[Translation]
Consolidated Business Results for the Third Quarter of the Fiscal Year Ending March 31, 2018
[U.S. GAAP]
January 31, 2018
Listed Company: Wacoal Holdings Corp.
Code Number: 3591
(URL: http://www.wacoalholdings.jp/)
Representative: Position: President and Representative Director
Name: Yoshikata Tsukamoto
For Inquiries: Position: General Manager of Corporate Planning
Name: Akira Miyagi

Stock Exchange: Tokyo

Tel: +81 (075) 682-1010

Scheduled quarterly report submission date:February 9, 2018
Scheduled dividend payment start date:
Supplementary materials regarding quarterly business results:
None
Explanatory meeting regarding quarterly business results:
None(Amounts less than 1 million yen have been rounded)1.

Third Quarter of the Fiscal Year Ending March 31, 2018 (April 1, 2017 – December 31, 2017)(1)

Consolidated Business Results(% indicates increase (decrease) from the corresponding period of the previous fiscal year)

Net Sales

Millions of Yen%

Third Quarter ended
148,416(0.4)
December 31, 2017
Third Quarter ended
149,019(3.2)
December 31, 2016
(Note)
Quarterly comprehensive income:Operating Income

Income Before
Income Taxes andEquity in Net Incomeof AffiliatedCompanies

Net Income
Attributable to
Wacoal Holdings
Corp.

Millions of Yen

Millions of Yen

Millions of Yen

%

%

%

13,056

16.8

14,833(10.3)

9,868(18.3)

11,175(12.0)

16,543

16.4

12,08520.5

19,849 million yen (101.8%) for the third quarter ended
December 31, 20179,834 million yen ((3.0)%) for the third quarter ended
December 31, 2016

Net Income
Attributable to
Wacoal Holdings
Corp. Per Share

Diluted Net Income
Attributable to
Wacoal Holdings
Corp. Per Share

Yen

Yen

Third Quarter ended
144.88144.40December 31, 2017
Third Quarter ended
173.46172.94
December 31, 2016
(Note) We have conducted a share consolidation of common stock of Wacoal Holdings Corp. (“the Company”)
pursuant to which two (2) shares were consolidated into one (1) share effective as of October 1, 2017.
Accordingly, the “net income attributable to Wacoal Holdings Corp. per share” and the “diluted net income
attributable to Wacoal Holdings Corp. per share” have been calculated assuming that such share consolidation
has been conducted at the beginning of the previous fiscal year.

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(2)Consolidated Financial Condition

Total Assets

Total Equity(Net Assets)

Total
Shareholders’EquityTotal
Shareholders’Equity Ratio

Shareholders’Equity Per Share

Millions of Yen

Millions of Yen

Millions of Yen%

Yen

As of December 31, 2017
301,982
240,881
235,975
78.1
3,503.09
As of the end of Fiscal
294,958
232,482
227,56877.2
3,317.05
Year (March 31, 2017)(Note) We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares
was consolidated into one (1) share effective as of October 1, 2017. Accordingly, the “shareholders’ equity pershare” has been calculated assuming that such share consolidation has been conducted at the beginning of theprevious fiscal year.
2.

Status of Dividends

End of First
Quarter

Annual Dividend
End of Second End of Third
Quarter
Quarter

Yen

Yen

Yen

Fiscal Year Ended March 31, 2017–––
Fiscal Year Ending March 31, 2018
–
18.00
–
Fiscal Year Ending March 31, 2018
(Estimates)(Note) Revision of estimated dividends announced during the latest quarter: No

Year-End

Total

Yen

Yen

36.00

36.00

36.00

–

We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shareswere consolidated into one (1) share effective as of October 1, 2017. Please note that such share consolidation istaken into consideration in determining the amount of the year-end cash dividend per share for the fiscal year
ending March 31, 2018 (estimates) mentioned above and the total annual dividend amount is indicated as “–.”The year-end cash dividend per share and total annual dividend amount per share for the fiscal year ending
March 31, 2018 (estimates), without taking into consideration of the share consolidation, are 18 yen and 36 yen,respectively. For details, please see “Cautionary Statement regarding Forecast of Business Results.”
3.

Forecast of Consolidated Business Results for the Fiscal Year Ending March 31, 2018 (April 1, 2017 - March 31,
2018)(% indicates increase (decrease) from the previous fiscal year)

Net Sales

Millions of Yen %Operating
IncomeIncome Before
Income Taxes
Net Income
Net Income
and Equity in Net Attributable toAttributable to
Income of
Wacoal Holdings Wacoal Holdings
AffiliatedCorp.
Corp. Per Share
Companies

Millions of Yen % Millions of Yen %Millions of Yen %Annual
200,000 2.1 11,500
3.9 12,500 (24.6)
9,000 (28.1)(Note) Revision of forecast of consolidated business results announced during the latest quarter: No

Yen

132.13We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares
was consolidated into one (1) share effective as of October 1, 2017. Please note that such share consolidation istaken into consideration in determining the amount of net income per share. For details, please see “Cautionary
Statement regarding Forecast of Business Results.”

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Notes(1)

Changes in significant subsidiaries in the consolidated cumulative third quarter of the current fiscal year (i.e.
changes in specified subsidiaries (tokutei kogaisha) which involve change in scope of consolidation): None

(2)

Application of simplified accounting methods and specific accounting methods: None

(3)

Changes in accounting principles:(i) Changes due to modifications in accounting standards, etc.: Yes(ii) Changes other than (i) above: None
(Note) For details, please see “2. Consolidated Quarterly Financial Statements and Accompanying Notes (5)Notes to Consolidated Quarterly Financial Statements (Changes in Accounting Policy).”(4)

Number of Issued Shares (Common Stock)
Third Quarter ended
December 31, 2017

Fiscal Year ended
March 31, 2017(i)

Number of issued shares (including
treasury stock) as of the end of:
71,689,042 shares
71,689,042 shares(ii) Number of shares held as treasury
stock as of the end of:
4,327,028 shares
3,083,605 shares(iii) Average number of shares duringconsolidated third quarter (third
68,113,218 shares
69,670,203 sharesquarter ended December 31):
(Note) We have conducted a share consolidation of common stock of the Company pursuant to which two (2)shares has been consolidated into one (1) share effective as of October 1, 2017. Accordingly, the“number of issued shares,” “number of shares held as treasury stock” and “average number of shares
during consolidated third quarter” have been calculated assuming that such share consolidation has been
conducted at the beginning of the previous fiscal year.
*These quarterly financial statements are exempt from the review procedures.

*Cautionary Statement regarding Forecast of Business Results(Cautionary note on forward-looking statements)
The forecast of business results is based on reasonable information we obtained as of the date hereof and, due to various
risks, uncertainties and other factors arising in the future, actual results in the future may differ largely from the estimates
set out in this document.
(Forecast of dividends and consolidated business results after share consolidation)
As approved at the 69th Ordinary General Meeting of Shareholders held on June 29, 2017, we have conducted a shareconsolidation of common stock of the Company pursuant to which two (2) shares was consolidated into one (1) shareeffective as of October 1, 2017. The forecast of dividends and consolidated business results for the fiscal year ending
March 31, 2018 before such share consolidation is taken into consideration are as follows:
1. Forecast of dividends for the fiscal year ending March 31, 2018
Interim dividend per share at the end of the second quarter:
18.00 yen (Note 1)
Year-end dividend per share:
18.00 yen (Note 2)
2. Forecast of consolidated business results for the fiscal year ending March 31, 2018
Net income per share for the fiscal year ending March 31, 2018:
66.07 yen
(Note 1) The interim dividend at the end of the second quarter for the fiscal year ending March 31, 2018 shall be payablefor the shares prior to the share consolidation.
(Note 2) The dividend amount is calculated before the share consolidation is taken into consideration.
(Note 3) Annual dividend amount per share for the fiscal year ending March 31, 2018 (before the share consolidation istaken into consideration) is 36.00 yen.

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Table of Contents for Attached Materials
1.

Qualitative Information regarding Consolidated Performance during the Third Quarter ---------------------------- 2(1)

Qualitative Information regarding Consolidated Business Results ----------------------------------------------------- 2(2)

Qualitative Information regarding Consolidated Financial Condition -------------------------------------------------- 6(3)

Qualitative Information regarding Forecast of Consolidated Business Results --------------------------------------- 7

2.

Consolidated Quarterly Financial Statements and Accompanying Notes ----------------------------------------------- 8(1)

Consolidated Quarterly Balance Sheets ------------------------------------------------------------------------------------- 8(2)

Consolidated Quarterly Statements of Income --------------------------------------------------------------------------- 10(3)

Consolidated Quarterly Statements of Comprehensive Income -------------------------------------------------------- 10(4)

Consolidated Quarterly Statements of Cash Flows ---------------------------------------------------------------------- 11(5)

Notes to Consolidated Quarterly Financial Statements ----------------------------------------------------------------- 12(Notes on Going Concern) --------------------------------------------------------------------------------------------------- 12(Notes on Significant Changes in the Amount of Total Shareholders’ Equity) -------------------------------------- 12(Changes in Accounting Policy) -------------------------------------------------------------------------------------------- 12(Segment Information) ------------------------------------------------------------------------------------------------------- 12(6)

Status of Sales ---------------------------------------------------------------------------------------------------------------- 13

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1.

Qualitative Information regarding Consolidated Performance during the Third Quarter(1)

Qualitative Information regarding Consolidated Business Results(i)Performance Overview of the Nine Months ended December 31, 2017

During the current consolidated third quarter (from April 1, 2017 to December 31, 2017), the domestic economy
showed signs of mild recovery as the employment environment continued to improve. The recovery of consumer spending,however, remained slow due to factors such as a slowdown in real income, which caused the consumers, concerned fortheir future social welfare, to remain budget-conscious. Similarly, the environment surrounding women’s domestic
innerwear market remained difficult, due to a slowdown in the recovery of consumer spending and due to a series ofclosings of general merchandise stores, although we were able to prevent a significant decline in results as a result ofconsumption by inbound tourists. In the overseas markets, consumer spending was stable in the United States, theemployment environment continued to improve in the Eurozone area, despite the deep-rooted uncertainty underlying theBrexit in Europe, and no significant change was seen in the positive consumer sentiment in Europe and America. In China,
real retails sales remained strong due to the better income environment, as well as the growing per capita disposable
income.
In such an environment, our group continues to move forward with efforts to improve and strengthen our businessstructure toward achieving the objectives of our mid-term business plan. In our domestic business, we are making efforts
to rebuild and strengthen sales force, to improve productivity, to realize omni-channel services that will achieve synergies
with our wholesale business, to form core IT systems which will improve inventory efficiency, and to improve profitability
by updating each of our brands and product groups. In our overseas business, we are continuing our initiatives to pursue
business collaboration among Europe and America and Asian countries, strengthen our ability to respond to the
e-commerce market, and improve product quality and cost competitiveness in China and ASEAN-member countries where
our product supply bases are located.
Consolidated sales from our domestic business for the nine months ended December 31, 2017 fell by 2% fromsuch sales for the corresponding period of the previous fiscal year due to a difficult environment for our wholesale business.
Our consolidated sales from our overseas business exceeded such sales for the corresponding period of the previous fiscal
year by 8% as a result of strong e-commerce sales and steady sales at the existing stores in Europe and America, and China.
Overall consolidated sales, however, decreased slightly by 0.4% as compared to such sales for the corresponding period of
the previous fiscal year due to a decrease in revenue from our Peach John and other business segments.
Consolidated operating income increased by 17% as compared to such consolidated operating income for thecorresponding period of the previous fiscal year. Consolidated operating income improved significantly as a result ofrecognition of compensation income from leaving a factory space occupied by our subsidiary during the first quarter of thecurrent fiscal year and the absence of non-recurring expenses related to the liquidation proceedings for our French
subsidiary that we recorded for the corresponding period of the previous fiscal year, as well as our efforts to reduce selling,
general and administrative expenses in Japan and the impact of increased revenue from our overseas business.
Consolidated income before income taxes and equity in net income of affiliated companies fell by 10% from suchconsolidated income for the corresponding period of the previous fiscal year, due to the absence of gain on sales of fixed
assets (land) that we recorded for the first quarter of the previous fiscal year.
The key exchange rates used for the current consolidated third quarter were: 111.70 yen to the U.S. dollar; 145.75
yen to the Sterling pound; and 16.47 yen to the Chinese yuan.
Net sales:

148,416 million yen(a decrease of 0.4% as compared to the corresponding period of theprevious fiscal year)

Operating income:

13,056 million yen(an increase of 16.8% as compared to the corresponding period of theprevious fiscal year)

Income before income
taxes and equity in net
income of affiliatedcompanies:

14,833 million yen(a decrease of 10.3% as compared to the corresponding period of theprevious fiscal year)

Net income attributable to9,868 million yen

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Wacoal Holdings Corp.:(a decrease of 18.3% as compared to the corresponding period of theprevious fiscal year)(ii)

Business Overview of Our Operating Segmentsa.

Wacoal Business (Domestic)

Wacoal Corp. reorganized its divisions, formerly called the Wacoal Brand Operation Division and Wing Brand
Operation Division, into the Wacoal Brand Operation Division, which is responsible for planning and development of“Wacoal” brand products and wholesale business mainly with department stores and specialty store channels, and theChain Store Operation Division, which is responsible for planning and development of “Wing” brand products andwholesale business with general merchandise stores.
Sales from our wholesale business, mainly composed of wholesale business from the Wacoal Brand Operation
Division and the Chain Store Operation Division, decreased by 2% as compared to such sales for the corresponding periodof the previous fiscal year. Over-the-counter sales at department stores remained at about the same level as such sales forthe corresponding period of the previous fiscal year due to weak sales in the provincial cities of the Kanto and East Japanregions, although sales expanded significantly in Tokyo and the Osaka area as a result of consumption by inbound tourists.
Although we have actively promoted renovations of our shops for “Dual W” that effectively brings together our Wacoal
and Wing brands, achieved steady growth at our core shops, and expanded our share in the market, over-the-counter sales
at general merchandise stores remained at about the same level as such sales for the corresponding period of the previous
fiscal year due to poor sales of men’s innerwear products and the effect of a series of closings of stores in rural areas.
Although sales of “GOCOCi,” our brassieres marketed for their comfort, are still growing after a year and half after its
launch, its percentage of contribution to overall sales fell as the weather became cooler.
In our retail business, sales only increased slightly from such sales for the corresponding period of the previous
fiscal year. Our cross-store common products among directly managed retail stores “BRANGENIC,” have grown tobecome our stable core product. While we continue to make efforts to retain a greater number of loyal customers throughacquiring shop members for our core directly managed retail store, “AMPHI,” despite reducing discount sales, weprioritized improving business profitability by reducing the number of our lineup products and closing underperforming
stores.
Sales from our wellness business fell by 2% as compared to such sales for the corresponding period of theprevious fiscal year due to weak sales of our core “CW-X” brand products which were impacted by the termination ofbusiness with certain sport specialty stores.
In our Web sales business (formerly catalog sales business), sales from our webstore business increased by 14% ascompared to such sales for the corresponding period of the previous fiscal year due to an expansion in the number of users
as a result of marketing niche products such as “Minimizer” bras, as well as our efforts to recapture our inactive customers
in our webstore business, along with our retail business. On the other hand, in our catalog sales business, the number ofusers and purchasers in our winter catalogue continued to show gradual decrease. As a result, overall sales from our Web
sales business slightly increased by 1% as compared to such sales for the corresponding period of the previous fiscal year.
Sales from swimwear business of Ai Co., Ltd. decreased by 4% as compared to such sales for the corresponding
period of the previous fiscal year. This was due to the impact of reducing the number of our seasonal stores opened only
during a period of peak demand, while retaining temporary sales representatives became difficult. Sales from theunderwear business were also weak and decreased by 14% as compared to such sales for the corresponding period of theprevious fiscal year due to closure of underperforming stores, and as a result, overall sales decreased by 6% as compared tosuch sales for the corresponding period of the previous fiscal year.
As a result, sales attributable to our “Wacoal Business (Domestic)” segment decreased by 2% as compared to suchsales for the corresponding period of the previous fiscal year.
Operating income was adversely impacted by increases in IT infrastructure related expenses, expenses related tochanges in the health insurance premium rate, retirement benefit expenses and greater operating loss at Ai Co., Ltd., but wecountered such negative factors with our efforts to improve business efficiency through restructuring of our wholesale
business structure and to strengthen profitability of our retail business. In addition, as a result of recognition ofcompensation income from leaving a factory space occupied by our subsidiary during the first quarter of the current fiscal
year, operating income increased by 17% from such operating income for the corresponding period of the previous fiscal
year.

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Net sales:

89,181 million yen(a decrease of 2.0% as compared to the corresponding period of theprevious fiscal year)

Operating income:

8,443 million yen(an increase of 16.6% as compared to the corresponding period of theprevious fiscal year)b.

Wacoal Business (Overseas)

Sales (on a local currency basis) of new products from Wacoal International Corp. (U.S.) for the autumn/winterseason did not achieve the level of sales recorded for the corresponding period of the previous fiscal year, and growth inover-the-counter sales weakened. Further, sales were adversely impacted by the management of inventories by certain
department stores and the EC companies specialized for e-commerce and by damage from a hurricane that caused
distribution delays, resulting in a decrease of 3% for the third quarter (three months ended December 31, 2017) from suchsales for the corresponding period of the previous fiscal year. Sales for the nine months ended December 31, 2017,
however, increased by 5% as compared to such sales for the corresponding period of the previous fiscal year as a result of
overall sales driven by e-commerce sales through our website and third-party e-commerce websites, which continue toshow strong sales growth since the first half of the current fiscal year, as well as the initial product delivery from anincrease in the number of department stores handling Wacoal brand products during the first quarter of the current fiscal
year.
Operating income on a local currency basis significantly contributed to the business results for the first half of thecurrent fiscal year due to a greater percentage of products sold at full price and an increase in the percentage of sales fromour own e-commerce website, as well as an increase in the gross profit rate which decreased the percentage ofmanufacturing overhead as to cost. While we experienced a slowdown in sales during the third quarter of the current fiscal
year, we continued to incur costs related to product listing advertisements and website renewal to strengthen e-commerce
sales. As a result, operating income for the nine months ended December 31, 2017 increased by 18% as compared to suchoperating income for the corresponding period of the previous fiscal year.
While sales on a local currency basis (Sterling pound) for Wacoal Europe fell below such sales for thecorresponding period of the previous fiscal year due to the effect of loss of sales that could have been recorded from thebrands which were liquidated in France, sales in the major markets, including the United Kingdom and the United States
were strong. Sales through third-party e-commerce websites which specialize in selling luxury lingerie were strong in the
United Kingdom and the United States. Sales of our swimwear increased and showed high growth in North Europe,
Germany and Australia, and sales were also grew as a result of the effect of the weak Sterling pound in the Eurozone area.
In our underwear business, sales of our plus-size brand “elomi” products increased by 23% as compared to such sales forthe corresponding period of the previous fiscal year, and continued to achieve high growth, and sales of our swimwear
products under “FANTASIE” and “Freya” were also strong with an increase of 26% and 18%, respectively, and as a result,overall sales increased by 4% as compared to such sales for the corresponding period of the previous fiscal year.
Operating income improved over budget as a result of the absence of the non-recurring expenses related to theliquidation proceedings for our French subsidiary which we recorded during the corresponding period of the previous
fiscal year, as well as of minimizing selling, general and administrative expenses following the postponement of our
website renewal for e-commerce sales.
In China, as the consumers are becoming more sensitive to fashion trends, the number of purchasers increased dueto the openings of specialty stores during China’s high-demand seasons such as the Chinese New Year, International
Women’s Day and Mother’s Day during the first quarter of the current fiscal year. Further, we expanded sales channels
through third-party e-commerce websites and actively held events for sales promotion during the second and third quartersof the current fiscal year. As a result, overall sales in China on a local currency basis increased by 11% from such sales forthe corresponding period of the previous fiscal year due to sales of our Wacoal brand products, which increased by 11%
from such sales for the corresponding period of the previous fiscal year, and due to sales of our Peach John brand products,
including our popular product “Cover Cleavage Strapless” bras, which significantly increased by 59% from such sales forthe corresponding period of the previous fiscal year, resulting from steady growth in the number of repeat users.
Operating income on a local currency basis increased by 29% as compared to such operating income for thecorresponding period of the previous fiscal year due to our efforts to close underperforming stores, and to improve
profitability by reducing selling, general and administrative expenses through postponement of certain store renovation
projects.

tk-679582-4-

As a result of the above, the overall sales and the operating income attributable to our “Wacoal Business(Overseas)” segment on the Japanese Yen basis increased by 8% and 38%, respectively, as compared to such sales andoperating income for the corresponding period of the previous fiscal year.
Net sales:

39,340 million yen(an increase of 8.2% as compared to the corresponding period of theprevious fiscal year)

Operating income:

3,933 million yen(an increase of 37.9% as compared to the corresponding period of theprevious fiscal year)c.

Peach John BusinessAlthough sales from retail stores of our premium themed “Salon by Peach John” showed a high growth with anincrease of 36% as compared to such sales for the corresponding period of the previous fiscal year as a result of a positive
impact of new shop openings, sales from our domestic business remained at about the same level as such sales for thecorresponding period of the previous fiscal year as sales from retail stores of “Peach John” could not make up for theabsence of strong sales of our popular product “Miracle Nudy” bras for the corresponding period of the previous fiscal year.
Wholesale business, particularly the third-party e-commerce websites, also remained at about the same level as such sales
for the corresponding period of the previous fiscal year due to a slowdown in sales during the third quarter of the current
fiscal year, which showed the effect of poor sales of our seasonal autumn/winter campaign “Gift Bra.” Although averagespending per customer increased, sales from our mail-order catalogue business decreased by 14% from such sales for thecorresponding period of the previous fiscal year as our products failed to attract consumers’ attention, which led to adecrease in the number of users who visited our own e-commerce website. Sales from our overseas business were strong as
demonstrated by the sales from Taiwan Peach John Ltd., which, after commencing operations in May, significantly
exceeded sales budgeted for retail stores and were twice the sales budgeted for our own e-commerce website. As a result,overall sales attributable to “Peach John Business” segment fell, decreasing by 4% from such sales for the corresponding
period of the previous fiscal year.
Despite a decrease in revenue, we maintained operating income at about the same level as such operating income
for the corresponding period of the previous fiscal year as a result of an improvement in the gross profit rate due to a greater
percentage of our innerwear products sold at full price in the domestic market, and our efforts to reduce advertisingexpenses, as well as an improvement in profitability of our Chinese business resulting from sales expansion.
Net sales:

8,098 million yen(a decrease of 4.2% as compared to the corresponding period of theprevious fiscal year)

Operating income:

512 million yen(a decrease of 0.2% as compared to the corresponding period of theprevious fiscal year)

d.

Other

With respect to Lecien Corporation (“Lecien”), sales from our art & hobby business remained at about the samelevel as such sales for the corresponding period of the previous fiscal year due to steady sales of handcraft products,
including embroidery, with the expansion of the C2C market, despite weak sales of sewing fabrics. However, sales fromour core innerwear business decreased by 14% as compared to such sales for the corresponding period of the previous
fiscal year as the number of orders received for our private brand products for sale at major general merchandise stores
decreased, and sales from our material business decreased by 18% as compared to such sales for the corresponding periodof the previous fiscal year due to a decrease in demand for garment laces. Further, sales from our apparel businesssignificantly decreased by 55% as compared to such sales for the corresponding period of the previous fiscal year due tothe withdrawal of our private brand business sold at major general merchandise stores and the impact of weak sales fromteleshopping. As a result, overall sales decreased by 19% as compared to such sales for the corresponding period of theprevious fiscal year.
Operating income decreased by 89% as compared to such operating income for the corresponding period of theprevious fiscal year due to a drop in sales profit resulting from decreased revenue, despite our efforts to reduce selling,
general and administrative expenses.
Sales from Nanasai Co., Ltd. (“Nanasai”) remained weak as no sign of recovery was seen in the business
tk-679582-5-confidence in the clothing industry and due to a decrease in the number of large-scale orders received from our valued
clients, including department stores. A sign of recovery was seen in demand for short-term leases for specialty stores at
department stores as we entered the third quarter of the current fiscal year, and as a result, we were able to maintain sales
from rental business at about the same level as such sales for the corresponding period of the previous fiscal year. Sales
from both sales business and construction business were weak and decreased by 9% and 10%, respectively, as compared tosuch sales for the corresponding period of the previous fiscal year due to the absence of large-scale orders received during
the corresponding period of the previous fiscal year. As a result, overall sales decreased by 8% from such sales for thecorresponding period of the previous fiscal year.
With respect to operating income, we recorded income, rather than a loss that we recorded for the corresponding
period of the previous fiscal year, due to cost rate improvement in our rental business and an improvement in the grossprofit rate from a decrease in the percentage of sales from our construction businessAs a result of the above, overall sales and operating income attributable to our “Other” segment decreased by 11%
and 70%, respectively, as compared to the corresponding period of the previous fiscal year.

(2)

Net sales:

11,797 million yen(a decrease of 10.6% as compared to the corresponding period of theprevious fiscal year)

Operating income:

168 million yen(a decrease of 70.3% as compared to the corresponding period of theprevious fiscal year)

Qualitative Information regarding Consolidated Financial Condition(i)

Assets, Liabilities and Total Shareholders’ Equity

Our total assets as of the end of the current consolidated third quarter were 301,982 million yen, an increase of
7,024 million yen from the end of the previous fiscal year, mainly due to an increase in investments at market value.
Our total liabilities were 61,101 million yen, a decrease of 1,375 million yen from the end of the previous fiscal
year, due to decreases in other payables and accrued payroll and bonuses.
Total Wacoal Holdings Corp. shareholders’ equity was 235,975 million yen, an increase of 8,407 million yen fromthe end of the previous fiscal year, due to increases in retained earnings and unrealized gain on securities.
As a result of the above, our total shareholders’ equity ratio as of the end of the current consolidated third quarter
was 78.1%, an increase of 0.9% from the end of the previous fiscal year.
(ii)

Cash Flows

Cash and cash equivalents as of the end of the consolidated third quarter of the current fiscal year were 31,663
million yen, a decrease of 2,332 million yen from the end of the previous fiscal year.
(Cash Flow Provided by Operating Activities)
Cash flow provided by operating activities was 13,923 million yen, a decrease of 2,828 million yen as compared tothe corresponding period of the previous fiscal year, after adjustments for changes in assets and liabilities to our net incomeof 9,913 million yen plus adjustments for depreciation, amortization and deferred income taxes.
(Cash Flow Used in Investing Activities)
Cash flow used in investing activities was 4,652 million yen, an increase of 3,474 million yen as compared to thecorresponding period of the previous fiscal year, due to increases in time deposits and capital expenditures.
(Cash Flow Used in Financing Activities)
Cash flow used in financing activities was 11,967 million yen, an increase of 3,193 million yen as compared to thecorresponding period of the previous fiscal year, due to cash dividend payments and repurchase of treasury stock.

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(3)

Qualitative Information regarding Forecast of Consolidated Business Results

We have not revised our forecast of consolidated business results for the fiscal year ending March 31, 2018 since
our announcement on May 10, 2017.

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2.

Consolidated Quarterly Financial Statements and Accompanying Notes(1)

Consolidated Quarterly Balance SheetsI.

Accounts

Previous Fiscal Year
as of March 31, 2017

(Assets)

Millions of Yen

Current Consolidated
Third Quarteras of December 31, 2017
Millions of Yen

Increase/(Decrease)
Millions of Yen

Current assets:
Cash and cash equivalents

33,99531,663(2,332)Time deposits

2,722

3,889

1,167

Marketable securities

1,457

1,418

(39)

Notes and accounts receivable
Allowance for returns anddoubtful receivables
Inventories

25,563

22,912(2,651)(2,477)
43,822(2,845)44,502(368)
680

Deferred income taxes

4,049

-

(4,049)Other current assets

4,683

5,046

363

113,814106,585(7,229)Land

21,555

21,58732

Buildings and structures

72,66473,378714

Machinery and equipment

17,722

18,503781

Total current assets
II. Property, plant and equipment:

Construction in progress

274

337

63

112,215

113,805

1,590(56,927)(59,156)(2,229)55,28854,649(639)

Investments in affiliated companies

20,86822,0891,221

Investments

59,847

71,385

11,538Goodwill

16,071

17,051

980

Other intangible assets

11,84912,519670

Prepaid pension expense

10,287

10,633

346

Deferred income taxes

1,060

1,272

212

Accumulated depreciation
Net property, plant and equipment
III. Other assets:

Other
Total other assets
Total assets

tk-679582

5,874

5,799

(75)

125,856

140,748

14,892294,958

301,982

7,024

-8-

I.

Accounts

Previous Fiscal Year
as of March 31, 2017

(Liabilities)

Millions of Yen

Current Consolidated
Third Quarteras of December 31, 2017
Millions of Yen

Increase/(Decrease)
Millions of Yen

Current liabilities:
Short-term bank loans

7,716

7,484

(232)

Trade notes payable

1,438

1,456

18

Trade accounts payable

11,605

10,943(662)

Notes and accounts payable:

Other payables

6,185

4,846

(1,339)19,22817,245(1,983)

Accrued payroll and bonuses

7,093

5,516

(1,577)

Income taxes payable

2,964

2,527

(437)

Other current liabilities

4,058

5,871

1,813

Total current liabilities

41,05938,643(2,416)

II. Long-term liabilities:
Liability for termination and retirement
benefits
Deferred income taxes

1,956

1,916

(40)

17,862

18,172

310

1,599

2,370

771

Total long-term liabilities

21,41722,458

1,041

Total liabilities

62,476

61,101(1,375)

13,26013,260-

Other long-term liabilities(Equity)I.

Common stock

II. Additional paid-in capital

29,70729,75851

III. Retained earnings
IV. Accumulated other comprehensive income(loss):
Foreign currency translation adjustments

170,062

172,544

2,482

1,212

3,645

2,433

Unrealized gain on securities

21,07528,6707,595

Pension liability adjustments

(414)

(561)

(147)

V. Treasury stock, at cost
Total Wacoal Holdings Corp.
shareholders’ equity
VI. Noncontrolling interests(7,334)(11,341)(4,007)

227,568

235,975

8,407

4,914

4,906

(8)

Total equity

232,482

240,881

8,399

Total liabilities and equity

294,958

301,982

7,024

tk-679582

-9-

(2)

Consolidated Quarterly Statements of Income

Accounts

I.

Net Sales

Previous Consolidated
Cumulative Third Quarter(From April 1, 2016
to December 31, 2016)
Millions of Yen%

Current Consolidated
Cumulative Third Quarter(From April 1, 2017
to December 31, 2017)
Millions of Yen%

Increase/(Decrease)
Millions of Yen

149,019100.0

148,416

100.0

(603)

Cost of sales

69,27746.5

68,24546.0(1,032)

Selling, general and administrative expenses

68,56746.0

67,823

45.7

(744)

II. Operating costs and expenses

Compensation income

(708)

(0.5)

(708)

Total operating costs and expenses

137,84492.5

135,360

91.2(2,484)

Operating income

11,175

7.5

13,0568.8

1,881

III. Other income (expenses):
Interest income
Interest expense
Dividend income
Gain or loss on sales or exchange ofmarketable securities and investments - net
Valuation loss on marketable securities andinvestments - net
Gain on sale of property, plant and equipment
Other – net
Total other income (expenses)
Income before income taxes and equity in net
income of affiliated companies
Income taxes
Income before equity in net income of affiliatedcompanies
Equity in net income of affiliated companies
Net income
Net income attributable to noncontrollinginterests
Net income attributable to Wacoal Holdings
Corp.

(3)

102

135

33

(25)

(10)

15

1,127

1,267

140

458

203

(255)

(2)

4

6

3,770

-

(3,770)

(62)

178

240

5,368

3.6

1,777

1.2

(3,591)

16,543

11.1

14,83310.0(1,710)

5,556

3.7

5,746

3.9

190

10,987

7.4

9,087

6.1

(1,900)

1,252

0.8

826

0.6

(426)

12,239

8.2

9,913

6.7

(2,326)

(154)

(0.1)

(45)

(0.1)

109

12,085

8.1

9,868

6.6

(2,217)

Consolidated Quarterly Statements of Comprehensive Income

Accounts

Previous Consolidated
Cumulative Third Quarter(From April 1, 2016
to December 31, 2016)
Millions of Yen

Current Consolidated
Cumulative Third Quarter(From April 1, 2017
to December 31, 2017)
Millions of Yen

Increase/(Decrease)
Millions of Yen

I. Net income
II. Other comprehensive income (loss)- net of tax:
Foreign currency translation adjustments

12,2399,913(2,326)(5,186)

2,485

7,671

Unrealized gain (loss) on securities

2,921

7,598

4,677

Pension liability adjustments

(140)

(147)

(7)

Other comprehensive income (loss)(2,405)

9,936

12,341

Comprehensive income (loss)
Comprehensive loss (income) attributable tononcontrolling interests
Comprehensive income (loss) attributable to
Wacoal Holdings Corp.

9,834

19,84910,015

249

(100)

(349)

10,083

19,7499,666

tk-679582- 10 -

(4)Consolidated Quarterly Statements of Cash Flows

Accounts

Previous Consolidated Cumulative
Third Quarter(From April 1, 2016
to December 31, 2016)
Millions of Yen

I. Operating activities
1. Net income
2. Adjustments to reconcile net income to net cash provided
by operating activities(1) Depreciation and amortization(2) Allowance for returns and doubtful receivables - net(3) Deferred income taxes(4) Gain on sales or disposal of property, plant andequipment - net(5) Compensation income(6) Gain on sales or exchange of marketable securities andinvestments – net(7) Valuation loss on marketable securities and investments– net(8) Equity in net income of affiliated companies,
less dividends received(9) Changes in assets and liabilities
Decrease in notes and receivable
Increase in inventories
Decrease (increase) in other current assets
Decrease in notes and accounts payable
Decrease in liability for termination and retirement
benefits
Increase in other liabilities(10) Other
Net cash provided by operating activities
II.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Investing activities
Increase in time deposits
Decrease in time deposits
Proceeds from sales and redemption of marketablesecurities
Payments to acquire marketable securities
Proceeds from sales of property, plant and equipment
Compensation income
Capital expenditures
Payments to acquire intangible assets
Proceeds from sales of other investments
Payments to acquire other investments
Other
Net cash used in investing activities

III. Financing activities
1. Net increase in short-term bank loans with original
maturities of three months or less
2. Proceeds from issuance of long-term debt
3. Repayment of long-term debt
4. Repurchase of treasury stock
5. Dividends paid on common stock
6. Dividends paid to noncontrolling interests
7. OtherNet cash used in financing activities
IV. Effect of exchange rate changes on cash and cash
equivalents
V. Net (decrease) increase in cash and cash equivalents
VI. Cash and cash equivalents, beginning of period
VII. Cash and cash equivalents, end of period

tk-679582- 11 -

Current Consolidated Cumulative
Third Quarter(From April 1, 2017
to December 31, 2017)
Millions of Yen

12,239

9,913

3,686
459
118

4,033
349
762

(3,575)

67

-

(708)

(458)

(203)

2

(4)

(751)

(330)

3,237
(274)
1,312
(1,352)

2,867
(434)
(368)
(1,894)

(515)

(615)

2,303
320
16,751450
38
13,923(2,456)
2,165
692(4,158)
3,026
720

(295)
3,553
(3,905)(1,371)
833
(272)
(122)
(1,178)

(113)
161
708
(2,422)(1,450)134(1,289)31(4,652)(1,391)

(431)

250
(293)
(2,548)(4,648)(167)
23(8,774)(35)(4,007)(7,386)(194)
86(11,967)

48

364

6,847
34,05940,906(2,332)33,99531,663

Additional Cash Flow Information
Cash paid for:
Interest
Income taxes
Noncash investing activities
Acquisition of fixed assets by assuming payment
obligation

(5)

25
2,254

11
5,424

958

562

Notes to Consolidated Quarterly Financial Statements(Notes on Going Concern)
Not applicable.
(Notes on Significant Changes in the Amount of Total Shareholders’ Equity)
During the current consolidated cumulative third quarter, we purchased 1,241 thousand shares of treasury stock
through market for an aggregate purchase price of 3,998 million yen. As a result, balance of treasury stock as of the end of
the current consolidated third quarter was 11,341 million yen, an increase of 4,007 million yen from the end of previous
fiscal year.
(Changes in Accounting Policy)
New accounting guidance has been adopted for the balance sheet classification of deferred taxes from the current
fiscal year. The new guidance requires deferred tax assets and liabilities to be classified as noncurrent on the consolidatedbalance sheet. The new accounting guidance has not been applied retrospectively for the financial statements for the priorperiods. The amount of current deferred tax assets as of the end of the previous fiscal year was 4,049 million yen.
(Segment Information)(i)

Operating Segment Information

Previous Consolidated Cumulative Third Quarter (From April 1, 2016 to December 31, 2016)(Millions of Yen)
Wacoal
Wacoal businessbusiness(Domestic)(Overseas)

Peach Johnbusiness

Other

Total

Elimination

Consolidated

Net sales(1) External customers

91,01836,3558,450

13,196

149,019-

149,019(2) Intersegment

908

7,490

754

4,422

13,574(13,574)-

Total

91,926

43,8459,204

17,618

162,593(13,574)

149,019

Operating income

7,243

2,853

513

566

11,175-

11,175Current Consolidated Cumulative Third Quarter (From April 1, 2017 to December 31, 2017)(Millions of Yen)
Wacoal
Wacoal businessbusiness(Domestic)(Overseas)

Peach Johnbusiness

Other

Total

Elimination

Consolidated

Net sales
89,181

39,3408,098

11,797

148,416-

148,416(2) Intersegment

833

8,127

1,000

3,921

13,881(13,881)-

Total

90,01447,467

9,098

15,718162,297(13,881)

148,416

Operating income

8,443

3,933

512

168

13,056-

13,056(1) External customers(Note)

Core products of respective businesses:
Wacoal business (Domestic): innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear,
hosiery, etc.
Wacoal business (Overseas): innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear,
hosiery, other textile-related products, etc.
Peach John business:
innerwear (foundation, lingerie, and nightwear), outerwear, and other textile-related products,
etc.

tk-679582- 12 -

innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, othertextile-related products, mannequins, construction of stores and interior design, etc.

Other:(ii)

Segment Information by Region

Previous Consolidated Cumulative Third Quarter (From April 1, 2016 to December 31, 2016)(Millions of Yen)

Net sales
External customers
Distribution ratio
Operating income

Japan

Asia/Oceania

Europe/N.A.

Consolidated

112,36775.4%

14,4779.7%

22,17514.9%

149,019100.0%

8,072

1,893

1,210

11,175Current Consolidated Cumulative Third Quarter (From April 1, 2017 to December 31, 2017)(Millions of Yen)

Net sales
External customers
Distribution ratio
Operating income(Note)

1.
2.

3.

(6)

Japan

Asia/Oceania

Europe/N.A.

Consolidated

108,698
73.3%

15,632
10.5%

24,08616.2%

148,416100.0%

9,007

1,597

2,452

13,056Countries or areas are classified according to geographical proximity.
Main countries and areas belonging to classifications other than Japan:
Asia/Oceania: various countries of East Asia, Southeast Asia and West Asia, and Australia
Europe/N.A.: North America and European countries
Sales in respect of consolidated companies are categorized by location.

Status of Sales

Type of productFoundationand lingerie
Innerwear Nightwear
Children’s
underwear
Subtotal
Outerwear/Sportswear
Hosiery
Other textile goods andrelated products
Other
Total

tk-679582

Previous Consolidated Cumulative
Third Quarter(From April 1, 2016 to
December 31, 2016)
AmountDistribution Ratio
Millions of Yen%

Current Consolidated Cumulative
Third Quarter
Increase/(Decrease)(From April 1, 2017 to
December 31, 2017)
AmountDistribution Ratio
AmountRatio
Millions of Yen%
Millions of Yen%

110,589

74.2

112,031

75.5

1,442

1.3

7,233

4.9

6,980

4.7

(253)

(3.5)

1,151

0.8

1,108

0.7

(43)

(3.7)

118,973
13,467
1,724

79.9
9.0
1.2

120,119
12,560
1,515

80.9
8.5
1.0

1,146
(907)
(209)

1.0
(6.7)
(12.1)

7,032

4.7

6,502

4.4

(530)

(7.5)

7,823
149,019

5.2
100.0

7,720
148,416

5.2
100.0

(103)
(603)

(1.3)
(0.4)

- 13 -