comprehensive income attributable to owners of the parent

8,945

17,430Comprehensive income attributable to minority interests

470

117

Other comprehensive income

for using equity

Comprehensive income attributable to11

(3)Consolidated Statements of Cash Flows(Unaudited)
For the 1st Half of the fiscal year (From March 1, 2011 to August 31, 2011) (From March 1, 2012 to August 31, 2012)(Millions of yen)August 31, 2011

August 31, 2012

Income before income taxes

17,15030,998Depreciation of fixed assets

17,907

20,825

Increase in provision for allowance for retirement benefits to employees

617

584

Decrease in allowance for doubtful accounts(257)(14,499)

Interest received

(326)

(360)

Interest expense

541

602

Loss on impairment of long-lived assets

2,574

2,700

Loss on disaster

3,392

-

Loss on adjustment for changes of accounting standard for

8,292

-

Other-net

1,204

(19)

Decrease in accounts receivable due from franchised stores

1,115

415

(3,452)(5,669)192

14,475

19,523

17,885

198

1,374

Increase in deposits received

16,2801,363

Decrease in lease deposits from franchisee and lessees

(976)

(238)

Other-net(3,331)(2,416)

Subtotal

80,64868,021

Interest income received

325

355

Interest expenses paid

(539)

(598)

Income taxes paid

(10,068)(14,456)

Payments for loss on disaster(2,473)-Operating activities;

asset retirement obligations

Increase in accounts receivable-other
Decrease in claims provable in bankruptcy, claims provable in
Rehabilitation
Increase in accounts payable—trade and due to franchised stores
Increase in accounts payable—otherNet cash flows provided by operating activities

67,89153,321(10,100)(11,900)

Proceeds from withdrawal of time deposits

9,700

10,100Purchase of investment securities(43)(1,105)(5,743)

(625)

-

480

Payment for acquisition of property and store equipment(12,919)(20,130)

Payment for acquisition of intangible fixed assets(3,744)(2,589)Payments for transfer of business(3,415)-

Other – net(2,233)(3,186)(28,499)(28,957)

Investing activities;
Payments into time deposits

Purchase of stocks of subsidiaries and affiliates
Proceeds from purchase of investments in subsidiaries resulting inchange in scope of consolidation

Net cash used in investing activities
12Financing activities;
-

1,128

Repayments of lease obligations(4,762)(6,578)Cash dividends paid

(8,488)(9,289)(32)

2(13,284)(14,736)(5)

12

Net increase in cash and cash equivalents

26,102

9,639

Cash and cash equivalents, beginning of year

67,71273,67049-

93,864

83,309Net increase in short-term loans payable

Other
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents

Increase (decrease) in cash and cash equivalents resulting fromchange of scope of consolidation
Cash and cash equivalents at end of period13(3) Notes to Going Concern
Not Applicable.

(4) Notes to Significant Changes in Shareholders’ Equity
Not Applicable14