Annual Securities Report(The 69th Fiscal Year)
From April 1, 2016 to March 31, 2017

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

E00590

The 69th Fiscal Year (from April 1, 2016 to March 31, 2017)

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 29, 2017.
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 company 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 operations or of financial condition, or state other “forward-looking”
information. In particular, the forward-looking statements may include statements relating to the impact of weak
consumer spending in Japan and our other markets on our sales and profitability; the impact on our business ofanticipated continued weakness of department stores and other general retailers in Japan; our ability to successfully
develop, manufacture and market products in Japan and our other markets that meet the changing tastes and needsof consumers and to deliver high quality products; the highly competitive nature of our business and the strength of
our competitors; our ability to successfully expand our network of our directly managed retail stores and achieve
profitable operations at these stores; our ability to further develop our catalogue and Internet sales capabilities; ourability to effectively manage our inventory levels; our ability to reduce costs; our ability to recruit and maintainqualified personnel; effects of irregular weather events on our business and performance; risks related to
conducting our business internationally; risks from acquisitions and other strategic transactions with third parties;risks relating to return of investment for the development of new markets; risks relating to intellectual property;risks relating to the protection of personal information and our confidential information; risks relating to internal
controls over financial reporting; the impact of weakness in the Japanese equity markets on our holdings ofJapanese equity securities; the impact of any natural disaster or epidemic on our business; risks in relation toliability for termination and retirement benefit; and risks related to realizability of deferred tax assets and transfer
pricing; and compliance risk. Forward-looking statements are contained in the sections entitled “II. 【Business
Overview】, 4. 【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 69th 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】……………………………………………………………………………………………………...

4

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

5

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

7

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

9【Business Overview】……………………………………………………………………………………………

10

1.【Summary of Business Results】……………………………………………………………………………...

10

2.【Production, Orders Received, and Sales】…………………………………………………………………...

15

3.【Management Issues】………………………………………………………………………………………...

16

4.【Risk Factors】 ………………………………………………………………………………………………..

21

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

25

6.【Research and Development】………………………………………………………………………………...

26

II.

III.

IV.

V.

7.【Analyses of Financial Position, Operating Results, and Cash Flows】………………………………………

27【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】………………………………………………………..

90

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

92

4.【Changes in Share Prices】……………………………………………………………………………………

92

5.【Directors and Audit & Supervisory Board Members】……………………………………………………...

93

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

96【Financial Information】………………………………………………………………………………………… 113
1.【Consolidated Financial Statements】………………………………………………………………………... 113

VI.

【Stock-Related Administration for the Company】……………………………………………………………... 161

VII. 【Reference Information on the Company】……………………………………………………………………... 163
1.【Information on the Parent Company】………………………………………………………………………. 163
2.【Other Reference Information】……………………………………………………………………………… 163
Part II【Information on Guarantors, etc., for the Company】…………………………………………………………... 165

Auditors’ Report and Internal Control Report

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 29, 2017

【Fiscal Year】

The 69th Fiscal Year (from April 1, 2016 to March 31, 2017)【Company Name】

KABUSHIKI KAISHA WACOAL HOLDINGS【Company Name in English】

WACOAL HOLDINGS CORP.

【Position and Name of Representative】

Yoshikata Tsukamoto, President and Representative Director【Address of Head Office】

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

Kyoto (075) 682-1007【Contact Person】

Kenya Yamamoto, General Manager of Accounting Department【Contact Address】

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

Kyoto (075) 682-1007【Contact Person】

Kenya Yamamoto, 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

65th

66th

67th

68th

69th

Year-EndMarch 2013

March 2014

March 2015

March 2016

March 2017180,230

193,781

191,765

202,917

195,881

Operating income

8,499

13,860

7,082

13,865

11,065

Net income attributable to
Wacoal Holdings Corp.

7,880

10,1068,444

11,15912,525Comprehensive income

19,34922,74928,813(49)

12,296

Total shareholders’ equity

186,646

205,106

228,857

224,374

227,568

Total assets

254,536

271,988

300,272

292,854294,958

Sales

Shareholders’ equity per share(yen)

1,325.19

1,456.32

1,624.93

1,592.90

1,658.53

Net income per share attributable
to Wacoal Holdings Corp.

(yen)

55.95

71.75

59.95

79.23

90.13

Diluted net earnings attributable
to Wacoal Holdings Corp. per
share

(yen)

55.86

71.61

59.80

79.00

89.85

Shareholders’ equity ratio

(%)

73.3

75.4

76.2

76.6

77.2

Return on equity

(%)

4.4

5.2

3.9

4.9

5.5

Price earnings ratio(times)

18.72

14.68

22.55

16.95

15.24

Net cash provided by operating
activities

12,3098,949

14,337

12,635

16,351

Net cash provided by (used in)investment activities(23,520)

1,658

164

(11,407)(3,032)

Net cash provided by (used in)financing activities

5,379(5,554)(8,391)(4,547)(13,055)

Cash and cash equivalents at endof year24,51430,65838,41034,05933,99518,65018,912

18,986

20,655

21,139[1,259][1,391][1,210][1,237][1,018]

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.
For the 66th fiscal years, certain subsidiaries changed their fiscal year ends from their former fiscal year ends toMarch 31 to more closely conform with the fiscal year end of the parent company. Accordingly, in order to reflect
the change, the consolidated financial statements of the 65th fiscal year have been adjusted retrospectively.

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

65th

66th

67th

68th

69th

Year-EndMarch 2013

March 2014

March 2015

March 2016

March 2017

Operating revenue

8,705

8,967

10,898

10,934

13,139Ordinary income

4,571

5,301

7,350

7,044

9,215

Net income (loss)

4,837

4,955

(541)

6,739

11,453

Common stock

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

143,378

143,378

143,378

143,378

Net assets

144,513

145,605

140,578

143,135

145,496

Total assets

174,280

177,411

168,762

163,972

165,113

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

1,024.27

1,031.57

995.481,013.19

1,057.19

Dividends per share(interim dividends per
share)

(yen)

28.00
(－)

33.00
(－)

30.00
(－)

33.00
(－)

36.00
(－)

Net income (loss) per share

(yen)

34.34

35.18

(3.84)

47.85

82.42

Diluted net earnings per
share

(yen)

34.28

35.10

－

47.69

82.16

Shareholders’ equity ratio

(%)

82.7

81.8

83.0

87.0

87.9

Return on equity

(%)

3.3

3.4

－

4.7

7.9

Price earnings ratio(times)

29.49

29.93

－

28.06

16.67

Dividend payout ratio

(%)

81.5

93.7

－

68.9

43.7

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

71
[－]

80
[－]

80
[－]

81
[－]

81
[－]

(Note)

1.

Operating revenue does not include consumption taxes, etc.

2.

Dividends per share for the 66th fiscal year include a commemorative dividend of 3.00 yen in commemoration of the50th anniversary of our listing.
Diluted net earnings per share data for the 67th fiscal year is not presented since a net loss was recorded.

3.
4.

Return on equity, price earnings ratio and dividend payout ratio for the 67th fiscal year are not presented since a net loss
was recorded.

-3-

2. 【History】
June 1946
November 1949
June 1951

Wako Shoji founded by late Koichi Tsukamoto
Wako Shoji Corp. established with 1 million yen in capital (Nakagyo-ku, Kyoto)
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
September 1964

established in Japan
Company name changed to Wacoal Corp.
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
June 1981

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

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.)

December 1983

THAI WACOAL CO., LTD., listed on The Stock Exchange of Thailand

March 1982

January 1986
April 1989

Beijing Wacoal Co., Ltd. (current Wacoal China Co., Ltd.), established as joint venture company
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
Joint venture agreement for Korea Wacoal Corp. canceled; investment made into Shinyoung Inc. (current

April 1993
January 1995
June 1997
December 2000

Shinyoung Wacoal Inc.) in Republic of Korea
Guangdong Wacoal Inc. established as an overseas subsidiary
VIETNAM WACOAL CORP. established as an overseas subsidiary
Joint venture agreement for Beijing Wacoal Co., Ltd. (current Wacoal China Co., Ltd.), canceled andAugust 2002

reestablished as Beijing Wacoal Co., Ltd., a wholly owned subsidiary
WACOAL SPORTS SCIENCE CORP. established as an overseas subsidiary

May 2003

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
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
January 2016

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-4-3. 【Description of Business】
Our corporate group consists of one holding company (Wacoal Holdings Corp.), 57 subsidiaries, and eight 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
sale of certain products to consumers. Our corporate group also conducts business in the restaurant, culture, service, and interior
design businesses.
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 11 subsidiaries in Japan.
Among 11 subsidiaries, Wacoal Corp. engages in the planning and designing of the above-mentioned products,
procurement of materials for the above-mentioned products, commercialization of semifinished products purchased fromsewing companies in Japan and overseas and other business associates after inspection, and distribution to end consumers
through department stores, general merchandisers, and other general retailers in Japan, as well as directly managed retail storesand distributors 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 andsportswear, 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 38 companies, including our overseas subsidiaries and affiliates.
Among our 31 overseas subsidiaries, nine companies are located in North and Central America; five companies arelocated in Europe; and 17 companies are located in Asia/Oceania. Seven 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 and specialty retail stores. In
addition, Eveden Inc., a sales company, distributes innerwear products, which are mainly supplied from Wacoal Timex LTD.
and WACOAL EMEA LTD.
Among our five overseas subsidiaries in Europe, WACOAL EMEA LTD., distributes products to end consumers throughdepartment 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 nineremaining 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 two investment companies 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 the manufacture and sale of mannequinsand 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, real estate 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:-5-

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

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: 5 companies)
WACOAL EUROPE LTD.

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

(U.K.)(France)2 other companies(Asia/Oceania: 24 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)
Out of 13 other companies,
4 equity method affiliates

Wacoal Holdings Corp. (holding company)
Without mark: a consolidated subsidiary*: an equity method affiliate-6-(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 Affiliated Companies】
Company Name

Location

Capital(Millions of yen)

Principal Business

Percentage of
Voting Rights
Owned or Held(%)

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

Minami-ku, Kyoto

5,000

Peach John Co., Ltd.

Shibuya-ku, Tokyo

90

Lecien Corp.

Minato-ku, Kyoto

90

Wacoal Corp.

Wacoal Business (Domestic)(Manufacture and sale of garments)
Peach John Business(Sale of garments)
Other(Manufacture and sale of garments

100

4

100

2

100

2

and other textile-related products)
Kyushu Wacoal Manufacturing Corp.
Niigata Wacoal Sewing Corp.

Unzen-shi,
NagasakiNishikan-ku,
Niigata

70
50

Torica Inc.

Ibaraki-shi, Osaka

92

Nanasai Co., Ltd.

Minami-ku, Kyoto

90*1
WACOAL INTERNATIONAL CORP.

New York, USA

WACOAL AMERICA, INC.

New York, USA

WACOAL DOMINICANA CORP.

Santo Domingo,
Dominican

USD

Republic
WACOAL EUROPE LTD.
WACOAL EMEA LTD.

Northamptonshire,UK
Northamptonshire,UK

WACOAL EUROPE SAS.

Saint-Denis, France

WACOAL HONG KONG CO., LTD.

Hong Kong*1
WACOAL INTERNATIONAL HONG

20,000thousandHong Kong

KONG CO., LTD.
Bien Hoa, Vietnam

Wacoal Investment Co., Ltd.

Taipei, Taiwan

Guangzhou, China*1
A TECH TEXTILE CO., LTD.

Bangkok, Thailand

Same as above
Other(Manufacture and sale of mannequinsand display fixtures; interior designand construction work of stores)
Wacoal Business (Overseas)(Investment and funding in U.S.
affiliates)

(100）

57
(57）

99

100
(100）

100
(100）

7 thousand

Wacoal Business (Overseas)(Sewing and sale of various textile

100

USD
175 thousand
GBP
250 thousandGBP
8 thousand
EUR
3,000 thousand
HK$373,690
thousand

54,604 million
VND
59,000thousand
17,730thousand
189,364

Beijing, China

Same as above

100(Manufacture and sale of garments)

RMB*1
Wacoal China Co., Ltd.

(100）

Wacoal Business (Overseas)

NT$
Guandong Wacoal Inc.

100

(Manufacture and sale of garments)

USD

2,062 thousandHK$

VIETNAM WACOAL CORP.

Wacoal Business (Domestic)

thousand
RMB

products)
Wacoal Business (Overseas)(Investment in affiliates)

(100）

100

Wacoal Business (Overseas)

100(Manufacture and sale of garments)(100）

Wacoal Business (Overseas)

100(Sale of garments)(100）

Same as above

80
(80）

Wacoal Business (Overseas)

100(Import and export of raw materials)(100）

Wacoal Business (Overseas)(Sewing and sale of various textile
products)
Wacoal Business (Overseas)(Investment in Taiwan affiliates)
Wacoal Business (Overseas)(Sewing and sale of various textile
products)
Wacoal Business (Overseas)(Manufacture and sale of garments)

100
(100）

100
(100）

100
(100）

100
(100）

1,000
million
THB

Wacoal Business (Overseas)(Manufacture and sale of raw

120 million

Wacoal Business (Overseas)

34(Manufacture and sale of garments)(34）

materials)

54
(54）

－

Rent of officebuilding－
Rent of office･
storage building
Rent of officebuilding－

Same as above－

Same as above

2

Same as above

2

－

2

－

－

－

2

－

－

－

－

－

1

－

2

－

－

－

3

－

－

－

1

－

－

－

2

－

2

－

1

－

3

－

－

－

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

Bangkok, Thailand

PT.INDONESIA WACOAL

Bogor, Indonesia

Shinyoung Wacoal Inc.

Seoul, South Korea

4,500 million
WON

Taiwan Wacoal Co., Ltd.

Taoyuan, Taiwan

800 millionNT$*4, *5
House of Rose Co., Ltd.

Minato-ku, Tokyo

934

THB
2,400 million
IDR

Same as above
Same as above
Same as above
Other(Manufacture and sale of cosmetics
products)

3 other companies

-7-

42
(42）

25
50
(50）

24

(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 the
Financial Instruments and Exchange Act.
2

The number in brackets under the “Percentage of Voting Rights Owned or Held” column means the percentage ofindirect holding.
3 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

108,378 million yen(ii) Ordinary income

7,658 million yen(iii) Net income

5,466 million yen(iv) Net assets

106,219 million yen(v) Total assets

142,319 million yen-8-5. 【Employees】(1) Employees within group
As of March 31, 2017
Name of Operating Segment

Number of Employees

Wacoal Business (Domestic)

7,658

[877]

Wacoal Business (Overseas)

11,030

[40]

420

[36]

2,031

[65]

21,139[1,018]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, 2017
Number of Employees
81(Note)

1
2
3

Average Age

Average Years of Service
46.0

Average Annual Salary (Yen)

20.8

6,411,995

The number of employees is the number of individuals working within the Company.
The average annual salary includes bonus and extra wages.
All employees of the Company belong to the Wacoal Business (Domestic) segment.

(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 domestic subsidiaries have their own labor unions.
Our relationship with Labor Unions is very stable and we have nothing to report on this matter.

-9-II. Business Overview
1. 【Summary of Business Results】(1) Summary of Operations
Our group entered the first year of our three-year mid-term plan (from fiscal year 2017 to fiscal year 2019), andwe have been making efforts to improve profitability and business efficiency in line with the five elements of the basic
policies, which are (i) to improve the infrastructure of our group management base as a foundation, (ii) to ensure profits
from our domestic business, (iii) to achieve further growth of our overseas business, (iv) to achieve group synergies throughcollaboration and to strengthen our competitiveness and (v) to attempt to expand our business portfolio. Also, we intend to
improve our corporate value by implementing an efficient capital policy.
During the current fiscal year, we steadily focused on increasing the productivity of our wholesale business andthe profitability of our retail business in Japan, as well as improving and strengthening the foundations of our overseas
business. While the domestic market continues to experience the slowdown in consumption of luxury goods and a series ofclosings of general merchandise stores, we moved forward with the development of products with new features and thestandardization of goods for campaigns implemented at our directly managed stores. With respect to our overseas business,while respecting the local management, we continued to improve the value of our brands by providing high-end goods
backed by craftsmanship and quality and to strengthen our ability to respond to the immensely growing e-commerce market.
Also, two material manufacturers in Thailand and one sewing company in Myanmar commenced operations, enabling us toupgrade the infrastructure for the stable supply of our high-quality and cost-competitive materials/products.
As a result of our above-mentioned efforts, our consolidated sales for the current fiscal year fell below theconsolidated sales for the previous fiscal year due to tighter management of inventories by our clients, even though the overthe-counter sales of our domestic business were steady. Sales from our overseas business in Europe on a local currency
basis exceeded such sales for the previous fiscal year, mainly due to the favorable effect of the depreciation of the British
Pound. However, sales from our business in the United States and China remained unchanged from the previous fiscal year.
As a result, on a yen converted basis, consolidated sales on the Japanese Yen basis fell below the consolidated sales for theprevious fiscal year due to the inflation of the Japanese Yen.
Although our consolidated operating income fell much below the consolidated operating income for the previous
fiscal year due to increases in selling, general and administrative expenses which resulted from our domestic business andexpenses related to the liquidation proceedings by our French subsidiary, it exceeded our initial plan for the current fiscal
year. On the other hand, income before income taxes and equity in net income of affiliated companies largely exceeded thatfor the previous fiscal year due to gain on sale of fixed assets (land) for the first quarter of the current fiscal year.
As a result of the above, with respect to our consolidated business results for the fiscal year ended March 31, 2017,
the consolidated operating income margin was 5.6%, and the consolidated ROE (i.e., return on Wacoal Holdings Corp.
shareholders’ equity for the current fiscal year) was 5.5%.

Net Sales:

195,881 million yen(a decrease of 3.5% as compared to the previous fiscal year)

Operating income:

11,065 million yen(a decrease of 20.2% as compared to the previous fiscal year)

Income before income taxes andequity in net income of affiliatedcompanies:

16,569 million yen

Net income attributable to Wacoal
Holdings Corp.:

12,525 million yen(an increase of 10.8% as compared to the previous fiscal year)(an increase of 12.2% as compared to the previous fiscal year)
The following is a summary of operations by operating segment.
(i)

Wacoal Business (Domestic)

With respect to our Wacoal brand business, sales of brassiere products with new features which provide comfort towear increased steadily, and sales of our pajama products of which design focuses on comfort for sleep increased by winningconsumers. On the other hand, sales of our luxury-line products and underwear products were poor due to factors such as a
slowdown in the consumption of luxury goods, a decrease in average spending per inbound tourist, the impact of a warm
winter and the absence of the temporary demand increase we experienced in the previous fiscal year. As a result, overallsales fell below the overall sales for the previous fiscal year.

- 10 -

With respect to our Wing brand business, the shop sales of brassiere products for the whole current fiscal year
were steady due to the strong sales of our spring/summer line of products. Also, our brand for junior generation “Pulili”
business largely exceeded the results for the previous fiscal year due to the increase in the number of retailers selling thisbrand. However, as the sales of bottoms products were poor as compared to the sales for the previous fiscal year and generalmerchandise stores increasingly elected to close unprofitable stores and reduce inventories, overall sales fell below theoverall sales for the previous fiscal year.
In our retail business, sales of our directly managed retail store, “AMPHI,” and our outlet store, “Factory Store,”remained unchanged from the previous fiscal year, despite a decrease in the number of buying customers, due to our successin updating our sales approach, including by introducing in-store discounts that resulted in an increase in average spending
per customer. However, due to efforts such as the expansion of sales of our common products for the campaign“BRAGENIC,” overall sales exceeded the overall sales for the previous fiscal year.
In our wellness business, although sales of our sports bra products under the “CW-X” brand showed were steady,sales of functional sport tights were poor at both sport specialty chain stores and outdoor specialty stores, due to increased
competition in the market. Export sales for the market in the United States were also weak. As a result, overall sales fell
below the overall sales for the previous fiscal year.
In our catalog sales business, although there was a turnaround in sales in the fourth quarter of the current fiscal
year due to our campaign using SNS “LINE,” review of the number of issues of catalogs published and expansion indemand through improved communications with member customers, overall sales for the whole current fiscal year fell
below the overall sales for the previous fiscal year due to the underperformance of our catalog products from the first quarterof the current fiscal year to the third quarter of the current fiscal year.
With respect to Ai Co., Ltd., although sales from our e-commerce website focusing on swimwear grew steadily,overall sales dropped compared to overall sales for the previous fiscal year, due to the underperformance of our seasonal
stores opened only during a period of peak demand, as well as the reduction of sales space at department stores and theincreased returns of our products resulting from poorly-functioning e-commerce websites managed by other companies.
As a result, sales attributable to our “Wacoal Business (Domestic)” segment decreased 1.8% from such sales forthe previous fiscal year. Operating income decreased 21.0% from the previous fiscal year due to an increase in retirement
benefit expenses at Wacoal Corp., recognition of one-time expenses and depreciation expenses in connection with the
opening for the business at the New Kyoto Building, and an increase in tax as a result of the introduction of pro-forma basis
taxation.
Net Sales:

118,389 million yen(a decrease of 1.8% as compared to the previous fiscal year)

Operating income:

6,959 million yen(a decrease of 21.0% as compared to the previous fiscal year)(ii) Wacoal Business (Overseas)
With respect to Wacoal America, Inc., department-store sales on a local currency basis were weak due to theshifting focus in the retail environment in the United States from physical store sales to e-commerce sales, a trend that has
become more prominent. On the other hand, overall sales on a local currency basis remained unchanged from the previous
fiscal year, as sales from our own e-commerce website increased significantly and sales of our products through e-commerce
websites managed by department stores and other companies grew substantially. The gross profit rate improved because
discounts were decreased by our pricing policy and also due to a higher ratio of e-commerce sales. However, operating
income on a local currency basis fell below the operating income for the previous fiscal year due to increases of expenses
associated with strengthening of e-commerce sales, increases of labor costs in healthcare costs as a result of increases inmedical insurance premiums, and impact of expenses from closure of our directly managed outlet stores that were
underperforming.
With respect to sales on a local currency basis for Wacoal Europe (the United Kingdom), sales at department
stores in the United Kingdom were steady and e-commerce sales in the North America were strong. Also, sales from ourplus-size brand “Elomi” greatly exceeded sales for the previous fiscal year in various countries including Europe, North
America and Australia. Although sales were significantly and negatively impacted by the “Huit” brand, which business was
liquidated, overall sales exceeded the overall sales for the previous fiscal year due to the currency appreciation in nonBritish Pound markets. In terms of operating income on a local currency basis, although gross profit increased due toincreased sales, our overall operating income largely fell below the operating income for the previous fiscal year due to theimpact of expenses related to the liquidation proceedings for our French subsidiary and increased expenses under IT-related
investments.
With respect to our business in China, as a result of consumers becoming more sophisticated in balancing quality
and service against price, sales of “Wacoal” brand products were poor and over-the-counter sales at department stores grewat a stagnant pace. However, e-commerce sales were steady due to strong sales on the online shopping festival day called- 11 -

“Double Eleven.” As a result, although overall sales on a local currency basis for the first half of the fiscal year were weak,
the overall sales on a local currency basis for the whole current fiscal year remained unchanged from the previous fiscal year.
Operating income on a local currency basis exceeded the operating income for the previous fiscal year due to the closure ofunderperforming stores and suspension of opening of shops for the “La Rosabelle,” our brand targeting the middle-classconsumers.
As a result of the above, and due to the impact of foreign exchange rates caused by the appreciation of theJapanese Yen during the current fiscal year, the overall sales attributable to our “Wacoal Business (Overseas)” segment on
the Japanese Yen basis decreased 6.6% and the operating income decreased 31.1% compared to the results for the previous
fiscal year.
Net Sales:

48,423 million yen(a decrease of 6.6% as compared to the previous fiscal year)

Operating income:

3,055 million yen(a decrease of 31.1% as compared to the previous fiscal year)(iii) Peach John BusinessWith respect to Peach John Co., Ltd., retail sales at stores exceeded retail sales from mail-order catalogues for thecurrent fiscal year. This is due to strong sales of our directly managed stores we own domestically, especially at the existing
stores located in Tokyo. We also experienced significant growth in sales through e-commerce websites managed by othercompanies for the whole current fiscal year. Overseas subsidiaries in Hong Kong and China both experienced positive
growth. On the other hand, because the sales of outerwear from domestic mail order catalogues fell significantly below suchsales for the previous fiscal year, the results for the overall sales remained unchanged from the previous fiscal year. In termsof operating income, as the gross profit rate improved due to favorable foreign exchange rates, as well as reduction in
production cost for direct mail sales catalogs and our Chinese subsidiaries returning to profitability, operating income
largely exceeded the operating income for the previous fiscal year.
Net Sales:

11,107 million yen(a decrease of 0.7% as compared to the previous fiscal year)

Operating income:

374 million yen(an increase of 45.0% as compared to the previous fiscal year)(iv) OtherWith respect to the business of Lecien Corporation (“Lecien”), sales of the innerwear business, which is its main
business division, were poor for the whole current fiscal year, as sales during the fall and winter were poor, while the“brassiere for school club activities” campaign conducted during the fourth quarter of the current fiscal year proved to be
successful. The art & hobby business, which mainly deals in handcraft items, performed poorly, as the anticipated repeat
orders from North America did not materialize. As a result, overall sales from Lecien fell below the overall sales from theprevious fiscal year. However, with respect to operating income, we moved to surplus from deficit for the previous fiscal
year, due to the increased gross profit rate as a result of favorable foreign exchange rates, as well as increases in unit prices
of innerwear products and a shift towards sales of high-profit products in both innerwear and art & hobby businesses.
With respect to Nanasai Co., Ltd. (“Nanasai”), while the rental business performed well in areas such as seasonal
shops and events, its business aimed at permanent stores such as department stores performed poorly. Sales from theconstruction business fell below the sales for the previous fiscal year due to continued postponement by our valued clients ofsales space renovation projects because of worsened business confidence in the clothing industry. The poor sales of sales
business were the result of postponement of construction projects. As a result, overall sales from Nanasai fell below theoverall sales for the previous fiscal year. Operating income fell below the operating income for the previous fiscal year inspite of our efforts to reduce operating expenses, due to the decrease in the gross profit rate caused by increases in rental
business costs and the increase in the percentage of low-profit construction projects.
As a result of the above, overall sales attributable to our “Other” segment decreased 6.9% from the overall sales
for the previous fiscal year, and operating income increased 86.0% from the operating income for the previous fiscal year.
Net Sales:

17,962 million yen(a decrease of 6.9% as compared to the previous fiscal year)

Operating income:

677 million yen- 12 -

(an increase of 86.0% as compared to the previous fiscal year)
The following is a summary of operations by region:
(i)

Japan

The summary of operations of this segment (Japan) reflects the results of net sales and operating income
attributable to “(i) Wacoal Business (Domestic)” under the operation segment above and the results under “(iii) Peach John
Business” and “(iv) Other” segments that are attributable to our domestic business.
As described in the summary of operations by operating segment above, both net sales and operating income
attributable to Wacoal Corp. (which accounts for a large portion of this segment) fell below the results for the previous fiscal
year.
Sales of Peach John Co., Ltd. remained unchanged from the previous fiscal year. In the current fiscal year, while
we experienced significant growth in our storefront business due to strong sales of our directly managed stores, net sales
were weak, as a result of weak sales from mail-order catalogues. Operating income largely exceeded the results for theprevious fiscal year as the gross profit rate improved due to favorable foreign exchange rates.
As described above, sales of Lecien fell below the results for the previous fiscal year due to the poor results of theinnerwear and the art & hobby business. However, we achieved operating income in improvement from operating loss forthe previous fiscal year, due to a significant improvement in the gross profit rate from favorable foreign exchange rates, aswell as a shift towards sales of highly profitable products.
As a result of the above, both net sales and operating income fell below the results for the previous fiscal year.

Net Sales:

147,061 million yen(a decrease of 2.4% as compared to the previous fiscal year)

Operating income:

7,738 million yen(a decrease of 16.9% as compared to the previous fiscal year)(ii) Asia/Oceania
With respect to our business in China, as described in the summary of operations by operating segment, sales on a
local currency basis remained unchanged from the previous fiscal year, and operating income on a local currency basis
exceeded the results for the previous fiscal year.
With respect to our business in Hong Kong, while sales on a local currency basis of “Wacoal” brand products werepoor due to changes in the sale space as a result of renovations at major department stores, sales of “Peach John” brand werestrong due to the strong result of our flagship stores, among other things. As a result, sales of our business in Hong Kongremained unchanged from the previous fiscal year. Operating income fell below the results for the previous fiscal year due
to a higher sales ratio of Peach John brand products at low profitability levels and increases in labor costs as a result of anincrease in the number of sales representatives.
This Asia/Oceania segment includes sales in Oceania and Israel in which our subsidiaries of WACOAL EUROPE
LTD. develop businesses. Sales on a local currency basis from Oceania and Israel significantly exceeded the results for theprevious fiscal year due to the growing sales from “Wacoal” brand and our plus-size brand “Elomi”. The increased grossprofit rate as a result of the depreciation of the British Pound had a positive impact on operating income. In addition, we
achieved operating income with respect to Israel, in improvement from operating loss for the previous fiscal year.
Also, two material manufacturers in Thailand and one sewing company in Myanmar commenced operations fromthe current fiscal year, and sales and operating loss, on the Japanese Yen basis, from these operations have reachedapproximately 3,200 million yen and 300 million yen, respectively.
As a result of the above, both net sales and operating income, on the Japanese Yen basis, have exceeded the results
for the previous fiscal year.

Net Sales:

19,187 million yen(an increase of 7.2% as compared to the previous fiscal year)- 13 -

Operating income:

1,758 million yen(an increase of 27.3% as compared to the previous fiscal year)(ⅲ) Europe/North America
As described in the summary of operations by operating segment, sales of WACOAL INTERNATIONAL CORP.
on a local currency basis remained unchanged from the previous fiscal year, and operating income on a local currency basis
fell below the results for the previous fiscal year.
Sales of WACOAL EUROPE LTD. on a local currency basis exceeded the results for the previous fiscal year due
to steady sales at department stores in the United Kingdom, strong e-commerce sales in the North America, as well as strong
sales at specialty stores in the Eurozone area. However, operating income fell significantly below the results for theprevious fiscal year due to the impact of expenses related to the liquidation proceedings for our French subsidiary.
As a result of the above and due to the impact of foreign exchange rates caused by the appreciation of the JapaneseYen, both net sales and operating income, on the Japanese Yen basis, fell significantly below the results for the previous
fiscal year.

Net Sales:

29,633 million yen(a decrease of 13.7% as compared to the previous fiscal year)

Operating income:

1,569 million yen(a decrease of 50.6% as compared to the previous fiscal year)(2) Cash Flow Status
The balance of cash and cash equivalents at the end of fiscal year 2017 was 33,995 million yen, a decrease of 64 million
yen as compared to the end of the previous fiscal year.
(Cash flow provided by operating activities)
Cash flow provided by operating activities during the fiscal year 2017 was 16,351 million yen, an increase of 3,716 million
yen as compared to the previous fiscal year. It is the result after the net income of 12,648 million yen was adjusted for
depreciation expenses, deferred taxes and changes in assets and liabilities.
(Cash flow used in investing activities)
Cash flow used in investing activities during the fiscal year 2017 was 3,032 million yen, a decrease of 8,375 million yen ascompared to the previous fiscal year, due to capital expenditures.
(Net cash used in financing activities)
Cash flow used in financing activities during the fiscal year 2017 was 13,055 million yen, an increase of 8,508 million yen
as compared to the previous fiscal year, due to the cash dividend payments and repurchase of treasury stock.

- 14 -

2. 【Production, Orders Received, and Sales】(1) Production Results
Our consolidated production results by operating segment for fiscal year ended March 2017 are as follows. No data isavailable for the Peach John Business since all of its entities are sales companies. The production results for other segment are
not shown since it is hard to define such term in this segment.
Changes as Compared toName of Operating Segment
Amount (Millions of yen)Previous Fiscal Year (%)
Wacoal Business (Domestic)

47,051

96.9

Wacoal Business (Overseas)

14,989109.1

62,04099.6

Total(Note)

The amount of operating results is based on the manufacturing costs and does not include consumption tax, etc.

(2) Orders Received
Among the Other segment, the department of Nanasai, which handles interior design and construction of general housingsand stores at commercial facilities, adopts the build-to-order production system.
The status of orders received for other segment for fiscal year ended March 2017 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)

5,219

89.1

253

115.0

The amounts in the above table do not include consumption tax, etc.

(3) Sales Results
Our consolidated sales results by operating segment for fiscal year ended March 2017 are as follows:
Changes as Compared
Name of Operating Segment
Amount (Millions of yen)to Previous Fiscal Year
Wacoal Business (Domestic)

118,389

98.2

Wacoal Business (Overseas)

48,423

93.4

Peach John Business

11,107

99.3

Other

17,962

93.1

195,881

96.5

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.

- 15 -

3. 【Management Issues】
Any forward-looking statement contained below is based on our judgements as of the end of the current fiscal year.
(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 is our starting point and has been our management philosophy since our establishment. We will continuously enhance ourcorporate value by increasing transparency 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.
(2) Measures for Business Targets
Our target is to achieve consolidated operating income margin of 7% and a consolidated ROE (i.e., return on Wacoal Holdings
Corp. shareholders’ equity for the current fiscal year) of 5% or higher as our mid-term financial data.
(3) Our Medium- and Long-term Business Strategy
We hope to promote sustainable growth and enhancement of our corporate value, and to become a company that is expected byconsumers to exist for 100 years or more, by making further achievements as we listen to the voice of the society andcontinuously improve our management foundation.
Our group is currently working to implement our three-year mid-term plan, which started from the fiscal year ended March 2017with our vision to achieve “Wacoal of the World as a Group.” We take full advantage of our management resources and ourgroup’s network, continue to offer pioneering products, cultivate new market opportunities for the undergarments industry andgain reputation for our reliability from customers around the world. In addition, we will challenge ourselves to participate inareas where we are most competitive and expand to new business area in order to increase our corporate value.
Under the three-year mid-term plan, we aim to achieve consolidated sales for the fiscal year ending March 31, 2019 of over
215,000 million yen and consolidated operating income for the fiscal year ending March 31, 2019 of over 15,000 million yen.
(4) Business and Financial Issues to Address
While the domestic market is expected to steadily recover with the improvement in the job market, consumer spending remains
unpredictable, as consumers remain frugal. Also, more and more retail properties continue to close, the environment for domestic
women’s innerwear continues to be very difficult. On the other hand, recovery and growth in consumption by foreign visitors toJapan, the rise of new distribution channels, women’s participation and success in society, and the 2020 Tokyo Olympics aregood opportunities for us to create new markets.
In the overseas business, while there are many risk factors such as financial and trade policies of the new U.S. administration,
political circumstances of European countries and slowdown of the Chinese economy, our overseas business is and will always
be our group’s biggest growth engine.
An accurate understanding of the social environment and consumers’ needs in each country and region and the establishment ofcommunity-based products and marketing strategies will be essential for us. We will develop pioneering products in order toenhance our brand recognition, and increase the productivity of our group and our employees as well as the efficiency of ourworking capital. We will also improve the management of local entities and further improve our profitability in order to develop astrong management foundation. Further, while we face challenges in an increasingly difficult environment for manufacturing due
to increasing wages in China and ASEAN-member countries and risks associated with procurement of raw materials, we will
strengthen the collaboration among our group companies to extend our global supply chain and to enable the improvement of
product competitiveness and stable supply.
<Basic Policy of Mid-term Plan (from fiscal year 2017 to fiscal year 2019>(i)
Ensure profits from our domestic businessWe will continue to develop new, attractive and high value-added products, and at the same time, build a greater mix ofchannels to deliver such products and their information through channels that improve the convenience for customers from their- 16 -

perspective. In order to achieve our aim, we will first focus on increasing the productivity of our wholesale business and the
profitability of our retail business. We will also review our transaction system and integrate our IT systems. Further, we will
deepen our consumer base and facilitate movement by consumers across our different service channels, by developing a uniqueservice model that we call “omni-channel” service.
(ii)

Achieve further growth of our overseas businessWe will promote establishment of a stable management structure, particularly in the United States, Europe and China, thatcan respond to environmental changes in each country and region. We will focus on strengthening our business structure bystrengthening our planning development capability to enhance the higher value-added components of our products, throughcollaboration between Europe and the United States in product planning and production management and by strengthening ourability to respond to accelerating expansion of e-commerce markets throughout the world, such as China. In addition, we willcommercialize products that leverage superior materials and skills by using new functionalities in our global supply chain.
(iii)

Achieve group synergies through collaboration and strengthen our competitivenessWe will implement measures to solve management issues at each of our operating entities, and enhance the overall

competitiveness of our group by leveraging each other’s strengths, such as business know-how, sales network, and manufacturing
capability within our group.
(iv)

Expand our business portfolio

We will attempt to expand our business portfolio in combination with external management resources by leveraging ourtangible and intangible strengths. There are no constrains on our business target, and we will ensure that any new business ofours will deliver “beauty,” “comfort” and “health” to society.
(v)

Improve the infrastructure of our group management baseWe will always ask ourselves what society demands or expects from us and will reflect our answers in our management.
For this purpose, we will emphasize our relationships with our stakeholders and aim to continuously improve our managementbase. We believe that a person’s growth will eventually lead to a company’s prosperity, and with this in mind, we will focus on
cultivating employees who are capable of playing active roles in our global society and nurture a corporate culture that respects
diversity. We will also continue to be committed to social issues (sustainability) regarding environmental and human rights
matters, socially responsible activities such as pink ribbon breast care, and guaranteeing the safety or security of our products orservices to build a relationship of trust with society.

- 17 -

(5) Basic Policies on the Nature of Personnel who should Control the Determination of Financial and Business Policies of
Wacoal Holdings Corp.
Basic policies on the nature of personnel who should control the determination of financial and business policies
of Wacoal Holdings Corp. have been prescribed as follows as of the filing date of this report (June 29, 2017).
(i) Details of Basic Policy
Since our establishment in 1949, we have strived to develop a domestic market for female innerwear(undergarments), penetrate the global market, and establish our business with the aim of creating a global company througha 50-year long-term management plan based on our business objectives of making and helping women in becoming
beautiful and facilitating the realization of women’s desire to be beautiful. Moreover, as a leading female innerwear
company, we have developed the Wacoal brand, which has become widely accepted by both domestic and international
consumers.
Our corporate value is mainly generated from (i) our strong market position and brand value in the intimate apparelmarket, which has been cultivated over a long period of time; (ii) our ability to develop highly functional, high value-added,
attractive products based on the results of human scientific research from a medium- to long-term perspective; (iii) our
superb product quality and supporting technical staff, as well as our highly productive global manufacturing and supply
systems that use excellent sewing technology; (iv) our close personal relationships with distributors in various sales channels,
which link us with consumers; (v) the trust of consumers that has been gained through direct communication and sales by
our beauty advisers, who have a sound knowledge of our products and a wealth of sales experience; and (vi) our good social
standing established through the promotion of various social action programs, such as the “Remmama” project and “Pink
Ribbon” activities, and our corporate value and the common interests of our shareholders will suffer unless these “Wacoal
strengths” are secured over the medium to long term. We, therefore, believe that personnel who control the determination offinancial and business policies must fully understand these considerations and must be capable of securing and enhancing
the corporate value and the common interests of our shareholders over the medium to long term.
We will not uniformly reject an acquisition of a substantial shareholding of the Company, if it contributes to thecorporate value and the common interests of our shareholders. However, there are many acquisitions of substantial
shareholdings of companies that do not contribute to the corporate value of the target company or the common interests ofour shareholders. For example, this is the case where it is clear from the purpose of the acquisition that it will cause damage
to the corporate value of the target company or the common interests of our shareholders - where it is likely that theshareholders are in effect being forced to sell their shares, where insufficient time or information is given for the Board of
Directors and the shareholders of the target company to consider the conditions of the acquisition or for the Board of
Directors of the target company to make an alternative proposal, or where it is necessary for the target company to negotiatewith the prospective purchaser to obtain conditions that are more favorable than those proposed by the prospective purchaser.
In light of these circumstances, we believe that it is essential that we be ready at all times to implement a systemthat will prevent any acquisition that is contrary to the corporate value or the common interests of our shareholders byenabling our shareholders to determine whether or not to accept such an acquisition and enabling our Board of Directors tosecure any necessary information and time to make an alternative proposal or to negotiate with the prospective purchaser onbehalf of our shareholders at the time of an acquisition of our shares.
(ii) Specific Details of Efforts- Special efforts toward ensuring effective use of company assets, appropriate formation of group companies, andimplementation of other basic policies(Efforts to improve corporate value)
We were restructured as a holding company in 2005 in order to realize our medium- and long-term strategies tofurther enhance our corporate value, and further, we are promoting expansion of domestic and overseas business (including
through Mergers and Acquisitions deals), making efforts to improve profitability, and working to secure and enhance thecorporate value and common interests of our shareholders under the medium-term and fiscal year management policies.
We will continue to conduct our business operations in order to build “Wacoal” as an enduring corporate brandwhile improving Wacoal’s strengths that form the basis of our corporate value as described in Section (i) above, and being
mindful of our objectives in making and helping women in becoming beautiful and facilitating the realization of women’s
desire to be beautiful.
We will make efforts to enhance our corporate value by (i) improving the profitability of our domestic business,(ii) achieving further growth of our overseas business, (iii) achieving group synergies through collaboration and bystrengthening our competitiveness, (iv) improving the infrastructure for our group management base, and (v) taking on new
business, which are also the mid-term policies in our mid-term plan which will start during fiscal year 2017.
(Measures to Enhance Corporate Governance)- 18 -

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 from the perspective of
all stakeholders, including our shareholders and customers.
The following bodies and systems have been established within the Company with the aim of enhancing ourcorporate governance, and the entire Company is also working toward this goal.
As of March 31, 2017, our Board of Directors is composed of seven Directors. The board makes 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. Three of these seven Directors are independent Outside Directors who give
our Board of Directors advice and guidance from an objective perspective based on their wealth of experience andknowledge of administration, management, culture and art. The term of office of each Director is one year, and we arefurther clarifying the responsibilities of our management to our shareholders. Further, with respect to the nomination,
promotion, and remuneration of Directors, an “Executive Compensation Advisory Committee,” whose members include
Outside Directors has been established, and operates with a high degree of transparency and fairness.
We use an “Audit & Supervisory Board Member system,” and our Audit & Supervisory Board consists of five
Audit & Supervisory Board Members, of which three are Outside Audit & Supervisory Board Members, as of March 31,
2017. The function of our Audit & Supervisory Board is to monitor and supervise our management.
Further, all of the three Outside Directors and three Outside Audit & Supervisory Board Members have been
designated as our independent officers, and have been notified to the Tokyo Stock Exchange.
Wacoal Corp., our core business company, has adopted an executive officer system in order to separate
management supervision and management execution. “Group Management Rules” and “Group Accounting Rules” havebeen established for Wacoal Corp. and all other group companies, and each group company conducts our business
operations in accordance with both sets of rules.
Further, the “Group Management Meeting” of our group that is composed of our Directors and Audit &Supervisory Board Members has been established in the Company. This meeting considers matters concerning themanagement strategy of our group and other important management issues, and conducts preliminary reviews of matters forreview by our Board of Directors together with the “Wacoal Senior Management Meeting,” which involves Directors, Audit& Supervisory Board Members, and senior executive officers of Wacoal Corp.
Further, the “Quarterly Business Results Review Committee” has been established under the “Group Management
Meeting.” Every quarter, our Directors and Audit & Supervisory Board Members and the Directors, Audit & Supervisory
Board Members, and executive officers of Wacoal Corp. attend meetings of the Quarterly Business Results Review
Committee and review the business results of each company and business department. Also, under the “Group Management
Meeting,’ we have established the “Group Strategy Committee,” where the managers of our group’s major companies inJapan and overseas, in addition to the attendees of the “Group Management Meeting,” attend meetings of the Group Strategy
Committee and share management issues and review important matters.
In addition, the “Corporate Ethics Committee” and “Risk Management Committee” have each been established ascommittees of the entire Company. Under these committees, the “Compliance Committee,” “Quality Assurance Division,”“Accident and Disaster Measures Division,” and “Environmental Division” have each been established, and each of thesedivisions is ready to enhance corporate value and respond to risks of loss in each field. These divisions report to our Boardof Directors from time to time on the status of their activities.

- Measures to prevent inappropriate persons from controlling the determination of financial and business policies
in light of the basic policy

For the purpose of securing and enhancing corporate value and the common interests of the shareholders of theCompany, the Company determined the basic policy for preventive measures to be taken against the acquisition of a
substantial shareholding of the Company (i.e., defensive measures against takeovers) at an ordinary general meeting ofshareholders held on June 26, 2015. The Board of Directors determined and updated specific measures at the meeting heldon the same day (which were introduced on June 29, 2006).
The Plan enables the Company’s shareholders, in the event of purchase or any similar act or a proposal topurchase the Company’s share certificates (hereinafter called “Purchase”), to determine whether or not to accept such offer
for the Company’s shares, and enables its Board of Directors to secure any necessary information and sufficient time topropose alternatives or to negotiate and consult with a person who purchases (hereinafter called “Purchaser”) on behalf of its
shareholders, in order to prevent a Purchase of the Company’s shares that is detrimental to its corporate value or its
shareholders’ common interests, and to secure and enhance its corporate value and the common interests of its shareholders.
The Plan covers a Purchase that falls under ① or ② below:①②

purchase of share certificates issued by the Company that results in 20% or greater ownership by ashareholder of such share certificates; orpublic tender offer for share certificates issued by the Company that results in combined ownership by
the offeror and/or any of its affiliates of 20% or more of such share certificates.
- 19 -

If a Purchaser intends to launch a Purchase of the shares of the Company, such Purchaser will be requested tosubmit to the Company a document describing the information required to consider details of the Purchase, as well as anoath by such Purchaser that such Purchaser will follow the procedures prescribed by the Plan. Accordingly, the information
provided by the Purchaser; the opinion of the Board of Directors; or any supporting materials, alternative proposals (if any),or other information and/or materials will be submitted to the Independent Committee, which consists of three members whoare independent from the management operating the Company, and the Independent Committee will evaluate and/or
examine such information and/or materials. If need be, the Independent Committee will also separately obtain advice fromindependent experts and evaluate and/or examine the terms and conditions of the Purchase, consider the alternatives
presented by the Board of Directors, and negotiate with the Purchaser or disclose information to the shareholders.
If (A) the Purchaser fails to follow the procedures as prescribed by the Plan or if (B) the Purchase is deemed to fallunder any of the requirements as prescribed by the Plan as a result of the examination of the terms and conditions of thePurchase or discussions and/or negotiations with the Purchaser, and if implementation of a free allocation of stockacquisition rights is considered appropriate, the Independent Committee will advise the Board of Directors to implement a
free allocation of stock acquisition rights. The Board of Directors will pay the utmost respect to the advice provided by the
Independent Committee, and will resolve to implement the free allocation of the stock acquisition rights. The Company will
implement a free allocation of the share acquisition rights to those shareholders, other than the Company, who are registeredor recorded in the Company’s final register of shareholders as of the allocation date that is determined separately, at suchrate, as separately determined, up to a maximum of two stock acquisition rights for every one common stock of theCompany held. Also, even when the Purchase by the Purchaser is considered to fall under either (A) or (B) above, if the
Independent Committee considers it necessary to obtain the approval at an ordinary general meeting of shareholders for
implementation of a free allocation of stock acquisition rights, the Independent Committee may advise the Board of
Directors to do so. In this case, the Board of Directors, in principle, shall promptly convene an ordinary general meeting ofshareholders so that a meeting can be held within the shortest time practically possible and submit a resolution for the
implementation of a free allocation of stock acquisition rights.
The holder of stock acquisition rights for the subscription of new shares (with terms that prohibit the Purchaserand certain people (hereinafter called “Nonqualified person”) from exercising such rights) is entitled to receive one share of
the Company by paying the amount determined by the Board of Directors or the ordinary general meeting of shareholders in
the resolution on the free allocation of stock acquisition rights, which shall be at least one yen (¥1) but not exceeding onehalf (1/2) of the fair value of one share of the Company. Also, the Company may acquire stock acquisition rights held byshareholders other than the Nonqualified Person, and in exchange, deliver one share of the Company for every stockacquisition right.
Promptly after passing a resolution by the Board of Directors or by an ordinary general meeting ofshareholders with regard to implementation or non implementation of the above-mentioned free allocation of stockacquisition rights, the Board of Directors will disclose the outline of such resolution and other information deemed
appropriate by the Board of Directors.
As with the effective period of the Basic Policy on Defensive Measures against Takeovers, the effective periodof the Plan will expire upon conclusion of the ordinary general meeting of shareholders to be held during the last fiscal year
ending within three years after the Ordinary General Meeting of Shareholders held on June 26, 2015. However, the Plan
may be changed or terminated to reflect the change made to the Basic Policy on Defensive Measures against Takeovers by
and pursuant to the resolution of the ordinary general meeting of shareholders, if the change or termination of the Basic
Policy on Defensive Measures against Takeovers is resolved by an ordinary general meeting of shareholders. Further, thePlan will be terminated if so resolved by the Board of Directors.
There will be no direct, concrete impact on the shareholders caused by the Plan’s introduction, provided the freeallocation of stock acquisition rights is not implemented. On the other hand, if the free allocation of stock acquisition rights
is implemented according to the Plan, the overall value of the shares held by the shareholders may be diluted if theprocedures for exercising stock acquisition rights are not followed. However, no dilution of the overall value of the shares
held will take place if the shares are provided in consideration of stock acquisition rights acquired by the Company.

(iii) Judgment of Board of Directors as to Efforts under Section (ii) above and Reasons Thereof
As stated in Section (ii) above, the Plan was introduced in line with the Basic Policy mentioned in Section (i)above for the purposes of securing or enhancing corporate value and the common interests of shareholders. In particular,
highly rational fairness and/or objectivity is ensured under the Plan because (i) the Plan focuses on shareholders’ intentions
such that the effective period is prescribed as three years, and the Plan may be terminated at any time by a resolution of theBoard of Directors or a resolution of an ordinary general meeting of the shareholders to terminate the Basic Policy on
Defensive Measures against Takeovers; (ii) the Plan establishes reasonably objective requirements, and a free allocation ofstock acquisition rights is not implemented unless these requirements are met; (iii) the Independent Committee shall consistof independent persons; (iv) a free allocation of stock acquisition rights under the Plan may not be initiated unless a
judgment is made by the Independent Committee; and (v) the Independent Committee may obtain advice from independent
experts at the expense of the Company. The Plan is formulated to maintain corporate value, which is aligned with thecommon interests of the shareholders. It is not intended to maintain the status of the corporate officers of the Company.

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4. 【Risk Factors】
Our business, performance, and financial condition are subject to risks and uncertainties, including those described in the risk
factors below. These risks and uncertainties could result in a material adverse effect on our operating results and financial
condition, and a material decline in the trading price of our common stock.
Forward-looking statements in this report are made based on information available as of the end of fiscal year 2017.
(1) We may be adversely affected by the domestic and global economy
In the major markets in which we operate, any weakness or deterioration in the economy may have a material
adverse effect on our sales, operation results and financial condition.
(2) Continued difficulties faced or changes in business policies made by department stores, general merchandisers, and othergeneral retailers in Japan would hurt our businessIn fiscal year 2017, a substantial majority of our net sales were generated in department stores, generalmerchandisers, 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 remain weak and may continue to decline.
If the business of one or more of our important general retail customers fails as a result of continued weakness inthe department stores, general merchandise and other general retail sector, such a business failure may result not only indecreased sales, but we may also be unable to collect some or all of our outstanding accounts receivable from suchcustomers.
Likewise, increased consolidation of Japanese department stores and general merchandisers in preparation for ashrinking market due to the future anticipated decrease in the population of Japan may allow our customers to increase theirbargaining power in negotiating pricing and other terms of trade. Any change in business policy by Japan’s leading
retailers would have an adverse impact on our performance, such as net sales or return on sales.
(3) Our sales may decline if we are unable to effectively anticipate and respond to consumer tastes and preferences and deliver
high-quality products
Customer tastes and fashion trends change continuously and are difficult to predict. If we are unable tosuccessfully anticipate or respond to changing styles or trends, and if we lose the support of our customers, we may beunable to achieve our sales targets and our financial results would suffer as a result.
In addition, our brand image may suffer if we misjudge the market or sell defective merchandise causing
customers to believe that we are not able to offer attractive fashions and top-quality products. If any event were to occurthat harms our reputation for producing high-quality products, our sales, operations and financial condition could bematerially adversely affected.
(4) The apparel market is highly competitive, and our share of sales or profitability may decline if we are unable to maintainour competitivenessIn the domestic innerwear market, in addition to competition from wholesalers and direct retailers in the mid- tohigh-end undergarment market in Japan, we must also compete against catalog and Internet sales, including mass-market
and specialty apparel companies, as well as non-store retailing. In addition, competition may intensify with new entrants.
Increased competition could result in price reductions, increased marketing expenditures, and loss of sales volume
and market share, all of which could have a material adverse effect on our sales, financial condition, and operating results.
(5) Expansion of our specialty retail store may not lead to improved sales and profits
Further investment is necessary in order to expand our specialty retail store business, including expenses for thedevelopment of new stores and the closure of underperforming stores, and improvement expenses for the specialty retailstore brand. While we continue to make efforts in improving profitability, if new shops fail to secure the expected sales
levels, if expenses such as shop rent or personnel costs increase due to changes in the market environment, or if the specialty
retail store brand fails to be popular with customers, we may not be able to make sufficient gains to recover the investment.
(6) We may experience difficulties in successfully increasing our catalogue and Internet sales
We believe that our Internet sales will be increasingly important, and we are seeking to strengthen our capabilities
in these channels. We also believe that we need to make further investments in systems for Internet sales in order toexpand the Internet sales of our entire group. However, as the system environment surrounding our catalogue and Internet
sales evolves rapidly, we cannot predict whether our accumulated investments would contribute to the benefit of the entire
group. We may not be successful in increasing Internet sales and profits sufficiently to compensate for continued flat or
declining sales through our core general retailer channel.

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(7) Our business may be adversely affected by poor sales or production plans or weather events
If we fail to properly judge the market for our products, we may face a significant amount of unsold inventory as aresult of poor sales and excess production because we generally manufacture our products in advance of the applicableseason. Also, if a season is unusually warm, cold, short or long, sales of our seasonal campaign products or our seasonal
products may be adversely affected by irregular weather events. In response, we may be forced to reduce our productprices, increase our marketing promotions, or revalue our inventory, which could have a material adverse effect on our sales,
operating results, and financial condition.
(8) Costs related to procurement of raw materials and products may rise due to changes in the environment
Raw materials such as nylon, polyester, polyurethane and cotton are used for our products and the price of such
raw materials fluctuates based on market conditions. We have gradually increased the amount of goods we produce andraw materials we procure for our products in lower-cost countries in Asia. However, labor costs and prices have been
rising consistently, and we also face high political and social instability in those countries in Asia. Increases in productmaterial prices or labor or product costs at our places of production would increase our production costs, and additional costs
may be incurred in response to changes in business environment. Any of the foregoing may have a material adverse effecton our operating results and financial condition.
(9) It may be difficult for us to attract and retain highly qualified personnel
The growth of our business depends significantly on our ability to attract, train, and retain qualified personnel inareas such as product planning, manufacturing technology, and sales and marketing. Our ability to attract qualified
personnel depends in large part on our ability to establish and maintain a positive image in the labor market. We may not
be successful in attracting and retaining qualified personnel, which may have a material adverse effect on our operating
results and financial condition.
(10) We may face increasing risks relating to conducting business internationally
We have gradually increased both the amount of goods we produce and the amount of raw materials we procure
for the products sold in Japan in lower-cost countries in Asia – a trend we expect to continue. In addition, we are making
efforts to expand our product sales in overseas markets, including in the United States, Europe, and China. These
initiatives and trends may increasingly expose us to various risks relating to the conduct of our business abroad, including:(i) the risk that our business may be adversely affected as a result of our failing to suit consumer tastes and preferencesin overseas markets;(ii) the risk that political, social, and economic instability in countries where we source, manufacture, or sell our
products may adversely affect our group;(iii) the risk that unexpected tax, legal, or regulatory changes or actions may adversely affect our group;(iv) the risk of our being unable to adjust to cultural differences which may lead to staffing or management failure that
may adversely affect our group business;(v) the risk that the procurement costs of our group products or our consolidated business results may fluctuate due tochanges in exchange rates;(vi) the risk of our not being able to protect our intellectual property as a result of different intellectual property
protection systems or our infringing on the intellectual property of other companies may adversely affect our groupbusiness; and(vii) the risk that public health or similar problems in our important overseas markets or sourcing/production centers may
adversely affect our group.
(viii)(11) We may not be successful with acquisitions and other strategic transactions with third parties
We intend to evaluate and pursue opportunities for acquisitions, investments, and other strategic transactions that
we believe will help us achieve our business objectives, including extending our product offerings in Japan and in overseas
markets and strengthening our capabilities in Internet, catalogue, and other marketing channels.
Any acquisitions or other strategic transactions, or any licensing business that we have pursued or may pursue inthe future may have an adverse effect on our group’s business results as a result of poor performance of the target company
or business partner due to deterioration in the economy, unsuccessful management integration or business collaboration, or
failure to achieve satisfying results or synergy effects from the relevant business model. Also, there is the risk of possible
impairment charges on goodwill and other intangible assets which we obtained through business acquisitions recorded on
our consolidated balance sheet as a result of a decline in anticipated future cash flows.
(12) We may not be able to recover the cost of investments we make in pursuing growth opportunities and developing newmarkets
Our pursuit of growth opportunities and new markets through international expansion, acquisitions, strategic
alliances, or otherwise will require significant resources, time, and costs. There is no guarantee that we will generate
results that are sufficient to cover the cost of making any such investment, even if we conduct an extensive due diligence
investigation and other analyses prior to making the investment to maximize the probability of success and minimize therisks. Failure to recover the cost of investments could have a material adverse effect on our operating results and financial
condition.
- 22 -

(13) We may face infringement of our intellectual property rights or claims that we infringe the intellectual property rights ofothersWe believe that our intellectual property rights, our brands and related trademarks in particular, are important toour ability to create 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 proprietary rights
by other could materially harm our operations and financial condition. Additionally, other parties have asserted in the past,and may assert in the future, that we have infringed their intellectual property rights. We cannot predict whether any suchassertions or related claims will substantially harm our operating results and financial condition.
(14) We may be exposed to risks in the occurrence of information system intrusion
Our computer system may be subject to an attack from external sources resulting in website defacement, leaking
of material data, or erasing of material data due to a computer virus, or occurring system problems as a result of systemdevelopment failures or delays. If any of these events occur, our sales may decline as a result of interruption of ourbusiness activities and deterioration in our corporate image, which could have a material impact on our operating results andfinancial condition.
(15) If we fail to protect our customers’ privacy and data and maintain the confidentiality of our trade secrets we may faceproceedings against us, lose customer confidence, or lose our market position
Any failure by us to comply with laws and regulations regarding privacy and the protection of customer
information could result in proceedings against us by governmental entities or others, which could potentially have an
adverse effect on our business, operating results and financial condition. Complying with varying privacy requirements
could cause us not only to incur substantial costs and force us to change our business practices, but also could cause
customers to lose confidence in our business and products, which could result in a material adverse effect on our sales andprofitability.
Additionally, in order for us to secure and maintain an advantageous position in the market, we need to protect ourtrade secrets, such as manufacturing technology and product information. If these trade secrets are divulged by any party
related to us or infringed by another company, our business or financial condition could be materially affected.
(16) If we fail to maintain adequate internal controls over financial reporting we may not be able to produce reliable financial
reports in a timely manner or prevent financial fraud
Beginning with our annual report for fiscal year 2007, we are required to document and test our internal control
procedures.
Effective internal controls are necessary for us to produce reliable financial reports and important in helping
prevent financial fraud. If we cannot provide reliable financial reports on a timely basis or prevent financial fraud, ourbusiness and operating results could be harmed, investors could lose confidence in our reported financial information, andthe trading price of our stock could drop significantly.
(17) Our holdings of equity securities expose us to market risks
We hold equity and other securities in publicly traded Japanese companies. A significant drop in the value ofthese securities or in the Japanese equity markets in general, could have an adverse impact on our financial results in therelevant reporting period.
(18) Natural disasters, epidemics, dispute, terrorism and riot could affect our manufacturing abilities, operating results, or
financial condition
Japan is one of the most seismically active countries in the world and regularly experiences typhoons and othernatural disasters. In the event of a large earthquake, other natural disaster, or outbreak of an epidemic that affects our
employees or our ability to continue using any of our sales or manufacturing facilities, our sales and marketing efforts would
be adversely affected and we would face the possibility of work delays or stoppages, any of which could have a negative
effect on our business. Any such natural disaster, epidemic, dispute, terrorism and riot could also cause disruptions in thetransportation networks that our business relies upon and could interfere with our normal course of production anddistribution. Furthermore, any such natural disaster, epidemic, dispute, terrorism or riot would also have a large impact on
consumer activity, which would have a significant impact on the sales of our products.
(19) We may be exposed to risks in relation to liability for termination and retirement benefit
Costs and liability for termination and retirement benefits are based on the actuarial assumptions that are used forthe calculation of the expected rate of return on plan assets or future liabilities for termination and retirement benefits.
Such costs and liability 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 rateenvironment. Further, additional obligations may arise if the retirement benefit scheme is amended. As a result, ourgroup business or financial condition could be adversely affected.

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(20) We may be exposed to risks related to realizability of deferred tax assets and transfer pricing
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 operating
results and financial condition.
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 the G20 in October 2015 in efforts
to improve tax rules. Following the release of this report, each country will reform and review its domestic tax laws andtax treaties.
We believe that formulation of the international taxation rules will not have a material impact on our group;
however, the opinion of the tax authorities in each country may differ from our opinion regarding the newly prescribedtransfer pricing documentation.
(21) Compliance Risk
We conduct our business activities pursuant to the Wacoal Code of Ethics and in full compliance with applicablelaws and rules, and are taking various risk prevention measures by providing training for our employees, for which ourCompliance Committee plays a key role to bring awareness of compliance and by making efforts to strengthen our internal
control process. However, if our reputation is damaged or significant compensation losses are incurred due to events
attributable to deceptive illegal acts or to our business partners, it may have a material impact on our operating results.

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5. 【Material Agreements, etc.】
Not applicable.

- 25 -

6. 【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 on addressing 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 Tradeand 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 effectbased on the basic study from three factors, which are pressure, heat, and touch. In 2005, we developed and created a newmarket for our breakthrough Style Science series products, which support the creation of a healthy and beautiful body bychanging the idea of everyday walking to walking for exercise. In 2010, we conducted an analysis and announced principles on
the physiological changes associated with the aging period from a person’s 20s to their 50s. We also strengthened thedevelopment of new products coping with aging and have been working on developing new functional products based on thelifestyle 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 introduced, and asenior generation.
We strengthened our research and development during the current fiscal year by focusing on the concepts of “new beauty,”
extending to beauty in motion from standstill, “comfort” and “modeling.”
As a result of the above, we recorded 810 million yen for our research and development during the fiscal year ended March2017.
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.

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7. 【Analyses of Financial Position, Operating Results, and Cash Flows】
Forward-looking statements in this report are made on information available as of the filing date of this report (June 29, 2017).
(1) Overview
We are a leading designer, manufacturer, and marketer in Japan of women’s intimate apparel, with the largest
share of the Japanese market for foundation garments and lingerie. Foundation garments (primarily brassieres and girdles)
and lingerie (primarily slips, bra-slips, and women’s briefs) accounted for 74.1% of our consolidated net sales for fiscal year
2017. We also design, manufacture, and sell nightwear, children’s underwear, outerwear, sportswear, hosiery and otherapparel and textile goods, and several other services.
Net Sales
We principally generate revenues from sales of innerwear (consisting of foundation garments and lingerie,nightwear, and children’s underwear), outerwear and sportswear, hosiery, textile goods, and other products.
The following table sets forth information with respect to our net sales by category of products for fiscal year
2017.

Net Sales to External Customers (and Percentage) by Product Category

Type of productFoundation and lingerieNightwear
Children’s underwear
Subtotal
Outerwear and sportswear
Hosiery
Other textile goods and related
products
Other
TOTAL

Millions ofyenDistribution
ratio

145,188
9,154
1,429
155,771
17,189
2,235
9,346

74.1%
4.7
0.7
79.5
8.8
1.1
4.8

11,340195,8815.8
100.0%For fiscal year 2017, approximately 78% of the net sales of Wacoal business (domestic). (the net sales of which
account for approximately 60% of our consolidated net sales) were apparel sales made on a wholesale basis to department
stores, general merchandisers, and other general retailers and approximately 20% were apparel sales made through directly
managed retail stores, catalogue sales, and the Internet. Sales from our other businesses (which include cultural products
and other services) constituted the remaining, approximately 2%, of Wacoal business (domestic)’s net sales for fiscal year
2017.
Over the past five fiscal years, fluctuations in our sales have typically reflected changes in unit volume, as average
unit prices have generally remained stable during this period.
Cost of Sales
Our cost of sales arises principally from material and manufacturing costs related to the production of our apparelproducts.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses principally consist of employee compensation and benefit
expenses and promotional expenses, such as advertising costs and renovation costs. Other selling, general andadministrative expenses include shipping and handling costs, payment fees (including outsourcing payments), and rental
payments for directly managed retail stores.
Key Industry Trends
We believe that the following have been key trends in our industry during the last two fiscal years:(i) In the domestic innerwear market, there was no sign of recovery in consumer spending due to the continued
impact of a decline in response to the consumption tax increase, while the female population was declining. The outlook- 27 -

for recovery in consumer spending remains uncertain despite the postponement in April 2017 of a consumption tax increase.
In addition, a slowdown is seen in consumption by inbound tourists, while the number of tourists visiting Japan isincreasing. With intensifying competition within the industry, the environment remains very difficult as consumer
spending continues to be weak.
(ii) As for sales channels, the amount of purchases has increased at locations other than our traditional sale spaces
such as department stores, general merchandise stores and specialty stores for underwear. Our sales channels have changed
and diversified as seen in growing sales online, at directly managed retail stores and casual apparel shops. On the other
hand, with respect to directly managed retail stores, certain competitors have focused on profitability by limiting shop
openings and closing underperforming stores.
(iii) Retailers and specialty store retailers of private label apparel have been making efforts to increase the numberof customer contacts through direct retail sales, website sales, and other online sales, and to integrate direct retail sales withwebsite sales (realization of omni-channel services). General merchandise stores have also strengthened the developmentof their “private brand” merchandises. Manufacturers have made efforts to strengthen direct sales and OEM and to develop
new sales channels.
(iv) These manufacturers and other competitors have produced lower priced women’s innerwear garments bysourcing fabric and producing garments in lower cost countries in Asia, but due to increasing raw material prices and risingcosts associated with increases in processing fees, they have come to focus on improving value-added components ofproducts.
During the last two fiscal years, which are the reporting periods of the audited consolidated financial statements
included in this report, we made efforts to cultivate new customers and to achieve customer optimization in the domestic
market, to rebuild our group’s production base, and to expand sales and profits in the overseas market in order to address theabove trends. With regard to the domestic market, we implemented initiatives to respond to market diversification andoptimization, which include strengthening our geographically-focused sales system, achieving synergies from the acquired
swimwear business, realizing omni-channel services, reducing costs related to our retail business, and building business
infrastructure. With respect to our production base, we have established a new factory in Myanmar and two new raw
materials manufacturing companies in Thailand. We aim to build a global production base by aligning these newly
established companies and our existing manufacturing companies in the ASEAN region. With regard to the overseas
market, in the United States, Wacoal America Inc. is expanding sales from e-commerce websites and our exports tosurrounding countries. In Europe, we have completed business restructuring. In our business in China, we havecontinued to make efforts to improve profitability, while our business has been weak due to the deteriorating market
conditions in China. In addition, we have developed our business and initiated sales in India. Despite these management
initiatives and sales efforts, our consolidated business results for the current fiscal year were as follows: 195,881 million yen
in sales, a decrease of 3.5% as compared to the previous fiscal year, due to an increase in retirement benefit expenses,
recognition of expenses in connection with the opening of new building and the business restructuring expenses in Europe,and the impact of foreign exchange rates; 11,065 million yen in operating income, a decrease of 20.2% as compared to theprevious fiscal year; and 16,569 million yen in income before income taxes and equity in net income of affiliated companies,
an increase of 10.8% as compared to the previous fiscal year, due to gain on sale of fixed assets (land).

(2) Significant Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of theconsolidated financial statements requires our management to make estimates and assumptions. We believe that thefollowings are some of the more critical judgment areas in applying our accounting policies in the preparation of ourconsolidated financial statements.
(i) Revenue Recognition
We recognize revenue on sales to retailers, mail-order catalogue sales, and Internet sales when persuasive
evidence of an arrangement exists, delivery has occurred resulting in transfer of title and risk of loss, the sales price is fixed
or determinable, and collectibility is reasonably assured. As for consignment sales, we recognize revenue when the
products are sold to the ultimate customer. We recognize revenue on direct retail sales at directly managed retail stores atthe point of sale to the customer.
(ii) Allowance for Returns and Doubtful Receivable
We are required to assess the collectibility of notes and accounts receivable. A considerable amount of judgment
is required in assessing the ultimate realization of these notes and receivables, including the current creditworthiness of eachapplicable customer, taking into 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.
We allow our customers to return their unsold products when the customers meet certain criteria established by us
as outlined in our applicable trade terms. We establish the allowance for estimated returns for each operating department
based on historical experience with product returns, sales movements, and the size of inventory on the retail level and on the- 28 -

situation of the retail industry overall. We review and revise the allowance every quarter, in consideration of actual returns,
planned product discontinuances, and promotional sales. We record the allowance for estimated returns as a reduction tosales.
(iii) Inventories
Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis for raw
materials and on an average cost basis for work in process and finished products. Market value, or net realizable value, isthe estimated selling 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 statedat the lower of cost 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,
are analyzed to determine estimated net realizable value. We also consider potential disposal of inventories. Criteria
utilized to quantify the factors we consider include historical results, judgments regarding future consumer demand, andother factors. We believe that the amount written down is appropriate. However, if market conditions and demand areless favorable than our projections, the amount we write down may increase and may adversely affect our financial
condition or operating results.
(iv) Deferred Tax Assets
We currently have significant deferred tax assets, which are subject to periodic recoverability assessments.
Realization of our deferred tax assets is principally dependent upon the realization of projected future taxable income. In
estimating our future taxable income, we consider past operating results, the feasibility of ongoing tax planning strategies,
and other factors. Our judgments regarding future profitability may change due to future market conditions and otherfactors. These changes, if any, may require recognition of a significant valuation allowance for these deferred tax asset
balances. In the event we determine that 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 arerecoverable. If we record lower-than-expected earnings and our deferred tax assets become unrecoverable, however, avaluation 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.
(v) Impairment Charges on Investments
Impairment charges on investments are charged to earnings when a decline in fair value below the cost is otherthan temporary. We periodically determine whether a decline in the fair value of marketable securities and investments isdeemed to be other-than-temporary decline, based on criteria that include the duration and severity of market decline, theextent to which cost exceeds market value, our financial position and business outlook, and our intent and ability to retain
the impaired marketable securities and investments for sufficient period of time for anticipated recovery in fair value.
We believe that the criteria for evaluating impairment are reasonable. However, changes in the market or
circumstances of each individual investment due to unforeseen changes in economic and business assumptions could affectthe valuations of the investments.
As of March 31, 2017, we held securities with respect to which we recognized impairment charges, as well as
securities with respect to which we did not recognize any impairment charges even though those securities had been in an
unrealized loss position. Based on our assessment of the period of the decline in the fair values and our assessment of therelevant 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 these particular securities.
As of March 31, 2017, we did not hold any security that had an unrealized material holding loss.
(vi) 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 amountsof such assets might not be recoverable. When we determined impairment, we evaluate the carrying amount of the assets
based on their fair value.
In fiscal year 2017, we did not recognize any impairment charges on long-lived assets.
(vii) Valuation of Indefinite-Lived Intangible Assets and Goodwill
We are required to perform an annual impairment test of our intangible assets with indefinite useful lives andgoodwill. We also assess the impairment of such intangible assets and goodwill 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 underperformance relative to projected future operating results;
significant changes in the manner of our use of the acquired assets or the strategy for our overall business;- 29 -

significant negative industry or economic trends; andsignificant changes in risk-adjusted discount rates.
When we determine that the carrying amount of indefinite-lived intangible assets and goodwill may not berecoverable based upon the existence of one or more of the above indicators of impairment, we evaluate the carrying amountof the assets based on their fair value. If the fair value is less than the carrying amount of the assets, we record an
impairment loss 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 indefinite-lived intangible assets and goodwill 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, we utilize the net present value method and incorporate relevant
unobservable inputs.
Significant assumptions used in this analysis include future cash flows and the risk-adjusted discount rate. Future
cash flows are based on the management’s cash flow projections for the future five years, after which future cash flows are
estimated using the perpetuity growth rate of zero. The management’s cash flow projections are developed using estimatesfor expected future revenue growth rates, profit margins, and working capital levels of the reporting units. The
risk-adjusted discount rate is determined by the Capital Asset Pricing Model (“CAPM”) and we mainly utilize aweighted-average cost of capital (“WACC”) of 4.3%.
As a result of the evaluation performed for fiscal year 2017, we judged impairment charge on goodwill is
unnecessary.
In our determination of the fair value of trademark, we utilize the relief-from-royalty method and incorporate
relevant unobservable inputs. Significant assumptions used in this analysis include future cash flows, the risk-adjusted
discount rate, and the rate of royalty. Future cash flows are based on the management’s cash flow projections for the future
five years, after which future cash flows are estimated using the perpetuity growth rate of zero. The management’s cash
flow projections are developed using estimates for expected future revenue growth rates, profit margins, and working capitallevels of the reporting units. We mainly used a risk-adjusted discount rate of 7.3% based on a WACC of 4.3% and an
inherent risk spread of trademark of 3%. The rate of royalty used for valuation was 3%, which was based on the royalty
ratio used in the actual transaction with a third party.
As a result of the evaluation performed for fiscal year 2017, we judged impairment in the carrying value of the
trademark is unnecessary.
(viii) 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 obligationand 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 other factors. Our management believes that these actuarial assumptions and methods are appropriate inlight of our circumstances. However, due to a change in an actuarial assumption, the amount of the projected retirement
benefit plan liabilities and costs may be adversely affected.
Our approach to establishing the discount rate is based upon long-term Japanese government bond rates andcorporate bond indices. The discount rate assumption is based upon the effective yields as of March 31, 2017 on Japanese
government bonds whose maturity dates approximate the timing of the expected future benefit payments. On March 31,
2017, the discount rate used for the contributory retirement plan was 0.6%.
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 2016 and 2017. The estimated long-term rate of return is basedon an asset allocation of 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. Achange 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 periodic benefit costs

Effect on benefit obligation

Discount rate: 0.5% decrease

an increase of 276 million yen

an increase of 1,845 million yen

Discount rate: 0.5% increasea decrease of 185 million yen

a decrease of 1,635 million yen- 30 -

Expected long-term rate of return onplan assets: 0.5% decrease

an increase of 155 million yen-

Expected long-term rate of return onplan assets: 0.5% increasea decrease of 157 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 earlier of the employee’s termination or the mandatory
retirement age.

(3) New Accounting Pronouncements
Revenue Recognition – In May 2014, the Financial Accounting Standard Board (the "FASB") issued a new accounting
related to revenue recognition. This guidance is based on the principle that revenue is recognized to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. This standard provides comprehensive guidance, and requires the disclosure of
information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue andflows arising from contracts with customers. In August 2015, the FASB issued additional guidance and deferred the effective
date of the guidance for a year. In May 2016, the FASB also issued additional guidance to improve above guidance byreducing the potential for diversity in practice at initial application and the cost and complexity of applying the guidance both attransition and on an ongoing basis. This guidance is effective for fiscal years beginning after December 15, 2017 and interim
periods within that annual period. The Company is currently evaluating the impact of adoption on the Company's
consolidated financial position, result of operations, or cash flows.
Extraordinary and Unusual Items – In January 2015, the FASB issued a new accounting standard related to extraordinary andunusual items. This guidance eliminates from U.S. GAAP the concept of extraordinary items and the requirements to 1)
segregate an extraordinary item from the results of ordinary operations, 2) present the item separately on the income statement,
net of tax, after income from continuing operations and 3) disclose income taxes and earnings-per-share data applicable to theextraordinary item. This guidance is effective for fiscal years and interim periods within that annual period, beginning after
December 15, 2015. Our group has adopted this guidance from the first quarter of the fiscal year ended March 31, 2017.
The adoption of this guidance does not have a material impact on the Company’s consolidated financial position, results ofoperations, or cash flows, since it relates only to disclosure requirements.
Fair Value Measurements and Disclosures– In May 2015, the FASB issued a new standard which amends fair value
measurement. This guidance removes the requirement to categorize within the fair value hierarchy all investments for which
fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement
to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per sharepractical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fairvalue using that practical expedient. This guidance is effective for fiscal years beginning after December 15, 2015, andinterim periods within those fiscal years. Our group has adopted this guidance from the first quarter of the fiscal year ended
March 31, 2017. The adoption of this guidance does not have a material impact on the Company’s consolidated financial
position, results of operations, or cash flows, since it relates only to disclosure requirements.

Measurement of Inventory – In July 2015, the FASB issued a new standard related to simplifying the measurement of
inventory. Currently an entity is required to measure inventory at the lower of cost or market. Market could be replacement
cost, net realizable value, or net realizable value less an approximately normal profit margin. This guidance requires an entity
to measure inventory at the lower of cost or realizable value. This guidance is effective for fiscal years beginning after
December 15, 2016, and interim periods within those fiscal years. This guidance has a slight material impact on the
Company’s consolidated financial position, results of operations, or cash flows.
Balance Sheet Classification of Deferred Taxes – In November 2015, FASB issued a new accounting standard related tobalance sheet classification of deferred taxes. This guidance requires an entity to classify deferred tax liabilities and assets asnoncurrent on the consolidated financial position. This guidance is effective for fiscal years beginning after December 15,
2016. As of March 31, 2017, the deferred income taxes under current assets were 4,049 million yen and we had no deferredincome taxes classified as current liabilities.
Recognition and Measurement of Financial Instruments – In January 2016, FASB issued a new accounting standard related
to recognition and measurement of financial assets and financial liabilities. This guidance requires an entity to measureequity investments (except those accounted for under to the equity method of accounting or those that result in consolidation of
the investee) at fair value with changes in fair value recognized in net income and change of related disclosures. This
guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The
Company is currently evaluating the impact of adoption on the Company's consolidated financial position, result of operations,or cash flows.
Leases – In February 2016, the FASB issued a new accounting standard related to leases. This guidance requires an entity torecognize lease assets and lease liabilities on the balance sheet for, with a few exceptions, those leases classified as operatingleases under current U.S. GAAP. This guidance is effective for fiscal years beginning after December 15, 2018, and interim- 31 -

periods within that annual period. The Company is currently evaluating the impact of adoption on the Company's
consolidated financial position, result of operations, or cash flows.
Classification of Cash Flows – In August 2016, the FASB issued a new accounting standard related to classification of cash
flows. This guidance reduces existing diversity and variation in practice in the cash flow statement classification of certain
cash receipts and cash payments. This guidance is effective for fiscal years beginning after December 15, 2017, and interim
periods within those fiscal years. The Company is currently evaluating the impact of adoption on the Company’s
consolidated financial position, results of operations, or cash flows.
Income Taxes – In October 2016, the FASB issued a new accounting standard related to income taxes. This guidance
requires recognition of current and deferred income taxes resulting from intra-entity transfers of assets other than inventory
when the transfer occurs. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods
within those fiscal years. The Company is currently evaluating the impact of adoption on the Company’s consolidated
financial position, results of operations, or cash flows.
Intangibles-Goodwill and Other – In January 2017, the FASB issued a new accounting standard related to goodwill and otherintangible assets. This guidance eliminates Step 2 from the goodwill impairment test and simplifies the measurement of theimplied fair value of goodwill. This guidance is effective for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years. The Company is currently evaluating the impact of adoption on the Company’s
consolidated financial position, results of operations, or cash flows.
Net Periodic Pension Cost – In March 2017, the FASB issued a new accounting standard related to the presentation of net
periodic pension cost and net periodic postretirement benefit cost. This guidance requires presentation of the othercomponents of net benefit cost separately from the service cost component. This guidance is effective for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating theimpact of adoption on the Company’s consolidated financial position, results of operations, or cash flows.

- 32 -

(4) Report on Business Results(i) Sales
Please see “II. Business Overview – 1. Summary of Business Results – (1) Summary of Operations.”(ii) Cost of Sales
Our cost of sales decreased 3.1% from 95,901 million yen for fiscal year 2016 to 92,950 million yen for fiscal year 2017.
This decrease was mainly due to cost of sales from our foreign consolidated subsidiaries which decreased due to theappreciation of the Japanese yen, in addition to a decrease in cost of sales caused by sales fluctuations. Cost of sales as apercentage of net sales for fiscal year 2016 and fiscal year 2017 were 47.3% and 47.5%, respectively.
(iii) Selling, General and Administrative Expenses
Our selling, general and administrative expenses decreased 1.4% from 93,151 million yen for fiscal year 2016 to 91,866
million yen for fiscal year 2017. This decrease was mainly due to selling, general and administrative expenses at ourforeign consolidated subsidiaries which were deflated by the appreciation of the Japanese yen.
(ⅳ) Operating Margin
Our operating margin decreased 1.2% from 6.8% for fiscal year 2016 to 5.6% for fiscal year 2017 as selling, general andadministrative expenses rose as a percentage of the total cost. This increase was mainly due to recognition of expenses
in connection with the opening for business at our new building, IT related expenses, and expenses related to theliquidation proceedings for our foreign consolidated subsidiary.
(ⅴ) Other Income/Expenses
We recorded 554 million yen as other income, an increase of 4,412 million yen, as compared to 1,092 million yen of otherincome recorded for fiscal year 2016. This increase was mainly due to 3,770 million yen of gain on sale of property, plantand equipment, the gain on sale and exchange of marketable securities and investments which increased from fiscal year
2016.
(ⅵ) Net Income Attributable to Wacoal Holdings Corp.
Net income attributable to Wacoal Holdings Corp. for fiscal year 2017 was 12,525 million yen, an increase of 1,366
million yen as compared to that for fiscal year 2016 as a result of an increase in other income, despite an increase in tax expenses.

- 33 -

(5) Liquidity and Capital Resources
Our current policy is to fund our cash needs from cash flows from operations, which allows us to secure working capital,
make capital investments, and pay dividends without relying on substantial borrowings or other financing from outside of ourgroup companies. As of March 31, 2017, we had credit facilities at financial institutions totaling 34,893 million yen, and theunused lines of credit for short-term financing amounted to 7,949 million yen. Of this credit, 2,500 million yen is available to
Wacoal Holdings Corp., 2,418 million yen is available to Wacoal Europe Ltd., 2,717 million yen is available to Wacoal
Service Co., Ltd., and 235 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. We believe our working capital is adequate for our present requirements and for our business operations in the
short to long term.
(i) Capital Investments
Please see “III. Property, Plants, and Equipment – 1. Summary of Capital Investment, etc.”(ii) Cash Flows
Please see “II. Business Overview - 1. Summary of Business Results - (2) Cash Flow Status.”- 34 -

III. 【Property, Plants, and Equipment】
1. 【Summary of Capital Investment, etc. 】
The amount of capital investment for the fiscal year ended March 31, 2017, was 7,445 million yen. A majority of our capital
investment was used in our new construction project of a business-use building, the information system investment for ourdomestic subsidiaries and maintenance and repair work implemented for the 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 5,233 million yen, 1,799 million yen, 355 million yen, and 58 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, 2017
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.

20,629MachineryandEquipment

1,233

2

Land (m )18,468(283,050)

Number of
Employee(s)

Total

81

40,332［－］(2) Domestic Subsidiaries
As of March 31, 2017
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 (m )

35

246

－

282

36

45

－

82

85

93

－

179

18

110

－

128

1

82

－

83

448

83

253

7

2

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

Total

711

410

2,152
［ 181］

1659
70 ］

［

－
［ －］
375
［ －］
359
［－ ］
148
［ 41］
16
［

3］

(3) Overseas Subsidiaries
As of March 31, 2017
Book Value (Millions of yen)
Name of Company(Location)

OperatingSegment

Type of Equipment
and Facilities
Buildings andstructures

Machinery,
Vehicle,Equipment,
and Fixtures2

Land (m )Total

Number of
Employees

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

Wacoaladministration

Businessaffairs/(Overseas)

merchandise

270

1,154

119

563

166

13

11

414

－

－

414

215

31

－

247

106

166

－

273

132

115

－

248

312

224

－

537

253

768

168

1,544

(32,300)［ －］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)

91

1,672

820

(24,459)

198

［ －］

55

223

(235）

［ 15］
123
［ 18］

affairs
Facilities for ad

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

Wacoalministration affaiBusiness

rs/manufacturing

615
［ －］

(Overseas)
facilities

Guandong Wacoal Inc.
(Guandong, China)

WacoalBusiness(Overseas)

Manufacturing
facilities

411
［ －］

Facilities for ad
VIETNAM WACOAL CORP.
(Bien Hoa City, Vietnam)

Wacoalministration affaiBusiness

rs/manufacturing

1,829
2］

［

(Overseas)
facilities

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

Business(Overseas)

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

Wacoal

WacoalBusiness(Overseas)

Manufacturing
facilities
Manufacturing
facilities

243

601
［ －］

729

1,265

( 65,136）［ －］1

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

23None 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.
book value of the buildings and land are as follows:
Name of Business Office(Location)

Operating Segment

Type of Equipment andFacilities

The

Book Value (Millions of yen)
Buildings and structures2

Land (m )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

Wacoal Corp. Osaka OfficeWacoal Business

Facilities for(Yodogawa-ku, Osaka)(Domestic)

administration affairs

12,5281,885(11,208)

Kyoto district
Wacoal Corp. Tokyo Office
1,355

1,945
(1,471)

Tokyo

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

Wacoal Business(Domestic)

Sales facilities- 36 -

434

1,310

960
(1,833)
3,972(1,739)

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

45Facilities for

Wacoal Businessmerchandise(Domestic)

1,419

1,912

(38,923)

management

Wacoal Business

Manufacturing(Domestic)facilities

52

233

(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

2

2

Buildings (m )Land (m )

1,708

－

Annual Lease
Amount(Millions of yen)

Facilities foradministration

140

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

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

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

Guandong Wacoal Inc.
(Guandong, China)

VIETNAM WACOAL CORP.
(Bien Hoa City, Vietnam)

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

Operating Segment

Type of Equipment
and Facilities

WacoalFacilities for

Business

administration(Overseas)affairs

WacoalFacilities for

Business

administration(Overseas)affairs

WacoalBusiness(Overseas)
WacoalBusiness(Overseas)
WacoalBusiness(Overseas)
WacoalBusiness(Overseas)

22

Annual Lease
Amount(Millions of yen)

Buildings (m )Land (m )

4,599

－

194

926

－

13

－

11,871

5－

11,224－－25,195

3－

27,543

1

Facilities for adm
inistration affairs/
manufacturing
facilities
Manufacturing
facilities
Facilities for adm
inistration affairs/
manufacturing
Facilities
Manufacturing
facilities

3. 【Plans for Capital Investment, Disposals of Property, Plants, and Equipment, etc.】(1) Additions of Important Facilities
Not applicable.
(2) Disposals of Important Facilities
Not applicable.

- 37 -

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(Note)

Total Number of Shares Authorized to be Issued

Common stock

500,000,000 shares

Total

500,000,000 shares

It was approved at the 69th Ordinary General Meeting of Shareholders held on June 29, 2017 to implement a shareconsolidation as to the shares of common stock of the Company pursuant to which two (2) shares will be consolidated intoone (1) share, and to amend the Articles of Incorporation of the Company so as to reduce the total number of sharesauthorized to be issued from 500,000,000 shares to 250,000,000 shares effective as of October 1, 2017, which is theeffective date of share consolidation.
(ii) Number of Shares Issued
Class

Common stock

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, 2017)(June 29, 2017) (shares) Financial Instruments Firms(shares)
Association

143,378,085

First section of Tokyo
Stock Exchange

143,378,085

Description

Shareholders haveunlimited standard rights.
The number of sharesconstituting a unit is
1,000.

Total(Note)

143,378,085

143,378,085－－

It was approved at the 69th Ordinary General Meeting of Shareholders held on June 29, 2017 to amend the Articles ofIncorporation of the Company so as to change the number of shares in one unit of shares from 1,000 shares to 100 shareseffective as of October 1, 2017, which is the effective date of share consolidation.

(2) Status of Stock Acquisition Rights
The stock acquisition rights are issued by the Company in accordance with the Companies Act.
(i) First Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 30, 2008)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

24 (Note 1)

24 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

24,000 shares (Note 2)

24,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 2, 2008

From September 2, 2008

until September 1, 2028

until September 1, 2028

Issue price: 1,138 yen

Issue price: 1,138 yen

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

Amount capitalized as common Amount capitalized as common
stock: 569 yenstock: 569 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors- 38 -

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2－－(Note 4)(Note 4)

The number of shares represented by one (1) stock acquisition right is 1,000 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 number of shares represented by stockacquisition rights (the “Conversion Ratio”) will be adjusted in accordance 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 each of the holders of stock acquisition rights who are registered as holders of stock acquisition rights(“Option holders”) no later than the day immediately preceding the day on which the adjusted Conversion Ratio

3

becomes effective. However, if the Company is unable to provide such notification or announcement by such date, theCompany shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights in the event that they lose their status as Director(including officers of a company that has adopted the committee system), Audit & Supervisory Board Member,or executive officer of the Company and Wacoal Corp. (the “Date of Loss of Status”); provided, however, that insuch 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 day
after the Date of Loss of Status (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, 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 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 a merger (limited to a merger that would result in the dissolution of theCompany), absorption-type demerger, incorporation-type demerger, stock swap or share transfer (collectively,“Organizational Restructuring”), stock acquisition rights of the joint stock companies (kabushiki kaisha) listed in
Article 236, Paragraph 1, Item 8, (a) through (e) of the Companies Act (the “Surviving Company”) shall be granted toeach holder of stock acquisition rights remaining immediately prior to the Organizational Restructuring takes effect (the“Residual Stock Acquisition Rights”) (i.e., for an absorption-type demerger, the date on which the demerger takes
effect; for an incorporation-type demerger, the date on which the new company is incorporated; for a stock swap, thedate on which the stock swap takes effect; and for share transfer, the date on which the wholly owning parent company- 39 -

is incorporated by share transfer) 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 the grant of stock acquisition rights of the Surviving
Company pursuant to the following conditions is stipulated in the absorption-type demerger agreement, incorporationtype demerger agreement, merger and spin-off agreement, new spin-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
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.

- 40 -

(ii) Second Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 30, 2008)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

8 (Note 1)

8 (Note 1)

Number of stock acquisition rights held by the Company－
Common stock

Common stock

Class of shares represented by stock acquisition rights

1,000 shares per one stockacquisition right

1,000 shares per one stockacquisition right

8,000 shares (Note 2)

8,000 shares (Note 2)

Number of shares represented by stock acquisition rights
Amount to be paid upon exercise of stock acquisition rights
Exercise period

One yen per share

From September 2, 2008
until September 1, 2028

From September 2, 2008
until September 1, 2028

stock: 569 yenstock: 569 yen(Note 3)(Note 3)

Subject to the approval of the

Subject to the approval of theBoard of Directors

Board of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)One yen per share

Issue price: 1,138 yen
Issue price: 1,138 yen
Amount capitalized as common Amount capitalized as common

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

Matters related to transfer of the stock acquisition rights－

1

The number of shares represented by one (1) stock acquisition right is 1,000 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 stock- 41 -

acquisition 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(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
40-1 of the Japanese Company Accounting Regulations. Any amount less than one (1) 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:- 42 -

(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:(iii) Third Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 30, 2009)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

20 (Note 1)

20 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

20,000 shares (Note 2)

20,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 2, 2009 until
September 1, 2029

From September 2, 2009 until
September 1, 2029

Issue price: 1,085 yen

Issue price: 1,085 yen

Exercise period
Issue price for shares issued through the exercise of the stock

Amount capitalized as common Amount capitalized as common
stock: 543 yenstock: 543 yenacquisition rights and the amount capitalized as common stock
Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights(Note 3)(Note 3)

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one (1) stock acquisition right is 1,000 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.

- 43 -

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)
(3)

(4)

(5)

(6)

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.
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, which are calculated in accordance with- 44 -

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.

(iv) Fourth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 30, 2009)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

8 (Note 1)

8 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

8,000 shares (Note 2)

8,000 shares (Note 2)

Number of shares represented by stock acquisition rights
Amount to be paid upon exercise of stock acquisition rights
Exercise period
Issue price for shares issued through the exercise of the stock

One yen per share

One yen per share

From September 2, 2009 until

From September 2, 2009 until

September 1, 2029

September 1, 2029

Issue price: 1,085 yen

Issue price: 1,085 yen

Amount capitalized as common Amount capitalized as common
stock: 543 yenstock: 543 yenacquisition rights and the amount capitalized as common stock
Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights(Note 3)(Note 3)

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 shares.

- 45 -

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 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, 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 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:- 46 -

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

(5)

(6)

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
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)

(7)
(8)

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.
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 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.

(v) Fifth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 30, 2010)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

21 (Note 1)

21 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

21,000 shares (Note 2)

21,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 2, 2010 until

From September 2, 2010 until

September 1, 2030

September 1, 2030

Exercise period- 47 -

Issue price: 1,082 yen
Issue price: 1,082 yen
Amount capitalized as common Amount capitalized as common

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

stock: 541 yenstock: 541 yen(Note 3)(Note 3)

Subject to the approval of the

Subject to the approval of theBoard of Directors

Board of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights
Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 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, 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 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 the- 48 -

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.

(vi) Sixth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 30, 2010)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

7 (Note 1)- 49 -

7 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

7,000 shares (Note 2)

7,000 shares (Note 2)

Number of shares represented by stock acquisition rights
Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 2, 2010 until
September 1, 2030

From September 2, 2010 until
September 1, 2030

Issue price for shares issued through the exercise of the stock

Issue price: 1,082 yen
Issue price: 1,082 yen
Amount capitalized as common Amount capitalized as common

acquisition rights and the amount capitalized as common stock

stock: 541 yenstock: 541 yen(Note 3)(Note 3)

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights
Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 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, 2029
From September 2, 2029 until September 1, 2030.

- 50 -

(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)
(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;- 51 -

(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.

(vii) Seventh Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 29, 2011)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

37 (Note 1)

37 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stock

Common stock
1,000 shares per one stockacquisition rightacquisition right

Number of shares represented by stock acquisition rights

37,000 shares (Note 2)

37,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 2, 2011 until
September 1, 2031

From September 2, 2011 until
September 1, 2031

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

Issue price: 879 yen
Issue price: 879 yen
Amount capitalized as common Amount capitalized as common
stock: 440 yen
stock: 440 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one stock acquisition right is 1,000 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 suchdate, the Company shall provide prompt notification or announcement thereafter.

- 52 -

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 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):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 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:- 53 -

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.

(viii) Eighth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 29, 2011)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

18 (Note 1)

18 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

18,000 shares (Note 2)

18,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 2, 2011 until
September 1, 2031

From September 2, 2011 until
September 1, 2031

Issue price: 879 yen

Issue price: 879 yen

Exercise period
Issue price for shares issued through the exercise of the stock

Amount capitalized as common Amount capitalized as common
stock: 440 yen
stock: 440 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one stock acquisition right is 1,000 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 the- 54 -

record 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, 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,(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:- 55 -

(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.

(ix) Ninth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2012)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

44 (Note 1)

44 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stock

Common stock
1,000 shares per one stockacquisition rightacquisition right

Number of shares represented by stock acquisition rights

44,000 shares (Note 2)

44,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 4, 2012 until
September 3, 2032

From September 4, 2012 until
September 3, 2032

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

Issue price: 800 yen
Issue price: 800 yen
Amount capitalized as common Amount capitalized as common
stock: 400 yen
stock: 400 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 shares.

- 56 -

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 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, 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):4

For 15 days from the day after the date of said approval.
(3) 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(3)

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:(4)

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:(2)- 57 -

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

(5)

(6)

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
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)

(7)
(8)

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.
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.

(9)

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

(x) Tenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2012)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

14 (Note 1)

14 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

14,000 shares (Note 2)

14,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 4, 2012 until

From September 4, 2012 until

September 3, 2032

September 3, 2032

Exercise period- 58 -

Issue price: 800 yen
Issue price: 800 yen
Amount capitalized as common Amount capitalized as common

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

stock: 400 yen

stock: 400 yen(Note 3)(Note 3)

Subject to the approval of the

Subject to the approval of theBoard of Directors

Board of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights
Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 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, 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 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 the- 59 -

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.

(xi) Eleventh Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2013)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

45 (Note 1)- 60 -

45 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

45,000 shares (Note 2)

45,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 3, 2013 until
September 2, 2033

From September 3, 2013 until
September 2, 2033

Issue price for shares issued through the exercise of the stock

Issue price: 919 yen
Issue price: 919 yen
Amount capitalized as common Amount capitalized as common

acquisition rights and the amount capitalized as common stock

stock: 460 yen

stock: 460 yen(Note 3)(Note 3)

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights
Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 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, 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 a- 61 -

wholly 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;(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 the- 62 -

(9)acquisition 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.

(xii) Twelfth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2013)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

25 (Note 1)

25 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

25,000 shares (Note 2)

25,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 3, 2013 until
September 2, 2033

From September 3, 2013 until
September 2, 2033

Issue price: 919 yen

Issue price: 919 yen

Exercise period
Issue price for shares issued through the exercise of the stock

Amount capitalized as common Amount capitalized as common
stock: 460 yen
stock: 460 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one stock acquisition right is 1,000 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- 63 -

(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, 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)
(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 approves- 64 -

of 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.

(xiii) Thirteenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2014)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

39 (Note 1)

39 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stock

Common stock
1,000 shares per one stockacquisition rightacquisition right

Number of shares represented by stock acquisition rights

39,000 shares (Note 2)

39,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 2, 2014 until
September 1, 2034

From September 2, 2014 until
September 1, 2034

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

Issue price: 938 yen
Issue price: 938 yen
Amount capitalized as common Amount capitalized as common
stock: 469 yenstock: 469 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one stock acquisition right is 1,000 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- 65 -

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)

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.

(4)

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:- 66 -

(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.

(xiv) Fourteenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2014)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

17 (Note 1)

17 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stock

Common stock
1,000 shares per one stockacquisition rightacquisition right

Number of shares represented by stock acquisition rights

17,000 shares (Note 2)

17,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 2, 2014 until
September 1, 2034

From September 2, 2014 until
September 1, 2034

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

Issue price: 938 yen
Issue price: 938 yen
Amount capitalized as common Amount capitalized as common
stock: 469 yenstock: 469 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 shares.

- 67 -

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 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, 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.

(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:- 68 -

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

(5)

(6)

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
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)

(7)
(8)

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.
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.

(9)

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

(xv) Fifteenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2015)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

37 (Note 1)

37 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

37,000 shares (Note 2)

37,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 2, 2015 until

From September 2, 2015 until

September 1, 2035

September 1, 2035

Exercise period- 69 -

Issue price: 1,420 yen
Issue price: 1,420 yen
Amount capitalized as common Amount capitalized as common

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

stock: 710 yen

stock: 710 yen(Note 3)(Note 3)

Subject to the approval of the

Subject to the approval of theBoard of Directors

Board of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights
Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 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, 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 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 the- 70 -

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.

(xvi) Sixteenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 31, 2015)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

12 (Note 1)- 71 -

12 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

12,000 shares (Note 2)

12,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 2, 2015 until
September 1, 2035

From September 2, 2015 until
September 1, 2035

Issue price for shares issued through the exercise of the stock

Issue price: 1,420 yen
Issue price: 1,420 yen
Amount capitalized as common Amount capitalized as common

acquisition rights and the amount capitalized as common stock

stock: 710 yen

stock: 710 yen(Note 3)(Note 3)

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights
Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1

The number of shares represented by one stock acquisition right is 1,000 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, 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 a- 72 -

wholly 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;(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 the- 73 -

(9)acquisition 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.

(xⅶ) Seventeenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 29, 2016)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

43 (Note 1)

43 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stockacquisition rightCommon stock
1,000 shares per one stockacquisition right

Number of shares represented by stock acquisition rights

43,000 shares (Note 2)

43,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

From September 2, 2016 until
September 1, 2036

From September 2, 2016 until
September 1, 2036

Issue price: 1,045 yen

Issue price: 1,045 yen

Exercise period
Issue price for shares issued through the exercise of the stock

Amount capitalized as common Amount capitalized as common
stock: 523 yenstock: 523 yenacquisition rights and the amount capitalized as common stock
Terms and conditions for exercising the stock acquisition rights
Matters related to transfer of the stock acquisition rights(Note 3)(Note 3)

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one stock acquisition right is 1,000 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- 74 -

(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,(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)
(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 approves- 75 -

of 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.

(xⅷ) Eighteenth Stock Acquisition Rights (resolved at the Board of Directors’ meeting held on July 29, 2016)
As of the end of Month
As of the end of Fiscal Year
Preceding the Filing Date
(March 31, 2017)(May 31, 2017)
Number of stock acquisition rights

26 (Note 1)

26 (Note 1)

Number of stock acquisition rights held by the Company－－

Class of shares represented by stock acquisition rights

Common stock
1,000 shares per one stock

Common stock
1,000 shares per one stockacquisition rightacquisition right

Number of shares represented by stock acquisition rights

26,000 shares (Note 2)

26,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share

One yen per share

Exercise period

From September 2, 2016 until
September 1, 2036

From September 2, 2016 until
September 1, 2036

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

Issue price: 1,045 yen
Issue price: 1,045 yen
Amount capitalized as common Amount capitalized as common
stock: 523 yenstock: 523 yen

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

Subject to the approval of theBoard of Directors

Subject to the approval of theBoard of Directors－－(Note 4)(Note 4)

Matters related to contributions of bonds upon exercise of thestock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts
(Note)

1
2

The number of shares represented by one stock acquisition right is 1,000 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- 76 -

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 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:- 77 -

(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.

(3) Status of Exercise of Bonds with Stock Acquisition Rights containing a Clause for Exercise Price Adjustment
Not applicable.
(4) Right Plans
Not applicable.
(5) Trends in the Total Number of Shares Issued, Common Stock, etc.
Changes in the
Balance of
Changes in
Total Number
Total Number
Commonof Sharesof Shares
Date
Stock
IssuedIssued(Millions of(Thousands of(Thousands ofyen)shares)shares)March 28, 2008
(Note)(Note)(3,900)143,378－

This decrease is due to the cancellation of shares held as treasury stock.

- 78 -

Balance ofCommonStock(Millions ofyen)

Changes in
Additional
Paid-in Capital(Millions ofyen)

Balance of
Additional
Paid-in Capital(Millions ofyen)

13,260－29,294

(6) Status of Shareholders
As of March 31, 2017
Status of Shares (1 unit = 1,000 shares)
Foreign Shareholders
Category

Shares under
One Unit(share)National and
Local
Governments

Financial
Institutions

Securities
Companies

Other
Corporations

Foreignshareholders
other than
individuals

Individuals

－

64

24

185

209

5

10,305

10,792－－

57,9182,168

27,52927,585927,425

142,634

744,085

－

40.61

1.52

19.30

19.34

0.01

19.22

100

－

Number ofshareholders

Individuals
and Other

Total

Number ofshares held
(units)Ratio (%)

(Note)Out of the treasury stock of 6,167,211 shares, 6,167 units are included under “Individuals and other,” and 211 shares of lessthan one share unit are included under “Shares under One Unit (share).”(7) Status of Major Shareholders
As of March 31, 2017

Name of Shareholder
The Bank of Tokyo-Mitsubishi UFJ,

Address

Number of Shares
held by Shareholder(Thousands of shares)

Shareholding
Ratio (%)

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

6,590

4.59

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

6,100

4.25

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

5,783

4.03

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

5,206

3.63

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

4,705

3.28

3,672

2.56

1-38, Hamamachi, Otsu-shi, Shiga

3,646

2.54

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

3,050

2.12

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

2,732

1.90

Asahi Kasei Corporation

1-105 Jimbocho Kanda Chiyoda-ku Tokyo

2,482

1.73

Total

──────

43,967

30.66

Ltd.
Meiji Yasuda Life Insurance Company
Japan Trustee Services Bank, Ltd. (Trust
Account)
The Master Trust Bank of Japan, Ltd.
(Trust Account)
The Bank of Kyoto, Ltd.

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 6,167 thousand shares of treasury stock, which are not listed in the above list of major
shareholders.

2

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

3

The substantial shareholding report dated July 8, 2016, 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 the Company’s shares
as of July 1, 2016. However, as we were unable to confirm the actual status of the shareholdings of these shareholders
as of the end of fiscal year 2017, 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:- 79 -Name of Shareholder

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

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

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

6,990

4.88

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

7,668

5.35

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

339

0.24

14,997

10.46

Total

(8) Status of Voting Rights(i) Shares Issued
As of March 31, 2017
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
6,167,000

Shares with full voting rights –treasury stock, etc.

Shares with full voting rights – otherCommon stock

136,467

136,467,000
Common stock

Shares less than one unit

unlimited standard
rights. The number ofshares constituting a unit
is 1,000.

－

744,085

Total number of shares issued

143,378,085

Total voting rights held by all
shareholders－

Same as above.

－

Same as above.

－－
136,467－(ii) Treasury Stock, etc.
As of March 31, 2017
Number of
Shares held under
Own Name

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

Name of
Shareholder

Address(Treasury stock)
Wacoal Holdings
Corp.

29 Nakajima-cho,
Kisshoin, Minamiku, Kyoto

6,167,000－

6,167,000

4.30

Total

－

6,167,000－

6,167,000

4.30- 80 -

Shareholding Ratio(%)

(9) Stock Option Plans
The Company issues stock acquisition rights under the stock option plans.
(i) First Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 30, 2008, in accordance with the provisions of theCompanies Act.
Date of resolution

July 30, 2008

Category and number of eligible recipients

Five Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

40,000

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock

Please see (2) Status of Stock Acquisition Rights above.

acquisition rights
Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(ii) Second Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 30, 2008, in accordance with the provisions of theCompanies Act.
Date of resolution

July 30, 2008

Category and number of eligible recipients

Five Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

17,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stockacquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

- 81 -

(iii) Third Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 30, 2009, in accordance with the provisions of theCompanies Act.
Date of resolution

July 30, 2009

Category and number of eligible recipients

Four Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

35,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stockacquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exercise－of the stock acquisition rights in lieu of cash payment
Matters related to the grant of stock acquisition rights
accompanying reorganization acts

Please see (2) Status of Stock Acquisition Rights above.

(iv) Fourth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 30, 2009, in accordance with the provisions of theCompanies Act.
Date of resolution

July 30, 2009

Category and number of eligible recipients

Four Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

14,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stockacquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

- 82 -

(v) Fifth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 30, 2010, in accordance with the provisions of theCompanies Act.
Date of resolution

July 30, 2010

Category and number of eligible recipients

Four Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

35,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stockacquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(vi) Sixth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 30, 2010, in accordance with the provisions of theCompanies Act.
Date of resolution

July 30, 2010

Category and number of eligible recipients

Three Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

11,000

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 83 -

(vii) Seventh Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 29, 2011, in accordance with the provisions of theCompanies Act.
Date of resolution

July 29, 2011

Category and number of eligible recipients

Five Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

48,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stockacquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(viii) Eighth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 29, 2011, in accordance with the provisions of theCompanies Act.
Date of resolution

July 29, 2011

Category and number of eligible recipients

Five Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

21,000

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 84 -

(ix) Ninth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2012, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2012

Category and number of eligible recipients

Five Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

53,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stockacquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(x) Tenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2012, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2012

Category and number of eligible recipients

Four Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 85 -

(xi) Eleventh Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2013, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2013

Category and number of eligible recipients

Five Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

52,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(xii) Twelfth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2013, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2013

Category and number of eligible recipientsSix Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 86 -

(xiii) Thirteenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2014, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2014

Category and number of eligible recipients

Five Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

46,000

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(xiv) Fourteenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2014, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2014

Category and number of eligible recipients

Five Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 87 -

(xv) Fifteenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2015, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2015

Category and number of eligible recipients

Five Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(xvi) Sixteenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 31, 2015, in accordance with the provisions of theCompanies Act.
Date of resolution

July 31, 2015

Category and number of eligible recipients

Four Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 88 -

(xⅶ) Seventeenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 29, 2016, in accordance with the provisions of theCompanies Act.
Date of resolution

July 29, 2016

Category and number of eligible recipients

Four Directors of the Company

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Exercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

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

Please see (2) Status of Stock Acquisition Rights above.

(xⅷ) Eighteenth Stock Acquisition Rights
This has been resolved at the Board of Directors’ meeting held on July 29, 2016, in accordance with the provisions of theCompanies Act.
Date of resolution

July 29, 2016

Category and number of eligible recipientsSix Directors of subsidiaries

Class of shares represented by stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Number of shares

Please see (2) Status of Stock Acquisition Rights above.

Amount to be paid upon exercise of stock acquisition

Please see (2) Status of Stock Acquisition Rights above.

rightsExercise period

Please see (2) Status of Stock Acquisition Rights above.

Terms and conditions for exercising the stock acquisitionrightsPlease see (2) Status of Stock Acquisition Rights above.

Matters related to transfer of the stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

Matters related to contributions of bonds upon exerciseof the stock acquisition rights in lieu of cash payment－

Matters related to the grant of stock acquisition rights

Please see (2) Status of Stock Acquisition Rights above.

accompanying reorganization acts

- 89 -

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 27, 2016)(Period for acquisition: From June 2, 2016 to September 30,
2,300,000
2016)

Total Amount (Yen)
3,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year

2,300,000

2,544,376,000

Total number of outstanding shares resolved and total amount－

455,624,000

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

－

15.1

Treasury stock acquired during the current period－－

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

Number of Shares(Shares)Category
Status of Resolution of Board of Directors (January 31, 2017)(Period for acquisition: From February 2, 2017 to February 28,
2017)

Total Amount (Yen)

1,400,000

2,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year

1,400,000

1,974,036,000

Total number of outstanding shares resolved and total amount－

25,964,000

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

－

1.2

Treasury stock acquired during the current period－－

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

Number of Shares(Shares)Category
Status of Resolution of Board of Directors (May 10, 2017)(Period for acquisition: From May 15, 2017 to December 31,
2017)

Total Amount (Yen)

2,800,000

4,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year－－

Total number of outstanding shares resolved and total amount－－Unexercised percentage as of the end of the current fiscal year
(%)

－

－

Treasury stock acquired during the current period

－

－

100.0

100.0

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

Treasury stock acquired during the current period does not include shares constituting less than one full unit purchased
during the period from June 1, 2017, to the filing date of this report.

- 90 -

(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 year
Treasury stock acquired during the current period(Note)

2,861

3,412,271

230

321,805

Treasury stock acquired during the current period does not include shares constituting less than one full unit purchased
during the period from June 1, 2017, to the filing date of this report.

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

Current Fiscal Year

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

－

－

－

－

Acquired treasury stock that was canceled

－

－

－

－

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

－

－

－

－

55,00063,571,000－－

Other (Note 2)
Number of shares of treasury stock held
(Note)

1

2

6,167,211－

6,167,441－

Number of shares of treasury stock held during the current period does not include shares acquired by resolution ofBoard of Directors or shares constituting less than one full unit purchased or sold during the period from June 1,
2017, to the filing date of this report.
Number of shares and total disposition amount for the current fiscal year under “Other” category were related to theexercise of stock acquisition rights.

- 91 -

3. 【Dividend Policy】
Our basic policy on profit distribution to shareholders is to make stable distributions based on consideration of ourconsolidated performance, while seeking to increase our enterprise value through active investment aimed at higher profitability
and to increase net income per share.
Based on such policy, we plan to distribute the year-end dividend of 36 yen per share as a distribution of earnings for thecurrent 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 investing in 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 tobenefit our shareholders by improving future profitability. We also intend to flexibly acquire treasury stock, and we will try to
improve capital efficiency and return profits to our shareholders.
In addition, although we have paid only year-end dividends so far, in order to enhance the opportunity to return profits to theCompany’s shareholders, our Articles of Incorporation have been amended to authorize the Company to make interim dividends
as stipulated in Paragraph 5, Article 454 of the Companies Act, by a resolution of the 69th Ordinary General Meeting of
Shareholders held on June 29, 2017.
Accordingly, our basic policy is to distribute earnings twice a year in the form of interim and year-end dividends and the Boardof Directors is the decision-making body for distribution of earnings.
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)

May 10,2017
Resolution of Board of Directors’ meeting

4,939

36.00

4. 【Changes in Share Prices】(1) Highest and Lowest Share Prices in each of the Recent Five Fiscal Years
Fiscal Year

65th

66th

67th

68th

69th

Year EndMarch 2013

March 2014

March 2015

March 2016

March 2017

Highest (yen)

1,056

1,128

1,471

1,768

1,463

Lowest (yen)

842

938

992

1,220

970

(Note)The share prices are market prices on the first section of the Tokyo Stock Exchange.

(2) Highest and Lowest Share Prices in each of the Recent Six Months
Month

October 2016

November 2016

December 2016

January 2017

February 2017

March 2017

Highest (yen)

1,228

1,329

1,405

1,411

1,463

1,443

Lowest (yen)

1,126

1,165

1,307

1,316

1,392

1,374

(Note)The share prices are market prices on the first section of the Tokyo Stock Exchange.

- 92 -

5. 【Directors and Audit & Supervisory Board Members】
Male:

11 persons

Female: 1 persons (which accounted for 8.3% 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)President andRepresentative
Director

Yoshikata
TsukamotoJan. 29, 1948

Apr. 1972

Joined the Company

Nov. 1977

Director

Nov. 1981

Managing Director

Sep. 1984

Executive Vice President

Sep. 1984

Representative Director (acting)Jun. 1987

President and Director (acting)Jun. 2002

Corporate Officer

Oct. 2005

Representative Director and President, and Corporate

Apr. 2011

Officer of Wacoal Corp.
Representative Director and Chairman of Wacoal Corp.

Note 1

939

Note 1

15

Note 119(acting)
Dec. 2012

Representative Director, Chairman, and President of
Peach John C o., Ltd.

Jan. 2014

Representative Director and Chairman of Peach John
Co., Ltd.

Jun. 2015

Chairman of Peach John Co., Ltd.

Mar. 1975

Joined the Company

Sep. 1996

Deputy General Manager of Guandong Wacoal Inc.

Apr. 1997

General Manager of Wacoal China Co., Ltd.

Apr. 2004

Chief of Planning & Product Group of Wing Brand
Business Department

Apr. 2005

Corporate Officer/General Manager of Wing Brand
Business Department

Director and Vice

Hironobu

President

Yasuhara

Dec. 28, 1951

Apr. 2006

Executive Corporate Officer and General Manager ofWing Brand Business Department of Wacoal Corp.

Jun. 2006

Director and Executive Corporate Officer, and General
Manager of Wing Brand Business Department , of
Wacoal Corp.

Apr. 2008

Director and Senior Corporate Officer, and General
Manager of Wing Brand Business Department , of
Wacoal Corp.

Apr. 2010

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

Apr. 2011

Representative Director and President, Corporate
Officer of Wacoal Corp. (acting)Jun. 2011

Director

Jun 2013
Jun 2016

Senior Managing Director
Director and Vice President (acting)Apr. 1979

Joined the Company

Apr. 2004

Group Chief of Business Administration of Direct
Retail Operation Division of Wacoal Corp

Director and Vice
President

MasayaWakabayashi

Apr. 2008

General Manager of Corporate Planning

Apr. 2010

Corporate Officer, Chief of Corporate Planning of
Wacoal Corp.

Jan. 6, 1956

Apr. 2011

Director, Corporate Officer, Chief of Corporate
Planning of Wacoal Corp.

Apr. 2013

Director, Managing Corporate Officer, Chief ofCorporate Planning of Wacoal Corp.

Apr. 2014

Director, Managing Corporate Officer, Supervisor of
Administration of Wacoal Corp.

Jun. 2014

Managing Director and Supervisor of Group Business
Management

Jun 2016

Director and Vice President and Supervisor of Group
Business Management (acting)- 93 -

Apr. 1981
Apr. 2006

Joined the Company
Business Administration Manager of Wing Brand
Operation Division of Wacoal Corp.

Apr. 2011

Corporate Officer and Manager of Personnel Divisionof Wacoal Corp.

Apr. 2013

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

Apr. 2014
Managing
Director

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

Masashi
Yamaguchi

Nov 26, 1957

Apr. 2015

Wacoal Corp.
Director and Senior Managing Corporate Officer inNote 1

4Note 1

3Note 1－

Note 1－charge of Administration, and General Manager of
Personnel and Administration Division of Wacoal Corp.
(acting)
Jun. 2015

Director in charge of Personnel and Administration(acting)

Apr. 2017

Representative Director and Vice President, andCorporate Officer of Wacoal Corp. and General
Manager of Personnel and Administration Division of
Wacoal Corp. (acting)Jun. 2017Managing Director in charge of Personnel and
Administration (acting)Director

Atsushi Horiba

Feb. 5, 1948

Sep. 1972

Joined HORIBA, Ltd.

Jun. 1982

Director and General Manager of Overseas Business ofJun. 1988

HORIBA, Ltd.
Senior Managing Director and General Manager ofSales Division of HORIBA, Ltd.

Jan. 1992

Representative Director and President of HORIBA, Ltd.

Jun. 2005

Representative Director, C hairman and President of
HORIBA, Ltd. (acting)Jun. 2008

Director (acting)

Aug. 1996

Launched and organized monthly haiku magazine
Gekkan HepburnJan. 2001

Member of “National Language Subdivision” ofCouncil for Cultural Affairs, Ministry of Education,
Culture, Sports, Science and Technology

Dec. 2004
Director

MadokaMayuzumi

Jul. 31, 1962

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

May. 2013

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

Apr. 2014

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

Apr. 2014

Advisor

Jun. 2015

Director (acting)Nov. 1979

Joined TOSE Software Co. Ltd.
Development Manager

Director

Shigeru
Saito

Jan 26, 1957

Oct. 1985

Director

Feb. 1987

Representative Director and President

Sep. 2004

Representative Director and President, and CEO

Dec. 2015

Representative Director and Chairman, and CEO(acting)Standing Audit &Supervisory
Board Member

TomokiNakamura

Jan 22, 1958

Jun. 2017

Director of the Company (acting)Apr. 1980

Joined the Company

Oct. 2007

Accounting Manager of Wacoal Corp.

Apr. 2008

Accounting Manager

Apr. 2012

Audit & Supervisory Board Member/Secretariat ofBoard of Audit & Supervisory Board Members

Jun. 2012

Audit & Supervisory Board Member (acting)- 94 -

Note 579

Apr. 1981

Joined the Company

Apr. 2008

Materials Control Manager of Technology/Production
Division of Wacoal Corp.

Standing Audit &Supervisory
Board Member

Kiyotaka
Hiroshima

Jan 4, 1958

Apr. 2009

Production Control Manager of Technology/Production
Division of Wacoal Corp.

Apr. 2010

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

Apr. 2011

Note 46Note 313

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

Apr. 2015

Director and Corporate Officer, in charge ofTechnology/Production Division of Wacoal Corp.
(acting)

Audit &
Supervisory
Board Member

Akira
Katayanagi

Feb. 4, 1946

Jun. 2015

Audit & Supervisory Board Member (acting)Apr. 1968

Joined Mitsubishi Bank Ltd.

Jun. 1995

Director and Manager of Loan Department 1

Apr. 1996

Director of The Bank of Tokyo-Mitsubishi, Ltd.

Feb. 2000

Managing Director and Deputy Branch Manager of

May 2001

Nihonbashi BranchManaging Director and Deputy Branch Office Manager
of Osaka Branch OfficeJun. 2003

Representative Director and President of DC Card Co.,Ltd.

Apr. 2007

Representative Director and Vice President of
Mitsubishi UFJ NICOS Co., Ltd.

Jun. 2008

Representative Director and Chairman of Mitsubishi
UFJ NICOS Co., Ltd.

Jun. 2010

Audit & Supervisory Board Member (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

Audit &
Supervisory

Public Accountants Kinki Chapter
Hiroshi ShiraiOct. 21, 1953

Board Member

Sep. 2011

Left Deloitte Touche Tohmatsu

Oct. 2011

Established Shirai public accounting firm, Managing
Partner (acting)Jun. 2013

Resigned from position as Vice Chairman of The

Note 4

1

Japanese Institute of Certified Public Accountants Kinki
Chapter

Audit &
Supervisory
Board Member

Mitsuhiro
Hamamoto

Apr. 18, 1970

Jun. 2015

Audit & Supervisory Board Member (acting)Oct. 2000

Admitted to the Bar

Oct. 2000
Oct. 2004

Joined the Law Office of Tadashi Yamada
Joined the Kikkawa Law Office

Oct. 2008

Partner at the Kikkawa Law Office (acting)Jun. 2017

Audit & Supervisory Board Member of the Company

Note 6－(acting)
Total(Note)

1
2
3
4
5
6
7

1,079

The term of office of a Director is one year from the conclusion of the Ordinary General Meeting of Shareholders heldon June 29, 2017.
Directors Messrs. Atsushi Horiba, Ms. Madoka Mayuzumi and Mr. Shigeru Saito 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 27, 2014.
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 26, 2015.
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 29, 2016.
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 29, 2017.
Audit & Supervisory Board Members Mr. Akira Katayanagi, Mr. Hiroshi Shirai, and Mr. Mitsuhiro Hamamoto are
Outside Audit & Supervisory Board Members.

- 95 -

6【Corporate Governance, etc.】(1) 【Status of Corporate Governance】
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.
(i)

System of Corporate GovernanceA.

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 seven Directors (including three Outside Directors) and one of them isfemale. Their roles are to supervise and make business judgments from an objective perspective. We have been working toenhance 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 respond promptly 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
Board of Directors’ meeting from time to time, as necessary, in accordance with the rules of the Board of
Directors, to make decisions on matters concerning important business, such as management policy andmanagement 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 Audit & Supervisory
Board 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.
With respect to the nomination, promotion, and remuneration of Directors, an “Executive Compensation
Advisory Committee” which is chaired by Managing Director and Supervisor of Group Business Management andwhich consists of five members (including an Outside Director) and one secretariat, has been established. The
Executive Compensation Advisory Committee discusses about the nomination, promotion and remuneration of
Directors, and reports the resolved matters to the President and Representative Director. This Committee operates
with a high degree of transparency and fairness by holding a meeting four times a year and by resolving matters by
the unanimous approval of all members.
The following diagram illustrates the outline of our corporate governance system:- 96 -

As of June 29, 2017
<General Meeting of Shareholders><Audit &Supervisory Board>
Audit & Supervisory
Board Members: 2
Outside Audit &Supervisory Board
Members: 3<Board of Directors>
Directors: 4
Outside Directors: 3
Audit & Supervisory
Board Members: 5<Group Management
Meeting>
Directors: 4
Audit & Supervisory
Board Members: 2

President<Meeting of Independent
Outside Officers>
Outside Directors: 3
Outside Audit & Supervisory Board
Members: 3<Group Strategy
Committee>
Directors: 4
Audit & Supervisory Board
Members: 2
Representatives of major
business companies andbusiness departments

Audit OfficeBusiness Companies

Business Companies

Business Companies

Business Companies

Corporate Ethics Risk
Management Committee

Corporate Ethics hotline

Compliance Committee- 97 -

Executive Compensation
Advisory Committee

Accounting Auditors<Quarterly Business Results
Review Committee>
Directors: 7
Audit & Supervisory Board
Members: 5
Representatives of eachbusiness company and eachbusiness department

Secretariat Office for
Audit & Supervisory
Board

B.

Reason for Adoption of Corporate Governance System
We, as a holding company, believe that our governance system using a “Board of Directors system” and thecompany with board of company auditors including Outside Audit & Supervisory Board Member to make decisions is themost effective in ensuring the corporate governance within our group companies, and auditing and supervising theoperations of each of our group companies for the purpose of actualizing and maintaining a high-quality management for the
benefit of all stakeholders, including our shareholders and customers. The “Board of Directors system” consists of Directors
who are experts in each business area and who receive advice from Outside Directors in terms of an objective andindependent perspective based on their long career and extensive professional knowledge and the “Audit & Supervisory
Board Member system,” consists of five Audit & Supervisory Board Members including Outside Audit & Supervisory
Board Members. For the foregoing reason, we have adopted our current governance system.

C.

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(“the Wacoal Group”) comply with laws and regulations and the Articles of Incorporation and conduct businessbased on sound social norms, we have enacted the Wacoal Code of Ethics and the Corporate Ethics: Wacoal--

Standards of Conduct.
In order to improve our system of compliance and consider any compliance issues which may have a material impact
on the Wacoal Group, we have established a Corporate Ethics Committee, which seeks to increase enlightenment ofand educate employees about corporate ethics. Our President and Representative Director acts as the chairperson,and our legal/compliance department is in charge of the committee.
We have established a system under which our legal/compliance department is promptly notified if the fact that a
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 (a corporate ethics hotline). After being notified and/or alerted, the legal/compliance department
conducts an investigation and formulates preventive measures after discussions with the related department. If theissue is critical, the legal/compliance department will refer the matter to the Corporate Ethics Committee and willreport 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, officers and employees shall firmly
refuse to comply with demands of antisocial forces. In order to handle unjust demands of antisocial forces, we
cooperate with outside specialized institutions, collect and/or control information related to antisocial forces and arebuilding an internal 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 andAudit & 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-

our risk management system, we have established a Risk Management Committee, for which the Director in chargeof risk management acts as chairperson. The Management Planning Department shall act as the organizer.
The Risk Management Committee prescribes risk management rules, subject to the approval of the Board of
Directors, which form the basis for our risk management system. The Risk Management Committee clarifies the- 98 -

-

responsibilities by risk category pursuant to these rules, and formulates a risk management system that thoroughly
and/or comprehensively controls potential risk within the Wacoal Group.
The 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 made by our Directors, we will appoint several 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 areconsistent 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 measures in the event
targets are not achieved, and review such targets, as may be necessary.

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

We have enacted and managed our group companies in accordance with our Group Management Rules, whichprescribe basic policies regarding the management of group companies and matters to be decided by the Board of
Directors, as well as matters to be reported to the Company.
We conduct any inter-company 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 ourcompliance system and risk management system, within the group companies and the audit office will report theresults of its audits to the Board of Directors and appropriate departments, and will give guidance and/or advice on
system formulation to group companies to ensure the appropriate conduct of business.

-

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 in major subsidiaries.

-

Our foreign subsidiaries will comply with the laws and regulations of their respective home countries and will adopt
a system 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
the duties of the Audit & Supervisory Board Members.
Such assistants shall be full-time employees and the Audit & Supervisory Board Members will be consulted
regarding the appointment, evaluation, relocation and discipline of such assistants as well as other related matters,
and their opinions will be respected to ensure the effectiveness and independence of such assistants.
(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 becomeaware of a material fact that violates the applicable laws and regulations and/or our Articles of Incorporation,
misconduct or a 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-aware of a material fact that violates the applicable laws and regulations and/or our Articles of Incorporation,
misconduct or a fact that may cause significant damage to any company of the Wacoal Group. Any employee who
makes such report will 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 internal audits
The condition of our internal reporting to our internal/alerting system
Other significant matters- 99 -

(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 management.
--

The Audit & Supervisory Board Members may order employees who belong to the audit office to perform any
matters that are required to provide audit services. In addition, the Audit & Supervisory Board Members may
request that the Company reimburse expenses incurred in performing their duties.
Audit & Supervisory Board Members will attend meetings of the Board of Directors and may also attend otherprimary 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 andmatters reported 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 have established an internal alerting system through an outside law office from September 2016.
In order to further effectively pursue corporate ethics and risk management, we consolidated the Risk Management
Committee and the Corporate Ethics Committee in April, 2017 to create the Corporate Ethics and Risk Management

Committee.
(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 theDocument 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 Risk Management Committee assessed risks, monitored the implementation of measures taken, and reported to
the Board of Directors on a quarterly basis.
(System to Ensure Effective Execution of Duties by Directors)--

We engage in highly transparent decision-making by appointing three independent Outside Directors among ourseven Directors. In addition, “Criteria for Appointment of Officers” and “Criteria for Appointment of Outside
Officers (to ensure independence)” were newly stipulated in April, 2015.
We discussed and drafted Wacoal Group’s plan which is during fiscal year 2018.
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.

(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.

- 100 -

(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 conducted hearings with the Directors and visited our domestic andoverseas subsidiaries to conduct audits. In addition, the Audit & Supervisory Board Members presided at “Audit &-D.

Supervisory Board Group Meetings” and received periodic reports from the audit & supervisory board members ofthe domestic subsidiaries.
The Audit & Supervisory Board Members have, regularly and whenever necessary, exchanged information andopinions with the Accounting Auditor and the audit office.

Status of Accounting Audit

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. There are no special
relationships between the Company and the said accounting firm and any of their partners who have been engaged in theaudit of the Company. Also, the said accounting firm takes precautionary measures not to have any of its engagement
partners participate in the audit of the Company for any longer period than the prescribed maximum period. The names of
the certified public accountants who were engaged in the audit of the Company and the composition of the assistants for theaudit services for this fiscal period are as follows:

Names of the certified public accountants who were engaged in the audit:
Designated Limited Liability Partners and Managing Members: Fumihiko Kimura, Hiroaki Sakai,
Seiichiro NakashimaComposition of the assistants for the audit services:
13 certified public accountants, nine persons who passed the certified public accountant
examination and 13 other persons
E.

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

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 theCompanies Act (including the matters concerning distribution of earnings) shall be determined by a resolution of the Boardof Directors, unless otherwise provided for in any laws or regulations, for the purpose of performing an expeditious profit

return to our shareholders.
H. Requirement for Appointment of Directors
Our Articles of Incorporation prescribe that resolutions to appoint Directors shall be made by a majority vote of
the voting rights of shareholders present at a General Meeting of Shareholders, where such shareholders present shall holdshares 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.

- 101 -

I.

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.

(ii)

Status of Audit & Supervisory Board Members and Internal Audit Department
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, and other matters. We
have implemented an audit system allowing the sharing of documents and information necessary for audit so that audit
working papers are mutually exchanged and confirmed by our Audit & Supervisory Board Members and audit office, andthe audit can be performed more efficiently and effectively through alliance between our Audit & Supervisory Board
Members and audit office.
The number of staff of our internal audit department (audit office) as of June 29, 2017, was 8.
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 a meeting from time to time as necessary.
Standing Audit & Supervisory Board Member Mr. Tomoki Nakamura has many years of accounting experience at
our Accounting Department with a respectable degree of finance and accounting knowledge. Also, Audit & Supervisory
Board Member Mr. Hiroshi Shirai is qualified as a certified public accountant with a considerable degree of finance andaccounting knowledge as well.

(iii)

Outside Directors and Outside Audit & Supervisory Board Members
We have three Outside Directors and three Outside Audit & Supervisory Board Members.
We have elected those persons having experiences in corporate management who excel in domestic and/or
overseas business development and persons playing an active role in the field of arts and culture in Japan and overseas to our
Outside Directors, and each of such persons takes a role in improving the appropriateness of the decision made by the Boardof Directors by giving objective and independent advice based on their long careers in each business area and extensive
professional knowledge. Also, we have elected 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 financeand accounting knowledge independently from us, to our Outside Audit & Supervisory Board Members. Each Outside
Audit & Supervisory Board Member conducts a strict audit on the legality of 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 or an Outside Audit & Supervisory Board Member, Executive
Compensation Advisory Committee nominates a candidate based on the following criteria for submission to a meeting ofshareholders as an agenda 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;
- 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 abalanced knowledge, experience and expertise that ensures diversity;
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;- 102 -

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 suchas 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 of our group; 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.
Each one of our Outside Directors and two of our Outside Audit & Supervisory Board Members hold 3,000 and
14,000 shares of 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.
The reasons for the election of our Outside Directors and Outside Audit & Supervisory Board Members are as
follows:
Title

Name

Outside Director

Atsushi Horiba

Reasons for Election
He has wide experience and knowledge with domestic and overseas
business deployment. We believe that he is qualified to be an
Outside Director of the Company that is aiming to further strengthen
the overseas business deployment.
Also, because he meets the eligibility requirements which theCompany prescribes under “Criteria for Appointment of Outside
Officers (to ensure independence)” and because there are noconcerns that any conflict of interest with general shareholders may
arise, we have designated him as an independent officer.

Outside Director

Madoka Mayuzumi

Ms. Mayuzumi plays an active role as a haiku poet in the field ofarts and culture in Japan and overseas. While serving as Advisor of
the Company from April 2014, she has provided advice that
addresses social challenges and educational training for employeesof the Company and Wacoal Corp. We expect that, with her
knowledge and experience, she will contribute to the Company’s
management which respects diversity.
- 103 -

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 believethat she will be able to perform her duties appropriately for theabove-stated reasons.
Also, because she meets the eligibility requirements which theCompany prescribes under “Criteria for Appointment of Outside
Officers (to ensure independence)” and because there are noconcerns that any conflict of interest with general shareholders may
arise, we have designated her as an independent officer.
Outside Director

Shigeru Saito

Mr. Saito currently serves as the Representative Director andChairman at another company, and has many years of experienceand knowledge as a business manager. We believe that he isqualified to be an Outside Director to further strengthen the
supervisory function of the Company management.
Also, because he meets the eligibility requirements which theCompany prescribes under “Criteria for Appointment of Outside
Officers (to ensure independence)” and because there are noconcerns that any conflict of interest with general shareholders may
arise, we have designated him as an independent officer.

Outside Audit &Supervisory Board

Akira Katayanagi

MemberMr. Katayanagi has many years of experience in the financial
industry, and we believe that he is qualified to be an Outside Audit& Supervisory Board Member, with his extensive experience andknowledge in different business fields.
Also, because he meets the eligibility requirements which theCompany prescribes under “Criteria for Appointment of Outside
Officers (to ensure independence)” and because there are noconcerns that any conflict of interest with general shareholders may
arise, we have designated him as an independent officer.

Outside Audit &Hiroshi Shirai

Supervisory Board
MemberWe believe that Mr. Shirai is qualified to be our Outside Audit &Supervisory Board Member, as he has knowledge and experience inaccounting and finance (including U.S. accounting standards) as acertified public accountant.
Mr. Shirai worked at Deloitte Touche Tohmatsu LLC, our
accounting auditor, from August 2007 to September 2011, but hewas never involved in the audit services engaged for the Company
during such period. It has been five years and eight months since
Mr. Shirai left Deloitte Touche Tohmatsu LLC.
Also, because he meets the eligibility requirements which theCompany prescribes under “Criteria for Appointment of Outside
Officers (to ensure independence)” and because there are noconcerns that any conflict of interest with general shareholders may
arise, we have designated him as an independent officer.

Outside Audit &Supervisory Board
MemberMitsuhiro Hamamoto

We believe that Mr. Hamamoto is qualified to be our Outside Audit& Supervisory Board Member, as he has legal knowledge and great
store of experience of business and commercial issues as an attorneyat law.
Also, because he meets the eligibility requirements which theCompany prescribes under “Criteria for Appointment of Outside
Officers (to ensure independence)” and because there are noconcerns that any conflict of interest with general shareholders may
arise, we have designated him as an independent officer.

- 104 -

(iv) Details of Remunerations Paid to Officers
A. Aggregate amount of remunerations, etc., paid to each category of officers, aggregate amount of remunerations, etc., bytype thereof, as well as the number of relevant officers:
Number of
Aggregate
Aggregate Amount of Remunerations, etc., by Type Thereof
Relevant
Amount of(Millions of yen)
Officers
Category of Officers
Remunerations,etc. (Millions of
Basic
Retirement
Stock Option
Bonus
yen)
Remuneration
Allowance
Directors(Excluding Outside
286
190
46
49
－
5
Directors)
Audit & Supervisory Board
Members(Excluding Outside Audit &
35
35
－
－
－
2
Supervisory Board
Members)
Outside officers(Note)

B.

46

－

－

－

6

As of March 31, 2017, 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 68th Ordinary General
Meeting of Shareholders held on June 29, 2016.

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., by Type
Aggregate
Thereof (Millions of yen)Amount ofConsolidated
Category of
Relevant
Name
Remunerations
Officers
Company
Basic
Retirement, etc.
Stock Option
Bonus
Remuneration
Allowance(Millions ofyen)
Yoshikata
TsukamotoC.

46

Director

WacoalHoldings
Corp.

109

24

25

－

Director

Wacoal Corp.

24

－

－

－

183

Details and Method of Determination of Policies for Determination of Amount of Remunerations, etc., Paid to Officers or
Method of Calculating such Amount
Our compensation system for officers is designed by the “Executive Compensation Advisory Committee,” whose
members include an Outside Director, and therefore, such system is highly objective and transparent.
The remunerations paid to Directors under said system consists of “Basic Remuneration,” the amount of which isfixed, and “Bonus,” which is linked to the business results of each fiscal year, as well as “Stock Option,” which is linked tomedium- and long-term business results. In the case of Outside Directors and Audit & Supervisory Board Members who
shall be in the position independent from the management, only “Basic Remuneration” is paid because any remuneration
linked to business results are not appropriate in such case.
The level of remuneration has been set according to the business results and scale of the Company, compared withother companies within the same industry or of the same scale.
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. The amount of bonuses was determined to be such amount as is determinedaccording to the business results of each fiscal year, which was resolved at each Ordinary General Meeting of Shareholders
held for the relevant year. Further, the maximum 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.
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.

- 105 -

(v)Information on Shareholdings
The status of the shareholding by the Company is as follows:A.

Equity securities held for purposes other than pure investment (including unlisted shares):
Number of stock names:
Three stock names
Total amount recorded on the balance sheet:
6 million yen

B.

Segments, stock names, number of shares, amount recorded in the balance sheet, and purpose of holding of listed equity
securities held for purposes other than pure investment are as follows:
Fiscal Year 2016
Specified investment stocks:
Amount Recorded in
Number of Shares
Stock Name
the Balance Sheet
Purpose of Holding(shares)(Millions of yen)

The Dai-ichi Life Insurance Company,
Limited2,100

2Number of Shares(shares)Amount Recorded in
the Balance Sheet(Millions of yen)

2,100

4

Maintaining and enhancing business
transactions

Fiscal Year 2017
Specified investment stocks:
Stock NameThe Dai-ichi Life Insurance Holdings,
Inc.
(Note)

Purpose of Holding
Maintaining and enhancing business
transactions

The foregoing table shows the information of one of the specified investment stocks held by the Company, although theamount recorded in the balance sheet as to such investment stocks is not more than one-hundredth of the stated capital of
the Company.

C.

Total amount recorded in the balance sheet for the fiscal year 2015 and the fiscal year 2016, as well as the amount ofdividends received, the gain/loss on sale, and the valuation gain/loss for fiscal year 2016 of equity securities held forpure investment are as follows:
N/A.

D.

Stock names, number of shares, and the amount recorded in the balance sheet of equity securities, the purpose of holdingof which has been changed from pure investment to any other purpose other than pure investment:
N/A.
Stock names, number of shares, and the amount recorded in the balance sheet of equity securities, the purpose of holdingE.

of which has been changed from any other purpose other than pure investment to pure investment:
N/A.

- 106 -

We are a holding company. The status of the shareholding by Wacoal Corp., the amount recorded in the balance sheet of
equity securities (i.e., the balance sheet amount of investment stocks) for which is the largest among the Company and ourconsolidated subsidiaries, is as follows:
A.

B.

Equity securities held for purposes other than pure investment (including unlisted shares):
Number of stock names:
107 stock names
Total amount recorded in the balance sheet:
58,666 million yen
Segments, stock names, number of shares, amount recorded in the balance sheet, and purpose of holding of those listed
equity securities held for purposes other than pure investment of which the amount recorded in the balance sheet is morethan one-hundredth of the stated capital of the Company are as follows:
Fiscal Year 2016
Specified investment stocks:
Number of Shares(Shares)Amount Recorded in
the Balance Sheet(Millions of yen)

3,520,500

10,582575,100

3,042

1,531,017

2,489

Kyocera Corporation

445,900

2,210

Maintaining and enhancing transactions

Bank of Kyoto, Ltd.

2,849,985

2,091

Maintaining steady financial transactions

Kokuyo Co., Ltd.

1,509,400

1,987

Maintaining and enhancing transactions

Aeon Financial Service Co., Ltd.

687,300

1,825

Isetan Mitsukoshi Holdings Ltd.

1,315,769

1,730

Mitsubishi UFJ Financial Group, Inc.

2,885,850

1,504

Maintaining steady financial transactions

Shimadzu Corporation

825,000

1,456

Maintaining and enhancing transactions

Heiwado Co., Ltd.

517,531

1,208

Taisho Pharmaceutical Holdings Cp.,
Ltd.

132,000

1,177

2,312,040

1,095

Maintaining steady financial transactions

Tokio Marine Holdings, Inc.

274,000

1,041

Maintaining steady financial transactions

SCREEN Holdings Co., Ltd

1,085,898

966

Horiba, Ltd.

230,000

966

Shiseido Co., Ltd.

383,000

962

Maintaining and enhancing transactions

Takara Holdings Inc.

1,000,000

927

Maintaining and enhancing transactions

Ezaki Glico Co., Ltd.

159,500

920

J. Front Retailing Co., Ltd.

541,388808

Toppan Printing Co., Ltd.

852,000

804

Maintaining and enhancing transactions

Chori Co., Ltd.

548,890799

Maintaining and enhancing transactions

Stock NameKDDI Corporation
Nissin Foods Holdings Co., Ltd.
Aeon Co., Ltd.

Shiga Bank, Ltd.

- 107 -

Purpose of Holding
Maintaining and enhancing transactions
Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment
Maintaining and enhancing business
transactions

Maintaining and enhancing business
transactions
Maintaining and enhancing business
transactions

Maintaining and enhancing business
transactions
Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment

Maintaining and enhancing regional
economy relationship
Maintaining and enhancing regional
economy relationship

Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment
Maintaining and enhancing business
transactions

Maintaining and enhancing regional
economy relationship
Maintaining and enhancing business
transactions

Nippon Shinyaku Co., Ltd.

175,000

770

Seven & i Holdings Co., Ltd.

154,939742

Mitsubishi UFJ Lease & Finance
Company Limited

1,320,000

652

Ono Pharmaceutical Co., Ltd.

130,000

619

Aoyama Trading Co., Ltd.

141,500

611

H2O Retailing Corporation

310,759603

1,022,000

561

Maintaining and enhancing transactions

Tokyo Broadcasting System Holdings,
Inc.

310,700

541

Maintaining and enhancing transactions

NTT DoCoMo, Inc.

209,200

533

Maintaining and enhancing transactions

Odakyu Electric Railway Co., Ltd.

395,000

483

Maintaining and enhancing business
transactions

Asahi Kasei Corporation

598,195

455

Maintaining and enhancing transactions

Hisamitsu Pharmaceutical Co., Inc.

90,000452

Maintaining and enhancing transactions

Hankyu Hanshin Holdings, Inc.

601,000

431

Maintaining and enhancing business
transactions

Saha Pathana Inter-Holding PCL

4,940,000

382

Maintaining and enhancing transactions

Autobacs Seven Co., Ltd.

188,400

357

Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment

Chuo Warehouse Co., Ltd.

381,300

356

Maintaining and enhancing transactions

Seino Holdings Co., Ltd.

283,000

343

Maintaining and enhancing transactions

Yomeishu Seizo Co., Ltd.

170,500

337

Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment

Onward Holdings Co., Ltd.

435,000

334

Strategic information sharing

I.C.C INTERNATIONAL PCL

2,677,300

328

Maintaining and enhancing transactions

Kintetsu Department Store Co., Ltd.

1,000,000

302

Maintaining and enhancing business
transactions

Sanyo Shokai Ltd.

1,000,000

256

Strategic information sharing

Marui Group Co., Ltd.

151,487244

Maintaining and enhancing business
transactions

Nissha Printing Co., Ltd.

147,000

242

Maintaining and enhancing transactions

Nichikon Corporation

296,500232

IZUMI Co., Ltd.

45,648221

Matsuya Co., Ltd.

205,000212

TSI Holdings Co., Ltd.

216,645

162

Strategic information sharing

Fuji Company, Limited

62,600145

Maintaining and enhancing business
transactions

Fukuyama Transporting Co., Ltd.

- 108 -

Maintaining and enhancing transactions
Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment
Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment
Maintaining and enhancing business
transactions

Maintaining and enhancing regional
economy relationship
Maintaining and enhancing business
transactions
Maintaining and enhancing business
transactions

Stocks deemed to be held:
Number of Shares(Shares)Amount Recorded in
the Balance Sheet(Millions of yen)KDDI Corporation

2,544,000

7,647

Mitsubishi UFJ Financial Group, Inc.

3,365,000

1,754

Stock Name

(Note)

Details of Rights
Authorization to give directions on theexercise of voting rights as toretirement benefit trust agreement
Authorization to give directions on theexercise of voting rights as toretirement benefit trust agreement

In specifying the major stock names in light of the amount recorded in the balance sheet, specified investment stocks andstocks deemed to be held have not been combined.
Fiscal Year 2017
Specified investment stocks:
Stock NameKDDI Corporation

Number of Shares(Shares)Amount Recorded in
the Balance Sheet(Millions of yen)

3,520,500

10,286

Maintaining and enhancing transactions

Purpose of Holding

Nissin Foods Holdings Co., Ltd.

575,100

3,548

Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment

Kyocera Corporation

445,900

2,765

Maintaining and enhancing transactions

Aeon Co., Ltd.

1,535,261

2,494

Maintaining and enhancing business
transactions

Bank of Kyoto, Ltd.

2,849,985

2,311

Maintaining steady financial transactions

Kokuyo Co., Ltd.

1,509,400

2,165

Maintaining and enhancing transactions

Mitsubishi UFJ Financial Group, Inc.

2,885,850

2,019

Maintaining steady financial transactions

SCREEN Holdings Co., Ltd

217,179

1,778

Maintaining and enhancing regional
economy relationship

Isetan Mitsukoshi Holdings Ltd.

1,315,769

1,607

Shimadzu Corporation

825,000

1,459

Aeon Financial Service Co., Ltd.

687,300

1,441

Heiwado Co., Ltd.

517,531

1,398

Maintaining and enhancing business
transactions

Horiba, Ltd.

230,000

1,373

Maintaining and enhancing regional
economy relationship

2,312,040

1,320

Maintaining steady financial transactions

274,000

1,286

Maintaining steady financial transactions

1,000,000

1,201

Maintaining and enhancing transactions

Taisho Pharmaceutical Holdings Cp.,
Ltd.

132,000

1,193

cooperative and transactional relationship inbusiness deployment

Shiseido Co., Ltd.

383,000

1,122

Maintaining and enhancing transactions

Chori Co., Ltd.

548,890

1,064

Maintaining and enhancing transactions

Nippon Shinyaku Co., Ltd.

175,000

992

Shiga Bank, Ltd.
Tokio Marine Holdings, Inc.
Takara Holdings Inc.

Maintaining and enhancing business
transactions
Maintaining and enhancing transactions
Maintaining and enhancing business
transactions

Building, maintaining and enhancing- 109 -

Maintaining and enhancing regional

economy relationship
Toppan Printing Co., Ltd.

852,000

967

Maintaining and enhancing transactions

J. Front Retailing Co., Ltd.

541,388

893

Maintaining and enhancing business
transactions
Building, maintaining and enhancing

Ezaki Glico Co., Ltd.

159,500

861

cooperative and transactional relationship inbusiness deployment

Mitsubishi UFJ Lease & Finance
Company Limited

1,320,000

732

Maintaining and enhancing transactions

Fukuyama Transporting Co., Ltd.

1,022,000

682

Maintaining and enhancing transactions

154,969

675

Maintaining and enhancing business
transactions

4,940,000

668

Maintaining and enhancing transactions

Asahi Kasei Corporation

598,195

646

Maintaining and enhancing transactions

Tokyo Broadcasting System Holdings,
Inc.

310,700

617

Maintaining and enhancing transactions

Hisamitsu Pharmaceutical Co.,Inc.

90,000572

Maintaining and enhancing transactions

H2O Retailing Corporation

310,759

556

Maintaining and enhancing business
transactions

NTT DoCoMo, Inc.

209,200

542

Maintaining and enhancing transactions

Aoyama Trading Co., Ltd.

141,500

540

Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment

Hankyu Hanshin Holdings, Inc.

120,200

435

Maintaining and enhancing business
transactions

Odakyu Electric Railway Co., Ltd.

197,500

427

Maintaining and enhancing business
transactions

Chuo Warehouse Co., Ltd.

381,300

412

Maintaining and enhancing transactions

Nissha Printing Co., Ltd.

147,000

387

Maintaining and enhancing transactions

Yomeishu Seizo Co., Ltd.

170,500

357

Building, maintaining and enhancing
cooperative and transactional relationship inbusiness deployment

Seino Holdings Co., Ltd.

283,000

353

Maintaining and enhancing transactions

Kintetsu Department Store Co., Ltd.

1,000,000

341

Maintaining and enhancing business
transactions

I.C.C INTERNATIONAL PCL

2,677,300

331

Maintaining and enhancing transactions

Nichikon Corporation

296,500

307

Maintaining and enhancing regional
economy relationship

Ono Pharmaceutical Co., Ltd.

130,000

299

Marui Group Co., Ltd.

151,487229

IZUMI Co., Ltd.

45,648228

Matsuya Co., Ltd.

205,000

216

Seven & i Holdings Co., Ltd.
Saha Pathana Inter-Holding PCL

Building, maintaining and enhancing- 110 -

cooperative and transactional relationship inbusiness deployment
Maintaining and enhancing business
transactions
Maintaining and enhancing business
transactions
Maintaining and enhancing business
transactions

Sanyo Shokai Ltd.

1,000,000

165

Fuji Company, Limited

62,600152

Dai Nippon Printing Co., Ltd.

116,000

139

Number of Shares(Shares)Amount Recorded in
the Balance Sheet(Millions of yen)KDDI Corporation

2,544,000

7,433

Mitsubishi UFJ Financial Group, Inc.

3,365,000

2,354

Strategic information sharing
Maintaining and enhancing business
transactions
Maintaining and enhancing transactions

Stocks deemed to be held:
Stock Name

Details of Rights
Authorization to give directions on theexercise of voting rights as toretirement benefit trust agreement
Authorization to give directions on theexercise of voting rights as toretirement benefit trust agreement(Note)In specifying the major stock names in light of the amount recorded in the balance sheet, specified investment stocks andstocks deemed to be held have not been combined.

C.

Total amount recorded in the balance sheet for the fiscal year 2016 and the fiscal year 2017, as well as the amount ofD.

dividends received, the gain/loss on sale, and the valuation gain/loss for fiscal year 2017 of equity securities held forpure investment are as follows:
N/A.
Stock names, number of shares, and the amount recorded in the balance sheet of equity securities, the purpose of holdingE.

of which has been changed from pure investment to any other purpose other than pure investment:
N/A.
Stock names, number of shares, and the amount recorded in the balance sheet of equity securities, the purpose of holdingof which has been changed from any other purpose other than pure investment to pure investment:
N/A.

(2)

【Audit Fees】(i)【Fees to Certified Public Accountants】
Fiscal Year Ended March 31, 2016
Category
Fees for Audit Services(Millions of yen)

Fiscal Year Ended March 31, 2017

Fees for Nonaudit
Services(Millions of yen)

Fees for Audit Services(Millions of yen)

Fees for Nonaudit
Services(Millions of yen)

The Company

133

2

138

12

Consolidated
subsidiaries

15

－

14

－

Total

149

2

153

12

(ii)【Other fees】(Fiscal year ended March 31, 2016)
Wacoal International Corp., one of the Company’s consolidated subsidiaries, and its consolidated subsidiaries paid
62 million yen as fees for audit services to Deloitte & Touche LLP, which belongs to the same network as the Company’s
certified public accountants, etc.
(Fiscal year ended March 31, 2017)
Wacoal International Corp., one of the Company’s consolidated subsidiaries, and its consolidated subsidiaries paid
57 million yen as fees for audit services to Deloitte & Touche LLP, which belongs to the same network as the Company’s
certified public accountants, etc.
(iii)【Description of nonaudit services provided to the Company】- 111 -

(Fiscal year ended March 31, 2016)
The Company pays fees to accounting auditors or certified public accountants as compensation for the advice and guidance
regarding the investigation of the impact of the application of IFRS, which is out of the scope of the services that are set
forth in Paragraph 1, Article 2 of the Certified Public Accountants Act.
(Fiscal year ended March 31, 2017)
The Company pays fees to the accounting auditor or certified public accountants as compensation for the advice
and guidance regarding the creation of Group Accounting Rules and Accounting Definition Glossary, which is out of thescope of the services that are set forth in Paragraph 1, Article 2 of the Certified Public Accountants Act.
(iv)【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.

- 112 -

V. 【Financial Information】
1. 【Consolidated Financial Statements】
Consolidated Balance Sheets
March 31, 2017 and 2016

Millions of Yen
2017
2016

ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Time deposits
Marketable securities (Notes 3, 19 and 20)
Notes and accounts receivable (Note 17)
Allowance for returns and doubtful receivables (Note 4)Inventories (Note 5)
Deferred income taxes (Note 16)
Other current assets (Notes 17, 20, 21 and 23)
Total current assets
PROPERTY, PLANT AND EQUIPMENT:Land (Notes 9 and 20)
Buildings and structures (Notes 9 , 11 and 20)
Machinery and equipment (Note 20)
Construction in progress
Total
Accumulated depreciation¥

33,9952,722
1,457
25,563(2,477)
43,822
4,049
4,683
113,814¥34,0592,131
1,880
26,936(2,229)44,4453,832
5,797
116,851

Thousands of
U.S. Dollars(Note 2)2017$

CURRENT LIABILITIES:
Short-term bank loans (Note 9)
Notes and accounts payable:
Trade notes payable
Trade accounts payable (Note 17)
Other payables
Accrued payroll and bonuses
Income taxes payable (Note 16)
Current portion of long-term debt (Notes 9 and 19)
Other current liabilities (Notes 20 and 21)

305,134
24,432
13,078229,450(22,233)
393,340
36,34342,034
1,021,578

21,55572,664
17,722
274
112,215(56,927)

21,67765,056
17,552
5,419
109,704(55,766)

193,475
652,222
159,070
2,459
1,007,226(510,969)

55,28853,938496,257

¥

7,716

¥

11,759$69,258

1,438
11,605
6,185
7,093
2,964
50
4,008

1,431
12,017
6,106
7,152
711
293
4,874

12,907104,165
55,516
63,666
26,604449
35,975

Total current liabilities

41,05944,343

368,540

LONG-TERM LIABILITIES:Long-term debt (Notes 9 and 19)
Liability for termination and retirement benefit (Note 12)
Deferred income taxes (Note 16)
Other long-term liabilities (Notes 11, 12 and 16)

185
1,956
17,862
1,414

95
1,703
15,588
1,724

1,661
17,557160,327
12,691

21,417

19,110192,236

13,26029,707
170,062

13,26029,686
162,196

119,020
266,646
1,526,452

1,212
21,075(414)
21,873

5,177
17,966(1,035)
22,108

10,878189,166(3,716)
196,328(7,334)
227,568(2,876)
224,374(65,829)
2,042,617

4,914
232,482

5,027
229,401

44,1072,086,724¥ 294,958¥ 292,854$ 2,647,500

Total long-term liabilities
Net property, plant and equipment

Millions of Yen
2017
2016

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars(Note 2)
2017

COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)
OTHER ASSETS:
Investments in affiliated companies (Note 6)
Investments (Notes 3, 19 and 20)
Goodwill (Notes 7 and 8)
Other intangible assets (Note 8)
Prepaid pension expense (Note 12)
Deferred income taxes (Note 16)
Other
Total other assets

20,86859,847
16,071
11,84910,2871,060
5,874

20,71356,021
17,911
12,112
8,145
1,036
6,127

187,308
537,178
144,251
106,355
92,3359,514
52,724

125,856

122,065

1,129,665

EQUITY:WACOAL HOLDINGS CORP. SHAREHOLDERS' EQUITY (Note14):
Common stock, no par value authorized, 500,000,000 shares in 2017 and 2016; issued
143,378,085 shares in 2017 and 2016
Additional paid-in capital (Note 14)
Retained earnings
Accumulated other comprehensive income (Note 15):
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments (Note 12)
Total accumulated other comprehensive income
Treasury stock, at cost - 6,167,211 shares and2,519,350 shares in 2017 and 2016, respectively
Total Wacoal Holdings Corp. shareholders' equity
NONCONTROLLING INTERESTS
Total equity
TOTAL

TOTAL

¥ 294,958¥ 292,854$ 2,647,500

See notes to consolidated financial statements.
- 113 -

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2017, 2016 and 2015

NET SALES (Note 17)

2017

Millions of Yen
2016

2015

Thousands of
U.S. Dollars(Note 2)2017

¥ 195,881¥ 202,917¥ 191,765$ 1,758,200

92,95091,866

95,901
93,15190,722
87,9404,845
1,176

834,306
824,576

184,816

189,052

184,683

1,658,882

11,065

13,865

7,082

99,318

157
(27 )
1,176
441
1
3,770

161
(65 )
1,057
90
(20 )

142
(98 )
1,011
1,585
(14 )

1,409
(242)
10,5563,958
933,839OPERATING COSTS AND EXPENSES:
Cost of sales (Notes 12 and 17)
Selling, general and administrative expenses (Notes 1, 10, 11, 12, 13, 20 and 22)
Impairment charges on goodwill (Notes 8 and 20)
Impairment charges on other intangible assets (Notes 8 and 20)
Total operating costs and expenses
OPERATING INCOME
OTHER INCOME (EXPENSES):Interest income
Interest expense
Dividend income
Gain (loss) on sale or exchange of marketable securities and investments – net (Note 3)
Valuation gain (loss) on marketable securities and investments – net (Note 3)
Gain on sale of property, plant and equipment
Gain on bargain purchase (Note 7)
Gain on sales of paintings
Other – net (Notes 1, 15 and 21)

173
(14 )

(304)

1,405
229

(126)

5,504

1,092

4,260

49,403

INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME OF AFFILIATED COMPANIES

16,56914,957

11,342

148,721

INCOME TAXES (Note 16):
Current
Deferred

4,830
450

3,442
1,288

5,223
(1,920)43,354
4,039

5,280

4,730

3,303

47,393

INCOME BEFORE EQUITY IN NET INCOME OF AFFILIATED COMPANIES

11,28910,227

8,039

101,328

EQUITY IN NET INCOME OF AFFILIATED COMPANIES (Note 6)

1,359

1,245

705

12,199NET INCOME

12,648

11,472

8,744

113,527(123 )

(313)

(300)

(1,104)

Total other income (expenses) – net

Total income taxes

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.

¥

12,525¥

11,159

¥

8,444

$

112,423(Continued)- 114 -

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2017, 2016 and 2015

2017

Yen
2016

2015

U.S. Dollars(Note 2)2017

NET INCOME ATTRIBUTABLE TOWACOAL HOLDINGS CORP. PERSHARE (Note 18):
Basic
Diluted¥ 90.13¥ 89.85¥ 79.23¥ 79.00¥ 59.95¥ 59.80$ 0.81$ 0.81NET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP. PER AMERICANDEPOSITARY RECEIPT (5 shares of common
stock) (Note 18):
Basic
Diluted¥ 450.65¥ 449.27¥ 396.15¥ 394.99¥ 299.77¥ 299.00$ 4.04$ 4.03

See notes to consolidated financial statements.

(Concluded)- 115 -

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2017, 2016 and 2015

2015

Thousands of
U.S. Dollars(Note 2)
2017

8,744

$ 113,527(5,670)8,671(36,613)(4,079)(5,670)8,671(36,613)

3,413
(304)
3,109

(2,833)(47 )(2,880)10,216(974 )
9,242

30,635(2,729)27,906

619
(1)
618

(2,327)(644)(2,971)

2,332(176 )
2,156

5,556
(9)
5,547

(352)

(11,521)

20,069(3,160)12,296(49 )

28,813110,367

COMPREHENSIVE (LOSS) INCOME
ATTRIBUTABLE TO NONCONTROLLINGINTERESTS

(6)

(270)

(472 )(54)

COMPREHENSIVE INCOME (LOSS)ATTRIBUTABLE TO WACOAL HOLDINGS
CORP.

¥ 12,290(319)¥ 28,341$ 110,313

NET INCOME
OTHER COMPREHENSIVE INCOME, NET OF TAX(Note 15):
Foreign currency translation adjustments:
Amounts arising during the year
Reclassification adjustments
Total foreign currency translation
adjustments
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
OTHER COMPREHENSIVE (LOSS) INCOME
COMPREHENSIVE INCOME (LOSS)

See notes to consolidated financial statements.

- 116 -

2017

Millions of Yen
2016¥ 12,648¥ 11,472(4,079)¥¥

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Equity
Years Ended March 31, 2017, 2016 and 2015

BALANCE, APRIL 1, 2014
Net income
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥165 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Share-based compensation granted (exercised) (Note 13)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2015
Net income
Foreign currency translation adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥150 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 13)
Increase due to establishment of subsidiaries (Note 7)
BALANCE, MARCH 31, 2016
Net income
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥165 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Share-based compensation granted (exercised) (Note 13)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2017

Shares of
Outstanding
Common Stock(Thousands)
140,839

CommonStock

Additional
Paid-in
CapitalRetained
Earnings¥ 13,260¥ 29,587¥ 151,468

Millions of Yen
Accumulated
Other
TreasuryComprehensive
Stock,
Incomeat Cost¥ 13,689¥ (2,898)

8,444
8,521
9,215
2,161
(4,648)

Total Wacoal
Holdings Corp.
Shareholders'EquityNoncontrolling
Interests

Total Equity¥ 205,106¥ 2,430¥ 207,536

8,444
8,521
9,215
2,161

300
150
27
(5 )

8,744
8,671
9,242
2,156

(4,648)
(3 )
61
0

(1 )

(4,648)
(190)
(3 )
61
(1 )

228,857

2,711

231,568

11,159(5,654)(2,855)(2,969)

313
(16 )
(25 )
(2 )

11,472(5,670)(2,880)(2,971)(190 )(3 )
5
140,841

(3)
6

55
0
13,26029,642

155,264

33,586(2,895)

11,159(5,654)(2,855)(2,969)(4,225)(4,225)

2,252(4,225)
(206)
(7 )
1
67
2,252

224,374

5,027

229,401

12,525(3,965)
3,109
621

123
(114 )
0(3 )12,648(4,079)3,109618(206 )(5 )1
22
140,85944
13,26029,686

(7)
1
25

(2 )
162,196

22,108(2,876)

12,525(3,965)
3,109
621(4,648)(7 )
1
67(4,648)48(4,648)(167)(4,522)74
48¥ 4,914¥ 232,482(167 )(3,703)
55
137,21121¥ 13,260¥ 29,707(4,522)64(11 )¥ 170,062¥ 21,873¥ (7,334)(4,522)74¥ 227,568(Continued)- 117 -

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Equity
Years Ended March 31, 2017, 2016 and 2015

BALANCE, MARCH 31, 2016

CommonStock

Additional
Paid-in
CapitalRetained
Earnings$ 119,020$ 266,457$ 1,455,848

Net income
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, $1 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Share-based compensation granted (exercised) (Note 13)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2017

Thousands of U.S. Dollars (Note 2)
Accumulated
Total Wacoal
Other
Treasury
Holdings Corp.
Comprehensive
Stock,
Shareholders'
Incomeat CostEquity$ 198,438$ (25,815)

112,423(35,590)
27,906
5,574(41,720)

Noncontrolling
Interests

Total Equity$ 2,013,948$ 45,121$ 2,059,069

112,423(35,590)
27,906
5,574

1,104(1,023)0(27 )113,527(36,613)27,906
5,547(41,720)431(41,720)(1,499)(40,589)665
431$ 44,107$ 2,086,724(1,499)189$ 119,020$ 266,646(40,589)575(99)$ 1,526,452$ 196,328$ (65,829)(40,589)665$ 2,042,617

See notes to consolidated financial statements.

(Concluded)- 118 -

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2017, 2016 and 2015

OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation (Note 13)
Allowance for returns and doubtful receivables – net
Deferred income taxes(Gain) loss on sales or disposal of property, plant and equipment – net
Impairment charges on long-lived assets
Impairment charges on goodwill (Notes 8 and 20)
Impairment charges on other intangible assets (Notes 8 and 20)(Gain) loss on sale or exchange of marketable securities and investments – net (Note 3)
Valuation (gain) loss on marketable securities and investments – net (Note 3)
Gain on bargain purchase (Note 7)
Gain on sales of paintings
Equity in net income of affiliated companies, less dividends received
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable
Increase in inventories
Decrease (increase) in other current assets(Decrease) increase in notes and accounts payable
Decrease in liability for termination and retirement benefit
Increase (decrease) in accrued expenses, income taxes payable and other current liabilities
Other
Net cash provided by operating activities

2017

Millions of Yen
2016¥ 12,648¥ 11,472

5,032
74
264
450
(3,374)

4,815
67
(117)
1,288
59
256

INVESTING ACTIVITIES:
Increase in time deposits
Decrease in time deposits
Proceeds from sales and redemption of available-for-sale securities (Note 3)
Payments to acquire available-for-sale securities
Proceeds from redemption of held-to-maturity debt securities
Payments to acquire held-to-maturity debt securities
Proceeds from sales of paintings
Proceeds from sales of property, plant and equipment
Capital expenditures
Payments to acquire intangible assets (Note 8)
Proceeds from sales of other investments
Payments to acquire other investments
Proceeds from sales of shares of affiliated companies
Payments to acquire additional shares of a subsidiary
Payments associated with the acquisition of a business (net of cash and cash equivalents acquired) (Note 7)
Other
Net cash (used in) provided by investing activities
FORWARD¥2015

Thousands of
U.S. Dollars(Note 2)
2017

8,744

$ 113,527

5,074
60
(45 )
(1,920)38

45,167
664
2,370
4,039
(30,285)

4,845
1,176
(1,585)14(3,958)
(9 )

(441)
(1)

(90)
20
(173)

(837)

(482)

(1,405)(27 )(7,513)

882
(378)
475
(95 )
(417)
1,615
454
16,351(195)(1,008)(1,111)(45)(2,101)(261)
241
12,635534(1,038)(442)
1,302(1,601)505
108
14,337

7,917(3,393)
4,264(853)(3,743)
14,496
4,074
146,764(4,336)
3,717
1,968
(313)
109
(330)

(2,459)
2,889
602
(420)
739
(629)

(38,919)
33,363
17,664(2,809)978(2,962)

3,585(5,504)(1,941)
15
(39 )
4

775
(7,546)(1,432)
12(3,548)3,383
4,499(1,353)
114
(568)
1,785
174
(3,093)(1,385)
124

6

¥

6
(1 )

(3,822)(122)(11,407)33(3,032)¥

32,178(49,403)(17,422)
135
(350)
36

27
164
¥

296
(27,215)$(Continued)- 119 -

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2017, 2016 and 2015

2017
FORWARD¥

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

Millions of Yen
2016¥(3,613)250(403)(4,522)

2015
¥

2,101

Thousands of
U.S. Dollars(Note 2)
2017$

(6,784)
4,460(1,226)(3 )(32,430)
2,244(3,617)(40,589)(4,648)(190)(41,720)(1,499)(4,648)(167)(4,463)(7 )
1(4,225)(206 )

48(13,055)

2,252(4,547)(8,391)

431(117,180)

EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS(328)(1,032)

1,642(2,944)NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS(64 )(4,351)

7,752

(575)

34,05938,41030,658305,709¥ 33,995¥ 34,059¥ 38,410$ 305,134

¥

¥

67
5,756

¥ 100
4,497

$ 242
25,240¥736¥419$7,136

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

27
2,812

NONCASH INVESTING ACTIVITIES:Acquisition of property, plant and equipment byassuming payment obligation¥795

See notes to consolidated financial statements.

(Concluded)- 120 -

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 manufacture and sale of apparel, including foundation garments, lingerie,nightwear and outerwear, in Japan, the United States of America, Europe and certain other Asian countries.
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.
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 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 income(expenses) in the consolidated statements of income.
Foreign currency translation gains (losses) for the years ended March 31, 2017, 2016 and 2015 were ¥(175)
million, ¥(519) million and ¥300 million, respectively. They have been included in other - net of other income(expenses).

- 121 -

Marketable Securities and Investments - The Companies classify their marketable securities and investments
into one of three categories: trading, available-for-sale or held-to-maturity. Trading securities are recorded atfair value and unrealized holding gains and losses on trading securities are included in earnings. Available-for-sale securities are recorded at fair value with a corresponding recognition of unrealized holding gain or loss
(net of tax) in accumulated other comprehensive income or loss, 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 tomaturity. Equity securities that do not have readily determinable fair values are recorded at cost. Gains andlosses on sales of investments are computed based on cost determined using the average cost method.
If a decline in the fair value of marketable securities and investments is determined to be other than temporary,
an impairment charge is recorded in the consolidated statements of income. The Companies periodicallydetermine whether a decline in the fair value of marketable securities and investments is deemed to be otherthan 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 marketable securities and investments for a sufficient period of time for
anticipated recovery in fair value.
Allowance for Sales Returns – An allowance for sales returns is estimated based on historical products returns
experience, sales movements, and the overall retail industry considerations.
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 andcreditworthiness of each applicable customer.
Inventories - Inventories are stated at the lower of cost or market, cost being determined by the first-in, firstout method for raw materials and the average cost method for work in process and finished products. Cost
includes net prices paid for materials purchased, production labor cost, factory overhead and charges forcustoms duties.
Property, Plant and Equipment - Property, plant and equipment is stated at cost less accumulated depreciationand impairment charges. Depreciation of property, plant and equipment is computed by the declining-balancemethod, except for buildings acquired on or after April 1, 1998 as well as building improvements andstructures acquired on or after April 1, 2016, which are depreciated using the straight-line method based upon
the estimated useful lives of the assets. The estimated useful lives are as follows:
Buildings and structures

2 - 50 years (mainly 38 years)

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

2 - 20 years (mainly 5 years)

Depreciation expenses for the years ended March 31, 2017, 2016 and 2015 are ¥3,443 million, ¥3,278 millionand ¥3,356 million, respectively.
Impairment of Long-Lived Assets - 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 that indicates that such
assets have been impaired or that the carrying amounts of such assets might not be recoverable. The carrying
amount of a long-lived asset 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 amountof 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 of a long-lived asset exceeds its fair value.
Impairment charges on long-lived assets for the year ended March 31, 2016 were ¥256 million in selling,
general and administrative expenses in the consolidated statements of income. The Companies recorded no
impairment charges on long-lived assets for the years ended March 31, 2017 and 2015.

- 122 -

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.
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 created the goodwill resides. To test for goodwill impairment, the carrying amountof each reporting unit is compared with its fair value. If the carrying amount of a reporting unit exceeds its fairvalue, the second step of the goodwill impairment test is performed by comparing the carrying amount ofreporting unit goodwill with its implied fair value. If the carrying amount of reporting unit goodwill exceeds
its implied fair value, an impairment charge is recognized in an amount equal to that excess.
To test for impairment of other intangible assets with indefinite useful lives, the carrying value of an intangible
asset is compared with its fair value. 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 estimable useful lives consist primarily of brands and software and are amortizedover their estimated useful lives using the straight-line method. The estimated useful lives are as follows:
Brands20 - 25 years (mainly 25 years)

Software5 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 estimate
because the Companies' lease contracts generally have automatic renewal articles. The estimated asset
retirement costs are capitalized as part of the carrying amount of the associated long-lived asset anddepreciated over its useful life.
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 - Certain noncancelable leases are classified as capital leases and the leased assets are included as partof property, plant and equipment. Other leases are classified as operating leases and are not capitalized. The
payments on such leases are recorded as expense. The rental expense under operating leases is recognized ona straight-line basis.
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.

- 123 -

Revenue Recognition - The Companies recognize revenue on sales to retailers, mail order catalog sales andweb sales when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred resulting intransfer of title and risk of loss, (3) the sales price is fixed or determinable, and (4) collectability is reasonably
assured. As for consignment sales, the Companies recognize revenue when the products are sold to theultimate customer. The Companies recognize revenue on direct retailing sales at the Companies' directly
managed retail stores at the point of sale to the customer.
Shipping and Handling Costs - Shipping and handling fees billed to customers are classified in net sales.
Shipping and handling costs are expensed as incurred. Shipping and handling costs for the years ended March
31, 2017, 2016 and 2015 were ¥5,249 million, ¥5,560 million and ¥5,487 million, respectively, and have been
included in selling, general and administrative expenses.
Advertising Expenses - Advertising costs are expensed as incurred. Advertising expenses for the years ended
March 31, 2017, 2016 and 2015 were ¥12,694 million, ¥13,167 million and ¥13,103 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, 2017, 2016 and 2015 were ¥810 million, ¥839 million and¥869 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.
Share-Based Compensation - Share-based compensation is accounted for in accordance with the guidance forstock compensation. The Company measures share-based compensation cost at the grant date, based on thefair value of the award and recognizes the cost over the requisite service period, which is the vesting period.
The fair value of the award is estimated using the Black-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 29, 2017.
Reclassifications - Certain reclassifications have been made to the prior years' consolidated financial
statements to conform to the current year's presentation.

- 124 -

Recent Accounting Pronouncements:
Revenue Recognition - In May 2014, the Financial Accounting Standards Board (the "FASB") issued a new
accounting standard related to revenue recognition. This guidance is based on the principle that revenue isrecognized to depict the transfer of promised goods or services to customers in an amount that reflects theconsideration to which the entity expects to be entitled in exchange for those goods or services. This standard
provides comprehensive guidance, and requires the disclosure of information to enable users of financial
statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising fromcontracts with customers. In August 2015, the FASB issued additional guidance and deferred the effective
date of the guidance for a year. In May 2016, the FASB also issued additional guidance to improve the above
guidance by reducing the potential for diversity in practice at initial application and the cost and complexity ofapplying Topic 606 both at transition and on an ongoing basis. This guidance is effective for fiscal years
beginning after December 15, 2017 and interim periods within that annual period. The Companies are
currently evaluating the potential impact of adoption on the Companies' consolidated financial position andresults of operations.
Extraordinary and Unusual Items - In January 2015, the FASB issued a new accounting standard related to
extraordinary and unusual items. This guidance eliminates from U.S. GAAP the concept of extraordinary
items and the requirements to 1) segregate an extraordinary item from the results of ordinary operations, 2)
present the item separately on the income statement, net of tax, after income from continuing operations, and
3) disclose income taxes and earnings per share data applicable to the extraordinary item. This guidance iseffective for fiscal years and interim periods within that annual period, beginning after December 15, 2015.
Adoption of this guidance did not have an impact on the Companies' consolidated financial position, results ofoperations, or cash flows.
Fair Value Measurement - In May 2015, the FASB issued a new standard which amends fair value
measurement. This guidance removes the requirement to categorize within the fair value hierarchy all
investments for which fair value is measured using the net asset value per share practical expedient. The
amendments also remove the requirement to make certain disclosures for all investments that are eligible to bemeasured at fair value using the net asset value per share practical expedient. Rather, those disclosures arelimited to investments for which the entity has elected to measure the fair value using that practical expedient.
This guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within thosefiscal years. The adoption of this guidance did not have an impact on the Companies' consolidated financial
position, results of operations, or cash flows.
Measurement of Inventory - In July 2015, the FASB issued a new standard related to simplifying themeasurement of inventory. Currently an entity is required to measure inventory at the lower of cost or market.
Market could be replacement cost, net realizable value, or net realizable value less an approximately normal
profit margin. This guidance requires an entity to measure inventory at the lower of cost or net realizablevalue. This guidance is effective for fiscal years beginning after December 15, 2016, and interim periods
within those fiscal years. The adoption of this guidance is not expected to have a significant impact on the
Company's consolidated financial position, results of operations, or cash flows.
Balance Sheet Classification of Deferred Taxes - In November 2015, the FASB issued a new accounting
standard related to balance sheet classification of deferred taxes. This guidance requires an entity to classify
deferred tax liabilities and assets as noncurrent on the consolidated financial position. This guidance iseffective for fiscal years beginning after December 15, 2016. The carrying amount of the current portion ofdeferred tax assets in the Companies’ consolidated balance sheet as of March 31, 2017 was ¥4,049 million.
There was no current portion of deferred tax liabilities as of March 31, 2017.

- 125 -

Recognition and Measurement of Financial Instruments - In January 2016, the FASB issued new accounting
guidance related to recognition and measurement of financial assets and financial liabilities. This guidance
requires an entity to measure equity investments (except those accounted for under to the equity method of
accounting or those that result in consolidation of the investee) at fair value with changes in fair value
recognized in net income and change of related disclosures. This guidance is effective for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently
evaluating the potential impact of adoption on the Company's consolidated financial position, and results ofoperations.
Lease - In February 2016, the FASB issued new accounting guidance related to leases. This guidance requires
an entity to recognize lease assets and lease liabilities on the balance sheet for, with a few exceptions, thoseleases classified as operating leases under current U.S. GAAP. This guidance is effective for fiscal years
beginning after December 15, 2018, and interim periods within that annual period. The Company is currently
evaluating the potential impact of adoption on the Company's consolidated financial position, and results ofoperations.
Classification of Certain Cash Receipts and Cash Payments - In August 2016, the FASB issued new
accounting guidance related to classification of certain cash receipts and cash payments. This guidance isintended to reduce existing diversity in practice with respect to classification of certain cash receipts andpayments in the statement of cash flows. This guidance is effective for fiscal years beginning after December
15, 2017, and interim periods within that annual period. The Company is currently evaluating the potential
impact of adoption on the Company's consolidated statement of cash flows.
Income Taxes - In October 2016, the FASB issued new accounting guidance related to income taxes. This
guidance requires an entity to recognize income tax consequences of intra-entity transfers of assets other thaninventory. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods
within that annual period. The Company is currently evaluating the potential impact of adoption on the
Company's consolidated financial position, and results of operations.
Simplifying the Test for Goodwill Impairment - In January 2017, the FASB issued new accounting guidance
related to goodwill and other intangible assets. This guidance simplifies the goodwill impairment test byeliminating Step 2 from the test. This guidance is effective for fiscal years beginning after December 15,
2020, and interim periods within that annual period. The Company is currently evaluating the potential impactof adoption on the Company's consolidated financial position, and results of operations.
Periodic Pension Cost - In March 2017, the FASB issued new accounting guidance related to periodic pension
cost and net periodic post retirement benefit cost. This guidance requires an entity to disaggregate the service
cost component from the other components of net periodic benefit costs. This guidance is effective for fiscal
years beginning after December 15, 2017, and interim periods within that annual period. The Company iscurrently evaluating the potential impact of adoption on the Company's consolidated financial position, andresults of operations.
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 ¥111.41 to $1,
the noon buying rate for yen in New York City as of March 31, 2017. 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.

- 126 -

3.

MARKETABLE SECURITIES AND INVESTMENTS
Held-to-Maturity and Available-for-Sale Securities - The fair value of debt and marketable equity securities
classified as held-to-maturity and available-for-sale is based on quoted market prices as of March 31, 2017 and2016. The cost, gross unrealized gain and loss and the fair value of held-to-maturity and available-for-salesecurities by major security type were as follows:
Millions of Yen
Gross
Gross
Unrealized
Unrealized
Gain
Loss

2017

Cost

Available-for-sale securities:
Current:
Municipal bonds
Mutual funds

¥ 10
701

¥

0
168

¥1

¥ 10
868

Total

¥ 711

¥ 168

¥1

¥ 878

¥ 23,153¥ 34,833¥ 10¥ 57,976

¥ 567

¥3

¥ 564

¥ 566

¥4

¥ 562

Noncurrent:
Equity securities
Held-to-maturity securities:
Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

2016

Cost

Available-for-sale securities:
Current:
Municipal bonds
Corporate debt securities
Mutual funds

¥

Total
Noncurrent:
Equity securities
Held-to-maturity securities:
Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

10
395
1,083

Millions of Yen
Gross
Gross
Unrealized
Unrealized
Gain
Loss

¥

0

Fair Value

Fair Value

279

¥0
1

10
395
1,361

¥ 1,488¥ 279¥1¥ 1,766¥ 23,592¥ 30,336¥3¥ 53,925

¥1

¥ 113

¥3

¥ 805

¥ 114
¥ 808

- 127 -

¥0¥

Gross unrealized holding losses and fair values of held-to-maturity securities, all of which have been in acontinuous unrealized loss position for more than 12 months as of March 31, 2017 and 2016, were as follows:
Millions of Yen
2017

Held-to-maturity securities:
Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

2016

Fair Value

Gross
Unrealized
Loss

Fair Value

Gross
Unrealized
Loss

¥340

¥3

¥114

¥1

¥345

¥3

Gross unrealized holding losses and fair values of available-for-sale and held-to-maturity securities, all ofwhich have been in a continuous unrealized loss position for less than 12 months as of March 31, 2017 and2016, were as follows:
Millions of Yen
2017

Available-for-sale securities:
Current:
Corporate debt securities
Mutual funds
Noncurrent:
Equity securities
Held-to-maturity securities:
Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

2016

Fair Value

Gross
Unrealized
Loss

Fair Value

Gross
Unrealized
Loss

¥8

¥1

¥395
480

¥0
1

¥172

¥10

¥102

¥3

¥224

¥0

¥562

¥4

¥232

¥0

As of March 31, 2017, the available-for-sale securities in a continuous unrealized loss position are composedof three equity securities and one mutual fund. The percentage of decline was less than 11.5%. The
Companies periodically determine whether a decline in the fair value of available-for-sale and held-to-maturity
securities is deemed to be other than temporary based on criteria that includes the duration of the market
decline, the extent to which cost exceeds fair value, the financial position and business outlook of the issuer,and the intent and ability of the Companies to retain the impaired available-for-sale and held-to-maturity
securities for a sufficient period of time for anticipated recovery in fair value as described in Note 1. No
available-for-sale or held-to-maturity securities were identified that meet the Companies' criteria forrecognition of an impairment charge on available-for-sale and held-to-maturity securities in an unrealized loss
position presented above. Therefore, the Companies do not believe the unrealized losses represent an otherthan-temporary impairment as of March 31, 2017 and 2016.

- 128 -

Future maturities of debt securities and mutual funds classified as available-for-sale excluding debt securities
and mutual funds without fixed maturities as of March 31, 2017 were as follows:
Millions of Yen
Fair
Cost
Value
Due within one year
Due after one year through five years
Due within ten years
More than ten years
Total

¥ 305

¥ 308

280

291

¥ 585

¥ 599

Future maturities of debt securities classified as held-to-maturity as of March 31, 2017 were as follows:
Millions of Yen
Fair
Cost
Value
Due within one year
Due after one year through five years

¥

567
566

Total

¥ 1,133

¥

564
562

¥ 1,126

Proceeds from sales of available-for-sale securities and the gross realized gain or loss on the sales of availablefor-sale securities during the years ended March 31, 2017, 2016 and 2015 were as follows:
2017
Proceeds from sales of available-for-sale securities
Gross realized gain on sales of available-for-sale securities
Gross realized loss on sales of available-for-sale securities¥1,573458
17Millions of Yen
2016

2015

¥102
90

¥3,4991,516

During the year ended March 31, 2017, the Companies exchanged certain equity securities for othermarketable securities. The Companies recorded newly-received securities at fair value and recognized a lossof ¥0 million for the year ended March 31, 2017. There was no exchange of marketable securities for the year
ended March 31, 2016. The Companies recorded newly-received securities at fair value and recognized a gainof ¥1 million for the year ended March 31, 2015.
The amount of impairment charges the Companies recognized on available-for-sale securities in which
declines in fair value were deemed to be other than temporary was ¥3 million, ¥20 million and ¥4 million forthe years ended March 31, 2017, 2016 and 2015, respectively.
Trading Securities - A subsidiary in the United States of America has trading securities consisting of mutual
funds, which are recorded as investments at a fair value of ¥44 million as of March 31, 2017. There were no
trading securities as of March 31, 2016. The Companies recorded a gain of ¥4 million for the year ended
March 31, 2017. There was no gain or loss related to trading securities for the years ended March 31, 2016
and 2015.

- 129 -

Cost Method Securities - Investments in nonmarketable equity securities for which there are no readily
determinable fair values were accounted for using the cost method and aggregated ¥1,273 million and ¥1,288
million as of March 31, 2017 and 2016, respectively. Investments in nonmarketable equity securities arereviewed annually or upon the occurrence of an event for other-than-temporary impairment. There were no
impairment charges on investments in nonmarketable equity securities for the year ended March 31, 2017.
The Companies recognized impairment charges on investments in nonmarketable equity securities of ¥0
million and ¥10 million for the years ended March 31, 2016 and 2015, respectively.
4.

ALLOWANCES FOR DOUBTFUL RECEIVABLES AND SALES RETURNS
Information related to the Companies' allowance for doubtful receivables was as follows:
2017

Millions of Yen
2016

2015

Balance at the beginning of the year
Charged to costs and expenses
Balances written-off/reversed

¥ 196
68
(45 )

¥ 198
110
(112)

¥ 201
45
(48 )

Balance at the end of the year

¥ 219

¥ 196

¥ 198

2017

Millions of Yen
2016

2015

Balance at the beginning of the year
Charged to costs and expenses
Balances utilized¥ 2,033
2,258(2,033)¥ 2,211
2,033(2,211)¥ 2,120
2,211(2,120)

Balance at the end of the year

¥ 2,258¥ 2,033¥ 2,211

Information related to the Companies' allowance for sales returns was as follows:

5.

INVENTORIESThe components of inventories as of March 31, 2017 and 2016 were as follows:
Millions of Yen
2017
2016

6.

Finished products
Work in process
Raw materials¥ 37,586
3,743
2,493

¥ 37,689
4,056
2,700

Total

¥ 43,822¥ 44,445

INVESTMENTS IN AFFILIATED COMPANIES
Certain investments are accounted for using the equity method if the investment provides the Companies withthe ability to exercise significant influence over an investee. Significant influence is generally deemed to exist
if the Companies have an 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 inaffiliated companies." Under the equity method, the Companies record their proportionate share of anaffiliated companies' income or loss based on the most recently available financial statements.

- 130 -

The primary affiliated companies and percentage of ownership as of March 31, 2017 and 2016, were as
follows:
Percentage of Ownership (%)
2017
2016

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
24

25
50
34
42
24

Aggregate carrying amounts and fair values of investments in affiliated companies which have a quoted
market price as of March 31, 2017 and 2016, were as follows:
Millions of Yen
2017
2016
Carrying amount
Aggregate value of quoted market price¥ 13,556
11,754¥ 13,522
11,561

The following tables represent the affiliated companies' summarized information from the balance sheets as ofMarch 31, 2017 and statements of income for the years ended March 31, 2017 and 2015. Summarized
information of the balance sheet and statement of income of affiliated companies for the year ended March 31,
2016 is not disclosed as it is immaterial.
Millions ofYen
2017
Current assets
Noncurrent assets¥ 40,589
41,773Total¥ 82,362

Current liabilities
Long-term liabilities
Equity¥Total¥ 82,362

8,538
7,366
66,458Millions of Yen
2017
2015
Net sales
Gross profit
Income before income taxes
Net income¥ 59,17230,2005,105
4,089¥ 62,459
31,5192,848
2,196

Dividends received from affiliated companies were ¥522 million, ¥763 million and ¥678 million for the years
ended March 31, 2017, 2016 and 2015, respectively.
Retained earnings includes net undistributed earnings of affiliated companies of ¥15,689 million and ¥15,226
million as of March 31, 2017 and 2016, respectively.

- 131 -

7.

ACQUISITIONSOn April 1, 2015, Ai Co., Ltd., a wholly-owned domestic subsidiary of the Company, acquired the swimwear
business and underwear business from San-Ai Co., Ltd. and San-Ai Style Co., Ltd., and the difference between
the acquisition cost and the estimated fair values of the identifiable assets acquired and liabilities assumed, thedetails of which were investigated and analyzed, was recorded on the consolidated statements of income as again on bargain purchase in the amount of ¥173 million.
The fair values of the assets and liabilities as of the date of the acquisition have been revised based on updated
information obtained after the date of acquisition, and were adjusted retroactively to the date of the acquisition.
In January 2016, Wacoal Corp., a wholly-owned subsidiary of the Company, established A Tech Textile Co.,
Ltd. ("A Tech") and G Tech Material Co., Ltd. ("G Tech") in the Kingdom of Thailand pursuant to joint
venture agreements executed on November 13, 2015. A Tech and G Tech executed business transfer
agreements with Textile Prestige Public Company Limited ("TPC") and Erawan Textile Company Limited("ETC"), respectively, and transfers of the material business assets and liabilities were completed on February
1, 2016.
In connection with these business transfers, A Tech and G Tech agreed to pay the purchase price for the assets
acquired and liabilities assumed, in the amount of ¥2,334 million (THB 699 million) and ¥693 million (THB
208 million), respectively.
By establishing these two subsidiaries, the Group will build a worldwide system to supply materials andproducts in the ASEAN region, which has the potential to further develop and grow, improve the
manufacturing quality and cost competitiveness of our entire group and to stably supply high value-added
materials and products to the global network of the Wacoal group and customers in the future.
As a result of purchase price allocations for A Tech and G Tech, goodwill was recognized and recorded in the
consolidated balance sheet in the year ended March 31, 2016. Goodwill is not deductible for tax purposes.
Furthermore, based on updated information obtained after the date of the transfers, the fair values of the assets
and liabilities as of the date of the transfers were adjusted. A Tech and TPC reached a final agreement on thepurchase price. As a result of these changes, the amount of goodwill relating to A Tech and G Tech decreasedby ¥39 million and ¥18 million, respectively. These adjustments during the measurement period werereflected in the consolidated balance sheet as of March 31, 2017.

- 132 -

The fair value of the assets and liabilities of the businesses, which A Tech and G Tech acquired, were as
follows:
Before Adjustment
Millions of Yen
February 1, 2016
A TechG TechCash and cash equivalents
Notes and accounts receivable
Inventories
Other current assets
Property, plant and equipment
Goodwill
Other noncurrent assets
Total

¥

210
557
608
18
1,243
246
2,882

¥ 150
101
4
342
223
1
821

Current liabilities
Other long-term liabilities
Total

281
251
532

82
46
128

Total shareholder's equity¥ 2,350¥ 693

After Adjustment
Millions of Yen
February 1, 2016
A TechG TechCash and cash equivalents
Notes and accounts receivable
Inventories
Other current assets
Property, plant and equipment
Goodwill
Other noncurrent assets
Total

¥

210
557
608
18
1,265
207
2,865

¥ 150
101
4
342
205
1
803

Current liabilities
Other long-term liabilities
Total

282
249
531

64
46
110

Total shareholder's equity¥ 2,334¥ 693- 133 -

8.

GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill - The changes in the carrying amount of goodwill by operating segment for the years ended March
31, 2017, 2016 and 2015 were as follows. For information about the Companies’ operating segments, seeNote 24.
Millions of Yen
2017
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total¥ 13,586
13,586

Adjustments during the measurement period
Foreign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment charges
Total

Peach John

Total

¥ 11,203(6,878)4,325¥ 24,789(6,878)17,911(57 )(1,783)(57 )(1,783)

11,746¥ 11,746¥

11,203(6,878)22,949(6,878)4,325¥ 16,071

Millions of Yen
2016
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total
Acquisition during the year
Foreign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment charges¥ 14,425
14,425469(1,308)Peach John

Total

¥ 11,203(6,878)4,325¥ 25,628(6,878)18,750469(1,308)

11,203(6,878)24,789(6,878)4,325¥ 17,911

13,586

Total¥ 13,586¥

Millions of Yen
2015
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total
Foreign currency translation adjustments
Impairment charges
Balance at the end of the year:
Goodwill
Accumulated impairment charges¥ 13,553
13,553872

Peach John

Total

¥ 11,203(2,033)
9,170(4,845)¥ 24,756(2,033)22,723872(4,845)

11,203(6,878)25,628(6,878)4,325¥ 18,750

14,425

Total¥ 14,425- 134 -¥

During the year ended March 31, 2015, the Companies recorded impairment charges on goodwill of ¥4,845
million in the Peach John segment. See Note 20 for further information.
Other Intangible Assets - The components of intangible assets excluding goodwill as of March 31, 2017 and2016 were as follows:Year Ended March 31
Amortized intangible assets:
BrandsSoftware
OthersTotal
Unamortized intangible assets:
Trademarks
Other
Total

Gross
Carrying
Amount¥Millions of Yen
2017
Accumulated
Amortization
Grossand Impairment
Carrying
ChargeAmount2016
Accumulated
Amortization
and Impairment
Charge

5,853
9,692
1,601

¥ 1,311
5,434
660

¥

6,766
8,034
1,646

¥ 1,212
4,597
633¥ 17,146¥ 7,405¥ 16,446¥ 6,442¥ 5,316114¥ 3,322¥ 5,316114¥ 3,322¥ 5,430¥ 3,322¥ 5,430¥ 3,322

Other intangible assets acquired during the year ended March 31, 2017, 2016 and 2015 totaled ¥1,941 million,¥1,432 million and ¥1,385 million, all of which primarily consist of software with an estimated useful life of
five years.
The gross carrying amounts of brands include foreign currency translation adjustments.
During the year ended March 31, 2015, the Companies recorded an impairment charge on other intangible
assets for the trademarks of ¥1,176 million in the Peach John segment. During the years ended March 31,2017 and 2016, the Companies recorded no impairment charge on other intangible assets. See Note 20 for
further information.
Aggregate amortization expenses for the years ended March 31, 2017, 2016 and 2015 related to otherintangible assets were ¥1,589 million, ¥1,537 million and ¥1,536 million, respectively. Future estimatedamortization expenses as of March 31, 2017 were as follows:Year Ending March 31

Millions ofYen

Estimated amortization expense
2018
2019
2020
2021
2022

¥ 1,568
1,382
1,124
840
633

Total

¥ 5,547- 135 -

9.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans as of March 31, 2017 and 2016 consisted of the following:
Millions of Yen
2017
2016
Unsecured bank loans¥7,716¥11,759

The weighted-average annual interest rate on short-term bank loans as of March 31, 2017 and 2016 was 0.4%.
Unused lines of credit for short-term financing as of March 31, 2017 and 2016 aggregated ¥26,830 million and¥24,779 million, respectively. The Companies compensate banks for these facilities in the form ofcommitment fees, which were not material during the years ended March 31, 2017 and 2016.
Long-term debt as of March 31, 2017 and 2016 is summarized below. The interest rates and maturities are forloans as of March 31, 2017.
Millions of Yen
2017
2016
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 portionLong-term debt, less current portion

¥ 95

¥ 231

140
235
(50 )

157
388
(293)

¥ 185

¥

95

The annual maturities of long-term debt as of March 31, 2017 were as follows:
Millions of
Yen

Year Ending March 31
2018
2019
2020
2021
2022

¥ 50
50
50
50
35

Total

¥ 235

A subsidiary has pledged assets as security for loans. As of March 31, 2017 and 2016, assets pledged ascollateral for bank loans were as follows:
Millions of Yen
2017
2016
Land
Buildings

¥ 150
213

¥ 150
236

Total

¥ 363

¥ 386

- 136 -

As is customary in Japan, both short-term and long-term loans are made under general agreements which
provide that security and guarantees for future and present indebtedness will be given upon request of thebank. The bank has the right to offset cash deposits against obligations that have become due or, in the eventof default, against all obligations due to the bank.
10.

LEASES
The Companies lease most of their store premises and certain equipment. Most leases have automatic renewal
provisions and allow the Companies to extend the lease term beyond the initial base period, subject to theterms agreed at lease inception. Future minimum rental commitments on operating leases having a remaining
noncancelable lease term in excess of one year as of March 31, 2017 are presented below:
Millions of
Yen

Year Ending March 31
2018
2019
2020
2021
2022
Thereafter

¥

495
466
157
72
8
10

Total

¥ 1,208

Rental expenses were ¥7,862 million, ¥7,902 million and ¥6,476 million for the years ended March 31, 2017,2016 and 2015, respectively, and have been included in selling, general and administrative expenses.
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 was
as follows:

12.

2017

Millions of Yen
2016

2015

Balance at the beginning of the year
Accretion expense
Liabilities incurred
Liabilities settled
Change due to translation of foreign currencies

¥ 878
2
84
(111)
2

¥ 777
20
157
(74 )
(2 )

¥ 728
8
66
(32 )
7

Balance at the end of the year

¥ 855

¥ 878

¥ 777

TERMINATION AND RETIREMENT PLANS
Employee Retirement Plans - The Company and certain subsidiaries sponsor termination and retirement
benefit plans that cover substantially all employees. Benefits are based on the employee's years of service,position and performance. If the termination is involuntary or caused by death, the employee is usuallyentitled to greater payments than in the case of voluntary termination.

- 137 -

The Company and certain subsidiaries have a contributory defined retirement benefit plan and several
unfunded termination plans administered by the Company and certain subsidiaries. Benefits under thecontributory defined retirement benefit plan are usually paid in a lump sum at the earlier of termination orretirement, although periodic payments are available under certain conditions. Benefits under the othertermination and retirement benefit plan are paid either as lump-sum payments or periodic payments undercertain conditions. The benefits are usually paid as a lump-sum payment, if the employee resigns before themandatory retirement age.
Contributory Defined Retirement Benefit Plan - The following provides a reconciliation of benefit
obligations, plan assets and funded status of the plans:Millions of Yen
2016

2015

¥ 34,085
1,074
321
66
1,893

¥ 33,712
1,021
417
66
1,001
(908)
(1,075)(149)

34,935

(950)
(850)
(100)
(6 )
244
35,777

Change 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 rate
Fair value of plan assets at the end of the year

¥ 42,156
2,176
633
65
(958)
(865)
(4 )
43,203¥ 43,137
(516)
1,275
66
(950)
(850)
(6 )
42,156¥ 37,738
5,565
1,751
66
(908)
(1,075)Funded status at the end of the year

¥

¥

¥

2017
Change in benefit obligations:Benefit obligations at the beginning of the year
Service cost
Interest cost
Participants' contributions
Actuarial (gain) loss
Prior service cost arising during the year
Benefits paid from plan assets
Settlement paid from plan assets
Settlement paid by the Company and certain subsidiaries
Changes in foreign currency exchange rate
Change in the scope of consolidation
Benefit obligations at the end of the year

¥ 35,777
1,103
183
65
(509)
271
(958)
(865)
(125)
(7 )

8,268

6,379

Amounts recognized in the consolidated balance sheets as of March 31, 2017 and 2016, consist of:Millions of Yen
2017
2016
Prepaid pension expense
Other current liabilities
Liability for termination and retirement benefit¥ 10,287(63 )(1,956)¥ 8,145(63 )(1,703)Total¥¥ 6,379- 138 -

8,268

34,085

43,137
9,052

Amounts recognized in accumulated other comprehensive income, pre-tax, as of March 31, 2017 and 2016
were as follows:
Millions of Yen
2017
2016
Actuarial loss (gain)
Prior service benefit

¥ 667
121

¥ (1,264)
607

Total

¥ 788

¥

(657)

The accumulated benefit obligation for all defined retirement benefit plans as of March 31, 2017 and 2016 was
as follows:
Millions of Yen
2017
2016
Accumulated benefit obligation¥34,935¥35,777

The projected benefit obligations and the fair value of the plan assets for the Company’s and certain
subsidiaries' pension plans with projected benefit obligations in excess of plan assets, and the accumulated
benefit obligations and the fair value of the plan assets for the Company and certain subsidiaries' pension plans
with accumulated benefit obligations in excess of plan assets were as follows:
Millions of Yen
2017
2016
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 plan
assets:Accumulated benefit obligations
Fair value of plan assets¥ 2,905886¥2,659
893

2,905
886

2,659
893

Net periodic benefit costs for the Company and certain subsidiaries' plans consisted of the following for theyears ended March 31, 2017, 2016 and 2015:

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss (gain)
Amortization of prior service benefit

2017

Millions of Yen
2016

2015

¥ 1,103183(967 )
213(215 )¥ 1,074321(967 )(461 )(491 )¥ 1,021417(865 )
220(492 )¥¥ (524 )

¥

317

301

The unrecognized net actuarial gain or loss and prior service benefit are being amortized within 12 years (theaverage remaining service life of active participants) using the declining-balance method and the straight-line
method, respectively.

- 139 -

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years
ended March 31, 2017, 2016 and 2015 were as follows:
Millions of Yen
2016

2015

¥ 1,718213(271 )(215 )¥ (3,376)(461)¥ 3,699220(491)(492 )¥ 1,445¥ (4,328)¥ 3,4272017
Actuarial gain (loss)
Amortization of actuarial loss (gain)
Prior service cost arising during the year
Amortization of prior service benefit

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic
benefit cost over the next year are summarized as follows:
Millions of
Yen
Actuarial loss
Prior service benefit¥ (124)(122)

The Company and certain subsidiaries use a measurement date of March 31 for their plans. The weightedaverage assumptions used as of March 31, 2017 and 2016 in computing the benefit obligations shown above
were as follows:

Discount rate

2017

2016

0.6%

0.5%

The weighted-average assumptions used as of March 31, 2017, 2016 and 2015 in computing the net periodic
benefit cost shown above were as follows:

Discount rate
Rate of increase in future compensation
Expected long-term rate of return on plan assets

2017

2016

2015

0.5%
5.3%
2.5%

1.0%
5.3%
2.5%

1.3%
7.6%
2.5%

The Company's approach to establishing the discount rate is based upon corporate bond indices. The discountrate assumption is based upon the effective yields as of March 31, 2017 on the corporate bond indices forwhich maturity dates approximate the timing of the expected future benefit payments.
The retirement benefit plans of the Company and a certain subsidiary 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%.

- 140 -

The Company’s and certain subsidiaries' plan investment strategy is to maintain actual asset weightings withina preset range of target allocations. The Company’s and certain subsidiaries' plan investments are broadly
diversified, consisting primarily of equity and debt securities. The Company and certain subsidiaries believethese ranges represent an appropriate risk profile for the planned benefit payments of the plans based on thetiming of the estimated benefit payments.
The asset allocation as of March 31, 2017 and 2016, was as follows:

Equity securities
Debt securities
Life insurance company general accounts
Real estate
Other short-term investments

2017

2016

48.3%
26.3%
11.1%
3.9%
10.4%

46.4%
30.6%
12.2%
3.9%
6.9%

The target allocation percentages are reviewed and approved by the Pension Committee. The actual
allocations for 2017 and 2016 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 basedon an agreement 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 Company’s and certain subsidiaries' plan assets using the fair value hierarchy
as of March 31, 2017 and 2016. The fair value hierarchy has three levels based on the reliability of the inputs
used to determine the fair value. For the reference to each level, see Note 20.
2017

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

¥

9,962
25

Total

¥

67

9,962
25

4,805

67
4,805

3,235

3,235
10,021
7,894
1,377
5,817

¥ 10,054- 141 -

Millions of Yen
Level 2
Level 3¥8,040

¥ 43,203

2016

Level 1

Assets evaluated by other than net asset value per
share
Equity securities:
Japanese 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

¥ 9,508

Total

¥

25

9,508

5,135

25
5,135

1,391

1,391
9,397
9,139
1,273
6,288

¥ 9,533¥

6,526¥ 42,156(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 34% Japanese companies and 66% foreigncompanies as of March 31, 2017 and 32% and 68%, respectively, as of March 31, 2016.
(c) This class includes approximately 15% of Japanese government bonds, 2% of Japanese municipal
bonds, 38% of foreign government bonds, 44% of corporate bonds and 1% of other short-term
investments as of March 31, 2017. This class includes approximately 27% of Japanese government
bonds, 4% of Japanese municipal bonds, 36% of foreign government bonds and 33% of corporate
bonds as of March 31, 2016.
(d) This class consists of hedge funds that invest in both long- and short-term debt securities as of March
31, 2017 and 2016.
(e) This class includes approximately 35% of corporate bonds, 2% of common stock of Japanesecompanies, 13% of common stock of foreign companies, 29% of real estate and 21% of other shortterm investments as of March 31, 2017. This class includes approximately 39% of corporate bonds,
2% of common stock of Japanese companies, 8% of common stock of foreign companies, 27% of realestate and 24% of other short-term investments as of March 31, 2016.
Equity securities and debt securities presented in Level 1 are primarily valued using a market approach basedon the quoted market prices of identical instruments. Pooled funds in equity securities or debt securities andhedge funds which are categorized in Level 2 are valued by the sponsor of the funds primarily based on quoted
prices in both active and inactive market for identical instruments which comprise the funds. Life insurancecompany general accounts include contracts with insurance companies with guaranteed rates of return andcapital, and those values are based on the sum of original value and return. Pooled funds are valued using the
net asset value per share provided by the administrator of the fund.
The Company’s and certain subsidiaries' funding policy for the funded plans is to contribute amounts
computed in accordance with actuarial methods accepted by Japanese tax law. The Company and certain
subsidiaries expect to contribute ¥613 million to their plans in the year ending March 31, 2018.

- 142 -

The following benefit payments, which reflect expected future services, as appropriate, are expected to bepaid:
Millions of
Yen

Year Ending March 31
2018
2019
2020
2021
2022
Thereafter¥ 1,879
1,996
2,007
2,008
1,943
9,623

Defined Contribution Plan - Certain subsidiaries have defined contribution plans. The amounts of cost
recognized for their contributions to the plan were ¥249 million, ¥219 million and ¥203 million for the years
ended March 31, 2017, 2016 and 2015, respectively.
Employee Early Retirement Program - The Company and certain subsidiaries provide additional benefits toemployees that elect to participate in the Company’s and certain subsidiaries' early retirement program.
Retirement benefits of ¥143 million, ¥125 million and ¥114 million were paid in addition to normal benefits
and charged to selling, general and administrative expenses for the years ended March 31, 2017, 2016 and2015, respectively.
Termination Plan for Directors - The Company previously had, and a certain subsidiary currently has,termination plans for directors. Payment of termination benefits to directors is made in a lump sum upon
termination and requires the approval of the shareholders before payment. In June 2005, the Company
rescinded its termination plan for directors upon the approval of its shareholders. The amount of benefit foreach individual was fixed as of June 29, 2005 and will remain frozen until the retirement of each respective
director. The outstanding liabilities were ¥340 million as of March 31, 2017 and 2016 and were recorded inother long-term liabilities. A certain subsidiary has plans for its directors and recorded a liability for
termination benefit for directors at the amount that would be needed if all directors were to resign at eachbalance sheet date in accordance with the guidance for determination of vested benefit obligation for a defined
benefit pension plan.
13.

SHARE-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, 2017, 2016 and 2015. The Company believes that such awards better align the interests of its directors
with those of its shareholders, by sharing both risk and return from fluctuations in stock prices and giving
motivation to enhance its corporate value. Each stock option is exercisable to acquire 1,000 shares of theCompany's common stock at ¥1 per share. The compensation cost is measured at fair value on the grant date.
Options vest over one year in proportion to the services rendered by the directors, and are 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 dateof retirement, whichever is earlier.
The fair value of the options is estimated by using the Black-Scholes option-pricing model with the following
assumptions.

- 143 -

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 date and they will exercise options
immediately after their retirement.

Expected dividend yield
Expected volatility
Risk-free interest rate
Expected term

2017

2016

2015

2.9%
25.1%
(0.2)%
2.5 years

2.0%
20.9%
0.0%
2.6 years

3.2%
18.7%
0.1%
3.1 years

A summary of stock option activities under the plan for the year ended March 31, 2017, was as follows:
Yen

Outstanding as of April 1, 2016
GrantedExercised
Outstanding as of March 31, 2017
Exercisable as of March 31, 2017

Millionsof YenShares

WeightedAverage
Exercise
Price

Years
WeightedAverage
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

431,000
69,00055,000445,000
52,000¥1
1
1
1
1

14.58 years
3.10 years

¥611
71

The total intrinsic value of options exercised was ¥69 million, ¥31 million and ¥6 million as of years ended
March 31, 2017, 2016 and 2015, respectively.
The total compensation costs recognized for the years ended March 31, 2017, 2016 and 2015 were ¥74
million, ¥67 million and ¥60 million, respectively. The total recognized tax benefits related thereto for theyears ended March 31, 2017, 2016 and 2015 were ¥23 million, ¥21 million and ¥21 million, respectively.
The weighted-average grant date fair values of options granted for the years ended March 31, 2017, 2016 and2015 were ¥1,044, ¥1,419 and ¥937, respectively.
As of March 31, 2017, 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.

- 144 -

14.

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 thatmeet certain 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 hasprescribed so in its articles of incorporation. The Company meets all the above criteria and, accordingly,
the Board of 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.
(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 capitalsurplus), depending on the equity account charged upon the payment of such dividends, until the total of
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 be reversed
without limitation. The Companies Act also provides that common stock, legal reserve, additional paidin capital, other capital surplus and retained earnings can be transferred among the accounts under certain
conditions upon resolution of the shareholders.
(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 theamount available for distribution to the shareholders which is determined by a specific formula.

- 145 -

15.

OTHER COMPREHENSIVE INCOME (LOSS)
The changes in the components of accumulated other comprehensive income, including amounts attributable to noncontrolling interests were as follows:
Millions of Yen
2016

2017
Foreign
Currency
Translation
Adjustments

Unrealized
Gain onSecurities

Balance at the beginning of the year (after-tax)
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)¥ 5,177(4,109)30(4,079)Balance at the end of the year (after-tax)

2015

PensionLiability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized
Loss onSecurities

PensionLiability
Adjustments¥ 17,966¥ (1,035)¥ 10,831¥ 20,821¥ 1,934

4,905(1,492)
3,413

1,062
(443)
619

(5,890 )220(5,670 )(4,169)1,336(2,833)(3,418)1,091(2,327)

(438)
134
(304)

(2)
1
(1)

(70 )
23
(47 )

(952)
308
(644)

114

(0 )

3

16

25

2

¥ 1,212¥ 21,075

5,177¥ 17,966¥ (1,035)

¥

(414)

¥

Foreign
Currency
Translation
Adjustments

Unrealized
Gain onSecurities

¥

2,310

¥ 11,606

9,019
(348)
8,671

15,809(5,593)
10,216

3,651(1,319)2,332(1,513)
539
(974)

(272)
96
(176)

(150)

(27 )

5

¥ 10,831¥ 20,821¥ 1,934

PensionLiability
Adjustments
¥

(227)

Reclassification adjustments (pre-tax) of unrealized gain or loss on securities are included in "Gain on sales or exchange of marketable securities and Investments - net" and “Valuation gain or loss on marketable securities and investments – net” in the
consolidated statements of income.
Reclassification adjustments (pre-tax) of pension liability adjustments are included in "Cost of sales" and "Selling, general and administrative expenses" in the consolidated statements of income as the net periodic benefit costs.
16.

INCOME TAXES
Domestic and foreign components of income before income taxes and equity in net income of affiliated companies for the years ended March 31, 2017, 2016 and 2015 were summarized as follows:
2017

Millions of Yen
2016

2015

Japan
Foreign¥ 27,487(10,918)¥ 24,002(9,045)¥ 19,902(8,560)Total¥ 16,569¥ 14,957¥ 11,342

Domestic and foreign components of income tax expense for the years ended March 31, 2017, 2016 and 2015 consist of:Current:
Japan
Foreign

Deferred:Japan
Foreign

Total income taxes

2017

Millions of Yen
2016

2015

¥ 3,230
1,600¥ 1,666
1,776¥ 3,852
1,371¥ 4,830¥ 3,442¥ 5,223¥690(240 )¥ 1,483(195 )¥ (1,983)
63

¥

450

¥ 1,288¥ (1,920)¥ 5,280¥ 4,730¥ 3,303- 146 -

Income taxes in Japan applicable to the Companies, imposed by the national, prefectural and municipal
governments, in the aggregate resulted in a normal effective statutory tax rate of approximately 30.9%, 33.1%
and 35.6% for the years ended March 31, 2017, 2016 and 2015, respectively. Foreign subsidiaries are subject
to income taxes of the countries in which they operate.
The 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,
2017, 2016 and 2015:
2017

2016

2015

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 charges on goodwill
Changes in Japanese income tax rates
Other – net

30.9%

33.1%

35.6%

2.4
3.1
(2.1)
(0.5)
(0.4)
(1.8)

2.8
1.1
0.1
(1.2)
(0.2)
(0.1)

0.2
0.1

(3.0)
(1.0)

3.6
(9.4)
(0.5)
(3.3)
(0.1)
0.0
15.2
(10.7)(1.4)

Effective tax rates

31.9%

31.6%

29.0%

The Act on the Partial Revision of the Income Tax Act, etc. (Act No. 9 of 2015) and the Act on the Partial
Revision of Local Tax Act, etc. (Act No. 2 of 2015), were issued on March 31, 2015, and the corporate tax rate
has been lowered starting from the consolidated fiscal year beginning on and after April 1, 2015. Accordingly,
from the end of the fiscal year ended March 31, 2015, with respect to the Company and our major domestic
subsidiaries, the effective statutory tax rate used for the calculation of deferred tax assets and deferred tax
liabilities has been changed from the current 35.6% to 33.1% for the temporary differences which were
expected to reverse during the consolidated fiscal year beginning April 1, 2015 and to 32.3% for the temporary
differences which are expected to reverse in and after the consolidated fiscal year beginning April 1, 2016.
Due to this tax rate change, the deferred income taxes recognized in the fiscal year ended March 31, 2015
decreased by ¥1,209 million as a result of the reversal of the deferred tax assets and deferred tax liabilities.
Following the amendments described above, new amendments, the Act on the Partial Revision of the Income
Tax Act, etc. (Act No. 15 of 2016) and the Act on the Partial Revision of Local Tax Act, etc. and Related
Matters (Act No. 13 of 2016) were enacted in the Diet session on March 29, 2016, and the corporate tax rate islowered starting from the consolidated fiscal year beginning on or after April 1, 2016. Accordingly, withrespect to the Company and our major domestic subsidiaries, the effective statutory tax rate used for the
calculation of deferred tax assets and deferred tax liabilities has been changed from 32.3% to 30.9% for the
temporary differences which are expected to reverse during the consolidated fiscal year beginning April 1,2016 and the consolidated fiscal year beginning April 1, 2017, and to 30.6% for the temporary differences
which are expected to reverse in and after the consolidated fiscal year beginning April 1, 2018.
Due to this tax rate change, the deferred income taxes recognized in the fiscal year ended March 31, 2016
decreased by ¥454 million as a result of the reversal of the deferred tax assets and deferred tax liabilities.

- 147 -

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax
balances as of March 31, 2017 and 2016 were as follows:
Millions of Yen
2017
DeferredDeferredTax
TaxAssetsLiabilities

2016
DeferredDeferredTax
TaxAssetsLiabilities

Allowance for returns
Allowance for doubtful receivables
Accruals not currently deductible
Inventory valuation
Accrued bonuses
Impairment charges on marketable securities andinvestments
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
Asset retirement obligation
Prepaid pension expense
Liability for termination and retirement benefit
Tangible fixed assets
Tax loss carryforwards
Intangible assets
Other temporary differences
Total
Valuation allowance

¥

¥

Total

¥ 7,322

713
14
221
830
963
972

638
17
139
964
1,038
1,118

¥

1,992
2,209

¥

10,738
818
162
298
761
267

9,395
818
167
86
743
277

2,462
478
1,472
1,491
525
9,167
(1,845)

1,126
2,564

1,872
415
1,439
2,017

1,761
95
20,075¥ 20,075

577
9,635(2,360)¥ 7,275

2,017
203
17,995¥ 17,995

The valuation allowance decreased by ¥515 million and ¥175 million for the years ended March 31, 2017 and2016, respectively.
On November 28, 2014, the Company resolved a restructuring plan for its group organization. Based on the
resolution, most of the assets and liabilities of Lecien Corp. ("Lecien"), a wholly-owned subsidiary of theCompany, were transferred to a newly-established subsidiary, and Wacoal Corp., another wholly-owned
subsidiary of the Company, merged with Lecien, including Lecien’s remaining of assets and liabilities on
April 1, 2015.
In conjunction with the merger, deferred tax assets for temporary differences related to the merged assets andliabilities and tax loss carryforwards were transferred from Lecien to Wacoal Corp., such deferred tax assets
which had been fully covered by a valuation allowance due to the poor operating results of Lecien. However,as a result of considering the change in the realizability of deferred tax assets triggered by the resolution, theCompany reversed ¥1,398 million of valuation allowance and recognized the same amount of income tax
benefit for the year ended March 31, 2015.
The Companies reversed a part of the valuation allowance and utilized ¥257 million and ¥189 million of tax
loss carryforwards, and recognized tax benefits of ¥77 million and ¥56 million for the years ended March 31,2017 and 2016, respectively.

- 148 -

As of March 31, 2017, certain subsidiaries had tax loss carryforwards, which are available to offset futuretaxable income of such subsidiaries, expiring as follows:
Millions of
Yen

Year ending March 31
2018
2019
2020
2021
2022
2023
2024
2025
2026
Thereafter

¥

267
439
812
194
414

Total

¥ 5,200

43
121
657
2,253

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures
which was deemed to be permanently invested as of March 31, 2017 and 2016.
A reconciliation of beginning and ending amounts of unrecognized tax benefits was as follows:
2017

Millions of Yen
2016

Balance at the beginning of the year
Additions based on tax positions related to the current year
Reductions for tax positions of prior years

¥ 300
1
(297)

¥ 312
1
(13 )

¥ 296
16

Balance at the end of the year

¥

¥ 300

¥ 312

4

2015

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is ¥4
million, ¥300 million and ¥312 million as of March 31, 2017, 2016 and 2015, 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, 2017, 2016 and 2015 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 2014 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. The transfer pricing examinations of certain
domestic and U.S. subsidiaries' 2007 and 2010 fiscal years were completed.
17.

RELATED PARTY TRANSACTIONSThe Companies purchase merchandise from numerous suppliers throughout the world, including certain
affiliated companies of the Companies. The Companies purchased merchandise from affiliated companies in
the amount of ¥2,646 million, ¥2,468 million and ¥2,581 million in the years ended March 31, 2017, 2016 and2015, respectively. The accounts payable to affiliated companies were ¥237 million and ¥188 million as ofMarch 31, 2017 and 2016, respectively.

- 149 -

The Companies also sell supplies, materials and products to certain affiliated companies. Aggregate sales toaffiliated companies were ¥1,898 million, ¥335 million and ¥386 million in the years ended March 31, 2017,2016 and 2015, respectively. The accounts receivable from affiliated companies were ¥513 million and ¥97
million as of March 31, 2017 and 2016, respectively.
The Companies earn royalties from the use of the Wacoal Brand by certain affiliated companies. The amountof royalty revenue earned was ¥263 million, ¥266 million and ¥288 million in the years ended March 31,
2017, 2016 and 2015, respectively. Other accounts receivable from affiliated companies, which are included
in other current assets in the consolidated balance sheets, were ¥226 million and ¥225 million as of March 31,2017 and 2016, respectively.
18.

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 thatwould 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 138,966,630 shares, 140,842,184 shares and 140,839,059
shares for the years ended March 31, 2017, 2016 and 2015, 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 139,393,263 shares, 141,255,241 shares and 141,203,998 shares for the years
ended March 31, 2017, 2016 and 2015, respectively.

19.

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, 2017 and 2016 were as follows:
Millions of Yen
2017
2016
Carrying
Fair
Carrying
Fair
AmountValue
AmountValue
Assets:Marketable securities (Notes 3 and 21)
Investments (Notes 3 and 21)
Total assets

¥

1,445
58,586¥

1,442
58,582¥

1,880
54,733¥

1,879
54,730¥ 60,031¥ 60,024¥ 56,613¥ 56,609

Long-term debt including current portion

¥ 235

¥ 235

¥ 388

¥ 389

Total liabilities

¥ 235

¥ 235

¥ 388

¥ 389

Liabilities:

There are investments in nonmarketable equity securities and debt securities for which there are no readily
determinable fair values. See Note 3 for further information. The carrying amounts of all other financial
instruments approximate their estimated fair values because of the short maturity of those instruments. For
information about fair values of foreign exchange contracts, see Note 20.

- 150 -

Marketable Securities and Investments - Held-to-maturity debt securities are classified as marketablesecurities and investments as of March 31, 2017 and 2016. The fair value of these held-to-maturity debt
securities are classified as Level 1. For all other investments included in marketable securities andinvestments, see Notes 3 and 20.
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.
20.

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.

- 151 -

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, 2017 and 2016 were as
follows:
2017

Level 1

Assets:Marketable securities:
Municipal bonds
Mutual funds
Total marketable securities
Investments:
Equity securities
Mutual funds
Total investments
Derivative instruments:
Foreign exchange contracts
Total assets

¥ 10
868
878

Liabilities:
Derivative instruments:
Foreign exchange contracts
Total liabilities

Level 1

Assets:Marketable securities:
Municipal bonds
Corporate bonds
Mutual funds
Total marketable securities
Investments:
Equity securities¥ 53,925

Total assets¥ 53,925

Liabilities:
Derivative instruments:
Foreign exchange contracts
Total liabilities

Total

¥

¥ 57,976
44
58,020¥ 58,020

2016

Millions of Yen
Level 2
Level 310868
878
57,97644
58,020

2

2

¥ 880

¥ 58,900

¥

4

¥

4

¥

4

¥

4

Millions of Yen
Level 2
Level 3

¥

10
395
1,361
1,766

Total

¥

10
395
1,361
1,766
53,925¥ 1,766¥ 55,691

¥

297

¥

297

¥

297

¥

297

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 recorded impairment charges on marketable securities and investments
if a decline in fair value of marketable securities and investments is determined to be other than temporary.

- 152 -

Foreign exchange contracts presented in Level 2 are valued by financial institutions based on market data inboth active and inactive market.
Assets Measured at Fair Value on a Nonrecurring Basis
There were no assets measured at fair value on a nonrecurring basis as of March 31, 2017. Assets measured atfair value on a nonrecurring basis as of March 31, 2016 were as follows:
Millions of Yen
2016

Level 1Land
Buildings and structures
Machinery and equipment

Level 2

Level 3

Total

Impairment
Losses

¥133
0
0

¥133
0
0

¥ (233)(8)(15)¥ (256)

During the fiscal year ended March 31, 2016, the Company categorized a certain asset group as real estate forrent. The Company performed an impairment analysis as of March 31, 2016 and determined that the fair valueof the real estate was below its carrying amount. Accordingly, the Company reduced the carrying amountfrom ¥366 million to ¥133 million for land and from ¥8 million to ¥0 million for buildings and structures,
respectively. The fair value was measured mainly based on the real estate appraisal value. An impairment
charge on the long-lived assets of ¥241 million was included in an operating expense of Wacoal Business(Domestic) in the segment information.
As of March 31, 2015, goodwill with a carrying amount of ¥9,170 million was written down to its implied fairvalue of ¥4,325 million, resulting in an impairment charge of ¥4,845 million, which is included in earnings forthe year ended March 31, 2015. The impairment arose due to the decline in its fair value, which was mainly
caused by a downturn in consumption due to general market conditions. To measure the fair values of thereporting units, 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, 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.
Trademarks with a carrying amount of ¥3,170 million as of March 31, 2015 were written down to their fairvalues of ¥1,994 million, resulting in recognition of an impairment charge of ¥1,176 million for the year ended
March 31, 2015. The impairment arose due to the decline in their fair value, which was mainly 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
the management's cash flow projections for the next future five years, and after five years, future cash flows
were estimated using the perpetuity growth rate of 0%. The 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.

- 153 -

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 their results of their valuations are reviewed by the responsible
personnel of the Companies. All valuations, including those performed by the external experts, are reviewed
and approved by management of the Companies before being recorded in the general ledger.
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 year ended March 31, 2015 is as follows:

21.

March 31, 2015

Millionsof YenFair
Value

Trademarks¥1,994

Valuation
Technique
Relief-fromroyalty method

Principal Unobservable
Input

Range

Discount rate

7.3% - 11.3%

Royalty rate
Short-term revenue growth
rates(within five years)
Perpetuity growth rate (overfive years)

3.0% - 4.0%
2.3% - 5.3%
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 are provided by the 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 are used to mitigate such risk.
Derivative Instruments Not Designated as A Hedge - Foreign exchange contracts are classified 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 in foreign currency exchange
rates, and the changes in fair value of such derivative instruments are recorded in earnings immediately.

- 154 -

Notional contract amounts of foreign currency exchange contracts that are not designated as hedges are ¥1,313
million and ¥5,366 million as of March 31, 2017 and 2016, respectively. The changes in the fair value of theforeign currency exchange contracts are recorded in earnings, since the foreign currency exchange contracts
are not designated as hedges. The Companies recognized a gain of ¥295 million, a loss of ¥(506) million and again of ¥192 million in other - net of other income (expenses) for the years ended March 31, 2017, 2016 and2015, respectively.
The Companies recorded the derivative instruments at fair value in the consolidated balance sheets as othercurrent assets and other current liabilities in the amount of ¥2 million and ¥4 million, respectively, as of March
31, 2017, and as other current liabilities of ¥297 million as of March 31, 2016.
22.

REORGANIZATION EXPENSES
Eveden Huit SAS, a wholly-owned subsidiary of the Company which sold underwear and swimwear, filedwith the Rennes Commercial Court in France for reorganization on April 1, 2016. On July 9, 2016, thesubsidiary was instructed to transfer its business to Trendy Capital Co., which operates in France.
Accordingly, in connection with this reorganization, expenses of ¥750 million were recognized during the year
ended March 31, 2017. The total amount of reorganization expenses are estimated to be ¥805 million.
The changes in the amount of related liabilities for the year ended March 31, 2017 were as follows:

2017
Balance at the beginning of theyear:
Reorganization expenses
Expenses without cash payment
Cash payments madeForeign currency translation
adjustments

Retirement
Cost

¥ 237
(237)

Balance at the end of the year

Millions of Yen
Depreciation and Losson Disposal
Otherof Assets without
RelatedCash Payment – net
Expenses

¥ 301
(301)

Total

¥ 212
(2)
(121)

¥ 750
(303)
(358)

(2)

(2)

¥

87

¥

87

The Companies recorded ¥211 million and ¥539 million of reorganization expenses in costs of sales andselling, general and administrative expenses, respectively, in the consolidated statement of income for the year
ended March 31, 2017. These expenses were included in the operating costs and expenses for Wacoal
Business (Overseas) in the segment information.
23.

ASSETS CLASSIFIED AS HELD FOR SALE
The Companies transferred land, located at the site of the Nagoya branch, on April 27, 2016 to make effective
use of resources because it was unlikely that the Companies would use this site for future business.
The Companies recorded ¥295 million of land held for sale in other current assets in the consolidated balance
sheet as of March 31, 2016, which was included in the asset group for Wacoal Business (Domestic) in thesegment information.

- 155 -

As a result of the transfer, the Companies recorded a gain on sale of property, plant and equipment of ¥3,770 million in the consolidated statement of income for the year ended March
31 2017.
24.

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 the Companies' resources and in assessing their performance. The accounting policies used for these reportable segments are thesame 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 andhosiery. The "Wacoal business (overseas)" segment produces and sells innerwear (consisting of foundation, lingerie, nightwear and children's innerwear), outerwear, sportswear,
hosiery and other textile-related products. The "Peach John" segment produces and sells 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 of foundation, lingerie, nightwear and children's innerwear), outerwear,
other textile-related products, mannequins and construction of stores and interior design.
Information about operating results and assets for each segment as of and for the years ended March 31, 2017, 2016 and 2015 is as follows:
Millions of Yen
2017
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Total
Operating income
Total assets and capital expenditures:
Total assets
Capital expenditures

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥ 118,389
1,098
119,487¥ 48,423
9,236
57,659¥ 11,107
1,006
12,113¥ 17,962
5,947
23,909¥ (17,287)(17,287)

109,280
3,248
112,528
6,959

53,3201,284
54,604
3,055

11,427
312
11,739374

23,044
188
23,232
677(17,287)259,531
5,233

77,313
1,799

11,882355

18,684
58(72,452)

294,958
7,445

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination

Consolidated¥ 120,570
1,427
121,997¥ 51,869
8,595
60,464¥ 11,190
775
11,965¥ 19,288
6,102
25,390¥ (16,899)(16,899)

110,144
3,043
113,187
8,810

54,711
1,320
56,031
4,433

11,442
265
11,707258

24,839187
25,026364(16,899)

254,269
6,977

80,580
1,694

11,959245

18,866
62(72,820)

Consolidated¥ 195,881(17,287)

195,881
179,784
5,032
184,816
11,065

Millions of Yen
2016
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Total
Operating income
Total assets and capital expenditures:
Total assets
Capital expenditures- 156 -¥ 202,917(16,899)

202,917
184,237
4,815
189,052
13,865292,854
8,978

Millions of Yen
2015
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on goodwill (Note 8)
Impairment charges on other intangible assets (Note 8)
Total
Operating income (loss)

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥ 112,203
1,906
114,109¥ 48,107
8,592
56,699¥ 11,626
650
12,276¥ 19,829
5,046
24,875¥ (16,194)(16,194)

102,789
2,876

50,444
1,479

24,469248(16,194)

105,665
8,444

51,923
4,776

12,080
471
4,845
1,176
18,572(6,296)

24,717
158(16,194)

261,467
3,338

78,143742

11,748300

20,78998(71,875)

Total assets and capital expenditures:
Total assets
Capital expenditures

Consolidated¥ 191,765
191,765
173,588
5,074
4,845
1,176
184,683
7,082
300,272
4,478

The sum of the operating income (loss) of the reportable segments is consistent with the operating income on the consolidated statements of income. For a reconciliation fromoperating income to income before income taxes and equity in net income of affiliated companies, see other income (expenses) 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 Service Information
Net sales information by product and service for the years ended March 31, 2017, 2016 and 2015 is as follows:

Innerwear:
Foundation and lingerieNightwear
Children's underwear
Subtotal
Outerwear/Sportswear and others
Hosiery
Other textile goods and related products
OthersTotal

2017

Millions of Yen
2016

2015

¥ 145,188
9,154
1,429
155,771¥ 151,166
10,098
1,386
162,650¥ 142,681
9,514
1,373
153,568¥¥¥

17,1892,235
9,346
11,340¥ 195,881

19,074
2,178
7,161
11,854¥ 202,917

16,2272,437
7,616
11,917¥ 191,765- 157 -

Geographic Information
Information by major geographic area as of and for the years ended March 31, 2017, 2016 and 2015 is asfollows:

Net sales:Japan
Asia and Oceania
Americas and Europe
Consolidated
Long-lived assets:Japan
Asia and Oceania
Americas and Europe
Consolidated

2017

Millions of Yen
2016

2015

¥ 147,061
19,187
29,633¥ 150,673
17,90634,338¥ 143,250
16,261
32,254¥ 195,881¥ 202,917¥ 191,765¥ 47,452
4,661
3,175

¥ 46,136
4,490
3,312

¥ 43,200
2,998
2,990

¥ 55,288¥ 53,938¥ 49,188

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.
25.

SUBSEQUENT EVENTS(Purchase of Treasury Stock)
On May 10, 2017, the Board of Directors resolved to purchase treasury stock with the specific purchasing
method as described below pursuant to the provisions of Paragraph 1, Article 459 of the Companies Act asfollows.
a.

Reason for Purchase:
To improve capital efficiency and to implement our capital policy with increased flexibility tailored to thebusiness environmentb.

Type of Shares to Be Purchased:
Common stock of the Companyc.

Total Number of Shares to Be Purchased:
2,800,000 shares (at maximum)d.

Purchase Period:
From May 15, 2017 through December 31, 2017e.

Total Amount to Be Purchased:¥4,000 million (at maximum)- 158 -

(Share Consolidation and Amendment of the Number of Shares Constituting One Share Unit)
On May 10, 2017, the Board of Directors resolved to submit a proposal for share consolidation andamendment of the number of shares constituting one share unit to the 69th ordinary general meeting ofshareholders held on June 29, 2017, and the proposal was approved.
a.

Reason for Share Consolidation and Amendment of the Number of Shares Constituting One Share Unit:
All Japanese stock exchanges issued the "Plan of Action for Consolidating Unit of Trading," and have
purpose the minimum trading unit of common stock for domestically listed companies to aiming to unify
100 shares and a unit trading price within a range from ¥50,000 to ¥500,000. In response to this, thenumber of shares constituting one share unit was amended to 100 shares from 1,000 shares, and a shareconsolidation pursuant to which two shares will be consolidated into one share was implemented, which
was determined based on the Company’s mid- and long-term stock price fluctuations.

b.

Details of the Share Consolidation:
Type of shares subject to the share consolidation:
Common stock of the Company
Method and ratio of share consolidation:
From October 1, 2017, shares possessed by shareholders of record as of September 30, 2017 (September
29, 2017 in fact) are consolidated in at a ratio of one for two shares.
Number of decreasing shares due to the share consolidation:
Total number of authorized shares (on March 31, 2017)
Decrease in shares due to the share consolidation
Total number of authorized shares after the share consolidation

143,378,085 shares
71,689,043 shares
71,689,042 shares

The "Decrease in shares due to the share consolidation" is theoretical value calculated by multiplying thetotal number of authorized shares before the share consolidation and the ratio of share consolidation.
Correspondence to fractional shares occurring:If any fractional shares arise as a result of the share consolidation, the Company will collectively
purchase all such fractional shares and distribute the proceeds to each of the shareholders holding
fractional share(s) in proportion to the number of fractional share(s) held by each of such shareholders,pursuant to the provisions of the Companies Act.
c.

Contents of Amendment of the Number of Shares Constituting One Share Unit:
Resulting from the share consolidation, the number of shares constituting one share unit was amended to
100 shares from 1,000 shares.

d.

Schedule of the Share Consolidation and Amendment of the Number of Shares Constituting One Share
Unit:
Resolution day of the Board of Directors
Resolution day of the ordinary general meeting of shareholders
Share consolidation and amendment of the number of shares constituting
one share unit

- 159 -

May 10, 2017
June 29, 2017
October 1, 2017(scheduled)e.

Effect on Per Share Information:
Assuming that the share consolidation had taken place on April 1, 2015, per share information for theyears ended March 31, 2017 and 2016 would be as follows:
Yen
Shareholder's equity per share
Basic net income attributable to Wacoal Holdings Corp. per share
Diluted net income attributable to Wacoal Holdings Corp. per share

2017

2016

¥3,317.06¥180.26¥179.71¥3,185.80¥158.46¥158.00(Dividend Declaration)
On May 10, 2017, the Board of Directors resolved to pay a cash dividend of ¥180 per 5 shares of common
stock to holders of record as of March 31, 2017 (aggregate amount of ¥4,940 million).

******- 160 -

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

Office for handling businessTransfer agent

March 311,000 shares(Special Account)
Osaka Securities Transfer Section
Mitsubishi UFJ Trust and Banking Corporation
6-3, Fushimi 3-chome, Chuo-ku, Osaka
Securities Transfer Section
Sumitomo Mitsui Trust Bank, Limited
1-10, Nikkocho, Fuchu-shi, Tokyo (Note 2)(Special Account)
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Forwarding office―――Handling charge forpurchase and Sale

Free of charge

Method of public noticeSpecial benefit forshareholders(Notes)

1.

2.

3.

Public notice of the Company shall be in electronic form; provided that, where public
notice cannot be provided electronically due to an accident or unavoidable event, it shallbe 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 1,000 shares or more, but less than 3,000 shares:
Wacoal Essence Check worth JPY3,000 shall be presented twice a year.
- To shareholders holding 3,000 shares or more:
Wacoal Essence Check worth JPY5,000 shall be presented twice a year.
(ii) Shareholder special discount shall be made for Wacoal products by means of catalogue
sales as follows:- Wacoal catalogue shall be sent to those shareholders who want it and 20% discountshall be made for the products ordered for purchase by such shareholders.

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 put 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.
For those shareholders of the Company who held shares of Lecien Corporation at the special account as of August
16, 2009 (i.e., the day preceding the effective date of the share exchange between the Company and Lecien
Corporation), Sumitomo Mitsui Trust Bank, Limited shall act as an account management institution of the special
account.
It was approved at the 69th Ordinary General Meeting of Shareholders held on June 29, 2017 to amend the Articles
of Incorporation of the Company so as to change the number of shares in one unit of shares from 1,000 shares to 100
shares effective as of October 1, 2017, which is the effective date of share consolidation.

- 161 -

4.

It was approved at the 69th Ordinary General Meeting of Shareholders held on June 29, 2017 to amend the Articles
of Incorporation of the Company so as to change the provisions on “Record Date for Allocation of Surplus”
following the introduction of the interim dividend policy.
The record dates for respective dividend payments are as follows:
Interim dividends
September 30 of each year
Year-end dividends
March 31 of each year

- 162 -

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 fiscal year ended
March 31, 2017, to the filing date of the Annual Securities Report.
(1） Annual Securities Report andthe attachments thereto, andFiscal Year(68th Fiscal Year)

From April 1, 2015
to March 31, 2016

Confirmation Letter(2) Amendment to Annual
Securities Report andJune 29, 2016
Fiscal Year(68th Fiscal Year)

Confirmation Letter

Amendment to the Annual
Securities Report (FromFiled with the Director of the
Kanto Local Finance Bureau on

April 1, 2015
to March 31, 2016), andConfirmation Letter

July 28, 2016(3） Internal Control Report and theattachments thereto(4） Quarterly Report andConfirmation Letter

Filed with the Director of the
Kanto Local Finance Bureau on

Filed with the Director of the
Kanto Local Finance Bureau on
June 29, 2016
(First quarter of 69h
Fiscal Year)

From April 1, 2016
to June 30, 2016

(Second quarter of 69th From July 1, 2016
Fiscal Year)to September 30, 2016

(Third quarter of 69th
Fiscal Year)

From October 1, 2016
to December 31, 2016

Filed with the Director of the
Kanto Local Finance Bureau on
August 10, 2016
Filed with the Director of the
Kanto Local Finance Bureau on
November 11, 2016
Filed with the Director of the
Kanto Local Finance Bureau on
February 10, 2017(5） Extraordinary Report

Extraordinary Report on the Results of the Exercise of

Filed with the Director of the

Voting Rights at General Meeting of Shareholders

Kanto Local Finance Bureau on

pursuant to Item 9-2, Paragraph 2, Article 19 of the
Cabinet Office Ordinance Concerning Disclosure of
Corporate Affairs, etc.

June 30, 2016

- 163 -

(6） Share Repurchase Report

Reporting Period

From June 2, 2016
To June 30, 2016

Reporting Period

Reporting Period

Reporting Period

Reporting Period

From July 1, 2016
To July 31, 2016
From January 1, 2017
To January 31, 2017
From February 1, 2017
To February 28, 2017
From May 1, 2017
To May 31, 2017

- 164 -

Field with the Director of the
Kanto Local Finance Bureau on
July 5, 2016
Field with the Director of the
Kanto Local Finance Bureau on
August 10, 2016
Field with the Director of the
Kanto Local Finance Bureau on
February 10, 2017
Field with the Director of the
Kanto Local Finance Bureau on
March 10, 2017
Field with the Director of the
Kanto Local Finance Bureau on
June 6, 2017

Part II 【Information on Guarantors etc. for the Company】
Not applicable.

- 165 -

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, 2017 and 2016, 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, 2017 (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, 2017 and 2016, and the results of
their operations and their cash flows for each of the three years in the period ended March 31, 2017, in accordancewith accounting principles generally accepted in the United States of America.
Convenience Translation
Our audits also comprehended the translation of the 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 thefinancial statement amounts into U.S. dollars has been made solely for 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 ourreport is included within this Annual Securities Report as information for readers.

DELOITTE TOUCHE TOHMATSU LLC
June 29, 2017

NOTE TO READERS:
The following is an English translation of the Independent Auditors' Report filed under the Financial Instruments andExchange Act 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 ("ICFR under FIEA") and one conducted under the attestation standards establishedby the American Institute of 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 the attestation standards establishedby 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 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 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 selectionof significant business units.
(TRANSLATION)
INDEPENDENT AUDITORS' REPORT
June 29, 2017
To the Board of Directors of Wacoal Holdings Corp.
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Fumihiko Kimura
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Hiroaki Sakai
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Seiichiro Nakashima
Audit of Financial Statements
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements included in the Financial Section, namely, the consolidated balance sheet as ofMarch 31, 2017 of Wacoal Holdings Corp. and its consolidated subsidiaries (the "Company"), and the consolidated
statements of income, comprehensive income, equity and cash flows for the fiscal year from April 1, 2016 to March
31, 2017, and a summary of significant accounting policies and other explanatory information.

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 pursuant to the thirdparagraph of the Supplementary Provisions of the Cabinet Office Ordinance for Partial Amendment of theRegulations for Terminology, Forms and Preparation Methods of Consolidated Financial Statements (No. 11 of the
Cabinet Office Ordinance in 2002), 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.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements arefree 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 entity's preparation andfair 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 entity's internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting 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 consolidated subsidiaries as of March 31, 2017, and the resultsof their operations and their cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Audit of Internal Control
Pursuant 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 the Company as of March 31, 2017.
Management's Responsibility for the 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. There is a possibility that misstatements may not becompletely prevented or detected by internal control over financial reporting.
Auditors' Responsibility
Our responsibility is to express an opinion on management's report on internal control based on our internal control
audit. We conducted our internal control audit in accordance with auditing standards for internal control overfinancial reporting generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether management's report on internal control is free from material misstatement.

An internal control audit involves performing procedures to obtain audit evidence about the results of theassessment of internal control over financial reporting in management's report on internal control. The
procedures selected depend on the auditors' judgment, including the significance of effects on reliability offinancial reporting. An internal control audit includes examining representations on the scope, procedures andresults 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.
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, 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. and its consolidated
subsidiaries as of March 31, 2017 is effectively maintained, presents fairly, in all material respects, the resultsof the assessment of internal control over financial reporting in accordance with assessment standards forinternal control over financial reporting generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required
under the provisions of the Certified Public Accountants Act.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

【Cover】【Document Filed】

Internal Control Report【Applicable Law】

Paragraph 1, Article 24-4-4 of the Financial Instruments and Exchange Act【Filed to】

Director, Kanto Local Finance Bureau【Filing Date】

June 29, 2017

【Company Name】

KABUSHIKI KAISHA WACOAL HOLDINGS【Company Name in English】

WACOAL HOLDINGS CORP.

【Position and Name of Representative】

Yoshikata Tsukamoto, President and Representative Director【Position and Name of Chief Financial
Officer】

Masaya Wakabayashi, Director and Vice President【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 Masaya Wakabayashi, 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 inaccordance with the basic framework for internal control set forth in "The Standards and Practice Standards forManagement Assessment and Audit of Internal Control Over Financial Reporting" published by the BusinessAccounting 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 our 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 the process-level controls.
At the selected significant business units, we included, in the scope of assessment, those business processes leading
to sales or accounts receivable and inventories, as significant accounts that may have a material impact on thebusiness objectives of us. 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 thefinancial reporting, (1) those business processes relating to greater likelihood of material misstatements andsignificant account involving estimates and the management's judgment, and (2) those business processes relating tobusinesses or operations dealing with 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, 2017.
4.【Supplementary Matters】
Not applicable.
5.【Special Information】
Not applicable.