[Translation]
Consolidated Business Results for the Second Quarter of the Fiscal Year Ending March 31, 2019
[U.S. GAAP]
October 31, 2018
Listed Company: Wacoal Holdings Corp.
Code Number: 3591
(URL: http://www.wacoalholdings.jp/)
Representative: Position: Representative Director and President
Name: Hironobu Yasuhara
For Inquiries: Position: Director, General Manager of Corporate Planning
Name: Akira Miyagi

Stock Exchange: Tokyo

Tel: +81 (075) 682-1010

Scheduled quarterly report submission date:November 9, 2018
Scheduled dividend payment start date:
December 4, 2018
Supplementary materials regarding quarterly business results: None
Explanatory meeting regarding quarterly business results:
Yes(Amounts less than 1 million yen have been rounded )1.

Second Quarter of the Fiscal Year Ending March 31, 2019 (April 1, 2018 – September 30, 2018)(1)

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

Net Sales

Millions of Yen

Operating Income%

Second Quarter ended
101,815 (0.2)
September 30, 2018
Second Quarter ended
101,976 (0.4)
September 30, 2017
(Note)
Quarterly comprehensive income:(Note)

Millions of Yen%

Income Before
Income Taxes andEquity in Net Incomeof AffiliatedCompanies
Millions of Yen%

Net Income
Attributable to
Wacoal Holdings
Corp.
Millions of Yen

%

8,994

(5.4)

16,311

48.2

11,391

53.2

9,511

29.2

11,005

(7.4)

7,437

(19.2)

11,759 million yen ((7.1)%) for the second quarter ended
September 30, 201812,651 million yen (- %) for the second quarter ended
September 30, 2017

Reclassification adjustments have been made to the consolidated quarterly statements of income for thesecond quarter ended September 30, 2018 pursuant to the changes in accounting principles. For details,
please see “2. Consolidated Quarterly Financial Statements and Accompanying Notes (5) Notes toConsolidated Quarterly Financial Statements (Changes in Accounting Policy).”
Net Income
Attributable to
Wacoal Holdings
Corp. Per Share

Diluted Net Income
Attributable to
Wacoal Holdings
Corp. Per Share

Yen

Yen

Second Quarter ended
170.35169.73September 30, 2018
Second Quarter ended
108.88108.53September 30, 2017
(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

As of September 30, 2018
As of the end of Fiscal
Year (March 31, 2018)2.

Total Assets

Total Equity(Net Assets)

Total
Shareholders’EquityTotal
Shareholders’Equity Ratio

Millions of Yen

Millions of Yen

Millions of Yen%

309,986

243,685

239,09177.1

3,607.35

298,534

237,497

232,71278.0

3,454.40

Shareholders’Equity Per Share
Yen

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, 2018
–
18.00
–
Fiscal Year Ending March 31, 2019–
36.00
Fiscal Year Ending March 31, 2019–
(Estimates)(Note) Revision of estimated dividends announced during the latest quarter: No

Year-End

Total

Yen

Yen

36.00

–

36.00

72.00

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
ended March 31, 2018 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 ended March 31, 2018,
without taking into consideration of the share consolidation, are 18 yen and 36 yen, respectively.
3.

Forecast of Consolidated Business Results for the Fiscal Year Ending March 31, 2019 (April 1, 2018 - March 31,
2019)(% 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 2.2 10,000 (13.0)
13,000 (9.0)
10,0002.6(Note) Revision of forecast of consolidated business results announced during the latest quarter: No

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Yen

149.55

Notes(1)

Changes in significant subsidiaries in the consolidated cumulative second 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)
Second Quarter ended
September 30, 2018

Fiscal Year ended
March 31, 2018(i)

Number of issued shares (including
treasury stock) as of the end of:70,689,042 shares
71,689,042 shares(ii) Number of shares held as treasury
stock as of the end of:
4,410,145 shares
4,322,121 shares(iii) Average number of shares duringconsolidated second quarter (second
66,866,299 shares
68,303,670 sharesquarter ended September 30):
(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“average number of shares during consolidated third quarter” has been calculated assuming that suchshare 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.

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Table of Contents for Attached Materials
1.

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

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

Qualitative Information regarding Consolidated Financial Condition -------------------------------------------------- 5(3)

Qualitative Information regarding Forecast of Consolidated Business Results ---------------------------------------- 6

2.

Consolidated Quarterly Financial Statements and Accompanying Notes ----------------------------------------------- 7(1)

Consolidated Quarterly Balance Sheets ------------------------------------------------------------------------------------- 7(2)

Consolidated Quarterly Statements of Income ----------------------------------------------------------------------------- 9(3)

Consolidated Quarterly Statements of Comprehensive Income ---------------------------------------------------------- 9(4)

Consolidated Quarterly Statements of Cash Flows ----------------------------------------------------------------------- 10(5)

Notes to Consolidated Quarterly Financial Statements ------------------------------------------------------------------ 11(Notes on Going Concern) -------------------------------------------------------------------------------------------------- 11(Notes on Significant Changes in the Amount of Total Shareholders’ Equity) -------------------------------------- 11(Changes in Accounting Policy) ------------------------------------------------------------------------------------------- 11(Segment Information) ------------------------------------------------------------------------------------------------------- 12(6)

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

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1.

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

Qualitative Information regarding Consolidated Business Results(i)Performance Overview of the Six Months ended September 30, 2018

Our group is working to complete the building of the foundation to enhance our business efficiency and to invest in
fields where we can expect growth during the current fiscal year, which is the last year of our mid-term business plan (fromfiscal year 2017 to fiscal year 2019). In our domestic business, we are making efforts to further strengthen collaborationand to improve productivity in our wholesale business through reorganization. In addition, we will further make efforts toimprove profitability of our retail business, and to complete and begin phased operation of our omni-channel service base.
In our overseas business, we will expand the number of counties where our e-commerce website is available, andstrengthen sales of our products sold at regular price through third-party e-commerce websites, while also improving ourservices at department stores and our directly managed retail stores. In China and ASEAN-member countries where our
product supply bases are located, we are moving forward with efforts to build facilities to produce non-sewing productsthat are highly competitive in terms of product quality and cost.
Consolidated sales for the six months ended September 30, 2018 (April 1, 2018 – September 30, 2018) remained atabout the same level as such sales for the corresponding period of the previous fiscal year. In our domestic business, ourcore wholesale business recorded a decrease in revenue due to decreases in over-the-counter sales at department stores andgeneral merchandise stores in the summer season. Overall sales from our overseas business on a yen converted basis
recorded an increase in revenue, driven by favorable sales in China, which exceeded by 16% such sales for thecorresponding period of the previous fiscal year. While revenue from our Peach John business decreased, sales from ourother business segment exceeded such sales for the corresponding period of the previous fiscal year.
Consolidated operating income decreased by 5% from consolidated operating income for the corresponding periodof the previous fiscal year. In our domestic business, while we achieved an improvement in the gross profit rate and areduction in selling, general and administrative expenses as a result of improved business efficiency due to restructuring ofour business structure, operating income fell below the operating income for the corresponding period of the previous
fiscal year due to the absence of the non-recurring increase in profit generated from compensation income from leaving afactory space occupied by our subsidiary recorded during the corresponding period of the previous fiscal year. Profit fromour overseas business increased as a result of increased revenue. We recorded less profit from both our Peach Johnbusiness and other business segments decreased due to lower business efficiency.
Consolidated income before income taxes and equity in net income of affiliated companies increased by 48% fromsuch consolidated income for the corresponding period of the previous fiscal year, due to recognition of valuation gain on
equity securities of 5,660 million yen following the changes in accounting policy (please see “2. Consolidated Quarterly
Financial Statements and Accompanying Notes (5) Notes to Consolidated Quarterly Financial Statements (Changes in
Accounting Policy)).
The key exchange rates used for the current consolidated second quarter were: 110.26 yen to the U.S. dollar;
146.91 yen to the Sterling pound; and 17.09 yen to the Chinese yuan.
Net sales:

101,815 million yen(a decrease of 0.2% as compared to the corresponding period of theprevious fiscal year)

Operating income:

8,994 million yen(a decrease of 5.4% as compared to the corresponding period of theprevious fiscal year)

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

16,311 million yen(an increase of 48.2% as compared to the corresponding period of theprevious fiscal year)

Net income attributable to
Wacoal Holdings Corp.:

11,391 million yen(an increase of 53.2% as compared to the corresponding period of theprevious fiscal year)

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(ii)

Business Overview of Our Operating Segmentsa.

Wacoal Business (Domestic)

To strengthen collaboration and improve productivity in our wholesale business, Wacoal Corp. reorganized during
the current fiscal year its divisions, formerly called the Wacoal Brand Operation Division, Chain Store Operation Division
and Wellness Operation Division, into “Wholesale Division” to unify our sales efforts toward retailers.
Sales from our Wholesale Division decreased by 4% as compared to such sales for the corresponding period of theprevious fiscal year due to weak sales of our luxury product lineup at department stores and management of inventories asa result of poor sales at general merchandise stores in the summer season, in addition to the impact of natural disasters
including typhoons, and heatwave. Over-the-counter sales of our brassieres products under both Wacoal and Wing branddecreased by 1% as compared to such sales for the corresponding period of the previous fiscal year. This was due toover-the-counter sales of Wacoal brand products, which remained at about the same level as such sales for thecorresponding period of the previous fiscal year as a result of sales growth from our e-commerce sales through our website,and over-the-counter sales of Wing brand products, which decreased by 3% as compared to such sales for thecorresponding period of the previous fiscal year due to weak sales of our core summer products.
Sales from our retail business increased by 1% as compared to such sales for the corresponding period of theprevious fiscal year. While sales of our products under “BRANGENIC,” a brand covering our cross-store common
products among directly managed retail stores continued to show strong sales, which were twice such sales for thecorresponding period of the previous fiscal year, sales from our retail business were affected by a decrease in size of saleand a decrease in the number of business days due to natural disasters.
Sales from Ai Co., Ltd. decreased by 22% as compared to such sales for the corresponding period of the previous
fiscal year, as we were significantly challenged by a decrease in demand from young adults and changes in the swimwear
market, with increased competition from new entrants in the low-priced product market, during the second quarter of thecurrent fiscal year, which is the period of peak demand.
As a result of the above, sales attributable to our “Wacoal Business (Domestic)” segment decreased by 3% ascompared to such sales for the corresponding period of the previous fiscal year.
Operating income decreased by 5% as compared to operating income for the corresponding period of the previous
fiscal year. Our continued initiatives to enhance management efficiency in our wholesale business and retail business have
led to an increase in profit at Wacoal Corp. resulting from improved gross profit rate and higher ratio of operating income.
Operating income, however, fell short of the operating income for the corresponding period of the previous fiscal year due
to the absence of the non-recurring impact of increased profit recorded during the corresponding period of the previous
fiscal year for compensation income from leaving a factory space occupied by our subsidiary.
Net sales:

58,585 million yen(a decrease of 3.0% as compared to the corresponding period of theprevious fiscal year)

Operating income:

4,964 million yen(a decrease of 5.3% as compared to the corresponding period of theprevious fiscal year)b.

Wacoal Business (Overseas)

Sales on a local currency basis from Wacoal International Corp. (U.S.) decreased by 2% as compared to such sales
for the corresponding period of the previous fiscal year. While e-commerce sales increased by 9%, over-the-counter sales
at department stores (actual shops) decreased by 8% as compared to such sales for the corresponding period of the previous
fiscal year. In addition, sales were impacted by closings of certain department stores that went bankrupt and the absence ofthe positive impact of initial product delivery during the corresponding period of the previous fiscal year due to an increasein the number of department stores handling our products.
Operating income on a local currency basis decreased by 9% as compared to such operating income for thecorresponding period of the previous fiscal year due to decreased revenue, while we achieved to reduce selling, general andadministrative expenses.
Sales on a local currency basis (Sterling pound) for Wacoal Europe increased by 2% as compared to such sales forthe corresponding period of the previous fiscal year. Sales in the United Kingdom and the United States, our major
tk-711669-3-

markets, were strong and increased by 8% and 4%, respectively, at department stores and through third-party e-commerce
websites. Sales of our underwear and swimwear products under plus-size brand “elomi” continued to show strong growthwith an increase of 20%, driving the overall sales.
Operating income on a local currency basis increased by 27% as compared to such operating income for thecorresponding period of the previous fiscal year due to decreases in the amount of sale discounts and reevaluation ofsuggested retail price in the United Kingdom, which improved the gross profit rate, in addition to the favorable effect ofincreased revenue.
In China, sales on a local currency basis increased by 11% as compared to such sales for the corresponding periodof the previous fiscal year. Over-the-counter sales at department stores increased by 4% as compared to such sales for thecorresponding period of the previous fiscal year due to an increase in the number of purchasers resulting from our
successful sales promotion conducted during China’s high-demand seasons such as the Chinese New Year andInternational Women’s Day. Further, e-commerce sales through third-party e-commerce websites expanded by 54% as aresult of our successful sales promotion during China’s high-demand seasons as well.
Operating income on a local currency basis increased by 51% as compared to such operating income for thecorresponding period of the previous fiscal year due to improvement in the gross profit rate resulting from the higher
percentage of e-commerce sales and sales of Wacoal brand products.
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 both exceeded such sales and operating income for the corresponding
period of the previous fiscal year.
Net sales:

28,821 million yen(an increase of 3.9% as compared to the corresponding period of theprevious fiscal year)

Operating income:

3,841 million yen(an increase of 7.6% as compared to the corresponding period of theprevious fiscal year)c.

Peach John Business

While sales in Taiwan, where we increased recognition of our brand through enhanced efforts with bloggers,
increased by 45% as compared to such sales for the corresponding period of the previous fiscal year, our domestic retailstores continued to show weak sales, although sales from our mail-order catalogue business achieved an increase of 1% asa result of enhanced advertisement using SNS. As a result, overall sales attributable to our “Peach John Business” segment
fell below such sales for the corresponding period of the previous fiscal year by 2%.
Operating income was impacted by weak sales growth from our Chinese business and increases in advertisingexpenses for third-party e-commerce websites, in addition to the impact of decreased revenue from our domestic business,and decreased by 54% as compared to such operating income for the corresponding period of the previous fiscal year.
Net sales:

5,470 million yen(a decrease of 1.6% as compared to the corresponding period of theprevious fiscal year)

Operating income:

182 million yen(a decrease of 53.8% as compared to the corresponding period of theprevious fiscal year)

d.

Other

Sales from Lecien Corporation (“Lecien”) decreased by 15% as compared to such sales for the corresponding
period of the previous fiscal year. Sales from our core innerwear business decreased by 16% from such sales for thecorresponding period of the previous fiscal year, due to a decrease in the number of orders received resulting from adecrease in the number of our private products handled at major general merchandise stores. Sales from our material
business, art & hobby business and apparel business were also weak.
Sales from Nanasai Co., Ltd. (“Nanasai”) increased by 33% as compared to such sales for the corresponding
period of the previous fiscal year. Sales from our construction business increased by 49% as compared to such sales for the
tk-711669-4-corresponding period of the previous fiscal year, as a result of renovation of a major department store’s headquarters thatcompleted in the first quarter of the current fiscal year, and sales from our sales business also increased by 30% ascompared to such sales for the corresponding period of the previous fiscal year.
As a result of the above, overall sales attributable to our “Other” segment increased by 8% as compared to suchsales for the corresponding period of the previous fiscal year.
We recorded an operating loss at Lecien due to the impact of decreased revenue, and due to decreased gross profit
rate resulting from higher percentage of sales from our construction business at Nanasai, despite the increased revenue, andas a result, operating income decreased by 98% as compared to such operating income the corresponding period of theprevious fiscal year.

(2)

Net sales:

8,939 million yen(an increase of 8.4% as compared to the corresponding period of theprevious fiscal year)

Operating income:7 million yen(a decrease of 97.7% 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 second quarter were 309,986 million yen, an increase of
11,452 million yen from the end of the previous fiscal year, mainly due to an increase in investments at market value, as
well as accrual of return assets.
Our total liabilities were 66,301 million yen, an increase of 5,264 million yen from the end of the previous fiscal
year, mainly due to increases in deferred income taxes, as well as accrual of refund liability.
Total Wacoal Holdings Corp. shareholders’ equity was 239,091 million yen, an increase of 6,379 million yen fromthe end of the previous fiscal year, mainly due to an increase in retained earnings.
As a result of the above, our total shareholders’ equity ratio as of the end of the current consolidated second quarter
was 77.1%, a decrease 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 second quarter of the current fiscal year were 29,436
million yen, a decrease of 51 million yen from the end of the previous fiscal year.
(Cash Flow Provided by Operating Activities)
Cash flow provided by operating activities was 7,974 million yen, a decrease of 525 million yen as compared to thecorresponding period of the previous fiscal year, after adjustments for changes in assets and liabilities to our net income of
11,472 million yen plus adjustments for depreciation, amortization and deferred income taxes.
(Cash Flow Used in Investing Activities)
Cash flow used in investing activities was 2,703 million yen, a decrease of 1,308 million yen as compared to thecorresponding period of the previous fiscal year, due to an increase in time deposits, as well as capital expenditures andpayments to acquire tangible assets which exceeded the cash inflows such as proceeds from sales of marketable securities.
(Cash Flow Used in Financing Activities)
Cash flow used in financing activities was 5,978 million yen, a decrease of 1,322 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, 2019 since
our announcement on May 15, 2018. Also, the impact of any change in valuation gain or loss on equity securities has notbeen reflected in our forecast of consolidated business results.

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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, 2018

(Assets)

Millions of Yen

Current Consolidated
Second Quarteras of September 30, 2018
Millions of Yen

Increase/(Decrease)
Millions of Yen

Current assets:
Cash and cash equivalents

29,48729,436(51)

Time deposits

4,296

5,688

1,392

Marketable securities

1,567

1,220

(347)

Notes and accounts receivable
Allowance for returns anddoubtful receivables
Inventories

25,87327,016

1,143(2,459)42,676(211)
42,432

2,248
(244)

‐

1,363

1,363

4,372

5,259

887

105,812112,203

6,391

Land

21,561

21,57817

Buildings and structures

73,61873,928310

Machinery and equipment

18,26818,875607

Construction in progress

254

184

(70)

113,701

114,565864(59,368)(60,840)(1,472)

54,33353,725(608)

Investments in affiliated companies

22,512

21,671(841)

Investments

69,31875,282

5,964

Goodwill

16,594

16,562(32)

Other intangible assets

12,85913,121262

Prepaid pension expense

10,17810,437

259

Deferred income taxes

1,194

1,243

49

Other

5,734

5,742

8

138,389

144,058

5,669

298,534

309,986

11,452Return assets
Other current assets
Total current assets
II. Property, plant and equipment:

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

Total other assets
Total assets

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I.

Accounts

Previous Fiscal Year
as of March 31, 2018

(Liabilities)

Millions of Yen

Current Consolidated
Second Quarteras of September 30, 2018
Millions of Yen

Increase/(Decrease)
Millions of Yen

Current liabilities:
Short-term bank loans

7,104

7,265

161

Trade notes payable

1,174

1,271

97

Trade accounts payable

11,393

10,856(537)

Notes and accounts payable:

Other payables

7,053

5,008

(2,045)

19,62017,135(2,485)

Accrued payroll and bonuses

7,213

6,908

(305)

Income taxes payable

1,979

3,182

1,203

-

3,781

3,781

Refund liability
Other current liabilities

3,716

4,922

1,206

Total current liabilities

39,632

43,193

3,561

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

1,852

1,840

(12)

17,231

19,014

1,783

2,322

2,254

(68)

Total long-term liabilities

21,405

23,108

1,703

Total liabilities

61,03766,301

5,264

Other long-term liabilities(Equity)I.

13,26013,260-

II. Additional paid-in capital

Common stock

29,76529,79631

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

172,418

206,587

34,169

2,274

2,744

470

Unrealized gain on securities

27,424-(27,424)

Pension liability adjustments(1,101)(1,099)2

V. Treasury stock, at cost
Total Wacoal Holdings Corp.
shareholders’ equity
VI. Noncontrolling interests(11,328)(12,197)(869)

232,712

239,091

6,379

4,785

4,594

(191)

Total equity

237,497

243,685

6,188

Total liabilities and equity

298,534

309,986

11,452

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(2)

Consolidated Quarterly Statements of Income

Accounts

I.

Net Sales

Previous Consolidated
Cumulative Second Quarter(From April 1, 2017
to September 30, 2017)
Millions of Yen%

Current Consolidated
Cumulative Second Quarter(From April 1, 2018
to September 30, 2018)
Millions of Yen%

Increase/(Decrease)
Millions of Yen

101,976

100.0

101,815

100.0

(161)

Cost of sales

47,06746.2

46,330

45.5

(737)

Selling, general and administrative expenses

46,10645.2

46,491

45.7

385

II. Operating costs and expenses

Compensation income

(708)

(0.7)

-

Total operating costs and expenses

92,465

90.7

92,821

91.2

708
356

Operating income

9,511

9.3

8,994

8.8

(517)

III. Other income (expenses):
Interest income

125

36

Interest expense

(10)

(10)

0

Dividend income
Gain or loss on sales or exchange ofmarketable securities and investments - net
Valuation loss on marketable securities andinvestments - net
Other – net

772

811

39

44

140

96

2

5,660

5,658

597

591

(6)

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

1,494

1.5

7,317

7.2

5,823

11,005

10.8

16,311

16.0

5,306

3,973

3.9

5,185

5.1

1,212

7,032

6.9

11,126

10.9

4,094

429

0.4

346

0.4

(83)

7,461

7.3

11,472

11.3

4,011

(24)

(0.0)

(81)

(0.1)

(57)

7,437

7.3

11,391

11.2

3,954

Net income
Net income attributable to noncontrollinginterests
Net income attributable to Wacoal Holdings
Corp.

(3)

89

Consolidated Quarterly Statements of Comprehensive Income

Accounts

Previous Consolidated
Cumulative Second Quarter(From April 1, 2017
to September 30, 2017)
Millions of Yen

Current Consolidated
Cumulative Second Quarter(From April 1, 2018
to September 30, 2018)
Millions of Yen

Increase/(Decrease)
Millions of Yen

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

7,461

11,472

4,011

1,653

389

(1,264)

Unrealized gain (loss) on securities

3,663

(104)

(3,767)Pension liability adjustments

(126)

2

128

Other comprehensive income (loss)

5,190

287

(4,903)Comprehensive income (loss)
Comprehensive loss (income) attributable tononcontrolling interests
Comprehensive income (loss) attributable to
Wacoal Holdings Corp.

12,651

11,759

(892)

(9)

0

9

12,642

11,759(883)

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(4)

Consolidated Quarterly Statements of Cash Flows

Accounts

Previous Consolidated Cumulative
Second Quarter(From April 1, 2017
to September 30, 2017)
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
Increase in notes and receivable
Decrease (increase) in inventories
Increase in return assets
Decrease (increase) in other current assets
Decrease in notes and accounts payable
Increase in refund liability
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 equity securities
Payments to acquire equity securities
Proceeds from redemption of debt securities
Payments to acquire debt securities
Proceeds from sales of property, plant and equipment
Compensation income
Capital expenditures
Payments to acquire intangible assets
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. Repayment of long-term debt
3. Repurchase of treasury stock
4. Dividends paid on common stock
5. Dividends paid to noncontrolling interests
6. 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-711669- 10 -

Current Consolidated Cumulative
Second Quarter(From April 1, 2018
to September 30, 2018)
Millions of Yen

7,461

11,472

2,676
287
(3)

2,752
(2,278)
1,642

56

(1)

(708)

-

(44)

(140)

(2)

(5,660)43

136(1,269)(134)374(1,425)-(1,064)373(1,363)(891)(2,445)
3,758

(473)

(263)

1,594
66
8,499

1,988
(42)
7,974

(4,133)
2,199
59
(10)
346
(576)
129
708
(1,876)(859)
2(4,011)(4,094)
2,986
882
(12)
341
(333)
33
(1,036)(1,480)10(2,703)

(228)

163

(23)
(2,001)(4,940)(194)
86(7,300)(25)(3,500)(2,425)(191)(5,978)156

656(2,656)33,99531,339(51)
29,48729,436

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

(5)

10
3,208

10
2,615

522

397

Notes to Consolidated Quarterly Financial Statements(Notes on Going Concern)
Not applicable.
(Notes on Significant Changes in the Amount of Total Shareholders’ Equity)
Not applicable.
(Changes in Accounting Policy)(i)

Revenue recognition

The new accounting guidance Revenue from Contracts with Customers (ASU2014-09, 2016-12) has been adopted
starting with the current consolidated fiscal year. This guidance requires an entity to recognize the amount of revenue
expected to be entitled in exchange for goods or services transferred under contract by such entity to customers. The
adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position,
results of operations or cash flows. Due to the adoption of this guidance, liability related to returns which were included in“Allowance for Returns and Doubtful Receivables” under current assets through the previous consolidated fiscal year will
be classified as “Refund Liability” under current liabilities and rights to collect goods to be returned will be classified as“Return Asset” under current assets starting with the current consolidated fiscal year.
(ii)

Recognition and Measurement of Financial Instruments

The new accounting guidance Recognition and Measurement of Financial Assets and Financial Liabilities(ASU2016-01, 2018-03) has been adopted starting with the current consolidated fiscal year. This guidance requires anentity to measure equity investments (except those accounted for under the equity method of accounting or those that result
in consolidation of the investee) at fair value with any change in fair value recognized in net income. Adoption of theguidance has required the Company to recognize unrealized gains of 27,320 million yen (net of tax) on equity securities
from accumulated other comprehensive income (loss), and unrealized gains of 514 million yen (net of tax) on
non-marketable equity securities at cost as a cumulative-effect adjustment to retained earnings at the beginning of the fiscal
year ending March 31, 2019.
(iii)

Periodic Pension Cost

The new accounting guidance Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost (ASU2017-07) has been adopted starting with the current consolidated fiscal year. This
guidance requires an entity to record components of net periodic pension costs and net periodic postretirement benefit costs
other than the service cost component as other income or expenses. This guidance will be applied retrospectively to thepresentation of the service cost and the other components of net periodic benefit costs. Due to the adoption of this guidance,
581 million yen has been reclassified as other (net) from operating costs and expenses for the previous fiscal consolidated
second quarter. As a result, operating income decreased 581 million yen as compared to operating income before such
reclassification for the previous consolidated second quarter.

tk-711669- 11 -

(Segment Information)(i)

Operating Segment Information

Previous Consolidated Cumulative Second Quarter (From April 1, 2017 to September 30, 2017)(Millions of Yen)
Wacoal
Wacoal businessbusiness(Domestic)(Overseas)

Peach Johnbusiness

Other

Total

Elimination

Consolidated

Net sales(1) External customers

60,427

27,744

5,559

8,246

101,976-

101,976(2) Intersegment

558

5,575

691

2,591

9,415

(9,415)-

Total

60,98533,3196,250

10,837111,391(9,415)

101,976

Operating income

5,240

3,569

394

308

9,511

-

9,511

Current Consolidated Cumulative Second Quarter (From April 1, 2018 to September 30, 2018)(Millions of Yen)
Wacoal
Wacoal businessbusiness(Domestic)(Overseas)

Peach Johnbusiness

Other

Total

Elimination

Consolidated

Net sales
58,58528,821

5,470

8,939

101,815-

101,815(2) Intersegment

473

5,377

665

2,595

9,110

(9,110)-Total

59,05834,1986,135

11,534110,925(9,110)101,815

Operating income

4,964

3,841

182

7

8,994

-

8,994

(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,
other textile-related products, etc.
Peach John business:
innerwear (foundation, lingerie, and nightwear), outerwear, and other textile-related products,
etc.
Other:
innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, othertextile-related products, mannequins, construction of stores and interior design, etc.

(ii)

Segment Information by Region

Previous Consolidated Cumulative Second Quarter (From April 1, 2017 to September 30, 2017)(Millions of Yen)Japan

Asia/Oceania

Europe/N.A.

Consolidated

Net sales
External customers
Distribution ratio

73,946
72.5%

10,572
10.4%

17,45817.1%

101,976
100.0%

Operating income

5,820

1,100

2,591

9,511

Current Consolidated Cumulative Second Quarter (From April 1, 2018 to September 30, 2018)(Millions of Yen)Japan

Asia/Oceania

Europe/N.A.

Consolidated

Net sales
External customers
Distribution ratio

72,61971.3%

11,77911.6%

17,41717.1%

101,815100.0%

Operating income

5,185

1,164

2,645

8,994

(Note)

1.
2.

3.

tk-711669

Countries 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.

- 12 -

(6)Status of Sales

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

tk-711669

Previous Consolidated Cumulative
Second Quarter(From April 1, 2017 to
September 30, 2017)
AmountDistribution Ratio
Millions of Yen%

Current Consolidated Cumulative
Second Quarter
Increase/(Decrease)(From April 1, 2018 toSeptember 30, 2018)
AmountDistribution Ratio
AmountRatio
Millions of Yen%
Millions of Yen%

77,203

75.7

77,052

75.7

(151)

(0.2)

4,403

4.3

4,216

4.1

(187)

(4.2)

742

0.7

676

0.7

(66)

(8.9)

82,348
9,289
987

80.7
9.1
1.0

81,944
8,181
895

80.5
8.0
0.9

(404)
(1,108)(92)(0.5)(11.9)
(9.3)

4,240

4.2

4,705

4.6

465

11.0

5,112
101,976

5.0
100.0

6,090
101,815

6.0
100.0

978
(161)

19.1
(0.2)

- 13 -