Annual Securities Report(The 72nd Fiscal Year)
From April 1, 2019 to March 31, 2020

WACOAL HOLDINGS CORP.
29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto, Japan

E00590

The 72nd Fiscal Year (from April 1, 2019 to March 31, 2020)

Annual Securities Report1.

2.

This is an English translation of the Annual Securities Report filed
pursuant to Paragraph 1, Article 24 of the Financial Instruments andExchange Act via the Electronic Disclosure for Investors’ Network(“EDINET”) as set forth in Article 27-30-2 of the same Act.
This does not contain English translations of the attachments to theAnnual Securities Report filed as set out in 1. above, other than theaudit report, the English translation of which is included at the end of
this document.

WACOAL HOLDINGS CORP.

Certain References and Information
This report is prepared for overseas investors and compiled based on the contents of the Annual Securities Report(“Yukashoken Hokokusho”) of WACOAL HOLDINGS CORP. filed with the Director of the Kanto Local Finance
Bureau of Japan on June 26, 2020.
As used in this report , unless the context otherwise requires, “the Company” and “Wacoal Holdings” refer to
Wacoal Holdings Corp., and “Wacoal,” “we,” “us,” “our” and similar terms refer to Wacoal Holdings Corp. and its
consolidated subsidiaries. References to “U.S. dollars” or “$” are to the currency of the United States andreferences to “yen” or “¥” are to the currency of Japan.
All financial statements and information contained in this report have been prepared in accordance with accounting
principles generally accepted in the United States, or U.S. GAAP except where otherwise noted.
A Cautionary Note on Forward-Looking Statements
This report contains forward-looking statements that are based on our current expectations, assumptions, estimatesand projections about our companies and our industry. You can identify these statements by the fact that they do
not relate strictly to historic or current facts. The forward-looking statements discuss future expectations, identify
strategies, contain projections of results of operation or of financial position, or state other “forward-looking”
information. Forward-looking statements are contained in the sections entitled “II. Business Overview, 2. 【Risk
Factors】” and elsewhere in this report.
The forward-looking statements are subject to various risks and uncertainties. Information contained in thesections listed above and elsewhere in this annual report identifies factors that could cause our actual results,
performance or achievements to differ materially from those expressed or implied in any forward-looking
statement.
We undertake no obligation to update any forward-looking statements contained in this annual report, whether as aresult of new information, future events or otherwise.

Contents
Page
Annual Securities Report for the 72nd Fiscal Year1

【Cover】
Part I【Information on Wacoal Holdings Corp. and its consolidated subsidiaries.】…………………………………

2

I.

【Overview of Wacoal Holdings Corp. and its consolidated subsidiaries.】……………………………………

2

1.【Key Financial Data】 ………………………………………………………………………………………

2

2.【History】 ……………………………………………………………………………………………………

6

3.【Description of Business】 …………………………………………………………………………………

7

II.

III.

IV.

4.【Information on Subsidiaries and Affiliated Companies】 …………………………………………………

9

5.【Employees】 ………………………………………………………………………………………………

11【Business Overview】 …………………………………………………………………………………………

12

1.【Management Policy, Business Environment and Management Issues】 …………………………………

12

2.【Risk Factors】 ………………………………………………………………………………………………

16

3.【Analyses of Financial Position, Results of operation, and Cash Flows by Management】 ………………

21

4.【Material Agreements, etc.】 ………………………………………………………………………………

33

5.【Research and Development】 ………………………………………………………………………………

34【Property, Plants, and Equipment】 ……………………………………………………………………………

35

1.【Summary of Capital Investment, etc.】 ……………………………………………………………………

35

2.【Major Property, Plants, and Equipment】 …………………………………………………………………

35

3.【Plans for Capital Investment, Disposals of Property, Plants, and Equipment, etc.】………………………

37【Information on the Company】 ………………………………………………………………………………

38

1.【Information on the Company’s Stock, etc.】 ………………………………………………………………

38

2.【Information on Acquisition etc. of Treasury Stock】………………………………………………………

67

3.【Dividend Policy】 …………………………………………………………………………………………

69

4.【Corporate Governance, etc.】 ………………………………………………………………………………

70

V.

【Financial Information】 ………………………………………………………………………………………

100

1.【Consolidated Financial Statements】 ………………………………………………………………………

100

VI.

【Stock-Related Administration for the Company】 ……………………………………………………………

145

VII. 【Reference Information on the Company】 ……………………………………………………………………

146

1.【Information on the Parent Company】 ……………………………………………………………………

146

2.【Other Reference Information】……………………………………………………………………………… 146
Part II【Information on Guarantors etc. for the Company】……………………………………………………………

Auditors’ Report and Internal Control Report147

End of this document

【Cover】【Document Filed】

Annual Securities Report (“Yukashoken Hokokusho”)【Applicable Law】

Paragraph 1, Article 24 of the Financial Instruments and Exchange Act【Filed to】

Director, Kanto Local Finance Bureau【Filing Date】

June 26, 2020

【Fiscal Year】

The 72nd Fiscal Year (from April 1, 2019 to March 31, 2020)【Company Name】

KABUSHIKI KAISHA WACOAL HOLDINGS【Company Name in English】

WACOAL HOLDINGS CORP.

【Position and Name of Representative】

Hironobu Yasuhara, Representative Director, President and Corporate Officer of
the Company【Address of Head Office】

29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto【Phone No.】

Kyoto (075) 682-1007【Contact Person】

Katsuya Hirooka, General Manager of Accounting Department【Contact Address】

29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto【Phone No.】

Kyoto (075) 682-1007【Contact Person】

Katsuya Hirooka, General Manager of Accounting Department【Place Where Available for PublicTokyo Stock Exchange, Inc.

Inspection】(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)

1

Part I【Information on Wacoal Holdings Corp. and its consolidated subsidiaries.】
I. 【Overview of Wacoal Holdings Corp. and its consolidated subsidiaries.】
1. 【Key Financial Data】(1) Consolidated Financial Data, etc.
(Millions of yen, unless otherwise stated)
Fiscal Year

68th

69th

70th

71st

72nd

Year-EndMarch 2016

March 2017

March 2018

March 2019

March 2020

Sales

202,917

195,881

195,725

194,201

186,760

Operating income

12,274

10,282

11,494

4,879

6,632

Net income attributable to
Wacoal Holdings Corp.

11,15912,525

9,745

341

3,472

(49)

12,296

16,448(5,046)

1,521

Wacoal Holdings Corp.
shareholders' equity

224,374

227,568

232,712

216,494

205,371

Total assets

292,854294,958

298,534

281,767

277,688(yen)

3,185.80

3,317.05

3,454.40

3,321.57

3,291.06(yen)

158.46180.26143.46

5.16

54.26

(yen)

158.00179.71142.98

5.14

54.05

Shareholders’ equity ratio

(%)

76.6

77.2

78.0

76.8

74.0

Return on equity

(%)

4.9

5.5

4.2

0.2

1.6

Price earnings ratio(times)

16.95

15.24

21.47

533.3343.25

Net cash provided by operating
activities

12,635

16,351

15,493

13,62013,325

Net cash provided by (used in)investing activities(11,407)(3,032)(7,362)(2,474)

2,569

Net cash used in financing
activities(4,547)(13,055)(12,303)(10,872)(17,471)

Cash and cash equivalents, endof year34,05933,99529,48730,13327,90520,655[1,237]

21,139[1,018]20,904[771]

20,662[739]

20,984[675]

Comprehensive income (loss)

Shareholders’ equity per share
Net income per share
attributable to Wacoal Holdings
Corp.
Diluted net income attributable
to Wacoal Holdings Corp. per
share

Number of employees[Average number of part-time
employees, etc.](Notes)(person)1.

The foregoing consolidated financial data has been prepared in conformity with accounting principles generally

2.
3.

accepted in the United States of America (U.S. GAAP). In the above table, operating income is stated instead ofordinary income.
Sales do not include consumption taxes, etc.
We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares wereconsolidated into one (1) share effective as of October 1, 2017. Accordingly, “Shareholders’ equity per share,” “Net
income per share attributable to Wacoal Holdings Corp.” and “Diluted net income attributable to Wacoal Holdings
Corp. per share” have been calculated assuming that such share consolidation had been conducted at the beginning of
the 68th fiscal year.

2

4.

New accounting guidance, Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost (ASU No. 2017-07), has been applied since the beginning of the 71st fiscal year.
Accordingly, key financial data for the 70th and earlier fiscal years are the amounts after the retroactive applicationof such accounting guidance.

3(2) Financial data etc. of the Company(Millions of yen, unless otherwise stated)
Fiscal Year

68th

69th

70th

71st

72nd

Year-EndMarch 2016

March 2017

March 2018

March 2019

March 2020

Operating revenue

10,934

13,13912,644

15,715

13,346

Ordinary income

7,044

9,215

6,308

11,2559,111

Net income

6,739

11,453

6,461

5,968

8,762

Common stock

13,26013,26013,26013,26013,260143,378

143,378

71,68970,68968,589Net assets

143,135

145,496

140,510

134,813130,996

Total assets

163,938

165,022160,086

154,554

156,000

Total number of issued andoutstanding shares(thousandshares)Net assets per share(yen)

2,026.40

2,114.38

2,078.38

2,060.13

2,090.11

Dividends per share(Interim dividends per
share)

(yen)

33.00
(－)

36.00
(－)

54.00
(18.00)72.00(36.00)60.00(40.00)Net income per share

(yen)

95.70

164.85

95.12

90.24

136.93

Diluted net income per
share

(yen)

95.40

164.32

94.47

89.91

136.39

Shareholders’ equity ratio

(%)

87.1

87.9

87.5

86.9

83.6

Return on equity

(%)

4.7

7.9

4.5

4.3

6.6

Price earnings ratio(times)

28.06

16.67

32.38

30.50

17.14

Dividend payout ratio

(%)

68.9

43.7

75.7

79.8

43.8

Number of employees[Average number of parttime employees, etc.](person)

81
[－]

81
[－]

95
[－]

90
[－]

94
[－]

Total shareholders’ return

(%)

101.8

106.7

121.7

112.2

99.4

(Benchmark: TOPIX incl.
dividends)(%)(89.2)(102.3)(118.5)(112.5)(101.8)Highest share price

(yen)

1,768

1,463

3,640

3,485

3,115

2,595

2,110

(1,648)Lowest share price

(yen)

1,220

970

3,015
(1,309)(Note)

1.

Operating revenue does not include consumption taxes, etc.

4

2.

3.

We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares wereconsolidated into one (1) share effective as of October 1, 2017. Accordingly, “Net assets per share,” “Net income
per share” and “Diluted net income per share” have been calculated assuming that such share consolidation had been
conducted at the beginning of the 68th fiscal year.
Dividends per share of 54.00 yen for the 70th fiscal year are a total of the interim dividend (18.00 yen) and the yearend dividend (36.00 yen). As we have conducted a share consolidation of common stock of the Company pursuant
to which two (2) shares were consolidated into one (1) share effective as of October 1, 2017, such interim dividend

4.

and year-end dividend are the amounts before such share consolidation and after such share consolidation,
respectively. Dividends per share for the 70th fiscal year will be 72.00 yen if calculated based on the per share
information after such share consolidation.
We have adopted ASBJ Statement No. 28 Partial Amendments to the Accounting Standard for Tax Effect5.
6.

Accounting (February 16, 2018) starting from the beginning of the 71st fiscal year. Accordingly, key financial data
for the 70th and earlier fiscal years are the amounts after the retroactive application of such accounting guidance.
The highest and lowest share prices are market prices on the first section of the Tokyo Stock Exchange.
We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares wereconsolidated into one (1) share effective as of October 1, 2017. The share prices for the 70th fiscal year indicate thehighest and lowest prices after such share consolidation, and the share prices in brackets indicate the highest andlowest prices before such share consolidation.

7. The amount of dividends per share for the 72nd fiscal year includes the special anniversary dividend of 8.00 yen.

5

2. 【History】
June 1946

Wako Shoji founded by late Koichi Tsukamoto

November 1949

Wako Shoji Corp. established with 1 million yen in capital (Nakagyo-ku, Kyoto)

June 1951

Head office relocated to Anekoji-agaru, Muromachi-dori, Nakagyo-ku, Kyoto; plant opened; self-manufacturing
beginsNovember 1957

Company name changed to Wacoal Inc.

November 1959

Tokai Wacoal Sewing Corp. established as a domestic manufacturing company, and seven sewing subsidiaries

June 1964

established in Japan
Company name changed to Wacoal Corp.

September 1964

Wacoal listed on the Second Section of the Tokyo and Osaka Stock Exchanges and the Kyoto Stock Exchange

August 1970

A joint venture company, Korea Wacoal Corp. established in Korea

October 1970

A joint venture company, THAI WACOAL CO., LTD. (current THAI WACOAL PUBLIC CO., LTD.)established in Thailand

October 1970

Taiwan Wacoal Co., Ltd. established as joint venture company

January 1971

Wacoal listed on the First Section of the Tokyo and Osaka Stock Exchanges

April 1978

Singapore office (current WACOAL SINGAPORE PRIVATE LTD.) opened

August 1979

Acquired shares from Torica Inc., a subsidiary of the Company, by way of capital increase through third-party
allocation
WACOAL AMERICA, INC. (current WACOAL INTERNATIONAL CORP.) established as an overseas

June 1981

February 1983

subsidiary
Acquired shares from Nanasai Co., Ltd., a subsidiary of the Company, by way of capital increase through thirdparty allocation
WACOAL HONG KONG CO., LTD., established as an overseas subsidiary

December 1983

Acquired all shares in Teenform Inc., an American corporation (current WACOAL AMERICA, INC.)

January 1986

Beijing Wacoal Co., Ltd. (current Wacoal China Co., Ltd.), established as joint venture company

April 1989

PHILIPPINE WACOAL CORP. established as joint venture company

January 1990

WACOAL FRANCE S.A. established as an overseas subsidiary (current WACOAL EUROPE SAS)

January 1991

INDONESIA WACOAL CO., LTD. (current PT.INDONESIA WACOAL), established as a joint venturecompany

April 1993
January 1995

Joint venture agreement for Korea Wacoal Corp. canceled; investment made into Shinyoung Inc. (current
Shinyoung Wacoal Inc.) in Republic of Korea
Guangdong Wacoal Inc. established as an overseas subsidiary

June 1997

VIETNAM WACOAL CORP. established as an overseas subsidiary

December 2000
May 2003

Joint venture agreement for Beijing Wacoal Co., Ltd. (current Wacoal China Co., Ltd.), canceled andreestablished as Beijing Wacoal Co., Ltd., a wholly owned subsidiary
WACOAL MALAYSIA SDN BHD established as a joint venture company

August 2003

Dalian Wacoal Co., Ltd., established as an overseas subsidiary

October 2005

Company name changed to Wacoal Holdings Corporation pursuant to the transition to holding company system

March 1982

Wacoal Corp. established through incorporation-type company split
January 2008

Peach John Co., Ltd. (“Peach John”), became a wholly owned Wacoal subsidiary through share exchange

August 2009

Lecien Corp. became a wholly owned Wacoal subsidiary through stock exchange

April 2012

Eveden Group Limited (currently Wacoal Europe Ltd.) became a wholly owned Wacoal subsidiary through theacquisition of all of the issued and outstanding shares of Eveden Group Limited
A TECH TEXTILE CO., LTD. and one other company established as joint venture companies

January 2016
July 2019

Intimates Online, INC. became a wholly owned Wacoal subsidiary through the acquisition of all of the issued
and outstanding shares.

63. 【Description of Business】
Our corporate group consists of one holding company (Wacoal Holdings Corp.), 58 subsidiaries, and seven affiliates, and isprincipally engaged in the manufacturing and wholesale distribution of innerwear (primarily women’s foundation wear, lingerie,nightwear, and children’s underwear), outerwear, sportswear, and other textile goods and related products, as well as the direct saleof certain products to consumers. Our corporate group also conducts business in the restaurant, culture, service, and interior designbusinesses.
The Company falls under the definition of “Specified Listed Companies” as prescribed under Paragraph 2, Article 49 of the
Cabinet Office Ordinance on Restrictions on Securities Transactions, etc. For this reason, whether an incident is minor (and not amaterial fact) under the insider trading restrictions will be determined on the basis of consolidated figures.
Segment information and a summary of the various companies that make up our corporate group are as follows:(1) Wacoal Business (Domestic)
This segment is composed of Wacoal Holdings Corp. and 12 subsidiaries in Japan.
Wacoal Corp. engages in the planning and designing of the above-mentioned products, procurement of materials for theabove-mentioned products, commercialization of semifinished products purchased from sewing companies in Japan andoverseas and other business associates after inspection, and distribution to end consumers through department stores, generalmerchandisers, and other general retailers in Japan, as well as directly managed retail stores, E-commerce(EC) websites anddistributors in Japan and overseas. Each of our 4 apparel manufacturing companies, including Kyushu Wacoal Manufacturing
Corp., receives a supply of raw materials from Wacoal Corp., conducts sewing and processing of innerwear and sportswear,
and delivers the semifinished products to Wacoal Corp. We have 4 sales companies, including Une Nana Cool Corp., which
conduct retail sales of innerwear, outerwear and swimsuit products.
(2) Wacoal Business (Overseas)
This segment is composed of 37 companies, including our overseas subsidiaries and affiliates.
Among our 31 overseas subsidiaries, nine companies are located in North and Central America; six companies are locatedin Europe; and 16 companies are located in Asia/Oceania. Six overseas affiliates are located in Asia.
Among our nine overseas subsidiaries in North and Central America, Wacoal Dominicana Corp., an apparel
manufacturing company of innerwear products, ships its products to WACOAL AMERICA, INC., a manufacturing and sales
company, which supplies these products to end consumers through local department stores, specialty retail stores and EC
websites. In addition, Eveden Inc., a sales company, distributes innerwear products, which are mainly supplied from Wacoal
Timex LTD. and WACOAL EMEA LTD.
Among our six overseas subsidiaries in Europe, WACOAL EMEA LTD. sells products such as innerwear, which aresupplied by WACOAL TIMEX LTD., to end consumers through department stores and specialty retail stores mainly in the
United Kingdom.
Our two subsidiaries and four affiliates in Asia/Oceania are manufacturing and sales companies, which distribute products
to end-consumers through their local department stores and specialty retail stores, and also distribute a part of their products to
Wacoal Corp. and sales companies in Asia. Our sales companies include six subsidiaries, including Wacoal Singapore PrivateLtd., Eveden Israel Ltd., and one affiliate. These sales companies distribute innerwear products, which are mainly supplied
from the group companies, to their local department stores, specialty retail stores and directly managed retail stores. Our eightremaining subsidiaries include four apparel manufacturing companies producing innerwear, two raw materials manufacturing
companies, one company that procures materials for subsidiaries and affiliates in Asia, and one investment company whichmake investments in the local subsidiaries and local affiliates that manufacture and sell innerwear.
(3) Peach John BusinessThis segment is composed of four companies, including our domestic and overseas subsidiaries. The one domestic
subsidiary and three overseas subsidiaries are sales companies, and Peach John mainly engages in the retail sales of productsthat are independently supplied mainly from nongroup companies.
(4) Other
This segment is composed of a total of 12 companies, including five domestic subsidiaries, six overseas subsidiaries andone domestic affiliate.
Among the five domestic subsidiaries, Nanasai Co., Ltd. (“Nanasai”) engages in manufacturing, sales and rental ofmannequins and fixtures, and interior design work and Lecien Corporation engages in the manufacture and wholesale
distribution of women’s innerwear and clothing, lace, thread, and fabrics for handicrafts. Our three remaining subsidiaries
include an apparel manufacturing company and two other subsidiaries which engage in other textile-related business, realestate leasing business, and other business.
Overseas, six subsidiaries are located in Asia.
Four of our subsidiaries in Asia are apparel manufacturing companies. The other two subsidiaries engage in the
manufacture and sale of mannequins and fixtures, interior design work and other textile-related business.
The business distribution diagram of these subsidiaries and affiliates follows on the next page:7

Consumer/Client(Apparel Manufacturing: 4 companies)
Kyushu Wacoal Manufacturing Corp.
Hokuriku Wacoal Sewing Corp.
Niigata Wacoal Sewing Corp.
Torica Inc.

(Other Textile Related: 1 company)
Wacoal Distribution Corp.

(Manufacturing and Sales: 1 company)
Wacoal Corp.

(Cultural Business Service: 1 company)
Wacoal Art Center Co., Ltd.

(Sales: 4 companies)
Une Nana Cool Corp.
3 other companies(Other: 1 company)
WACOAL I NEXT CORP.

Wacoal Business (Domestic)

Peach John Business

Wacoal Business (Overseas)

Other(North/Central America: 9 companies)
WACOAL INTERNATIONAL CORP. (U.S.)(Sales: 4 companies)
Peach John Co., Ltd.
3 other companies

WACOAL AMERICA, INC.
WACOAL DOMINICANA CORP.

(U.S.)(Dominican Republic)
EVEDEN INC(U.S.)(Lecien: 7 companies)
Lecien Corporation
LECIEN (VIETNAM) CO., LTD.
(Vietnam)
5 other companies

5 other companies(Europe: 6 companies)
WACOAL EUROPE LTD.

(U.K.)WACOAL EMEA LTD.
WACOAL EUROPE SAS.

(U.K.)(France)3 other companies(Asia/Oceania: 22 companies)
Wacoal Investment Co., Ltd.

(Taiwan)

WACOAL INTERNATIONAL HONG
KONG CO., LTD.
(Hong Kong)
Wacoal China Co., Ltd.
(China)WACOAL SINGAPORE PRIVATE LTD.
(Singapore)
WACOAL HONG KONG CO., LTD.
(Hong Kong)
Guangdong Wacoal Inc.
(China)Wacoal Timex Limited(Sri Lanka)
A TECH TEXTILE CO., LTD(Thailand)*Shinyoung Wacoal Inc.
(South Korea)*Taiwan Wacoal Co., Ltd.
(Taiwan)*THAI WACOAL PUBLIC CO., LTD(Thailand)
11 other companies,
including 3 equity method affiliates

Wacoal Holdings Corp. (holding company)
Without mark: a consolidated subsidiary*: an equity method affiliate

8(Other: 5 companies)
Nanasai Co., Ltd.
Wacoal Service Co., Ltd.
Wacoal Career Service Corp.
*House of Rose Co., Ltd.
1 other company

4. 【Information on Subsidiaries and Affiliated Companies】
Relationship
Company Name

Location

Capital(Millions of yen)

Principal Business

Percentage of
Voting Rights
Owned or Held(%)

Number ofCompany Officer(s)holding a Position
Lease/Rent of Facilities
as Officer in such
Subsidiaries andAffiliated Company(Consolidated Subsidiary)*1, *6

Wacoal Business (Domestic)(Research and development, productplanning and sale of innerwear
products, etc.)

100

2

90

Peach John Business (Productplanning and sale of innerwear
products)

100

2

－

90

Other
(Product planning and sale ofinnerwear products, etc.)

1002Rent of office･
storage building70

Wacoal Business (Domestic)(MTO (make to order) of innerwear
products)

50

Same as above

Minami-ku, Kyoto

5,000

Peach John Co., Ltd.

Minato-ku, Tokyo

Lecien Corp.

Minami-ku, Kyoto

Wacoal Corp.

Kyushu Wacoal Manufacturing Corp.

Niigata Wacoal Sewing Corp.

Unzen-shi,
NagasakiNishiura-ku,
Niigata

Torica Inc.

Ibaraki-shi, Osaka

92

Same as above

Nanasai Co., Ltd.

Minami-ku, Kyoto

90

Other
(Leasing of mannequins, interior
design and construction work of
stores)*1
WACOAL INTERNATIONAL CORP.

New York, USA

WACOAL AMERICA, INC.

New York, USA

20,000Santo Domingo,
WACOAL DOMINICANA CORP.

WACOAL EUROPE LTD.

WACOAL EMEA LTD.

WACOAL EUROPE SAS.
WACOAL HONG KONG CO., LTD.

thousandUSD
2,062 thousand
USD

Wacoal Business (Overseas)(MTO of innerwear products)

Northamptonshire,UK

175 thousand
GBP

Wacoal Business (Overseas)(a holding company)

Northamptonshire,

250 thousand

UK
Saint-Denis, France
Hong Kong

GBP
8 thousand
EUR
3,000 thousand
HK$373,690

WACOAL INTERNATIONAL HONG
KONG CO., LTD.

Hong Kong

VIETNAM WACOAL CORP.

Bien Hoa, Vietnam

Wacoal Investment Co., Ltd.

Taipei, Taiwan

thousandNT$

thousandHK$

Guandong Wacoal Inc.

Guangzhou, China

thousand
RMB

54,604 million
VND
59,00017,730Wacoal China Co., Ltd.
*1A TECH TEXTILE CO., LTD.

Wacoal Business (Overseas)(Product planning and sale ofinnerwear products)

20 thousand
USD

Dominican
Republic*1*1

Wacoal Business (Overseas)(a US holding company)

Beijing, China

189,364
thousand
RMB

Bangkok, Thailand

1,000
million
THB

Wacoal Business (Overseas)(Product planning and sale ofinnerwear products)
Wacoal Business (Overseas)(Sale of innerwear products)
Same as above
Wacoal Business (Overseas)(Procurement of innerwear products
and raw materials)
Wacoal Business (Overseas)(MTO and sale of innerwear
products)

100
(100）

100
(100）

57
(57）

99

100
(100）

100
(100）

100
(100）

100
100
(100）

100
(100）

80
(80）

100
(100）

100
(100）

Wacoal Business (Overseas)(a Taiwan holding company)

100

Wacoal Business (Overseas)(MTO of innerwear products)

100

Wacoal Business (Overseas)(Product planning, manufacturing andsale of innerwear products)
Wacoal Business (Overseas)(Manufacturing of raw materials)

(100）

(100）

100
(100）

54
(54）

－

Rent of officebuilding

Rent of officebuilding－

Same as above

－

－

2

Rent ofoffice building

2

－

1

－

－

－

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1

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38 other companies(Equity Method Affiliate)
THAI WACOAL PUBLIC CO., LTD.

Bangkok, Thailand

PT.INDONESIA WACOAL

Bogor, Indonesia

Shinyoung Wacoal Inc.

Seoul, South Korea

Taiwan Wacoal Co., Ltd.

Taoyuan, Taiwan*4, *5
House of Rose Co., Ltd.

Minato-ku, Tokyo

120 million
THB
2,500 million
IDR
4,500 million
WON
800 million
NT$
934

Wacoal Business (Overseas)(Product planning, manufacturing andsale of innerwear products)
Same as above
Same as above
Same as above
Other(Development and sale of cosmetics

9

34
(34）

42
(42）

25
50
(50）

21

and healthcare products, etc.)
2 other companies(Note)*1 Wacoal Corp., WACOAL INTERNATIONAL CORP., WACOAL INTERNATIONAL HONG KONG CO., LTD,
Wacoal China Co., Ltd. and A TECH TEXTILE CO., LTD. are categorized as a specified subsidiary under the2
3

Financial Instruments and Exchange Act.
The number in brackets under the “Percentage of Voting Rights Owned or Held” column means the percentage ofindirect holding.
The name of operating segments is shown under the “Principal Business” column.

*4 The Company executed a business alliance agreement between House of Rose Co., Ltd.
*5 House of Rose Co., Ltd. is a company that is obliged to file an annual securities report.
*6 Wacoal Corp.’s sales (excluding the internal sales recorded among consolidated subsidiaries) account for more than
10% in our consolidated sales.
Key Income Summary (i) Sales

100,946 million yen(ii) Ordinary income

6,070 million yen(iii) Net income

11,469 million yen(iv) Net assets

99,408 million yen(v) Total assets

128,048 million yen

10

5. 【Employees】(1) Employees within group
As of March 31, 2020
Name of Operating Segment

Number of Employees

Wacoal Business (Domestic)

7,464

[539]

Wacoal Business (Overseas)

11,089

[58]

514

[60]

1,917

[18]

20,984[675]

Peach John Business
Other
Total
(Note)

1

The number of employees is the number of individuals working within our group (excludes individuals seconded fromour group to third parties, but includes individuals seconded from third parties to our group). The average number of
temporary employees is indicated in brackets for the current consolidated fiscal year.

2

Temporary employees include temporary staff and part-time workers whose working period is about 3 months.

(2) Employees of the Company
As of March 31, 2020
Number of Employees
94(Note)

Average Age

Average Years of Service
46.9

Average Annual Salary (Yen)

20.6

1
2

The number of employees is the number of individuals working within the Company.
The average annual salary includes bonus and extra wages.

3

All employees of the Company belong to the Wacoal Business (Domestic) segment.

5,850,266(3) Relationship with Labor Union
Employees of the Company are members of the Wacoal Labor Union. The Wacoal Labor Union is a member of The
Japanese Federation of Textile, Chemical, Food, Commercial, Service, and General Workers’ Unions.
Certain subsidiaries have their own labor unions.
Our relationship with Labor Unions is very stable and we have nothing to report on this matter.

11

II. Business Overview
1.【Management Policy, Business Environment and Management Issues】
Any forward-looking statement contained below is based on our judgements as of the end of the current fiscal year. Actual
results and performance may differ from the estimates set out in this document due to various risks, uncertainties and otherfactors arising in the future.
(1) Basic Business Policy
Our business activities are built upon “relationships founded in mutual trust,” which are based on our listening to the voice ofeach and every one of our customers, and continuously transforming our business with a sense of humility. This spirit of mutual
trust and respect for humanity serves as the starting point for all of our business activities and has been our management
philosophy since our establishment. Our group will continuously enhance our corporate value by making efforts to increasetransparency in our corporate management and ensuring fairness and independence of our corporate management in order tobuild “mutual trust” in relationships with every stakeholder, including shareholders, customers, employees, business partners andthe local community.

■Our Mission
We will contribute to society by helping women to express their beauty.
■Our VisionWe, the employees and management of Wacoal, will maintain a refined corporate culture based on mutual trust
and will continually strive to make the Company a global leader in the industry.
■Our Value
1. Create products loved by customers
2. Develop new products that meet the needs of the times
3. Conduct business in a fair manner with a forward focus
4. Build a better Wacoal through better human resources
5. Fear not failure and boast not of success(2) Our Medium- and Long-term Business Strategy and Measures for Business Targets(i)Environmental awarenessThe outlook for the domestic market is increasingly uncertain due to a decline in consumer spending
attributable to a series of natural disasters such as typhoons and heavy rains and unusual weather conditions,with the most recent record-cold summer and record-warm winter, in addition to the increasing budget
consciousness of consumers following the consumption tax increase.
Overseas markets are starting to show signs of instability due to factors such as the US-China trade war,
political uncertainties in European countries, business restructuring of mass merchandisers including
department stores, and the emergence of new distribution channels and marketing with innovative digitaltechnologies.
Consumer behavior is changing globally, and consumers are increasingly accessing information throughvarious networks and spending money using their own selective judgment, as a result of increased value
diversity. As consumers are no longer accepting standardized value propositions, we are required to provide
services that are better tailored to each consumer who seeks to realize her own beauty.
In this environment, we should reassess all of our activities through the eyes of our customers and takeactions to transform our business. Accordingly, it is our major challenge to flexibly react to changing market
conditions where digital transformation is accelerating while maintaining the current growth rate. Further, weneed to develop a diversified workforce that supports our sustainable growth and to build a business culturethat can meet the challenges of the future. We also believe that we need to commit ourselves to solving criticalsocial issues and to strengthening our ability to coexist with the global environment and local communities inorder to become a company that continues to prosper with society, be trusted in the globalizing world and beneeded by society.
Change in the environment surrounding our business (change and trends in consumer behavior)
Change in distribution channels- Weak sales at department stores/general merchandise stores- E-commerce and global SPA breakthroughs

12Acceleration of technology & innovation- Accelerated digitization of consumption of products and experience- Expansion of society of people able to connect with each other directly via SNS, C2C, D2C
Change in consumers- Increase in the number of women taking active roles in the society- Increase in the number of consumer segments seeking to realize their own personalized beauty- Casualization of clothing- Continued budget-consciousness of consumers in Japan due to uncertainties about the future
Trends in business and industrial structure- Closure of companies that are capable of producing high quality underwear- Difficulty in securing sales forces- Accelerated needs to social and ethical business activities(ii) Long-term vision and Medium-Term Management Plan＜Long-term vision＞
We continue to move forward with efforts to become “Global Wacoal as a Group”, that is, to continue to offer pioneering
products to the global markets by taking full advantage of our management resources and our group’s network, and to gain
reputation for our reliability from stakeholders around the world with our group’s products and services as well as ourcommitments to social issues by cultivating new market opportunities for the undergarment industry.
Furthermore, in order to achieve a competitive edge in the global markets, we will invest in new business areas and growth
opportunities and rise to the challenge of realizing unprecedented growth. In addition, we will make efforts to continuously
improve our management foundation, generate greater results, and thereby aim to achieve sustainable growth and enhance
our corporate value, and make progress toward becoming a global company that is expected to continue to exist in 100 years.
Our vision of a “Global Wacoal”
1. The Wacoal Group’s products and services and efforts to address social issues are highly trusted by customers and allother stakeholders in markets worldwide.
2. The number of countries and regions in which we operate continues to increase.
3. Under our Group network, we are operating businesses in a coordinated manner on a global scale.
4. We always provide pioneering products to the world and continue to lead the industry of innerwear culture.
5. The Group mission and philosophy are instilled in employees across the world.
＜Medium-Term Management Plan (Three Years; FY2020 – FY2022)＞
Aiming to realize our vision of “Global Wacoal”, we will continue to make efforts to understand the actual situation, conduct
fast reform and achieve strong growth domestically and globally under the new three-year medium-term management plan
(FY2020-FY2022).
Basic policy-

Understand the actual situation, estimate future demand and implement drastic reform, while emphasizing growth-

Achieve strong growth in Japan and overseas
Examine the potential of unprofitable businesses and brands, and promote review and structural reform of group businesses
where no business will be safe from such review or structural reform
Enhance corporate value by improving economic and social values-

Based on these goals, the medium-term management plan will pick up pace to address operational issues by expanding ourcustomer service advanced by digital technology; implementing plans for unrivaled omni-channel services; launching new
high-value added products without regional boundaries; strengthening cooperation with key third-party EC websites andbuilding our EC websites that match country and geographical characteristics; making investments in growth for businessexpansion in countries and regions where we have a market presence but our business remains small; reforming businessmodels suffering from systemic fatigue; and building a highly competitive supply chain network.
13

To realize a sustainable society, we will make efforts to achieve advanced CSR procurement in cooperation with
manufacturers that we outsource to, better live within the global environment through efforts to reduce plastic use andunsold inventory, and build an organization that encourages diversity and inclusion by taking advantage of diverse humanresources. We will commit in a responsible manner to create new value through cultivation of a sustainable businessfoundation.
(Please see the “Business and Financial Issues to Address on a Priority Basis” section for priority strategies.)
We will make stable distributions and make repurchases in a flexible manner, and will make efforts to improve profitability
and capital efficiency through our business activities. We will also make efforts to maintain a real total return ratio of 100%excluding any gain (loss) on valuation of marketable securities and investments (recognized as other income (expenses)
under the statements of income under the U.S. accounting standards). In addition, while we prioritize investments that
support sustainable growth of our business, we will seek to hold an adequate cash balance by reducing, as appropriate, crossshareholdings with other companies.
Under the above-described initiatives, our target for the fiscal year 2022, which is the last year of our new medium-term
management plan, is to achieve net sales of 210,000 million yen, operating income of 14,000 million yen (ratio of operating
income to net sales of 6.7%), net income attributable to Wacoal Holdings Corp. of 12,000 million yen, and a consolidated
ROE (i.e., return on Wacoal Holdings Corp. shareholders’ equity for the current fiscal year) of 6% or higher.

<Plan for FY2021, the second year of the medium-term management plan>

The COVID-19 outbreak continues to have a very significant impact on our group’s business activities due tomeasures such as suspension of operations and stay-at-home measures in efforts to prevent the spread of infection.
As the measures to prevent the spread of the outbreak continue, we expect that the slowdown in consumer spending
due to anticipated deterioration in the employment and income environment will continue to have a negative impact
on our group’s management as well as sales and/or profit.
At this point, it is difficult to assess the impact of the COVID-19 on our group and to reasonably make any business
forecast. Accordingly, our forecast of consolidated business results for the fiscal year ending March 31, 2021 isundetermined and will be announced as soon as the details become available.
Under such difficult circumstances, our group will reassess all of our business activities, decrease costs such as
advertising expenses and officers’ remuneration and review the timing of new investments. These will be
implemented while taking into consideration the health and safety of our group’s customers, employees and relatedparties. In addition, we will seek to expand loan programs from financial institutions to ensure liquidity for ourgroup companies.
We will conduct bold revision of our initiatives and costs, further accelerate our efforts to introduce digitaltransformation, and establish a new road map to achieve growth in business by effectively utilizing our customer
database, coordinating and merging the physical stores and e-commerce channels, and strengthening our efforts on
improving CX (customer experience). In addition, we will reform our business structure to generate stable profit
by steadily identifying changes in consumer values and distribution and by making further progress in our efforts
to be selective and concentrated in our businesses within the entire group.
(3) Business and Financial Issues to Address on a Priority Basis
We are working on the following priority issues under the new medium-term management plan.
(i) Advance business measures●Sustain the growth and enhance the profitability of Wacoal Corp.
 Evolve into one of the world’s leading companies in the aggregation and utilization of data on customer physiques andpreferences- Develop differentiated stores throughout Japan based on the omni-channel strategy and strengthen service infrastructure- Create new products and services by leveraging multifaceted personal data on customers
 Reduce product groups and product varieties and review terms of transactions with department stores in the wholesale
business Enhance the corporate brand by strengthening communication
 Reform work styles and leave systems to heighten productivity
 Advance personnel measures that heighten job satisfaction●Revitalize domestic consolidated subsidiaries
 Peach John: capture demand arising from behavior and trends among young consumers and focus boldly on e-commerce Ai: establish a value-added brand that earns the endorsement of “adult” women14 Lecien: select and concentrate business fields; develop a new business model through collaboration with generalmerchandise stores
 Nanasai: develop new value-added mannequins and acquire new customers in interior construction businesses●Expand and grow the overseas business United States: begin developing new distribution channels and business opportunities; reform cost structure Europe: expand and enhance the brand portfolio and marketing activities based on the characteristics of countries, regions,and sales channels; cultivate new market
 China: foster undeveloped customer groups by stepping up branding and marketing in the e-commerce market●Reform the group’s production and supply systems
 Establish a groupwide production management system that supplies competitive products and materials
 Build an optimal supply system in anticipation of overseas business growth●Pursue the expansion of the business portfolio and new business Invest to realize rapid improvements in growth from the medium- to long-term viewpoints and while staying focused on theselection and concentration of business fields(ii) Enhance social value (tackle ESG issues)●Create a vibrant corporate culture based on human rights, ethics, and diversity
 Strengthen measures for CSR-focused procurement (improve continuously and extend coverage)
 Establish environments that enable various work styles
 Promote diversity and inclusion to create new value●Coexist with the earth’s environment and local communities
 Take steps to eliminate plastic from product packaging
 Reduce the disposal of unsold products(iii) Conduct business management with an awareness of equity cost
●Invest for future growth and enhance shareholder returns
 Realize ROE of 6% above equity cost
 Maintain a total payout ratio of 100%
 Reduce strategic shareholdings (target: 30% reduction)
We will promote our operational management based on the priority issues above as basic policies in the fiscal year ending March
31, 2021. We will promptly disclose any change or reassessment to our strategies that are outlined under our medium-term
management plan, or any material impact on our initial plan, in connection with the spread of the COVID-19 outbreak.
(Please see “3. Analyses of Financial Position, Results of Operation, and Cash Flows by Management (2) Analysis andConsideration on the Status of Business Performance etc. from the Viewpoint of Management” for the impact of the COVID19 outbreak and future policies.)15

2. 【Risk Factors】
Major risk factors related to business and financial conditions described in this report as identified by the management that
may significantly impact the financial position, results of operation and cash flows within group are as follows.
Forward-looking statements in this report are made based on information available as of the end of fiscal year 2020.
(1) Risks related to business environment and strategies(i) Risks related to economic environment
In the major domestic and overseas markets in which we operate, the deteriorating economy will have a material adverse effecton our sales, results of operation and financial position. For example, weak consumer spending resulting from the consumption
tax increase of 2% in October 2019 in Japan has had a material adverse effect on our domestic sales and results of operation (netsales for the consolidated third quarter (from October 2019 to December 2019) at Wacoal Corp., our group’s core operatingcompany, was 89% of such sales for the corresponding period of the previous fiscal year due to the impact of the tax increase).
(ii) Risks related to domestic businessApproximately 66% of our net sales at Wacoal Corp., our group’s core operating company, was generated in department stores,
general merchandisers, and other general retailers in Japan. Due to the ongoing structural change in the retail market, however,
we expect that the share of sales from department stores, general merchandisers and other general retailers in the overall retailmarket will continue to decline. During the current fiscal year, sales are estimated to have decreased by 700 million yen due tothe closure of 12 department stores, 52 general merchandisers, and 51 other general retails that had business transactions with
Wacoal Corp. Six department stores and 11 general merchandisers have already announced that they will close during the fiscal
year ending March 31, 2021. Our group has addressed these risks by shifting to an area-based sales system that cuts acrossbusiness categories and strengthening directly managed retail stores and e-commerce sales. In order to address the accounts
receivable collection risk following store closures and bankruptcies, we manage our credit exposure at all times and keep
adequate inventory at stores.
While sales in the domestic women’s innerwear market have been declining for seven consecutive years, different types ofcompetitors are increasing their presence in the market. In the domestic innerwear market, in addition to competition fromwholesalers and direct retailers in the mid- to high-end garment market in Japan, we must also compete against e-commerce
vendors and fast fashion manufacturers across sales channels (our e-commerce website for the current consolidated fiscal year
showed strong sales, achieving 117% of such sales for the previous fiscal year). Competition may intensify with new entrants.
Increased competition could result in declines in prices, increased marketing expenditures, and loss of sales volume and market
share, all of which may have a material adverse effect on our sales, financial position, and results of operation.
In order to address these risks, we have set out and promote the “Wacoal Omni-Channel Strategy” as our major initiative under
our medium-term management plan to restore growth and improve profitability of Wacoal Corp. Under this strategy, we aim toretain customers with digital technology-based innovation of our strength in sales service, which we have developed over many
years, by developing our relationship with our customers through coordination among physical stores and e-commerce channels.
During the current fiscal year, we have installed “Wacoal 3D smart & try”, our next generation system at the core of the omnichannel strategy, at six shops, mainly at department stores, and we plan to expand the number of stores installing the 3D smart& try system.
We also make efforts to improve profitability of our domestic group companies other than Wacoal Corp. through drastic measures
including selection and concentration of businesses, reforming the structure of businesses and personnel deployment andbolstering collaboration within the Group and alliances with other companies. With these efforts and initiatives to improveearnings within the entire Wacoal Group, we have established as our target a 3~5% operating margin.
(iii) Risks related to overseas business
We operate our business overseas and aim to expand sales in Europe and North America, as well as in Asia. We may be
exposed to the following risks related to our overseas business.
While the number of global transactions continues to increase, there is a risk of being subject to regulations and new custom
duties in various countries due, for example, to the U.S.-China trade war and Brexit. While our transaction volume between the
United States and China is not significant, if new custom duties are imposed between the United Kingdom and EU member states
during or after the fiscal year ending March 31, 2021, there may be a material adverse effect on the business results of Wacoal
Europe Ltd., our subsidiary headquartered in the United Kingdom, as a result of an increase in cost of sales. We will continue
to watch the situation closely as the post-Brexit talks with EU member states have been suspended due to the global spread of
the COVID-19 outbreak.

16

We may be exposed to the risk that our business will be adversely affected if we fail to understand consumer tastes andpreferences in overseas markets, and the risk of not being able to adjust to cultural differences, which may lead to staffing or
management failure adversely affecting our group business. In order to address these risks, we have continued to invest in our
three major corporate entities in the United States, Europe, and China to achieve business growth. In the United States, forexample, we acquired Intimates Online, Inc. (“Intimates Online”) to appeal to the millennials as customers, to create growth
opportunities in the e-commerce market, and to strengthen our competitiveness. We acquired Intimates Online for 86,041
thousand U.S. dollars (approximately 9,348 million yen using the exchange rate at the date of acquisition), and we also agreed
to pay contingent consideration to the current shareholders of Intimates Online based on performance achievements (“earn-out
consideration”). We expect under our growth scenario to achieve an operating profit in two years (for the fiscal year ending
March 31, 2022), net sales of 100 million dollars and an operating margin of 12%~15% (for the fiscal year ending March 31,2024). In addition, we are making efforts to develop our distribution channels and continue to expand our e-commerce business
in Europe and China. As our initiatives to expand our presence in the emerging countries, we will accelerate opening shops andwill actively invest in advertisement to expand our business in India.
We have gradually increased the amount of goods we produce and raw materials we procure for our products in lower-cost
countries in Asia. In recent years, we have shifted our overseas production base from China to ASEAN countries in response tochanges in the social and/or working environment. At the same time, we are facing challenges in productivity and profit
performance at a number of our production bases that we newly launched. Under such circumstances, we are aiming to build aglobal production base that is capable of supplying competitive products and raw materials and making efforts to establish amanagement system within our group based on our medium-term management plan.
(2)Risks related to business administration(i) Risks related to quality and quality labeling
Our ability to provide high-quality products on a global basis is one of our strengths. If we sell defective products or if our
products harm our customers’ health, we may suffer costs for product recalls and brand damage. In such an event, our reputation
as a producer of high-quality products may be damaged and we may lose trust from society, which may adversely affect ourbusiness results. In 2014, Une Nana Cool Corp., our subsidiary, voluntarily recalled certain sleepwear products to prevent
accidents after discovering that the sleepwear could cause “surface flash” (clothing flammability) failing to meet our group’s
quality standards. Any violation of law concerning misrepresentation of quality labeling or exaggeration of functionality may
cause us to lose trust from society, incur costs for product recalls and label corrections, and loss of sale opportunity, any of which
may have a material adverse effect on our results of operation and financial position.
In order to address these risks, each of our group companies formulates safety guidelines, ensures strict clearance rules on productdevelopment, implements measures to thoroughly trace causes of problems and prevent reoccurrence with respect to each defectand engages in efforts to maintain and improve product quality. At the same time, we have established the “Quality Assurance
Inquiry Committee” to advance quality assurance efforts within our group and introduced such efforts to Group companies toraise the basic level of the entire group.
(ii) Compliance-related risks
We are subject to various laws and regulations in Japan and overseas, and if we violate these laws or act in contrary to any
social order, we may suffer an economic and/or social impact as a result of punishment or loss of trust from society. Our groupmakes efforts to prevent violation of law by implementing measures, through the Compliance Committee, such as complianceawareness training for employees, an internal alert system, and compliance review by external experts. We also address thisissue as one of our material issues as part of our ESG initiatives under the current medium-term management plan. In
particular, we focus on labor and human rights issues in our supply chain for our group’s businesses. We have begun working
on these issues in response to the concerns raised by a non-profit human rights organization about working conditions andhuman rights issues at an overseas sewing factory with which we contract. In April 2018, we established the CSR Procurement
Committee and are proactively making efforts such as self-assessment, on-site audit and disclosure of our supplier list.
(iii) Risks related to personal information
We possess personal information of our customers for business purposes. Under our medium-term management plan,
Wacoal Corp., our core operating company, has established the Wacoal Omni-Channel Strategy as the pillar of our growthstrategy and promotes business strategies using digital data including collected personal information. In addition, our overseas
subsidiaries directly obtain the personal information of customers in the course of sales through their websites, which they
have strengthened as a pillar of growth. In 2014, our website was defaced by a hacker and we were forced to suspend sales fora month. With the growing significance of personal information protection for our business activities, we have launched an IT
17

Governance department with a specialized mission in April 2020. This department focuses on security measures to protect
personal information against external threats, including strengthening of management of personal information, implementing
responses to amendments of applicable laws and regulations, and providing training for employees. Any leak or alteration of
personal information, deletion of material data or system failures may impact our business management and strategies, and as aresult, may have a material adverse effect on our results of operation and financial position.
(iv) Risk of infringement of our intellectual property rights or claims that we infringe the intellectual property rights of others
We believe that our intellectual property rights, our brands and related trademarks in particular, are important to our ability tocreate and sustain demand for our products and to the value of our business. We may encounter trademark and related disputes
in the future, and imitation of our products or the infringement of our trademarks and intellectual property rights by other could
materially harm our operations and financial position. Additionally, other parties have asserted in the past, and may assert in the
future, that we have infringed their intellectual property rights. Such assertions or related claims may substantially harm ourresults of operation and financial position. As cross-border e-commerce has expanded and become borderless, our brand may
be less competitive in the market if we fail to implement measures globally to control our brand, in addition to any brandmanagement measures in each country. In order to address these risks, the Intellectual Property Committee has been established,
and we also provide annual e-learning programs to enhance the awareness of employees, improve the research capability of
responsible personnel, use external researchers, and cooperate with outside experts.
(3)Risks related to accounting/tax matters(i) Risks of price fluctuation of equity securities
We hold equity securities in publicly traded Japanese and other companies. Our group adopts the U.S. accounting standards
and we are required to recognize any fluctuation in the value of equity securities under the consolidated statements of income.
A significant fluctuation in the value of these equity securities could have an adverse impact on our financial results in therelevant reporting period.
During the current fiscal year, we recorded a loss of 3,760 million yen as (Loss) gain on sale, exchange and valuation ofmarketable securities and investments – net, due to a significant decline in the value of equity securities.
Under the current medium-term management plan, we plan to reduce cross-shareholdings with other companies by at least 20,000
million yen as of March 31, 2019 by the fiscal year ending March 31, 2022 and have sold shares in a total amount of 15,200
million yen (13,600 million in market price as of March 31, 2019 during the current fiscal year. In addition, we examine fromtime to time whether it is appropriate to hold shares from a medium- to long-term perspective and whether benefits and risks
associated with such holdings are worth the cost of capital, and the results are reported to the Board of Directors on a regularbasis. The Board of Directors then examines whether the holdings will enhance the corporate value of the Company from a
medium-to long-term perspective based on such examination results, and determines whether to continue to hold or dispose ofsuch shares.
(ii) Risks of impairment charges on fixed assets
We may be required to record impairment charges on fixed assets upon the occurrence of negative industry or economic trends
or underperformance relative to projected future operation results. During the current fiscal year, we recorded 191 million yen,
834 million yen and 217 million yen of impairment charges on trademark for Peach John, on property, plant and equipment etc.
for A Tech Textile Co., Ltd., and on goodwill for G Tech Material Co., Ltd., respectively. The amount of goodwill outstanding
was 10,800 million yen for Wacoal Europe Ltd. and 11,571 million yen for Intimates Online. Because valuation of goodwill isbased on the future management plan, we may be required to reassess the fair value and record impairment charges if new custom
duties between the United Kingdom and EU member states are imposed and the interest rate is raised for Wacoal Europe, and if
business growth and synergies at Intimates Online do not sufficiently exceed the level we anticipated upon investment, in
addition to the impact of the deterioration in the economy due to the COVID-19 outbreak. Goodwill is tested for impairment
annually, or more frequently if conditions indicate an earlier review is necessary.
(iii) Risks in relation to liability for termination and retirement benefits
Costs and obligations for termination and retirement benefits are based on the actuarial assumptions that are used for the
calculation of the expected rate of return on plan assets or projected benefit obligations for termination and retirement benefits.
Such costs and obligations for termination and retirement benefits may increase if the actual results differ from the assumptions
or if there is any change to the assumptions, due to fluctuations in the market for securities as well as the interest rate environment.
In addition, our group’s results of operation and financial position could be adversely affected if the retirement benefit scheme
is amended. Our approach to establishing the discount rate is based upon corporate bond indices. For discount rates, please see18

3.(2)(iii) “Significant Accounting Policies and Estimates”. Wacoal Corp., our core operating company, which accounts for amajority of costs and obligations for termination and retirement benefits, has established the Pension Committee, which reviews
the status of assets under management on a quarterly basis and takes necessary measures.
(iv) Risks relating to tax matters
According to our current accounting standards, deferred tax assets are recorded based on reasonable assumptions about our
future taxable income. However, deferred tax assets may decrease due to changes in the estimated amount of future taxable
income or changes in tax rates following tax reforms, which could have an adverse impact on our results of operation andfinancial position.
As the international tax avoidance by certain multinational enterprises turned into a political issue, OECD prepared and released
a report on BEPS (base erosion and profit shifting) at the request of G20 in October 2015 in efforts to improve tax rules.
Following the release of this report, each country has reformed and reviewed its domestic tax laws and tax treaties. We do notbelieve that implementation of any new international taxation rules will have a material impact on our group; however, theopinion of the tax authorities in a country may differ from our opinion regarding any newly prescribed transfer pricing
documentation and we may suffer additional tax obligations. In order to address these risks, we have a system to obtain the latest
tax-related information internally and externally, and receive advice from external experts. We plan to formulate and disclose a
tax administration manual to conduct tax management with a high degree of transparency and earn the trust of all stakeholders
in the fiscal year ending March 31, 2021.
(4)Risks related to human resources
Securing personnel domestically and internationally is a key issue for our group. If we fail to secure and/or foster highly
qualified personnel for manufacturing, sales representative, personnel specialized in the areas of management of foreigncompanies and new technology, we may not achieve future growth or gain advantages against competitors. As a result, there
may be a material adverse effect on the results of operation and financial position. In order to address these risks, we securenecessary personnel by implementing new recruiting methods such as lateral hires and alumni referrals and develop humanresources through improvement of group lectures, online training for professional expertise, and strengthen onsite training
through on-the-job training and overseas training programs.
(5)Risk related to natural disasters or epidemics
In the event of a large-scale natural disaster such as an earthquake, outbreak of an epidemic, dispute, act of terror or riot that
affects our ability to continue using any of our sales or manufacturing facilities or many of our employees or triggers confusion
in our operation or delays or stoppages in logistics resulting from closed traffic, energy outage or blocked communication, oursales and marketing efforts will be adversely affected. We will face the possibility that consumption will stagnate, which could
have a significant negative effect on the sales of our products, if a large natural disaster such as an earthquake, outbreak of an
epidemic, dispute, act or terror or riot occurs in any area where our products are sold.
In particular, a large earthquake that directly hits the Tokyo metropolitan area or a “Nankai Trough Earthquake” will cause
damage at large consumption markets where the main offices or stores of our group are located and it will have a significant
impact on our business continuity. We have set up the BCP project within the Incident and Disaster Control Committee andintend to make a BCP and BCM basic plan for the whole group as well as BCP plans for specific disasters such as a large
earthquake that directly hits the Tokyo metropolitan area.
The COVID-19 pandemic has had a significant impact on the sales and production of our group. In the current fiscal year, ourgroup has established a COVID-19 Infection Control Committee (chaired by the Director and Vice President), as a subcommitteeof the Corporate Ethics and Risk Management Committee which implements appropriate measures depending on the status of
the outbreak in order to prioritize the safety of our customers, partner companies and employees and prevent the spread of
infection. Since April 1, 2020, Wacoal Corp. has introduced one additional holiday per week for all of its employees andencourages its back office staff to work from home. All of our in-store sales staff were on call at home as a result of thedeclaration of the state of emergency throughout the country on April 16, 2020, with many stores such as department stores inurban areas closed. In the current fiscal year, the impact of COVID-19 outbreak on sales is estimated to be 2,000 million yen
for Wacoal Corp., our core operating company, and 3,000 million yen for the whole group, respectively. If the situation is
prolonged or the infection spreads again, the business results and financial position of our group will be adversely affected evenmore. In order to address these risks, we have expanded our borrowing facilities with financial institutions in order to build astrong financial foundation. The sales of Wacoal Corp. in April 2020 decreased by approximately 70 % as compared to theprevious fiscal year. The sales of our major overseas subsidiaries from physical stores also decreased by 30 to 70 %. The sales
19

from e-commerce website were strong in each county and increased by more than 70 % for Wacoal Corp as compared to suchsales of the previous fiscal year.
We will anticipate change in individual consumer behavior as they adopt a new lifestyle following the outbreak, strengthen
services that meet the customers’ needs such as e-commerce, introduce new products, reduce costs substantially and reassess
new investments in order to ensure sound management.

20

3. 【Analyses of Financial Position, Results of operation, and Cash Flows by Management】(1) Overview of Status of Business Performance etc.
The overview of financial position, results of operation and cash flows (“business performance etc.”) of our group (theCompany, consolidated subsidiaries and equity-method affiliates) for the current fiscal year are as follows.
(i)

Status of Financial Position and Results of operationa.

Status of Financial Position

Total assets at the end of fiscal year 2020 was 277,688 million yen, a decrease of 4,079 million yen as compared to theend of the previous fiscal year, mainly due to a decrease in investments resulting from decrease in market value.
Total liabilities at the end of fiscal year 2020 was 68,240 million yen, an increase of 7,617 million yen as compared tothe end of the previous fiscal year, due to the recognition of operating lease liabilities following the changes in theaccounting policy, as well as increases in contingent consideration liability.
Total Wacoal Holdings Corp. shareholders' equity at the end of fiscal year 2020 was 205,371 million yen, an decreaseof 11,123 million yen as compared to the end of the previous fiscal year, due to decreases in retained earnings and foreign
currency translation adjustments.
As a result of the above, shareholders' equity ratio at the end of fiscal year 2020 was 74.0%, an decrease of 2.8% ascompared to the end of the previous fiscal year.
b.

Results of operation(Millions of Yen)
Previous Fiscal
Year (ended
March 31,2019)

Current Fiscal
Year (ended
March 31,2020)

Changes from Previous
Fiscal Year
Amount%Net sales

194,201

186,760(7,441)(3.8％)

Cost of sales

89,804

84,959(4,845)(5.4％)

Sales profit

104,397

101,801(2,596)(2.5％)

Selling, general and administrative expenses

93,517

93,927

＋410

＋0.4％

167

769

＋602

+360.5％

5,834

473

(5,361)(91.9％)

Operating income

4,879

6,632

+1,753+35.9％

Other income/expenses

2,894

1,487

(1,407)(48.6％)(5,570)(3,760)+1,810

－

2,203

4,359

＋2,156+97.9％

341

3,472+3,131+918.2％

10,713

7,105(3,608)(33.7％)

13,607

8,592(5,015)(36.9％)

Impairment charges on property, plant and equipment
A: Impairment charges on goodwill and other intangible
assets

B: Valuation gain / loss (△) on marketable securities andinvestments - net
Income before income taxes and equity in net income ofaffiliated companies
Net income attributable to Wacoal Holdings Corp.

Reference figure (i): Operating income not taking into
account A
Reference figure (ii): Income before income taxes andequity in net income of affiliated companies not taking
into account A and B

Our group entered the first year (from April 1, 2019 to March 31, 2020) of our mid-term business plan and continues to21

implement various initiatives based on our basic policy to understand the actual situation, estimate future demand and implement
drastic reform, while emphasizing growth. Wacoal Corp., which aims to return its business to growth and improve profitability,
made efforts to improve CX (customer experience) by innovation through the introduction of 3D body scanning and an AI(artificial intelligence)-based customer service system in stores (six shops), and creating an environment for effective use of ourcustomer database to coordinate and merge the physical stores and e-commerce channels. In the overseas markets, we have madeefforts to create growth opportunities and strengthen our competitiveness in e-commerce, which is one of our business challenges,
and as part of such initiative, we acquired all of the issued and outstanding shares of Intimates Online, Inc. (“Intimates Online”),
a women’s LIVELY brand innerwear design and sales company in the U.S., at the end of July 2019, making Intimates Online ourwholly-owned subsidiary (the operating results of our acquired subsidiary, Intimates Online, have been included in ourconsolidated results from the second quarter of the current consolidated fiscal year and are disclosed along with Wacoal
International Corp. (U.S.) under the “Wacoal Business (Overseas)” segment). Although we implemented these initiatives, thebusiness environment surrounding our group has become extremely difficult due to the effects of a slowdown in global economic
activities resulting from the COVID-19 outbreak (the “outbreak”) during the fourth quarter of the current fiscal year, in addition
to the impact of the slowdown in consumer spending after consumption tax increase in October 2019.
As a result of the above, our consolidated sales for the current fiscal year were 186,760 million yen, a decrease of 3.8% ascompared to such consolidated sales for the previous fiscal year. In addition to the prolonged effect of the slowdown in demand
after the consumption tax increase, our domestic business activities were impacted by a decrease in the number of customers
visiting our domestic retail stores following the implementation of self-isolation measures since March after the spread of theoutbreak. Our overseas business was negatively impacted by the weak sales at department stores in the United Kingdom andUnited States, poor sales from our raw materials factory in Thailand and the impact of the appreciation of the Japanese yen (1,780
million yen), as well as the suspension of economic activities due to lockdown measures implemented at major cities since March,
despite the positive impact of the consolidation of Intimates Online results. Accordingly, revenue from our domestic and overseas
businesses both decreased.
Consolidated operating income was 6,632 million yen, an increase of 35.9% as compared to such consolidated operating income
for the previous fiscal year. Both our domestic and overseas businesses recorded a decrease in profit, due to decreased revenue
from the wholesale business of Wacoal Corp. and an increase in IT-related expenses with respect to our domestic business, anddue to the impact of inclusion of operating loss from Intimates Online, non-recurrence expenses incurred for the acquisition ofIntimates Online, as well as the recognition of impairment charges on property, plant and equipment (769 million yen) related to
the raw material factory in Thailand with respect to our overseas business. Although we also recorded 473 million yen as
impairment charges on goodwill and other intangible assets for the current fiscal year, we recorded an increase in operating income
because the amount of such impairment charges was less than that for the previous fiscal year (5,834 million yen) (See Row A in
the table above).
Consolidated income before income taxes and equity in net income of affiliated companies was 4,359 million yen, an increaseof 97.9% as compared to such consolidated income for the previous fiscal year. Although we recorded valuation loss on marketablesecurities and investments (net) for both the previous fiscal year and the current fiscal year, we recorded an increase in the
consolidated income since the amount of such valuation loss was less than that for the previous fiscal year (See Row B in the table
above). (We have been using U.S. accounting standards, under which equity securities held by the Company and consolidated
subsidiaries are measured at fair value, and any change from the beginning of the period is recognized as other income (expenses).)
As a result of the above, net income attributable to Wacoal Holdings Corp., the ratio of operating income to net sales and theratio of net income attributable to Wacoal Holdings Corp. to shareholders’ equity for the current fiscal year were, 3,472 million
yen, 3.6% and 1.6%, respectively.
The exchange rates used for the current fiscal year (previous fiscal year) were: 108.74 yen (110.91 yen) to the U.S. dollar;
138.24 yen (145.68 yen) to the Sterling pound; and 15.78 yen (16.72 yen) to the Chinese yuan.

The following is a summary of results of operation by operating segments.

22

(Millions of Yen)

Previous Fiscal Year(ended March 31, 2019)% toAmountSales

Current Fiscal Year(ended March 31,2020)% toAmountSales

Changes from Previous
Fiscal Year%
AmountChange194,201

100.0％

186,760

100.0％△7,441△3.8％

113,400

58.4％

109,70958.7％△3,691△3.3％

53,10027.3％

50,55227.1％△2,548△4.8％Peach John Business

10,491

5.4％

10,480

5.6％

△11

△0.1％

Other

17,2108.9％

16,0198.6％△1,191△6.9％

Total Net Sales
Wacoal Business(Domestic)
Wacoal Business(Overseas)(Millions of Yen)

Previous Fiscal Year(ended March 31, 2019)% toAmount
Sales
2.5％

6,632

3.6％

+1,753+35.9％

6,325

5.6％

5,782

5.3％

△543

△8.6％

4,581

8.6％

1,493

3.0％

△3,088△67.4％△5,859－△351－+5,508

－

△168

－

△292

－

△124

－

Wacoal Business(Domestic)
Wacoal Business(Overseas)
Other

Changes from Previous
Fiscal Year%
AmountChange4,879

Operating Income/Loss

Peach John BusinessCurrent Fiscal Year(ended March 31, 2020)% toAmountSales(Reference) Net Sales and Operating Income/ (Loss) of Major Subsidiaries（Millions of Yen ）Net Sales

Previous Fiscal Year(ended March 31,
2019)
Distribut
ion
AmountRatio(%)

Current Fiscal Year(ended March 31,
2020)
Distribut
ion
AmountRatio(%)

Increased/(Decreased) from previous
fiscal year
Amount％Wacoal Corp

102,35652.7％

99,22453.1％△3,132△3.1％

Ai Co., Ltd.

4,181

2.2％

3,597

1.9％

△584

△14.0％

Wacoal International Corp. (U.S)

18,486

9.5％

19,194

10.3％

＋708

＋3.8％

Wacoal Europe Ltd.

14,106

7.3％

12,9887.0％△1,118△7.9％

Wacoal China Co., Ltd.

11,617

6.0％

11,081

5.9％

△536

△4.6％

Peach John Co., Ltd.

10,491

5.4％

10,480

5.6％

△11

△0.1％

Lecien Corporation

6,284

3.2％

5,760

3.1％

△524

△8.3％

Nanasai Co., Ltd.

9,414

4.8％

8,717

4.7％

△697

△7.4％

*Sales to external customers only
（Millions of Yen ）Operating Income/(Loss)

Previous Fiscal Year(ended March 31,
2019)
23

Current Fiscal Year(ended March 31,
2020)

Increased/(Decreased) from previous
fiscal year

% to
Sales

AmountAmount% toSales

Amount％Wacoal Corp

5,099

5.0％

3,140

3.2％

△1,959△38.4％Ai Co., Ltd.

△321

－

△269

－

＋52

－

Wacoal International Corp. (U.S)

2,095

11.3％

401

2.1％

△1,694△80.9％

Wacoal Europe Ltd.

1,407

10.0％

1,007

7.8％

△400

△28.4％

913

7.9％

923

8.3％

＋10

＋1.1％

Peach John Co., Ltd.

△5,859－△351－＋5,508－

Lecien Corporation

△375

－

△478

－

△103

－

Nanasai Co., Ltd.

282

3.0％

218

2.5％

△64

△22.7％

Wacoal China Co., Ltd.

Wacoal Business (Domestic)

Sales attributable to our “Wacoal Business (Domestic)” segment decreased by 3.3% as compared to such sales
for the previous fiscal year. While we recorded an increase of 3.0% in revenue for the first half of the current
fiscal year (from April to September) due to the positive impact of the last-minute rise in demand before theconsumption tax increase, we recorded a decrease of 10.0% in revenue for the second half of the current fiscal
year (from October to March) due to self-isolation measures implemented against the spread of the outbreak.
Operating income decreased by 8.6% due to the impact of decreased revenue from our wholesale business of
Wacoal Corp. and the operating loss that we recorded with respect to Ai Co., Ltd., which distributes resort wear
and undergarments.
Wacoal Corp.:
Sales from Wacoal Corp. decreased by 3.1% as compared to such sales for the previous fiscal year. Sales fromour products under the Wing brand which are mainly sold at general merchandise stores exceeded the sales forthe previous fiscal year due to strong sales of our regular products, as well as the successful sales promotion of
our wireless “Synchro Bra” products. Sales from our products under the Wacoal brand fell below the sales for theprevious fiscal year due to a decrease in the number of customers visiting our retail stores following the spread of
the outbreak and the weak sales from our key sales channels such as department stores resulting from theslowdown in demand after the consumption tax increase, despite growth in sales of certain products such as “NightUp Bra”. In addition, sales from products other than innerwear, such as nightwear and sportswear also fellsignificantly below such sales for the previous fiscal year as a result of weak sales from our key sales channels.
Although sales from our retail business were also poor during March due to the spread of the outbreak, sales
exceeded the sales for the previous fiscal year as a result of initiatives that we implemented to minimize thedecline in demand after the consumption tax increase as well as our successful marketing to the shop members,
the number of which reached 1.2 million. In addition, sales from our e-commerce website maintained high growth
resulting from strengthened communication with our customers attributable to marketing automation.
Operating income decreased by 38.4% as compared to operating income for the previous fiscal year. While grossprofit rate from our wholesale and retail businesses continued to improve, operating income was significantly
impacted by a drastic sales decline in March in the wholesale business, in addition to an increase in IT related
expenses incurred for the implementation of our omni-channel strategies.
Wacoal Business (Overseas)

Sales attributable to our “Wacoal Business (Overseas)” segment on a Japanese yen basis decreased by 4.8% ascompared to such sales for the previous fiscal year due to the impact of the appreciation of the Japanese yen(1,781 million yen), as well as weak sales from our raw materials factory in Thailand attributable to a decreasein the number of orders received and a drastic sales decline in Europe and North America due to the spread of
the outbreak since mid-March. Operating income decreased by 67.4% as compared to operating income for theprevious fiscal year due to the impact of decreased profit of Wacoal International Corp. (U.S.) resulting from theacquisition of Intimates Online, as well as the recognition of impairment charges of 769 million yen on property,
plant and equipment with respect to our raw materials factory in Thailand.
Wacoal International Corp. (U.S.):
Sales from Wacoal International Corp. (U.S.) on a local currency basis increased by 5.9% as compared to suchsales for the previous fiscal year, while sales on a Japanese yen basis increased by 3.8%. This increase was due
24

to the inclusion of sales of 11.9 million dollars (approximately 1,300 million yen) from Intimates Online, which
has been consolidated into our business results since August. Revenue from Wacoal America Inc., which
distributes “Wacoal” and “b.tempt’d” brand products, decreased due to the weak over-the-counter sales at
department stores (physical stores), while sales from our e-commerce website and third-party e-commerce
websites were strong.
Operating income on a local currency basis decreased by 80.5% (80.9% on a Japanese yen basis) as compared tosuch operating income for the previous fiscal year. This significant decrease was due to lower gross profit rate
resulting from the higher percentage of sales subject to discounts, the impact of decreased profit from Wacoal
America Inc. resulting from higher labor costs and office lease expenses, the impact of inclusion of operating
loss of 11.5 million dollars (approximately 1,250 million yen) from Intimates Online, as well as non-recurring
expenses incurred for the acquisition.
Wacoal Europe Ltd.:Sales from Wacoal Europe Ltd. on a local currency basis decreased by 3.0% (7.9% on a Japanese yen basis) as
compared to such sales for the previous fiscal year. While sales were weak in the United Kingdom due to poorsales at department stores, sales exceeded such sales for the previous fiscal year resulting from the expansion ofsales in the North America, France and other European countries up until the third quarter of the current fiscal
year. Revenue, however, decreased as a result of weak sales recorded during March which was impacted by the
spread of the outbreak.
Operating income on a local currency basis decreased by 24.6% (28.4% on a Japanese yen basis) as compared tosuch operating income for the previous fiscal year due to a more aggressive advertising campaign to expand ourbrand awareness, recognition of expenses incurred for the redesign of our own e-commerce website, andincreases in labor costs incurred in connection with the launch of business with departments stores in Spain.
Wacoal China Co., Ltd.:Sales from Wacoal China Co., Ltd. on a local currency basis increased by 1.1% as compared to such sales forthe previous fiscal year, while sales on a Japanese yen basis decreased by 4.6% due to the impact of theappreciation of the Japanese yen. We maintained high growth from our e-commerce sales by strengthening ouralliance with online mall providers through initiatives including the active sales promotion of “Wacoal” brandproducts during the high demand season, and launch of Japanese “Amphi” brand products targeting a newcustomer segment. As the fiscal year-end for Wacoal China Co., Ltd. is December, the spread of the outbreak
did not affect its results for the current fiscal year.
Operating income on a local currency basis increased by 7.1% (1.1% on a Japanese yen basis) as compared tosuch operating income for the previous fiscal year. Despite increases in advertising expenses and recognition of
non-recurring expenses incurred in connection with the relocation of a warehouse, we recorded an increase inprofit due to improvement in the gross profit rate resulting from a lower percentage of products with low profit
margins, and reduction of labor costs and office lease expenses resulting from the closing of certain
underperforming stores.
Peach John BusinessOverall sales attributable to our “Peach John Business” segment remained at about the same level as such sales
for the previous fiscal year. While revenue from the mail-order business decreased as we ceased distribution of
catalogues in an effort to improve business efficiency, we recorded an increase in revenue from our domestic
retail stores, which closed certain underperforming stores in Japan, due to steady sales of our regular products,
as well as strong sales subject to discounts.
We recorded an operating loss of 351 million yen (an operating loss of 5,859 million yen recorded for theprevious fiscal year). While we recorded income for our business in Japan due to various efforts including
reduction of selling, general and administrative expenses, as well as improvement in gross profit rate, werecorded an operating loss due to recognition of impairment charges of 191 million yen on intangible assets(trademark), in addition to the operating loss recorded from our Chinese business.

Other

Overall sales attributable to our “Other” business segment decreased by 6.9% as compared to such sales for theprevious fiscal year, while we recorded an operating loss of 292 million yen (an operating loss of 168 million
recorded for the previous fiscal year).

25

Lecien Corporation:
While sales of our private products handled at general merchandise stores and specialty stores exceeded such sales
for the previous fiscal year, sales from Lecien Corporation decreased by 8.3% as compared to such sales for theprevious fiscal year due to the impact of decreased revenue in our material business. We recorded an operating
loss due to recognition of one-time expenses incurred for the withdrawal from certain businesses including theapparel business.
Nanasai Co., Ltd.:Sales from Nanasai Co., Ltd. decreased by 7.4% as compared to such sales for the previous fiscal year due to theabsence of the one-time increase in revenue (large-scale construction for renovation such as department stores) inthe previous fiscal year. Operating income decreased by 22.7% as compared to operating income for the previous
fiscal year due to decreased revenue.

(ii) Cash Flow Status
The balance of cash and cash equivalents at the end of fiscal year 2020 was 27,905 million yen, an decrease of
2,228 million yen as compared to the end of the previous fiscal year.
(Cash flow provided by operating activities)
Cash flow provided by operating activities was 13,325 million yen, a decrease of 295 million yen as comparedto the previous fiscal year, after adjustments for changes in assets and liabilities to our net income of 2,968
million yen plus adjustments for depreciation expenses and deferred taxes.
(Cash flow used in investing activities)
Cash flow provided by investing activities was 2,569 million yen, as compared to cash flow used in investing
activities in the amount of 2,474 million yen for the previous fiscal year, due to proceeds from sales andredemption of equity securities and decreases in time deposits, despite payments made in connection withacquisition of new subsidiaries (net of cash acquired) and payments made to acquire tangible and intangible
assets.
(Net cash used in financing activities)
Cash flow used in financing activities was 17,471 million yen, an increase of 6,599 million yen as compared tothe previous fiscal year, due to a decrease in short-term bank loans, repurchase of treasury stock and cash
dividend payments.

26

(iii) Production, Orders Received, and Sales
a. Production Results
Our consolidated production results by operating segment for fiscal year ended March 2020 are as follows. No data is available
for the Peach John Business since all of its entities are sales companies. The production results for other segment are not shownsince it is hard to define such term in this segment.
Amount (Millions of yen)

Changes as Compared toPrevious Fiscal Year (%)

Wacoal Business (Domestic)

42,178

98.5

Wacoal Business (Overseas)

14,95988.7

57,137

95.7

Name of Operating Segment

Total(Note)The amount of results of operation is based on the manufacturing costs and does not include consumption tax, etc.
b.

Orders Received

Among Other, the department of Nanasai, which handles interior design and construction of general housings and stores atcommercial facilities, adopts the build-to-order production system.
The status of orders received for other segment for fiscal year ended March 2020 is as follows:
Amount of Orders Changes as Compared Balance of Amount of Changes as Compared
Name of Operating Segment
Received
to Previous Fiscal
Orders Received
to Previous Fiscal(Millions of yen)
Year (%)(Millions of yen)
Year (%)
Other(Note)

5,924

95.0

268

64.1

The amounts in the above table do not include consumption tax, etc.
c. Sales Results
Our consolidated sales results by operating segment for fiscal year ended March 2019 are as follows:
Changes as Compared
Name of Operating Segment
Amount (Millions of yen)to Previous Fiscal Year (%)

Wacoal Business (Domestic)

109,709

96.7

Wacoal Business (Overseas)

50,552

95.2

Peach John Business

10,480

99.9

Other

16,01993.1

186,760

96.2

Total
(Note)

1
2

None of the purchasers’ sales accounts for 10% or more of the total sales results.
The amounts in the above table do not include consumption tax, etc.

(2) Analysis and Consideration on the Status of Business Performance etc. from the Viewpoint of Management
The management’s understanding, analysis and consideration with respect to our group’s business performance etc. are as
follows. Any forward-looking statements contained below are based on our judgment as of the end of the current fiscal year.
(i) Understanding, Analysis and Consideration with respect to Status of Business Performance etc. for the Current Fiscal YearOur group entered the first year (from April 1, 2019 to March 31, 2020) of our mid-term business plan and continues toimplement various initiatives based on our basic policy to understand the actual situation, estimate future demand andimplement drastic reform, while emphasizing growth. Wacoal Corp., which aims to return its business to growth andimprove profitability, made efforts to improve CX (customer experience) by innovation through the introduction of 3D bodyscanning and an AI (artificial intelligence)-based customer service system in stores (six shops), and creating an environment
for effective use of our customer database to coordinate and merge the physical stores and e-commerce channels. In theoverseas markets, we have made efforts to create growth opportunities and strengthen our competitiveness in e-commerce,
which is one of our business challenges, and as part of such initiative, we acquired all of the issued and outstanding shares ofIntimates Online, Inc. (“Intimates Online”), a women’s LIVELY brand innerwear design and sales company in the U.S., at27

the end of July 2019, making Intimates Online our wholly-owned subsidiary. Although we implemented these initiatives, thebusiness environment surrounding our group has become extremely difficult due to the effects of a slowdown in global
economic activities resulting from the COVID-19 outbreak (the “outbreak”) during the fourth quarter of the current fiscal
year, in addition to the impact of the slowdown in consumer spending after consumption tax increase in October 2019.
Our view of the management achievements and issues for the current consolidated fiscal year, the first year of our mid-termbusiness plan, is as follows.
Our achievement in “Wacoal Business (Domestic)” was that we realized stable growth in our retail and e-commerce businesses
after we constructed a mechanism to efficiently use our members’ data. On the other hand, the average annual growth rate of
our wholesale business, our core business, was -4% for the recent two years, and growth in other businesses was not enoughto offset such decrease. In our wholesale business, we introduced a new customer service system using 3D body scanning andorganized customer data, but challenges remained in operation. In addition, because our fixed cost ratio remains high whilesales are decreasing, our urgent priority is to control costs and expenses.
In “Wacoal Business (Overseas)”, we expanded our brand portfolio to gain new millennial customers after we acquired
Intimates Online, which operates the LIVELY brand. We also succeeded in achieving strong growth of our e-commercebusiness, which has been our core challenge, in various countries. We are facing challenges in dealing with the continued
slowdown in sales from the physical stores, mainly in Europe and North America. It is essential that we accelerate the speedof growth of our e-commerce business to offset the negative performance of the physical stores. It is also necessary to stabilize
production capacity and improve our product development capability at our raw materials factory in Thailand where thenumber of orders received continues to decrease.
In our “Peach John Business” and “Other” segments, our achievements include our decisions to close certain underperforming
stores and cease distribution of catalogues at Peach John, and to withdraw from certain underperforming businesses at Lecien,in an effort to improve business efficiency. The issue resides in the fact that operating loss was recorded for both segments.
We continue to implement measures to improve profitability.
Our view of the impact of the COVID-19 outbreak and future policies is as follows.
We believe that the COVID-19 outbreak will adversely and significantly impact our group’s management. As business
uspensions, lockdown measures and requests for self-isolation in response to the COVID-19 outbreak have gradually been
eased, economic activities have resumed and shown some positive signs in many countries and regions. We believe, however,that it will take a certain amount of time for the world to return to normal and for consumers to be able to enjoy shopping.
Also, there is concern that consumer spending will remain weak due to the deterioration of employment and income
environment, and if we suffer from another outbreak, consumer activity may further slow down.
In addition, the most significant impact of the outbreak has been to cause drastic changes in the sales channels, consumer value
and purchasing behavior. While there is no significant change to our direction to promote evolution of digital technology andto focus on consumer-based business models, we will calmly assess the changes in the consumer values and distribution.
Below are our policies for regrowth within three timeframes.
Basic Policies
Basic policies in all aspects are to prioritize the health and safety of our customers, employees and partner companies.
Although we have been providing customer service including close-to-customer support such as fitting, it is important tomaintain such service while considering the health and safety of our employees and customers in the interest of balance.
Short-Term Policies
Firstly, we aim to boldly reassess our current initiatives and spending plans in all business fields. We will reassess our existing
business activities from scratch, decrease costs such as advertising expenses, take further steps toward reforming working
styles, make efforts to lower business travel expenses, and review the timing of new investments.
Secondly, to strengthen liquidity on hand in preparation for the prolonged impact of the COVID-19 outbreak, we have alreadyexpanded our borrowing facilities with financial institutions, and are moving to ensure liquidity on hand for our groupcompanies. We expect that we will temporarily have excess inventory following the weak sales resulting from the outbreak.
We plan to lower our inventory level to the March 31, 2020 level by adjusting production of autumn/winter products and thefollowing spring/summer season products at all subsidiaries.

28Mid- and Long-Term Policies
Due to decreasing sales during the past few years, expenses of our group have been rising to a very high level, exceeding 50%
for the current consolidated fiscal year. It is our urgent priority to review our cost structure, and to inspect to ensure that our
cost structure is tailored to our business. At the same time, we will identify future demand in all businesses, and clarify whichbusiness to end, which business to start anew and which business to maintain after making some adjustments.
Secondly, we will accelerate our initiatives on digital transformation domestically and globally under our initiatives toward
growth, deepen connection with our customers, and make efforts to promote efficiency in business operation. Domestically,
we will continue to strengthen our omni-channel strategies, which we promote to establish deeper, broader, and longer
relationships. We will carefully assess changes in the purchasing behavior and make adjustments as needed, in the recognition
that digital transformation is essential to growth. We will aim to achieve regrowth by providing services and values that are
responsive to changes in the customers including by promoting coordination and merger between the physical stores and ecommerce channels, establishing efficient operation structure for our customer database, and making adjustments to 3D bodyscanning and AI (artificial intelligence) tailored to the new lifestyle. In addition, we will work to strengthen our e-commercebusiness and conduct a thorough inspection of our business by emphasizing customer experience overseas as we have done inJapan.
Further, we will review and rebuild customer touchpoints. Domestically, we will consider responses appropriate for thetransformation of the business model of department stores whose sales continue to remain weak. While transition of thewholesale business to self-managed business (i.e. fixed-term leasehold business) is one of the options we have, our focus will
be on building a store management system that emphasizes profitability, including efficient allocation of human resources anda method profit/loss management at stores.
The last part of the mid- and long-term policies is to develop products and services that our customers want to buy for their
new lifestyle and to strengthen our capability to address new customer service and sale styles. Sales channels may change
significantly as the values of the customers may change. In addition, decreasing income may change the customers to be morepredisposed toward lower price. We will review our brand portfolio developed in various countries, and recombine our brands
based on those new values. In addition, we will consider and conduct test marketing for a new service style to replace closecontact customer service. We will carefully observe how the women’s values regarding beauty around the world will change
after experiencing the pandemic, and make a practical judgement on the direction we should take.
Our view, analysis and consideration with respect to improvement of capital efficiency through implementation of our financial
strategies and initiatives on shareholder returns are as follows:Under the new medium-term management plan, which started
from the current fiscal year, our target is to reduce shareholders’ equity to between 200,000 million to 210,000 million yen andto increase the consolidated ROE (i.e., return on Wacoal Holdings Corp. shareholders’ equity for the current fiscal year) to 6%
or higher by March 31, 2022, following the last year of the plan. During the current fiscal year, however, we were impacted
by the inclusion of operating loss from Intimates Online, a U.S. company which we acquired to create growth opportunities inthe e-commerce market and to strengthen our competitiveness, and the recognition of valuation loss of 3,800 million yen on
marketable securities and investments, as well as negative factors including the prolonged decline in consumer spending
attributable to a consumption tax increase and weak sales impacted by the spread of the COVID-19 outbreak. Accordingly, as
in the previous fiscal year, net income attributable to Wacoal Holdings Corp. and the consolidated ROE for the current fiscal
year were low, at 3,470 million yen and 1.6%, respectively. The net income attributable to Wacoal Holdings Corp. not taking
into account the impact of the impairment charges on goodwill and other intangible assets and valuation loss decreased byapproximately 3,100 million yen. It is a fact that profitability, as a business entity, is declining rapidly and we view the recoveryof the profitability to be a critical issue.
Our basic policy on profit distributions to shareholders is to provide stable distributions based on our consolidated results,
while seeking to increase our enterprise value through active investment for improving profitability, and to increase net
income per share attributable to Wacoal Holdings Corp. With respect to retained earnings, in addition to actively investing in
expanding customer contacts in domestic business and expanding overseas business, from the viewpoint of enhancing ourenterprise value, we will make strategic investments to maintain our competitiveness and strengthen our growth potential.
With these efforts, we aim to return to our shareholders through improved earnings. In addition, we will acquire treasury
shares flexibly while taking into account the free cash flow level and market environment, and improve capital efficiency
and returns to our shareholders.
For the fiscal year ended March 31, 2020, we actively made investment for our future growth, including in IT infrastructure
for omni-channel services in Japan and acquisition of Intimates Online to strengthen e-commerce in the U.S. We will return
profits to our shareholders in the amount of 12,600 million yen in total, 4,900 million yen, in the form of dividends, and29

7,700 million yen, in the form of repurchases. In late March, we announced suspension of stock repurchases that had beenscheduled before April 30, 2020 partly because of the spread of the COVID-19 outbreak, while we maintain the total return
ratio of 100% through this year.
Though our basic policies on capital or profit distributions to shareholders have not been amended at this time, we may
consider revising our basic policies if needed after examination of trends in the results of operation and capital needs
resulting from the spread of the outbreak.
(ii) Capital Resources and Liquidity
Our current policy is to fund our cash needs from cash flows from operating activities, which allows us to secure most ofworking capital, make capital investments, and pay dividends without relying on substantial borrowings or other financing
from outside of our group companies. As of March 31, 2020, we had credit facilities at financial institutions totaling 32,259
million yen, and the balance of loan which established line of credit amounted to 3,449 million yen. Of these loan, 985
million yen is available to Wacoal Europe Ltd., 2,379 million yen is available to Wacoal Service Co., Ltd., and 85 million yen
is available to Nanasai.
In general, most of our credit facilities have automatically renewed terms, and we are not aware of any issues with respect toany of our lenders that could cause these facilities to become unavailable. Even if any of our subsidiaries loses access tofunds from our credit facilities, we believe that it is possible for other companies in our group to provide any necessary funds.
Our borrowing requirements are not affected by seasonality.
We are not aware of any restrictions on the transfers of funds from a subsidiary to a parent company in the form of a cash
dividend.
Our group’s business activities have been impacted by the COVID-19 outbreak and our cash flows from operating activities
may significantly decrease on a short-term basis. For this reason, we have set up new borrowing facilities with financial
institutions after April 2020 to ensure liquidity on hand. We will reduce the cash outflow that had been planned for operating
activities by reassessing it from scratch, and review the timing of new investments in order to ensure liquidity.
a.
Capital Investments
Please see “III. Property, Plants and Equipment – 1. Summary of Capital Investment, etc.”b.
Cash Flows
Please see “(1) Overview of Status of Business Performance etc. (ii) Cash Flow Status.”(ⅲ) Significant Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of the consolidated
financial statements requires our management to make estimates and assumptions. We believe that the followings are some of
the more critical judgment areas in applying our accounting policies in the preparation of our consolidated financial statements.
The assumptions on future business results are subject to uncertainties such as the impact of the COVID-19 outbreak andother factors that may arise in the future, and are based on information currently available. Please see “Use of Estimates” under“V. Financial Information – 1. Consolidated Financial Statements (1) Consolidated Financial Statements – Notes toConsolidated Financial Statements – 1. Summary of Significant Accounting Policies” for the impact of the COVID-19 outbreakon estimates.
a. Revenue Recognition
We recognize revenue when control of promised products are transferred to customers and performance obligations are
satisfied. Our Group’s revenue is recognized for transactions, net of any trade discounts or rebates given. In addition,
provision for expected returns is deducted from revenue based on actual return amounts from previous fiscal year.
b.

Allowance for Doubtful Receivable

We are required to assess the collectability of notes and accounts receivable. A considerable amount of judgment is requiredin assessing the ultimate realization of these notes and receivables, including the current creditworthiness of each applicable
customer, to take account business conditions, turnover of receivables, and financial positions for significant customers. In
the event that a customer’s financial condition worsens, the allowance for doubtful receivables may increase and may
adversely affect our financial condition and performance.
c.

Valuation Loss on Inventories
30

Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis for raw materials andon an average cost basis for work in process and finished products. Market value, or net realizable value, is the estimatedselling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to
make a sale. A periodic review of inventory is performed in order to determine if inventory is properly stated at the lower ofcost or market. Inventories are written down to the estimated net realizable values, if appropriate. Factors, such as expected
average selling price, expected average cost to make a sale, markdown rate, and class or type of inventories, based on
judgments regarding historical results future consumer demand, and other factors, are analyzed to determine estimated net
realizable value. We also consider potential disposal of inventories. We believe that the amount written down is appropriate.
However, if market conditions and demand are less favorable than our projections, the amount we write down may increase
and may adversely affect our business performance etc.
d. Deferred Tax Assets
We currently have significant deferred tax assets, which are subject to periodic recoverability assessments. Realization of ourdeferred tax assets is principally dependent upon the realization of projected future taxable income. In estimating our futuretaxable income, we consider past results of operation, the feasibility of ongoing tax planning strategies, and other factors. Our
judgments regarding future profitability may change due to future market conditions and other factors. These changes, if any,
may require recognition of a significant valuation allowance for these deferred tax asset balances. In the event we determinethat certain deferred tax assets may not be recoverable, such amounts will be reserved for and may adversely affect net
income. We believe our deferred tax assets after adjustments for valuation allowance are recoverable. If we record lowerthan-expected earnings and our deferred tax assets become unrecoverable, however, a valuation allowance must be recorded
against the amount that is not likely to be recovered, and this may have a negative impact on our profit and loss.
e.

Valuation Loss on Marketable securities and Investments

Valuation loss on debt securities are charged to earnings when a decline in fair value below the cost is other than temporary.
We periodically determine whether a decline in the fair value of debts securities and investments is deemed to be other-thantemporary decline, based on criteria that include the duration and severity of market decline, the extent to which cost exceeds
market value, our financial position and business outlook, and our intent and ability to retain the impaired marketablesecurities and investments for sufficient period of time for anticipated recovery in fair value.
Equity securities are measured at fair value and unrealized holding gain or loss is recorded in net profit or loss.
We believe that the criteria for evaluating impairment are reasonable. However, changes in the market or circumstances ofeach individual investment due to unforeseen changes in economic and business assumptions could affect the valuations ofmarketable securities and investments.
As of March 31, 2020, we held debt securities which we did not recognize any impairment charges even though thosesecurities had been in an unrealized loss position. Based on our assessment of the period of the decline in the fair values andour assessment of the relevant companies’ earnings outlook, we concluded that the decline in fair value for the securities not
subject to impairment charges was only temporary and thus impairment charges did not need to be recognized for theseparticular securities. As of March 31, 2020, we did not hold any debt securities that had a material unrealized holding loss.
f.

Impairment of Long-Lived Assets

The carrying values of long-lived assets, held and used by the Companies, are evaluated for impairment whenever there is an
event or change in circumstances that indicates that such assets have been impaired or that the carrying amounts of such assets
might not be recoverable. When we determined impairment, we evaluate the carrying amount of the assets based on their fairvalue.
In fiscal year 2020, the carrying values of buildings, machinery and equipment, vehicles and tools, furniture and fixtures in A
TECH TEXTILE CO., LTD, whose fair values fell below the book values, were reduced as a result of an impairment test for
fixed assets. The impairment charges of 769 million yen was recognized as impairment loss under operating costs andexpenses of the “Wacoal Business (Overseas)” segments in the fiscal year ended March 2020.

g. Impairment of Goodwill and Other Intangible Assets
We are required to perform an annual impairment test of our intangible assets with indefinite useful lives and goodwill at least
once a year. We also assess the impairment of such goodwill and intangible assets whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. Some of the factors we consider important that
could trigger an impairment review include the following: significant negative industry or economic trends; significant
31

underperformance relative to projected future operation results; significant changes in the manner of the strategy for our
overall business; and significant changes in risk-adjusted discount rates.
When we determine that the carrying amount of goodwill and intangible assets may not be recoverable based upon theexistence of one or more of the above indicators of impairment, we evaluate the carrying amount of the assets based on theirfair value. If the fair value is less than the carrying amount of the assets, we record an impairment charge based on the
difference between the carrying amount and the fair value of the assets.
If we make an initial determination that the carrying amount of goodwill and intangible assets may not be recoverable, we
engage an independent appraiser to assist us in our determination of the fair values of our reporting units. In our
determination of the fair value of goodwill, the appraiser utilizes the net present value method with incorporate relevant
unobservable inputs. In our determination of the fair value of trademark, the appraiser utilizes the relief-from-royalty methodwith incorporate relevant unobservable inputs.
As a result of evaluation performed for fiscal year 2020, we recorded 217 million yen, 191 million yen and 65 million yen of
impairment charges on goodwill, trademark and software, respectively.
h.

Employee Retirement Benefits

We provide a number of retirement benefit plans to a substantial portion of our employees. Our wholly owned subsidiary,
Wacoal Corp., has a contributory retirement plan. The amount of the projected retirement benefit obligation and pension
costs are dependent on management’s assumptions used by actuaries in calculating such amount. The key assumptions
include discount rates, the expected long-term rate of return on plan assets, retirement rates, mortality expectations, and otherfactors. Our management believes that these actuarial assumptions and methods are appropriate in light of our circumstances.
However, due to a change in an actuarial assumption, the amount of the projected retirement benefit plan obligations and costs
may be adversely affected.
Our approach to establishing the discount rate is based upon domestic bond rates. The discount rate assumption is based upon
the effective yields as of March 31, 2020 on Japanese government bonds whose maturity dates approximate the timing of the
expected future benefit payments. On March 31, 2020, the discount rate was 0.5%.
We determine the expected long-term rate of return on plan asset assumptions by evaluating both historical returns, as well as
estimates of future returns. The expected return on assets was based on expected equity and debt securities returns weighted
by the percentage of each of the major asset classes. The estimate of the long-term rate of return on assets for the contributory
retirement plan is 2.5% for fiscal years 2018 and 2019. The estimated long-term rate of return is based on an asset allocationof equity securities of 26.0%, debt securities of 54.0%, life insurance company general accounts of 18.0%, and short-term
financing of 2.0%.
These assumptions have a significant effect on the amount of the obligation and periodic benefit cost reported. A change of
0.5% in the discount rate and the expected long-term rate of return on plan assets would have the following effects:
Effect on net periodic benefit
costs

Effect on benefit obligation

Discount rate: 0.5% decrease

an increase of 274 million
yen

an increase of 2,008million
yen

Discount rate: 0.5% increasea decrease of 228 million yen

Expected long-term rate of
return on plan assets: 0.5%
decrease
Expected long-term rate of
return on plan assets: 0.5%
increasea decrease of 1,826 million
yen

an increase of 140 millionyen-

a decrease of 142 million yen-

The other retirement plans provide for either lump-sum termination benefits or periodic payments under certain conditions.
Benefits are usually paid as a lump sum at the employee’s termination before the mandatory retirement age.
i. Recent Accounting Pronouncements:
Please see “V. Financial Information – Notes to Consolidated Financial Statements – 1. Summary of Significant Accounting
Policies – Recent Accounting Pronouncements”.

32

4. 【Material Agreements, etc.】
Our board of directors resolved at its meeting held July 30, 2019 to enter into a share purchase agreement to acquire through our
U.S. subsidiary Wacoal International Corp. (“Wacoal International”) all of the issued and outstanding shares of Intimates
Online, a women’s innerwear design and sales company in the U.S. Wacoal International entered into the share purchaseagreement as of the same day (U.S. time). Please see “V. Financial Information – 1. Consolidated Financial Statements – Notes
to Consolidated Financial Statements” - 7.Aquisitions.

33

5. 【Research and Development】
Our research and development activities are mainly conducted by our Human Science Research Center to achieve harmony
between the human body and clothing and to support better product making.
Since 1964, we have been conducting research into the female body in order to accurately understand the Japanese woman’s
physique. In particular, we have developed a silhouette analysis system and introduced a three-dimensional measuring system. We
are also working on an even more advanced measurement of sensory comfort. Our research and development activities focus onaddressing the proportional, physiological, and mental aspects of garment design. One of our most important research results was
the enrichment of our research on sensory comfort through our participation in a project led by the Ministry of Trade and Industry(presently the Ministry of Economy, Trade and Industry) from 1995 to 1998. Based on this research, we have been focusing on
developing new products that are not only comfortable for the wearer, but also have a positive physiological effect based on thebasic study from three factors, which are pressure, heat, and touch. In 2005, we developed and created a new market for ourbreakthrough Style Science series products, which support the creation of a healthy and beautiful body by changing the idea of
everyday walking to walking for exercise. In 2010, we conducted an analysis and announced principles on the physiologicalchanges associated with the aging period from a person’s 20s to their 50s. We also strengthened the development of new products
coping with aging and have been working on developing new functional products based on the lifestyle habits of people as they
undergo small physical changes associated with aging.
Our Human Science Research Center is promoting research and development, which is based on a survey analysis of the body
shapes and needs of young customers including customers of an age of which the products for the first time are introduced, and asenior generation.
During the fiscal year ended March 31, 2020, we worked on research and development focused on measurement technology
pursuant to our omni-channel strategies. We also made efforts to expand our body care products by releasing a study on breast
movement caused by gravity and skin, to protect breasts from gravity, as part of our study of daily life situations and breast
movement. We also launched a breast care bra that keeps breasts at near-zero gravity.
As a result of the above, we recorded 508 million yen for our research and development during the fiscal year ended March 2020.
Our research and development activities cover a wide range of research from basic research to product development, mainly of
women’s innerwear. Therefore, it is difficult to relate each of such activities to a specific segment, and thus, we do not provide
information regarding such research and developments by segment.
In order to promote “the realization of an industry supporting women with unbounded living beauty,” we will make efforts toenrich research and development activities that contribute to the improvement of customer satisfaction and corporate value basedon the key concepts of beauty, comfort, and health. We will also work toward strengthening product appeal and developing new
products or services that can gain support from and satisfy our customers.

34

III. 【Property, Plants, and Equipment】
1. 【Summary of Capital Investment, etc. 】
The amount of capital investment for the fiscal year ended March 31, 2020, was 6,981 million yen. A majority of our capital
investment was used in the information system investment of our subsidiaries and maintenance and repair work implemented forthe real properties held by the Company.
The amounts of capital investment made in Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John Business,
and Other were 4,619 million yen, 2,106 million yen, 129 million yen, and 127 million yen, respectively.

2. 【Major Property, Plants, and Equipment】
The table below shows our major property, plants, and equipment within our group (Company and consolidated subsidiaries).
(1) Wacoal Holdings Corp.
As of March 31, 2020
Book Value (Millions of yen)
Facility(Location)

Head Office(Minami-ku, Kyoto) and other

OperatingSegment

Type of Equipment
and Facilities
Buildings andstructures

WacoalFacilities for

Business

administration(Domestic)

affairs, etc.

18,558

MachineryandEquipment

1,207Land (m2)

18,342(266,637)

Number of
Employee(s)Total

38,10894［－］(2) Domestic Subsidiaries
As of March 31, 2020
Book Value (Millions of yen)
Name of Company(Location)

Wacoal Corp. Head Office

OperatingSegment

Type of Equipment
and Facilities
Buildings andstructures

WacoalFacilities for

Business

administration(Domestic)

affairs

Wacoal Corp. Tokyo OfficeWacoalFacilities for(Chiyoda-ku, Tokyo)

Business

administration

One other business office in Tokyo(Domestic)

affairs

Wacoal Corp. Spiral Business

WacoalDepartment

Business(Minato-ku, Tokyo)(Domestic)

Wacoal Distribution Corp.

WacoalFacilities forMoriyama Distribution Center

Businessmerchandise(Moriyama, Shiga)(Domestic)

management

Kyushu Wacoal Manufacturing

WacoalCorp., Nagasaki Plant

Business(Unzen, Nagasaki)(Domestic)

Torica Inc.

Wacoal(Saihakugun Nanbucho, Tottori)

BusinessThree other plants(Domestic)(Minami-ku, Kyoto)
Two other business office in Kyoto
districtNanasai Co., Ltd.
Osaka Commodity Center(Yodogawa-ku, Osaka)

Other

Sales facilities

Manufacturing
facilities
Manufacturing
facilities
Manufacturing
facilities

35

Number of
Employee(s)Machinery,
Vehicle,Equipment,
and Fixtures

Land (m2)

48

229

－

277

22

31

－

54

55

33

－

89

16

64

－

80

0

64

－

64

389

68

172

6

180
(40,840)150(2,790)

Total

637

328

2,158
［ 120］

1,495
［ 69］
－
［ －］
343
［ －］
322
［－ ］
155
［ 49］
26
［－ ］

(3) Overseas Subsidiaries
As of March 31, 2020
Book Value (Millions of yen)
Name of Company(Location)

OperatingSegment

Type of Equipment
and Facilities
Buildings andstructures

Machinery,
Vehicle,Equipment,
and Fixtures

Land (m2)

Total

Number of
Employees

Facilities for
WACOAL AMERICA, INC.
(New York, USA)

Wacoaladministration

Businessaffairs/(Overseas)

merchandise

914

231

591

288

11

12

311

－

221

21

263
(32,300)

193

1,407

［ －］

management
WACOAL DOMINICANA
CORP.
(Santo Domingo, Dominican
Republic)

WacoalBusiness(Overseas)

Manufacturing
facilities

WACOAL SINGAPORE

WacoalFacilities for

PRIVATE LTD.

Business

administration(Singapore)(Overseas)affairs

WACOAL HONG KONG CO.,WacoalFacilities forLTD.

Business

administration(Hong Kong)(Overseas)

Wacoal China Co., Ltd.
(Beijing, China)

Business(Overseas)

Guandong Wacoal Inc.
(Guandong, China)

WacoalBusiness(Overseas)

VIETNAM WACOAL CORP.
(Bien Hoa City, Vietnam)

Dalian Wacoal Co., Ltd.
(Dalian, China)

WacoalBusiness(Overseas)
WacoalBusiness(Overseas)

A TECH TEXTILE CO., LTD.
(Kabin Buri, Thailand）(Note)

Wacoal

WacoalBusiness(Overseas)

88(24,459)

189
(235）

2,187

967

［ －］

52

212

［ 16］
145

311

－

［ 26］

affairs
Facilities for adm－

inistration affairs/
manufacturing
Facilities（－）［ 11,871］

458

242

［ －］

－
Manufacturing
facilities

69

106

85

166

Facilities for adm（－）［ 11,224］

420

175

［ －］

－

inistration affairs/
manufacturing

（－）

1,865

251

［ 1］

［ 25,195］

Facilities－

Manufacturing

207

facilities

231

（－）

617

439

［ 13］

［ 27,543］

Manufacturing

109

facilities

324

249
（ 58,481）

322

682

［

－］

1

The amount of book value above does not include consumption taxes, etc.

234Area of land under lease by the Company is shown in brackets.
None of our major facilities is currently out of service.
Buildings and land regarding certain domestic subsidiaries under (2) above are under lease by the Company. The bookvalue of the buildings and land are as follows:
Name of Business Office(Location)

Type of Equipment andFacilities

Operating Segment

Book Value (Millions of yen)
Buildings and structures

Land (m 2)

Wacoal Corp. Head Office(Minami-ku, Kyoto)

Wacoal Business

Facilities for

Two other business office in(Domestic)

administration affairs(Chiyoda-ku, Tokyo)

Wacoal Business

Facilities for

One other business office in(Domestic)

administration affairs

11,027

1,885(11,208)

Kyoto district
Wacoal Corp. Tokyo Office
1,175

1,945
(1,471)

Tokyo
Wacoal Corp. Spiral Business
Department(Minato-ku, Tokyo)

Wacoal Business

Sales facilities(Domestic)

36

1,020

3,972
(1,739)

Wacoal Distribution Corp.

merchandise(Domestic)

Center(Moriyama, Shiga)
Kyushu Wacoal Manufacturing
Corp., Nagasaki Plant(Unzen, Nagasaki)

5
6Facilities for

Wacoal Business

Moriyama Distribution

1,419

1,612

(38,923)

management

Wacoal Business

Manufacturing(Domestic)facilities

52

195

(19,369)

The average number of temporary employees during the period is in brackets.
The details of the major leased facilities by other entities other than the above consolidated subsidiaries are as follows.
(1) Domestic Subsidiaries
Name of Business Office(Location)

Operating Segment

Peach John Co., Ltd. Head Office

Peach John

(Shibuya-ku, Tokyo)

Business

Type of Equipment
and Facilities

Annual Lease
Amount(Millions of yen)

Buildings (m2)Land (m2)

1,554

－

Buildings (m2)Land (m2)

4,772

－

328

926

－

14

Facilities foradministration

104

affairs(2) Overseas Subsidiaries
Name of Company(Location)

WACOAL AMERICA, INC.
(New York, USA)
PHILIPPINE WACOAL CORP.
(Manila, Philippines)

Operating Segment

Type of Equipment
and Facilities

WacoalFacilities for

Business

administration(Overseas)affairs

WacoalFacilities for

Business

administration(Overseas)affairs

Annual Lease
Amount(Millions of yen)

3. 【Plans for Capital Investment, Disposals of Property, Plants, and Equipment, etc.】(1) Additions of Important Facilities
Name of Company
Name of Business
OfficeLocation

Segment

Type of
Equipment andFacilities

Expected investment amount
Total amount(Millions ofyen)Amount paid
(Millions of
yen)

4,290

－

Start and completion dateFinancingmethodStartCompletion

2020.72022.1

WacoalDistribution Corp.
Moriyama
Distribution Center

Moriyama, Shiga

WacoalBusiness(Domestic)

Facilities formerchandise
management(2) Disposals of Important Facilities
Not applicable.

37

Own resourcesand debt

IV. 【Information on the Company】
1. 【Information on the Company’s Stock, etc.】(1) Total number of shares, etc.
(i) Total number of shares
Class

Total Number of Shares Authorized to be Issued

Common stock

250,000,000 shares

Total

250,000,000 shares(ii) Number of Shares Issued
Names of Stock Exchanges on
Number of Shares Issued
Number of Shares Issued which the Company is listed
as of the end of Fiscal
as of the Filing Dateor Names of AuthorizedYear (March 31, 2020)(June 26, 2020) (shares) Financial Instruments Firms(shares)
Association

Class

Common stock

68,589,042

65,589,042

Total

68,589,042

65,589,042(Note)

Description

Shareholders haveunlimited standard rights.
The number of sharesconstituting a unit is 100.

First section of Tokyo
Stock Exchange－－

The total number of shares issued decreased to 65,589,042 shares following the cancellation of treasury stock of
3,000,000 shares conducted on May 25, 2020 as resolved by the Board of Directors’ meeting held on May 15, 2020.

(2) Status of Stock Acquisition Rights(i) 【Stock Option Plans】（1st Stock Acquisition Rights / 2nd Stock Acquisition Rights）
Date of resolution

July 30, 2008

Category and number of eligible grantees

Director of the Company 5

Director of subsidiary 5

19 (Note 1)

4 (Note 1)

Common stock
9,500 shares (Note 2)

Common stock
2,000 shares (Note 2)

Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 2, 2008
until September 1, 2028

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 2,275 yen
Amount capitalized as common
stock: 1,138 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note)

1
2

The number of shares represented by one (1) stock acquisition right is 500 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

38

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or3

announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, that(2)

in such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i)if the Exercise Start Date of the Option holder has not occurred by September 1, 2027
From September 2, 2027 until September 1, 2028.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
(2)
(3)

(4)

Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.
39

(5)

(6)

Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
40-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer;(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribes(9)that the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above:（3rd Stock Acquisition Rights / 4th Stock Acquisition Rights）
Date of resolution

July 30, 2009

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

Director of the Company 4

Director of subsidiary 4

20 (Note 1)

4 (Note 1)

Common stock

Common stock

10,000 shares (Note 2)

2,000 shares (Note 2)

One yen per share
From September 2, 2009
until September 1, 2029

Exercise period

Issue price:2,169 yen
Amount capitalized as common

Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

stock: 1,085 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)40

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note) 1
The number of shares represented by one stock acquisition right is 500 shares.
2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.

3(1)

Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the“Exercise Start Date.

(2)

Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i)if the Exercise Start Date of the Option holder has not occurred by September 1, 2028
From September 2, 2028 until September 1, 2029.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company a(3)4wholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:
(1)

(2)

Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:(3)

Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:

41

To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:(4)

The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the

(5)

(6)

exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer.
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights.
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer;(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribes(9)that the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights.
To be determined pursuant to Note 3 above.

（5th Stock Acquisition Rights / 6th Stock Acquisition Rights）
Date of resolution

July 30, 2010

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

Director of the Company 4

Director of subsidiary 3

21 (Note 1)

4 (Note 1)

Common stock

Common stock

10,500 shares (Note 2)

2,000 shares (Note 2)

One yen per share
From September 2, 2010
until September 1, 2030

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 2,163 yen
Amount capitalized as common
42stock: 1,082 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note)

1
2

The number of shares represented by one stock acquisition right is 500 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion

Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or3

announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, that(2)

in such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i) if the Exercise Start Date of the Option holder has not occurred by September 1, 2029
From September 2, 2029 until September 1, 2030.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,(3)
4

if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.

In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in the43

absorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:

(2)
(3)

(4)

The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise of

(5)

(6)

each stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer;(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribes(9)that the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（7th Stock Acquisition Rights / 8th Stock Acquisition Rights）
Date of resolution

July 29, 201144

Category and number of eligible grantees

Director of the Company 5

Director of subsidiary 5

31 (Note 1)

4 (Note 1)

Common stock
15,500 shares (Note 2)

Common stock
2,000 shares (Note 2)

Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 2, 2011
until September 1, 2031

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 1,757 yen
Amount capitalized as common
stock: 879 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note) 1
The number of shares represented by one stock acquisition right is 500 shares.
2
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion

3

Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the(2)

expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i) if the Exercise Start Date of the Option holder has not occurred by September 1, 2030
From September 2, 2030 until September 1, 2031.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):
45

(3)
4

For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.

In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:

(2)
(3)

(4)

The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise of

(5)

(6)

each stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
46

(9)

Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（9th Stock Acquisition Rights / 10th Stock Acquisition Rights）
Date of resolution

July 31, 2012

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

Director of the Company 5

Director of subsidiary 4

36 (Note 1)

3 (Note 1)

Common stock
18,000 shares (Note 2)

Common stock
1,500 shares (Note 2)

One yen per share
From September 4, 2012
until September 3, 2032

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 1,599 yen
Amount capitalized as common
stock: 800 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note)

1
2

The number of shares represented by one stock acquisition right is 500 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by such3

date, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the(2)

Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:

47

(i)

if the Exercise Start Date of the Option holder has not occurred by September 1, 2031
From September 2, 2031 until September 3, 2032.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
(2)
(3)

(4)

Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued(5)

upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:(6)

From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capitalshall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.

(7)
(8)

Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;48

(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
(9)

Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（11th Stock Acquisition Rights / 12th Stock Acquisition Rights）
Date of resolution

July 31, 2013

Category and number of eligible grantees

Director of the Company 5

Director of subsidiary 6

39 (Note 1)

13 (Note 1)

Common stock
19,500 shares (Note 2)

Common stock
6,500 shares (Note 2)

Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 3, 2013

Exercise period

until September 2, 2033

Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 1,837 yen
Amount capitalized as common
stock: 919 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note) 1
The number of shares represented by one stock acquisition right is 500 shares.
2
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion49

3

Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, that(2)

in such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i) if the Exercise Start Date of the Option holder has not occurred by September 1, 2032
From September 2, 2032 until September 2, 2033.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,(3)
4

if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.

In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:

(2)
(3)

(4)

The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise of

(5)

(6)

each stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital(7)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
50

(8)

The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that the(9)Company shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（13th Stock Acquisition Rights / 14th Stock Acquisition Rights）
Date of resolution

July 31, 2014

Category and number of eligible grantees

Director of the Company 5

Director of subsidiary 5

39 (Note 1)

14 (Note 1)

Common stock
19,500 shares (Note 2)

Common stock
7,000 shares (Note 2)

Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 2, 2014
until September 1, 2034

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 1,875 yen
Amount capitalized as common
stock: 938 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note)

1
2

The number of shares represented by one stock acquisition right is 500 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day

51

following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion

3

Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the(2)

expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i) if the Exercise Start Date of the Option holder has not occurred by September 1, 2033
From September 2, 2033 until September 1, 2034.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving(3)4Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
(2)
(3)

(4)

Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.

(5)

Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.

(6)

Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:

52

(i)

In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up

to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capitalshall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
(7)(8)

Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that the(9)Company shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（15th Stock Acquisition Rights / 16th Stock Acquisition Rights）
Date of resolution

July 31, 2015

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

Director of the Company 5

Director of subsidiary 4

37 (Note 1)

10 (Note 1)

Common stock
18,500 shares (Note 2)

Common stock
5,000 shares (Note 2)

One yen per share
From September 2, 2015
until September 1, 2035

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 2,839 yen
Amount capitalized as common
stock: 1,420 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note)

1
2

The number of shares represented by one stock acquisition right is 500 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:53

Adjusted Conversion
Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by such3

date, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the(2)

Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i) if the Exercise Start Date of the Option holder has not occurred by September 1, 2034
From September 2, 2034 until September 1, 2035.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.

(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
(2)
(3)

(4)

Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.
54

(5)

(6)

Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribes(9)that the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（17th Stock Acquisition Rights / 18th Stock Acquisition Rights）
Date of resolution

July 29, 2016

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

Director of the Company 4

Director of subsidiary 6

43 (Note 1)

26 (Note 1)

Common stock

Common stock

21,500 shares (Note 2)

13,000 shares (Note 1)

One yen per share
From September 2, 2016
until September 1, 2036

Exercise period
Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 2,089 yen
Amount capitalized as common
55

stock: 1,045 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note) 1
The number of shares represented by one stock acquisition right is 500 shares.
2
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion

3

Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the(2)

expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i)if the Exercise Start Date of the Option holder has not occurred by September 1, 2035
From September 2, 2035 until September 1, 2036.

(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving(3)4Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in the56absorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1) Number of Stock Acquisition Rights of the Surviving Company to be Granted:

(2)
(3)

(4)

The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise of

(5)

(6)

each stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribes(9)that the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

（19th Stock Acquisition Rights / 20th Stock Acquisition Rights）
Date of resolution

July 31, 2017

Category and number of eligible grantees

Director of the Company 4

57

Director of subsidiary 7

Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights
Amount to be paid upon exercise of stock acquisition rights

28 (Note 1)

18 (Note 1)

Common stock
14,000 shares (Note 2)

Common stock
9,000 shares (Note 2)

One yen per share
From September 2, 2017
until September 1, 2037

Exercise period

Issue price: 2,919 yen

Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Amount capitalized as common
stock: 1,460 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note) 1
The number of shares represented by one stock acquisition right is 500 shares.
2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.

3(1)

Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.

(2)

Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i)if the Exercise Start Date of the Option holder has not occurred by September 1, 2036
From September 2, 2036 until September 1, 2037.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.

58

(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:
(1)

(2)
(3)

(4)

Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise of

(5)

(6)

each stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capital

(7)
(8)

shall be increased by the amount remaining after deducting the increase in the limit for increase in common
stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
59

(9)

Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

(21st Stock Acquisition Rights / 22nd Stock Acquisition Rights）
Date of resolution

July 20, 2018

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights

Director of the Company 5

Director of subsidiary 5

147 (Note 1)

62 (Note 1)

Common stock
14,700 shares (Note 2)

Common stock
6,200 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

Exercise period

From August 18, 2018
until August 17, 2038

Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Issue price: 3,006 yen
Amount capitalized as common
stock: 1,503 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights
accompanying reorganization acts

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note)

1
2

The number of shares represented by one stock acquisition right is 100 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by such3

date, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the(2)

Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:

60

(i)

if the Exercise Start Date of the Option holder has not occurred by August 17, 2037
From August 18, 2037 until August 17, 2038.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.
(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:
(1)

(2)
(3)

(4)

Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.

(5)

Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.

(6)

Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capitalshall be increased by the amount remaining after deducting the increase in the limit for increase in common

(7)
(8)

stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;61

(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.
(9)

Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

(23rd Stock Acquisition Rights / 24th Stock Acquisition Rights）
Date of resolution

July 20, 2019

Category and number of eligible grantees
Number of stock acquisition rights
Class, description and number of shares represented by stockacquisition rights

Director of the Company 4

Director of subsidiary 6

172 (Note 1)

113 (Note 1)

Common stock
17,200 shares (Note 2)

Common stock
11,300 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

Exercise period

From July 23, 2019
until July 22, 2039
Issue price: 2,517 yen

Issue price for shares issued through the exercise of the stockacquisition rights and the amount capitalized as common stock

Amount capitalized as common
stock: 1,259 yen

Terms and conditions for exercising the stock acquisition rights(Note 3)Matters related to transfer of the stock acquisition rights

Subject to the approval of the Board of Directors

Matters related to the grant of stock acquisition rights(Note 4)

accompanying reorganization acts

Above is based on information available as of the end of the current fiscal year (March 31, 2020). No change has been made as ofthe end of the month preceding the filing date (May 31, 2020).
(Note) 1
The number of shares represented by one stock acquisition right is 100 shares.
2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Conversion Ratio prior to
Ratio of stock split
=
X
Ratio
adjustment
or reverse stock split
This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
Ratio becomes effective. However, if the Company is unable to provide such notification or announcement by suchdate, the Company shall provide prompt notification or announcement thereafter.

62

3

(1)

(2)

Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the
Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(i) if the Exercise Start Date of the Option holder has not occurred by July 22, 2038
From July 23, 2038 until July 22, 2039.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.

(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:
(1)

(2)
(3)

(4)

Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.
Number of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
To be determined pursuant to Note 2 above after taking into consideration the terms and conditions of theOrganizational Restructuring.
Amount Capitalized upon Exercise of Stock Acquisition Rights:
The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.

(5)

Exercise Period for Stock Acquisition Rights:
From the later of (i) the starting date of the exercise period for stock acquisition rights as stipulated in the table
above and (ii) the effective date of Organizational Restructuring, and lasting until the expiration date for the
exercise of stock acquisition rights as stipulated in the table above.

(6)

Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
17-1 of the Japanese Company Accounting Regulations. Any amount less than one yen shall be rounded up
to the nearest yen.
(ii) In the event that shares are issued due to the exercise of stock acquisition rights, additional paid-in capitalshall be increased by the amount remaining after deducting the increase in the limit for increase in common(7)

stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:
The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
63

(8)

Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for theacquisition of the shares to be issued upon the exercise of stock acquisition rights by transfer or that theCompany shall obtain all of the shares of said class by a resolution of the general meeting of shareholders.

(9)

Other Conditions relating to the Exercise of Stock Acquisition Rights:
To be determined pursuant to Note 3 above.

(ii) 【Right Plans】
Not applicable.
(iii) 【Other Stock Acquisition Rights】
Not applicable.
(3) Status of Exercise of Bonds with Stock Acquisition Rights containing a Clause for Exercise Price Adjustment
Not applicable.
(4) Trends in the Total Number of Shares Issued, Common Stock, etc.

Date

October 1, 2017 (Note 1)

May 25, 2018 (Note 2)

May 24, 2019 (Note 2)(Note)

Changes in the
Total Number of
Shares Issued(Thousands ofshares)Balance of Total
Number of Shares
Issued (Thousandsof shares)

Changes in
Common Stock(Millions of yen)

Balance ofCommon Stock(Millions of yen)

Changes in
Additional Paid-in
Capital (Millions ofyen)

Balance of
Additional Paid-in
Capital(Millions ofyen)△71,689

71,689－13,260－29,294△1,00070,689－13,260－29,294△2,10068,589－13,260－29,294

1
2

Reflect the share consolidation pursuant to which two (2) shares were consolidated into one (1) share.
The decrease was due to the cancellation of treasury stock.

3

The total number of shares issued decreased by 3,000,000 shares following the cancellation of treasury stock on May
25, 2020, as resolved by the Board of Directors’ meeting held on May 15, 2020.

64

(5) Status of Shareholders
As of March 31, 2020
Status of Shares (1 unit = 100 shares)
Shares Less
Than One
Unit(share)Foreign Shareholders
Category

National and
Local
Governments

Financial
Institutions

Securities
Companies

Other
Corporations

Foreignshareholders
other than
individuals

Individuals

－

57

27

191

240

11

12,262

12,788－－

293,655

6,187

121,115

100,51554

163,005

684,531

135,942

－

42.90

0.90

17.69

14.68

0.01

23.82

100

－

Number ofshareholders

Individuals
and Other

Total

Number ofshares held
(units)Ratio (%)

(Note)

1

Out of the treasury stock of 6,186,410 shares, 61,864 units are included under “Individuals and Other,” and 10
shares of less than one unit are included under “Shares less than One Unit.”
Shares under “Other Corporations” and “Shares less than One Unit” include 2 units and 27 shares, respectively, held2

under the name of the Japan Securities Depository Center.
(6) Status of Major Shareholders
As of March 31, 2020
Name of Shareholder
The Master Trust Bank of Japan, Ltd.

Address

Number of Shares
held by Shareholder(Thousands of shares)

Shareholding
Ratio (%)

2-11-3, Hamamatsucho, Minato-ku, Tokyo

3,447

5.52

The Bank of Mitsubishi UFJ,Ltd.

2-7-1, Marunouchi, Chiyoda-ku, Tokyo

3,195

5.12

Japan Trustee Services Bank, Ltd. (Trust
Account)

1-8-11, Harumi, Chuo-ku, Tokyo

3,081

4.94

Meiji Yasuda Life Insurance Company

2-1-1, Marunouchi, Chiyoda-ku, Tokyo

3,050

4.89

The Bank of Kyoto, Ltd.

700, Yakushimae-cho, Karasuma-dori,Matsubara-agaru, Shimogyo-ku, Kyoto

2,352

3.77

1,836

2.94

1-38, Hamamachi, Otsu-shi, Shiga

1,775

2.84

1-4-5, Marunouchi, Chiyoda-ku, Tokyo

1,525

2.44

The Dai-ichi Life Insurance Company,
Limited13-1, Yurakucho 1-chome, Chiyoda-ku,
Tokyo

1,366

2.19

Asahi Kasei Corporation

1-2 Yurakucho 1-chome, Chiyoda-ku,
Tokyo

1,241

1.99

Total

──────

22,86936.65(Trust Account)

Nippon Life Insurance Company
The Shiga Bank, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation(Note)

1-6-6, Marunouchi, Chiyoda-ku, Tokyo(Nippon Life Insurance Securities Services)

1

The Company is holding 6,186 thousand shares of treasury stock, which are not listed in the above list of major
shareholders.

2

The numbers of shares held by The Master Trust Bank of Japan, Ltd. (Trust Account) and Japan Trustee Services Bank,
Ltd . (Trust Account) are related to their respective trust services.

3

The substantial shareholding report dated April 13, 2018, filed by Mitsubishi UFJ Financial Group, Inc., which is
publicly available, indicates that the shareholders in the below table are holding the respective number of theCompany’s shares as of April 9, 2018. However, as we were unable to confirm the actual status of the shareholdings ofthese shareholders as of the end of fiscal year 2020, those shareholdings have not been reflected in the above list. In
addition, the content of such substantial shareholding report (the amended report) is as follows:65

Name of Shareholder

Number of Shares
held by Shareholder Shareholding Ratio(Thousands of(%)
shares)Address

The Bank of Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation
Mitsubishi UFJ International AssetManagement Co., Ltd.

2-7-1, Marunouchi, Chiyoda-ku, Tokyo

3,295

4.60

1-4-5, Marunouchi, Chiyoda-ku, Tokyo

3,167

4.42

1-12-1, Yurakucho, Chiyoda-ku, Tokyo

187

0.26

6,649

9.28

Total

(7) Status of Voting Rights(i) Shares Issued
As of March 31, 2020
Number of Shares(Shares)Number of Voting Rights(Units)Description

Shares without voting rights

－

－

－

Shares with restricted voting rights –treasury stock, etc.

－

－

－

Shares with restricted voting rights –
other

－

－

－

Category

Shareholders have
(Treasury stock)
Common stock
6,186,400

Shares with full voting rights –treasury stock, etc.

Shares with full voting rights – other622,667

62,266,700

68,589,042

Total voting rights held by all
shareholders
1

Common stock

135,942

Total number of shares issued(Note)－

Common stock

Shares less than one unit

unlimited standard
rights. The number ofshares constituting a unit
is 100.
Same as above.

－

Same as above.

－－622,667－－

Shares under “Shares with full voting rights – other” include 200 shares held under the name of the Japan Securities
Depository Center. Also, 2 units of the voting right under the “Number of Voting Rights” are related to the shares with fullvoting rights held under the name of the Japan Securities Depository Center.

(ii) Treasury Stock, etc.
As of March 31, 2020
Number of
Shares held under
Own Name

Number of
Shares held under
the Name of
OthersTotal Number of
Shares held

29 Nakajima-cho,
Kisshoin, Minamiku, Kyoto

6,186,400－

6,186,400

9.02－

6,186,400－

6,186,400

9.02

Name of
Shareholder

Address(Treasury stock)
Wacoal Holdings
Corp.
Total

66

Shareholding Ratio(%)

2. 【Information on Acquisition etc. of Treasury Stock】<Class of shares>
Acquisition of shares of common stock under the condition set forth in Article 155, Item 3 of the Companies Act, andacquisition of shares of common stock under the condition set forth in Article 155, Item 7 of the Companies Act(1) Acquisition of Treasury Stock based on a Resolution of General Meeting of Shareholders
Not applicable.
(2) Acquisition of Treasury Stock based on a Resolution of Board of Directors
Acquisition pursuant to Article 155, Item 3 of the Companies Act
Number of Shares
Category(Shares)
Status of Resolution of Board of Directors (May 15, 2019)(Period for acquisition: From May 16, 2019 to December 31,
1,900,000
2019)

Total Amount (Yen)
5,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year

1,828,000

4,999,832,200

Total number of remaining shares resolved and total amount

72,000167,800

Unexercised percentage as of the end of the current fiscal year
(%)

3.8

0.0

Treasury stock acquired during the current period－－

Unexercised percentage as of the filing date of this report (%)

3.8

0.0

Number of Shares(Shares)Category
Status of Resolution of Board of Directors (January 31, 2020)(Period for acquisition: From February 3, 2020 to April 30,
2020)

Total Amount (Yen)

2,000,000

6,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year

969,500

2,743,744,700

1,030,500

3,256,255,300

51.5

54.3

－

－

51.5

54.3

Total number of remaining shares resolved and total amountUnexercised percentage as of the end of the current fiscal year(%)
Treasury stock acquired during the current period
Unexercised percentage as of the filing date of this report (%)(Note)The number of shares of treasury stock acquired during the current period does not include the number of shares of treasury
stock acquired during the period from June 1, 2020 until the filing date of this report.

(3) Acquisition of Treasury Stock not based on a Resolution of Ordinary General Meeting of Shareholders or Board of Directors
Acquisition pursuant to Article 155, Item 7 of the Companies Act
Number of Shares
Category
Total Amount (Yen)(Shares)
Treasury stock acquired during the current fiscal year554

1,524,333

Treasury stock acquired during the current period

30

64,680(Note)The number of shares of treasury stock acquired during the current period does not include the number ofshares less than one unit purchased during the period from June 1, 2020 until the filing date of this report.

67

(4) Status of Disposition and Holding of Acquired Treasury Stock
Current Fiscal Year
Category

Current Period

Number of Total Disposition
Number of Total Disposition
Shares (Shares) Amount (Yen)
Shares (Shares) Amount (Yen)

Acquired treasury stock that was offered to subscribers
for subscription

－

－

－

－

2,100,000

5,934,652,279

3,000,000

8,404,303,715

Acquired treasury stock that was transferred due tomerger, stock swap, or company split

－

－

－

－

Other (transfer of shares less than one unit perpurchase request)

35

97,545－－

Other (exercise of stock acquisition rights)

22,50063,041,000

Number of shares of treasury stock held

6,186,410－

3,186,440－

Acquired treasury stock that was canceled(Note)The number of shares of treasury stock held during the current period does not include shares less than one unit purchased
or sold during the period from June 1, 2020 until the filing date of this report.

68

3. 【Dividend Policy】
Our basic policy on profit distribution to shareholders is to make stable distributions based on consideration of our consolidated
performance, while seeking to increase our enterprise value through active investment aimed at higher profitability and to increase
net income per share.
Our basic policy is to distribute earnings twice a year in the form of interim and year-end dividends and the Board of Directors
is the decision-making body for distribution of earnings.
Based on such policy, we plan to distribute a year-end dividend of 20.00 yen (including special anniversary dividend of 4.00
yen) per share as a distribution of earnings for the current fiscal year. As a result, the annual cash dividend per share, including
an interim dividend of 40.00 yen per share, is 60.00 yen for the current fiscal year.
As for retained earnings, with the aim of improving our corporate value, we have actively invested in expanding new points ofcontact with consumers for our domestic business and our overseas businesses. We also plan to use our retained earnings in our
strategic investments for maintaining competitiveness and reinforcing growth. With these efforts, we seek to benefit ourshareholders by improving future profitability. We also intend to acquire treasury stock in a flexible manner taking into accountthe level of free cash flow as well as the market environment, and will make efforts to improve capital efficiency and return
profits to our shareholders.
We also provide that the Company may distribute earnings subject to the resolution of the Board of Directors pursuant to theprovisions of Paragraph 1, Article 459 of the Companies Act.
(Note)The distribution of earnings for which record date belongs to the current fiscal year is as follows:
Total Dividend Amount
Dividend Amount per Share
Date of Resolution(Millions of yen)
(Yen)

October 31, 2019
Resolution of Board of Directors’ meeting

2,560

40.00

May 15, 2020
Resolution of Board of Directors’ meeting

1,248

20.00

69

4【Corporate Governance, etc.】(1) 【Status of Corporate Governance】(ⅰ) Fundamental Policies for Corporate Governance:
The purpose and basic policy of our group’s corporate governance is to continuously enhance our corporate value
by increasing transparency and securing the fairness and independence of our corporate management to establish mutual
confidence relationship with all stakeholders, including our shareholders, customers, employee, client and community.
(ⅱ) Outline of System of Corporate Governance and Reason for Adoption of such Systema.

Outline of System of Corporate Governance
We, as a holding company, use an “Audit & Supervisory Board Member system” for the purpose of ensuring thecorporate governance of group companies, and have both the Board of Directors and the Audit & Supervisory Board monitor
and supervise the management operating the Company.
Our Board of Directors is composed of eight Directors (including three Outside Directors) and one of them is female.
Their roles are to supervise and make business judgments from an objective perspective. We have been working to enhance
the supervisory function and to improve the decision-making process. Further, the term of office of each Director is one year
for the purpose of clarifying the responsibilities of our management, and establishing a management system that may respondpromptly to changes in the business environment.
In addition to the supervisory function of the Board of Directors, the Audit & Supervisory Board is composed offive Audit & Supervisory Board Members (including three Outside Audit & Supervisory Board Members). Their function is
to monitor and supervise our management.
We have designated the above-stated three Outside Directors and three Outside Audit & Supervisory Board
Members (i.e., six persons in total) as our independent officers.
We, as a holding company, seek to govern our group companies with the management, audit, and supervisorysystems as set out below:
The Board of Directors shall hold a regular Board of Directors’ meeting every month and also hold a special Boardof Directors’ meeting from time to time, as necessary, in accordance with the rules of the Board of Directors, tomake decisions on matters concerning important business, such as management policy and management strategy
and matters stipulated by laws or ordinances or our Articles of Incorporation. Further, we have established the“Group Management Meeting” comprising our Directors and major management members, which considers--

matters concerning the management strategy of our group and other important management issues and conducts
preliminary reviews of matters for review by our Board of Directors.
The Audit & Supervisory Board shall hold regular monthly meetings at the same time as the Board of Directors’
meetings and also hold special meetings from time to time, as necessary, in accordance with the rules of the Audit& Supervisory Board, to make decisions on matters concerning the preparation of audit reports and audit policies,
method of asset status investigation and execution of duties by the Audit & Supervisory Board Members.
We have established the “Executive Nomination Advisory Committee” and “Executive Compensation Advisory
Committee”, which are each chaired by the Independent Outside Director and half of which is filled by the Outside
Directors. These Committees discuss and provide recommendations on nomination, promotion and remunerationof Directors. The “Executive Nomination Advisory Committee” shall be held, in principle, in January when the
Board of Directors’ meeting is held, and the “Executive Nomination Advisory Committee” shall be held, inprinciple, in April, July and February when the Board of Directors’ meeting is held. Each Committee is operated--

with a high degree of transparency and fairness pursuant to resolutions approved unanimously with all members
in attendance.
The Independent Outside Officers Meeting, which is joined mainly by the Independent Officers, performs anevaluation on the Board of Directors after exchange of views among the members of such Meeting. The details of
discussions are reported to the Board of Directors, which are also disclosed in our Corporate Governance Report.
In order to improve our system of compliance, we have established a Corporate Ethics and Risk Management
Committee, for which our Representative Director and President acts as head in charge of the committee and the
Director of Supervisor of Group Business Management acts as chairman, which will consider any complianceissues which may have a material impact on the Wacoal Group, enhance awareness and enlightenment on corporate
ethics and effectively promote control of any management risks on the Wacoal Group.

70

The members of each Committee/Meeting are as follows (● indicates chair or chairman, ○ indicates members
and * indicates supervisor):

Board of
Title

Name

Directors’Meeting

Representative
Director andChairman

Yoshikata
Tsukamoto

Audit &

Executive

Executive

Independent

Supervisory

Nomination

Compensation

OutsideBoard

Advisory

Advisory

Officers

Meeting

Committee

Committee

Meeting○

Group
Management
Meeting

Corporate Ethics
and RiskManagement
Committee○

Representative
Director,
President andHironobu

Corporate

Yasuhara

●

○

○

○

○

*

●

●

○

○

○

○

○

○

Officer of theCompany
Director andVice President

MasashiCorporate

Yamaguchi○●

Officer
Director andVice President

Tomoyasu

Corporate

Ito○

Officer
Director andManaging

Akira

Corporate

Miyagi

○

○

○

○

○

○

○

○

○

○

○

○

○

●

●

○

Officer
Outside Director
Outside Director
Outside Director
Standing Audit& Supervisory
Board Member
Standing Audit& Supervisory
Board Member
Audit &
Supervisory
Board Member
Audit &
Supervisory
Board Member
Audit &
Supervisory
Board Member

MadokaMayuzumi
Shigeru
Saito
Tsunehiko
Iwai
Kiyotaka
Hiroshima
Shinichi
Kitagawa
HiroshiShirai
Mitsuhiro
Hamamoto
MinoruShimada

○

●

○

○

○

○

○

○

○

○

○

○

○

○

○
○

Other

71

○

The following diagram illustrates the outline of our corporate governance system:
General Meeting of Shareholders
Appointment and removal of
Audit & Supervisory Member

Appointment and removal of Director
Executive Nomination Advisory Committee
Chaired by: Outside Director
Members: 6 (including 3 Outside Directors)

Submitrecommendation

Audit & Supervisory Board
Members: 5 (including 3 Outside Audit &Supervisory Board Members)

Audit
Board of Directors
Members: 8 (including 3 Outside Directors)

SubmitExecutive Compensation Advisory Committee recommendation
Chaired by: Outside Director
Members: 6 (including 3 Outside Directors)

Appointment
and removal

Cooperate

Secretarial Office for Audit & Supervisory Board

Evaluate/
examineIndependent Outside Officers Meeting

Audit

Appointment and removal

Representative Director, President and Corporate
Officer of the Company
Cooperate

Audit Office

Key Management Committees
Group Management Meeting

Corporate Ethics and Risk
Management Committee

Accounting audit

Corporate Ethics Hotline
Quarterly Business Results
Review Committee

Group Strategy Committee

Give instructions

ReportCompliance Committee

Give instructions

Business Execution Divisions/Group Companies

72

CSR Procurement Committee

ReportInternal audit

Accounting Auditor

Execution ofoperation

b. Reason for Adoption of Corporate Governance System
The Company has adopted a governance system by a “Board of Directors” composed of Directors who are experts
in each business area and Outside Directors with diverse careers, and an “Audit & Supervisory Board” including Outside
Audit & Supervisory Board Members. We, as a holding company, believe that this governance system is effective insupervising and auditing the execution of duties at our group companies and to realize and maintain high-quality management.
For the foregoing reason, we have adopted our current governance system.
(ⅲ) Other Matters regarding Corporate Governance Systema.

Status of Improvement of Internal Control System
Our fundamental philosophy toward the internal control system and the status of improvement thereof, details of
which have been determined at the Board of Directors’ meetings, are as follows:＜System to Ensure Appropriate Business Conduct＞(System to ensure that execution of duties by Directors and/or employees is in compliance with laws and regulations and the
Articles of Incorporation)
To ensure that all Directors and employees of the business group comprised of the Company and its subsidiaries (“theWacoal Group”) comply with laws and regulations and the Articles of Incorporation and conduct business based on
sound social norms, we have enacted the “Wacoal Code of Ethics” and the “Corporate Ethics: Wacoal Standards ofConduct”.
-

In order to improve our system of compliance, we have established a Corporate Ethics and Risk Management
Committee, for which our Representative Director and President acts as administrative manager and the Director ofSupervisor of Group Business Management acts as chairman, which will consider any compliance issues which may
have a material impact on the Wacoal Group, enhance awareness and enlightenment on corporate ethics and effectively
promote control of any management risks on the Wacoal Group. The Management Planning Department shall act asorganizer, and shall be responsible for the corporate ethics and risk management related to the Wacoal Group.

-

We have established a system under which our legal/compliance department could be promptly notified if the fact thata Director and/or employee of the Wacoal Group may have violated the “Wacoal Code of Ethics” or the “Corporate
Ethics: Wacoal’s Code of Conduct”, or any other compliance issues is found. We have also established an internal
alerting system (corporate ethics hotline to the legal/compliance department and a law firm). After being notified
and/or alerted, the legal/compliance department conducts an investigation and formulates preventive measures after
discussions with the related department. If the issue is critical, the legal/compliance department will refer the matterto the Corporate Ethics and Risk Management Committee and will report the results of its deliberation to the Board of
Directors and/or Audit & Supervisory Board.

-“The Corporate Ethics: Wacoal Standards of Conduct” prescribes that Directors, and employees shall firmly refuse tocomply with demands of antisocial forces. In order to handle unjust demands of antisocial forces, we cooperate withoutside specialized institutions, collect and/or control information related to antisocial forces and are building aninternal system.

(System concerning the Storage and Management of Information related to Execution of Duties by Directors)
With the approval of the Board of Directors, we have enacted the “Document Management Rules” pursuant to which
we store the following documents (including electromagnetic records; hereafter the same) along with any relatedmaterials:-

Minutes of the General Meeting of Shareholders, minutes of the Board of Directors’ meetings, minutes of theGroup Management meetings, documents for which a Director is the final decision maker, and any otherdocuments prescribed in the “Document Management Rules”.
The retention period and the place for storage of the documents prescribed in the preceding paragraph shall be subject
to the “Document Management Rules”, but such retention period shall be at least ten years. The Directors and Audit& Supervisory Board Members shall have access to these documents at all times.

(Rules and Other Systems Concerning Risk Management of Losses)
In order to understand the management risk within the Wacoal Group in general and to improve and/or strengthen ourrisk management system, we have established the Corporate Ethics and Risk Management Committee, for which ourRepresentative Director and President acts as administrative manager and the Director of Supervisor of Group Business
Management as Chairman. The Management Planning Department shall act as the organizer.

73

-

-

The Corporate Ethics and Risk Management Committee prescribes “the Risk management basic rules”, subject to theapproval of the Board of Directors, which form the basis for our risk management system. The Corporate Ethics andRisk Management Committee clarifies the responsibilities by risk category pursuant to these rules, and formulates arisk management system that thoroughly and/or comprehensively controls potential risk within the Wacoal Group.
The Corporate Ethics and Risk Management Committee regularly reports on the operations of the Wacoal Group’s risk
management system to the Board of Directors.

(System to Ensure Effective Execution of Duties by Directors)---

In order to enhance appropriate decision-making by our Directors, we will at least one-third of all Directors will be
independent Outside Directors.
We will formulate a medium-term management plan to be shared by the Directors and/or employees within the Wacoal
Group and will direct and confirm courses of action and business targets in the mid to short term that are consistent
with such plan.
We will follow the business results of each Wacoal Group company on a monthly basis and report back to the Boardof Directors. In addition, by holding “Quarterly Business Results Review Committee” and “Group Strategy
Committee”, we will confirm the business results and the implementation of measures and policies, consider measuresin the event targets are not achieved, and review such targets, as may be necessary.
We adopt a corporate officer system, under which we seek to build an appropriate and efficient management system
which clearly defines the delegation of authority and responsibilities with respect to major Group companies(System to Ensure Appropriate Business Conduct within Group Companies)
We have enacted “the Group Management Rules”, which prescribe basic policies regarding the management of Group
companies and matters to be decided by our Board of Directors, as well as matters to be reported to the Company andmanage our Group companies in accordance with the rules.
--

We conduct any intercompany transaction fairly in compliance with laws and regulations, accounting principles andthe tax system.
Our audit office will conduct internal audits, including an audit of the establishment and/or operation of our compliancesystem and risk management system, within the group companies and will report the results of its audits to the Boardof Directors and appropriate departments and give guidance and/or advice related to the above group companies toensure the appropriate conduct of business.
Our foreign subsidiaries will comply with the laws and regulations of their respective home countries and will adopt asystem that is in line with our policies to the extent reasonable.

(Matters Concerning Assistants to Audit & Supervisory Board Members)-

Audit & Supervisory Board Members may appoint employees of the Company as their assistants who are to assist theduties of the Audit & Supervisory Board Members.
Such assistants shall be full-time employees. In order to ensure the effectiveness and independence of such assistants,
decisions on personal affairs, including appointment, evaluation, relocation and discipline of such assistants will be
subject to the consent of the Audit & Supervisory Board Members.

-(Reporting System of Directors and Employees to the Audit & Supervisory Board Members and Other Reporting System to
Audit & Supervisory Board Members)--

Directors of the Wacoal Group will promptly report to the Audit & Supervisory Board Members if they become awareof a material fact that violates the applicable laws and regulations and/or our Articles of Incorporation, misconduct ora fact that may cause significant damage to any company of the Wacoal Group.
Employees of the Wacoal Group may directly report to the Audit & Supervisory Board Members if they become awareof a material fact that violates the applicable laws and regulations and/or our Articles of Incorporation, misconduct ora fact that may cause significant damage to any company of the Wacoal Group. Any employee who makes such reportwill not be at a disadvantage for the reason of making such report.

-

Through the reporting of the following matters in addition to statutory matters to the Audit & Supervisory Board
Members by Directors and employees of the Wacoal Group, we strive to have the Audit & Supervisory Board Members
audit conducted effectively.
Matters referred to the Group Management Meeting
Monthly and quarterly group management conditions
Results of audits of operations
74

The condition of our internal reporting to our internal alert system
Other significant matters(Other Systems to Ensure Effective Audit by the Audit & Supervisory Board Members)
The majority of the Audit & Supervisory Board Members will be independent Outside Audit & Supervisory Board
Members to enhance the transparency and neutrality of audit.
The Audit & Supervisory Board Members may order employees who belong to the audit office to perform any tasks-

that are required to provide audit services. In addition, the Audit & Supervisory Board Members may request theCompany for reimbursement of expenses incurred for performing their duties.
Audit & Supervisory Board Members will attend meetings of the Board of Directors and may also attend other primary
meetings of the Wacoal Group.
The Audit & Supervisory Board Members will regularly meet with the audit office and the Accounting Auditor toreceive reports and to exchange opinions.
The Audit & Supervisory Board may consult legal counsel, certified public accountants, consultants, or other outsideadvisers as it deems necessary.

< Outline of Operation of our “System to Ensure Appropriate Business Conduct>(System to ensure that execution of duties by Directors and/or employees is in compliance with laws and regulations andthe Articles of Incorporation)
We have a Compliance Committee which specifically establishes and operates our compliance system. The-

Compliance Committee held a meeting each quarter and discussed and reviewed awareness of compliance and mattersreported to us through the internal alert system.
Our legal/compliance department continued to provide level-specific group education and e-learning programs as
part of our educational activities for our employees. We are also making step-by-step efforts to strengthen theinternal alert system for our overseas Group companies by providing compliance awareness training and carrying out
compliance review by a third-party as well as by expanding our external corporate ethics hotline.

(System concerning the Storage and Management of Information related to Execution of Duties by Directors)
Documents prescribed in the “Document Management Rules” have been properly stored in accordance with the“Document Management Rules” and the Directors and Audit & Supervisory Board Members have access to these
documents on a timely basis.
(Rules and Other Systems Concerning Risk Management of Losses)
The Corporate Ethics and Risk Management Committee assessed risks, monitored the implementation of measurestaken, and reported to the Board of Directors on a quarterly basis.
-

In April 2018, we established the CSR Procurement Committee as a subcommittee of the Corporate Ethics and Risk
Management Committee. As part of our group purchase policy, we launched an initiative that links together thefollowing functions, which we continue to expand, in order to check the outsources’ compliance with the “Wacoal
Group CSR-based Procurement Guidelines”, which includes provisions such as promotion of business transactions
with business enterprises that emphasize attention to social needs towards human rights, labor practices, environment
and ethics; monitoring of self-evaluation by outsources; analysis/assessment feedback; correction/improvement plans;
and follow-up.

(System to Ensure Effective Execution of Duties by Directors)
We engage in highly transparent decision-making by appointing three independent Outside Directors among our eight
Directors. In addition, “Criteria for Appointment of Officers” and “Criteria for Appointment of Outside Officers (toensure independence)” were newly stipulated in April, 2015.
We discussed and drafted Wacoal Group’s plan which is during fiscal year 2021.
-

We held meetings of the “Quarterly Business Results Review Committee” and “Group Strategy Committee’ on aquarterly basis and confirmed and reviewed the business results and implementation of measures.
We have resolved at the Board of Directors’ Meeting held in February 2020 to adopt the corporate officer systemstarting from April 1, 2020 in order to further enhance the Group’s business execution functions as a group.

75

(System to Ensure Appropriate Business Conduct within Group Companies)-

Matters to be decided and reported by our subsidiaries are appropriately managed in accordance with the “GroupManagement Rules”.
Our audit office develops an audit plan for each fiscal year and conducts audits on the operation and internal controlsof the Company and our domestic and overseas subsidiaries.

(Matters Concerning Assistants to Audit & Supervisory Board Members)-

Our audit office is currently assisting the duties of the Audit & Supervisory Board Members upon their request fromtime to time. Audit & Supervisory Board Members have not requested or appointed any assistant for their duties.

(Reporting System of Directors and Employees to the Audit & Supervisory Board Members and Other Reporting System
to Audit & Supervisory Board Members)-

The Audit & Supervisory Board Members attended primary meetings and received reports on matters that werediscussed and on the management condition, and also received reports, from time to time, on the results of internal
audits and matters reported through the internal alert system.

(Other Systems to Ensure Effective Audits by Audit & Supervisory Board Members)--

We enhance the effectiveness of audit by appointing three independent Outside Audit & Supervisory Board Members
among the five Audit & Supervisory Board Members.
The Company reimburses any and all expenses incurred by the Audit & Supervisory Board Members for performing
their duties.
The Audit & Supervisory Board Members attend meetings of the Board of Directors and other important meetings,
conducted hearings with the Directors and visited our domestic and overseas subsidiaries to conduct audits. In addition,
the Audit & Supervisory Board Members presided at “Audit & Supervisory Board Group Meetings” and received
periodic reports from the audit & supervisory board members of the domestic subsidiaries.
The Audit & Supervisory Board Members have, regularly and whenever necessary, exchanged information andopinions with the Accounting Auditor and the audit office.

b.

Matters Concerning Limitation of Liability Agreements with Outside Directors and Outside Audit & Supervisory Board
Members
Pursuant to the provisions of Paragraph 1, Article 427 of the Companies Act and our Articles of Incorporation, theCompany has executed an agreement with its Directors (excluding executive directors, etc.) and Audit & Supervisory Board
Members to limit their liability for damages as stipulated in Paragraph 1, Article 423 of the Companies Act.
The maximum amount of liability under such agreement is the minimum amount as provided by laws andregulations.

c.

Number of Directors
Our Articles of Incorporation prescribe that the number of Directors of the Company shall be not more than eight.

d.

Requirement for Appointment of Directors
Our Articles of Incorporation prescribe that resolutions to appoint Directors shall be made by a majority vote of thevoting rights of shareholders present at a General Meeting of Shareholders, where such shareholders present shall hold shares
representing one-third or more of the voting rights of all shareholders who are entitled to exercise such voting rights and that
resolutions to appoint Directors shall not be adopted by cumulative voting.

e.

Requirement for Special Resolutions at General Meeting of Shareholders
Our Articles of Incorporation prescribe that a resolution as stipulated in Paragraph 2, Article 309 of the Companies
Act shall be adopted by a two-thirds majority of the voting rights held by the shareholders present at the General Meeting of
Shareholders, who shall represent one-third or more of the total number of voting rights of the shareholders who are entitled
to exercise such voting rights. The purpose of this provision is to more surely secure the quorum for a special resolution at
any General Meeting of Shareholders.

76

f.

Decision-Making Body for Distribution of Earnings, etc.
Our Articles of Incorporation prescribe that matters set out in each Item of Paragraph 1, Article 459 of the Companies
Act (including the matters concerning distribution of earnings) shall be determined by a resolution of the Board of Directors,
unless otherwise provided for in any laws or regulations, for the purpose of performing an expeditious profit return to ourshareholders.

(2)【Directors and Audit & Supervisory Board Members】(ⅰ) List of Officers
Male: 12 persons
Female: 1 person (which accounted for 7.7% of the total number of directors and audit & supervisory board members)
Number of
Title

Name

Date of BirthBusiness Experience and Position(s) and Office(s)Office Shares Owned
Term (Thousands ofshares)Representative
Director andChairman

Yoshikata
TsukamotoJan. 29, 1948

Apr. 1972

Joined the Company

Nov. 1977

Director of the Company

Nov. 1981

Managing Director of the Company

Sep. 1984

Executive Vice President of the Company

Sep. 1984

Representative Director (acting)Jun. 1987
Oct. 2005

President and Director of the Company
Representative Director, President and Corporate Officer ofNote 1

278

Note 110

Wacoal Corp.
Apr. 2011

Representative Director and Chairman of Wacoal Corp.

Jun. 2018

Representative Director and Chairman of the Company (acting)Apr. 2020

Chairman of Kyoto Chamber of Commerce and Industry (acting)Mar. 1975

Joined the Company

Apr. 1997

President of Wacoal China Co., Ltd.

Apr. 2005

Corporate Officer/General Manager of Wing Brand Business
Department of the Company

Jun. 2006

Director and Managing Corporate Officer, General Manager ofWing Brand Business Department, of Wacoal Corp.

Representative
Director,
President andCorporate

Apr. 2010

Director and Senior Managing Corporate Officer, and General
Manager of Wacoal Brand Business Department, of Wacoal

Hironobu
Yasuhara

Dec. 28, 1951

Corp.
Apr. 2011

Representative Director, President and Corporate Officer of
Wacoal Corp.

OfficerJun. 2011

Director of the Company

Jun. 2013

Senior Managing Director of the Company

Jun. 2016

Vice President and Director of the Company

Apr. 2018
Jun. 2018

Representative Director and Chairman of Wacoal Corp.(acting)
Representative Director of the Company and President(acting)Apr. 2020

Representative Director, President and Corporate Officer of theCompany (acting)Apr. 1981

Joined the Company

Apr. 2011

Corporate Officer and Manager of Personnel Division of Wacoal
Corp.

Apr. 2013

Director and Corporate Officer, and General Manager of
Personnel and Administration Division of Wacoal Corp.

Apr. 2014

Director and Managing Corporate Officer, and General Manager
of Personnel and Administration Division of Wacoal Corp.

Apr. 2015

Director andVice President
Corporate
Officer

Masashi
Yamaguchi

Director and Senior Managing Corporate Officer in charge of
Administration, and General Manager of Personnel andNov 26, 1957

Administration Division of Wacoal Corp.
Jun. 2015

Director in charge of Personnel and Administration of theApr. 2017

Company
Director, Vice President Corporate Officer in charge of
Administration, and General Manager of Personnel and
Administration Division of Wacoal Corp.

Jun. 2017Managing Director and Supervisor of Personnel andApr. 2019

Appointed Director, Vice President Corporate Officer in charge

Administration and Future Business of the Company
of Administration of Wacoal Corp.

77

Note 1

3

Jun.2019

Director and Vice President and Supervisor of Group Business
Management of the Company

Apr.2020

Director and Vice President Corporate Officer and Supervisor ofGroup Business Management (acting)Jan. 18,1960
Director and

Apr. 1983

Joined the Company

Apr. 2006

General Manager of Sales Planning Division, Wacoal-Brand

Apr. 2007

Operations of Wacoal Corp.
Representative Director and President of Studio Five Corp.

Apr. 2011

General Manager of Innerwear Merchandising Division, WacoalBrand Operations of Wacoal Corp.

Apr. 2014

Vice President

Tomoyasu

Corporate

Ito

Director, Corporate Officer, Head of Wacoal-Brand Operationsof Wacoal Corp.

Apr. 2015

Officer

Director, Managing Corporate Officer, Head of Wacoal -Brand

Note 1

3Note 1

3Note 1－

Note 10Note 1－

Operations of Wacoal Corp.
Apr. 2016

Director, Senior Managing Corporate Officer, Head of Wacoal-Apr. 2018

Brand Operations of Wacoal Corp
Appointed Representative Director, President and Corporate
Officer of Wacoal Corp (acting).

Oct. 18,1960

Apr. 2020

Vice President Corporate Officer

Jun.2020

Director and Vice President Corporate Office (acting)Mar. 1984

Joined the Company

Oct. 2007

Manager of Business Management and Administration of
Wacoal Brand Operation Division of Wacoal Corp.

Apr. 2011

Director and Deputy General Manager of Wacoal China Co.,Ltd.

Director andManaging

Akira

Corporate
OfficeMiyagi

Apr. 2014

General Manager of Corporate Planning of the Company (acting)Apr. 2017

Corporate Officer of Wacoal Corp.

Jun. 2018

Director and General Manager of Corporate Planning of theCompany

Jun.2019

Managing director and General Manager of Corporate Planning

Apr. 2020of the Company
Director and Managing Corporate Officer in charge of Group
Finance of the Company (acting)

Aug. 1996

Launched and organized monthly haiku magazine Gekkan
HepburnJan. 2001

Member of “National Language Subdivision” of Council for
Cultural Affairs, Ministry of Education, Culture, Sports, Scienceand Technology

Dec. 2004

Member of “Council for the Promotion of Cultural Diplomacy”,
Cabinet Secretariat

Director

MadokaMayuzumi

Apr. 2010“Japan Cultural Envoy” appointed by the Agency for Cultural
Affairs

Jul. 31, 1962
May. 2013

Member of “Forum to Realize Culture and Arts-Oriented
Nation” held by Minister of Education, Culture, Sports, Scienceand Technology

Apr. 2014

Member of “Cultural Policy Subdivision” of Council for Cultural
Affairs, Ministry of Education, Culture, Sports, Science andTechnology

Director

Shigeru
Saito

Jan 26, 1957

Apr. 2014

Advisor of the Company

Jun. 2015

Director of the Company (acting)Nov. 1979

Joined TOSE CO., LTD.

Oct. 1985

General Manager of Development Department
Director of TOSE CO., LTD.

Feb. 1987

Representative Director and President of TOSE CO., LTD.

Sep. 2004

Representative Director and President, and CEO of TOSE CO.,LTD.

Dec. 2015

Representative Director and Chairman, and CEO of TOSE CO.,LTD. (acting)Jun. 2017

Director of the Company (acting)Apr. 1979

Joined Shiseido Co., Ltd.

Apr. 2002

General Manager of Product Commercialization, Planning
Department, Shiseido Co., Ltd.

Director

Tsunehiko
Iwai

May 28, 1953

Apr. 2008

Corporate Officer, General Manager of Technical Department,
Shiseido Co., Ltd.

Jun. 2014

Director, Corporate Executive Officer in charge of Research &Development, Production and Technical Affairs, Shiseido Co.,
Ltd.

78

Jan. 2016

Representative Director, Executive Vice President Chief
Technology & Innovation Officer, Shiseido Co., Ltd.

Mar. 2018

Senior Advisor, Shiseido Co., Ltd.

Jun. 2018

Director of the Company (acting)Apr. 1981

Joined the Company

Apr. 2008

Materials Control Manager of Technology/Production Divisionof Wacoal Corp.

Apr. 2009

Production Control Manager of Technology/Production Divisionof Wacoal Corp.

Standing Audit& Supervisory

Kiyotaka
Hiroshima

Board Member

Apr. 2010

Corporate Officer and General Manager ofApr. 2011

Technology/Production Division of Wacoal Corp.
Director and Corporate Officer and General Manager of

Jan 4, 1958

Note 54Note 6－Note 53Note 3

1Note 4

1

Technology/Production Division of Wacoal Corp.
Apr. 2015

Director and Corporate Officer and Supervisor ofTechnology/Production of Wacoal Corp.

Jun. 2015

Audit & Supervisory Board Member of Wacoal Corp. (acting)Jun. 2015

Audit & Supervisory Board Member of the Company (acting)Mar. 1985

Joined the Company

Apr. 2008

Director and General Manager of Accounting and
Administration Division of Studio Five Corp.

Standing Audit

Shinichi& Supervisory

Kitagawa

Board Member

Dec. 29, 1962

Audit &
Supervisory Board
MemberHiroshi ShiraiOct. 21, 1953

Apr. 2009

Director and General Manager of Business Control Division ofStudio Five Corp.

Apr. 2013
Apr. 2018

IR/Public Relations Officer of the Company.
General Manager of Accounting Department of the Company

Jun. 2020

Audit & Supervisory Board Member of the Company (acting)Nov. 1977

Joined Pricewaterhouse

Aug. 1982

Registered as Certified Public Accountant

Jul. 1992

Joined Aoyama Audit Corporation

Aug. 2007

Joined Deloitte Touche Tohmatsu

Jun. 2010

Vice Chairman of The Japanese Institute of Certified Public
Accountants Kinki Chapter

Sep. 2011

Left Deloitte Touche Tohmatsu

Oct. 2011

Established Shirai public accounting firm, Managing Partner(acting)

Audit &
Supervisory
Board Member

Mitsuhiro
Hamamoto

Apr. 18, 1970

Jun. 2015

Audit & Supervisory Board Member (acting)Oct. 2000

Admitted to the Bar

Oct. 2000

Joined the Law Office of Tadashi Yamada

Oct. 2004

Joined the Kikkawa Law Office

Apr. 2008

Partner at the Kikkawa Law OfficeJun. 2017

Audit & Supervisory Board Member of the Company (acting)Feb. 2019

Managing Partner of Hamamoto Law Office (acting)Apr. 1977

Joined The Bank of Tokyo, Ltd. (current “MUFG Bank, Ltd.”)

Jun. 2004

Corporate Officer, General Manager of Corporate Banking
Group No.1, Corporate Banking Division No.4, The Bank ofTokyo Mitsubishi, Ltd. (current “MUFG Bank, Ltd.”)

May. 2005

Corporate Officer, Manager of New York Branch

Apr. 2008

Managing Corporate Officer, General Manager of Corporate
Banking Group, Nagoya Branch, The Bank of Tokyo -Mitsubishi

Audit &
Supervisory
Board Member

MinoruShimadaUFJ, Ltd. (current “MUFG Bank, Ltd.”)
Feb. 22,1955

Jun. 2010

Representative Director and Vice President, SOTSU
CORPORATION

Jun. 2011

Representative Director and President, NAIGAI Construction
Co., Ltd.

Jun. 2012

Representative Director and President, SOTSU CORPORATION
Representative Director and President, Sotsu Amenity Service
Corporation

Jun. 2018

Director and Chairman, SOTSU CORPORATION
Audit & Supervisory Board Member of the Company (acting)
Total(Note)

1
2
3

310

The term of office of a Director is one year from the conclusion of the Ordinary General Meeting of Shareholders heldon June 26, 2020.
Directors Ms. Madoka Mayuzumi, Mr. Shigeru Saito and Mr. Tsunehiko Iwai are Outside Directors.
The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders held on June 29, 2017.

79

4
5
6
7

8

The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders to be held on June 28, 2018.
The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders to be held on June 27, 2019.
The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders to be held on June 26, 2020.
Audit & Supervisory Board Members Mr. Hiroshi Shirai, Mr. Mitsuhiro Hamamoto and Mr. Minoru Shimada are
Outside Audit & Supervisory Board Members.
We have adopted the corporate officer system in order to clarify executive responsibility and accelerate the speed of
execution of duties.

The Corporate Officers who do not concurrently serve as Directors are as follows:
Title
Corporate
Officer

Name

General Manager of Corporate Planning and IT Governance

HiroakiMiyakeCorporatein charge of Group Personnel, Director and Corporate Officer and General Manager of Personnel and

Takahiko

Officer

Administration Division of Wacoal Corp.

Hasegawa

Corporatein charge of Group Technology and Production, Director and Corporate Officer and General

Kazuhiro

OfficerManager of Technology/Production Division of Wacoal Corp.

Shibahara

Corporatein charge of Group International Business, Director and Corporate Officer and General Manager of

Mitsuru

Officer

Global Division of Wacoal Corp.

Sekiguchi

Corporatein charge of Group Research and Development, Corporate Officer and Director of Human Science

Hiroshi

Officer

Research Center of Wacoal Corp.

Imai

Corporatein charge of Group IT Promotion, Corporate Officer and Manager of IT Promotion Division of

Officer

Wacoal Corp.

(ii)

Shuji
Morimoto

Status of Outside Officers
We have three Outside Directors and three Outside Audit & Supervisory Board Members.
We have elected those persons playing an active role widely in the field of arts and culture in Japan and overseas
and persons having extensive knowledge and experience as executives to our Outside Directors, and each of such persons
takes a role in improving the appropriateness of the decision made by the Board of Directors by giving objective andindependent advice based on their long careers in each business area and extensive professional knowledge. Also, we haveelected those persons who have experiences as business administrators in financial services, independent attorneys at law or
independent certified public accountants having a considerable degree of finance and accounting knowledge, to our Outside
Audit & Supervisory Board Members. Each Outside Audit & Supervisory Board Member conducts a strict audit on the legalityof Directors’ decision making and performance of their businesses from a technical perspective by maintaining high levels of
independence.
The Company prescribes “Criteria for Appointment of Officers” and “Criteria for Appointment of Outside Officers(that ensures independence)” for appointing an Outside Director and an Outside Audit & Supervisory Board Member.
Upon the appointment of an Outside Director Board Member, the “Executive Nomination Advisory Committee”
will submit a list of candidates based on the following criteria to the Board of directors, and a candidate for Audit &Supervisory Board Member is appointed at a Board of Directors’ meeting with the approval of the Audit & Supervisory Board.
The list of candidates for Audit & Supervisory Board Member is then submitted to a general meeting of shareholders as anagenda item.
- A candidate with superior character and knowledge and is mentally and physically healthy;- A candidate pursues a law-abiding spirit;- A candidate has comprehensive experience in business operation, company management, legal community,
administration, accounting, education or culture and art and upon re-appointment, his/her management
performance and contribution to the group management during the term of office shall be considered;- A candidate is not in violation of the “Criteria for Appointment of Outside Officers (that ensures independence)”
separately prescribed by the Company;- A candidate is not currently holding a position as an officer of 4 or more listed companies;- By appointing such candidate, Board of Directors and the Audit & Supervisory Board will each have a balanced
knowledge, experience and expertise that ensures diversity such as gender and internationalism;80

We also believe that an Outside Director and an Outside Audit & Supervisory Board Member shall maintain an
independent position so that each will not cause any conflict of interest with general shareholders. From this aspect, theCompany shall appoint a candidate for an Outside Officer who does not fall under any of the following items:
1. Has held a position to execute duties at any of our group companies;
2. A major shareholder holding the shares of the Company under its name or other name, is equal to or higher than
5% as percentage of voting rights; in case such major shareholders is a legal entity or an association such as
general partnership (“Entities”), a candidate who is holding a position to execute duties at such Entities;
3. A candidate who:
- is the major client of our group or considers our group as the candidate’s major client; in case such candidate
is an Entity, a candidate who is holding a position to execute duties at such Entity;- is the major lender of our group; in case such lender is an Entity, a candidate who is holding a position to
execute duties at such Entity;- is holding a position to execute duties at lead manager securities company; or- is holding a position to execute duties at any Entity in which our group hold shares, whose percentage ofvoting rights is equal to or greater than 5%.
4. A certified public accountant who works at an audit firm, which is the Accounting Auditor of our group;
5. Any legal counsel, accountant, tax accountant, patent attorney, consultant or other expert who receives large
amount of monies or other assets from our group; in case such candidate is an Entity, an expert who works atsuch Entity;
6. Anyone who receives large amount of donation from our group; in case such candidate is an Entity, a candidate
who is holding a position to execute duties at such Entity;
7. A candidate who is holding a position to execute duties at other companies having a relationship involving
mutual appointment of outside officers;
8. A spouse or second-degree relative of a person (limited to those significant) who falls under any of the items
under 1 through 7 above;
9. A candidate who used to fall under any of the items under 1 through 8 above during the past three years;
10. A candidate who is deemed to have a special circumstance where a possible conflict of interest with generalshareholders of the Company may arise.
It should be noted, however, that a candidate who falls under any of the items under 2 through 9 above, but who
fulfills the requirements of an outside officer under the Companies Act, and if the Company deems it appropriate for suchcandidate to be appointed as an outside officer, may exceptionally become a candidate for an outside officer by describing
the reasons of the Company for making such judgment.
For our Outside Directors, the Management Planning Department hands out documents setting out the proposals
presented to the Board of Directors’ meetings in advance and gives prior explanations on important matters to them. For
Outside Audit & Supervisory Board Member, Standing Audit & Supervisory Board Member does it.
One of our Outside Director and three of our Outside Audit & Supervisory Board Members hold 0 and 6,000 sharesof common stock of the Company, respectively. Other than the foregoing, there are no special interests between our Outside
Directors or Outside Audit & Supervisory Board Members and the Company.

81

The reasons for the election of our Outside Directors and Outside Audit & Supervisory Board Members are as
follows:
Title

Name

Outside Director

Madoka Mayuzumi

Outside Director

Shigeru Saito

Outside Director

Tsunehiko Iwai

Outside Audit &Hiroshi Shirai

Supervisory Board
MemberOutside Audit &Mitsuhiro Hamamoto

Supervisory Board
MemberOutside Audit &Supervisory Board
MemberMinoru Shimada

Reasons for Election
Ms. Mayuzumi plays an active role as a haiku poet in the field of arts andculture in Japan and overseas. While serving as Advisor of the Company from
April 2014, she has provided advice that addresses social challenges andeducational training for employees of the Company and Wacoal Corp. We
expect that, with her knowledge and experience, she will contribute to theCompany’s management which respects diversity.
Although Ms. Mayuzumi has never been involved in the Company’s
management other than by way of serving as an Outside Director or Outside
Audit & Supervisory Board Member in the past, we believe that she will beable to perform her duties appropriately for the above-stated reasons.
Also, because she meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated her as an independent
officer.
Mr. Saito currently serves as the Representative Director and Chairman at
another company, and has many years of experience and knowledge as abusiness manager. We believe that he is qualified to be an Outside Director tofurther strengthen the supervisory function of the Company management.
Also, because he meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated him as an independent
officer.
We believe that Mr. Iwai is qualified to be an Outside Director to further
strengthen the supervisory function of the Company management, as he has
extensive knowledge and experience as management, as well as specialized
knowledge in the fields of research & development, production and technology.
Also, because he meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated him as an independent
officer.
We believe that Mr. Shirai is qualified to be our Outside Audit & Supervisory
Board Member, as he has knowledge and experience in accounting and finance(including U.S. accounting standards) as a certified public accountant.
Mr. Shirai worked at Deloitte Touche Tohmatsu LLC, our accounting auditor,
from August 2007 to September 2011, but he was never involved in the audit
services engaged for the Company during such period. It has been eight years
and eight months since Mr. Shirai left Deloitte Touche Tohmatsu LLC.
Also, because he meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated him as anindependent officer.
We believe that Mr. Hamamoto is qualified to be our Outside Audit &Supervisory Board Member, as he has legal knowledge and great store ofexperience of business and commercial issues as an attorney at law.
Also, because he meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated him as anindependent officer.
We believe that Mr. Shimada is qualified to be our Outside Audit &Supervisory Board Member, as he has years of experience in the financial

82

industry and also has extensive experience and expertise in different industrial
sectors.
Also, because he meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated him as anindependent officer.
(ⅲ)

Supervision or Audit and Internal Audit by Outside Directors or Outside Audit & Supervisory Board Members, Audit byAudit & Supervisory Board Members and Mutual Collaboration with Accounting Auditor, as well as Relationship with Internal
Control Division
Outside Directors fulfill the supervisory function of management by providing recommendations at the Board of Directors meetings
based on their extensive knowledge and experience after they receive necessary documents and are explained about agenda items
which they receive prior to the Board of Directors meetings, as well as by serving as the chair or a member of the “Executive
Compensation Advisory Committee” and/or “Executive Nomination Advisory Committee”. Outside Directors also contribute to
the implementation and/or maintenance of the internal control system by receiving various reports from the internal control division.
Outside Audit & Supervisory Board Members perform the audit of the internal control system, including fair presentation of financial
statements, by attending meetings of the Audit & Supervisory Board, and by establishing sufficient communication channels andcoordinating with the Standing Audit & Supervisory Board Members, who in turn report to the Outside Audit & Supervisory Board
Members the status of audit on operations, details of important meetings and other matters as necessary, as well as by receiving
various reports from the Accounting Auditor and internal control division. In addition, based on matters discussed at the meetings of
the Audit & Supervisory Board, Outside Audit & Supervisory Board Members attend the Board of Directors meetings and otherimportant meetings and enhance the effectiveness of audit by visiting and conducting hearings at our subsidiaries.
In addition to the above, Outside Directors and Outside Audit & Supervisory Board Members exchange opinions on issues raised inconnection with the operation of the Board of Directors’ meeting.

(3)【Status of Audit】(ⅰ) Status of Audit by Audit & Supervisory Board Members
a. Organization and Members
Our Audit & Supervisor Board are composed of five members, who are two Standing Audit & Supervisory Board
Members and three Outside Audit & Supervisory Board Members. Standing Audit & Supervisory Board Member Mr.
Kiyotaka Hiroshima serves as the head of the Audit & Supervisor Board. Standing Audit & Supervisory Board
Member Mr. Shinichi Kitagawa and out side Audit & Supervisory Board Member Mr. Hiroshi Shirai, qualified as acertified accountant, has a considerable degree of finance and accounting knowledge. Standing Audit & Supervisory
Board Member Mr. Kiyotaka Hiroshima provides audit and advices based on his experience as a Director of Wacoal
Corp., our core operating entity, and extensive knowledge of the production and technology divisions. Outside Audit& Supervisory Board Member Mr. Mitsuhiro Hamamoto provides audit and advices based on his legal knowledge asa lawyer and experience in business law, which is his area of specialization. Outside Audit & Supervisory Board
Member Mr. Minoru Shimada provides audit and advices based on extensive experience in financial industry andextensive knowledge as a corporate executive. The foregoing members have enhanced the effectiveness of audit. In
addition, we have a full-time assistant for the Secretarial Office for the Audit & Supervisory Board to assist the dutiesof the Audit & Supervisory Board Members and our Audit Office assists the duties of the Audit & Supervisory Board
Members upon their request from time to time.
b. Activities of Audit & Supervisory Board
The Audit & Supervisory Board generally meets once a month before the Board of Directors meeting and also fromtime to time as necessary. We held 15 meetings during the current fiscal year. The attendance record of each Audit &Supervisory Board Member is as follows.

Name

Meeting attendance (Attendance rate)

Standing Audit &TomokiSupervisory

Nakamura

14/15 (93%)

Title

83

Board Member
Standing Audit &Supervisory
Board Member
Outside Audit &Supervisory
Board Member
Outside Audit &Supervisory
Board Member
Outside Audit &Supervisory
Board Member

Kiyotaka

15/15 (100%)

Hiroshima
Hiroshi

14/15 (93%)

Shirai
Mitsuhiro

15/15 (100%)

Hamamoto
Minoru15/15 (100%)

ShimadaThe Audit & Supervisory Board prepares an audit report, determines appointment and removal of Standing
Audit & Supervisory Board Members, audit policies, procedures of investigation on the conduct of the businessand the assets and properties and matters regarding the execution of duties of Audit & Supervisory Board
Members in accordance with the Companies Act. The Audit & Supervisory Board also examines matters to beresolved by the Audit & Supervisory Board such as matters regarding appointment and removal or nonreappointment of the accounting auditor, consent on the amount of remuneration, etc. paid for the accounting
auditor, consent on appointment of Audit & Supervisory Board Members, examines the agenda of the Board of
Directors in advance, exchanges information and opinions in relation to audit, exchanges opinions with the
Representative Director and Chairman and the Representative Director and President, and conducts hearings on
the execution of duties with the Directors of Wacoal Corp., our major subsidiary. The Audit & Supervisory
Board monitors and inspects the status of the audit by the accounting auditor through results of quarterly review
and the status of its accounting audit at the end of the fiscal year, as well as hearings on the system to ensure theappropriate execution of duties of the accounting auditor and the results of audits on the internal controls as
appropriate.
c. Activities of Audit & Supervisory Board Members
The Audit & Supervisory Board Members attend meetings of the Board of Directors and other important
meetings such as Group Management Meeting, express their opinions as necessary and hear explanation on
important operational matters from the Directors etc. in accordance with the audit standards prescribed by the
Audit & Supervisory Board. The Audit & Supervisory Board Members also monitors and inspects the system toensure appropriate business conduct to perform audits on legality and validity of the execution of duties of the
Directors. In addition, Outside Audit & Supervisory Board Member Mr. Minoru Shimada attends the Executive
Nomination Advisory Committee and the Executive Compensation Advisory Committee as an observer andexpresses his opinions as necessary and Standing Audit & Supervisory Board Members attend the Corporate
Ethics and Risk Management Committee, the Compliance Committee and the CSR Procurement Committee as
an observer and express their opinions as necessary in order to strengthen the monitoring function on
operations.
Standing Audit & Supervisory Board Members make efforts to communicate with the Directors and employees,
maintain an environment for information gathering and auditing, conduct audits on the status of principal offices
and the assets and properties, receive monthly reports from Audit Office and share the information with Outside
Audit & Supervisory Board Members in accordance with the audit standards and the assignment of work
responsibilities prescribed by the Audit & Supervisory Board. Standing Audit & Supervisory Board Members
also hold Audit & Supervisory Board group meetings, receive annual reports from the Audit & Supervisory
Board Members of the domestic subsidiaries and visit the domestic and overseas subsidiaries to conduct audits
with Outside Audit & Supervisory Board Members as much as possible in order to understand the management
condition through hearings from the management. Standing Audit & Supervisory Board Members receive
reports regarding the management conditions of the major overseas subsidiaries from Global division from time
to time.
During the current fiscal year, we focused on compliance with the business judgement rule in the meeting ofBoard of Directors, dealing with the Corporate Governance Code, enhancement of compliance in areas such as
CSR procurement and strengthening audits on the adequacy of the accounting auditor, including the audit
84

results that took into consideration the Key Audit Matters (KAM) which will be adopted starting with the fiscal
year ending March 31, 2021.

(ⅱ) Status of Internal Audit
Pursuant to the “Internal Audit Regulations”, our Audit Office, the internal audit division, which is directly under thecontrol of the Representative Director and President, audits the legality and appropriateness of the execution ofoperations at the Company and our domestic and overseas subsidiaries, and evaluates the effectiveness of the internal
controls. The results of such audit and evaluation are regularly reported to the Representative Director and President.
The number of staff of our internal audit department (Audit Office) as of June 26, 2020, was 11.
Our Audit & Supervisory Board Members and internal audit department (Audit Office) have a regular meeting forreporting and confirmation once a month. The main purpose of such meeting is to report the discussions at major
meetings at which our Audit & Supervisory Board Members attended, activities conducted by our Audit Office, andother matters. We have implemented an audit system allowing the sharing of documents and information necessary foraudit so that audit working papers are mutually exchanged and confirmed by our Audit & Supervisory Board Members
and Audit Office, and the audit can be performed more efficiently and effectively through alliance between our Audit &Supervisory Board Members and Audit Office.
Further, our Audit & Supervisory Board Members and Accounting Auditor have regular meetings for discussion six
times a year. The purpose of such discussion is mainly to report and confirm the plan and status of the audit and to
exchange opinions on the management. In addition, they have meetings from time to time as necessary.
(ⅲ) Status of Accounting Audita.

Name of Audit Firm
An accounting audit agreement has been executed between the Company and Deloitte Touche Tohmatsu LLC(“Tohmatsu”) pursuant to the Companies Act and the Financial Instruments and Exchange Act.

b. Consecutive Number of Years during which Audit Was Performed
52 yearsc. Names of the certified public accountants who were engaged in the audit:
Designated Limited Liability Partners and Managing Members: Wakyu Shinmen, Hiroaki Sakai, Tomomi Tsujid.

Composition of the assistants for the audit services:
8 certified public accountants, 6 persons who passed the certified public accountant examination and 7 otherpersons

e．Policies and Reason for Appointing Audit Firm
The Audit & Supervisor Board selects the certified public accountants, etc. on the condition that such certified public accountant
does not fall under any of the item under Paragraph 1, Article 340 of the Companies Act and that there are no event that may
impair the eligibility and independence of such certified public accountant.
We have selected Tohmatsu based on the fact that it has the required independence, expertise, and appropriateness and adequacy
in auditing activities, and on our judgment that it has the system to ensure that the accounting audit of the Company will be
conducted appropriately and sufficiently.
f．Evaluation of Audit Firm by Audit & Supervisory Board Members and Audit & Supervisory Board
Upon the discussion and resolution on the appointment and non-reappointment of Tohmatsu at a meeting held on April 25, 2019,
the Audit & Supervisory Board performed an evaluation from the following perspectives: (1) how the compliance system has
been established and operated; (2) ensuring and/or monitoring of independence; (3) system to ensure audit quality; (4) high levelof audit and/or accounting expertise; (5) communication with the Audit & Supervisory Board Members; and (6) sufficiency oftime taken for audit procedures and adequacy of remuneration for audit.

85

(ⅳ) Audit Fees
A. Fees to Certified Public Accountants
Fiscal Year Ended March 31, 2019
Category
Fees for Audit Services(Millions of yen)

Fiscal Year Ended March 31, 2020

Fees for Nonaudit
Services(Millions of yen)

Fees for Audit Services(Millions of yen)

Fees for Nonaudit
Services(Millions of yen)

The Company

141

9

146

82

Consolidated
subsidiaries

14

－

14

－

Total

155

9

160

82

For both fiscal years ended March 31, 2019 and 2020, the Company paid fees to the accounting auditor or certified
public accountants as compensation for the advice and guidance regarding the creation of Group Accounting Rules
and consulting services for CSR procurement activities, which are out of the scope of the services that are set forthin Paragraph 1, Article 2 of the Certified Public Accountants Act.
B．Compensation for the same network as the CPA (Deloitte) (excluding a)
Fiscal Year Ended March 31, 2019
Category

Fees for Audit
Services(Millions of yen)－

Fees for Nonaudit
Services(Millions of yen)

Fiscal Year Ended March 31, 2020
Fees for Audit
Services(Millions of yen)－

Fees for Nonaudit
Services(Millions of yen)

The Company
1022
Consolidated
97
31
111
57
subsidiaries
Total
97
41
111
79
For both fiscal years ended March 31, 2019 and 2020, the Company paid fees to the accounting auditor or certified
public accountants as compensation for the advice and guidance regarding tax.
In the fiscal year ended March 31, 2019, the consolidated subsidiaries paid fees to the accounting auditor or certified
public accountants as compensation for the advice and guidance regarding tax. In the fiscal year ended March 31,
2020, the consolidated subsidiaries paid fees to the accounting auditor or certified public accountants ascompensation for the advice and guidance regarding tax and M&A.
C. Other material audit fees
Not applicable.
D. Policy on determination of audit fees
The Company determines the amount of audit fees to be paid to the certified public accountants, etc., taking into
account the number of days required for the audit, the characteristics of services, and other factors.
E．Reason by Audit & Supervisory Board Members for giving consent on the amount of fees payable to the accounting
auditor
The Audit & Supervisory Board has obtained necessary documents and received explanations regarding thecomparison of the estimated time under the audit plan from the previous fiscal year and the actual time used for audit
performance and the trend in the amount of fees paid for the audit performance during the past fiscal years from therelevant departments and the accounting auditor, has reviewed the details of audit planning, basis for calculating fees
and level of fees presented by the accounting auditor for the current fiscal year, and after deliberating whether theamount of fees for the audit performance is appropriate to maintain the independence of the accounting auditor and tocarry out its accounting audit under appropriate audit system and audit plan for the assessment of risks related to theaudit environment and internal control system of the business group (including the Company and its consolidated
subsidiaries), the Audit & Supervisory Board has deemed the amount of fees for the current fiscal year is appropriate.
Based on the above, the Audit & Supervisory Board has given its consent, pursuant to the provisions of Paragraph 1,
Article 399 of the Companies Act, on the amount of fees payable to the accounting auditor.

86

(4)【Remunerations Paid to Officers】(ⅰ)Details and Policies of Calculation methods for Amount of Remunerations, etc., Paid to Officers or Method of Calculatingsuch AmountThe remunerations paid to Directors under our compensation system for officers consists of “Basic Remuneration,” the amount of
which is fixed, and “Bonus,” which is linked to the business results of each fiscal year, as well as “Stock Option,” which is linked
to medium- and long-term business results. In the case of Outside Directors and Audit & Supervisory Board Members who shallbe in the position independent from the management, only “Basic Remuneration” is paid because any remuneration linked tobusiness results are not appropriate in such case.
<Basic Remuneration>
The basic remuneration is designed to be determined for each position, but may be increased, within a certain range, based on thecontribution made to the management of the Company in the past years. The Company annually verifies the adequacy of thelevel of remuneration, which has been set according to the business results and scale of the Company and is based on comparison
with other companies within the same industry or of the same scale through the investigation results on remuneration prepared by
an external agency.
The basic remuneration amount for Directors is determined after discussion within the Executive Compensation Advisory
Committee and resolution by the Board of Directors. The basic remuneration amount for Audit & Supervisory Board Members isdetermined after discussion within the Audit & Supervisory Board.
<Performance-Linked Bonus>
The total amount of the performance-linked bonus is based on achievement as a percentage of the consolidated operating income
recorded for each fiscal year, plus other performance factors. The consolidated operating income is the base amount so that theamount of the bonus is highly linked to the consolidated business results. The base amount has been set as 13,500 million yen
based on the business results from previous fiscal years, and the consolidated operating income for the current fiscal year was
6,632 million yen.
The amount of the performance-linked bonus is determined after discussion within the Executive Compensation Advisory
Committee, resolution by the Board of Directors, and approval by the general meeting of shareholders.
<Share-Based Compensation>
Share-based compensation in the form of stock options is resolved by the Executive Compensation Advisory Committee after
discussion within the Executive Compensation Advisory Committee.
The maximum annual amounts of the basic remuneration paid to Directors and Audit & Supervisory Board Members were
determined to be 350 million yen (excluding the amount paid as salaries for employees to the Directors who concurrently serve as
employees) and 75 million yen, respectively, by the resolution adopted at the 57th Ordinary General Meeting of Shareholders
held on June 29, 2005.Totaling seven directors jointed to the resolution.
The amount of Performance-Linked bonuses was determined to be such amount as is determined according to the business resultsof each fiscal year, which is resolved at each Ordinary General Meeting of Shareholders held for the relevant year. Further, themaximum annual amount of stock options was determined to be 70 million yen by the resolution adopted at the 60th Ordinary
General Meeting of Shareholders held on June 27, 2008. Totaling eight directors jointed to the resolution.
The ratio of the basic remuneration, performance-linked bonuses and stock options is as follows:
basic remuneration 71%; performance-linked bonuses 18%; and stock options 11%.
(assuming the performance-linked bonuses meet the base amount)
The retirement allowance system for officers was abolished by the resolution adopted at the 57th Ordinary General Meeting of
Shareholders held on June 29, 2005.
<Roles and Activities of Executive Compensation Advisory Committee>
As an advisory body to Board of Directors, the Executive Compensation Advisory Committee discusses and resolves mattersrelated to officers’ compensation and system from an independent and objective perspective. Half of the members of the
Executive Compensation Advisory Committee, chaired by Independent Outside Director Mr. Tsunehiko Iwai, are Independent87

Outside Directors. The Executive Compensation Advisory Committee is also attended by the Outside Audit & Supervisory
Board Member(s) as an observer to ensure transparency.
The Executive Compensation Advisory Committee has resolved after discussion on the matters related to the remuneration paid
to officers for the current fiscal year as follows:
We have resolved upon discussion the matters below related to the remuneration of officers for the current fiscal year:
February 25, 2019:

Verification of the level of remuneration for officers and basic remuneration amount

July 21, 2019:

Issuance of stock options

April 24, 2020:

Performance-linked bonus for officers<Roles and Agenda at the Board of Directors’ Meeting>Board of Directors discusses and resolves matters related to officers’ remuneration based on recommendations received from the
Executive Compensation Advisory Committee.
The Board of Directors has resolved after discussion on the matters related to the remuneration paid to officers for the current
fiscal year as follows:
June 27, 2019:

Basic remuneration amount for the current fiscal year

June 27, 2019:

Issuance of stock options

May 28, 2020:

Performance-linked bonus for officers

The Executive Compensation Advisory Committee continues to work on restructuring the whole compensation system forexecutives including the following:- Examination and formulation of the basic policy regarding the compensation for executives- Composition of basic compensation, performance-linked bonuses and mid- and long-term incentives (reassessment of theamount and relative proportions)- Calculation method for performance-linked bonuses (to strengthen their link to business targets in accordance with themedium- and long-term management plan)-

Mid- and long-term incentive (examination of compensation other than stock options)(ⅱ) Aggregate amount of remunerations, etc., paid to each category of officers, aggregate amount of remunerations, etc., by typethereof, as well as the number of relevant officers:
Aggregate
Aggregate Amount of Remunerations, etc.,
Amount of
by Type Thereof (Millions of yen)
Number ofCategory of Officers
Remunerations,
Relevant
Basicetc. (Millions of
Officers
Bonus
Stock Option
Remunerationyen)
Directors(Excluding Outside
Directors)
Audit & Supervisory Board
Members(Excluding Outside Audit &Supervisory Board
Members)
Outside Officers(Note)

282

227

12

43

5

39

39

－

－

2

49

49

－

－

6

As of March 31, 2020, the numbers of Directors, Audit & Supervisory Board Members, and Outside Officers werefour, two, and six, respectively. These numbers were inconsistent with the numbers described above because thenumbers described above include one Director who resigned as Director upon the close of the 71th Ordinary General
Meeting of Shareholders held on June 27, 2019.

88

(ⅲ) Aggregate amount, etc., of the consolidated remunerations, etc., of the person who receives 100 million yen or more as
remunerations, etc., on a consolidated basis:Amount of Consolidated Remunerations, etc.,
Aggregate
by Type Thereof (Millions of yen)Amount ofConsolidated
Category of
Relevant
Name
Remunerations,
Officers
Company
Basic
etc.
Bonus
Stock Option
Remuneration(Millions ofyen)
Yoshikata
Tsukamoto

156

WacoalHoldings
Corp.

Director

129

5

21

(5)【Information on Shareholdings】(ⅰ) Standard and Concept for Categories of Investment Stocks
With respect to the category of the investment stocks that are held for the purpose of pure investment and that are held for the
purposes other than pure investment, the Company does not hold any shares for the purpose of pure investment as part of asset
management, but holds shares of other companies for purposes other than pure investment that are strategically important for ourgroup, to maintain and enhance business transactions, to build, maintain and enhance cooperative and transactional relationships
for business expansion, and to maintain steady financial transactions.
(ⅱ)Equity securities held by Wacoal Corp.
Shares held by Wacoal Corp., which is among the Company and our consolidated subsidiaries and holds the largest amount ofequity securities on the balance sheet (i.e., the balance sheet amount of investment stocks) are as follows:
A．Equity securities held for purposes other than pure investment
a. Policies and method to verify the rationality of shareholding, as well as the verification process at meeting of Board of
Directors regarding appropriateness of holding certain stock of shares
The Company examines whether it is appropriate to hold shares from a medium-to long-term perspective, whether risks
associated with such holding are worth the cost of capital, and profits in connection with the transaction and dividend
income indices are reported to the Board of Directors on a regular basis. The Board of Directors then examines whether
the holding will be enhance corporate value of the Company from a medium-to long-term perspective based on suchverification results, and determines whether to continue to hold or dispose such shares.
b. Number of Stock and Amount Recorded in the Balance Sheet
Number of Total Amount Recorded in the
StocksBalance Sheet (Millions of yen)
Unlisted Stock of Shares
Shares Other than Unlisted
Stock of Shares

29

1,635

55

40,536(Name of stock of shares which increased during the current fiscal year)
Total Acquisition Amount for
Number of
Increased Shares (Millions ofStocksyen)
Unlisted Stock of Shares

2275

Shares Other than Unlisted
Stock of Shares

1

4(Name of stock of shares which decreased during the current fiscal year)
Total Disposal Amount for
Number of
Decreased Shares (Millions ofStocksyen)
Unlisted Stock of Shares－－

Shares Other than Unlisted
Stock of Shares

14

15,24889

Reason for Increase in the Number of Shares
Acquired for the purpose of building
cooperative relationship
Increased through purchases made by shareownership plan for shares in clients

c. Information on specified investment stocks and stocks deemed to be held, including number of shares by stock, and theamount recorded in the balance sheet
Specified investment stocks:
Fiscal Year 2020
Issuer Name

Fiscal Year 2019

Number of Shares
Number of Shares Purpose of Holding, Quantitative Effects of Whether Issuer
Shareholding (Note 2) and Reason for
Holds Company(Shares)(Shares)
Increase in Number of Shares
SharesAmount Recorded in Amount Recorded in
the Balance Sheet
the Balance Sheet(Millions of yen)
(Millions of yen)
1,520,500

3,520,500

KDDI
Corporation
4,850

8,396

We engage in a transaction involving
communications equipment andinfrastructure with the issuer and continue
to hold the issuer’s shares to maintain andstrengthen our good relationship from theperspective of enhancing corporate value.

1,542,264

We engage in a transaction involving
women’s garments and continue to holdthe issuer’s shares to maintain andstrengthen our good relationship from the

3,705

3,572

perspective of enhancing corporate value.
The number of shares has increased due toparticipation in the stock ownershipassociation.

445,900

445,900

1,544,410
Aeon Co., Ltd.

KyoceraCorporation
2,857

2,898

We have close connections with the issuer,
as a local firm, through information
sharing, and continue to hold the issuer’s
shares to maintain and strengthen our

No

Yes

Yes

good relationship from the perspective of
business strategy.
We have close connection with the issuer,

825,000

825,000

Shimadzu
Corporation
2,347

2,640

as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofYesbusiness strategy.
1,509,400

We have close connection with the issuer
as a major supplier of office furniture andstationery and continue to hold the issuer’s

2,282

2,451

shares to maintain and strengthen our
good relationship from the perspective ofenhancing corporate value.

569,997569,997

1,509,400
Kokuyo Co.,Ltd.

Bank of Kyoto,
Ltd.
1,960

2,639

We engage in a financial transaction with
the issuer, as a major local financial firm,and continue to hold the issuer’s shares tomaintain and strengthen our good

Yes

Yes

relationship from the perspective ofenhancing corporate value.
We have close cooperative relationship in

Saha PathanaInter-Holding
PCL

7,606,666

1,664

7,606,666

1,891

90

business deployment in the Kingdom ofThailand and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofNoenhancing corporate value in the Kingdomof Thailand.

NipponShinyaku Co.,
Ltd.

Tokio Marine
Holdings, Inc.

175,000

175,000

1,484

1,410

274,000

274,000

1,356

1,469

230,000

230,000

Horiba, Ltd.
1,237

1,414

We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen ourYesgood relationship from the perspective of
business strategy.
We have various general insurances tominimize business risks and continue tohold the issuer’s shares to maintain andstrengthen our good relationship from theperspective of enhancing corporate value.
We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen our

Yes(Note 3)Yes

good relationship from the perspective of
business strategy.
We engage in a financial transaction with

462,408

462,408

Shiga Bank, Ltd.
1,187

1,219

the issuer, as a major local financial firm,and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofYesenhancing corporate value.

Mitsubishi UFJ
Financial Group,
Inc.

Heiwado Co.,Ltd.

TaishoPharmaceutical
Holdings Co.,Ltd.

SCREEN
Holdings Co.,Ltd.

2,885,850

2,885,850

1,162

1,587

517,531517,531

We engage in overall financialtransactions with the issuer as a major
financial institution and continue to holdthe issuer’s shares to maintain andstrengthen our good relationship from theperspective of enhancing corporate value.
We engage in a transaction of women’s
garments and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective of

985

1,219

132,000

132,000

We continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective of

876

1,392

enhancing corporate value in a close andcooperative connection in businessdeployment.

217,719

217,179868

968

548,890548,890

Chori Co., Ltd.
843

854

91

Yes
(Note 3)Yesenhancing corporate value.

We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen our

Yes

Yes

good relationship from the perspective of
business strategy.
As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andstrengthen our good relationship through aYesstable supply.
We engage in a transaction of various
IsetanMitsukoshi
Holdings Ltd.

1,315,769

828

1,315,769

1,472

products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective of

Yes(Note 3)enhancing corporate value.
1,000,000

1,000,000

Takara Holdings
Inc.
810

687,300

1,309

687,300

Aeon Financial
Service Co., Ltd.

Fukuyama
Transporting
Co., Ltd.

795

1,548

204,400

204,400

790

870

1,320,000

1,320,000

744

154,969

154,969554

197,500

647

197,500

We engage in a transaction of leases,
mainly auto leases, and continue to holdthe issuer’s shares to maintain andstrengthen our good relationship from theWe engage in a transaction of women’s
garments and continue to hold the issuer’s
shares to maintain and strengthen our good
relationship from the perspective ofenhancing corporate value.
We engage in a transaction of various
products, mainly the women’s garmentswith Odakyu Department Store Co., Ltd,
which is the issuer’s subsidiary, and

468

529

381,300

381,300

We have close connection in logistics
transaction and continue to hold the

92

Yes

Yes

Yes

perspective of enhancing corporate value.

continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofenhancing corporate value.

Ltd.

No

of enhancing corporate value.

711

Odakyu Electric
Railway Co.,

Chuo Warehouse
Co., Ltd.

We have close connection in logistics
transaction and continue to hold theissuer’s shares to maintain and strengthen
our good relationship from the perspective

705

702

Yes

maintain and strengthen our good
relationship with Aeon group from theperspective of business strategy.

issuer’s shares to maintain and strengthen
our good relationship from the perspectiveof enhancing corporate value.

Co., Ltd.

Holdings Co.,
Ltd.

Issuer is a group company of Aeon Co.,
Ltd. with whom we engage in atransaction of women’s garments andcontinue to hold the issuer’s shares to426,000

Toppan Printing

Seven & isharing and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective of
business strategy.

We have close connection with the issuer
in printing advertisements, mainly
catalogues, and continue to hold the426,000

Mitsubishi UFJ
Lease & Finance
Company
LimitedWe have close connection with the issuer,
as a local firm, through information

No

Yes

Yes

459

385

issuer’s shares to maintain and strengthen
our good relationship from the perspectiveof enhancing corporate value.

598,195

As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance

457

683

corporate value and to maintain andstrengthen our good relationship through astable supply.

90,00090,000598,195
Asahi Kasei
Corporation

Hisamitsu
PharmaceuticalCo., Inc.

453

458

We continue to hold the issuer’s shares tomaintain and strengthen our good
relationship as we have close connection
in building cooperative and transactional

Yes

Yes

relationship in business deployment.

120,200

120,200

Hankyu Hanshin
Holdings, Inc.

Issuer is a group company of H2O
Retailing Corporation with whom weengage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares to

436

498

Yes

maintain and strengthen our good
relationship from the perspective ofenhancing corporate value.

170,500

170,500

Yomeishu Seizo
Co., Ltd.
334

363

We continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective of
business strategy, as we have close
connection in building cooperative andtransactional relationship in businessYes

deployment.

Seino Holdings

283,000

283,000

We have close connection in logistics
transaction and continue to hold theissuer’s shares to maintain and strengthen417

our good relationship from the perspectiveof enhancing corporate value.

Co., Ltd.
331

Yes

We have close cooperative relationship in
2,677,300
I.C.C
INTERNATIONAL PLC

2,677,300

299

371

151,487

151,487

Marui Group
Co., Ltd.
274

Kintetsu
Department
Store Co., Ltd.

100,000

251

338

100,000

348

93

business deployment in the Kingdom ofThailand, and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofYesenhancing corporate value in the Kingdomof Thailand.
We engage in a transaction of various
products, mainly the women’s garments
and continue to hold issuer’s shares tomaintain and strengthen good relationshipfrom the perspective of enhancing
corporate value.
We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofenhancing corporate value.

Yes

Yes

310,759

310,759

H2O Retailing
Corporation
245

296,500

479

296,500

We engage in a transaction of various
products, mainly the women’s garments at
the issuer’s subsidiaries such as
department store and general merchandise
stores and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofenhancing corporate value.
We have close connection with the issuer,
as a local firm, through information

200

300

sharing and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective of
business strategy.

45,64845,648We engage in a transaction of women’s
garments and continue to hold the issuer’s

235

shares to maintain and strengthen our
good relationship from the perspective ofenhancing corporate value.

Nichicon
Corporation

IZUMI Co., Ltd.
136

Yes

Yes

No

We have close connection with the issuer
100,000

100,000

Sanyo Shokai
Ltd.

Dai Nippon
Printing Co.,
Ltd.

134

172

58,00058,000133

141,500

153

141,500

Aoyama Trading
Co., Ltd.
131

356

through information sharing as apparel
manufacturers and exploring potential
cooperation in business strategy andcontinue to hold the issuer’s shares toYesmaintain and strengthen our good
relationship from the perspective of
business strategy.
We have close connection with the issuer
in printing advertisements, mainly
catalogues, and continue to hold theissuer’s shares to maintain and strengthenYes

our good relationship from the perspectiveof enhancing corporate value.
We have close connection with the issuer
through information sharing as apparel
manufacturers and exploring potential
cooperation in business strategy andcontinue to hold the issuer’s shares tomaintain and strengthen our goodYes

relationship from the perspective of
business strategy.
We engage in a transaction of various

205,000

205,000

Matsuya Co.,
Ltd.
125

205

products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofYesenhancing corporate value.
62,60062,600Fuji Company,
Limited

112

119

94

We engage in a transaction of women’s
garments and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofenhancing corporate value.

Yes147,000

147,000

Nissha Co., Ltd.
105

71,100171

71,100YAGI & CO.,
LTD.
97

107

We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective of
business strategy.
As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain and

Yes

Yes

strengthen our good relationship through astable supply.
We have close connection with the issuer

168,000

168,000

King Co., Ltd.
90

95

through information sharing as apparel
manufacturers and continue to hold theissuer’s shares to maintain and strengthen
our good relationship from the perspectiveYesof business strategy.
We have close connection with the issuer
46,80046,800

Takihyo Co.,
Ltd.
72

82

60,00060,000Takashimaya
Co., Ltd.
58

88

20,00020,000Fujibo Holdings,
Inc.

through information sharing as apparel
manufacturers and continue to hold theissuer’s shares to maintain and strengthen
our good relationship from the perspectiveof business strategy.
We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our goodAs the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andstrengthen our good relationship through astable supply.

52

20,04320,043As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance40

corporate value and to maintain andstrengthen our good relationship through astable supply.

Industries Ltd.
51

Yes

relationship from the perspective ofenhancing corporate value.

57

Kurabo

Yes

Yes

Yes

We have close connection with the issuer
75,89175,891

Toda
Corporation
47

51

through proposals and information sharing
related to facilities and continue to holdthe issuer’s shares to maintain andstrengthen our good relationship from theYesperspective of business strategy.

Toray Industries,

100,000

100,000

As the issuer is one of major suppliers of
textile-related products, we continue to70

hold the issuer’s shares to enhance
corporate value and to maintain andstrengthen our good relationship through a

Inc.
46

95

Yes

stable supply.
We have close connection with the issuer
94,38094,380Sankyo Seiko
Co., Ltd.
46

44

through information sharing as apparel
manufacturers and continue to hold theissuer’s shares to maintain and strengthen
our good relationship from the perspectiveYesof business strategy.

Tenmaya Store

11,00011,000Co., Ltd.
10

13

2,000

*

We engage in a transaction of women’s
garments and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofenhancing corporate value.

Yes

As the issuer is one of major suppliers of

Toyobo Co., Ltd.
2*

textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andstrengthen our good relationship through aYesstable supply.
13,56425,364

Izutsuya Co.,
Ltd.
2

6

7,400

*

Daiwa Co., Ltd.

Nissin Foods
Holdings Co.,
Ltd.

1

*

－

575,100

－

－

4,370

383,000

Shiseido Co.,
Ltd.
－

3,059

－

541,388

We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofenhancing corporate value.
We engage in a transaction of women’svarious products, mainly of women’s
garments and continue to hold the issuer’s
shares to maintain and strengthen ourNoNogood relationship from the perspective ofenhancing corporate value.
We continue to hold the issuer’s shares tomaintain and strengthen our good
relationship as we have cooperative andclose connections through information
sharing in business expansion.
We have close connections with the issuer
through joint product development andinformation sharing and continue to holdthe issuer’s shares to maintain and

Yes

No

strengthen our good relationship from theperspective of business strategy.
We engage in a transaction of various

J. Front
Retailing Co.,
Ltd.

－

713

products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofNoenhancing corporate value.
Tokyo
Broadcasting
SystemHoldings, Inc.

－－

310,700

629

96

We have close connection with the issuer
through informational programs on TBS
Broadcasting System, Inc., where our
products are being advertised and continue
to hold the issuer’s shares to maintain andstrengthen our good relationship from theNoperspective of enhancing corporate value.
As the issuer is one of major suppliers of－

23,347

Teijin Limited－

42

textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andstrengthen our good relationship through aNostable supply.
－

6,913

ARCS Co., Ltd.
－

16

－

9,369

We engage in a transaction of women’s
garments and continue to hold the issuer’s
shares to maintain and strengthen our
good relationship from the perspective ofenhancing corporate value.

No

We engage in a transaction of various
PARCO CO.,
LTD.
－

9

products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofNoenhancing corporate value.
(Note)

1

2
3“－” indicates that we do not hold any shares of such stock. “*” indicates that the amount has been omitted since theamount recorded on the balance sheet does not reach one-hundredth of the stated capital and is below the top sixty
stocks based on the amounts recorded on the balance sheet.
The quantitative effects of shareholding are difficult to describe as it relates to an individual transaction.
The company in which we hold the stocks does not hold any shares of the Company, while its subsidiary holds sharesof the Company.
Stocks deemed to be held:
Fiscal Year 2020
Issuer Name

Fiscal Year 2019

Number of Shares
Number of Shares Purpose of Holding, Quantitative Effects of Whether Issuer
Shareholding (Note2) and Reason for
Holds Company(Shares)(Shares)
Increase in Number of Shares
SharesAmount Recorded in Amount Recorded in
the Balance Sheet
the Balance Sheet(Millions of yen)
(Millions of yen)

2,544,000

2,544,000

KDDI
Corporation
8,115

3,365,000

6,067

3,365,000

Mitsubishi UFJ
Financial Group,
Inc.
1,356

1,850

97

We engage in a transaction ofcommunications equipment andinfrastructure with the issuer and continue
to hold issuer’s shares to maintain andstrengthen good relationship with theissuer from the perspective of enhancing

No

corporate value. We currently haveretirement benefit trust agreement underwhich we withhold our right to give
directions on the exercise of voting rights.
We engage in overall financialtransactions with the issuer as a major
financial institution and continue to holdissuer’s shares to maintain and strengthen
good relationship with the issuer from theperspective of enhancing corporate value.
We currently have retirement benefit trust
agreement under which we withhold ourright to give directions on the exercise of
voting rights.

Yes(Note 3)

(Note) 1

The specified investment stock and stocks deemed to be held are not combined when selecting the top stocks based on
the amount recorded in the balance sheet.
The quantitative effects of shareholding are difficult to describe as it relates to an individual transaction.

2
3

The company in which the Company holds the stocks does not hold any shares of the Company, while its subsidiaryholds shares of the Company.

d.

Equity securities held for pure investment
N/A.
Equity securities reclassified from held for pure investment to held for purposes other than pure investment during thecurrent fiscal year:
N/A.

e.

f.

Equity securities reclassified from held for purposes other than pure investment to held for pure investment during thecurrent fiscal year:
N/A.

(ⅲ)

Equity securities held by Wacoal holdings Corp.
A．Equity securities held for purposes other than pure investmenta.

Policies and method to verify the rationality of shareholding, as well as the verification process at meeting of Board of
Directors regarding appropriateness of holding certain stock of shares
The Company examines whether it is appropriate to hold shares from a medium-to long-term perspective, whether risks
associated with such holding are worth the cost of capital, and profits in connection with the transaction and dividend
income indices are reported to the Board of Directors on a regular basis. The Board of Directors then examines whether
the holding will be enhance corporate value of the Company from a medium-to long-term perspective based on suchverification results, and determines whether to continue to hold or dispose such shares.
The information on quantitative effects of shareholding is omitted since it relates to an individual transaction.
b. Number of Stock and Amount Recorded in the Balance Sheet
Total Amount Recorded in the
Number of
Balance Sheet
Stock(shares)(Millions of yen)
Unlisted Stock of Shares

22

Shares Other than Unlisted
Stock of Shares－－(Name of stock of shares which increased during the current fiscal year)
Total Acquisition Amount for
Number of
Stock
Increased Shares (Millions of Reason for Increase in the Number of Shares(shares)yen)
Unlisted Stock of Shares

－

－

－

Shares Other than Unlisted
Stock of Shares

－

－

－

(Name of stock of shares which decreased during the current fiscal year)
Total Disposal Amount for
Number of
Decreased Shares (Millions of
Stock
yen)
(shares)c.

Unlisted Stock of Shares－－

Shares Other than Unlisted
Stock of Shares

1

3

Information on specified investment stocks and stocks deemed to be held, including number of shares by stock, and theamount recorded in the balance sheet
Specified investment stocks:
Stock Name

Fiscal year 2020

Fiscal year 2019

Number of Shares(shares)Number of Shares(shares)98

Purpose of Holding, Quantitative Effects of Whether Issuer
Shareholding(Note2) and Reason for
Holds Company
Increase in Number of Shares
SharesAmount Recorded in Amount Recorded in
the Balance Sheet
the Balance Sheet(Millions of yen)
(Millions of yen)
The Dai-ichi Life
Holdings, Inc.

－

2,100

－

3

We continued to hold the issuer’s sharesto maintain and enhance a stable welfare
program for employees through life
insurance transactions

No(Note) “－” indicates that the Company does not hold any shares of such stock.
d.
e.

f.

Equity securities held for pure investment:
N/A.
Equity securities reclassified from held for pure investment to held for purposes other than pure investment during thecurrent fiscal year:
N/A.
Equity securities reclassified from held for purposes other than pure investment to held for pure investment during thecurrent fiscal year:N/99

V. 【Financial Information】
1. 【Consolidated Financial Statements】
Consolidated Balance Sheets
March 31, 2020 and 2019

Millions of Yen
2020
2019

ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Time deposits
Marketable securities (Notes 3, 20 and 21)
Notes and accounts receivable (Note 6)
Allowance for doubtful receivables (Note 4)Inventories (Note 5)
Return assets
Other current assets (Notes 6, 21 and 22)
Total current assets
PROPERTY, PLANT AND EQUIPMENT:Land (Note 9)
Buildings and structures (Notes 9, 11 and 21)
Machinery and equipment (Note 21)
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment¥

27,905797
656
20,062(489)
43,427
868
4,964

¥

30,133
4,004
446
24,989(229)
42,508
1,180
4,985

Thousands of
U.S. Dollars(Note 2)2020$

CURRENT LIABILITIES:
Short-term bank loans (Note 9)
Notes and accounts payable:
Trade notes payable
Trade accounts payable (Note 6)
Other payables
Accrued payroll and bonuses
Income taxes payable (Note 17)
Refund liabilities
Short-term operating lease liabilities (Notes 1 and 10)
Other current liabilities (Notes 9, 12, 18, 20, 21 and 22)
Total current liabilities

259,5097,412
6,101
186,571(4,548)403,860
8,072
46,164

98,190108,016

913,141

21,46074,03918,782
1,090
115,371(63,288)

21,54974,033
18,914478
114,974(61,704)

199,572
688,543
174,668
10,137
1,072,920(588,562)

52,08353,270484,358

Millions of Yen
2020
2019

LIABILITIES AND EQUITYLONG-TERM LIABILITIES:
Liability for termination and retirement benefits (Note 12)
Deferred income taxes (Note 17)
Long-term operating lease liabilities (Notes 1 and 10)
Contingent consideration (Notes 7 and 21)
Other long-term liabilities (Notes 9, 11, 12, 20 and 21)
Total long-term liabilities

¥

3,364

¥

8,116

Thousands of
U.S. Dollars(Note 2)
2020$

31,284

1,112
9,588
7,107
6,734
4,878
2,645
4,600
4,079
44,107

1,155
10,638
6,548
7,209
2,759
3,482

2,069
7,911
9,101
2,786
2,266
24,133

1,828
12,5672,366
16,761

19,24173,57084,63725,90921,073
224,430

13,26029,836
185,233

13,26029,807
193,139

123,314
277,467
1,722,618(1,033)(4,594)(5,627)

1,551(5,679)(4,128)(9,607)(42,723)(52,330)(17,331)(15,584)(161,174)

205,371
4,077
209,448

216,494
4,650
221,144

1,909,895
37,916
1,947,811¥ 277,688¥ 281,767$ 2,582,424

3,955
43,862

10,341
89,166
66,09362,62445,364
24,59842,77937,934410,183

COMMITMENTS AND CONTINGENCIES (Notes 9, 10 and 13)
OTHER ASSETS:
Operating leases right-of-use assets (Notes 1 and 10)
Investments in affiliated companies (Note 6)
Investments (Notes 3, 20 and 21)
Goodwill (Notes 7, 8 and 21)
Other intangible assets (Notes 7, 8 and 21)
Prepaid pension expense (Note 12)
Deferred income taxes (Note 17)
Other13,54021,59543,904
22,371
14,547
4,974
1,118
5,366

21,85963,372
11,954
12,297
3,990
1,362
5,647

125,918
200,828
408,296
208,044
135,283
46,257
10,397
49,902

Total other assets

127,415

120,481

1,184,925

TOTAL¥ 277,688¥ 281,767

EQUITY:WACOAL HOLDINGS CORP. SHAREHOLDERS' EQUITY:
Common stock, no par value –authorized, 250,000,000 shares in 2020 and 2019;
issued 68,589,042 shares and 70,689,042 shares in 2020 and
2019, respectively
Additional paid-in capital (Note 14)
Retained earnings
Accumulated other comprehensive (loss) income (Note 16):
Foreign currency translation adjustments
Pension liability adjustments (Note 12)
Total accumulated other comprehensive loss
Treasury stock, at cost – 6,186,410 shares and5,510,891 shares in 2020 and 2019, respectively
Total Wacoal Holdings Corp. shareholders' equity(Note 15)
Noncontrolling interests
Total equity$ 2,582,424

TOTAL

See notes to consolidated financial statements.

100Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2020, 2019 and 2018

NET SALES (Notes 6, 10 and 18)

2020

Millions of Yen
2019

2018

Thousands of
U.S. Dollars(Note 2)2020

¥ 186,760¥ 194,201¥ 195,725$ 1,736,818

84,95989,804

92,032790,096

93,92793,517

92,701

873,496

769

167

OPERATING COSTS AND EXPENSES (REVENUE):
Cost of sales (Notes 6, 10 and 12)
Selling, general and administrative expenses (Notes 10,
11, 12 and 14)
Impairment charges on property, plant and equipment(Note 21)
Compensation income
Impairment charges on goodwill (Notes 8 and 21)
Impairment charges on other intangible assets (Notes 8
and 21)
Total operating costs and expenses
OPERATING INCOME

7,151
(708)
206

217

4,325

2,018

256

1,509

180,128

189,322

184,231

1,675,142

6,632

4,879

11,494

61,6762,381

OTHER (EXPENSES) INCOME:
Interest income
Interest expense
Dividend income (Note 6)(Loss) gain on sale, exchange and valuation ofmarketable securities and investments – net (Note3)
Other – net (Notes 10, 12, 16 and 22)

177
(19 )
1,506

289
(11 )
1,429

194
(10 )
1,329

1,646
(177)
14,005(3,760)(177)(5,430)
1,047

206
1,073

(34,967)(1,646)

Total other (expenses) income – net(2,273)(2,676)

2,792(21,138)

INCOME BEFORE INCOME TAXES AND EQUITYIN NET INCOME OF AFFILIATED COMPANIES

4,359

2,203

14,286

40,538

INCOME TAXES (Note 17):
Current
Deferred

7,126(5,673)5,350(2,817)

4,880
662

66,270(52,757)

1,453

2,533

5,542

13,513

INCOME (LOSS) BEFORE EQUITY IN NET
INCOME OF AFFILIATED COMPANIES

2,906

(330)

8,744

27,025EQUITY IN NET INCOME OF AFFILIATEDCOMPANIES (Note 6)

62

725

916

577

2,968

395

9,660

27,602

504

(54 )

85

4,687

Total income taxes

NET INCOME
NET LOSS (INCOME) ATTRIBUTABLE TONONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP.

¥

3,472

¥

341

¥

9,745

$

32,289(Continued)
101

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2020, 2019 and 2018

2020

Yen
2019

2018

U.S. Dollars(Note 2)2020

NET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP. PER SHARE (Note 19):
Basic
Diluted¥ 54.26¥ 54.05¥ 5.16¥ 5.14¥ 143.46¥ 142.98

$ 0.5
$ 0.5

NET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP. PER AMERICAN DEPOSITARYRECEIPT (5 shares of common stock) (Note 19):
Basic
Diluted¥ 271.29¥ 270.25¥ 25.78¥ 25.68¥ 717.30¥ 714.89$ 2.52$ 2.51

As of October 1, 2017, the Company effected a one-for-two ordinary share reverse stock split. Net income
attributable to Wacoal Holdings Corp. per share is calculated assuming that the reverse stock split had occurred at the
beginning of the earliest fiscal year presented in the consolidated financial statements.
See notes to consolidated financial statements.

(Concluded)102

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2020, 2019 and 2018

2020
NET INCOME¥ 2,968

OTHER COMPREHENSIVE (LOSS) INCOME, NET
OF TAX (Note 16):
Foreign currency translation adjustments:
Amounts arising during the year
Total foreign currency translation
adjustments

Millions of Yen
2019
¥

395

¥

2018

Thousands of
U.S. Dollars(Note 2)
2020

9,660

$ 27,602(2,532)

(750)

1,113

(23,547)(2,532)

(750)

1,113

(23,547)

(7 )
(97 )
(104)

6,494
(139)
6,355

125
960
1,085

(4,787)200(4,587)

(487)
(193)
(680)

1,162
8,928
10,090OTHER COMPREHENSIVE (LOSS) INCOME(1,447)(5,441)

6,788(13,457)

COMPREHENSIVE INCOME (LOSS)

1,521(5,046)

16,44814,145COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLETO NONCONTROLLING INTERESTS

452

(18 )

21

4,203

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE
TO WACOAL HOLDINGS CORP.

¥ 1,973¥ (5,064)¥ 16,469$ 18,348

Unrealized gain (loss) on securities:
Amounts arising during the year
Reclassification adjustments
Total unrealized gain (loss) on securities
Pension liability adjustments:
Amounts arising during the year
Reclassification adjustments
Total pension liability adjustments

See notes to consolidated financial statements.

103

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Equity
Years Ended March 31, 2020, 2019 and 2018

BALANCE, APRIL 1, 2017
Net income
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥270 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Share-based compensation granted (exercised) (Note 14)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2018
Cumulative effects (net of tax) of adoption of new accounting standards
Net income
Foreign currency translation adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥360 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Share-based compensation granted (exercised) (Note 14)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2019
Cumulative effects (net of tax) of adoption of new accounting standards(Note 1)
Net income
Foreign currency translation adjustments
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥300 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Share-based compensation granted (exercised) (Note 14)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2020

Shares of
Outstanding
Common Stock(Thousands)
68,605

CommonStock

Additional
Paid-in
CapitalRetained
Earnings¥ 13,260¥ 29,707¥ 170,062

Millions of Yen
Accumulated
Other
TreasuryComprehensive
Stock,
Income (Loss)at Cost¥ 21,873¥(7,334)

9,745
1,062
6,349
(687)
(7,386)

Total Wacoal
Holdings Corp.
Shareholders'EquityNoncontrolling
Interests

Total Equity¥ 227,568¥ 4,914¥ 232,482

9,745
1,062
6,349
(687)

(85 )
51
6
7

9,660
1,113
6,355
(680)

(7,386)86(7,386)(194)(4,007)
0
68
86

4,785

237,497(194 )(1,243)0
567,36758
13,26029,765(4,007)0
13(3 )172,418

28,597

27,834341(27,320)(11,328)(4,007)068
232,712
514
341
(723)
(104)
(4,578)

(723)
(104)
(4,578)(4,811)

54
(27 )
(9 )

(4,811)(191 )(2,200)011
65,17842
13,26029,807(6,919)02,631
32(2,631)(12 )
193,139(4,128)(15,584)(515 )
3,472(2,584)
1,085(4,907)(6,919)
0
62

62
38

216,494

4,650

221,144

(515)
3,472
(2,584)1,085(504 )
52

(515)
2,968
(2,532)
1,085(4,907)23
62,40329¥ 13,260¥ 29,836(7,745)
0
5,935
63

(0 )
(5,935)(21 )¥ 185,233¥(5,627)¥ (17,331)(4,811)(191)(6,919)038(237 )(2,798)
0

514
395
(750)
(104)
(4,587)(7,745)0
71¥ 205,371(4,907)(237)(7,745)
0

116

71
116

¥ 4,077¥ 209,448

As of October 1, 2017, Wacoal Holdings Corp. effected a one-for-two ordinary share reverse stock split. The number of outstanding shares is calculated assuming that the reverse stock split had occurred at the beginning of the earliest fiscal year presented in the
consolidated financial statements.
(Continued)
104

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Equity
Years Ended March 31, 2020, 2019 and 2018

BALANCE, MARCH 31, 2019

CommonStock

Additional
Paid-in
CapitalRetained
Earnings$ 123,314$ 277,197$ 1,796,141

Cumulative effects (net of tax) of adoption of new accounting standards(Note 1)
Net income
Foreign currency translation adjustments
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, $2.79 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Share-based compensation granted (exercised) (Note 14)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2020

Thousands of U.S. Dollars (Note 2)
Accumulated
Total Wacoal
Other
Treasury
Holdings Corp.
Comprehensive
Stock,
Shareholders'
Income (Loss)at CostEquity$ (38,389)$ (144,927)(4,789)32,289(24,031)
10,090(45,634)

Noncontrolling
Interests

Total Equity$ 2,013,336$ 43,244$ 2,056,580(4,789)32,289(24,031)
10,090(4,687)484(4,789)27,602(23,547)
10,090(45,634)(2,204)270$ 123,314$ 277,467(72,027)
055,194586(0)(55,194)(195)$ 1,722,618$ (52,330)$ (161,174)(72,027)
0661$ 1,909,895(45,634)(2,204)(72,027)
0

1,079

661
1,079

$ 37,916$ 1,947,811

See notes to consolidated financial statements.

(Concluded)105

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2020, 2019 and 2018

Millions of Yen
2019

2020
OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation (Note 14)
Allowance for returns and doubtful receivables – net
Deferred income taxes
Loss on sales or disposal of property, plant and equipment – net
Impairment charges on property, plant and equipment (Note 21)
Compensation income
Impairment charges on goodwill (Notes 8 and 21)
Impairment charges on other intangible assets (Notes 8 and 21)
Loss (gain) on sale, exchange and valuation of marketable securities and investments – net (Note 3)
Equity in net loss (income) of affiliated companies, less dividends received
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories
Decrease (increase) in return assets(Increase) decrease in other current assets(Decrease) increase in notes and accounts payable(Decrease) increase in refund liabilities
Increase (decrease) in liability for termination and retirement benefits
Increase (decrease) in accrued expenses, income taxes payable and other current liabilities
Other
Net cash provided by operating activities
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
Compensation income
Proceeds from sales of property, plant and equipment
Payments to acquire property, plant and equipment
Payments to acquire intangible assets (Note 8)
Acquisition of a subsidiary (net of cash acquired) (Note 7)
Proceeds from sales of shares of affiliated companies
Other
Net cash provided by (used in) investing activities
FORWARD

¥

2,968

¥

395

6,029
71
299
(5,673)
103
769

5,647
62
(2,263)(2,817)
48
167

217
256
3,760
480

4,325
1,509
5,430
(211)

4,685
(1,350)
312
(29 )
(373)
(837)
776
665
197
13,325822(76)(1,180)(653)(1,640)
3,482
(620)
1,075
118
13,620(438)
3,576
15,252(339)
544(4,783)
5,226
2,497
(323)
1,008
(900)

104
(3,442)(3,539)(9,181)

2018
¥

9,660
5,492
68
18
662
250
(708)
206
(206)
(397)
(232)
1,012
270
676
(833)
(518)
73
15,493Thousands of
U.S. Dollars(Note 2)
2020$

27,60256,068670
2,781(52,757)
958
7,151
2,018
2,381
34,967
4,464
43,569(12,556)
2,902
(270)
(3,469)(7,784)
7,217
6,184
1,823
123,919(4,073)33,256
141,839(3,153)5,060

276(2,603)(3,180)(5,129)
3,368
394
(22 )
567
(1,605)708
159(3,429)(2,455)

32
2,569

270
38
(2,474)82(7,362)298
23,891¥ 15,894¥ 11,146

8,131$ 147,810¥

967(32,010)(32,912)(85,381)(Continued)
106

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2020, 2019 and 2018

FORWARD
FINANCING ACTIVITIES:(Decrease) increase in short-term bank loans withoriginal maturities of three months or less – net
Repayments of long-term debt
Purchase of treasury stock
Disposal of treasury stock
Dividends paid on common stock
Dividends paid to noncontrolling interests
Proceeds from share issuance of noncontrollinginterests
Net cash used in financing activities

Thousands of
U.S. Dollars(Note 2)
2020

2020

Millions of Yen
2019¥ 15,894¥ 11,146¥

8,131$ 147,810

¥

¥

¥

(755)
(47 )
(4,007)0(7,386)(194)(43,197)(493)(72,026)0(45,635)(2,204)(4,645)(53 )(7,745)0(4,907)
(237)

1,061
(50 )
(6,919)0(4,811)
(191)

2018

116
(17,471)38(10,872)86(12,303)

1,079(162,476)

EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS

(651)

372

(336)

(6,054)NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS(2,228)646(4,508)(20,720)

CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR30,13329,48733,995280,229¥ 27,905¥ 30,133¥ 29,487$ 259,509¥¥

CASH AND CASH EQUIVALENTS, END OFYEARADDITIONAL CASH FLOW INFORMATION:
Cash paid for:
Interest
Income taxes

20
4,758

NONCASH INVESTING ACTIVITIES:Acquisition of a subsidiary (contingent
consideration) (Note 7)
Acquisition of property, plant and equipment byassuming payment obligation

1
5,068

¥

11
5,853

4,172
¥751

$ 186
44,24838,798¥954¥583$6,984

See notes to consolidated financial statements.

(Concluded)107

Wacoal Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements
1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Financial Statements – Wacoal Holdings Corp. (the "Company") and subsidiaries are predominantly
engaged in one industry, the manufacturing and sale of apparel, including foundation garments, lingerie,nightwear, and outerwear in Japan, the United States of America, Europe and certain other countries in Asia.
The accompanying consolidated financial statements, stated in Japanese yen, have been prepared on the basisof accounting principles generally accepted in the United States of America ("U.S. GAAP").
Consolidation – The consolidated financial statements include the accounts of the Company and its majorityowned subsidiaries (collectively, the "Companies"). All intercompany transactions and balances have been
eliminated.
Some foreign subsidiaries of the Company have a fiscal year ending December 31. The accounts of thosesubsidiaries are included in the Company's consolidated financial statements based on the subsidiaries' fiscal
year end. Necessary adjustments have been made for significant events related to subsidiaries that occurred
during the period between their fiscal year ends and March 31.
Investments in affiliated companies where the Companies' ownership is 20% to 50% are accounted for using
the equity method.
Significant influence is generally deemed to exist if the Companies have an ownership interest in the voting
stock of the investee from 20% to 50%, although other factors are considered in determining whether theequity method of accounting is appropriate.
Use of Estimates – The preparation of consolidated financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The Companies reflected the impact of the COVID-19 outbreak in such estimates. The official views of when
the outbreak will be contained have not been announced by public institutions. The Companies are estimatingthat COVID-19 will have an impact on their business results until September 2020, and that their results in
October 2020 will recover to the level before the outbreak. The Companies developed future business plans
and used them for the estimates of impairment charges on property, plant and equipment, goodwill and otherintangible assets based on this assumption. However, COVID-19's impact on impairment charges on property,
plant and equipment, goodwill and other intangible assets recorded for the year ended March 31, 2020 wereimmaterial.
Note that when the outbreak will be settled is not easy to predict and there is a possibility that these
impairment charges would increase if the assumptions were different from actual results.
Cash and Cash Equivalents – Cash and cash equivalents include all highly liquid investments with original
maturities of three months or less.
Foreign Currency Translation – Assets and liabilities of foreign subsidiaries have been translated to Japanese
yen at period-end exchange rates and income and expenses have been translated using average exchange rates
for the period. Translation adjustments resulting from the process of translating consolidated financial
statements, net of tax, are included in accumulated other comprehensive (loss) income, which is a separate
component of equity. Exchange gains and losses resulting from foreign currency transactions and theconversion of monetary assets and liabilities denominated in foreign currencies are included in other(expenses) income in the consolidated statements of income.

108

Foreign currency translation gains (losses) for the years ended March 31, 2020, 2019 and 2018 were ¥36
million, ¥76 million and ¥(189) million, respectively. They have been included in other – net of other(expenses) income.
Marketable Securities and Investments – The Companies classify their marketable securities and investments
in debt securities into one of two categories: available-for-sale or held-to-maturity. Available-for-salesecurities are recorded at fair value with a corresponding recognition of unrealized holding gain or loss (net oftax) in accumulated other comprehensive (loss) income, which is a separate component of equity, until
realized. Held-to-maturity securities are measured at amortized cost. The Companies classify debt securities as
held-to-maturity only if the Companies have the positive intent and ability to hold those securities to maturity.
Gains and losses on sales of debt securities are computed based on cost determined using the average cost
method. The Company periodically determines whether any decline in the value of debt securities is
temporary, based on the period and extent of the decline, the issuer's financial position and prospects, and theintention to hold it for a sufficient period of expected recovery of fair value. If it is determined that the decline
is not temporary, the difference between the carrying amount and its fair value is recognized as a valuation
loss.
Equity securities are measured at fair value and unrealized holding gain or loss is recorded in net profit or loss.
Allowance for Doubtful Receivables – An allowance for doubtful notes and receivables is estimated based on
historical collection experience and additional information including current economic conditions and thecreditworthiness of each applicable customer.
Inventories – Inventories are stated at the lower of cost or net realizable value, cost being determined by the
first-in, first-out method for raw materials and the average cost method for work in process and finishedproducts. Cost includes net prices paid for materials purchased, production labor cost, factory overhead andcharges for customs duties.
Property, Plant and Equipment – Property, plant and equipment is stated at cost less impairment charges.
Property, plant and equipment are amortized over their estimated useful lives mainly using the straight-line
method. The estimated useful lives are as follows:
Buildings and structures

2 to 50 years (mainly 38 years)

Machinery and equipment(except for the part of the paintings)

2 to 20 years (mainly 5 years)

Depreciation expenses for the years ended March 31, 2020, 2019 and 2018 were ¥3,545 million, ¥3,538
million and ¥3,681 million, respectively.
Impairment of Property, Plant and Equipment – The carrying amount of long-lived assets held and used by
the Companies is evaluated for impairment whenever there is an event or change in circumstances thatindicates that such assets have been impaired or that the carrying amounts of such assets might not berecoverable. The carrying amount of property, plant and equipment is not recoverable if it exceeds the sum of
the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That
assessment is based on the carrying amount of the asset at the date it is tested for recoverability, whether in use
or under development. The impairment charge is measured as the amount by which the carrying amount ofproperty, plant and equipment exceeds its fair value.
Goodwill and Other Intangible Assets – Goodwill represents the excess of the purchase price of an acquired
entity over the fair value of assets acquired and liabilities assumed.

109

Goodwill and other intangible assets with indefinite useful lives are tested for impairment annually, or more
frequently if conditions indicate an earlier review is necessary. The goodwill is allocated to the reporting unit
in which the business that the goodwill resides. To test for goodwill impairment, the carrying amount of eachreporting unit is compared with its fair value. If the carrying amount of a reporting unit exceeds its fair value,
an impairment charge is recognized in an amount equal to that excess. To test for impairment of otherintangible assets with indefinite useful lives, the carrying value of an intangible asset is compared with its fairvalue. If the carrying amount of an intangible asset with indefinite useful life exceeds its fair value, an
impairment charge is recognized in an amount equal to that excess.
Other intangible assets with finite useful lives consist primarily of brands and software are amortized overtheir estimated useful lives using the straight-line method. The estimated useful lives are as follows:
BrandsCustomer relationships
Software10, 20 and 25 years (mainly 25 years)
5 years
5 years

Asset Retirement Obligations – The Companies have obligations arising from contractual commitments toremove leasehold improvements from leased facilities and return the property to a specified condition when
the lease terminates. The Companies recognize asset retirement obligations at the inception of a lease. The
asset retirement obligations are measured with an expected present value technique based on historicalexperience and recorded in other long-term liabilities in the consolidated balance sheets and subsequently
adjusted for changes in estimated disposal costs. The difference between the gross expected future cash flow
and its present value is accreted over the life of the related lease, which is determined using best estimates
because the Companies' lease contracts generally have automatic renewal provisions. The estimated asset
retirement costs are capitalized as part of the carrying amount of the associated long-lived asset anddepreciated over its useful life. For some lease contracts that are automatically renewed at the end of thecontract, asset retirement obligations are calculated based on a reasonable estimate of the end of the contract.
Termination and Retirement Plans – Termination and retirement benefits are accounted for in accordancewith the guidance for retirement benefits. The Companies amortize net actuarial gains and losses and priorservice cost over the average employees' remaining service period by the declining-balance method and by thestraight-line method, respectively.
Leases – As for lessor accounting, the Companies recognized revenue mainly from contracts consisted ofleasing mannequins, display furniture and real estate owned by the Companies to our customers. These leasearrangements are classified as operating leases and related revenue is recognized ratably over the lease term.
Options to extend or terminate the leases are included in some of the contracts. The Companies take such
options into account to determine the lease term when it is probable that these options will be exercised.
Moreover, almost all of the contracts do not contain variable consideration and purchase options for theircustomers. Some of the contracts contain lease and non-lease components and the consideration in thecontracts are allocated based upon estimated standalone selling prices of the lease and non-lease components.
As for lessee accounting, the Companies have leases for assets such as retail stores, warehouses, offices,
corporate housing, vehicles, machinery, and equipment, which are classified as an operating lease. The
Companies determine whether a contract is, or contains a lease at the inception of the contract. Options toextend or terminate the leases contracts are included in some of the contracts. The Companies take such
options into account in order to determine the lease term when it is probable that these options will be
exercised. Some of the contracts contain variable lease payments. Most of the variable lease payments are forour retail stores, which depend on their sales. Material residual value guarantees and restriction or covenants
imposed by leases do not exist in the contracts.

110Some of the contracts contain lease and non-lease components. Considerations in the contracts for which
underlying assets are land and buildings and structures are allocated based upon the estimated standalone
selling prices of the lease and non-lease components, which are accounted for separately. On the other hand,
the Companies elects the practical expedient and did not separate lease components from non-lease
components for leases for which underlying assets are machinery and equipment. The Companies uses theincremental borrowing rate based on the information available at commencement date to determine the present
values of lease payments, unless the implicit rate is readily determinable. The Companies also elects thepractical expedient which allows entities to expense leases with a term of 12 months or less at thecommencement date as incurred. Operating lease cost is recognized on a straight-line basis over the lease term.
Treasury Stock – The Companies account for treasury stock under the cost method and include treasury stock
as a component of equity.
Acquisitions – The Companies account for acquisitions using the acquisition method in accordance with theguidance for business combinations. The Companies allocate the purchase price to the assets acquired andliabilities assumed based on the estimated fair values at the date of acquisition, including intangible assets thatcan be identified and named. The purchase price in excess of the fair value of the net assets is recorded as
goodwill. In the case where the purchase price is below the fair value of the net assets, the Companies
recognize the excess of fair value of the net assets over the purchase price in earnings as a gain on bargain
purchase in the consolidated statements of income. The Companies measure contingent consideration
classified as liabilities at the fair value as of the date of acquisition and remeasure them to fair values at eachreporting date until the contingencies are resolved. Fluctuations of the fair values due to the remeasurement arerecognized in income or expenses as incurred.
Revenue Recognition – The Companies recognize revenue when control of promised products are transferred
to customers and performance obligations are satisfied. The Group's revenue is recognized for transactions, netof any trade discounts or rebates given. In addition, provision for expected returns is deducted from revenue
based on historical return.
Shipping and Handling Costs – Shipping and handling costs are expensed as incurred.
Advertising Expenses – Advertising costs are expensed as incurred. Advertising expenses for the years ended
March 31, 2020, 2019 and 2018 were ¥13,169 million, ¥12,329 million and ¥12,719 million, respectively, andhave been included in selling, general and administrative expenses.
Research and Development Costs – Research and development costs are expensed as incurred. Research anddevelopment costs for the years ended March 31, 2020, 2019 and 2018 were ¥508 million, ¥739 million and¥781 million, respectively, and have been included in selling, general and administrative expenses.
Consumption Taxes – Consumption taxes are excluded from sales, costs, and expenses in the consolidated
statements of income.
Income Taxes – The provision for income taxes is determined under the asset and liability method in
accordance with the guidance for income taxes. Under this method, deferred tax assets and liabilities are
determined for temporary differences between the financial statements and tax bases of assets and liabilities
and tax loss carryforwards at presently enacted tax rates. A valuation allowance is recorded when it is more
likely than not that some portion or all of the deferred tax assets will not be realized in the future.
The Companies assess their income tax positions and record tax benefits for all years subject to examination
based upon their evaluation of the facts, circumstances and information available as of the end of the fiscal
year. For those tax positions only where there is greater than a 50% likelihood that the tax position will besustained, the Companies record the largest amount of tax benefit that may potentially be realized uponultimate settlement with a taxing authority that has full knowledge of all relevant information. Interest andpenalties related to income taxes are included in the consolidated statements of income.

111

Share-Based Compensation – Share-based compensation is accounted for in accordance with AccountingStandard Codification 718, "Compensation – Stock Compensation" ("ASC 718"). The Company measures
share-based compensation cost at the grant date, based on the fair value of the award and recognizes the costover the requisite service period, which is the vesting period. The fair value of the award is estimated using theBlack-Scholes option-pricing model.
Derivatives – Derivative instruments, including certain derivative instruments embedded in other contracts, areaccounted for in accordance with the guidance for derivatives and hedging. Because such derivative
instruments are not designated as hedges, changes in the fair value of the derivatives are recorded in earnings
or losses.
Subsequent Events – In accordance with the guidance for subsequent events, the Company has evaluatedsubsequent events through June 26, 2020.
Reclassifications – Certain reclassifications have been made to the prior years' consolidated financial
statements to conform to the current year's presentation. And as of October 1, 2017, the Company effected a
one-for-two ordinary share reverse stock split. The number of ordinary shares, outstanding shares, treasury
stock and net income attributable to Wacoal Holdings Corp. per share are calculated assuming that the reverse
stock split occurred at the beginning of the earliest fiscal year presented in the consolidated financial
statements.
Recent Accounting Pronouncements:
Recently Adopted Accounting Guidance
Leases – In February 2016, the FASB issued new accounting guidance related to leases, Accounting Standard
Codification 842, "Leases" ("ASC 842"). This guidance requires an entity to recognize lease assets and leaseliabilities on the balance sheet for those leases classified as operating leases under current U.S. GAAP ("ASC840") with a few exceptions.
In January 2018, the FASB also issued a new accounting guidance related to land easements. This guidanceclarifies that land easements are within the scope of ASC 842 and introduces a transition practical expedient
allowing the Company to forgo assessment as to whether existing or expired land easements that were notpreviously accounted for as leases under ASC 840 are or contain leases under ASC 842. The guidance iseffective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years.
In July 2018, the FASB issued ASU No. 2018-11, "Leases." This ASU provides entities with an additional(and optional) transition method to adopt the new leases standard. Under this new transition method, entities
initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the
opening balance of retained earnings in the period of adoption.
This guidance is effective for annual reporting periods beginning after December 15, 2018 and quarter periods
within those fiscal year. The Companies has adopted the guidance from the quarter beginning April 1, 2019.
The Companies has adopted the modified retrospective approach, and applied the transition requirements at theeffective date with a cumulative-effect adjustment to the opening balance of retained earnings in the period of
adoption, and prior periods were not restated. The Companies elected to apply the package of practical
expedients permitted under the transition guidance which does not require entities to reassess whether any
expired or existing contracts are leases, lease classification and initial direct costs. The Companies also elected
to apply the practical expedient which allows entities to not assess whether existing or expired land easementsthat were not previously accounted for as leases are leases. As a result of this adoption, operating leases rightof-use assets and operating leases liabilities of ¥14,550 million were recorded in the consolidated balance sheet
as of April 1, 2019. In addition, the application of deferred tax accounting resulted in the recording of deferred
tax liabilities of ¥515 million and a related decrease in the opening balance of retained earnings as acumulative-effect adjustment for the same amount. The adoption of this guidance is not expected to have amaterial impact on our group's cash flows.

112

Recent Accounting Guidance Not Yet Adopted
Internal-Use Software – In August 2018, the FASB issued guidance related to internal-use software. This
guidance clarifies the accounting for costs of implementation activities performed in a cloud computing
arrangement that is a service contract. This guidance is effective for fiscal years beginning after December 15,
2019 and interim periods within that annual period. The adoption of this guidance is not expected to have amaterial impacts on the Company's balance sheets and statements of income.
Disclosure on Fair Value Measurement – In August 2018, the FASB issued guidance related to the fair value
measurement disclosure. This guidance removes, modifies, and adds some of the disclosure requirements onfair value. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods
within that annual period. The adoption of this guidance is not expected to have a material impact on the
Company's balance sheets and statements of income.
Disclosure on Defined Benefit Plans – In August 2018, the FASB issued guidance related to disclosure on
defined benefit plans. This guidance removes, modifies, and adds the disclosure requirements on defined
benefit pension. This guidance is effective for fiscal years beginning after December 15, 2020 and interim
periods within that annual period. The adoption of this guidance did not have a material impact on the
Company's balance sheets and statements of income.
Measurement of Credit Losses on Financial Instruments – In June 2016, the FASB issued a new accounting
guidance related to measurement of credit losses on financial instruments. This guidance introduces a new
impairment model based on expected losses rather than incurred losses. Using this model will result in more
timely recognition of losses than under current incurred approach. In November 2019, the FASB issued an
additional guidance related to changing the effective date of the above guidance. As a result, the guidance iseffective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The
Company is currently evaluating the impact of adoptions on the Company's consolidated financial position,
results of operations or cash flows.
2.

TRANSLATION INTO U.S. DOLLAR STATEMENTS
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts is
included solely for the convenience of readers outside of Japan and has been made at the rate of ¥107.53 to $1,
the noon buying rate for yen in New York City as of March 31, 2020. Such translation should not be construed
as representations that the Japanese yen amounts could be converted into U.S. dollars at the above or any other
rate.

3.

MARKETABLE SECURITIES AND INVESTMENTS
Debt Securities – The fair value of debt securities is based on quoted market prices as of March 31, 2020 and2019. The cost, gross unrealized gain and loss and the fair value by major security type were as follows:
Millions of Yen
Gross
Gross
Unrealized
Unrealized
Gain
Loss

2020

Cost

Held-to-maturity securities:
Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

¥656

¥2

¥329

¥4

113

¥1

Fair Value

¥657
¥333

Millions of Yen
Gross
Gross
Unrealized
Unrealized
Gain
Loss

2019

Cost

Fair Value

Held-to-maturity securities:
Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

¥446

¥0

¥1

¥445

¥1,124¥1¥4¥1,121Gross unrealized losses and fair values of debt securities, for those that have been in a continuous unrealized
loss position for more than 12 months as of March 31, 2020 and 2019, were as follows:
Millions of Yen
2020

Held-to-maturity securities:
Marketable securities:
Corporate debt securities
Investment:
Corporate debt securities

2019

Fair Value

Gross
Unrealized
Loss

Fair Value

Gross
Unrealized
Loss

¥109

¥1

¥332

¥1

¥446

¥3

Gross unrealized losses and fair values of debt securities, for those that have been in a continuous unrealized
loss position for less than 12 months as of March 31, 2020 and 2019, were as follows:
Millions of Yen
2020

Held-to-maturity securities:
Marketable securities:
Corporate debt securities
Investment:
Corporate debt securities

2019

Fair Value

Gross
Unrealized
Loss

¥220

¥0

Fair Value

Gross
Unrealized
Loss

¥228

¥1

The Companies periodically determine whether a decline in the fair value of debt securities is deemed to beother than temporary based on criteria that include the duration of the market decline, the extent to which costexceeds fair value, the financial position and business outlook of the issuer, and the intent and ability of theCompanies to retain the impaired held-to-maturity securities for a sufficient period of time for anticipated
recovery in fair value. No debt securities were identified that meet the Companies' criteria for recognition of an
impairment charge on debt securities in an unrealized loss position presented above. Therefore, the Companies
do not believe the unrealized losses represent an other-than-temporary impairment as of March 31, 2020 and2019.
Future maturities of debt securities classified as held-to-maturity securities as of March 31, 2020, were as
follows:
Millions of Yen
Fair
Cost
Value
Due within one year
Due after one year through five years

¥ 656
329

¥ 657
333

Total

¥ 985

¥ 990

114

As a result of the conversion of convertible bonds into equity securities, the Company recorded gains on
exchange of marketable securities of ¥140 million for the year ended March 31, 2019. There were no exchangeof marketable securities and investments during the year ended March 31, 2020.
Equity Securities – Realized and unrealized gains and losses on equity securities during the years ended
March 31, 2020 and 2019, were as follows:
Millions of Yen
2020
2019
Realized gain (losses) recognized during the period on equity
securities sold during the period
Unrealized losses recognized during the period on equity
securities still held at March 31
Net (gains) losses recognized during the period on equity
securities4.

¥ 1,620¥(77 )(5,380)(5,493)¥ (3,760)¥ (5,570)

ALLOWANCES FOR DOUBTFUL RECEIVABLES
Information related to the Companies' allowance for doubtful receivables as of March 31, 2020, 2019 and 2018
was as follows:
2020

Millions of Yen
2019

2018

Balance at the beginning of the year
Charged to expenses
Balances written-off/reversed

¥ 229
270
(10 )

¥ 207
36
(14 )

¥ 219
28
(40 )

Balance at the end of the year

¥ 489

¥ 229

¥ 207

Information related to the Companies' allowance for sales returns was as follows:
Millionsof Yen2018

5.

Balance at the beginning of the year
Charged to cost
Balances utilized¥ 2,258
2,252(2,258)

Balance at the end of the year

¥ 2,252

INVENTORIESThe components of inventories as of March 31, 2020 and 2019 were as follows:
Millions of Yen
2020
2019
Finished products
Work in process
Raw materials¥ 37,224
3,938
2,265

¥ 36,358
3,793
2,357

Total

¥ 43,427¥ 42,508

115

6.

INVESTMENTS IN AFFILIATED COMPANIES
Certain investments are accounted for using the equity method if the Companies have the ability to exercise
significant influence over an investee. Significant influence is generally deemed to exist if the Companies havean ownership interest in the voting stock of the investee between 20% and 50%, although other factors are
considered in determining whether the equity method of accounting is appropriate. The Companies record
investments in equity method investees meeting these characteristics as "Investments in affiliated companies."
Under the equity method, the Companies record their proportionate share of an affiliated company's income orloss based on the most recently available financial statements.
The primary affiliated companies and percentage of ownership as of March 31, 2020 and 2019 were as
follows:
Percentage of Ownership (%)
2020
2019

Name of Investee
Shinyoung Wacoal Inc.
Taiwan Wacoal Co., Ltd.
THAI WACOAL PUBLIC CO., LTD.
PT. Indonesia Wacoal
House of Rose Co., Ltd.

25
50
34
42
21

25
50
34
42
21

Aggregate carrying amounts and fair values of investments in affiliated companies which have a quoted
market price as of March 31, 2020 and 2019 were as follows:
Millions of Yen
2020
2019
Carrying amount
Aggregate value of quoted market price¥14,431
9,421¥14,523
11,075

The following tables represent the affiliated companies' summarized balance sheets and statements of income
as of and for the years ended March 31, 2020 and 2019. Such information as of and for the year ended March
31, 2018 were not disclosed as they were immaterial.
Millions of Yen
2020
2019
Current assets
Noncurrent assets¥ 43,974
42,161¥ 41,929
44,635

Total¥ 86,135¥ 86,564

Current liabilities
Long-term liabilities
Equity

¥

¥

Total

¥ 86,135

9,048
7,583
69,5048,569
7,145
70,850¥ 86,564

Millions of Yen
2020
2019
Net sales
Gross profit
Income before income taxes
Net income¥ 62,676
32,455
1,654
860

116

¥63,066
32,1053,458
2,714

The balance of receivables and payables to affiliated companies as of March 31, 2020 and 2019 were as
follows:
Millions of Yen
2020
2019
Accounts receivable
Accounts payable
Other receivable

¥618
509
329

¥927
665
286

The amounts of transaction with affiliated companies for the years ended March 31, 2020, 2019 and 2018 were
follows:

Sales
Cost of sales corresponding to sales of material and products
Purchases
Royalties

2020

Millions of Yen
2019

2018

¥ 2,838
2,826
5,302
330

¥3,257
3,175
5,612
299

¥2,700
2,675
5,744
300

Dividends received from affiliated companies were ¥ 542 million, ¥514 million and ¥519 million for the years
ended March 31, 2020, 2019 and 2018, respectively.
7.

ACQUISITIONSThe Company decided to enter into a share purchase agreement pursuant to which the Companies acquired
through our U.S. subsidiary Wacoal International Corp. ("Wacoal International") all of the issued andoutstanding shares of Intimates Online, Inc. ("Intimates Online"), a women's innerwear design and sales
company in the U.S. at the meeting of our board of directors held on July 30, 2019. Wacoal International
entered into the share purchase agreement on the same day (U.S. time) and acquired all of the issued andoutstanding shares of Intimates Online on July 31, 2019 (U.S. time).
Intimates Online designs and sells women's innerwear products under its "LIVELY" brand in the U.S.
thorough its e-commerce website and directly managed retail stores. The Companies expect discontinuous
growth in the U.S. by acquiring its customer base mainly for millennials and its unique marketing method tospread its reputation and online reviews by organizing its customers as its ambassador.
Consideration for the acquisition was ¥13,520 million and is consisted of ¥9,348 million (USD 86 million) of
cash and ¥4,172 million (USD 38 million) of contingent consideration.
The contingent consideration was agreed with previous shareholders upon the share purchase agreement andwill be paid to them over a period of four fiscal years. Payment is contingent on Intimate Online's performanceachieving certain goals such as sales targets. The total contingent payment amount will be within the range of
USD 20 million and USD 55 million.
The fair value of the contingent consideration was ¥3,874 million (USD 36 million) as of March 31, 2020. Thechanges in fair value were recognized in selling, general and administrative expenses. The contingent
consideration of ¥1,088 million (USD 10 million), for which the consideration has been fixed, was recognizedin accounts payable.
For the year ended March 2020, acquisition-related costs were ¥245 million and had been included in selling,
general and administrative expenses.

117

As a result of the purchase price allocation, the Company recognized ¥11,551 million of goodwill and ¥1,923
million of other intangible assets in Wacoal Business (Overseas). The goodwill arising from the acquisition
consists largely of the expected growth of Intimates Online, synergies and economies of scale expected fromcombining the operations with Wacoal International. Other intangible assets were composed of ¥1,097 million
brands, ¥793 million customer relationships, and ¥33 million of noncompetition agreements, respectively.
Goodwill is not deductive for tax purposes. The amount of brands, customer relationships and noncompetition
agreements are amortized based on the estimated useful lives of 10 and 5 years, respectively.
The Company adjusted the fair values of assets acquired and liabilities assumed as of the acquisition datebased on the information the Company obtained subsequent to the acquisition date. These adjustment arereflected retrospectively to the fair value of assets acquired and liabilities assumed as of the acquisition date.
The fair values of assets acquired and liabilities assumed as of the acquisition date were as follows:
Millions of yen
July 31, 2019
BeforeAfter
Adjustment
Adjustment
Cash and cash equivalents
Notes and accounts receivable
Inventories
Other current assets
Property, plant and equipment
Operating leases right-of-use assets
Goodwill
Other intangible assets
Other assets
Total assets

¥

167
14
341
16
14
295
13,50518
14,370Notes and accounts payables
Short-term operating lease liabilities
Other current liabilities
Deferred income taxes
Long-term operating lease liabilities
Total liabilities

¥

167
14
383
12
17
290
11,5511,923
18
14,375222
47
42

Total equity

249
560

228
47
43
288
249
855

¥ 13,810¥ 13,520

Pro Forma Financial Information (Unaudited)
Unaudited supplemental pro forma information for the combined result of operation of the Company and its
subsidiary as though the acquisition had occurred as of April 1, 2018 were as follows:
Millions of yen
2020
2019
Net sales
Operating income
Net income (loss) attributable to Wacoal Holdings Corp.

¥187,482
6,338
3,172

¥195,684
4,346
(193)

Net sales and operating loss of Intimates Online included in the Company's consolidated statements of income
for the year ended March 31, 2020 are ¥1,301 million and ¥1,250 million, respectively.

118

8.

GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill – Changes in the carrying amount of goodwill by operating segments for the years ended March 31,
2020, 2019 and 2018 were as follows.
Millions of Yen
2020

Balance at the beginning of the year:
Acquisition cost
Accumulated impairment charges
Carrying amount
Acquisition during the year
Impairment charges
Foreign currency translation adjustments
Balance at the end of the year:
Acquisition cost
Accumulated impairment charges
Carrying amountWacoalBusiness(Overseas)

Peach John

¥ 11,954¥

Total¥ 11,954

11,954
11,551(217)(917)

11,954
11,551(217)(917)

22,594(223)

22,594(223)¥ 22,371¥¥ 22,371

Millions of Yen
2019
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Acquisition cost
Accumulated impairment charges
Carrying amount
Impairment charges
Foreign currency translation adjustments
Balance at the end of the year:
Acquisition cost
Accumulated impairment charges¥ 12,269
12,269Peach John

Total

¥ 11,203(6,878)4,325(4,325)¥ 23,472(6,878)
16,594(4,325)(315)

11,203(11,203)

23,157(11,203)(315)
11,954

Carrying amount¥ 11,954¥¥ 11,954

Millions of Yen
2018
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total
Impairment charges
Foreign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment charges¥ 11,746
11,746(206)
736

Peach John

Total

¥ 11,203(6,878)4,325¥ 22,949(6,878)16,071(206)
736

11,203(6,878)23,685(7,091)

4,325¥ 16,594

12,482
(213)

Total

¥ 12,269

119¥

The Company recorded impairment charges on goodwill of ¥217 million for the G Tech in the year ended
March 31, 2020, which was included in operating costs and expenses of Wacoal Business (Overseas). The
Company recorded impairment charges on goodwill of ¥4,325 million for the Peach John Business in the year
ended March 31, 2019, which was included in operating costs and expenses of the Peach John Business. The
Company recorded impairment charges on goodwill of ¥206 million for the A Tech in the year ended March
31, 2018, which was included in operating costs and expenses of Wacoal Business (Overseas). See Note 21 forfurther information about measurement of fair value.
Other Intangible Assets – The components of intangible assets excluding goodwill as of March 31, 2020 and2019 were as follows:Year Ended March 31
Amortized intangible assets:
BrandsSoftware
OthersTotal
Unamortized intangible assets:
Trademarks
Other
Total

Gross
Carrying
Amount¥6,670
16,0392,534Millions of Yen
2020
Accumulated
Amortization
Grossand Impairment
Carrying
ChargesAmount
¥

2,076
8,163
1,022

¥

6,058
14,060
1,732

2019
Accumulated
Amortization
and Impairment
Charges
¥

1,899
7,542
868

¥ 25,243¥ 11,261¥ 21,850¥ 10,309¥ 5,31676¥ 4,827¥ 5,31676¥ 4,636¥ 5,392¥ 4,827¥ 5,392¥ 4,636

Other intangible assets acquired during the year ended March 31, 2020 totaled ¥5,313 million, which primarily
consist of brands and software. Other intangible assets acquired during the years ended March 31 2019 and2018 totaled ¥3,266 million and ¥2,569 million, which primarily consist of software. Estimated useful life
brands and software are ten and five years, respectively.
During the years ended March 31, 2020 and 2019, the Companies recorded impairment charges on the
trademark of Peach John of ¥191 million and ¥1,314 million, which was included in operating costs andexpenses of the Peach John Business. During the year ended March 31, 2020, the Companies also recorded¥65 million of impairment charges on software of the A Tech, which was included in operating expenses ofthe Wacoal Business (Overseas). During the year ended March 31, 2019, the Companies recorded ¥195
million of impairment charges on software of Ai, which was included in operating expenses of the Wacoal
Business (Domestic). See Note 21 for further information.
Aggregate amortization expenses for the years ended March 31, 2020, 2019 and 2018 related to otherintangible assets were ¥2,484 million, ¥2,109 million and ¥1,811 million, respectively. Future estimatedamortization expenses as of March 31, 2020 were as follows:
Millions of
Yen

Year Ending March 31
Estimated amortization expense
2021
2022
2023
2024
2025

¥

Total

2,640
2,497
2,267
1,815
1,169

¥ 10,388

120

9.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans as of March 31, 2020 and 2019 consisted of the following:
Millions of Yen
2020
2019
Unsecured bank loans¥3,364¥8,116

The weighted-average annual interest rates on short-term bank loans as of March 31, 2020 and 2019 were0.3% and 0.2%, respectively.
Unused lines of credit for short-term financing as of March 31, 2020 and 2019 aggregated to ¥28,657 millionand ¥22,935 million, respectively.
Long-term debt as of March 31, 2020 and 2019 was summarized below. The interest rates and maturities were
for loans as of March 31, 2020.
Millions of Yen
2020
2019
Collateralized bank loans, with fixed interest at 0.6%, maturing
through 2022
Unsecured bank loans, with fixed interest at 0.4%,
maturing through 2022
Total
Less current portion of long-term portionLong-term debt, less current portion

¥ 35

¥ 55

50
85
(50)

83
138
(50 )

¥ 35

¥ 88

The annual maturities of long-term debt as of March 31, 2020 were as follows:
Millions of
Yen

Year Ending March 31
2021
2022

¥ 50
35

Total

¥ 85

A subsidiary has pledged assets as security for loans. As of March 31, 2020 and 2019, assets pledged ascollateral for bank loans were as follows:
Millions of Yen
2020
2019
Land
Buildings

¥ 150
146

¥ 150
169

Total

¥ 296

¥ 319

As is customary in Japan, both short-term and long-term loans are made under general agreements which
provide for security and guarantees for future and present indebtedness to be given upon request of the bank.
The bank has the right to offset cash deposits against obligations that have come due or, in the event of default,
against all obligations due to the bank.

121

10.

LEASES
Lessor Accounting
Operating lease income for the year ended March 31, 2020 was as follow. Lease income was included in net
sales and other net income.
Millions ofYen
2020
Operating lease income¥2,392

The acquisition costs of equipment leased to customers under operating leases were ¥2,756 million of land and¥516 million of building and building improvements. Accumulated depreciation on these equipment was ¥413
million as of March 31, 2020. These are included in net property, plant and equipment.
Future minimum lease income classified as operating leases as of March 31, 2020 were as follows. Note thatlease payments related to mannequins and display furniture which were mainly part of the Companies' lease
income were not included in the below table because the contracts terms were not material.
Millions of
Yen

Year Ending March 31
2021
2022
2023
2024
2025
Thereafter

¥

245
201
173
172
112
1,287

Total

¥ 2,190

Lessee accounting
Operating lease costs for the year ended March 31, 2020 were as follows. Lease expenses were included incost of sales and selling, general and administrative expenses.
Millions ofYen
2020
Operating lease costs
Short-term lease costs
Variable lease costs¥ 4,945
635
1,295

Total

¥ 6,875

Supplemental cash flow information related to operating leases for the year ended March 31, 2020 was asfollows.
Millions ofYen
2020
Cash paid for amounts included in the measurement of leaseliabilities
Non-cash activities concerning right-of-use assets obtained in
exchanged for new operating lease liabilities.

122¥ 4,798
5,483

Weighted-average remaining lease term and discount rate for operating leases were as follows:
2020
Weighted-average remaining lease term
Weighted-average discount rate

63.0 months
1.7%

Future minimum lease payments classified as operating leases as of March 31, 2020 were as follows:
Millions of
Yen

Year Ending March 31
2021
2022
2023
2024
2025
Thereafter¥

Total minimum lease payments
Less interest cost

4,805
3,075
1,719
1,148
909
2,899
14,555(854)

Total lease liabilities¥ 13,701

Any material leases commenced after April 1, 2020 were not recognized as of March 31, 2020.
11.

ASSET RETIREMENT OBLIGATIONSThe Companies recorded the fair value of asset retirement obligations in order to recognize legal obligations
associated with the removal of leasehold improvements from leased facilities and return of the property to a
specified condition when the lease terminates.
A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation is asfollows:

12.

2020

Millions of Yen
2019

2018

Balance at the beginning of the year
Accretion expense
Liabilities incurred
Liabilities settled
Change due to foreign currency translation

¥ 813
3
63
(52 )
0

¥ 825
2
92
(106)
0

¥ 855
1
62
(91 )
(2 )

Balance at the end of the year

¥ 827

¥ 813

¥ 825

TERMINATION AND RETIREMENT PLANS
Employee Retirement Plans – Certain subsidiaries of the Company sponsor termination and retirement benefit
plans that cover substantially all employees. Benefits are based on the employee's years of service, positionand performance. If the termination is involuntary or caused by death, the employee is usually entitled togreater payments than in the case of voluntary termination.
Certain subsidiaries of the Company have contributory defined retirement benefit plans and several unfunded
termination plans administered by certain subsidiaries of the Company. Benefits under the contributory
defined retirement benefit plan are usually paid in a lump sum at the earlier of termination or retirement,
although periodic payments are available under certain conditions. Benefits under the other termination andretirement benefit plan are paid either as lump-sum payments or periodic payments under certain conditions.
The benefits are usually paid as a lump-sum payment, if the employee resigns before the mandatory retirement
age.

123

Contributory Defined Retirement Benefit Plan – The following provides a reconciliation of benefit
obligations, plan assets and funded status of the plans:2020

Millions of Yen
2019

2018

Change in benefit obligations:Benefit obligations at the beginning of the year
Service cost
Interest cost
Participants' contributions
Actuarial (gain) loss
Loss based on prior service benefits
Benefits paid from plan assets
Settlement paid from plan assets
Settlement paid by the Company and certain subsidiaries
Changes in foreign currency exchange rates
Benefit obligations at the end of the year

¥ 38,681
1,243
176
60
(217)
253
(961)
(1,275)(289)
337,674¥ 34,580
1,196
178
62
4,937

¥ 34,935
1,086
205
63
432

(961)
(976)
(339)
4
38,681(1,007)(1,003)(138)
734,580Change in plan assets:
Fair value of plan assets at the beginning of the year
Actual return on plan assets
Employer contributions
Participants' contributions
Benefit payments
Settlement payments
Changes in foreign currency exchange rates
Fair value of plan assets at the end of the year

¥ 40,680
1,375
579
60
(961)
(1,275)
6
40,464¥ 42,736
(846)
657
62
(961)
(976)
8
40,680¥ 43,203
878
612
63(1,007)(1,003)(10 )
42,736

Funded status at the end of the year

¥

¥

¥

2,790

1,999

8,156

Amounts recognized in the consolidated balance sheets as of March 31, 2020 and 2019 consist of:Millions of Yen
2020
2019
Prepaid pension expense
Other current liabilities
Liability for termination and retirement benefits¥ 4,974(115)(2,069)¥ 3,990(163)(1,828)

Total¥ 2,790¥ 1,999

Amounts recognized in accumulated other comprehensive income, as of March 31, 2020 and 2019 were as
follows:
Millions of Yen
2020
2019
Actuarial loss
Prior service cost

¥ (5,048)(253)¥ (6,820)

Total¥ (5,301)¥ (6,820)

The accumulated benefit obligation for all defined retirement benefit plans as of March 31, 2020 and 2019 was
as follows:
Millions of Yen
2020
2019
Accumulated benefit obligations¥37,532

124¥38,531The projected benefit obligations and the fair value of the plan assets for certain subsidiaries' of the Company
with projected benefit obligations in excess of the fair value of plan assets, and the accumulated benefit
obligations and the fair value of the plan assets for certain subsidiaries' pension plans with accumulated benefit
obligations in excess of the fair value of plan assets were as follows:
Millions of Yen
2020
2019
Plans with projected benefit obligations in excess of plan
assets:
Projected benefit obligations
Fair value of plan assets
Plans with accumulated benefit obligations in excess of the fairvalue of plan assets:
Accumulated benefit obligations
Fair value of plan assets¥ 3,075738¥2,856
865

3,075
738

2,856
865

Net periodic benefit costs for certain subsidiaries' of the Company plans consisted of the following for theyears ended March 31, 2020, 2019 and 2018:

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss (gain)
Amortization of prior service benefits

2020

Millions of Yen
2019¥ 1,243
176(1,006)
1,186¥ 1,196
178(1,007)5¥ 1,086
205
(991)
(157)
(121)

¥ 1,599

¥

¥

372

2018

22

The unrecognized net actuarial gain or loss and prior service benefits are amortized within 12 years (theaverage remaining service life of active participants) using the declining-balance method and the straight-line
method, respectively.
Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years
ended March 31, 2020, 2019 and 2018 were as follows:
2020
Actuarial gain (loss)
Amortization of actuarial loss (gain)
Prior service benefits
Amortization of prior service benefits

¥

586
1,186
(253)

Millions of Yen
2019

2018

¥ (6,790)5¥ (545)
(157)
(121)

¥ 1,519¥ (6,785)¥ (823)The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic
benefit costs over the next year were summarized as follows:
Millions of
Yen
Actuarial loss
Prior service cost

¥ 875
21

125

Certain subsidiaries of the Company use a measurement date of March 31 for their plans. The weightedaverage assumptions used as of March 31, 2020 and 2019 in computing the benefit obligations shown above
were as follows:

Discount rate

2020

2019

0.5%

0.5%

The weighted-average assumptions used as of March 31, 2020, 2019 and 2018 in computing the net periodic
benefit costs shown above were as follows:

Discount rate
Rate of increase in future compensation
Expected long-term rate of return on plan assets

2020

2019

2018

0.5%
5.3%
2.5%

0.5%
5.3%
2.5%

0.6%
5.3%
2.5%

Certain subsidiaries' of the Company approach to establishing the discount rate is based upon corporate bondindices. The discount rate assumption is based upon effective yields as of March 31, 2020 on the corporatebond indices for which maturity dates approximate the timing of the expected future benefit payments.
The retirement benefit plan of certain subsidiaries of the Company is a point-based benefits system, and,
therefore, the rate of compensation increase has not been included in computing the benefit obligations.
The expected long-term rate of return on plan assets is derived proportionally from return assumptions
determined for each of the major asset classes. The return expectations for each of the asset classes are basedlargely on assumptions about economic growth and inflation, which are supported by long-term historical data.
The estimated long-term rate of return is based on an asset allocation of equity securities of 26.0%, debt
securities of 54.0%, life insurance company general accounts of 18.0% and other short-term investments of
2.0%.
The plan investment strategy of certain subsidiaries of the Company is to maintain actual asset weightings
within a preset range of target allocations. The plan investment strategy of certain subsidiaries of the Company
is broadly diversified, consisting primarily of equity and debt securities. Certain subsidiaries of the Company
believe these ranges represent an appropriate risk profile for the planned benefit payments of the plans basedon the timing of the estimated benefit payments.
The asset allocation as of March 31, 2020 and 2019 was as follows:

Equity securities
Debt securities
Life insurance company general accounts
Real estate
Other short-term investments

2020

2019

44.7%
31.1%
9.3%
3.2%
11.7%

42.3%
34.9%
9.7%
3.4%
9.7%

The target allocation percentages are reviewed and approved by the Pension Committee. The actual allocationsfor 2020 and 2019 are different from the target allocation percentages primarily because Wacoal Corp.
maintained additional equity securities within a separate plan asset which is assigned to the plan based on anagreement between Wacoal Corp. and its employees and is not governed by the Pension Committee. As such,the actual allocation percentage of equity securities to the total plan assets is higher than the target allocation
and, similarly, the actual allocation for some other types of assets is lower than the target allocation.
The following tables present the plan assets of certain subsidiaries of the Company using the fair value
hierarchy as of March 31, 2020 and 2019. The fair value hierarchy has three levels based on the reliability of
the inputs used to determine the fair value. For references to each level, see Note 21.

126

2020

Level 1

Assets evaluated by other than net asset value
per share
Equity securities:
Japanese companies
Foreign companies
Debt securities:
Foreign government bonds
Life insurance company general accounts
Other types of investments:
Other short-term investments
Assets evaluated by net asset value per share (a)Equity securities:
Pooled funds (b)Debt securities:
Pooled funds (c)Other types of investments:
Hedge funds (d)Pooled funds (e)
Total

2019
Assets evaluated by other than net asset value
per share
Equity securities:
Japanese companies
Foreign companies
Debt securities:
Foreign government bonds
Life insurance company general accounts
Other types of investments:
Other short-term investments
Assets evaluated by net asset value per share (a)Equity securities:
Pooled funds (b)Debt securities:
Pooled funds (c)Other types of investments:
Hedge funds (d)Pooled funds (e)TotalMillions of Yen
Level 2
Level 3

¥ 9,707
43

Total

¥

9,707
43

216
¥ 3,773

216
3,773

2,209

2,209
5,227
8,145
3,634
7,510

¥ 9,966¥ 5,982

Level 1Millions of Yen
Level 2
Level 3

¥ 8,13858¥ 40,464

Total

¥

152

8,138
58

¥ 3,928

152
3,928

2,943

2,943
5,955
8,912
3,832
6,762

¥ 8,348¥ 6,871¥ 40,680(a) Certain assets evaluated by net asset value per share (or its equivalent) are not categorized in the fairvalue hierarchy. Total amounts in the above table are presented to reconcile the amounts in the fairvalue hierarchy to the amounts stated on the consolidated balance sheets.
(b) This class includes common stock of approximately 52% Japanese companies and 48% foreigncompanies as of March 31, 2020 and 50% and 50%, respectively, as of March 31, 2019.

127

(c) This class includes approximately 83% of foreign government bonds and 17% of corporate bonds
investments as of March 31, 2020 and 79% and 21%, respectively, as of March 31, 2019.
(d) This class consists of hedge funds that invest in both securities and equity securities as of March 31,
2020 and 2019.
(e) This class includes approximately 20% corporate bonds, 0% common stock of Japanese companies,
29% common stock of foreign companies, 17% real estate and 34% other short-term investments as ofMarch 31, 2020. This class includes approximately 34% corporate bonds, 1% common stock ofJapanese companies, 30% common stock of foreign companies, 20% real estate and 15% other shortterm investments as of March 31, 2019.
Equity securities and debt securities presented in Level 1 are primarily valued using a market approach basedon the quoted market prices of identical instruments. Life insurance company general accounts categorized in
Level 2 include contracts with insurance companies with guaranteed rates of return and capital, and thosevalues are based on the sum of principal amount and return. Pooled funds are valued using the net asset value
per share provided by the administrator of the fund.
The funding policy for the funded plans of certain subsidiaries of the Company is to contribute amounts
computed in accordance with actuarial methods accepted by Japanese tax law. Certain subsidiaries of theCompany expect to contribute ¥564 million to their plans in the year ending March 31, 2021.
The following benefit payments, which reflect expected future services, are expected to be paid:
Millions of
Yen

Year Ending March 31
2021
2022
2023
2024
2025
Thereafter

¥

2,198
2,152
2,358
2,113
2,163
10,757

Defined Contribution Plan – Certain subsidiaries of the Company have defined contribution plans. The
amounts of cost recognized for their contributions to the plan were ¥407 million, ¥394 million and ¥327
million for the years ended March 31, 2020, 2019 and 2018, respectively.
Termination Plan for Directors – The Company previously had, and a certain subsidiaries of the Company
currently has, termination plans for directors. Payment of termination benefits to directors is made in a lumpsum upon termination and requires the approval of the shareholders before payment. In June 2005, theCompany rescinded its termination plan for directors upon the approval of its shareholders. The amount ofbenefits for each individual was fixed as of June 29, 2005 and will remain frozen until the retirement of each
respective director. Outstanding liabilities of ¥344 million and ¥349 million as of March 31, 2020 and 2019,respectively, were recorded in other long-term liabilities. A certain subsidiary has plans for its directors andrecorded a liability for termination benefits for directors at the amount that would be needed if all directors
were to resign at each balance sheet date in accordance with the guidance for determination of vested benefit
obligations for a defined benefit pension plan.
13.

COMMITMENT AND CONTINGENT LIABILITIESThe Company entered into a construction supervision and construction contract in the amount of ¥ 4,290
million, in connection with a new logistics center that will be established next to the Moriyama Distribution
Center in Moriyama, Shiga on March 16, 2020.
The Company had contractual obligation of ¥4,290 million as of March 31, 2020.

128

The annual payments of contractual obligation as of March 31, 2020 were as follows:
Millions of
Yen

Year Ending March 31

14.

2021
2022
2023

¥

900
3,200
190

Total

¥ 4,290SHARE-BASED COMPENSATIONThe Company adopted an annual stock option plan in the year ended March 31, 2009. Under the stock option
plan, the Company granted shares of its common stock to directors of the Company, excluding outside
directors and directors of the Company's wholly-owned subsidiary, Wacoal Corp., in the years ended March
31, 2020, 2019 and 2018. The Company believes that such awards better align the interests of its directors withthose of its shareholders by sharing both risk and return from fluctuations in stock prices and giving
motivation to enhance corporate value. Each stock option is exercisable to acquire 100 shares of theCompany's common stock at ¥1 per share (for stock option granted prior to September 1, 2017, it isexercisable to acquire 500 shares of the Company's common stock). The compensation cost is measured at fairvalue on the grant date. Options vest over one year in proportion to the services rendered by the directors, andare exercisable from the day after the date of retirement up to (i) 20 years from the grant date or (ii) 5 years
from the day after the date of retirement, whichever is earlier.
The fair value of the options is estimated by using the Black-Scholes option-pricing model with the following
assumptions.
Expected dividend yield is based on the actual payout of dividends in the last fiscal year and the closing priceof the Company's common stock on the grant date. Expected volatility is based on the historical volatility of
the Company's share price over the most recent period commensurate with the expected term of the Company's
stock options. The risk-free interest rate is based on the Japanese government bond yield curve in effect at thetime of grant for a period commensurate with the expected term of the Company's share options. The expected
term of options granted is based on the average remaining service period of directors, assuming that those whoare granted options will render service until the stated retirement and they will exercise options immediately
after their retirement.

Expected dividend yield
Expected volatility
Risk-free interest rate
Expected term

2020

2019

2018

2.6%
25.0%
(0.2)%
4.0 years

2.2%
24.6%
(0.1)%
3.7 years

2.3%
23.7%
(0.2)%
3.4 years

A summary of stock option activities under the plan for the years ended March 31, 2020 and 2019 was asfollows:
Yen

Outstanding as of April 1, 2019
GrantedExercised
Outstanding as of March 31, 2020
Exercisable as of March 31, 2020

Millionsof YenShares

WeightedAverage
Exercise
Price

Years
WeightedAverage
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

249,900
28,50022,500255,900
36,800¥11
1
1
112.95 years
3.23 years

¥600
86

129

Yen

Outstanding as of April 1, 2018
GrantedExercised
Outstanding as of March 31, 2019
Exercisable as of March 31, 2019

Millionsof YenShares

WeightedAverage
Exercise
Price

Years
WeightedAverage
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

240,500
20,90011,500249,900
40,500¥1
1
1
1
1

13.09 years
3.68 years

¥687
111

The total intrinsic value of options exercised was ¥62 million, ¥33 million and ¥16 million as of the years
ended March 31, 2020, 2019 and 2018, respectively.
The total compensation costs recognized for the years ended March 31, 2020, 2019 and 2018 were ¥71
million, ¥62 million and ¥68 million, respectively. The total recognized tax benefits related thereto for theyears ended March 31, 2020, 2019 and 2018 were ¥22 million, ¥19 million and ¥21 million, respectively.
The weighted-average grant date fair values of options granted for the years ended March 31, 2020, 2019 and2018 were ¥2,516, ¥3,005 and ¥2,918, respectively.
As of March 31, 2020, there was ¥11 million in total unrecognized compensation cost related to nonvested
share-based compensation arrangements granted under the plan. That cost is expected to be recognized overthree months.
15.

EQUITYJapanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to
the year-end dividend upon resolution at the shareholders' meeting. Additionally, for companies that meetcertain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an
Audit and Supervisory Board, and (4) the term of service of the directors being prescribed as one year
rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribedso in its articles of incorporation. The Company meets all the above criteria and, accordingly, the Boardof Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders
subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if
the articles of incorporation of the companies so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the shareholders, but the amount of net assets after
dividends must be maintained at no less than ¥3 million.

130

(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity account charged
upon the payment of such dividends, until the total of the aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may bereversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of theshareholders.
(c) Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by a specific formula.
16.

OTHER COMPREHENSIVE (LOSS) INCOME
Changes in the components of accumulated other comprehensive income, including amounts attributable to noncontrolling interests were as follows:
Millions of Yen
2019

2020
Foreign
Currency
Translation
Adjustments
Balance at the beginning of the year (after-tax)
Cumulative effects (net of tax) of the adoption of
ASU No. 2016-01 and 2018-03
Amount arising during the year:
Pre-tax amountTax credit
Net amount
Reclassification adjustments:
Pre-tax amountTax credit
Net amount
Other comprehensive (income) loss attributable to noncontrollinginterests (after-tax)¥ 1,551

Balance at the end of the year (after-tax)¥ (1,033)

Unrealized
Gain onSecurities

PensionLiability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized
Gain onSecurities¥ (5,679)¥ 2,274¥ 27,424

2018
PensionLiability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized
Gain onSecurities

PensionLiability
Adjustments¥ (1,101)¥ 1,212¥ 21,075¥ (414)

(10 )
3
(7 )

(6,866)
2,079(4,787)

1,158
(45 )
1,113

9,309
(2,815)
6,494

(655)
168
(487)

(140)
43
(97 )

202
(2 )
200

(201)
62
(139)

(278)
85
(193)

(27,320)(2,529)(3)(2,532)

265
(140)
125

(795)
45
(750)

1,357
(397)
960
(52)

27
¥ (4,594)¥ 1,551

¥

9

(51 )

(6 )

(7)

¥ (5,679)¥ 2,274¥ 27,424¥ 1,101

Reclassification adjustments (pre-tax) of unrealized gain or loss on securities are included in "(Loss) gain on sales, exchange, and valuation of marketable securities and investments – net" in the consolidated statements of income.
Reclassification adjustments (pre-tax) of pension liability adjustments are included in "Other – net" in the consolidated statements of income as the net periodic benefit costs.
17.

INCOME TAXESThe Companies are subject to a number of different taxes based on income. The effective income tax rates differed from the normal effective statutory tax rates for the following reasons for the years ended March 31, 2020, 2019 and 2018:
2020

2019

2018

Normal Japanese effective statutory tax rates
Increase (decrease) in taxes resulting from:
Permanently nondeductible expenses
Change in valuation allowance
Undistributed earnings of associated companies
Differences in foreign subsidiaries' tax rate
Tax exemption
Unrecognized tax benefits
Impairment losses on goodwill
Changes in Japanese income tax rates
Other – net

30.6%

30.6%

30.9%

7.3
10.3
2.3
(7.2)
(2.0)
(1.0)
1.3
(0.1)
(8.2)

22.9
25.5
3.9
(27.3)
(2.9)
1.4
60.1
(0.4)
1.2

3.0
2.8
0.7
(1.3)
(0.9)
(0.1)
0.1
2.0
1.6

Effective tax rates

33.3%

115.0%

38.8%

131

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax
balances as of March 31, 2020 and 2019 were as follows:
Millions of Yen
2020
2019
DeferredDeferredDeferredDeferred
Tax
Tax
Tax
Tax
AssetsLiabilities
AssetsLiabilities
Refund liabilities
Allowance for doubtful receivables
Accruals not currently deductible
Inventory valuation
Accrued bonuses
Advanced depreciation on property, plant andequipment
Undistributed earnings of associated companies
Net unrealized gain on marketable securities andinvestments
Net realized gain on exchange of investments
Capitalized supplies
Enterprise taxes
Accrued vacation
Operating leases right-of-use assets
Operating lease liabilities
Asset retirement obligation
Prepaid pension expense
Liability for termination and retirement benefit
Return assets
Property, plant and equipment
Tax loss carryforwards
Intangible assets
Other temporary differences
Total
Valuation allowance

¥

Total

¥

734
15
205
1,089
882

¥

¥

963
9
226
837
990

1,839
2,485

¥

5,848
416
137
352
741

1,912
2,400
10,394
792

172
245
739
3,580

3,616
250

250
720

611

357
430

266
1,591
2,388
36
12,647(2,858)
9,789

361
1,393
1,838

1,151
277
16,582¥ 16,582

602
8,694(2,177)¥ 6,517

1,261
245
17,722¥ 17,722

The valuation allowance decreased by ¥681 million and increased by ¥160 million for the years ended March
31, 2020 and 2019, respectively.
The Companies also utilized ¥245 million and ¥661 million of tax loss carryforwards, and recognized tax
benefits of ¥29 million and ¥215 million for the years ended March 31, 2020 and 2019, respectively.

132

As of March 31, 2020, certain subsidiaries had tax loss carryforwards which are available to offset futuretaxable income of such subsidiaries and expire as follows:
Millions of
Yen

Year Ending March 31
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Thereafter

¥

186
421
554
390
818
656
577
164
1,047
1,033
3,215

Total

¥ 9,061

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures
which was deemed to be permanently reinvested as of March 31, 2020 and 2019.
A reconciliation of beginning and ending amounts of unrecognized tax benefits is as follows:
2020
Balance at the beginning of the year
Additions based on tax positions related to the current year
Addition based on tax position related to the previous years
Reductions for tax positions of prior years

¥ 101
1

Balance at the end of the year¥

Millions of Yen
2019
¥

2018

5
60
36

¥4
1

¥ 101

¥5

(100)
2

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is ¥2
million, ¥101 million and ¥5 million as of March 31, 2020, 2019 and 2018, respectively.
The Companies recognize interest and penalties accrued related to unrecognized tax benefits in income taxes
in the consolidated statements of income. Total amounts of interest and penalties recognized in the
consolidated statements of income for the years ended March 31, 2020, 2019 and 2018 were not material.
The Companies file income tax returns in Japan and various foreign tax jurisdictions. In Japan, the Companies
are no longer subject to regular income tax examinations by the tax authorities for years before 2017, with few
exceptions. For other countries, the Companies are no longer subject to regular income tax examinations by
the tax authorities for years before 2010, with few exceptions. For certain subsidiaries in Japan, the UnitedStates, and Asia, the transfer pricing examinations for the fiscal years ended March 31, 2007, 2010 and 2016
were completed respectively.
18.

REVENUEThe Group focuses on sales of innerwear (women's foundation garments and lingerie, nightwear and children's
underwear), sportswear, and other textile products and related products ("Products"), and our customers
include retail and wholesale distributors and consumers in Japan and overseas. See Note "23. Segment
Information" for revenue information for each segment, by each product and service, and by geographic area.

133

Revenue from sales of our products is recognized when performance obligations are satisfied, which is upondelivery of the products. We invoice when we satisfy the performance obligation and receive cash payment
shortly thereafter.
The Group's revenue is recognized for transactions, net of any trade discounts or rebates given. We generally
provide a right of return to our customers. In order to estimate the transaction price, provision for expected
returns is deducted from revenue based on historical returns.
Contract liabilities from contracts with customers consists mainly of customer royalty points. Some ofsubsidiaries have customer royalty programs as part of the promotion and provide royalty points to customers
when they purchase the products. The points provided to customers are identified as performance obligations,which are satisfied when the points are redeemed for the products. The unredeemed points as of the end ofyears are recorded as contract liabilities, which are estimated based on actual redemption amounts fromprevious fiscal year. Contract liability is included in other current liabilities, and the amount of contract
liabilities as of March 31, 2020 and 2019 are as follows:
Millions of Yen
2020
2019
Contract liabilities

¥917

¥873

Revenue recognized for the years ended March 31, 2020 and 2019, which had been included in the contract
liabilities balance at beginning of year were ¥494 million and ¥324 million.
19.

EARNINGS PER SHARE
Basic net income attributable to Wacoal Holdings Corp. per share has been computed by dividing net income
attributable to Wacoal Holdings Corp. by the weighted-average number of common shares outstanding during
each year. Diluted net income attributable to Wacoal Holdings Corp. per share assumes the dilution that would
occur if share-based options to issue common stock were exercised.
The weighted-average number of common shares outstanding used in the computations of basic net income
attributable to Wacoal Holdings Corp. per share was 63,989,561 shares, 66,143,405 shares and 67,928,557
shares for the years ended March 31, 2020, 2019 and 2018, respectively. The weighted-average number ofdiluted common shares outstanding used in the computations of diluted net income attributable to Wacoal
Holdings Corp. per share was 64,242,244 shares, 66,393,127 shares and 68,157,430 shares for the years ended
March 31, 2020, 2019 and 2018, respectively.
*

As of October 1, 2017, the Company effected a one-for-two ordinary share reverse stock split. Net
income attributable to Wacoal Holdings Corp. per share is calculated assuming that the reverse stock split
occurred at the beginning of the earliest fiscal year presented in the consolidated financial statements.

134

20.

FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Fair Value of Financial Instruments
The carrying amounts and fair values of financial instruments as of March 31, 2020 and 2019 were as follows:
Millions of Yen
2020
2019
Carrying
Fair
Carrying
Fair
AmountValue
AmountValue
Assets:Marketable securities
Investments¥

Total assets

656
43,904¥657
43,908¥446
63,372¥445
63,369¥ 44,560¥ 44,565¥ 63,818¥ 63,814

Liabilities:
Long-term debt including current portion

¥

85

¥

85

¥

138

¥

138

Total liabilities

¥

85

¥

85

¥

138

¥

138

The carrying amounts of all other financial instruments approximate their estimated fair values because of theshort maturity of those instruments. For information about fair values of foreign exchange contracts andcurrency swaps, see Note 21.
Marketable Securities and Investments – The fair value of these held-to-maturity debt securities are based on
Level 1 inputs. For all other investments included in marketable securities and investments, see Notes 3 and21.
Long-Term Debt – The fair values for long-term debt are estimated by discounted cash flow analysis, using
rates currently available for similar types of borrowings with similar terms and remaining maturities. The
estimated fair value is based on Level 2 inputs.
Limitations – Fair value estimates are made at a specific point in time based on relevant market informationand information about the financial instruments. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Concentration of Credit Risk – The Companies' business consists primarily of sales of women's intimate
apparel to a large number of diverse customers in the Japanese retail industry, which include well-establisheddepartment stores, general merchandise stores and other general retailers and specialty stores.
21.

FAIR VALUE MEASUREMENTS
The guidance for fair value measurements defines fair value as the price that would be received to sell an asset
or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants at the measurement date. The guidance
establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value as follows:
Level 1

Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2

Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are not active, inputs other than quoted
prices that are observable, and inputs that are derived principally from or corroborated byobservable market data by correlation or other means.

Level 3

Inputs are unobservable.

135

Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and 2019 were as
follows:
2020

Level 1

Assets:Investments:
Equity securities
Mutual funds
Total
Derivative instruments:
Foreign exchange contracts¥ 40,920
94
41,014

Millions of Yen
Level 2
Level 3

¥ 2,561
2,561

Total

¥ 43,481
94
43,575¥ 57

Total assets¥ 41,014

Liabilities:
Derivative instruments:
Foreign exchange contracts
Currency swap
Total
Contingent consideration

¥ 57

57
¥ 2,561

¥ 24
72
96

¥ 43,632

¥

24
72
96
3,874

¥

3,970

¥ 3,874

Total liabilities

¥ 96

2019

Level 1

Assets:Investments:
Equity securities
Mutual funds
Total
Derivative instruments:
Foreign exchange contracts¥ 59,911
50
59,961¥ 3,874

Millions of Yen
Level 2
Level 3

¥ 2,287
2,287

Total

¥ 62,198
50
62,248¥ 27

Total assets¥ 59,961

Liabilities:
Derivative instruments:
Foreign exchange contracts
Currency swap
Total liabilities

¥ 27

27
¥ 2,287¥ 62,275

¥ 18
36

¥

18
36

¥ 54

¥

54

Investments presented in Level 1 are valued using unadjusted quoted market prices in active markets with
sufficient volume and frequency of transactions. Bonds presented in Level 2 are valued by financial
institutions using quoted market prices for identical instruments in markets that are not active. Mutual funds
presented in Level 2 are valued by financial institutions based on quoted prices in an inactive market for
identical instruments which are included in the mutual funds.
As discussed in Note 3, the Companies record impairment charges on debt securities if a decline in fair valueof debt securities is determined to be other than temporary.
Foreign exchange contracts and currency swaps presented in Level 2 are valued by financial institutions basedon market data in both active and inactive markets.

136

Equity securities in Level 3 are non-marketable equity securities and are valued by the comparable multiple
valuation method using financial indicators as inputs or other appropriate valuation methods. Contingent
consideration are valued by the Monte Carlo simulation using unobservable inputs.
The tables below show the change in assets presented in Level 3 that are continuously assessed at fair value asof March 31, 2020 and 2019:
Millions of Yen
2020
Contingent
Investment
Consideration
Balance at the beginning of the year
Purchase/assumed in acquisition
Total gains or losses for the period:(Loss) gain on sale, exchange and valuation of marketablesecurities and investments – net
Selling, general and administrative expenses
Foreign currency translation adjustments¥ 2,287276

Balance at the end of the year

¥ 2,561¥ 3,874

Unrealized (loss) gain included in earnings for assets andliabilities still held as of March 31, 2020¥

¥ (304 )¥ 4,172(2 )(304 )
6(2 )Millions ofYen
2019
Investment
Balance at the beginning of the year
Purchase
Total gains or losses for the period:(Loss) gain on sale, exchange and valuation of marketablesecurities and investments – net¥ 2,002
201

Balance at the end of the year

¥ 2,287

Unrealized gains included in earnings for assets still held as ofMarch 31, 2019

¥

84

84

Assets Measured at Fair Value on a Nonrecurring Basis
Assets measured at fair value on a nonrecurring basis as of March 31, 2020 and 2019 were as follows:
Millions of Yen
2020

Level 1

Buildings and structures
Machinery and equipment
Goodwill (Note 8)
Trademarks (Note 8)
Software (Note 8)

Level 2

Level 3

Total

¥ 109
324

¥ 109
324

489
14

489
14

Impairment
Losses
¥

(162)
(607)
(217)
(191)
(65 )

¥ (1,242)

137

Millions of Yen
2019

Level 1

Buildings and structures
Machinery and equipment
Goodwill (Note 8)
Trademarks (Note 8)
Software (Note 8)

Level 2

Level 3

Total

Impairment
Losses
¥

¥ 680

¥ 680

(43 )
(124)
(4,325)(1,314)(195)¥ (6,001)
As of March 31, 2019, the carrying amount of G Tech's machinery was fully written off, resulting in an
impairment charge of ¥105 million, which is included as a charge to earnings for the year ended March 31,
2019. The impairment arose due to the close of the unprofitable business and the assets associated with it areconsidered to be non-recoverable. In addition, all the carrying amounts of Ai's buildings, equipment, andsoftware were written off resulting in impairment charges of ¥43 million, ¥19 million, and ¥195 million,
respectively. To measure their fair values, the Companies used the expected present value of future cash flows
and incorporated relevant unobservable inputs, such as management's internal assumptions about future cash
flows and appropriately risk-adjusted discount rates, and the prices calculated based on market data forcomparable assets which reflected management's estimate of assumptions that market participants would use
in pricing the asset in an arm's length transaction as of the measurement date.
As of the end of March 31, 2019, the carrying amount of goodwill in Peach John Business was fully writtenoff, resulting in an impairment charge of ¥4,325 million, which is included in earnings for the year ended
March 31, 2019. The impairment arose due to the decline in its fair value, which was caused by a downturn inconsumption due to general market conditions. To measure the fair values of the reporting units, theCompanies used the expected present value of future cash flows and incorporated relevant unobservable
inputs, such as management's internal assumptions about future cash flows and appropriately risk-adjusted
discount rates, which reflected management's estimate of assumptions that market participants would use inpricing the asset in an arm's length transaction as of the measurement date.
Peach John's trademarks with a carrying amount of ¥1,994 million as of March 31, 2019, were written down totheir fair values of ¥680 million, resulting in recognition of an impairment charge of ¥1,314 million for theyear ended March 31, 2019. The impairment arose due to the decline in their fair value, which was caused by adownturn in consumption due to general market conditions. To measure the fair value of the trademarks, theCompanies used the relief-from-royalty method and incorporated relevant unobservable inputs, such as
management's internal assumptions about future cash flows, the rate of royalty, and appropriately risk-adjusted
discount rate, which reflected management's estimate of assumptions that market participants would use inpricing the asset in an arm's length transaction as of the measurement date. Future cash flows were based on
management's cash flow projections for the future three years, and after three years, future cash flows were
estimated using a perpetuity growth rate from 0% to 3.0%. Management's cash flow projections weredeveloped using estimates for expected future revenue growth rates, profit margins and working capital levelsof the reporting units. The rate of royalty used for the valuation was based on the actual royalty ratio used intransactions. The risk-adjusted discount rate represents a weighted-average cost of capital (WACC) adjusted
for inherent risk spread.

138

As of the end of March 31, 2020, the carrying amount of A Tech's buildings, machinery and equipment, andsoftware under the Wacoal Business (Overseas) were written down to their fair values, resulting in therecognition of an impairment charge of ¥162 million, ¥607 million, and ¥65 million, respectively. The
impairment arose due to the revision of the future business plan made in response to a decrease in sales. To
measure the fair values of A Tech's reporting units, the Companies used the discounted cash flows method andincorporated relevant unobservable inputs, such as management's assumptions about future cash flows and an
appropriately risk-adjusted discount rate, which reflected management's estimate of assumptions that market
participants would use in pricing the asset in an arm's length transaction as of the measurement date. Future
cash flows were based on management's cash flow projections for the future five years, and after five years,
future cash flows were estimated using a growth rate of 2.0%. Management's cash flow projections weredeveloped using estimates for expected future revenue growth rates, profit margins and working capital levelsof the reporting units. The risk-adjusted discount rate represents the weighted-average cost of capital (WACC).
As of the end of March 31, 2020, the carrying amount of G Tech's goodwill under the Wacoal Business(Overseas) was fully written off, resulting in an impairment charge of ¥217 million. The impairment is due tothe revision of the future business plan made in response to a decrease in sales. To measure the fair values of G
Tech's reporting units, the Companies used discounted cash flows method and incorporated relevant
unobservable inputs, such as management's internal assumptions about future cash flows and appropriately
risk-adjusted discount rates, which reflected management's estimate of assumptions that market participants
would use in pricing the asset in an arm's length transaction as of the measurement date.
As of the end of March 31, 2020, Peach John's trademarks with a carrying amount of ¥680 million were
written down to their fair values of ¥489 million, resulting in the recognition of an impairment charge of ¥191
million for the year ended March 31, 2020. The impairment is due to the decline in their fair value, which wascaused by a downturn in consumption due to general market conditions. To measure the fair value of the
trademarks, the Companies used the relief-from-royalty method and incorporated relevant unobservable inputs,
such as management's assumptions about future cash flows, the rate of royalty, and an appropriately riskadjusted discount rate, which reflected management's estimate of assumptions that market participants would
use in pricing the asset in an arm's length transaction as of the measurement date. Future cash flows werebased on management's cash flow projections for the future three years, and after three years, future cash flows
were estimated using a perpetuity growth rate from 0% to 3.0%. Management's cash flow projections weredeveloped using estimates for expected future revenue growth rates, profit margins and working capital levelsof the reporting units. The royalty rate used for the valuation was based on the actual royalty ratio used intransactions. The risk-adjusted discount rate represents the weighted-average cost of capital (WACC) adjusted
for an inherent risk spread.
Valuation process:
The valuation process involved in Level 3 measurements for applicable assets and liabilities is governed by thevaluation policies and procedures, including evaluation method for fair value measurements, pre-approved by
the Companies. Based on the policies and procedures, either personnel from the accounting division or
personnel in charge of valuation determine the valuation model to be utilized to measure each asset andliability at fair value. We engage independent external valuation experts to assist us in the valuation process
for certain assets over a specific amount, and the results of their valuations are reviewed by the responsible
personnel. All of the valuations, including those performed by the external experts, are reviewed and approvedby management of the Company before being recorded in the general ledger.

139

Quantitative information regarding Level 3 fair value measurements:
Information about valuation techniques and significant unobservable inputs used for Level 3 assets measured
at fair value for the years ended March 31, 2020 and 2019 is as follows:

March 31, 2020

Millionsof YenFair
Value

Buildings andstructures
Machinery andequipment
Software¥109

Trademarks¥489

Contingent
consideration

March 31, 2019
Trademarks

324

Valuation
Technique

Discount rate
Expected present
value method

14¥3,874

Millionsof Yen
Fair
Value
¥680

Principal Unobservable Input

Relief-fromroyalty method

Monte Carlosimulation

Valuation
Technique
Relief-fromroyalty method

10.0%

Short-term revenue growth rates(within five years)
Growth rate(over five years)(31.1)% - 102.5%

Discount rate

10.3% - 13.9%

Royalty rate
Short-term revenue growth rates(within three years)
Perpetuity growth rate(over three years)

3.0%(14.8)% - 24.3%

2.0%

0% - 3.0%

Discount rate

5.2%

Volatility

15%

Principal Unobservable Input
Discount rate
Royalty rate
Short-term revenue growth rates(within three years)
Perpetuity growth rate(over three years)

22.

Range

Range
9.9% - 13.4%
3.0%
2.3% - 7.0%
0% - 3.0%

DERIVATIVE INSTRUMENTS
Risk Management Policy – The Companies are exposed to the risk of changes in foreign currency exchange
rates. Derivative instruments are used to manage such risk. Derivative instruments are used based on Company
policy and administrative provisions. There were no derivative instruments used for the purpose of speculative
trading. The Companies consider the related credit risk to be low since these derivative instruments areprovided by financial institutions with international credibility.
Foreign Exchange Risk – Assets and liabilities denominated in foreign currencies, which are primarily related
to international business, are exposed to the risk of changes in foreign currency exchange rates. Foreignexchange contracts and currency swaps are used to mitigate such risk.
Derivative Instruments Not Designated as a Hedge – Foreign exchange contracts and currency swaps areclassified as derivative instruments, which are not designated as a hedge since these derivative instruments do
not qualify for hedge accounting. These derivative instruments are used to mitigate the risk of changes inforeign currency exchange rates, and the changes in fair value of such derivative instruments are recorded inearnings immediately.

140

Notional contract amounts of derivative instruments that are not designated as hedges as of March 31, 2020
and 2019 were as follow:
Millions of Yen
2020
2019
Foreign currency exchange
Currency swaps¥2,786695¥1,837653

The amounts of derivative instruments at fair value in the consolidated balance sheets in consolidated balance
sheets as of March 31, 2020 and 2019 were as follow:

Assets:Foreign currency exchange
Liabilities:
Foreign currency exchange
Currency swaps

Balance Sheets Location

Millions of Yen
2020
2019

Other current assets

¥57

¥27

Other current liabilities
Other current liabilities

¥24
72

¥18
36

The effect of derivative instruments in consolidated statements of income for the years ended March 31, 2020,2019 and 2018 were as follow:

Foreign currency exchange
Currency swaps
23.

Statements of Income Location

2020

Millions of Yen
2019

2018

Other – net
Other – net

¥ 57
(36)

¥ 45
(5)

¥ 60
(31)

SEGMENT INFORMATION
Operating Segment Information
The Companies have three reportable segments: "Wacoal Business (Domestic)," "Wacoal Business(Overseas)," and "Peach John," which are based on their locations and brands. These segments represent
components of the Companies for which separate financial information is available and for which operating
income (loss) is reviewed regularly by the chief operating decision-maker in deciding how to allocate theCompanies' resources and in assessing their performance. The accounting policies used for these reportablesegments are the same as those described in the summary of significant accounting policies in Note 1.
The "Wacoal Business (Domestic)" segment primarily produces and sells innerwear (consisting of foundation,
lingerie, nightwear and children's innerwear), outerwear, sportswear and hosiery. The "Wacoal Business(Overseas)" segment produces and sells innerwear (consisting of foundation, lingerie, nightwear and children's
innerwear), outerwear, sportswear, and other textile-related products. The "Peach John" segment produces andsells innerwear (consisting of foundation, lingerie, nightwear), outerwear, and other textile-related products,
which are sold under the "Peach John" brand. The "Other" produces and sells innerwear (consisting offoundation, lingerie, nightwear and children's innerwear), outerwear, other textile-related products, andmannequins and also engages in construction of stores and interior design.

141

Information about operating results and assets for each segment as of and for the years ended March 31, 2020, 2019 and 2018 is as follows:
Millions of Yen
2020
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on property, plant and equipment
Impairment charges on goodwill
Impairment charges on other intangible assets
Total
Operating income (loss)
Total assets and capital expenditures:
Total assets
Capital expenditures

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥ 109,709
860
110,569¥ 50,552
10,57061,122¥ 10,480
694
11,174¥ 16,019
5,236
21,255¥ (17,360)(17,360)

101,203
3,584

10,951
383

21,407140(17,360)

104,787
5,782

56,656
1,922
769
217
65
59,6291,493

191
11,525(351)

21,547(292 )(17,360)

236,9614,619

86,292
2,106

9,751
129

16,708127(72,024)

277,688
6,981

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination

Consolidated¥ 113,400
905
114,305¥ 53,100
10,121
63,221¥ 10,491
1,083
11,574¥ 17,210
5,543
22,753¥ (17,652)(17,652)

104,2243,499
62

56,9501,585
105

11,400394

22,752
169(17,652)

22,921(168)(17,652)

17,395
70(71,719)

281,767
5,783

Consolidated

Consolidated¥ 186,760
186,760
172,857
6,029
769
217
256
180,128
6,632

Millions of Yen
2019
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on property, plant and equipment
Impairment charges on goodwill
Impairment charges on other intangible assets
Total
Operating income (loss)
Total assets and capital expenditures:
Total assets
Capital expenditures¥ 194,201

195
107,980
6,325

58,640
4,581

4,325
1,314
17,433(5,859)249,141
3,382

78,912
1,837

8,038
494

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥ 116,085
1,051
117,136¥ 51,888
10,18062,068¥ 10,795
1,281
12,076¥ 16,957
5,283
22,240¥ (17,795)(17,795)

106,822
3,469

11,290345

21,712
172(17,795)

110,291
6,845

56,504
1,506
206
58,216
3,852

11,635441

21,884356(17,795)

260,582
3,649

77,374
1,752

13,825365

18,261
118(71,508)

194,201
177,674
5,647
167
4,325
1,509
189,322
4,879

Millions of Yen
2018
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on goodwill
Total
Operating income
Total assets and capital expenditures:
Total assets
Capital expenditures142¥ 195,725
195,725
178,533
5,492
206
184,231
11,494
298,534
5,884

The sum of the operating income (loss) of the reportable segments agrees to the operating income on the
consolidated statements of income. For a reconciliation from operating income to income before income taxes
and equity in net income of affiliated companies, see other expenses (income) on the consolidated statements
of income.
The Companies account for intersegment sales and transfers at cost plus a markup. Operating income (loss)
represents net sales less operating costs and expenses.
Products and Services Information
Net sales information by product and service for the years ended March 31, 2020, 2019 and 2018 is as follows:

Innerwear:
Foundation and lingerieNightwear
Children's underwear
Subtotal
Outerwear/sportswear and others
Hosiery
Other textile goods and related products
OthersTotal

2020

Millions of Yen
2019

2018

¥ 144,933
7,459
1,014
153,406¥ 146,525
8,296
1,213
156,034¥ 146,970
8,758
1,376
157,104¥¥¥

12,746
1,563
7,545
11,500¥ 186,760

14,733
1,881
9,428
12,125¥ 194,201

16,1281,983
8,907
11,603¥ 195,725

Geographic Information
Information by major geographic area as of and for the years ended March 31, 2020, 2019 and 2018 is asfollows:

Net sales:Japan
Asia and Oceania
Americas and Europe
Consolidated
Long-lived assets:Japan
Asia and Oceania
Americas and Europe
Consolidated

2020

Millions of Yen
2019

2018

¥ 135,273
20,59630,891¥ 140,189
22,50931,503¥ 143,196
21,05731,472¥ 186,760¥ 194,201¥ 195,725¥ 44,014
4,034
4,035

¥ 45,257
4,810
3,203

¥ 46,367
4,916
3,050

¥ 52,083¥ 53,270¥ 54,333

Countries or areas are classified according to their geographical proximity.
Asia and Oceania includes East Asia, Southeast Asia, West Asia and Australia.
Net sales are attributed to countries or areas based on the location where sold.
Long-lived assets represent property, plant and equipment.

143

24.

SUBSEQUENT EVENTS(Cancellation of Treasury Stock)
On May 15, 2020, the Board of Directors resolved to retire treasury stock as described below pursuant to theprovisions of Article 178 of the Companies Act as follows.
a.

Type of Shares to Be Retired:
Common stock of the Companyb.

Total Number of Shares to Be Retired:
3,000,000 sharesc.

Date for Retirement:
May 25, 2020

(Dividend Declaration)
On May 15, 2020, the Board of Directors resolved to pay a cash dividend of ¥100 per 5 shares of common stock toholders of record as of March 31, 2020 (aggregate amount of ¥1,248 million).
(Bank Loans)
On May 25, 2020, The Company received bank loans as working capital from MUFG Bank, Ltd., The Bank of
Kyoto, Ltd. and The Shiga Bank, Ltd., as follows.
Bank

Transaction
MethodBorrowingAmountMUFG Bank, Ltd.
The Bank of Kyoto, Ltd.
The Shiga Bank, Ltd.

Loan by bill
Overdraft
Overdraft¥10,000 million¥6,000 million¥4,000 million******

144

Interest Rate

Repayment Term

SpreadBase rate + spread
Base rate + spreadMay 25, 2021
Within a month
Within a monthVI. 【Stock-Related Administration for the Company】
Fiscal year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

To be held in June

Record date

March 31

Record date for distribution of
surplusNumber of shares constituting
one unit
Purchase and sale of shares lessthan one unit

September 30
March 31

Office for handling business

100 shares(Special Account)
Osaka Securities Transfer Section
Mitsubishi UFJ Trust and Banking Corporation
6-3, Fushimi 3-chome, Chuo-ku, Osaka

Transfer agent(Special Account)
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Forwarding office―――Handling charge for purchase
and SaleFree of charge

Method of public noticeSpecial benefit forshareholders(Notes)Public notice of the Company shall be in electronic form; provided that, public noticecannot be provided electronically due to an accident or unavoidable event, it shall be
published in Nihon Keizai Shimbun.
(i) Wacoal Essence Check (coupon for goods) shall be presented to the shareholders as
follows (with the date of determination of the shareholders entitled thereto being the endof March and September):- To shareholders holding 500 shares or more, but less than 1,500 shares:
Wacoal Essence Check worth JPY3,000 shall be presented twice a year.
- To shareholders holding 1,500 shares or more:
Wacoal Essence Check worth JPY5,000 shall be presented twice a year.
- To shareholders holding shares for three years or more:
Wacoal Essence Check worth JPY 1,000 shall be added to above.
(ii) Shareholder special discount shall be made for Wacoal products by means of catalogue
sales and internet sales as follows:- To shareholders holding 100 shares or more:
20% discount shall be made for the purchase of our products listed in catalogues
issued by Wacoal or internet sales; provided, however, that the total purchaseprice applicable for the discount shall be 1,000,000 yen (before discount) per year.

Our Articles of Incorporation prescribe that the shareholders holding shares constituting less than one unit of theCompany may not exercise any rights, except for the rights as prescribed under each item in Paragraph 2, Article 189of the Companies Act, the claim rights pursuant to the provisions of Paragraph 1, Article 166 of the same law, the rightto receive an allocation of share offerings and stock acquisition rights in proportion to the number of shares held, andthe right to request the sale of additional shares not constituting one unit.

145

VII. 【Reference Information on the Company】
1. 【Information on the Parent Company】
The Company does not have the parent company set out in Paragraph 1, Article 24-7 of the Financial Instruments and Exchange Act.

2. 【Other Reference Information】
The Company filed the following documents during the period from the commencing date of the current fiscal year, to the filing date of the Annual
Securities Report.
(1） Annual Securities Report andFiscal Year
From April 1, 2018
Filed with the Director of thethe attachments thereto, and(71st Fiscal Year)
to March 31, 2019
Kanto Local Finance Bureau on
Confirmation Letter
June 27, 2019(2） Internal Control Report and theattachments thereto(3） Quarterly Report andConfirmation Letter

Filed with the Director of the
Kanto Local Finance Bureau on
June 27, 2019
(First quarter of 72th
Fiscal Year)

From April 1, 2019
to June 30, 2019

(Second quarter of 72th From July 1, 2019
Fiscal Year)to September 30, 2019
(Third quarter of 72th
Fiscal Year)(4） Extraordinary Report(5） Share Repurchase Report

From October 1, 2019
to December 31, 2019

Filed with the Director of the
Kanto Local Finance Bureau on
August 9, 2019
Filed with the Director of the
Kanto Local Finance Bureau on
November 12, 2019
Filed with the Director of the
Kanto Local Finance Bureau on
February 12, 2020

Extraordinary Report on the Results of the Exercise of
Filed with the Director of the
Voting Rights at General Meeting of Shareholders pursuant Kanto Local Finance Bureau on
to Item 9-2, Paragraph 2, Article 19 of the Cabinet Office
June 28, 2019
Ordinance Concerning Disclosure of Corporate Affairs, etc.
Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

From June 1, 2019
To June 30, 2019
From July 1, 2019
To July 31, 2019
From August 1, 2019
To August 31, 2019
From September 1, 2019
To September 30, 2019
From October 1, 2019
To October 31, 2019
From November 1, 2019
To November 30, 2019
From December 1, 2019
To December 31, 2019
From February 1, 2020
To February 29, 2020
From March 1, 2020
To March 31, 2020

146

Field with the Director of the
Kanto Local Finance Bureau on
July 5, 2019
Field with the Director of the
Kanto Local Finance Bureau on
August 5, 2019
Field with the Director of the
Kanto Local Finance Bureau on
September 6, 2019
Field with the Director of the
Kanto Local Finance Bureau on
October 7, 2019
Field with the Director of the
Kanto Local Finance Bureau on
November 7, 2019
Field with the Director of the
Kanto Local Finance Bureau on
December 5, 2019
Field with the Director of the
Kanto Local Finance Bureau on
January 8, 2020
Field with the Director of the
Kanto Local Finance Bureau on
March 5, 2020
Field with the Director of the
Kanto Local Finance Bureau on
April 13, 2020

Part II 【Information on Guarantors etc. for the Company】
Not applicable.

147

INDEPENDENT AUDITORS' REPORTTo the Board of Directors and Stockholders of Wacoal Holdings Corp.
Kyoto, Japan
We have audited the accompanying consolidated financial statements of Wacoal Holdings Corp. and its subsidiaries(the "Company"), which comprise the consolidated balance sheets as of March 31, 2020 and 2019, and the related
consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the
period ended March 31, 2020 (all expressed in Japanese yen), and the related notes to the consolidated financial
statements.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
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 the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors' judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparationand fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of Wacoal Holdings Corp. and its subsidiaries as of March 31, 2020 and 2019, and the results of
their operations and their cash flows for each of the three years in the period ended March 31, 2020, in accordancewith accounting principles generally accepted in the United States of America.

Convenience Translation
Our audit for the year ended March 31, 2020 also comprehended the translation of Japanese yen amounts into U.S.
dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2. The
translation of the financial statement amounts into U.S. dollars has been made solely for the convenience of readers
outside of Japan.
Report on Management's Report on Internal Control over Financial Reporting
Notwithstanding the second paragraph of the "Auditors' Responsibility" section, we have performed an audit ofmanagement's report on internal control over financial reporting ("ICFR") under the Financial Instruments andExchange Act of Japan. A translated copy of management's report on ICFR along with a translated copy of our reportis included within this Annual Securities Report as information for readers.

June 26, 2020

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING(TRANSLATION)NOTE TO READERS
Following is an English translation of management's report on internal control over financial reporting ("ICFR") filed
under the Financial Instruments and Exchange Act of Japan. This report is presented merely as supplemental
information.
There are differences between management's assessment of ICFR under the Financial Instruments and Exchange Act("ICFR under FIEA") and one conducted under the attestation standards established by the American Institute ofCertified Public Accountants ("AICPA").
In management's assessment of ICFR under FIEA, there is detailed guidance on the scope of management's
assessment of ICFR, such as quantitative guidance on business unit selection and/or account selection. In
management's assessment of ICFR under the attestation standards established by the AICPA, there is no suchdetailed guidance. Accordingly, based on the quantitative guidance which provides an approximate measure of thescope of the assessment of internal control over business processes, we designated the business units that accounted
for approximately two-thirds of the aggregated sales for the previous fiscal year on a consolidated basis as"significant business units" which should be subject to management's assessment of the process-level controls.
1.【Matters Relating to the Basic Framework for Internal Control over Financial Reporting】
Hironobu Yasuhara, President and Representative Director, and Masashi Yamaguchi, Director and Vice President,
are responsible for designing and operating effective ICFR of Wacoal Holdings Corp. (the "Company"), and havedesigned and operated ICFR in accordance with the basic framework for internal control set forth in "On the
Revision of the Standards and Practice Standards for Management Assessment and Audit concerning Internal
Control Over Financial Reporting (Council Opinions)" published by the Business Accounting Council.
The internal control is designed to achieve its objectives to the extent reasonable through the effective function andcombination of its basic elements. Therefore, there is a possibility that misstatements may not be completely
prevented or detected by ICFR.
2.【Matters Relating to Scope of Assessment, the Assessment Date, and Assessment Procedures】
The assessment of ICFR was performed as of March 31, 2020. The assessment was performed in accordance withassessment standards for ICFR generally accepted in Japan.
In conducting this assessment, we evaluated internal controls which may have a material effect on the entire financial
reporting in a consolidation ("company-level controls") and, based on the result of this assessment, we appropriately
selected business processes to be evaluated, analyzed these selected business processes, identified key controls that
may have a material impact on the reliability of our financial reporting, and assessed the design and operation ofthese key controls. These procedures have allowed us to evaluate the effectiveness of the internal controls.
We determined the required scope of the assessment of ICFR for the Company, as well as its consolidated
subsidiaries and equity method affiliated companies, from the perspective of the materiality that may affect thereliability of our financial reporting. We determined the materiality that may affect the reliability of the financial
reporting taking into account the materiality of quantitative and qualitative impacts. We confirmed that we hadreasonably determined the scope of assessment of internal controls over business processes in light of the results of
the assessment of company-level controls conducted for the Company, its consolidated subsidiaries and equity
method affiliated companies. We did not include those consolidated subsidiaries and equity method affiliatedcompanies which do not have any quantitatively or qualitatively material impact on the consolidated financial
statements in the scope of the assessment of company-level controls.

Regarding the scope of assessment of internal control over business processes, we selected business units for testingas "significant business units," whose combined sales were at least two-thirds of total consolidated sales for the prioryear on a consolidated basis.
At the selected significant business units, we included in the scope of our assessment those business processes
leading to sales or accounts receivable and inventories as significant accounts that may have a material impact on ourbusiness objectives. Further, not only at selected significant business units, but also at other business units, we added
to the scope assessment the following as business processes with greater materiality considering their impact onfinancial reporting:(1) those business processes relating to greater likelihood of material misstatements and significant accounts
involving estimates and management's judgment, and (2) those business processes relating to businesses oroperations dealing with high-risk transactions.
3.【Matters Relating to the Results of Assessment】
As a result of the assessment above, we concluded that our ICFR was effective as of March 31, 2020.
4.【Supplementary Matters】
Not applicable.
5.【Special Information】
Not applicableNOTE TO READERS:
Following is an English translation of the Independent Auditors' Report filed under the Financial Instruments andExchange Act ("FIEA") of Japan. This report is presented merely as supplemental information.
There are differences between an audit of internal control over financial reporting ("ICFR") under the Financial
Instruments and Exchange Act and one conducted under attestation standards established by the American Instituteof Certified Public Accountants ("AICPA").
In an audit of ICFR under FIEA, the auditors express an opinion on management's report on ICFR, and do not
express an opinion on the Company's ICFR directly. In an audit of ICFR under attestation standards established by
the AICPA, the auditors express an opinion on the Company's ICFR directly. Also, in an audit of ICFR under FIEA,
there is detailed guidance on the scope of an audit of ICFR, such as quantitative guidance on business units selection
and/or account selection. In an audit of ICFR under attestation standards established by the AICPA, there is no suchdetailed guidance. Accordingly, based on the quantitative guidance which provides an approximate measure for thescope of assessment of internal control over business process, we used a measure of approximately 70% of total
assets on a consolidated basis and income before income taxes on a consolidated basis for the selection of significant
business units.
(TRANSLATION)
INDEPENDENT AUDITORS' REPORT
June 26, 2020
To the Board of Directors of Wacoal Holdings Corp.
Deloitte Touche Tohmatsu LLC
Kyoto office
Designated Engagement Partner,
Certified Public Accountant:
Wakyu Shinmen
Designated Engagement Partner,
Certified Public Accountant:Hiroaki Sakai
Designated Engagement Partner,
Certified Public Accountant:
Tomomi Tsuji
Audit of Financial Statements
OpinionPursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements of Wacoal Holdings Corp. and its consolidated subsidiaries (the "Group") includedin the Financial Section, namely, the consolidated balance sheet as of March 31, 2020, and the consolidated
statement of income, consolidated statement of comprehensive income, consolidated statement of equity andconsolidated statement of cash flows for the fiscal year from April 1, 2019 to March 31, 2020, and a summary ofsignificant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as of March 31, 2020, and its consolidated results of its operations andits consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in
the United States of America pursuant to the provisions of Article 95 of the Ordinance on Terminology, Forms andPreparation Methods of Consolidated Financial Statements.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the provisions of theCode of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for
the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in the United States of America, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in the United States of America.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing the
Directors' execution of duties relating to the design and operating effectiveness of the controls over the Group's
financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes ouropinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks. The procedures selected depend on
the auditor's judgement. In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion.

•

Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group's internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.

•

Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause
the Group to cease to continue as a going concern.

•

Evaluate whether the overall presentation and disclosures of the consolidated financial statements are inaccordance with accounting principles generally accepted in the United States of America, as well as the overall
presentation, structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We are responsible forthe direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.

We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among
other matters, the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that wehave complied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Audit of Internal Control
OpinionPursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited
management's report on internal control over financial reporting of Wacoal Holdings Corp. as of March 31, 2020.
In our opinion, management's report on internal control over financial reporting referred to above, which represents
that the internal control over financial reporting of Wacoal Holdings Corp. as of March 31, 2020, is effectively
maintained, presents fairly, in all material respects, the results of the assessment of internal control over financial
reporting in accordance with assessment standards for internal control over financial reporting generally accepted inJapan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial
reporting generally accepted in Japan. Our responsibilities under those standards are further described in the
Auditor's Responsibilities for the Internal Control Audit section of our report. We are independent of the Group inaccordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our other ethicalresponsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for
Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the
preparation and fair presentation of its report on internal control in accordance with assessment standards for internal
control over financial reporting generally accepted in Japan.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing andverifying the design and operating effectiveness of internal control over financial reporting. There is a possibility thatmisstatements may not be completely prevented or detected by internal control over financial reporting.
Auditor's Responsibilities for the Internal Control Audit
Our objectives are to obtain reasonable assurance about whether management's report on internal control overfinancial reporting is free from material misstatement and to issue an auditor's report that includes our opinion.

As part of an audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We
also:•

Perform audit procedures to obtain audit evidence regarding the results of the assessment of internal control overfinancial reporting in management's report on internal control. The procedures selected depend on the auditor's
judgment, including the significance of effects on reliability of financial reporting.

•Examine representations on the scope, procedures and results of the assessment of internal control over financial
reporting made by management, as well as evaluating the overall presentation of management's report on internal
control.

•Obtain sufficient appropriate audit evidence regarding the results of the assessment of internal control overfinancial reporting. We are responsible for the direction, supervision and performance of the internal control
audit. We remain solely responsible for our audit opinion.

We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among
other matters, the planned scope and timing of the internal control audit, result of the internal control audit, including
any identified material weakness which should be disclosed and the result of remediation.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that wehave complied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

【Cover】【Document Filed】

Annual Securities Report (“Yukashoken Hokokusho”)【Applicable Law】

Paragraph 1, Article 24 of the Financial Instruments and Exchange Act【Filed to】

Director, Kanto Local Finance Bureau【Filing Date】

June 26, 2020

【Company Name】

KABUSHIKI KAISHA WACOAL HOLDINGS【Company Name in English】

WACOAL HOLDINGS CORP.

【Position and Name of Representative】【Position and Name of Chief Financial
Officer】

Hironobu Yasuhara, Representative Director, President and Corporate Officer of
the Company
Masashi Yamaguchi, Director and Vice President Corporate Officer【Address of Head Office】

29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto【Place Where Available for PublicTokyo Stock Exchange, Inc.

Inspection】(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING(TRANSLATION)NOTE TO READERS
The following is an English translation of management's report on internal control over financial ("ICFR") filed
under the Financial Instruments and Exchange Act of Japan. This report is presented merely as supplemental
information.
There are differences between the management assessment of ICFR under the Financial Instruments and Exchange
Act ("ICFR under FIEA") and one conducted under the attestation standards established by the American Institute ofCertified Public Accountants ("AICPA").
In the management assessment of ICFR under FIEA, there is detailed guidance on the scope of management’s
assessment of ICFR, such as quantitative guidance on business units selection and/or account selection. In the
management assessment of ICFR under the attestation standards established by the AICPA, there is no such detailed
guidance. Accordingly, based on the quantitative guidance which provides an approximate measure for the scope ofassessment of internal control over business processes, we designated the business units that accounted forapproximately two-thirds of the aggregated sales for the previous fiscal year on a consolidated basis as "significant
business units" which should be subject to the process-level controls.
1.【Matters Relating to the Basic Framework for Internal Control over Financial Reporting】
Yoshikata Tsukamoto, President and Representative Director, and Masashi Yamaguchi, Director and Vice President,
are responsible for the designing and operating effective internal control over financial reporting of Wacoal Holdings
Corp. (the "Company"), and have designed and operated internal control over financial reporting in accordance withthe basic framework for internal control set forth in "The Standards and Practice Standards for Management
Assessment and Audit of Internal Control Over Financial Reporting" published by the Business Accounting Council.
The internal control is designed to achieve certain objectives to the extent reasonable through the effective function
and combination of its basic elements. Therefore, there is a possibility that misstatements may not be completely
prevented or detected by internal control over financial reporting.
2.【Matters Relating to Scope of Assessment, the Assessment Date, and Assessment Procedures】
The assessment of internal control over financial reporting was performed as of March 31, 2017. The assessment
was performed in accordance with assessment standards for internal control over financial reporting generally
accepted in Japan.
In conducting this assessment, we evaluated internal controls which may have a material effect on the entire financial
reporting in a consolidation ("company-level controls") and, based on the result of this assessment, we appropriately
selected business processes to be evaluated, analyzed these selected business processes, identified key controls that
may have a material impact on the reliability of our financial reporting, and assessed the design and operation ofthese key controls. These procedures have allowed us to evaluate the effectiveness of its internal controls.
We determined the required scope of the assessment of internal control over financial reporting for the Company, as
well as its consolidated subsidiaries and equity method affiliated companies, from the perspective of the materialitythat may affect the reliability of our financial reporting. The materiality that may affect the reliability of our
financial reporting is determined taking into account the materiality of quantitative and qualitative impacts. We
confirmed that we had reasonably determined the scope of assessment of internal controls over business processes inlight of the results of assessment of company-level controls conducted for the Company, its consolidated subsidiaries
and equity method affiliated companies. We did not include those consolidated subsidiaries and equity method
affiliated companies which do not have any quantitatively or quantitatively material impact on the consolidated
financial statements in the scope of the assessment of company-level controls.

Regarding the scope of assessment of internal control over business processes, we designated the business locations
that accounted for approximately two-thirds of the aggregated sales for the previous fiscal year on a consolidated
basis as "significant business locations" which should be subject to process-level controls.
At the selected significant business units, we included, in the scope of our assessment, those business processes
leading to sales or accounts receivable and inventories, as significant accounts that may have a material impact on
our business objectives. Further, not only at selected significant business units, but also at other business units, we
added to the scope assessment, as business processes having greater materiality considering their impact on financial
reporting, (1) those business processes relating to greater likelihood of material misstatements and significant
accounts involving estimates and management's judgment, and (2) those business processes relating to businesses oroperations dealing high risk transactions.
3.【Matters Relating to the Results of Assessment】
As a result of the assessment above, we concluded that our internal control over financial reporting was effective asof March 31, 2020.
4.【Supplementary Matters】
Not applicable.
5.【Special Information】
Not applicable.