Annual
Repor t2005
Year Ended February 29, 2005

profile

ProfileSince its establishment in 1947, ONWARD KASHIYAMA Co., Ltd., has been an
active leader in the world of fashion. The Company has drawn on its sophisticated capabilities in planning, technological development, information network management, and production to develop a wide range of popular brands that appeal
to the diverse tastes of consumers, who differ not only in age but also in the values they hold. Onward’s products are marketed through department stores,
direct merchants, shopping centers, and general retailers throughout Japan aswell as via a global sales network that spans Europe, Asia, and North America.
Onward has earned a strong reputation in all quarters for its continued ability
to anticipate consumer needs and offer new concepts that reflect those needs.
As a leading retailer in the global apparel industry, Onward is drawing on its longexperience in planning and development, technology, information, and production to more actively develop business in both domestic and overseas markets.

contents

Contents
1 Financial Highlights
2 A Message to Our Shareholders

42 Notes to Non-Consolidated
Financial Statements

5 Developing Brand-Leveraged Management

47 Report of Independent Accountants

8 Business Overview

48 Board of Directors

13 Topics

49 Organization Chart

14 Consolidated Six-Year Summary

50 Principal Subsidiaries

15 Financial Review

51 Corporate Data

18 Consolidated Balance Sheets
20 Consolidated Statements of Income
21 Consolidated Statements ofShareholders’ Equity
22 Consolidated Statements of Cash Flows
23 Notes to Consolidated Financial
Statements
37 Report of Independent Accountants
38 Non-Consolidated Balance Sheets
40 Non-Consolidated Statements of Income
and Retained Earnings
41 Non-Consolidated Statements ofShareholders’ Equity

Future business plans, targets, and related numericalfigures presented in this annual report are intended togive an accurate picture of Onward’s future prospects.
However, no guarantee can be offered that plans, targets,and other numerical figures described herein can be realized. The achievement of stated targets is dependent not
only on the efforts of the Company, but also the conditions
facing the industry as a whole, and we ask for understanding in this regard.

financial
highlights

Financial Highlights
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries
Years ended February 29, 2004 and February 28, 2005
Thousands of
U.S. dollars

Millions of yen

ASSETS

2004

2005

2005

At year-end:
Total current assets
Total current liabilities
Short-term bank loans
Total shareholders’ equity¥165,931
92,27017,491
196,796¥150,969
79,025
15,772
202,377$1,441,366
754,488
150,580
1,932,182

For the year:
Net sales
Operating income
Net income¥267,746
22,896
13,053¥271,273
24,205
10,257$2,589,966
231,098
97,927Yen

Per share:
Net income—Basic
Cash dividends
ROE (%)
Operating income margin (%)

U.S. dollars

¥74.1
20.0

¥58.1
22.0

6.7
8.6

5.1
8.9

$0.5550.210

Note: Yen amounts have been translated, for convenience only, at ¥104.74=US$1, the approximate exchange rate on February 28, 2005.

300,000

15,000240,000

12,000180,000

9,000

240,000

200,000

160,000

120,000
120,000

6,000
80,00060,0003,000

0Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

40,0000Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Net Sales

Net Income(Millions of yen)

(Millions of yen)0Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Total
Shareholders’Equity(Millions of yen)1

A Message to Our Shareholders

In fiscal 2005, ended February 28, 2005, ONWARD KASHIYAMA Co., Ltd., set net
sales and operating income records and recorded increased revenues and profits
for the fourth consecutive year.
On March 1, 2005, Shigeru Uemura assumed the role of president of Onward,
and former president Takeshi Hirouchi became Chairman and CEO. This new management structure will advance the creation of an energetic organization that canaddress the rapidly changing business environment with confidence.
Performance Overview
In the year under review, in addition to flagging personal consumption, unusual weather patterns,
including severe summer heat waves, frequent typhoons, and a warm winter, contributed to slack

Takeshi Hirouchi
Chairman & CEO

sales in department stores, a core sales channel. The central players in the consumer market areshifting as the generations older and younger than the baby boomers as well as second-generation
baby boomers make their presence felt in the market. Distribution is being affected by the emergence in quick succession of various shopping centers and fashion malls in suburban areas.
Increasing selectivity among consumers, “seasonless” consumption, and channel-specificshopping constitute some of the significant market changes that are taking place.
Amid this challenging environment, we vigorously promoted Brand-Leveraged Management inboth our core sales channels of department stores and shopping centers and other new channels.
As a result, we were able to realize consistent growth, posting higher revenues and profits for the
fourth year running.
In fiscal 2005, net sales were up 1.3%, to ¥271.3 billion, operating income rose 5.7%, to¥24.2 billion, and ordinary income increased 4.1%, to ¥26.2 billion. However, due to the absenceof a gain such as the one recorded in fiscal 2004 due to the settlement of the substitutional portionof the government pension fund, net income dropped 21.4%, to ¥10.3 billion.
The parent company and subsidiary Impact 21 Co., Ltd., in particular, put in strong performances in fiscal 2005. At Onward, sales of major core brands, including KUMIKYOKU and2

a message
to ourshareholders

NIJYUSANKU, grew, making significant contributions to profits. Impact 21’s Onward Beach Resort
Guam, Inc., which previously had been a source of concern, reduced its deficit and improved its
profitability. In addition, the reorganization of Group affiliates raised the profitability of Impact 21,
thereby contributing to the overall increase in profits.

A Growth Strategy to Strengthen Our Management Foundations
Onward continued to aggressively advance Brand-Leveraged Management. Specifically, we rolled
out the Channel-Specific Brand Strategy, under which we aim to carefully examine products andprice ranges to facilitate the development of optimum brands for each channel.
Product appeal is what drives the fashion business. The accurate use of detailed data analysis
and firsthand information from the sales floor is crucial. We must be able to adopt a consumer

Shigeru Uemura
President

mentality and pick up on changes, making confident decisions that do not rely on preexisting concepts. Onward will advance its growth as an apparel company by stimulating customer demandand consistently introducing brands and products that customers favor.

Establishment of Corporate Governance
Onward recognizes the establishment of corporate governance as an important management
issue. Management is working to improve the Company’s soundness, fairness, transparency, andcompliance with laws to create an organizational framework that responds to rapid changes in thebusiness environment.
Beginning in fiscal 2006, the Company appointed external directors and auditors for the firsttime to properly ensure objectivity in decision making. In addition to the two external directors,
directors in charge of operations and products, respectively, have been added to the Company’s
Board of Directors, increasing the number of board members from 10 to 14. Two of the Company’s four auditors are external auditors so as to strengthen the Board of Auditors’ supervisory
functions.

3

In 2004, we established a Compliance Committee as part of our compliance framework. The
committee conducts training related to the Act Concerning the Protection of Personal Information,
providing an ongoing and thorough course of education for all employees. We are also moving forward with a number of corporate social responsibility initiatives, which are becoming more popular,
with the aim of being a company that society can trust.

Creating a “New” Onward
Under our new management, we are creating a “new” Onward that will move further ahead. In
March 2005, we divided the former International Business Division into the North America, Europe,and Asia business groups with the goal of increasing our international market presence in theapparel industry. We plan to implement strategies tailored to the special characteristics of eachregion and will devote efforts to training local employees. In Shanghai and the rest of China, in particular, we are aiming to establish operations that range from planning and production to sales.
Looking at our production framework, we boast some of the world’s best factories—includingthat of Italian subsidiary GIBO’ CO. S.p.A. and a plant in China operated in conjunction with DAIDOH
LIMITED, with which we formed a partnership in December 2004—to promote internationally viable
product creation.
Furthermore, we are pushing forward with the creation of a corporate Group specializing in the
fashion business by globalizing planning, forging alliances with other companies, collaborating withfamous designers, and vigorously engaging in M&A activity.
In spring 2006, NAVE, a jointly designed Japanese/U.S. brand, will be simultaneously launched
in Japan and the United States. A number of overseas designers were recruited for the brand,which includes men’s, women’s, and children’s lines and is expected to be a global brand for the
next generation.

Aiming to Maximize Shareholder ValueIn March 2005, we established the IR Division within the Management Planning Office with the aimof enhancing IR activities. To this end, we are working to improve the disclosure of information andfulfill our obligations regarding accountability vis-à-vis our shareholders.
Our basic profit-sharing policy is to engage in profit sharing that is fair and takes into accountoverall performance to provide continuous and stable dividends. To this end, dividends for the
fiscal year under review increased ¥2, to ¥22 per share.
Looking ahead, Onward plans to continue on its path of growth, realizing higher revenues andhigher profits. In fiscal 2006, net sales are expected to rise 2.1%, to ¥277.0 billion, operating
income is forecast to increase 14.0%, to ¥27.6 billion, and net income is anticipated to surge
11.7%, to ¥11.5 billion.
We sincerely thank our shareholders for their continued support on the road ahead.

May 2005

4

Takeshi Hirouchi, Chairman and CEO

Shigeru Uemura, President

Developing Brand-Leveraged Management

Onward is advancing Brand-Leveraged Management, the cornerstone of which is maximizing brandvalue. Brand-Leveraged Management is used to determine the identity, basic value, and added value ofbrands and, based on this, to nurture both core and spin-off brands and expand them. As a result, suchmajor core brands as NIJYUSANKU, KUMIKYOKU, ICB, and GOTAIRIKU have exhibited stable growth,
making a significant contribution to overall profits.
Looking ahead, Onward plans to shift to a Channel-Specific Brand Strategy that develops and nurtures
brands that are appropriate to their respective distribution channels.
Japan’s Fashion Market—

In Japan, consumers are practicing “selective consump-

Ushering in a Period of Changetion,” wherein they purchase certain products from specificJapan’s fashion market has matured and is experienc-

shops that meet their needs, a phenomenon that is advancing

ing major changes with regard to structure and consumer

the compartmentalization of department stores, suburban

behavior. A change in consumer tastes that favors “affordable

shopping centers, and station buildings. Recognizing thisluxury,” with a focus on premium cars, cutting-edge hometrend, the Company has created a Channel-Specific Brand

electronics, and designer furniture, has resulted in a decrease

Strategy that clarifies its brand images. With departmentin the priority given to fashion consumption. One of thestores as its primary focus, the Company is actively promoting

reasons for this can be found on the supplier side, where

this strategy, under which it develops new brands and busi-

excessive quick response activity has resulted in a flood ofnesses for specific channels that best meet customer needs

knockoffs and a shift from a fashion-centric market in which

and that will thrive amid competition.

fashion is an object of admiration to a consumer-centric market that caters to consumers.

Channel-Specific Brand Strategy
Department Stores

The Next Step in Brand-Leveraged Management

In the Company’s core distribution channel of department

The considerable changes that are taking place in the busi-

stores, apparel sales are stagnating due to a decrease in theness environment for the fashion industry demand the estab-amount spent per shopper and competition from new sales

lishment of more detailed strategies under the Company’s

channels. Consequently, department stores are working to

Brand-Leveraged Management. Thus, it must raise branddistinguish themselves from their competitors by shifting tovalue by differentiating its brands and raising their impact

the sale of luxury items.

and presence at stores.

5developing
brandleveraged
management
In response to this trend, Onward is rejuvenating the brandRegional Shopping Centers (RSCs)

images of mainstays NIJYUSANKU and KUMIKYOKU by infus-

RSCs, which for a number of years have been increasing theing them with new character. At the same time, it is enhancing

number of stores they house, have now entered a period of

its stores to increase the volume of products supplied andcompetition and maturity. Their customer base has begun toraise the efficiency of sales floor use.

change, with second-generation baby boomers added to their

Looking at menswear, the Company is striving to effecttarget age-groups, and it is becoming easier for them to offer

growth for new as well as recently transferred brands, aoverseas brands.

lineup that includes DAKS, CK Calvin Klein, and JOSEPHIn RSCs, the Company’s second focus of its Channel-

HOMME. Furthermore, it is making forays into luxury depart-Specific Brand Strategy, it will work to clearly compart-ments with the expansion of upscale tailored suits from Rome-mentalize its brand products. To cultivate customers

based CIFONELLI and the addition of a high-end line to thewho practice selective consumption, Onward plans

J. PRESS brand.

to market certain brands through certain channels
to revitalize existing brand groups. Specifically, theIn spring 2006, joint Japan-U.S. planning created NAVE,
a new brand that is being developed in both Japan andbrand name KUMIKYOKU will be used exclusively at

the United States to be marketed globally. Furthermore, thedepartment stores and, to this end, KUMIKYOKU FAM andCompany plans to target baby boomers with the launch of a

KUMIKYOKU SIS will change their names to anyFAM andnew brand aimed at women in their mid-50s in autumn 2005

anySiS this fall. Prior to the name changes, the Company will

and the development of a store that carries a variety of men’s

engage in a major campaign to ensure the brands’ market

brands.

penetration.

150,000

30,00025,000120,000

20,00090,00015,00060,00010,00030,0005,000

0Years ended ’01
February 28 or 29

6’02 ’03 ’04 ’05

0Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Sales of Onward
Brands in
Department
StoresSales of Onward
Brands in RSCs,
Station Buildings,
and Fashion Malls(Millions of yen)

(Millions of yen)In the past, the

KORS MICHAEL KORS, launched in spring 2005, targets

Company mainly tar-young women and will be followed by rosebullet this fall. In

geted mothers andspring 2006, the Company plans to roll out Gramaras Casual,children in its RSC opera-

a new brand targeting men and women in their 30s.

tions. Over the next few years, itwill expand the number of shops targeting men, developing

Tapping into New Demand with an Aggressive Strategy

DEUX CONCEPT LABO, a casual brand that is a revamped

By advancing the Channel-Specific Brand Strategy outlined

version of NIJYUSANKU HOMME DEUX. Furthermore, inhere, along with a growth strategy for its mainstay brands,

spring 2006, it will roll out a new brand targeting second-

the Company is evolving Brand-Leveraged Management. The

generation baby boomer couples in their 30s.

fashion industry is led by the era, and its goods create added
value. If a product lacks appeal, consumers will not accept it.

Station Buildings and Fashion Malls

Onward will work to generate demand by creating excitement

Onward is expanding its business in the shopping areas withinwith marketing devices that have impact, including large-scale

and above rail stations, where it is pushing forward with thecampaigns and collaboration with magazines.

development of new shops as well as remodeling of existingones located in station buildings and fashion malls. Because
this sales channel has until now been virtually untouched by
Onward, it plans to effect growth here with the aggressive
establishment of stores.

60,00050,00040,00030,00020,00010,0000Years ended ’01
February 28 or 29
 ICB
 NIJYUSANKU KUMIKYOKU  JIYUKU GOTAIRIKU J. PRESS’02 ’03 ’04 ’05

Growth of Our
Main Brands(Retail Sales)

Note: In addition to the listed retail sales categories for thesebrands, Onward generates revenue from licensing out
the brands.

(Millions of yen)7

Business Overview

NIJYUSANKUKUMIKYOKU

businessICB

JIYUKUGOTAIRIKU

J. PRESS
8

Despite continuing sluggishness in overall market

women’s wear sales up 3.9% on a non-consolidated

conditions, which were marked by slack personalbasis.

consumption, Onward achieved consistent perform-

Looking at sales channels, we energetically devel-ance gains through the aggressive promotion of

oped business involving our core department store

Brand-Leveraged Management. In addition, in thechannels as well as urban and regional shopping cen-period under review, it successfully generated hit

ters. Non-consolidated sales at department storesproducts by employing original patterns and garment

rose 6.3%, while there was a 14.0% jump in sales inconstruction technology for the Stylish Up series.

new channels, where the number of stores and sales

At the parent company, menswear sales soared,

floor space increased.

exceeding the previous fiscal year’s sales by 13.7%.

The Company progressed with the application ofThis was attributable to the fact that, in addition to the

supply chain management, engaging in total manage-

overview
introduction of the DAKS brand and the transfer of CK

ment that ranges from demand forecasts to planning,

Calvin Klein to the parent company, consumer prefer-production, and distribution. By implementing 52-

ences continued to trend toward casual wear, driving

week merchandising (52-week MD), we have created

growth in NIJYUSANKU HOMME and NIJYUSANKU

a system that efficiently expands the presence of the

SPORT. Strong performances by the KUMIKYOKU,

right products at the right time to boost sales andPaul Smith, and MICHAEL KORS brands pushed

strengthen our profit base.

Target Customers

Main Brands
ICB
NIJYUSANKUKUMIKYOKUJIYUKUGOTAIRIKU
J. PRESSDAKS*
prideglide
rosebullet
Dip Drops
field dream
Feroux
La je

Concept
Urban and sophisticated brand forthe global market
Casual wear separates for women who
like to assemble their own original outfits
Trendy casual wear featuring mix-andmatch separates
High-quality elegant everyday wear
Tokyo-born brand that blends timeless
British styling with an international flair
Modern versions of American-traditionaland high quality styles
Traditional English brand with ayoung mind-set and high quality
Elegant styles that are sweet yet cool
Sexy-casual brand that blends cutesexiness and attractivenessA casual jeans brand that combines
fashion and convenience
Lifestyle shop brand that offers afeeling of a better quality of life
A sweet and casual brandA brand that offers products foran elegant and high-quality lifestyle
Deux CONCEPT Sophisticated casual wear brand for
LABO
everyday wear
anyFAM**
High-quality casual fashion that aims to
improve the quality of life for anyone,
anytime, anywhere
anySiS**

Men

Women Children

Main Targets

Distribution
DepartUrban Regional
ment Shopping Shopping
Stores Centers Centers

—



—

Working womenin their late 20s



—

—





—

Women around 30



—

—

—







—

—





—



—

—



—

—

Young womenin their early 20s
Women in their 40s
Businessmen in their
40s and 50s



—

—







Men in their late 30s



—

—





—



—

—

—



—

Fashion-conscious,
sophisticated men 45 to 55
Working women in theirearly to mid-20s





—

—



—

Women in their mid-20s

—





—



—

Young women 16 to 25

—



—

—





—

—



Men and women 30 to 40
living in urban areas
Working womenin their mid-20s





—

—



—

—



—

Women 45 to 55

—

—





—

—

Men 25 to 35

—

—



—





—

—



—



—

Second-generation
baby boomer mothers
Working women in their 20s

—

—



** DAKS is a licensed brand of U.K.-based DAKS.
** KUMIKYOKU spin-off brands KUMIKYOKU FAM and KUMIKYOKU SiS will be relaunched in fall 2005 as the new strategic brands anyFAM and anySiS.

9

Fiscal 2005

In individual brands, both DAKS,

OutlookIn the men’s apparel market, al-which was launched in March 2004,

To stimulate new demand, Onwardthough sales of high-end suits andand CK Calvin Klein performed on par

will continue to expand the Stylish Up

high-quality casual apparel werewith forecasts, contributing to theSeries. In March 2005, in addition tostrong, severe summer heat and a

increase in overall sales. Like Stylish

pants, suits, and coats, the Company

cold winter resulted in a difficult mar-

Up Pants, casual shirts in the NIJYU-

added Stylish Up Denim to its lineup.

ket environment for business wear.

SANKU HOMME brand performed

It plans to develop the series in the

Amid such conditions, in its corewell, enjoying considerable sales

GOTAIRIKU, NIJYUSANKU, and J.

eight brands the Company launched

growth. GOTAIRIKU posted strong

PRESS brands to expand sales of

Stylish Up Pants, trousers that makesales of pattern-made suits, but, due

men’s casual apparel. In addition, it

the wearer’s legs appear longer, into slack demand for business suits

will vigorously promote lines of high-April 2004. These became a major hit

and coats, overall performance fellend suits under the GOTAIRIKU andproduct, selling 90,000 pairs in one

below that of the previous fiscal year.

J. PRESS brands. Furthermore, theyear. In addition, Stylish Up Suit andAs a result of the aforementioned

Company will aggressively work to

Stylish Up Coat, products that give thefactors, consolidated sales of men’sraise sales and secure profits by prior-

illusion of slimness, exceeded sales

fashions rose 1.8%, to ¥77.9 billion,

itizing efforts toforecasts, with 20,000 suits sold in theand accounted for 28.7% of net sales.

strengthen the
DAKS and CK

fall/winter season alone.

Calvin Klein
brands.

Stylish Up Pants

Men’s Fashions
100,000

80,00060,000NIJYUSANKU HOMME

J. PRESS
40,00020,0000Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Sales of Men’s
Fashions
GOTAIRIKU

10(Millions of yen)

Fiscal 2005

performances that contributed greatly

strengthening its business structure

Despite stagnancy in the general mar-to the overall growth in sales. Alsoin all areas, from planning and pro-ket for women’s apparel due to theexhibiting solid sales were KUMIKYOKU

duction to sales floors and stores.

lack of a hit product, Onward exhibit-

FAM and KUMIKYOKU SiS, brands

At regional and metropolitan area

ed growth in sales of its women’s

being promoted in such new channels

shopping centers, Onward will opti-

apparel business.

as regional and metropolitan shopping

mize its Channel-Specific Brand

centers, as well as prideglide andStrategy with the aim of increasing

ment of Stylish Up Pants continued

VANILLA CONFUSION, strategic

profits. Specifically, in addition toto yield strong results in the year

urban department store brands.

reorganizing and newly establishing

The cross-brand product develop-

under review, and we sold 160,000

Consequently, consolidated sales offour spin-off brands originating frompairs. Although KUMIKYOKU per-women’s fashions climbed 1.1%, to

NIJYUSANKU and KUMIKYOKU, it

formed solidly, such other mainstay¥144.6 billion, and comprised 53.3%

will work to effect the full-fledged

brands as NIJYUSANKU, ICB, andof net sales.

activation of the middle-aged ladies’
brand La je, which was launched in

JIYUKU underperformed comparedwith the previous fiscal year, primarily

Outlookfall 2004. Furthermore, the Company

due to unusual weather patterns andIn its core sales channel of depart-will endeavor to fully enter the younga slump in demand for suits and coats.

ment stores as well as with regard

casual market with KORS MICHAEL

However, image-driven product devel-

to NIJYUSANKU, KUMIKYOKU, and

KORS, launched in spring 2005, andopment at Paul Smith, MICHAEL KORS,

other major core brands, Onward

rosebullet, which it will roll out in falland J. PRESS resulted in positiveplans to expand its profit base by

2005.

Women’s Fashions
VANILLA CONFUSION

150,000

120,000

90,000JIYUKUNIJYUSANKU

60,00030,0000Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Sales of Women’s
Fashions(Millions of yen)11

Children’s Fashions

FAM, which is being marketed in newBusiness Group inched up 0.6%, toJapan’s declining birthrate has led

sales channels, saw a steady increase¥3.6 billion, or 1.3% of the Company’s

to ongoing harshness in the market

in sales. As a result, consolidated sales

net sales.

for children’s fashions. However, theof children’s fashions rose 2.2%, toamount of money that parents can¥9.3 billion, which represented 3.4%

Other

spend per child has risen, translatingof net sales.

Thanks to a reduction in the amount ofdebt posted by Onward Beach Resort

into strong sales of well-designed, goodquality, and even premium-priced prod-

KimonosGuam, Inc., resort-related business re-ucts. The KUMIKYOKU brand struggled

In the steadily shrinking market forcovered profitability. In fashion jewelry,

as a result of difficult conditions in thekimonos, Onward posted healthy sales

product lines designed for personal pur-cut and sewn garment business asof yukata (cotton summer kimonos). The

chases for oneself rather than as gifts

well as its inability to respond to thedevelopment of new products, includ-

were popular. NIJYUSANKU bags styled

market’s trend toward casual clothing.

ing yukata linked to popular brands offor career women, and mit mitte design-

However, experimental forays into baby

Western clothing as well as items in theer brand leisure bags were a hit, con-clothing under the J. PRESS brand,

KUMIKYOKU FAM

WANOFUKU by NIJYUSANKU line,

tributing to an increase in sales. Thus,

designed withexpanded this segment’s share of net

other operations

three-generation

sales. In addition, casual prêt-à-porter

posted consoli-families in mind,

kimonos and small novelty goods per-dated sales of

did well, yielding

formed well. Discount sales of high-end¥35.9 billion, up

sales growth.

kimono fabric resulted in a significant

0.9%, and repre-

In addition,

decrease in sales. As a result, consoli-sented 13.3% of

KUMIKYOKU

dated sales in Onward’s Kimono

net sales.

KUMIKYOKU jewelryChildren’s Fashions, Kimonos,
and Other
10,0004,000

40,0003,000

30,0002,000

20,0001,000

10,000

8,000

6,000

4,000

2,000

0
Years ended ’01
February 28 or 29

12’02 ’03 ’04 ’05

0Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Sales of Children’s
Fashions

Sales of
Kimonos(Millions of yen)

(Millions of yen)0Years ended ’01
February 28 or 29’02 ’03 ’04 ’05

Sales of Other(Millions of yen)

topics

TopicsAcquisition of U.K.-Based Joseph Group, Acceleration of Overseas Strategy
In May 2005, Onward acquired the U.K.-based Joseph Group, which operates Joseph,a fashion brand that evokes London style. The Joseph brand is marketed in major cities in Europe,
the United States, and Japan and is favored by sophisticated, urban men and women. Onward islooking to further expand its operations in North America and Asia by strengthening links among
the companies in its global network through such activities as utilizing Italy-based subsidiary GIBO’
CO. S.p.A. for production.
Launch of DAKS Golf to Boost the New DAKS Brand
DAKS products and stores were transferred to Onward, and planning and production functions were also transferred with thelaunch of the 2005 spring line. In December 2004, the Company
commenced domestic operations for DAKS Golf, a brand of golf
clothing derived from the traditional British-style brand DAKS.
Adding DAKS Golf to the DAKS lineup is part of the Company’sefforts to create a new brand image for DAKS. Onward aims tohave 80 DAKS outlets in major nationwide department stores byspring 2006.
New Brand rosebullet to Debut in Fall 2005
Onward will roll out the new brand rosebullet, which targets women in their mid-20s, in fall 2005.
The brand’s concept is glamorous-casual, making this the Company’s first sexy yet casual brand.
It plans to open at least 15 stores, primarily in fashion malls and station buildings, by winter 2005.
In addition, Onward is planning a simultaneous debut of the brand in eastern Asian countries.
Acquisition of Management Rights for Italian Company IRIS
In June 2005, Onward acquired the management rights for Italian shoe manufacturer IRIS s.r.l.
through subsidiary GIBO’. Including IRIS—which manufactures and markets shoes created by theworld’s top designers—under the Onward umbrella will strengthen the GIBO’ designer brand business. In Japan, Onward subsidiary BUS STOP CO., LTD., will open a new shop, AUDOXIA, offering
imported brand goods and IRIS shoes in spring 2006.
Japan-U.S. Joint Planning for Next-Generation
International Strategic Brand NAVE
NAVE, a new brand jointly developed in Japan and the UnitedStates that targets working women in their 20s, will be launchedsimultaneously in Japan and the United States. The brand concept
is of a select boutique created and evolved by designers, with thefashions offered representing a collaborative effort among designers. We are developing NAVE with an emphasis on unique pieces
that celebrated stylists have carefully chosen from among offerings
created exclusively for the brand by fresh new designers fromaround the world.

13

Consolidated Six-Year Summary
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries
Years ended February 28 or 29
Thousands of
U.S. dollars

Millions of yen
2000

2001

2002

2003

2004

2005

2005

¥120,922¥126,151¥146,080¥141,468¥165,931¥150,969$1,441,366

equipment

92,956

103,581

99,274

101,188

96,017

96,394920,318

Total assets

296,715

312,258

312,443

302,188318,270

308,170

2,942,239

At year-end:
Total current assets
Total property, plant andTotal current liabilities

79,63678,98599,67380,147

92,27079,025754,488

Total shareholders’ equity

180,415

189,236

187,039

190,755

196,796202,377

1,932,182

Net sales¥221,206¥245,924¥257,306¥263,399¥267,746¥271,273$2,589,966

Cost of sales

130,058

143,449

145,687

143,234

143,921

146,447

1,398,197

administrative expenses

73,88785,731

93,499100,558

100,929

100,621960,671

Operating income

17,261

16,744

18,12019,60722,89624,205231,098

Income taxes, current

9,306

4,888

11,176

6,166

13,8687,490

71,513

Net income

7,404

4,805

3,802

7,158

13,053

10,257

97,927For the year:

Selling, general andYen

U.S. dollars

Per share (Yen and U.S. dollars):
Net income—Basic

¥43.0

¥27.9

¥22.1

¥41.6

¥74.1

¥58.1

$0.555

Cash dividends

16.5

16.5

16.5

16.5

20.0

22.0

0.210

Note: Yen amounts have been translated, for convenience only, at ¥104.74=US$1, the approximate exchange rate on February 28, 2005.

300,000

10

240,000

8

180,00080

80

240,000

60

60

160,000

40

40

80,0002020

6120,000

4

60,00020Years ended ’01
February 28 or 29
 Net sales (left scale) Operating income
margin (right scale)

320,000

0’02 ’03 ’04 ’05

Net Sales
and Operating
Income Margin(Millions of yen, %)0Years ended ’01
February 28 or 29
 Total assets (left scale) Total shareholders’equity (left scale) Shareholders’ equity
ratio (right scale)0’02 ’03 ’04 ’05

Total Assets,
Total Shareholders’Equity, andShareholders’Equity Ratio(Millions of yen, %)140Years ended ’01
February 28 or 29
 Net income per share Cash dividends pershare’02 ’03 ’04 ’05

Net Income Per
Share and Cash
Dividends Per
Share
(Yen)

Financial Review

Overview
In fiscal 2005, ended February 28, 2005, although certain
domestic economic indices pointed toward a recovery,business confidence was low due to a deflationary trend.
In addition, the employment situation and wage levels failed
to improve and personal consumption was affected by uncertainty linked to the ongoing demographic aging of theJapanese population, contributing to continued stagnation.
Conditions in the apparel industry remained harsh due toslack personal consumption as well as unusual weather
patterns, including severe summer heat waves, frequent
typhoons, and a warm winter, that resulted in lackluster
clothing sales at our core distributors, department stores.
Faced with this challenging business environment, theCompany aggressively promoted Brand-Leveraged Management with the aim of establishing a stable profit baseby working to ensure that the core brands NIJYUSANKU,KUMIKYOKU, ICB, and JIYUKU continued to meet the quality
standards for better brands at department stores. In department store distribution, the Company launched DAKS, an
upscale British-style brand for men. By creating dedicatedbrand shops that exclusively feature this line in a new shopping environment, we are steadily building a system to expand
the DAKS brand. In addition, the Company is consistently
expanding sales through urban department stores of prideglide and VANILLA CONFUSION, strategic brands targeting
young career women and young women in general.
Onward has developed Stylish Up Pants as a strategic
product for its mainstay men’s and women’s brands that will
stimulate new demand, launching a campaign for the productin early spring. In the autumn, in addition to suits, jackets, andcoats in its GOTAIRIKU, J. PRESS, and DAKS lines, the Company kicked off the Stylish Up campaign to promote the product line, resulting in higher sales than originally projected. In
new distribution channels, including regional and metropolitan
shopping centers, the Company expanded sales of suchbrands as KUMIKYOKU FAM, field dream, and Dip Drops.
In addition, we launched the new La je brand for middle aged
women in the autumn to strengthen our brand lineup withthe aim of supporting further growth.
Despite the aforementioned overall weakness in the market,
the Company was able to effect steady growth, thanks to its
vigorous promotion of Brand-Leveraged Management in coredepartment store distribution channels as well as such new
distribution channels as shopping centers.

In addition, the Company promoted supply-chain management, employing demand forecasts to ensure the comprehensive management of planning, production, and distribution
operations. The application of the 52-week merchandising (52week MD) structure enabled store expansion driven by timely
and appropriate products, simultaneously raising sales andstrengthening the Company’s profit base.
As a result of the aforementioned activities, consolidated
net sales in the year under review rose 1.3%, to ¥271.3 billion,
and operating income increased 5.7%, to ¥24.2 billion; however, net income was down 21.4%, to ¥10.3 billion, due to theabsence of special income posted in the previous fiscal year
as a result of a gain on the settlement of substitutional portionof governmental pension fund.

Results of Operations
Net Sales
Net sales increased for the fifth consecutive year, rising
1.3%, to ¥271.3 billion. The Company’s persistent efforts
to strengthen the pull of its mainstay brands through BrandLeveraged Management was the primary factor in achieving
the increase despite such negative factors as overall weakness in personal consumption and unusual weather patterns,
including severe summer heat waves, frequent typhoons, anda warm winter. Brands that made considerable contributions
to this achievement included KUMIKYOKU FAM, which exhibited remarkable growth in children’s apparel in new distribution channels; KUMIKYOKU, one of the Company’s core
women’s apparel brands, which gave a solid performance;
brands targeted at young career women, including prideglide,
Paul Smith, and MICHAEL KORS, all of which grew steadily;
VANILLA CONFUSION and other new brands that made astrong start; and the CK Calvin Klein brand, the transfer ofwhich to the Company helped strengthen profits. In menswear in particular, the new contribution of DAKS, an upscale
British-style brand launched in the period under review, andthe aforementioned transfer of the CK Calvin Klein brand as
well as of the Joseph brand to the Company contributed tohigher revenues. Overall sales in the Clothing Segment edged
up 1.0%, to ¥257.6 billion.
Sales in the Other business segment climbed 8.1%, to¥27.5 billion.

15

Furthermore, in fiscal 2005, the Company decided to implement the following changes to make business operations more
efficient.
• Chacott Co., Ltd., became a fully owned subsidiary on
March 1, 2004, through a stock swap.
• On Business Trend Co., Ltd., transferred its brands CK
Calvin Klein and Joseph to the Company and completed its
liquidation on February 14, 2005.
Costs, Expenses, and Earnings
The cost of sales climbed 1.8%, to ¥146.4 billion. This was
mainly attributable to the increase in net sales. At the sametime, the introduction of new brands resulted in a decrease in
the gross profit margin of 0.2 percentage points, from 46.2%
to 46.0%, although gross profit edged up 0.8%, to ¥124.8 billion.
Selling, general and administrative (SG&A) expenses slipped
0.3%, to ¥100.6 billion. Due to the fact that SG&A expenses
fell despite the growth in net sales, SG&A expenses as a percentage of net sales decreased 0.6 percentage point, from
37.7% to 37.1%. Higher operational efficiency and the promotion of the reorganization of subsidiaries constituted the reasons for the reduction in costs. As a result of the reduced
costs and modest gain in net sales, operating income rose
5.7%, to ¥24.2 billion, making fiscal 2005 the fourth consecutive year of gains, while the operating income margin improved
0.3 percentage point, from 8.6% to 8.9%. Thus, the Company has broken its records for net sales and operating
income for four straight years.
Other income (expenses) declined ¥4.1 billion, fromincome of ¥4.2 billion to ¥0.1 billion. The primary reason forthe decrease was the absence of a ¥10.5 billion gain on thesettlement of substitutional portion of governmental pension
fund recorded in fiscal 2004. However, also absent during
fiscal 2005 were such expenses as a ¥2.7 billion provision
for allowance for bad debt incurred in the previous fiscal
year in connection with the Company’s support for businessrestructuring and overseas businesses as well as ¥3.7 billion in
valuation losses on fixed assets and investments in unconsolidated subsidiaries and affiliates. During the fiscal year underreview, Onward posted ¥1.6 billion in additional retirement
payments resulting from voluntary early retirements at subsidiary O & K Co., Ltd.

16

These factors contributed to a 10.2% fall in income before
income taxes and minority interests, to ¥24.3 billion. The effective tax rate in fiscal 2004 was 42.1%, almost the same as thestatutory tax rate of 42.0%, but due to losses recorded byconsolidated subsidiaries for which deferred tax assets are notrecognized as well as unrealized income related to Chacott’s
new status as a wholly owned subsidiary, the effective tax rate
in 2005 increased to 49.4%, reflecting a rise in the tax burden.
As a result, net income dropped 21.4%, to ¥10.3 billion, thefirst drop in income in three years. The profit margin thus fell
1.1 percentage points, to 3.8%, and return on equity declined
1.6 percentage points, to 5.1%.

Financial Position
The Onward Group’s total assets as of the fiscal year-end
were down 3.2%, or ¥10.1 billion, to ¥308.2 billion. A 9.0%, or¥15.0 billion, drop in current assets represented a significant
portion of this decrease and was largely attributable to a ¥6.3
billion drop in cash and time deposits resulting from higher tax
payments as well as declines in accounts and notes receivableand deferred tax assets.
Compared with property, plant and equipment, which
was at roughly the same level as at the previous fiscal yearend, edging up only ¥0.4 billion, investments and advances
increased ¥4.5 billion. The principal factors in this movement
were a ¥4.8 billion increase in investments in securities and a¥3.0 billion decrease in long-term loans related to the reorganization of subsidiaries, as well as a reduction in deferred tax
assets—non-current of ¥1.7 billion.
Turning to the liabilities side of the balance sheet, current
liabilities were down ¥13.2 billion compared with the previous
year-end. This was primarily attributable to a ¥9.5 billion dropin accrued income taxes, a ¥2.1 billion reduction in accounts
and notes payable, a ¥1.7 billion decrease in short-term bankloans, and a decline in accrued expenses of ¥1.1 billion. Total
interest-bearing debt continued its downward trend, falling¥1.8 billion, from ¥22.3 billion to ¥20.5 billion.
Shareholders’ equity was boosted by the increase inretained earnings, rising 2.8%, or ¥5.6 billion, to ¥202.4 billion.
As a result, the shareholders’ equity ratio climbed 3.9 percentage points, to 65.7%. In addition, the ratio of short-term bankloans to shareholders’ equity improved 1.1 percentage points,from 8.9% to 7.8%. The current ratio also improved, rising
11.2 percentage points, from 179.8% to 191.0%.

Viewed as a whole, significant changes in the balance
sheets were generally related to the reorganization and consolidation of subsidiaries and brands as a part of the Group’s
strategy to advance optimally efficient business management
through the strategic allocation of business resources to promising brands and business opportunities, which was undertaken to benefit shareholders.
Cash FlowsNet cash provided by operating activities fell ¥14.5 billion, to¥16.0 billion, due largely to income tax payments of ¥17.7 billion.
Net cash used in investing activities increased ¥4.2 billion
compared with the previous fiscal year, for a net outflow of¥12.9 billion, reflecting investments in stores and sales floors
as well as the acquisition of investments in securities.
Net cash used in financing activities dipped ¥1.5 billion, to¥9.3 billion, owing to declines in the acquisition of treasury
stock and debt repayment.
As a result of the aforementioned factors, the balanceof cash and cash equivalents at the end of fiscal 2005, at¥81.5 billion, was down ¥6.3 billion.

Policy on the Distribution of Profits
The Onward Group’s management has long recognized as
one of its top priorities the distribution of profits to shareholders. We will strive to continue to make stable dividend payments and carry out the distribution of profits in a way that
adequately takes into account the overall business environment as well as performance trends. Internal reserves will be
employed in a flexible manner that strikes a balance between
strategic investment for the construction of a solid businessstructure, bolstering the Company’s financial position, andmeeting financing requirements.
Based on these considerations, and taking into account theCompany’s performance in the year under review as well as
the outlook for the business environment, special dividends of¥3.5 per share from fiscal 2004 were included in the regulardividends of ¥20 per share, along with special dividends of¥2 per share for fiscal 2005, bringing total dividends to ¥22
per share. As a result, the nonconsolidated payout ratio forfiscal 2005 was 36.4%, and the nonconsolidated ratio of cash
dividends to shareholders’ equity was 1.8%.

Forward-Looking Statement
Looking ahead, despite signs of economic recovery, we
expect challenging economic conditions to persist amid uncertainty in the areas of employment, wages, and the international
political climate.
To counter these adverse economic conditions, the Onward
Group will continue to actively promote Brand-Leveraged Management. It will focus on solidifying its Channel-Specific Brand
Strategy, which clearly defines brand images and aims toadvance brand development that is tailored to the needs andcompetition of different kinds of sales channels.
In the Company’s core sales channel of department
stores, it will strive toward improved product planning andthe expansion of sales at individual stores of such major mainstay brands as NIJYUSANKU and KUMIKYOKU through integrated planning, production, sales, marketing, sales floor
design, and store proposals, with the ultimate goal of creatinga stronger profit base.
Strengthening the new DAKS brand as well as the CK
Calvin Klein and MICHAEL KORS brands will be priorities, andwe will energetically work toward securing higher sales andstable profits for these brands. To stimulate new demand,
Onward will continue to expand its Stylish Up Campaign andplans to cross-market brands in a “Vacation Your Style” campaign targeting Golden Week* holidaymakers.
Onward has established such spin-off brands of mainstays
NIJYUSANKU and KUMIKYOKU as Feroux, DEUX CONCEPTLABO, anyFAM, and anySiS, for suburban and metropolitan
shopping centers. In addition, it is engaged in the full-fledged
activation of La je, a brand launched in the 2004 fall season,endeavoring to optimize its Channel-Specific Brand Strategy
as a means of expanding its profit base.
In addition, the Company is working to boost its presence
in young casual apparel at fashion malls and station buildings
with the launch of new brands KORS MICHAEL KORS in thespring and rosebullet in the fall.
For the fiscal year ending February 28, 2006, we anticipate
a 2.1% increase in consolidated net sales, to ¥277.0 billion, a
14.0% rise in operating income, to ¥27.6 billion, and an 11.7%
jump in net income, to ¥11.5 billion. These forecasts, basedon information available to the Onward Group at the time ofwriting, include the possibility of latent risks and uncertainties.
Please be aware that a variety of factors may affect theGroup’s forecasts and cause actual results to differ significantly from projections.
* Falling at the end of April, Golden Week is one of Japan’s busiest holiday
seasons.

17

Consolidated Balance Sheets
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries
February 29, 2004 and February 28, 2005
Thousands of
U.S. dollars(Note 2. (19))

Millions of yen

ASSETS

2004

2005

2005

Current assets:
Cash and time deposits (Note 2. (16))
Accounts and notes receivable
Less: Allowance for bad debt

¥088,099
31,781(318)¥081,821
26,084(307)$0,781,186
249,035(2,934)Inventories (Note 2 (4))
Deferred tax assets—current (Note 8)
Other current assets

31,463
26,1587,240
12,971

25,777
27,4104,228
11,733

246,101
261,701
40,362
112,016

Total current assets

165,931

150,969

1,441,366

13,113
6,089
7,481
1,626
18,791

17,889
3,089
5,744
1,612
23,307

170,789
29,49554,83815,394
222,524

Total investments and advances

47,10051,641

493,040

Property, plant and equipment (Note 5):
Buildings and structures
Other depreciable property
Less: Accumulated depreciation

65,006
18,357(43,416)

64,52819,037(44,308)

616,074
181,758(423,030)

39,94756,07039,257
57,137

374,802545,516

96,017

96,394920,318

9,222

9,166

87,515¥318,270¥308,170$2,942,239

Investments and advances:
Investments in securities (Note 3)Long-term loans (Note 14)
Deferred tax assets—non-current (Note 8)
Deferred tax assets—revaluation of land (Notes 8 and 9)
Other investments

Land (Note 9)
Total property, plant and equipment

Deferred charges and other assets

The accompanying notes are an integral part of these statements.

18

Thousands of
U.S. dollars(Note 2. (19))

Millions of yen

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY

2004

2005

2005

Current liabilities:
Short-term bank loans (Note 16)
Accounts and notes payable
Accrued expenses
Accrued income taxes
Consumption tax payable
Accrued bonuses to employees
Allowance for sales returns
Other current liabilities¥017,491
47,777
7,840
10,867
1,104
2,969
1,213
3,009

¥015,772
45,657
6,710
1,407
1,308
2,592
1,013
4,566

$0,150,580
435,91364,05913,433
12,49224,751
9,670
43,590Total current liabilities

92,27079,025754,488

4,764
1,790
3,198
1,682

4,694
1,342
2,088
1,766

44,813
12,817
19,931
16,864

11,434

9,890

94,425

103,704

88,915

848,913

17,77016,878161,144

30,08049,707
124,575(2,373)807(627)

30,08050,043130,979(2,353)
1,266
(556)

287,184
477,787
1,250,520(22,457)
12,078(5,308)202,169

209,459

1,999,804(5,373)(7,082)(67,622)

196,796202,377

1,932,182¥318,270¥308,170$2,942,239

Long-term liabilities:
Long-term debt
Negative goodwill on consolidation
Accrued retirement benefits (Note 6)
Accrued retirement benefits for directors and statutory auditors
Total long-term liabilities
Total liabilities
Minority interests in consolidated subsidiaries
Commitments and contingent liabilities (Note 10)
Shareholders’ equity:
Common stock:
Authorized—400,000,000 shares
Issued—172,921,669 sharesat February 29, 2004 and February 28, 2005
Capital surplus
Retained earnings (Note 11)
Net revaluation loss of land (Notes 8 and 9)
Net unrealized gains on available-for-sale securities (Note 3)
Foreign currency translation adjustment
Less: Treasury stock, at cost, 5,128,796 shares and 5,690,756 sharesat February 29, 2004 and February 28, 2005, respectively
Total shareholders’ equity

U.S. dollars(Note 2. (19))

Yen

Per share (Note 13):
Net assets per share¥1,170.0¥1,207.3

$11.5

19

Consolidated Statements of Income
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries
For the years ended February 28, 2003, February 29, 2004 and February 28, 2005
Thousands of
U.S. dollars(Note 2. (19))

Millions of yen
2003

2004

2005

2005

Net sales¥263,399¥267,746¥271,273$2,589,966

Cost of sales

143,234

143,921

146,447

1,398,197

Gross profit
Selling, general and administrative expenses (Note 14)

120,165
100,558

123,825
100,929

124,826
100,621

1,191,769
960,671

Operating income

19,60722,89624,205231,098

160
(149)
(911)
1,338
(2,549)
1,030
(72)
(993)
—
(665)

149
(128)
(1,169)
1,016
(15)
899
(34)
(54)
(2,744)
(794)

131
(102)
(352)
883
(112)
741
(536)
(1,554)
—
(127)

1,249
(974)
(3,364)8,430(1,067)
7,079(5,118)(14,834)—(1,210)—10,471

—

—

—
(2)
651

(1,611)(2,103)
304

(300)
—
1,431

(2,864)—
13,660

Income before income taxes and minority interests

17,44527,08324,308232,085

Income taxes (Note 8):
Current
Deferred

6,166
3,605

13,868(2,466)

7,490
4,507

71,51343,030

Income before minority interests

7,674

15,681

12,311

117,542

Minority interests in (earnings) lossesof consolidated subsidiaries(516)(2,628)(2,054)(19,615)¥007,158¥013,053¥010,257$0,097,927

Other income (expenses):
Interest income
Interest expenses
Loss on disposal of property, net
Gain on sale of investments in securities, net
Loss on write-down of investments in securities
Royalty income
Loss on liquidation of subsidiaries and affiliates
Additional retirement payments
Provision for allowance for bad debt
Foreign currency exchange loss
Gain on the settlement of substitutional portionof governmental pension fund (Note 2. (11))
Valuation losses on investments in unconsolidated
subsidiaries and affiliates
Valuation losses on fixed assets
Other, net (Note 14)

Net income

U.S. dollars(Note 2. (19))

Yen

Per share (Note 13):
Net income—Basic
Cash dividends
Diluted net income per share is not disclosed because there were no securities with dilutive effect.
The accompanying notes are an integral part of these statements.

20

¥41.6
16.5

¥74.1
20.0

¥58.1
22.0

$0.5550.210

Consolidated Statements of Shareholders’ Equity
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries
For the years ended February 28, 2003, February 29, 2004 and February 28, 2005
Millions of yen

Balance as at February 28, 2002:
Cash dividends
Directors’ bonuses
Selling of treasury stock, net
Net income for the year
Reversal of reserve for land valuation
Net unrealized losses onavailable-for-sale securities
Foreign currency translation adjustment
Balance as at February 28, 2003:
Cash dividends
Directors’ bonuses
Gain on sales of treasury stock
Increase in treasury stock
Net income for the year
Increase in net revaluation loss ofland due to statutory tax rate change
Reversal of reserve for land valuation
Net unrealized gains onavailable-for-sale securities
Foreign currency translation adjustment
Issuance of new stock in exchange
for Oak Co., Ltd.’s stock
Balance as at February 29, 2004:
Cash dividends
Directors’ bonuses
Gain on sales of treasury stock
Increase in treasury stock
Exchange of treasury stock for
Chacott Co., Ltd.’s stock
Net income for the year
Reversal of reserve for land valuation
Net unrealized gains onavailable-for-sale securities
Foreign currency translation adjustment
Balance as at February 28, 2005

Numberof sharesof commonstock(thousands)

CapitalsurplusRetainedearnings(Note 11)Net
revaluation
loss of land
(Notes 8
and 9)Net unrealized
gains (losses)
on available-forsale-securities(Note 3)Foreigncurrencytranslation
adjustment

Commonstock

Treasurystock

172,293—————¥30,080—————¥49,135—————¥110,942(2,843)
(466)
—
7,158
—

¥(2,348)————
1¥0(278)—————¥(475)—————¥00,(17)
—
—
(75)
—
—

—
—
172,293
—
—
—
—
—

—
—
30,080
—
—
—
—
—

—
—
49,135
—
—
0
—
—

—
—
114,791(2,841)(401)——
13,053——(2,347)
—
—
—
—
—

103
—
(175)
—
—
—
—
—

—
(162)
(637)
—
—
—
—
—

—
—
(92)
—
—
2
(5,283)
—

—
—

—
—

—
—

—
(27)

(53)
27

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

982
—

—
10

—
—

629
172,922—————30,080————572
49,707——
2——
124,575(3,356)
(477)
—
—

—
(2,373)
—
—
—
—

—
807
—
—
—
—

—
(627)
—
—
—
—

—
(5,373)——
5(3,495)

—
—
—

—
—
—

334
—
—

—
10,257
(20)

—
—
20

—
—
—

—
—
—

1,781
—
—

—
—
172,922——¥30,080——¥50,043——¥130,979——¥(2,353)459—¥1,266—71¥(556)——¥(7,082)

Foreigncurrencytranslation
adjustment

Treasurystock

Thousands of U.S. dollars (Note 2. (18))

Commonstock

Balance as at February 29, 2004:
Cash dividends
Directors’ bonuses
Gain on sales of treasury stock
Increase in treasury stock
Exchange of treasury stock for Chacott Co., Ltd.’s stock
Net income for the year
Reversal of reserve for land valuation
Net unrealized gains onavailable-for-sale securities
Foreign currency translation adjustment
Balance as at February 28, 2005

CapitalsurplusRetainedearnings(Note 11)Net
revaluation
loss of land
(Notes 8
and 9)

Net
unrealized gains
on available-forsale-securities(Note 3)$287,184 $474,577 $1,189,377 $(22,650) $07,696——(32,040)————(4,551)
—
—
—
18
—
—
—
—
—
—
—
—
—
3,192
—
—
—
—
—
97,927
—
—
—
—
(193)
193
—

$(5,984) $(51,297)
—
—
—
—
—
42
— (33,370)—
17,003
—
—
—
—

—
—
—
—
4,382
—
—
—
—
—
$287,184 $477,787 $1,250,520 $(22,457) $12,078

—
—
676
—
$(5,308) $(67,622)

The accompanying notes are an integral part of these statements.

21

Consolidated Statements of Cash Flows
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries
For the years ended February 28, 2003, February 29, 2004 and February 28, 2005
Thousands of
U.S. dollars(Note 2. (19))

Millions of yen

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization
Increase (decrease) in provision for allowance for doubtful accounts
Increase (decrease) in provision for accrued retirement benefits
Net interest and dividend income
Loss on disposal of property, net
Gain on sale of investments in securities, net
Loss on write-down of investments in securities
Valuation losses on investments
in unconsolidated subsidiaries and affiliates(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Increase in time deposits
Decrease in time deposits
Decrease in investments in securities
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of investments in securities
Proceeds from sale of investments in securities
Net (increase) decrease in deferred charges
Payments for deposits
Proceeds from deposits
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net repayments of short-term loans
Net repayments of long-term debt
Acquisition of treasury stock
Dividends paid
Dividends paid to minority stockholders
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 2. (16))
The accompanying notes are an integral part of these statements.

22

2003

2004

2005

2005

¥17,445¥27,083¥24,308$232,085

7,890
(658)
996
(43)
911
(1,338)
2,549

7,531
2,683
(2,792)(46)
1,169(1,016)15

7,042(2,863)(1,110)
(81)
352
(883)
112

67,229(27,336)(10,601)
(773)
3,364
(8,430)
1,067

—
2,363
1,750
(2,396)
1,492
30,961
190(156)(15,494)
15,501

1,611(2,746)(1,035)
4,942(1,936)35,463178(130)(4,996)30,515300
5,734(1,230)(2,128)3,897
33,450326(101)(17,683)
15,9922,864
54,750(11,748)(20,313)
37,209319,367
3,114(970)(168,827)
152,684(2,283)445—(4,170)316(6,324)5,554
220(2,182)
2,370(553)(6,607)

(498)
493
—
(4,183)
1,208
(412)
1,907
(2,444)(1,320)668(4,123)(8,704)(2,278)288
4,400(5,288)50(7,570)1,546(2,723)(874)
685(1,185)(12,949)(21,749)
2,750
42,009(50,485)481(72,274)
14,759(26,005)(8,346)
6,542(11,313)(123,631)(6,293)(2,060)(75)(2,843)(196)—(11,467)(18)(2,591)
79,499¥76,908(2,385)—(5,281)(2,841)(337)(3)(10,847)(61)
10,90376,908¥87,811(1,719)—(3,495)(3,356)(770)
3(9,337)26(6,268)87,811¥81,543(16,421)—(33,370)(32,040)(7,351)
38(89,144)251(59,840)
838,372$778,532

Notes to Consolidated Financial Statements
ONWARD KASHIYAMA Co., Ltd. and Subsidiaries

1. Basis of Presentation of the Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared from the accounts maintained by ONWARD
KASHIYAMA Co., Ltd. (the “Company”), and its consolidated subsidiaries in accordance with the provisions set forth in theCommercial Code of Japan (the “Code”) and the Securities and Exchange Law and in conformity with accounting principles andpractices generally accepted in Japan, which are different in certain respects from the application and disclosure requirements ofInternational Financial Reporting Standards.
Certain items presented in the consolidated financial statements submitted to the Director of the Kanto Finance Bureau in Japan
have been reclassified for the convenience of readers outside Japan.
The accompanying consolidated financial statements are not intended to present the consolidated financial position, results ofoperations and cash flows of the Company and its consolidated subsidiaries in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.
2. Summary of Significant Accounting Policies(1) Scope of Consolidation
The Company had 42 subsidiaries as at February 28, 2005 (47 as at February 29, 2004, 53 as at February 28, 2003). The accompanying consolidated financial statements include the accounts of the Company and 16 subsidiaries (17 for 2004, 23 for 2003).
The 16 subsidiaries which have been consolidated with the Company are listed below (the Company and these consolidated subsidiaries are together referred to as the “Companies”):
Name of subsidiary

Impact 21 Co., Ltd.
Onward Life Design Network Co., Ltd.
Freed of London Ltd.
O & K Co., Ltd.
Onward Beach Resort Co., Ltd.
Donna Karan Japan K.K.
Onward Creative Center Co., Ltd.
Excel Co., Ltd.
Across Transport Co., Ltd.
Onward Marine Co., Ltd.
Personal Order Japan Co., Ltd.
Onward Beach Resort Guam, Inc.
Bus Stop Co., Ltd.
Oak Co., Ltd.
Chacott Co., Ltd.
BOOKLET CORP.

Equity ownership percentage

41.1%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Closing dateFebruary 28
February 28
December 31
February 28
December 31
December 31
February 28
February 28
February 28
February 28
February 28
December 31
February 28
February 28
February 28
February 28

Effective from February 28, 2005, On Business Trend Co., Ltd. was excluded from consolidation, as the company was liquidated on February 14, 2005.
By an exchange of stock, Chacott Co., Ltd. became a 100% owned subsidiary on March 1, 2004. Chacott Co., Ltd. has
reduced its common stock to ¥400 million on July 1, 2004.
+A VIA BUS CO., LTD. and Field Dream Co., Ltd. were liquidated in 2003. By an exchange of stock, Oak Co., Ltd. became a
100% owned subsidiary on April 1, 2003. Acty 21 Co., Ltd., and Partner 21 Co., Ltd. have been merged with Impact 21 Co., Ltd.
in 2003 and the name of the new company is Impact 21 Co., Ltd. Across Service Co., Ltd. has been merged with AcrossTransport Co., Ltd. in 2003 and the name of the new company is Across Transport Co., Ltd.
The financial statements of Donna Karan Japan K.K., Onward Beach Resort Co., Ltd., Onward Beach Resort Guam, Inc. andFreed of London Ltd., which have a fiscal year-end of December 31, have been used for consolidation.
Significant transactions between January 1 and February 28 are reflected in the consolidated financial statements.
The remaining 26 subsidiaries (30 for 2004 and 2003) were not consolidated because their combined assets, net sales, net
income and retained earnings in the aggregate were not material compared with those of the consolidated financial statementsof the Companies.

23

(2) Consolidation and Elimination
For the purposes of preparing the consolidated financial statements of the Companies, all significant intercompany transactions,account balances and unrealized profits among the Companies have been entirely eliminated, and the portion attributable tominority interests is credited/charged thereto.
The assets and liabilities of consolidated subsidiaries are incorporated into the financial statements at fair value at the time ofacquisition, and the differences between the cost of investments in consolidated subsidiaries and the equity in their net assets at
dates of acquisition are amortized equally over five-year periods.
(3) Investments in Unconsolidated Subsidiaries and Affiliates
Although the Company had 26 unconsolidated subsidiaries (30 in 2004 and 2003) and 5 affiliates (5 in 2004 and 3 in 2003) as
at February 28, 2005, the equity method was not applied to any of those subsidiaries and affiliates except for Polo Ralph Lauren
Japan Co., Ltd. This was because investment in the unconsolidated subsidiaries and affiliates would not have had a material
effect on the stocks of consolidated financial statements.
Since Polo Ralph Lauren Japan Co., Ltd. was acquired at the 2003 fiscal year-end, the equity method has been applied to theinvestment since the 2004 fiscal year.
(4) Inventories
Inventories are stated at cost, cost being determined generally by the last purchase invoice price method which approximates thefirst-in, first-out cost method. Merchandise held at retail stores is valued at the retail cost method.
When the net realizable value of certain classes of inventories (consisting primarily of seasonal merchandise which remains
unsold after the end of such seasons) is substantially less than the carrying value (cost), and the decline of value is not expected
to be recovered in the near future, appropriate write-downs are recorded on such inventory items. The amount of write-down isdetermined based on the experience of sales of merchandise similar to those unsold items during the immediately preceding
three years. At February 29, 2004 and February 28, 2005, the recorded write-downs were ¥10,335 million and ¥10,489 million($100,145 thousand), respectively.
(5) Investments in Securities
Debt securities and equity securities designated as available for sale (“other securities”) whose fair values are readily determinable
are carried at fair values prevailing at the fiscal year-end date with unrealized gains or losses included as a component of shareholders’ equity, net of applicable taxes.
Other securities whose fair values cannot readily be determined are stated principally at cost. In cases where declines in fair values of individual securities are assessed to be other than temporary, the cost of the security is reduced to net realizable value andthe loss is charged to income. Realized gains and losses are determined using the moving-average method and are reflected inincome.
Unconsolidated subsidiaries and affiliates are stated at cost determined by the moving-average method.
(6) Derivative Transactions
All derivatives are stated at fair value, and changes in fair value are included in income for the period in which they arise, except forderivatives that are designated as “hedging instruments” (see (7) Hedge Accounting below).
(7) Hedge Accounting
All gains or losses arising from changes in fair values of the derivatives designated as “hedging instruments” are deferred asassets or liabilities and included in net profit or loss in the same period during which the gains and losses on the hedged items ortransactions are recognized. For foreign exchange forward contracts, if they meet conditions for hedge accounting, the difference
between the contract rate and spot rate at the date of the contract is recognized over the period from the contract date to thesettlement date.

24

The derivatives designated as hedging instruments by the Company are principally foreign exchange forward contracts. The
related hedged items are trade accounts payable and trade accounts receivable denominated in foreign currencies and scheduledtransactions.
The Company has a policy to utilize hedging instruments in order to reduce the exposure to the risk of foreign currency
exchange rate fluctuation.
(8) Property, Plant and Equipment
Depreciation is computed using the declining-balance method at rates based on the estimated useful lives of assets which areprescribed by Japanese income tax regulations except for certain buildings.
The Companies compute depreciation expense for buildings (other than improvements) acquired on and after April 1998 by thestraight-line method pursuant to the amendment to the Japanese income tax law.
(9) Amortization
Intangible assets and long-term prepaid expenses are amortized on a straight-line method over the period prescribed by theCommercial Code of Japan or tax regulations.
Software costs for internal use are amortized over their expected useful lives (five years) by the straight-line method.
(10) Income Taxes
The income taxes of the Company and its domestic consolidated subsidiaries consist of corporate income tax, local inhabitant taxes
and enterprise taxes.
(11) Allowances
An allowance for bad debt is provided for estimated losses on known bad debt and doubtful accounts at the balance sheet date.
Accrued bonuses to employees are provided for at an amount determined based on the estimated bonuses to employees
which were incurred at the balance sheet date.
An allowance for sales returns is provided for the estimated losses on sales returns calculated under the Japanese tax regulations.
Accrued retirement benefits are provided for at the present value of the projected benefit obligation less the estimated fair valueof plan assets and deferred gains or losses at the balance sheet date.
Unrecognized prior service costs are amortized and charged/credited to income on a straight-line basis over 5 to 10 years,
which is within the related employees’ average remaining service years. Unrecognized actuarial differences are amortized on astraight-line basis over 5 to 10 years, which is within the related employees’ average remaining service years from the year following the one in which they arise.
Following the enactment of the Defined Benefit Corporate Pension Plan Law in Japan, on September 25, 2003, the Company
and certain consolidated subsidiaries obtained approval from Japan’s Ministry of Health, Labour and Welfare for exemption fromthe future benefit obligation with respect to the portion of the Employee Pension Fund that the Company and certain consolidated
subsidiaries operate on behalf of the Government (the so-called substitutional portion). The Company and the subsidiaries appliedtransitional provisions as prescribed in paragraph 47-2 of the “Practical Guidelines of Accounting for Retirement Benefits (Interim
Report)” (Accounting Committee Report No. 13 issued by the Japanese Institute of Certified Public Accountants) and recognized again in the amount of ¥10,471 million ($95,524 thousand) for the settlement of the substitutional portion at the date of approval
from Japan’s Ministry of Health, Labour and Welfare. The amount of plan assets to be transferred to the Government was computed at ¥21,743 million ($198,351 thousand) as of February 29, 2004.
Accrued retirement benefits for directors and statutory auditors are provided for at the amount required at the balance sheet
dates in accordance with the internal rules of the Company and certain consolidated subsidiaries.
While these companies have no legal obligation, it is the customary practice in Japan to make lump-sum payments to a director
or a statutory auditor upon retirement under the approval of the general meeting of shareholders.

25(12) Accounting for Leases
Finance leases other than those which are deemed to transfer the ownership of the lease assets to lessees are accounted for by amethod similar to that applicable to ordinary operating leases.
(13) Accounting for Consumption Tax
The consumption tax withheld upon sales and the consumption tax paid by the Companies on the purchase of goods and services are not included in the accompanying consolidated statements of income.
(14) Dividends
Under the resolution of the general meeting of shareholders held on May 26, 2005, the Board of Directors declared a cash dividend of ¥3,679 million ($35,126 thousand), ¥22.0 ($0.210) per share, which was applicable to earnings of the year ended
February 28, 2005 and payable to shareholders on the register on February 28, 2005.
(15) Net Assets, Net Income—Basic and Dividends per Share
Effective from the fiscal year ended February 29, 2004, the Company and its domestic consolidated subsidiaries applied the
Financial Accounting Standards No. 2 “Financial Accounting Standards for Earning per Share” and the Financial AccountingStandards Implementation Guidance No. 4 “Implementation Guidance for Accounting Standards for Earnings per Share” issued
by the Accounting Standards Board of Japan on September 25, 2002. The effect of the adoption is set forth in Note 13.
(16) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statement of cash flows are composed of cash on hand, bank deposits which can
be withdrawn on demand, and short-term investments which are readily convertible into cash or with an original maturity of threemonths or less, which represent insignificant risk of changes in value.
Cash and cash equivalents at February 29, 2004 and February 28, 2005, consisted of the following:
Millions of yen

Cash and time deposits
Time deposits with maturities of more than three months
Cash and cash equivalents

Thousands of
U.S. dollars

2004

2005

2005

¥88,099(288)¥81,821(278)$781,186(2,654)¥87,811¥81,543$778,532(17) Accounting Standard for Impairment of Fixed Assets
On August 9, 2002, the Business Accounting Council in Japan issued “Accounting Standard for Impairment of Fixed Assets.”
The standard requires that fixed assets be reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. An impairment loss shall be recognized in the income statement by reducing
the carrying amount of impaired assets or a group of assets to the recoverable amount to be measured as the higher of net selling
price or value in use.
The standard shall be effective for fiscal years beginning April 1, 2005. However, an earlier adoption is permitted for fiscal years
beginning April 1, 2004, and for fiscal years ending between March 31, 2004 and March 30, 2005.
(18) Reclassification of Accounts
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
(19) United States Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside of Japan. The rate of ¥104.74=US$1, the rateof exchange as of February 28, 2005, has been used in translation. The inclusion of such amounts is not intended to imply thatJapanese yen have been or could be readily converted, realized or settled in U.S. dollars at that rate or any other rate.

26

3. Investments in Securities(1) Information as of and for the Year Ended February 28, 2005(a) Available-for-sale securities (other securities) with fair value:
Investments in securities whose fair values were available at February 28, 2005, are analyzed as follows:
Millions of yen

Securities with unrealized gains:
Equity securities
Total
Securities with unrealized losses:
Equity securities
Total
Total

Acquisition
cost

Fair value(Carrying value)¥5,738
5,738

Thousands of U.S. dollars
Difference

Acquisition
cost

Fair value(Carrying value)

Difference¥7,902¥2,164$54,786$75,445$20,659

7,902

2,164

54,78675,44520,659

217

211

(6)

2,069

2,017

(52)

217

211

(6)

2,069

2,017

(52)

¥5,955¥8,113¥2,158$56,855$77,462$20,607(b) Other securities sold during the year ended February 29, 2005:

Proceeds from sale of other securities
Gross realized gain on sale of other securities
Gross realized loss on sale of other securities

Millions of yen

Thousands of
U.S. dollars¥1,541
883—$14,7118,430—

Millions of yen

Thousands of
U.S. dollars¥3,2086,568$30,625
62,702¥9,776$93,327(c) Major securities which were not stated at fair value as of February 28, 2005:

Other securities:
Non-listed equity securities
Investments in equity securities of unconsolidated subsidiaries and affiliates
Total(2) Information as of and for the Year Ended February 29, 2004(a) Available-for-sale securities (other securities) with fair value:
Investments in securities whose fair values were available at February 29, 2004, are analyzed as follows:
Millions of yen

Securities with unrealized gains:
Equity securities
Total
Securities with unrealized losses:
Equity securities
Total
Total

Acquisition
cost

Fair value(Carrying value)

Difference¥1,373¥2,873¥1,500

1,373

2,873

1,500

728

606

(122)

728

606

(122)

¥2,101¥3,479¥1,37827

(b) Other securities sold during the year ended February 29, 2004:
Millions of yen

Proceeds from sale of other securities
Gross realized gain on sale of other securities
Gross realized loss on sale of other securities¥1,9071,016—(c) Major securities which were not stated at fair value as of February 29, 2004:
Millions of yen

Other securities:
Non-listed equity securities
Non-listed foreign bonds¥00,786
4,400

Subtotal
Investments in equity securities of unconsolidated subsidiaries and affiliates

5,186
6,448

Total

¥11,634(d) Redemption and maturity schedule of debt securities classified as other securities:
Millions of yen

Non-listed foreign bonds

Within 1
year

1 to 5years

5 to 10years

Over 10years¥2,000¥—¥2,400¥—4. Derivative Transactions
Derivatives are used in order to hedge foreign exchange market risk on the transactions and balances which occur in the normal
course of business. Derivatives are not used for speculative purposes or for highly leveraged transactions. Derivatives are executed with creditworthy financial institutions, and the Company does not anticipate significant losses due to the nature of its counterparties.
The Company and its consolidated subsidiaries applied hedge accounting for all derivative transactions as of February 29, 2004
and February 28, 2005, therefore, no market value information is disclosed.
5. Property, Plant and Equipment
The Japanese tax regulations allow a company to defer capital gains on the sale of real property if the company intends to offset
such gains against the cost of newly acquired fixed assets. When such accounting is followed, the cost of the new fixed assets is
reduced to the extent of the deferred capital gains, thereby affecting related depreciation charges and accumulated depreciation.
Property, plant and equipment at February 29, 2004 and February 28, 2005, were reduced by ¥8,658 million and ¥8,573 million($81,852 thousand), respectively, representing accumulated deferred gains from eligible prior sales.

28

6. Retirement Plan and Retirement Benefits
The Company and its subsidiaries have defined benefit retirement plans covering substantially all employees. Defined benefit retirement plans include a plan which is governed by the regulations of the Japanese Welfare Pension Insurance Law (“welfare benefitplan”), tax qualified pension plans and plans for lump-sum retirement benefits.
The reserve for retirement benefits as of February 28, 2005, is analyzed as follows:
Millions of yen

Thousands of
U.S. dollars¥(34,942)
40,266$(333,603)
384,434

Funded status
Unrecognized prior service costs
Unrecognized actuarial differences

5,324
(231)
652

50,831(2,206)
6,229

Subtotal
Prepaid pension cost

5,745
7,833

54,85474,785¥0(2,088)$0(19,931)

Millions of yen

Thousands of
U.S. dollars

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial differences¥1,376
643
(382)
(41)
548

$13,140
6,140(3,652)
(397)
5,236

Net pension expense¥2,144$20,467

Projected benefit obligations
Plan assets (including employee retirement benefit fund)Accrued retirement benefits

The net pension expense for the year ended February 28, 2005, was as follows:

Assumptions used in the calculation of the aforementioned information were as follows:
As of February 28, 2005

Method of attributing the projected benefits to periods of service
Discount rate
Expected rate of return on plan assets
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial differences

Straight-line basis
2.0%
0.8%~2.0%
510 years
510 years

The reserve for retirement benefits as of February 29, 2004, is analyzed as follows:
Millions of yen

Projected benefit obligations
Plan assets (including employee retirement benefit fund)¥(34,940)
36,571

Funded status
Unrecognized prior service costs
Unrecognized actuarial differences

1,631
(273)
3,413

Subtotal
Prepaid pension cost

4,771
7,969

Accrued retirement benefits¥0(3,198)

29

The net pension expense for the year ended February 29, 2004, was as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial differences¥2,030
1,229
(588)
(111)
1,682

Net pension expense¥4,242

Assumptions used in the calculation of the aforementioned information were as follows:
As of February 29, 2004

Method of attributing the projected benefits to periods of service
Discount rate
Expected rate of return on plan assets
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial differences

Straight-line basis
2.0% (2.0% to 2.5% at the beginning)
0.8%~2.0%
5~10 years
5~10 years

7. Lease Transactions
The Companies’ finance lease contracts which are not deemed to transfer the ownership of the leased assets to lessees are notcapitalized, which is permitted by the Japanese accounting principles. Certain key information on such lease contracts of theCompanies for the years ended February 29, 2004 and February 28, 2005, are as follows:(Lessee)
Assumed data as to acquisition cost, accumulated depreciation and net book value of the leased assets, which included the
portion of interest thereon, as of February 29, 2004 and February 28, 2005, are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2004
Tools, furniture,and fixtures

Other

Acquisition cost
Accumulated depreciation¥2,670(1,392)¥1,354(745)

Net book value¥1,278¥2,6092005
Total

Tools, furniture,and fixtures

Other¥4,024(2,137)¥2,446(1,458)¥1,290(773)¥1,887¥0,988¥0,5172005
Total

Tools, furniture,and fixtures

Other

Total

¥3,736(2,231)$23,353(13,920)$12,311(7,381)$35,664(21,301)¥1,505$09,433$04,930$14,363

The scheduled maturities of future lease payments on such lease contracts as of February 29, 2004 and February 28, 2005, areas follows:
Millions of yen

Scheduled maturities of future leases:
Due within one year
Due over one year

30

Thousands of
U.S. dollars

2004

2005

2005

¥0,8281,102¥0,725808$06,922
7,712¥1,930¥1,533$14,634

The lease expenses for the year and depreciation of the lease assets as of February 29, 2004 and February 28, 2005, are as
follows:
Millions of yen

Lease expenses for the year
Depreciation

Thousands of
U.S. dollars

2004

2005

2005

¥756
¥756

¥839
¥839

$8,006$8,006(Lessor)Assumed data as to acquisition cost, accumulated depreciation and net book value of the leased assets, which included the
portion of interest thereon, as of February 29, 2004 and February 28, 2005, are summarized as follows:
Thousands of
U.S. dollars

Millions of yen
2004

2005

2005

Other

Total

Other

Total

Other

Total

Acquisition cost
Accumulated depreciation

¥75
(36)

¥75
(36)

¥83
(51)

¥83
(51)

$792
(482)

$792
(482)

Net book value

¥39

¥39

¥32

¥32

$310

$310

The scheduled maturities of future lease income on such lease contracts as of February 29, 2004 and February 28, 2005, areas follows:
Millions of yen

Due within one year
Due over one year

Thousands of
U.S. dollars

2004

2005

2005

¥033
¥077

¥35
¥60

$338
$568

¥110

¥95

$906

The lease income for the year and depreciation of the lease assets as of February 29, 2004 and February 28, 2005, are as
follows:
Millions of yen

Lease income for the year
Depreciation

Thousands of
U.S. dollars

2004

2005

2005

¥16
¥17

¥18
¥19

$172
$184

31

8. Income Taxes
Deferred tax assets and liabilities as at February 29, 2004 and February 28, 2005, consisted of the following elements:
Millions of yen

Deferred tax assets:
Valuation loss on inventories
Evaluation loss on investments in unconsolidated subsidiaries
Excess amount of tax deductible accrued bonuses to employees
Excess amount of tax deductible accrued employees’ retirement benefits
Accrued retirement benefits for directors and corporate auditors
Tax loss carryforwards
Other
Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Gain on securities contributed to an employee retirement benefit trust
Provision for deferred capital gains on real property
Other

Thousands of
U.S. dollars

2004

2005

2005

¥02,828
1,392
995
6,381
677
12,2188,604¥02,890
1,939
1,061
6,626
730
7,325
2,273

$027,590
18,512
10,126
63,2596,975
69,93821,70533,09522,844

218,105(14,342)(8,550)(81,635)

18,753

14,294

136,470(3,474)(23)(561)(3,474)(23)(914)(33,167)(218)(8,730)Total deferred tax liabilities(4,058)(4,411)(42,115)

Net deferred tax assets¥14,695¥09,883$094,355

The reconciliation of the difference between the statutory tax rate and the effective tax rate for the year ended February 29,
2004, has not been disclosed because such a difference is immaterial.
The reconciliation of the difference between the statutory tax rate and the effective tax rate for the year ended February 28,
2005, is as follows:%

Statutory tax rate
Reconciliation:
Nondeductible items (entertainment expense, etc.)
Losses of consolidated subsidiaries to which deferred tax assets are not recognized
Deduction of deferred tax assets caused by changing of tax rate
Unrealized gains by exchange of stock (Chacott Co., Ltd. became a 100% owned subsidiary)
Other
Effective tax rate42.0)%
1.7
2.3
0.6
5.4
(2.6)
49.4)%In accordance with an amendment of a local tax law on March 31, 2003, the statutory tax rate was changed from 42.1% to40.7% for the calculation of deferred tax assets and liabilities for temporary differences that are expected to reverse for the year
beginning March 1, 2005, and thereafter. As a result, deferred tax assets, net of deferred tax liabilities, as of February 29, 2004,
decreased by ¥250 million, income tax expense—deferred for the year then ended increased by ¥250 million and net revaluation
loss of land increased by ¥53 million.
9. Revaluation of LandIn the year ended February 28, 2002, the Company revaluated land for its business use at a market value as a result of the application of the law, which permits a one-time revaluation of land for business use.
The revaluation loss amounted to ¥3,964 million ($37,851 thousand), the related deferred tax asset recognized is ¥1,612 million($15,394 thousand) and the net revaluation loss of ¥2,352 million ($22,457 thousand) is presented as a separate component ofshareholders’ equity as a “net revaluation loss of land.”The difference between the market value of land subject to the revaluation and the book value was ¥6,572 million ($62,748 thousand) as at February 28, 2005.

32

10. Commitments and Contingent Liabilities
The Company was contingently liable as a guarantor for certain affiliates’ bank loans and certain customers’ bank loans. The outstanding balance guaranteed as at February 29, 2004 and February 28, 2005, aggregated ¥3,147 million and ¥2,733 million($26,090 thousand), respectively.
11. Legal Reserve and Appropriation of Retained Earnings
Under the Commercial Code of Japan and the Company’s Articles of Incorporation, a proposal for the appropriation of retained
earnings must be submitted by the Board of Directors to the shareholders’ meeting held within three months following the fiscal
year-end for shareholders’ approval.
The appropriation of retained earnings reflected in the accompanying consolidated statements of income represents the resultof such an appropriation applicable to the preceding fiscal period.
Under Japanese accounting practices, bonuses to directors and statutory auditors are paid out of retained earnings instead ofbeing charged to income of the year and constitute a part of the appropriation explained above.
The Commercial Code of Japan requires that an amount equal to at least 10% of any payment by way of appropriation ofretained earnings be set aside as a legal reserve until the total additional paid-in capital and a legal reserve equals 25% of paid-in
capital. Additional paid-in capital and/or a legal reserve in excess of 25% of stated capital in total may be reduced by resolution of
the shareholders.
12. Subsequent Events(1) Subsequent to February 28, 2005, the Company’s Board of Directors proposed a plan for the appropriation of retained earnings applicable to the year ended February 28, 2005, which was approved at the general meeting of shareholders held on May 26,
2005.
The approved appropriations of retained earnings is shown below:

Reversal of a reserve for deferred capital gains on real property
Appropriations:
Cash dividends (¥22.0 per share)
Directors’ bonuses
Arbitrary reserves:
General reserve

Millions of yen

Thousands of
U.S. dollars¥(00,000$(000,006(3,679)(421)(35,126)(4,019)(6,500)(62,058)¥(10,600)$(101,197)(2) The Board of Directors on May 16, 2005, resolved that the Company should acquire all shares of Project Sloane Limited andmake Project Sloane Limited a subsidiary. Upon the resolution and approval of the Board of Directors the Company concluded thecontract for the acquisition of shares on May 16, 2005.
An outline is as follows:(a) The objective: Strengthening of overseas business strategy(b) An outline of the company purchased
Name of the company: Project Sloane Limited
Representative of the company: Thierry Jean Letrilliart
Head office: 50 Carnwath Road, London SW6 3JX, United Kingdom
Date of foundation: August 5, 1999
Content of the business: Planning and sales of the Joseph brand
Paid in Capital: £17,557 thousand
Net Sales: £68,303 thousand (For the fiscal year ended March 31, 2004, consolidated basis)33

(c) Date of purchase of shares: May 16, 2005(d) Number and amount of shares to be purchased and ownership situation before and after acquisition
Ownership (before acquisition): 0 shares (ownership percentage: 0%)
Number of shares to be purchased: 47,510,000 shares (value: £84 million)
Ownership (after acquisition): 47,510,000 shares (ownership percentage: 100%)(e) Method of procuring the payment capital: All of the amount was procured by the Company
13. Net Assets, Net Income—Basic and Cash Dividends per Share
Net income per share of common stock is computed based upon the weighted-average number of shares of common stock
outstanding during each year. Cash dividends per share shown for each year in the accompanying consolidated statements
of income represent dividends declared as applicable to the respective years rather than those paid during the years.
The basis for the calculation of net income—basic per share for the years ended February 29, 2004 and February 28, 2005, is
as follows:
Thousands of
U.S. dollars

Millions of yen

Net income
Less: Components not pertaining to common shareholders—Bonuses to directors and corporate auditors
Net income pertaining to common stock
Average outstanding shares of common stock (shares)

2004

2005

¥13,053(479)¥10,257(487)$97,927(4,649)2005¥12,574¥09,770$93,278

169,754,659

168,160,781

Effective from the year ended February 29, 2004, the Company and its subsidiaries applied the Financial Accounting Standards
No. 2 “Financial Accounting Standards for Earnings per Share” and the Financial Accounting Standards Implementation Guidance
No. 4 “Implementation Guidance for Accounting Standards for Earnings per Share” issued by the Accounting Standards Board ofJapan on September 25, 2002.
By applying the previous method, the amounts of net income—basic per share and net assets per share for the year ended
February 29, 2004, would be calculated as follows:
Net income—basic per share: ¥76.9
Net assets per share: ¥1,172.9
14. Related Party Transaction
Year ended February 28, 2005
The Company leased land from Mr. Hirouchi, Chairman of Onward Kashiyama Co., Ltd., during the year and the rental fee was¥5 million (US$52 thousand). At the same time, Mr. Hirouchi, Chairman of Onward Kashiyama Co., Ltd., paid a rental fee for ahouse to the Company of ¥16 million (US$151 thousand). The rental fees were determined by the market average amount.
Year ended February 29, 2004
The Company lent ¥3,300 million to ONWARD KASHIYAMA U.S.A. INC., a 100% owned subsidiary of the Company, during theyear, and an outstanding balance as at February 29, 2004, in the same amount was included in long-term loans. The interest rateis based on the market rate and the repayment is scheduled at a time on the due date.

34

15. Segment Information(1) Industry Segment Information
The Company and its consolidated subsidiaries operate principally in two industrial segments, “Clothing” and “Other.”
The Clothing Division produces and sells a wide range of women’s and men’s clothing, including dresses, suits, shirts, skirts,
sweaters, trousers and casual wear.
The Other Division operates logistics, sports facilities, resort facilities, etc.
Segment information classified by industry segment of the Companies for the two years ended February 28, 2005 and February
29, 2004, is as follows:
For the year ended February 28, 2005

Millions of yen
Industry segment
Clothing

Other

Total

Elimination ofintersegment sales

Consolidated
total

Sales to outside customers
Intersegment sales¥257,619
16¥13,654
13,832¥271,273
13,848¥ 0000—(13,848)¥271,273—

Total
Costs and expenses

257,635
233,924

27,48626,995285,121260,919(13,848)(13,851)

271,273
247,068

Operating income¥023,711¥00,491¥024,202¥00,00(3¥024,205

AssetsDepreciation
Capital expenditures¥287,331
6,274
8,801

¥40,681827
351¥328,012
7,101
9,152

¥(19,842)
(59)
(75)

¥308,170
7,042
9,077

For the year ended February 28, 2005

Thousands of U.S. dollars
Industry segment
Clothing

Other

Total

Elimination ofintersegment sales

Consolidated
total

Sales to outside customers
Intersegment sales$2,459,605
151$130,361
132,062$2,589,966
132,213$ 00000—(132,213)$2,589,966—

Total
Costs and expenses

2,459,756
2,233,378

262,423
257,734

2,722,179
2,491,112(132,213)(132,244)

2,589,966
2,358,868

Operating income$0,226,378$004,689$0,231,067$000,(031$0,231,098

AssetsDepreciation
Capital expenditures$2,743,278
59,90484,024$388,405
7,894
3,349

$3,131,683
67,79887,373$(189,444)
(569)
(713)

$2,942,239
67,22986,66035

For the year ended February 29, 2004

Millions of yen
Industry segment
Clothing

Other

Total

Elimination ofintersegment sales

Consolidated
total

Sales to outside customers
Intersegment sales¥255,111
19¥12,635
12,632¥267,746
12,651¥ 0000—(12,651)¥267,746—

Total
Costs and expenses

255,130
232,20925,26725,361

280,397
257,570(12,651)(12,720)

267,746244,850

Operating income (loss)¥022,921¥000(94)¥022,827¥00,0(69¥022,896

AssetsDepreciation
Capital expenditures¥298,909
6,573
6,858

¥38,384
1,026
336¥337,293
7,599
7,194

¥(19,023)
(68)
(47)

¥318,270
7,531
7,147

(2) Geographic Segment Information
Geographic segment information is omitted because more than 90% of total sales and total assets relate to only the domestic
segment.
(3) Overseas Sales
Overseas sales information is omitted because the total overseas sales of the Companies is under 10% of consolidated sales
amount.
16. Loans
Short-term loans at February 29, 2004 and February 28, 2005, represented loans, principally from banks. The weighted-averageinterest rate on these loans was 0.6% in 2004 and 2005.

36

Report of Independent Accountants

To the Board of Directors and Shareholders of ONWARD KASHIYAMA Co., Ltd.:We have audited the accompanying consolidated balance sheets of ONWARD KASHIYAMA Co., Ltd. and its consolidated
subsidiaries as of February 29, 2004 and February 28, 2005, and the related consolidated statements of income, shareholders’equity, and cash flows for each of the three years in the period ended February 28, 2005, all expressed in Japanese yen. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of ONWARD KASHIYAMA Co., Ltd. and its consolidated subsidiaries as of February 29, 2004 and February 28,
2005, and the consolidated results of their operations and their cash flows for each of the three years in the period ended
February 28, 2005, in conformity with accounting principles and practices generally accepted in Japan (see Note 1).
The amounts expressed in U.S. dollars, provided solely for the convenience of the reader, have been translated on the basis set
forth in Note 2. (19) to the accompanying consolidated financial statements.
As discussed in Note 12 to the consolidated financial statements, the Company acquired all shares of Project Sloane Limited on
May 16, 2005, and Project Sloane Limited became a subsidiary of the Company.

ChuoAoyama PricewaterhouseCoopers
Tokyo, JapanMay 26, 200537

Non-Consolidated Balance Sheets
ONWARD KASHIYAMA Co., Ltd.
February 29, 2004 and February 28, 2005
Thousands of
U.S. dollars(Note 2. (15))

Millions of yen

ASSETS

2004

2005

2005

¥008,103
45,008¥008,324
35,308$0,079,474
337,101

2,009
19,524

1,746
16,116

16,669
153,870

Less: Allowance for bad debt

21,533(238)

17,862(206)

170,539(1,964)Inventories (Notes 2 (1) and 3)
Advance payments
Deferred tax assets—current (Note 9)
Prepaid pension cost
Other current assets

21,295
19,914
918
5,743
7,969
3,757

17,656
20,887
1,478
3,102
7,833
1,306

168,575
199,422
14,107
29,61674,786
12,463

Total current assets

112,707

95,894

915,544

5,552
30,068
226
9,063
1,626
2,000
16,268(3,801)

10,37731,441
184
8,341
1,612
4,000
16,549(953)

99,074300,176
1,760
79,63815,39438,190157,998(9,099)Total investments and advances

61,002

71,551

683,131

Property, plant and equipment (Note 5):
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures

47,066
1,374
8,837

48,256
1,381
9,793

460,724
13,18293,498Less: Accumulated depreciation

57,277(29,019)59,430(31,486)

567,404(300,609)

Land (Note 6)

28,25842,92627,94444,028

266,795
420,354

71,184

71,972

687,149

Current assets:
Cash
Time deposits
Accounts and notes receivable:
Notes
Accounts

Investments and advances:
Investments in securities
Investments in and advances to subsidiaries and affiliates (Note 8)Long-term loans to employees
Deferred tax assets—non-current (Note 9)
Deferred tax assets—revaluation of land (Notes 6 and 9)
Long-term deposits
Other investments
Less: Allowance for bad debt

Total property, plant and equipment
Deferred charges and other assets
Total assets
The accompanying notes are an integral part of these financial statements.

38

3,681

5,520

52,698¥248,574¥244,937$2,338,522

Thousands of
U.S. dollars(Note 2. (15))

Millions of yen

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Accounts and notes payable:
Notes
Accounts
Non-trade payables
Accrued expenses
Accrued income taxes
Consumption tax payable
Accrued bonuses to employees
Allowance for sales returns
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term guarantee money deposited
Accrued retirement benefits
Provision for loss on guarantee obligations
Accrued retirement benefits for directors and statutory auditors
Total long-term liabilities
Total liabilities

2004

2005

2005

¥027,912
7,437¥026,412
6,942$0,252,166
66,27935,349
1,188
5,647
8,890
760
2,122
1,119
469

33,354
1,917
5,136
—
997
1,810
875
414

318,445
18,30449,036—
9,519
17,281
8,354
3,953

55,54444,503424,892

2,238
195
—
1,328

2,307
294
1,800
1,463

22,024
2,808
17,185
13,964

3,761

5,864

55,98159,30550,367

480,873

30,08050,615
5,483
96,20933
13,830(2,373)765

30,08051,552
5,483
102,20933
14,681(2,353)
1,092

287,184
492,194
52,344
975,835
324
140,163(22,457)
10,421

Commitments and contingent liabilities (Note 10)
Shareholders’ equity:
Common stock:
Authorized—400,000,000 shares
Issued—172,921,669 sharesat February 29, 2004 and February 28, 2005, respectively
Capital surplus
Legal reserve (Note 11)
General reserve
Special reserve
Retained earnings (Note 11)
Net revaluation loss of land (Note 6)
Net unrealized gains on available-for-sale securities
Less: Treasury stock, at cost, 5,128,796 shares and 5,690,756 sharesat February 29, 2004 and February 28, 2005, respectively
Total shareholders’ equity
Total liabilities and shareholders’ equity(5,373)(8,207)(78,359)

189,269

194,570

1,857,649¥248,574¥244,937$2,338,522
U.S. dollars(Note 2. (15))

Yen

Per share:
Net assets per share (Note 13)¥1,125.5¥1,161.0

$11.1

39

Non-Consolidated Statements of Income and Retained Earnings
ONWARD KASHIYAMA Co., Ltd.
For the years ended February 28, 2003, February 29, 2004 and February 28, 2005

Net sales
Cost of sales

Reversal of allowance for sales returns, net
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Loss on disposal of property, net
Loss on write-down of investments in securities
Royalty income
Loss on liquidation of subsidiaries and affiliates
Provision for allowance for bad debt
Additional retirement payments
Provision for loss on guarantee obligations
Gain on sale of equities in affiliates
Rents received
Gain on sale of investments in securities, net
Gain on the settlement of substitutional potion of
governmental pension fund (Note 2. (8))
Reversal of allowance for bad debt
Other, net
Income before income taxes

2003

Millions of yen
2004

2005

Thousands of
U.S. dollars(Note 2. (15))
2005¥175,031
92,84382,188¥184,914
96,782
88,132¥197,230
105,161
92,069$1,883,048
1,004,027
879,02111982,30765,423
16,884

147
88,27970,416
17,863265
92,33474,34917,9852,530
881,551
709,841
171,710431(77)(2,380)536(4,435)
(800)
(929)
—
2,197
1,197
—

409
(86)
(15)
467
(4,750)(2,744)
—
—
—
1,123
1,016

674
(286)
(112)
420
(536)
—
—
(1,800)
—
1,058
883

6,432
(2,727)(1,067)
4,014(5,118)——(17,186)—
10,098
8,430

—
—
515
(3,745)
13,1398,616—(3,756)280
18,143

—
37
325
663
18,648

—
354
3,101
6,331
178,041

3,005
2,895
5,900
7,239

10,522(2,582)
7,940
10,203

4,847
3,153
8,000
10,64846,28130,09876,379101,662

6,344

10,342

13,830132,039

1
(1)

1
(27)

1
(20)

6
(193)

(2,843)(398)(2,841)(348)(3,356)(421)(32,040)(4,019)——(3,241)¥010,342—(3,500)(6,689)¥013,830(1)(6,000)(9,778)¥014,681(7)(57,285)(93,351)$0,140,163

Income taxes (Note 9):
Current
Deferred
Net income
Retained earnings:
Balance at beginning of year
Reversal of reserve for deferred capital gains on property
due to adoption of deferred tax accounting
Reversal of reserve for land revaluation
Appropriations (Note 11):
Cash dividends
Directors’ bonuses
Reserve for deferred capital gains on property
due to adoption of deferred tax accounting
Transfer to general reserve
Balance at end of year

U.S. dollars(Note 2. (15))

Yen

Per share (Note 13):
Net income—Basic
Cash dividends
Diluted net income per share is not disclosed because there were no securities with dilutive effect.
The accompanying notes are an integral part of these financial statements.

40

¥42.0
16.5

¥57.6
20.0

¥60.4922.0$0.5780.210

Non-Consolidated Statements of Shareholders’ Equity
ONWARD KASHIYAMA Co., Ltd.
For the years ended February 28, 2003, February 29, 2004 and February 28, 2005
Number ofshares ofcommonstock(thousands)

Millions of yen

Specialreserve

Retainedearnings(Note 11)Net
revaluation
loss of land
(Note 6)

Net unrealized
gains (losses)
on available-forsale-securities

Treasurystock

Commonstock

CapitalsurplusLegalreserve(Note 11)

Balance as at February 28, 2002:
172,293
Reversal of reserve for deferred
capital gains on property—
Reversal of reserve for land valuation—
Cash dividends—
Directors’ bonuses—
Net income for the year—
Net unrealized gains on available-for-sale securities—
Treasury stock, at cost—

¥30,080¥49,135¥5,483¥092,709¥35¥06,344¥(2,348)¥0(255)¥0,0(17)

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

(1)
—
—
—
—
—
—

1
(1)
(2,843)
(398)
7,239
—
—

—
1
—
—
—
—
—

—
—
—
—
—
82
—

—
—
—
—
—
—
(75)

Balance as at February 28, 2003:
172,293
Reversal of reserve for deferred
capital gains on property—
Increase in net revaluation loss of land
due to statutory tax rate change—
Reversal of reserve for land valuation—
Cash dividends—
Directors’ bonuses—
Transfer to general reserve—
Net income for the year—
Net unrealized gains on available-for-sale securities—
Issuance of new stock in exchange
for Oak Co., Ltd.’s stock
629
Gain on sales of treasury stock—
Increase in treasury stock—

30,08049,135

5,483

92,70934

10,342(2,347)

(173)

(92)

—

—

—

—

(1)

1

—

—

—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
3,500
—
—

—
—
—
—
—
—
—

—
(27)
(2,841)(348)(3,500)
10,203
—

(53)
27
—
—
—
—
—

—
—
—
—
—
—
938

—
—
—
—
—
—
—

—
—
—

1,480
0
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
2
(5,283)

Balance as at February 29, 2004:
172,922
Reversal of reserve for deferred
capital gains on property—
Reversal of reserve for land valuation—
Cash dividends—
Directors’ bonuses—
Reserve for deferred capital gains on property
due to adoption of deferred tax accounting—
Transfer to general reserve—
Net income for the year—
Net unrealized gains on available-for-sale securities—
Exchange of treasury stock
for Chacott Co., Ltd.’s stock—
Gain on sales of treasury stock—
Increase in treasury stock—

30,08050,615

5,483

96,20933

13,830(2,373)765(5,373)

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(1)
—
—
—

1
(20)
(3,356)
(421)

—
20
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
6,000
—
—

1
—
—
—

(1)
(6,000)10,648
—

—
—
—
—

—
—
—
327

—
—
—
—

—
—
—

936
1
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

4,164
5
(7,003)

Balance as at February 28, 2005

¥30,080¥51,552¥5,483¥102,209¥33¥14,681¥(2,353)¥1,092¥(8,207)172,922

GeneralreserveThousands of U.S. dollars (Note 2. (15))

Commonstock

CapitalsurplusLegalreserve(Note 11)

Generalreserve

Specialreserve

Retainedearnings(Note 11)Net
revaluation
loss of land
(Note 6)

Net unrealized
gains onavailable-forsale-securities

Treasurystock

Balance as at February 29, 2004:
Reversal of reserve for deferred
capital gains on property
Reversal of reserve for land valuation
Cash dividends
Directors’ bonuses
Reserve for deferred capital gains on property
due to adoption of deferred tax accounting
Transfer to general reserve
Net income for the year
Net unrealized gains on available-for-sale securities
Exchange of treasury stock
for Chacott Co., Ltd.’s stock
Gain on sales of treasury stock
Increase in treasury stock$287,184$483,241$52,344$918,550$323$132,029$(22,650)$07,300$(51,297)

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(6)
—
—
—

6
(193)
(32,040)(4,019)

—
193
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
57,285
—
—

7
—
—
—

(7)
(57,285)
101,662
—

—
—
—
—

—
—
—
3,121

—
—
—
—

—
—
—

8,936
17
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

39,757
44(66,863)

Balance as at February 28, 2005

$287,184$492,194$52,344$975,835$324$140,163$(22,457)$10,421$(78,359)

The accompanying notes are an integral part of these financial statements.

41

Notes to Non-Consolidated Financial Statements

ONWARD KASHIYAMA Co., Ltd.

1. Basis of Presentation of the Non-Consolidated Financial Statements
The accompanying non-consolidated financial statements have been prepared from the accounts maintained by ONWARD
KASHIYAMA Co., Ltd. (the “Company”), in accordance with the provisions set forth in the Commercial Code of Japan (the “Code”)
and the Securities and Exchange Law and in conformity with accounting principles and practices generally accepted in Japan,
which are different in certain respects from the application and disclosure requirements of international Financial ReportingStandards.
Certain items presented in the non-consolidated financial statements submitted to the Director of the Kanto Finance Bureau in
Japan have been reclassified for the convenience of readers outside Japan.
The accompanying non-consolidated financial statements are not intended to present the financial position and results of operations of the Company in accordance with accounting principles and practices generally accepted in countries and jurisdictions
other than Japan.
2. Summary of Significant Accounting Policies(1) Inventories
Inventories are stated at cost, cost being determined generally by the last purchase invoice price method which approximates thefirst-in first-out cost method. Merchandise and finished goods held at retail stores is valued at the retail cost method.
When the net realizable value of certain classes of inventories (consisting primarily of seasonal merchandise which remains
unsold after the end of such seasons) is substantially less than the carrying value (cost), and the decline of value is not expected
to be recovered in the near future, appropriate write-downs are recorded on such inventory items. The amount of write-down isdetermined based on the experience of sales of merchandise similar to those unsold items during the immediately preceding three
years. At February 29, 2004 and February 28, 2005, the recorded write-downs were ¥7,621 million and ¥8,379 million ($79,998
thousand), respectively.
(2) Investments in Securities
Debt securities and equity securities designated as available for sale (“other securities”) whose fair values are readily determinable
are carried at fair values prevailing at the fiscal year-end date with unrealized gains or losses included as a component of shareholders’ equity, net of applicable taxes.
Other securities whose fair values cannot readily be determined are stated principally at cost. In cases where declines in fair values of individual securities are assessed to be other than temporary, the cost of the security is reduced to net realizable values andthe loss is charged to income. Realized gains and losses are determined using the moving-average method and are reflected inincome.
Investment in subsidiaries and affiliates is stated at cost determined by the moving-average method.
(3) Derivative Transactions
Refer to Note 2. (6) to the consolidated financial statements.
(4) Hedge Accounting
Refer to Note 2. (7) to the consolidated financial statements.
(5) Property, Plant and Equipment
Refer to Note 2. (8) to the consolidated financial statements.
(6) Amortization
Refer to Note 2. (9) to the consolidated financial statements.
(7) Income Taxes
Refer to Note 2. (10) to the consolidated financial statements.
(8) Allowances
An allowance for bad debt is provided for estimated losses on known bad debt and doubtful accounts at the balance sheet date.
Accrued bonuses to employees are provided for at an amount determined based on the estimated bonuses to employees
which were incurred at the balance sheet date.

42

An allowance for sales returns is provided for the estimated losses on sales returns calculated under the Japanese tax regulations.
Accrued retirement benefits are provided for at the present value of the projected benefit obligation less the estimated fair valueof plan assets and deferred gains or losses at the balance sheet date.
Unrecognized prior service costs are amortized on a straight-line basis over 10 years, which is within the related employees’
average remaining service years. Unrecognized actuarial differences are amortized on a straight-line basis over 10 years, which iswithin the related employees’ average remaining service years from the year following the one in which they arise.
Following the enactment of the Defined Benefit Corporate Pension Plan Law in Japan, on September 25, 2003, the Company
obtained approval from Japan’s Ministry of Health, Labour and Welfare for exemption from the future benefit obligation withrespect to the portion of the Employee Pension Fund that the Company operates on behalf of the Government (the so-called substitutional portion). The Company applied transitional provisions as prescribed in paragraph 47-2 of the “Practical Guidelines of
Accounting for Retirement Benefits (Interim Report)” (Accounting Committee Report No. 13 issued by the Japanese Institute ofCertified Public Accountants) and recognized a gain in the amount of ¥8,616 million for the settlement of the substitutional portion
at the date of approval from Japan’s Ministry of Health, Labour and Welfare. The amount of plan assets to be transferred to theGovernment was computed at ¥19,705 million as of February 29, 2004.
Accrued retirement benefits for directors and statutory auditors is provided for at the amount required at the balance sheet
dates in accordance with the Company’s internal rules.
While the Company has no legal obligation, it is the customary practice in Japan to make lump-sum payments to a director or a
statutory auditor upon retirement under the approval of the general meeting of shareholders.
The provision for loss on guarantee obligations was provided in case the Company is obliged to pay for the guaranteed subsidiaries. In estimating the allowance the Company considers the financial condition of each subsidiary.
(9) Accounting for Leases
Refer to Note 2. (12) to the consolidated financial statements.
(10) Accounting for Consumption Tax
Refer to Note 2. (13) to the consolidated financial statements.
(11) Cash Dividends
Refer to Note 2. (14) to the consolidated financial statements.
(12) Net Assets, Net Income—Basic and Cash Dividends per Share
Refer to Note 2. (15) to the consolidated financial statements.
(13) Accounting Standard for Impairment of Fixed Assets
Refer to Note 2. (17) to the consolidated financial statements.
(14) Reclassification of Accounts
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
(15) United States Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside of Japan. The rate of ¥104.74=US$1, the rateof exchange as of February 28, 2005, has been used in translation. The inclusion of such amounts is not intended to imply thatJapanese yen have been or could be readily converted, realized or settled in U.S. dollars at that rate or any other rate.

43

3. Inventories
Inventories at February 29, 2004 and February 28, 2005, consisted of the following:Thousands of
U.S. dollars

Millions of yen

Merchandise and finished goods
Raw materials
Work-in-process
Supplies

2004

2005

2005

¥17,175
1,637
885
217

¥18,243
1,399
1,016
229

$174,175
13,355
9,702
2,190¥19,914¥20,887$199,422

4. Derivative Transactions
Derivatives are used in order to hedge foreign exchange market risk on the transactions and balances which occur in the normal
course of business. Derivatives are not used for speculative purposes or for highly leveraged transactions. Derivatives are executed with creditworthy financial institutions, and the Company does not anticipate significant losses due to the nature of its counterparties.
The Company applied hedge accounting for all derivative transactions as of February 29, 2004 and February 28, 2005, therefore, no market value information is disclosed.
5. Property, Plant and Equipment
Refer to Note 5 to the consolidated financial statements.
6. Revaluation of Land
Refer to Note 9 to the consolidated financial statements.
7. Lease Transactions
The Company’s finance lease contracts which are not deemed to transfer the ownership of the leased assets to lessees are notcapitalized, which is permitted by the Japanese accounting principles. Certain key information on such lease contracts of theCompany for the years ended February 29, 2004 and February 28, 2005, is as follows.
Assumed data as to acquisition cost, accumulated depreciation, net book value of the leased assets, which included the portionof interest thereon, are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2004
Tools, furniture,and fixtures

Other

Acquisition cost
Accumulated depreciation¥1,407
(786)

¥373
(184)

Net book value¥0,621

¥189

44

2005
Total

Tools, furniture,and fixtures

Other¥1,780(970)¥1,190
(756)

¥421
(243)

¥0,810¥0,434

¥178

2005
Total

Tools, furniture,and fixtures

Other

Total

¥1,611(999)$11,360(7,220)$4,018(2,319)$15,378(9,539)¥0,612$04,140$1,699$05,839

The scheduled maturities of future lease payments on such lease contracts as of February 29, 2004 and February 28, 2005, areas follows:
Thousands of
U.S. dollars

Millions of yen

Scheduled maturities of future leases:
Due within one year
Due over one year

2004

2005

2005

¥382
428

¥320
292

$3,055
2,784

¥810

¥612

$5,839The lease expenses for the year and depreciation of the lease assets as of February 29, 2004 and February 28, 2005, are as
follows:
Thousands of
U.S. dollars

Millions of yen

Lease expenses for the year
Depreciation

2004

2005

2005

¥419
419

¥401
401

$3,8273,827

8. Investments in and Advances to Subsidiaries and Affiliates
Shares of subsidiaries with market value at February 29, 2004 and February 28, 2005, are as follows:
Millions of yen
2004

Shares of subsidiaries

Book
value

Marketvalue¥280¥13,529

Thousands of U.S. dollars
2005

Difference

Book
value

Marketvalue¥13,249¥280¥12,795

2005
Difference

Book
value

Marketvalue

Difference¥12,515$2,677$122,162$119,485

9. Income Taxes
Deferred tax assets and liabilities as at February 29, 2004 and February 28, 2005, consisted of the following elements:
Millions of yen

Deferred tax assets:
Valuation loss on inventories
Evaluation loss on investments in subsidiaries
Excess amount of tax deductible accrued employees’ retirement benefits
Accrued retirement benefits for directors and corporate auditors
Provision for loss on guarantee obligations
Other
Total deferred tax assets
Deferred tax liabilities:
Gain on securities contributed to an employee retirement benefit trust
Provision for deferred capital gains on real property
Other

Thousands of
U.S. dollars

2004

2005

2005

¥01,713
4,303
5,519
540
—
6,752

¥01,894
3,797
5,937
595
732
2,767

$018,078
36,251
56,685
5,679
6,989
26,427

18,827

15,722150,109(3,474)(23)(524)(3,474)(23)(782)(33,167)(218)(7,470)Total deferred tax liabilities(4,021)(4,279)(40,855)

Net deferred tax assets¥14,806¥11,443$109,254

The reconciliation of the difference between the statutory tax rate and the effective tax rate for the years ended February 29,
2004 and February 28, 2005, has not been disclosed because such difference is immaterial.
In accordance with an amendment of the local tax law at March 31, 2003, the statutory tax rate was changed from 42.1% to40.7% for the calculation of deferred tax assets and liabilities for temporary differences that are expected to reverse for the year
beginning March 1, 2005, and thereafter. As a result, deferred tax assets, net of deferred tax liabilities, as of February 29, 2004,
decreased by ¥290 million, income tax expense—deferred for the year then ended increased by ¥290 million and the net revaluation loss of land increased by ¥53 million.

45

10. Commitments and Contingent Liabilities
The Company was contingently liable as a guarantor for certain affiliates’ bank loans. The outstanding balance guaranteed as at
February 29, 2004 and February 28, 2005, aggregated ¥17,419 million and ¥13,984 million ($133,512 thousand), respectively.
11. Legal Reserve and Appropriation of Retained Earnings
Refer to Note 11 to the consolidated financial statements.
12. Subsequent Events
Refer to Note 12 to the consolidated financial statements.
13. Net Assets, Net Income—Basic and Cash Dividends per Share
Net income per share of common stock is computed based upon the weighted-average number of shares of common stock outstanding during each year. Cash dividends per share shown for each year in the accompanying non-consolidated statements ofincome and retained earnings represent dividends declared as applicable to the respective years rather than those paid during
the years.
Effective from the year ended February 29, 2004, the Company applied the Financial Accounting Standards No. 2 “Financial
Accounting Standards for Earnings per Share” and the Financial Accounting Standards Implementation Guidance No. 4 “Implementation Guidance for Accounting Standards for Earnings per Share” issued by the Accounting Standards Board of Japan on
September 25, 2002.
The basis for the calculation of net income—basic per share for the years ended February 29, 2004 and February 28, 2005, is
as follows:
Thousands of
U.S. dollars

Millions of yen

Net income
Less: Components not pertaining to common shareholders—Bonuses to directors and corporate auditors
Net income pertaining to common stock
Average outstanding shares of common stock (shares)

2004

2005

¥10,203(421)¥10,648(421)$101,662(4,019)2005¥09,782¥10,227$097,643

169,755,528

169,077,356

By applying the previous method, the amounts of net income—basic per share and net assets per share for the year ended
February 29, 2004, would be calculated as follows:
Net income—basic per share: ¥57.6
Net assets per share: ¥1,125.5

46

Report of Independent Accountants

To the Board of Directors and Shareholders of ONWARD KASHIYAMA Co., Ltd.:We have audited the accompanying non-consolidated balance sheets of ONWARD KASHIYAMA Co., Ltd. as of February 29,
2004 and February 28, 2005, and the related non-consolidated statements of income and retained earnings, and of shareholders’equity for each of the three years in the period ended February 28, 2005, all expressed in Japanese yen. These non-consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
non-consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall non-consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the nonconsolidated financial position of ONWARD KASHIYAMA Co., Ltd. as of February 29, 2004 and February 28, 2005, and the resultsof its operations for each of the three years in the period ended February 28, 2005, in conformity with accounting principles andpractices generally accepted in Japan (see Note 1).
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on thebasis set forth in Note 2. (15) to the accompanying non-consolidated financial statements.
As discussed in Note 12 to the consolidated financial statements, the Company had acquired all shares of Project Sloane Limitedon May 16, 2005, and Project Sloane Limited became a subsidiary of the Company.

ChuoAoyama PricewaterhouseCoopers
Tokyo, JapanMay 26, 2005

47

Board of Directors<DIRECTORS><CORPORATE AUDITORS>

Executive Officers

Honorary Chairman

Standing Corporate Auditors

Kisaku Uragami

Akira Baba

Akito Yamamoto

Toshio Tobita

Yuji Ohtsuka

Shigeru Kamakari

Chairman & CEO

Keiichi Ogawa**

Yoshihiko Sato

Takeshi Hirouchi*

Zyoutarou Yabe**

Hideo Matsumoto
Hiroshi Ishida

President

Tsutomu Hagihira

Shigeru Uemura*<OFFICERS>

Eiji Tono

Managing Executive Officers

Masayoshi Harazawa

Senior Managing Directors

Tetsuji Wada

Minoru Tanaka

Kazuya Baba*

Kentaro Mizuno

Hitoshi Aoyama

Masaru Kusaki

Masabumi Kiyohara

Takahisa Suzuki

Tsutomu Ohnuma

Susumu Maeda

Hideo Hisamichi

Wataru Sakai

Kazuo Kagatani

Managing Directors

Hiroaki Yamada

Manabu Nomura

Masao Ohno

Akio Date

Hidenobu Tanaka

Isao Yamane

Akira Okuda

Teruhiko Komatsu

Masaaki Yoshizawa

Kenichiro Tamai

Hirokazu Yoshizato

Ryuji Horie

Akinori Baba

Hironobu Mitsuta

1

Hiroshi Imai

Kazuhito Kobayashi

Tadayoshi Kobayashi

Outside Directors
Tasuku Chino
Hachiro Honjou** Representative Director** Outside Auditor

48

As of May 27, 2005

Organization Chart

Board of Directors
Board ofCorporate
Auditors

Honorary Chairman
ChairmanAffiliate Companies Supervisor
Production Officer

Onward GroupManagement Council

Men’s Office Clothes Business Group
President

Compliance Committee

Men’s Casual Clothes Business GroupDAKS Business GroupJ. PRESS Business Group

Sales Officer

NIJYUSANKU HOMME Business Group

Shopping Center andMass Retail Business GroupJOSEPH Business GroupSportswear Business Group

Western Japan Region
Branch Supervisor

Casualwear Business Group
Prideglide Business Group

Compliance
DivisionManagement
Planning Office

KUMIKYOKU Business GroupPaul Smith Business GroupIR Division

ICB Business GroupManagement
Information
Division
Information Systems Division
Supply Chain Management
Promotion Division
Advertising Division

Business
Coordination
HeadquartersNIJYUSANKU Business GroupNAVE Business GroupJIYUKU Business Group
JANE MORE Business Group
Women’s Fashion Business Group
VANILLA CONFUSION Business GroupChildren and Teen Business Group

Secretarial OfficePublic Relations Division
Customer Service
OfficeGeneral Affairs
Division

Luxury Brand Business GroupMICHAEL KORS Business Group
Jean-Paul Gaultier Business GroupCK Calvin Klein Business Group
Family Apparel Business Group
Lifestyle Business Group
Lifestyle Goods Business Group

Onward ResearchInstitute

Kimono Business Group
Men’s NR Promotion Office

Accounting Division
Human Resources
Division

Ladies’ NR Promotion Office
Men’s Apparel ProductDevelopment Office
Women’s Apparel ProductDevelopment Office
Quality Improvement Office
Production Division
Store Retailing Business OfficeMarketing Promotion Office
Sales Promotion Office

Tokyo Branch
Kanto Branch
Osaka Branch
Fukuoka Branch
Nagoya Branch
Sapporo Branch
Sendai Branch
Hiroshima Branch
Kimono Sales
Business Division
Trading Business
Division
Europe BusinessGroup

Trading Business Group

North America
Business GroupInternational Operations
Business Group

Asia Business GroupAs of September 1, 2005

49

Principal Subsidiaries

OVERSEAS SUBSIDIARIES
J. PRESS INC.
262 York Street,
New Haven, CT 06511, U.S.A.
Tel: (1) 203-772-1310
ONWARD KASHIYAMAFRANCE S.A.
6, Rue Vivienne,
75002 Paris, France
Tel: (33) 1-5504-8787
ONWARD KASHIYAMAHONG KONG LTD.
Unit 1208-9, Lippo Sun Plaza,
28 Canton Road, T.S.T.,
Kowloon, Hong Kong

ONWARD RETAIL L.L.C.
530 7th Ave., 29th Floor,
New York, NY 10018, U.S.A.
Tel: (1) 212-997-3600
ONWARD KASHIYAMAKOREA CO., LTD.

GIBO’ CO. S.p.A.
Via Cassia 69, Tavarnuzze,
50029 Firenze, Italy
Tel: (39) 055-237-2020
ONWARD ITALIA S.p.A.
Via Della Spiga 9, 20121 Milano, Italy
Tel: (39) 02-783-667
SHANGHAI ONWARD
FASHION CO., LTD.
5F Jinjiang Dickson Center,#400 Changle Road, Shanghai,

DONNA KARAN JAPAN K.K.

Republic of Korea
Tel: (82) 2-548-5841

BUS STOP CO., LTD.

HORLOGE SAINT BENOIT S.A.

PERSONAL ORDER JAPAN

22 Rue Saint Benoit,

CO., LTD.

75006 Paris, France
Tel: (33) 1-4544-1118

Tamuning, Guam 96911, U.S.A.

CO., LTD.

Tel: (1) 671-647-7777
FREED OF LONDON LTD.
94, St. Martin’s Lane,
London WC2N 4AT, U.K.
Tel: (44) 20-7240-0432

People’s Republic of China
Tel: (86) 21-6472-3660

50

NETWORK CO., LTD.
EXCEL CO., LTD.
BOOKLET CORP.

Unit 11, 50 Carnwath Road,
London SW6 3JX, U.K.

<RESORTS>

Tel: (44) 20-7736-2522

O & K CO., LTD.

IRIS s.r.l.

ONWARD MARINE CO., LTD.

Via Pampagnina 42, Fisso d’Artico,
30032 Venezia, Italy

ONWARD BEACH RESORT

Tel: (39) 041-5169911

CO., LTD.

Via Boschi 421 bis,#400 Changle Road, Shanghai,

ONWARD LIFE DESIGNJOSEPH LTD.

ERIKA s.r.l.

5F Jinjiang Dickson Center,

ACROSS TRANSPORT CO., LTD.
ONWARD CREATIVE CENTER

Tel: (86) 21-6466-6466

CO., LTD.

<SERVICES>

445 Governor Carlos G. Camacho Road,

People’s Republic of China

ONWARD TRADING (SHANGHAI)OAK CO., LTD.

Kangnam-ku, Seoul,

GUAM, INC.

Tel: (44) 20-7494-2074

IMPACT 21 CO., LTD.

CHACOTT CO., LTD.

Tel: (852) 2367-2055, 2721-7074

W1 London, U.K.

PRODUCTS>

584-1 Shinsa-Dong,

ONWARD BEACH RESORT47, Conduit Street,<APPAREL AND TEXTILEU-SAM BLDG., 2F,

People’s Republic of China

ONWARD KASHIYAMA U.K. LTD.

DOMESTIC SUBSIDIARIES

Maccari, 37060 Verona, Italy
Tel: (39) 0442-56666

As of May 27, 2005

Corporate Data
(As of February 28, 2005)

Head Office10-5, Nihonbashi 3-chome,

Major Shareholders

Chuo-ku, Tokyo 103-8239, Japan

Percentage ofTotal Shares Issued

Tel: (81) 3-3272-2317

Established

Fax: (81) 3-3272-2314

Japan Trustee Services Bank, Ltd.

9.89%

URL: http://www.onward.co.jp/

The Master Trust Bank of Japan, Ltd.

7.03%

Kashiyama Scholarship Foundation

5.03%

Nippon Life Insurance Company

3.60%

Nomura Securities Co., Ltd.

2.61%

Isetan Company Limited

2.49%

The Dai-ichi Mutual Life Insurance Company

2.42%

September 1947

Paid-in Capital¥30,080 million

Common Stock

Authorized—400,000,000 shares
Issued—172,921,669 shares

Sumitomo Mitsui Banking Corporation

1.69%

Number of Shareholders 9,069

The Chase Manhattan Bank, N.A., London

1.64%

Stock Listings

The National Mutual Insurance Federationof Agricultural Cooperatives

1.63%

Tokyo, Osaka, and Nagoyastock exchanges

Transfer Agent

UFJ Trust Bank Ltd.
1-4-3, Marunouchi, Chiyoda-ku,(On a number of shares basis)

Tokyo 100-0005, Japan
Number of Employees

Distribution of Ownership among Shareholders
Other Japanese corporations
11.4%

1,684

Japanese financial institutions
43.6%

Foreign institutions and others
29.2%Japanese securities companies
2.9%Japanese individuals and others
13.0%

Stock Price Movement(Thousands of shares)

(Yen)

6,000

2,000

1,500
4,000
1,000
2,000
500

0

0
Mar.
2004

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.
2005

Feb.

 Trading Volume (left scale) Onward Kashiyama’s Stock Price (Closing) (right scale)51

Head Office: 10-5, Nihonbashi 3-chome, Chuo-ku, Tokyo 103-8239, Japan
Tel: (81) 3-3272-2317
URL: http://www.onward.co.jp

Printed in Japan