Annual Securities Report(The 71st Fiscal Year)
From April 1, 2018 to March 31, 2019

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

E00590

The 71st Fiscal Year (from April 1, 2018 to March 31, 2019)

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 27, 2019.
As used in this report , unless the context otherwise requires, “the Company” and “Wacoal Holdings” refer to
Wacoal Holdings Corp., and “Wacoal,” “we,” “us,” “our” and similar terms refer to Wacoal Holdings Corp. and its
consolidated subsidiaries. References to “U.S. dollars” or “$” are to the currency of the United States andreferences to “yen” or “¥” are to the currency of Japan.
All financial statements and information contained in this report have been prepared in accordance with accounting
principles generally accepted in the United States, or U.S. GAAP except where otherwise noted.
A Cautionary Note on Forward-Looking Statements
This report contains forward-looking statements that are based on our current expectations, assumptions, estimatesand projections about our companies and our industry. You can identify these statements by the fact that they do
not relate strictly to historic or current facts. The forward-looking statements discuss future expectations, identify
strategies, contain projections of results of operation or of financial position, or state other “forward-looking”
information. 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 Internet sales capabilities; our ability toeffectively manage our inventory levels, and effects of irregular weather events; our ability to reduce costs; ourability to recruit and maintain qualified personnel; risks related to conducting our business internationally; risks
from acquisitions and other strategic transactions with third parties; risks relating to return of investment for thedevelopment of new markets; risks relating to intellectual property; risks relating to information system; 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, 2. 【Risk Factors】” and elsewhere in this report.
The forward-looking statements are subject to various risks and uncertainties. Information contained in thesections listed above and elsewhere in this annual report identifies factors that could cause our actual results,
performance or achievements to differ materially from those expressed or implied in any forward-looking
statement.
We undertake no obligation to update any forward-looking statements contained in this annual report, whether as aresult of new information, future events or otherwise.

Contents
Page
Annual Securities Report for the 71st Fiscal Year
【Cover】

1

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

2

I.

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

2

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

2

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

6

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

7

II.

III.

IV.

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

9

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

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

12

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

12

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

14

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

18

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

27

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

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

29

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

29

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

29

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

31【Information on the Company】 ………………………………………………………………………………

32

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

32

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

60

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

62

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

63

V.

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

91

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

91

VI.

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

134

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

135

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

135

2.【Other Reference Information】……………………………………………………………………………… 135
Part II【Information on Guarantors etc. for the Company】……………………………………………………………

Auditors’ Report and Internal Control Report136

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 27, 2019

【Fiscal Year】

The 71st Fiscal Year (from April 1, 2018 to March 31, 2019)【Company Name】

KABUSHIKI KAISHA WACOAL HOLDINGS【Company Name in English】

WACOAL HOLDINGS CORP.

【Position and Name of Representative】

Hironobu Yasuhara, President and Representative Director【Address of Head Office】

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

Kyoto (075) 682-1007【Contact Person】

Shinichi Kitagawa, General Manager of Accounting Department【Contact Address】

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

Kyoto (075) 682-1007【Contact Person】

Shinichi Kitagawa, 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

67th

68th

69th

70th

71st

Year-EndMarch 2015

March 2016

March 2017

March 2018

March 2019

191,765

202,917

195,881

195,725

194,201

Operating income

6,377

12,274

10,282

11,494

4,879

Net income attributable to
Wacoal Holdings Corp.

8,444

11,15912,525

9,745

341

Comprehensive income (loss)

28,813(49)

12,296

16,448(5,046)

Wacoal Holdings Corp.
shareholders' equity

228,857

224,374

227,568

232,712

216,494

Total assets

300,272

292,854294,958

298,534

281,767(yen)

3,249.87

3,185.80

3,317.05

3,454.40

3,321.57(yen)

119.91158.46180.26143.46

5.16

(yen)

119.60158.00179.71142.98

5.14

Shareholders’ equity ratio

(%)

76.2

76.6

77.2

78.0

76.8

Return on equity

(%)

3.9

4.9

5.5

4.2

0.2

Price earnings ratio(times)

22.55

16.95

15.24

21.47

533.33

Net cash provided by operating
activities

14,337

12,635

16,351

15,493

13,620Net cash (used in) provided byinvesting activities

164(11,407)(3,032)(7,362)(2,474)

Net cash used in financing
activities(8,391)(4,547)(13,055)(12,303)(10,872)

Cash and cash equivalents, endof year38,41034,05933,99529,48730,133

18,986[1,210]20,655[1,237]

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

20,662
[739]

Sales

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

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

(person)The foregoing consolidated financial data has been prepared in conformity with accounting principles generally
accepted in the United States of America (U.S. GAAP). In the above table, operating income is stated instead ofordinary income.

2.
3.

Sales do not include consumption taxes, etc.
We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares wereconsolidated into one (1) share effective as of October 1, 2017. Accordingly, “Shareholders’ equity per share,” “Net
income per share attributable to Wacoal Holdings Corp.” and “Diluted net income attributable to Wacoal Holdings
Corp. per share” have been calculated assuming that such share consolidation had been conducted at the beginning of
the 67th fiscal year.

2

4.

New accounting guidance, Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost (ASU No. 2017-07), has been adopted from the beginning of the current consolidated
fiscal year. Accordingly, key financial data for the previous fiscal years are the amounts after the retroactive
application of such accounting guidance.

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

67th

68th

69th

70th

71st

Year-EndMarch 2015

March 2016

March 2017

March 2018

March 2019

Operating revenue

10,898

10,934

13,13912,644

15,715

Ordinary income

7,350

7,044

9,215

6,308

11,255

Net income (loss)

△541

6,739

11,453

6,461

5,968

Common stock

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

143,378

143,378

71,68970,689Net assets

140,578

143,135

145,496

140,510

134,813

Total assets

168,678

163,938

165,022160,086

154,554

1,990.97

2,026.40

2,114.38

2,078.38

2,060.13

30.00

33.00

36.00

54.00

72.00

(－)

(－)

(－)

(18.00)(36.00)Total number of issued andoutstanding shares(thousandshares)Net assets per share(yen)

Dividends per share(Interim dividends per
share)(yen)

Net income (loss) per share(yen)(7.70)

95.70

164.85

95.12

90.24

Diluted net income per
share

(yen)

－

95.40

164.32

94.47

89.91

Shareholders’ equity ratio

(%)

83.1

87.1

87.9

87.5

86.9

Return on equity

(%)

－

4.7

7.9

4.5

4.3

Price earnings ratio(times)

－

28.06

16.67

32.38

30.50

Dividend payout ratio

(%)

－

68.9

43.7

75.7

79.8

Number of employees[Average number of parttime employees, etc.](person)Total shareholders’ return

80

81

81

95

90

[－]

[－]

[－]

[－]

[－]

(%)

131.2

133.5

139.9

159.1

146.9

(Benchmark: TOPIX incl.
dividends)(%)(130.7)(116.5)(133.7)(154.9)(147.1)Highest share price

(yen)

1,471

1,768

1,463

3,640

3,485

(1,648)Lowest share price

(yen)

992

1,220

970

3,015

2,595

(1,309)(Note)

1.
2.

Operating revenue does not include consumption taxes, etc.
Diluted net income per share data for the 67th fiscal year is not presented since a net loss was recorded.

3.

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

4

4.

We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares wereconsolidated into one (1) share effective as of October 1, 2017. Accordingly, “Net assets per share,” “Net income(loss) per share” and “Diluted net income per share” have been calculated assuming that such share consolidation

5.

had been conducted at the beginning of the 67th fiscal year.
Dividends per share of 54.00 yen for the 70th fiscal year are a total of the interim dividend (18.00 yen) and the yearend dividend (36.00 yen). As we have conducted a share consolidation of common stock of the Company pursuant
to which two (2) shares were consolidated into one (1) share effective as of October 1, 2017, such interim dividend
and year-end dividend are the amounts before such share consolidation and after such share consolidation,
respectively. Dividends per share for the 70th fiscal year will be 72.00 yen if calculated based on the per share

6.

information after such share consolidation.
We have adopted ASBJ Statement No. 28 Partial Amendments to the Accounting Standard for Tax EffectAccounting (February 16, 2018) starting from the beginning of the 71st fiscal year. Accordingly, key financial data
for the previous fiscal years are the amounts after the retroactive application of such accounting guidance.

7.
8.

The highest and lowest share prices are market prices on the first section of the Tokyo Stock Exchange.
We have conducted a share consolidation of common stock of the Company pursuant to which two (2) shares wereconsolidated into one (1) share effective as of October 1, 2017. The share prices for the 70th fiscal year indicate thehighest and lowest prices after such share consolidation, and the share prices in brackets indicate the highest andlowest prices before such share consolidation.

5

2. 【History】
June 1946

Wako Shoji founded by late Koichi Tsukamoto

November 1949

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

June 1951

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

Company name changed to Wacoal Inc.

November 1959

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

June 1964

established in Japan
Company name changed to Wacoal Corp.

September 1964

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

August 1970

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

October 1970

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

October 1970

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

January 1971

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

April 1978

Singapore office (current WACOAL SINGAPORE PRIVATE LTD.) opened

August 1979

Acquired shares from Torica Inc., a subsidiary of the Company, by way of capital increase through third-party

June 1981

allocation
WACOAL AMERICA, INC. (current WACOAL INTERNATIONAL CORP.) established as an overseas

March 1982

subsidiary
Acquired shares from Nanasai Co., Ltd., a subsidiary of the Company, by way of capital increase through third-

February 1983

party 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

January 1986

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

April 1989

PHILIPPINE WACOAL CORP. established as joint venture company

January 1990

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

January 1991

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

April 1993

company
Joint venture agreement for Korea Wacoal Corp. canceled; investment made into Shinyoung Inc. (current

January 1995

Shinyoung Wacoal Inc.) in Republic of Korea
Guangdong Wacoal Inc. established as an overseas subsidiary

June 1997

VIETNAM WACOAL CORP. established as an overseas subsidiary

December 2000

Joint venture agreement for Beijing Wacoal Co., Ltd. (current Wacoal China Co., Ltd.), canceled and

May 2003

reestablished as Beijing Wacoal Co., Ltd., a wholly owned subsidiary
WACOAL MALAYSIA SDN BHD established as a joint venture company

August 2003

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

October 2005

Company name changed to Wacoal Holdings Corporation pursuant to the transition to holding company system
Wacoal Corp. established through incorporation-type company split

January 2008

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

August 2009

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

April 2012

Eveden Group Limited (currently Wacoal Europe Ltd.) became a wholly owned Wacoal subsidiary through theJanuary 2016acquisition 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

6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 saleof certain products to consumers. Our corporate group also conducts business in the restaurant, culture, service, and interior designbusinesses.
The Company falls under the definition of “Specified Listed Companies” as prescribed under Paragraph 2, Article 49 of the
Cabinet Office Ordinance on Restrictions on Securities Transactions, etc. For this reason, whether an incident is minor (and not amaterial fact) under the insider trading restrictions will be determined on the basis of consolidated figures.
Segment information and a summary of the various companies that make up our corporate group are as follows:(1) Wacoal Business (Domestic)
This segment is composed of Wacoal Holdings Corp. and 12 subsidiaries in Japan.
Wacoal Corp. engages in the planning and designing of the above-mentioned products, procurement of materials for theabove-mentioned products, commercialization of semifinished products purchased from sewing companies in Japan andoverseas and other business associates after inspection, and distribution to end consumers through department stores, generalmerchandisers, and other general retailers in Japan, as well as directly managed retail stores, E-commerce(EC) websites anddistributors in Japan and overseas. Each of our 4 apparel manufacturing companies, including Kyushu Wacoal Manufacturing
Corp., receives a supply of raw materials from Wacoal Corp., conducts sewing and processing of innerwear and sportswear,
and delivers the semifinished products to Wacoal Corp. We have 4 sales companies, including Une Nana Cool Corp., which
conduct retail sales of innerwear, outerwear and swimsuit products.
(2) Wacoal Business (Overseas)
This segment is composed of 37 companies, including our overseas subsidiaries and affiliates.
Among our 30 overseas subsidiaries, eight 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 eight overseas subsidiaries in North and Central America, Wacoal Dominicana Corp., an apparel
manufacturing company of innerwear products, ships its products to WACOAL AMERICA, INC., a manufacturing and sales
company, which supplies these products to end consumers through local department stores, specialty retail stores and EC
websites. In addition, Eveden Inc., a sales company, distributes innerwear products, which are mainly supplied from Wacoal
Timex LTD. and WACOAL EMEA LTD.
Among our 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:7

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

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

(Manufacturing and Sales: 1 company)
Wacoal Corp.

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

(Sales: 4 companies)(Other: 1 company)
WACOAL I NEXT CORP.

Une Nana Cool Corp.
3 other companies

Wacoal Business (Domestic)

Peach John Business

Wacoal Business (Overseas)

Other(North/Central America: 8 companies)
WACOAL INTERNATIONAL CORP. (U.S.)(Sales: 4 companies)

WACOAL AMERICA, INC.

Peach John Co., Ltd.
3 other companies(U.S.)WACOAL DOMINICANA CORP.
(Dominican Republic)
EVEDEN INC(U.S.)(Lecien: 7 companies)
Lecien Corporation
LECIEN (VIETNAM) CO., LTD.
(Vietnam)
5 other companies

4 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)
13 other companies,
including 4 equity method affiliates

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

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

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

Location

Capital(Millions of yen)

Principal Business

Percentage of
Voting Rights
Owned or Held(%)

Number ofCompany Officer(s)holding a Position
Lease/Rent of Facilities
as Officer in such
Subsidiaries andAffiliated Company(Consolidated Subsidiary)
Wacoal Business (Domestic)(Research and development, productplanning and sale of innerwear
products, etc.)

100

3Rent of officebuilding

90

Peach John Business (Productplanning and sale of innerwear
products)

100

2

－

90

Other
(Product planning and sale ofinnerwear products)

100

2Rent of office･
storage building70

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

100－

Rent of office

50

Same as above－

Same as above

－

－

2

Rent ofoffice building

2

－

2

－

－

－

100

2

－

－

－

－

－

1

－

1

－

－

－

3

－

－

－

1

－

－

－

2

－

2

－

1

－

3

－

*1, *6
Wacoal Corp.

Minami-ku, Kyoto

5,000

Peach John Co., Ltd.

Minato-ku, Tokyo

Lecien Corp.

Minami-ku, Kyoto

Kyushu Wacoal Manufacturing Corp.

Niigata Wacoal Sewing Corp.

Unzen-shi,
NagasakiNishikan-ku,
Niigata

(100）

100
(100）

57

Torica Inc.

Ibaraki-shi, Osaka

92

Same as above

Nanasai Co., Ltd.

Minami-ku, Kyoto

90

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

New York, USA

20,000thousand
USD

Wacoal Business (Overseas)(a US holding company)

100

WACOAL AMERICA, INC.

New York, USA

2,062 thousand
USD

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

100

WACOAL DOMINICANA CORP.

Santo Domingo,
Dominican
Republic

20 thousand
USD

Wacoal Business (Overseas)(MTO of innerwear products)

100

WACOAL EUROPE LTD.

Northamptonshire,UK

175 thousand
GBP

Wacoal Business (Overseas)(a holding company)

WACOAL EMEA LTD.

Northamptonshire,UK

250 thousand
GBP

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

100

WACOAL EUROPE SAS.

Saint-Denis, France

8 thousand
EUR

Wacoal Business (Overseas)(Sale of innerwear products)

100

WACOAL HONG KONG CO., LTD.

Hong Kong

3,000 thousand
HK$*1
WACOAL INTERNATIONAL HONG
KONG CO., LTD.

Hong Kong

373,690
thousandHK$

VIETNAM WACOAL CORP.

Bien Hoa, Vietnam

Wacoal Investment Co., Ltd.

Same as above

(57）

99

(100）

(100）

(100）

(100）

(100）

80
(80）

Wacoal Business (Overseas)(Procurement of innerwear products
and raw materials)

100

54,604 million
VND

Wacoal Business (Overseas)(MTO and sale of innerwear
products)

100

Taipei, Taiwan

59,000thousandNT$

Wacoal Business (Overseas)(a Taiwan holding company)

100

Guandong Wacoal Inc.

Guangzhou, China

17,730thousand
RMB

Wacoal Business (Overseas)(MTO of innerwear products)

100*1
Wacoal China Co., Ltd.

Beijing, China

189,364
thousand
RMB

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

100*1
A TECH TEXTILE CO., LTD.

Bangkok, Thailand

1,000
million
THB

THAI WACOAL PUBLIC CO., LTD.

Bangkok, Thailand

120 million
THB

PT.INDONESIA WACOAL

Bogor, Indonesia

2,500 million
IDR

Wacoal Business (Overseas)(Manufacturing of raw materials)

(100）

(100）

(100）

(100）

(100）

54
(54）

building

37 other companies(Equity Method Affiliate)

Shinyoung Wacoal Inc.

Seoul, South Korea

Taiwan Wacoal Co., Ltd.

Taoyuan, Taiwan

4,500 million
WON
800 million
NT$

Wacoal Business (Overseas)(Manufacturing and sale of innerwear
products)
Same as above
Same as above
Same as above

9

34
(34）

42
(42）

25
50
(50）

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

Minato-ku, Tokyo

934

Other
(Development and sale of cosmetics
and healthcare products, etc.)

21

－

－

3 other companies(Note)*1

Wacoal Corp., WACOAL INTERNATIONAL CORP., WACOAL INTERNATIONAL HONG KONG CO., LTD,
Wacoal China Co., Ltd. and A TECH TEXTILE CO., LTD. are categorized as a specified subsidiary under 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
*6

House of Rose Co., Ltd. is a company that is obliged to file an annual securities report.
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

103,989 million yen(ii) Ordinary income

9,634 million yen(iii) Net income

8,280 million yen(iv) Net assets

107,167 million yen(v) Total assets

140,560 million yen

10

5. 【Employees】(1) Employees within group
As of March 31, 2019
Name of Operating Segment

Number of Employees

Wacoal Business (Domestic)

7,457

[637]

Wacoal Business (Overseas)

10,781

[45]

531

[33]

1,893

[24]

20,662[739]

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, 2019
Number of Employees
90(Note)

Average Age

Average Years of Service
46.7

Average Annual Salary (Yen)

20.6

1

The number of employees is the number of individuals working within the Company.

2
3

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

5,919,069(3) Relationship with Labor Union
Employees of the Company are members of the Wacoal Labor Union. The Wacoal Labor Union is a member of The
Japanese Federation of Textile, Chemical, Food, Commercial, Service, and General Workers’ Unions.
Certain subsidiaries have their own labor unions.
Our relationship with Labor Unions is very stable and we have nothing to report on this matter.

11

II. Business Overview
1.【Management Policy, Business Environment and Management Issues】
Any forward-looking statement contained below is based on our judgements as of the end of the current fiscal year. Actual
results and performance may differ from the estimates set out in this document due to various risks, uncertainties and otherfactors arising in the future.
(1) Basic Business Policy
Our business activities are built upon “relationships founded in mutual trust,” which are based on our listening to the voice ofeach and every one of our customers, and continuously transforming our business with a sense of humility. This spirit of mutual
trust and respect for humanity serves as the starting point for all of our business activities and has been our management
philosophy since our establishment. We will continuously enhance our corporate value by making efforts to increasetransparency in our corporate management and ensuring fairness and independence of our corporate management in order tobuild “mutual trust” in relationships with every stakeholder, including shareholders, customers, employees, business partners andthe local community.
(2) Measures for Business Targets
Our target is to achieve consolidated operating income margin of 7% or higher and a consolidated ROE (i.e., return on Wacoal
Holdings Corp. shareholders’ equity for the current fiscal year) of 6% or higher as our mid-term financial data.
(3) Our Medium- and Long-term Business Strategy
We aim to achieve 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.
We continue to move forward with efforts to become “Wacoal of the World as a Group”, that is, to continue to offer pioneering
products to the global markets by taking full advantage of our management resources and our group’s network, and to gain
reputation for our reliability from stakeholders around the world with our group’s products and services as well as ourcommitments to social issues by cultivating new market opportunities for the garment industry.
Furthermore, in order to achieve a competitive edge in the global markets, we will invest in new business areas and growth
opportunities and rise to the challenge of realizing unprecedented growth, thereby further enhancing our corporate value.
(4) Business and Financial Issues to Address
While the domestic market is expected to steadily recover with the improvement in the job market and income environment,
consumer spending on innerwear and clothing remains unpredictable, led by deep-rooted concern for the future, which continued
to make consumers budget-conscious, as non-consumption expenditures tightened the household budgets.
Overseas markets are starting to show signs of instability due to factors such as the US-China trade war, political uncertainties in
European countries, business restructuring of mass merchandisers including department stores, and the emergence of new
distribution channels and marketing with innovative digital technologies.
Under such environment, our most important issue is to build a stronger market position in the most core market, our domestic
market, with the most recognized brand, by improving our customer service using digital technology and implementing unrivaled
plans for our distribution channels. We also need to continue to achieve stable profit growth by optimizing brand and productcomposition, promoting structural reform of the value chain, and maximizing organizational productivity.
The major challenge in the overseas markets is to flexibly react to changing market conditions where digital transformation isaccelerating, and to maintain the current growth rate. Further, we need to build our operating foundation, as well as to makeinvestments for business expansion in countries and regions where we have a market presence but our business remains small insize. Our overseas business is and will always be our group’s biggest growth engine.
We also believe that we need to commit ourselves to solving critical social issues in order to become a company that continues toprosper with the society, is trusted in the globalizing world and is expected be necessary for the society.
Basic Policies for Medium-Term Management Plan (Three Years; FY2020 – FY2022)>12

We will continue to move forward with efforts to achieve our future vision to become “Wacoal of the World as aGroup”.
We will grow our business so that we gain reputation not only for the reliability of our group’s products andservices but also for our commitments to social issues, among stakeholders all around the world, including shareholders,investors and customers.
In light of the expectations that stakeholders have for us, we have set the following three highly importantmanagement goals for our group:--

Achieve strong growth in Japan and overseas
Examine the potential of unprofitable businesses and brands, and promote review and structural reform of group businesses
where no business will be safe from such review or structural reform
Enhance corporate value by improving economic and social values
Based on these goals, we will pick up pace to address operational issues by expanding our customer service
advanced by digital technology; implementing plans for unrivaled omni-channel services; launching new high-value added
products without regional boundaries; strengthening cooperation with key third-party EC websites and building our EC
websites that match country and geographical characteristics; making investments in growth for business expansion incountries and regions where we have a market presence but our business remains small; reforming business models sufferingfrom systemic fatigue; and building a highly competitive supply chain network.
To realize a sustainable society, we will make efforts to achieve advanced CSR procurement in cooperation with
manufacturers that we outsource to, better live within the global environment through efforts to reduce plastic use andunsold inventory, and build an organization that encourages diversity and inclusion by taking advantage of diverse humanresources. We will commit in a responsible manner to create new value through cultivation of a sustainable businessfoundation.
We will make stable distributions and make repurchases in a flexible manner, and will make efforts to improve
profitability and capital efficiency through our business activities. We will also make efforts to maintain a real total return
ratio of 100% excluding any gain (loss) on valuation of marketable securities and investments (recognized as other income(expenses) under the statements of income under the U.S. accounting standards). In addition, while we prioritize
investments that support sustainable growth of our business, we will seek to hold an adequate cash balance by reducing, as
appropriate, cross-shareholdings with other companies.
Under the above-described initiatives, our target for the fiscal year 2022, which is the last year of our new
medium-term management plan, is to achieve net sales of 210,000 million yen, operating income of 14,000 million yen(ratio of operating income to net sales of 6.7%), net income attributable to Wacoal Holdings Corp. of 12,000 million yen,
and a consolidated ROE (i.e., return on Wacoal Holdings Corp. shareholders’ equity for the current fiscal year) of 6% orhigher.

13

2. 【Risk Factors】
Our business, performance, and financial position 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 results of operation and financial
position, 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 2019.
(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, results of operation and financial position.
(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 2019, 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, results of operation and financial position 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 garment market in Japan, we must also compete against catalog and Internet sales, including mass-market andspecialty 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 position, and results of operation.
(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 to expand
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.

14(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 product prices,increase our marketing promotions, or revalue our inventory, which could have a material adverse effect on our sales, resultsof operation, and financial position.
(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 and raw
materials we procure for our products in lower-cost countries in Asia. However, labor costs and prices have been risingconsistently, and we also face high political and social instability in those countries in Asia. Increases in product material
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 effect on our
results of operation and financial position.
(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 results ofoperation and financial position.
(10) We may face increasing risks relating to conducting business internationally
It is expected that the overseas production ratio will continue to expand, especially in Asian countries, inprocurement and manufacturing of products that our group sells in Japan. 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:
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 that may adversely affect our group business;and(vii) the risk that public health or similar problems in our important overseas markets or sourcing/production centers may
adversely affect our group.
(i)(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 from synergy effects or 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 developing new markets
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 resultsthat 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 results of operation andfinancial position.

15

(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 andrelated disputes in the future, and imitation of our products or the infringement of our trademarks and intellectual property
rights by other could materially harm our operations and financial position. Additionally, other parties have asserted in thepast, and may assert in the future, that we have infringed their intellectual property rights. We cannot predict whether any
such assertions or related claims will substantially harm our results of operation and financial position.
(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 our businessactivities and deterioration in our corporate image, which could have a material impact on our results of operation andfinancial position.
(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 for 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, results of operation and financial position. Complying with varying privacy requirements
could not only cause us 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 position 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 prepare 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 results of operation 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 securities in publicly traded Japanese and other 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, results of operation, or
financial position
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. Suchcosts and liability for termination and retirement benefits may increase if the actual results differ from the assumptions or if
here 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, our group’s
results of operation and financial position could be adversely affected.

16

(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 results ofoperation and financial position.
As the international tax avoidance by certain multinational enterprises turned into a political issue, OECD
prepared and released a report on BEPS (base erosion and profit shifting) at the request of the G20 in October 2015 in efforts
to improve tax rules. Following the release of this report, each country is reforming and reviewing 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 business partners in our supply chain, it may have a material impact on our resultsof operation.

17

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

Status of Financial Position and Results of operationa.

Status of Financial Position

Total assets at the end of fiscal year 2019 was 281,767 million yen, a decrease of 16,767 million yen as compared to theend of the previous fiscal year, due to a decrease in investment resulting from decrease in market value and impairment
charges on goodwill.
Total liabilities at the end of fiscal year 2019 was 60,623 million yen, a decrease of 414 million yen as compared to theend of the previous fiscal year, due to decreases in trade payables and deferred tax liabilities, despite an increase in shortterm bank loans and a recognition of refund liabilities.
Total Wacoal Holdings Corp. shareholders' equity at the end of fiscal year 2019 was 216,494 million yen, an decreaseof 16,218 million yen as compared to the end of the previous fiscal year, due to cash dividend payments, repurchase oftreasury stock and decreases in pension liability adjustments.
As a result of the above, shareholders' equity ratio at the end of fiscal year 2019 was 76.8%, an decrease of 1.2% ascompared to the end of the previous fiscal year.

b.

Results of operation(Millions of Yen)
Previous Fiscal

Current Fiscal

Changes from Previous

Year (ended
March 31,

Year (ended
March 31,

Fiscal Year

2018)

2019)

Amount%Net sales

195,725

194,201△1,524△0.8％

Cost of sales

92,03289,804△2,228△2.4％

Sales profit

103,693

104,397

＋704

＋0.7％

Selling, general and administrative expenses

92,701

93,684

＋983

＋1.1％

Compensation income

△708

－

＋708

－

206

5,834

＋5,628－Operating income

11,494

4,879△6,615△57.6％

Other income/expenses

2,789

2,894

＋105

＋3.8％

3

△5,570△5,573－

14,2862,203△12,083△84.6％

9,745

341△9,404△96.5％

11,70010,713

△987

△8.4％

14,48913,607

△882

△6.1％

A: Impairment charges on goodwill and other intangible
assets

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

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

18

Our consolidated sales for the current fiscal year was 194,201 million yen, a decrease of 0.8% or 1,524 million yen from suchsales for the previous fiscal year. Consolidated operating income was 4,879 million yen, a decrease of 57.6% or 6,615 million
yen from such consolidated operating income for the previous fiscal year, and consolidated income before income taxes andequity in net income of affiliated companies was 2,203 million yen, a decrease of 84.6% or 12,083 million yen from suchconsolidated income for the previous fiscal year.
Our group uses the U.S. accounting standards and we are required to record impairment charges on goodwill and otherintangible assets of 5,834 million yen as operating costs and expenses. As a result, operating income decreased significantly.
Consolidated income before income taxes and equity in net income of affiliated companies also decreased significantly due torecognition of valuation loss of 5,570 million yen following the changes in the U.S. accounting standards that required us torecord “gain (loss) on valuation of marketable securities and investments” as “Other income (expenses)” starting from thecurrent fiscal year.
As a result of the above, net income attributable to Wacoal Holdings Corp. was 341 million yen, a decrease of 96.5% or 9,404
million yen from the previous fiscal year. The ratio of operating income to net sales and the ratio of net income attributable
to Wacoal Holdings Corp. to shareholders’ equity for the current fiscal year were, 2.5% and 0.2%, respectively.
As references, we have provided in the above statements of income the real operating income and income before income taxes
and equity in net income of affiliated companies not taking into account this series of impairment charges and valuation loss
on marketable securities and investments which were not accompanied by decreases in cash flows. Both operating income
and income before income taxes and equity in net income of affiliated companies decreased from the previous fiscal year but
exceeded, the respective estimates that we provided at the beginning of the current fiscal year, i.e., 10,000 million yen ofoperating income and 13,000 million yen of income before income taxes and equity in net income of affiliated companies.
Accordingly, the real ratio of operating income to net sales and the real ratio of net income attributable to Wacoal Holdings
Corp. to shareholders’ equity were 5.5% and 4.2%, respectively.
During the current fiscal year (from April 1, 2018 to March 31, 2019), which is the last year of our current mid-term (3 year)
business plan (from fiscal year 2017 to fiscal year 2019), in order for our business to return to growth during the period coveredby our next mid-term business plan, our group proceeded to build the foundation to enhance our business efficiency and toinvest in fields where we can expect growth. Wacoal Corp. improved business efficiency in our wholesale business throughreorganization and profitability of our retail business through improved brand value, and completed preparation for
introduction of 3D body scanning and AI (artificial intelligence)-based customer service as a part of our omni-channel strategy.
In the overseas markets, we have strengthened our business framework in response to the e-commerce channels, which
continue to show a high rate of growth in sales, and expanded our brand awareness in Chinese, North America and European
markets. On the other hand, in improving the production base, we were successful in enhancing the production capability ofhighly competitive products in Dalian and Vietnam, while the structural reform in the raw materials factory in Thailand
required time.
While e-commerce sales from our business in China expanded and sales from Nanasai showed significant growth resulting
from its active construction business, overall sales were affected by the slow growth in our domestic wholesale business of
Wacoal Corp. due to weak sales from department stores and decreased revenue from our domestic consolidated subsidiaries,
including Lecien Corporation (“Lecien”), Ai Co., Ltd., Peach John Co., Ltd. (“Peach John”), due to delays in addressing
market changes. While Wacoal Corp. recorded an increase in profit as a result of a record-high gross profit rate and ouroverseas business recorded an increase in profit as a result of an increase in revenue, operating income were affected by the
impairment charges on goodwill and other intangible assets with respect to Peach John.
Although we have recorded impairment charges on goodwill, etc. with respect to Peach John several times in the past, we took
one step further of examining the future potential of our “Peach John” brand, as the current fiscal year was the last year of ourcurrent mid-term (3 year) business plan to complete the building of our business foundation. Accordingly, we recorded
impairment charges of 5,639 million yen as a result of our reevaluation of fair value of goodwill and trademarks.
Our “Peach John” brand products are well known among influencers in China and East Asia as a Japan-originated high fashion
brand and have high brand equity when compared to competitive brands. Peach John has a fan base and strong namerecognition all over Japan, and the fact remains that it is one of our important brands in our group that creates fashion trends.
It has potential to be recognized as one of the “Cool Japan” products in the Asian markets. We plan to focus on strategies
aimed at revitalizing Peach John, based on the current brand value, by confronting bold and unprecedented challenges, withan understanding of the changes in consumer consciousness and trends.

The key exchange rates used for the current fiscal year (previous fiscal year) were: 110.91 yen（110.85 yen） to the U.S.
dollar; 145.68 yen（147.03 yen） to the Sterling pound; and 16.72 yen（16.63 yen） to the Chinese yuan.

19The following is a summary of results of operation by operating segments.
(Millions of Yen)

Previous Fiscal Year(ended March 31, 2018)
% to
Amoun
Sales

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

Changes from Previous
Fiscal Year%
AmountChange195,725100.0％

194,201

100.0％△1,524△0.8％

116,08559.3％

113,400

58.4％△2,685△2.3％

51,88826.5％

53,10027.3％＋1,212＋2.3％

Peach John Business

10,795

5.5％

10,491

5.4％

△304

△2.8％

Other

16,957

8.7％

17,210

8.9％

＋253

＋1.5％

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

Previous Fiscal Year(ended March 31, 2018)% toAmountSales

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

Changes from Previous
Fiscal Year
Amount%Change

11,494

5.9％

4,879

2.5％

△6,615△57.6％

6,845

5.9％

6,325

5.6％

△520

△7.6％

3,852

7.4％

4,581

8.6％

＋729

＋18.9％

Peach John Business

441

4.1％

△5,859－△6,300

－

Other

356

2.1％

△168

－

△524

－

Operating Income/Loss
Wacoal Business(Domestic)
Wacoal Business(Overseas)

Wacoal Business (Domestic)
Sales attributable to our “Wacoal Business (Domestic)” segment decreased by 2% as compared to such sales for the previous
fiscal year. As a result of developing high-value-added products that are comfortable and have good design for both “Wacoal”
and “Wing” brand products, sales of our core brassieres products in our wholesale business of Wacoal Corp. were strong.
However, overall sales from our wholesale business decreased due to weak sales of nightwear, maternity innerwear, junior’s
innerwear, as well as weak sales of “CW-X” brand products. In our retail business, although overall sales were driven by salesof our wireless brassieres “BRAGENIC”, which showed significant growth throughout the year, sales increased only slightly
in our retail business as a result of a reduced volume of discount sales intended to improve profitability and a decrease in sales
due to the expiration period for points earned under the customers’ loyalty program. Sales from Ai Co., Ltd. decreased by
18% as compared to such sales for the previous fiscal year, as we were significantly affected by the weak sales from our coreswimwear business in the summer season, which is the period of peak demand.
Operating income decreased by 8% as compared to such operating income for the previous fiscal year. While Wacoal Corp.
recorded an increase in operating profit as a result of improving the gross profit rate, operating income was affected by theincrease in profit recorded in the previous fiscal year in respect of the one-time compensation income from leaving a factory
space occupied by our subsidiary.
Wacoal Business (Overseas)
Overall sales attributable to our “Wacoal Business (Overseas)” segment on the Japanese Yen basis increased by 2% ascompared to such sales for the previous fiscal year. Sales on a local currency basis decreased by 1% from Wacoal International
Corp. (the United States), increased by 2% from Wacoal Europe, and increased by 10% from Wacoal China Co., Ltd. ascompared to such corresponding sales for the previous fiscal year. In the United States, while e-commerce sales through our ecommerce website and third-party e-commerce websites were strong, sales were affected by the weak over-the-counter sales at
department stores (physical stores) and closings of certain department stores that went bankrupt. E-commerce sales in Europe
showed significant growth along with the strong sales of our plus-size brand “elomi”, despite the impact of the inventory
adjustments at certain department stores in the United Kingdom, where business conditions deteriorated. In China, we enhanced
our customer data marketing and distribution system, and expanded growth through third-party EC websites. Over-the-counter20

sales at department stores were also strong as a result of our successful sales promotion conducted during China’s high-demandseasons.
Operating income on a Japanese yen basis increased by 19% as compared to such operating income for theprevious fiscal year. Positive factors attributable to the increase in the operating income include: increased revenue, an
improvement in inventory efficiency, and an improvement in the gross profit rate resulting from a higher percentage of ecommerce sales in China; reevaluation of suggested retail price and closings of our unprofitable directly managed retailstores in the United Kingdom; productivity enhancement in our factory in Vietnam; gain on sale of property related to raw
materials factory and the absence of one-time impairment charges recorded during the previous fiscal year in Thailand.
Peach John BusinessOverall sales attributable to our “Peach John Business” segment fell by 3% as compared to such sales for the previous fiscal
year. This decrease was due to poor sales from our own EC website and failure to expand the number of customers visiting
our domestic retail stores, although we made efforts to develop products and cultivate sales channels that respond to changes
in the market trend. On the other hand, sales in Taiwan, where we commenced operations in May 2017, increased by 34%
for the current fiscal year as a result of the expansion of brand awareness through events and blogs.
Operating income was affected by decreased revenue from our domestic business, weak growth from our Chinese businessresulting from aggressive competition, an increase in labor costs to retain personnel and distribution expenses, as well as theimpact of non-recurring expenses incurred for the relocation of the head office. As a result, we recorded an operating loss of
220 million yen, as well as impairment charges of 5,639 million yen on goodwill and other intangible assets.

Other
Overall sales attributable to our “Other” segment increased by 2% from such sales for the previous fiscal year. Sales from
Lecien decreased by 10% from such sales for the previous fiscal year. This was due to weak sales of our core innerwear business,
which was affected by a decrease in the number of our private products handled at general merchandise stores, as well as sales
from our material business, art & hobby business and apparel business which were also weak. On the other hand, Nanasai was
successful in receiving new orders for interior finishes, in addition to renovating a major department store’s headquarters, andas a result, sales from Nanasai increased by 14% as compared to such sales for the previous fiscal year due to significant growthin our construction business along with an expansion in our sales business.
Although gross profit rate decreased due to higher percentage of construction business at Nanasai, we recorded an increasein operating income resulting from increased revenue. However, we recorded an operating loss for our “Other” segment in
total as the amount of operating income from Nanasai was not enough to offset the amount of operating loss recorded withregard to Lecien.

(ii) Cash Flow Status
The balance of cash and cash equivalents at the end of fiscal year 2019 was 30,133 million yen, an increase of 646 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 2019 was 13,620 million yen, a decrease of 1,873 million
yen as compared to the previous fiscal year. It is the result after the net income of 395 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 2019 was 2,474 million yen, a decrease of 4,888 million yen ascompared to the previous fiscal year due to acquisition of property, plant and equipment and intangible assets, despite
proceeds from sale of equity securities.
(Net cash used in financing activities)
Cash flow used in financing activities during the fiscal year 2019 was 10,872 million yen, a decrease of 1,431 million yen
as compared to the previous fiscal year, due to the cash dividend payments and repurchase of treasury stock.

21

(iii) Production, Orders Received, and Salesa.

Production Results

Our consolidated production results by operating segment for fiscal year ended March 2019 are as follows. No data is available
for the Peach John Business since all of its entities are sales companies. The production results for other segment are not shownsince it is hard to define such term in this segment.
Amount (Millions of yen)

Changes as Compared toPrevious Fiscal Year (%)

Wacoal Business (Domestic)

42,813

97.5

Wacoal Business (Overseas)

16,873105.1

59,686

99.6

Name of Operating Segment

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

Orders Received

Among Other, the department of Nanasai, which handles interior design and construction of general housings and stores atcommercial facilities, adopts the build-to-order production system.
The status of orders received for other segment for fiscal year ended March 2019 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)

6,237

112.7

418

78.0

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

Wacoal Business (Domestic)

113,400

97.7

Wacoal Business (Overseas)

53,100102.3

Peach John Business

10,491

97.2

Other

17,210101.5

194,201

99.2

Total
(Note)

1

None of the purchasers’ sales accounts for 10% or more of the total sales results.

2

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

(2) Analysis and Consideration on the Status of Business Performance etc. from the Viewpoint of Management
The management’s understanding, analysis and consideration with respect to our group’s business performance etc. are as
follows. Any forward-looking statements contained below are based on our judgment as of the end of the current fiscal year.
(i) 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.

22

a.

Revenue Recognition

The Companies recognize revenue when control of promised products are transferred to customers andperformance obligations are satisfied. The Group’s revenue is recognizes for transactions, net of any trade discounts orrebates given. In addition, provision for expected returns is deducted from revenue based on actual return amounts fromprevious fiscal year.

B.

Allowance for 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.
b.

Allowance for Returns

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, balance of receivables, and financial positions for significant
customers. In the event that a customer’s financial position worsens, the allowance for doubtful receivables may increase
and may adversely affect our business performance etc.
c.

Valuation Loss on 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 stated at
the lower of cost or market. Inventories are written down to the estimated net realizable values, if appropriate. Factors, suchas expected average selling price, expected average cost to make a sale, markdown rate, and class or type of inventories,
including historical results, judgments regarding future consumer demand, and other factors, are analyzed to determine
estimated net realizable value. We also consider potential disposal of inventories. We believe that the amount written down
is appropriate. However, if market conditions and demand are less favorable than our projections, the amount we write
down may increase and may adversely affect our business performance etc.
d.

Deferred Tax Assets

We currently have significant deferred tax assets, which are subject to periodic recoverability assessments.
Realization of our deferred tax assets is principally dependent upon the realization of projected future taxable income. In
estimating our future taxable income, we consider past results of operation, the feasibility of ongoing tax planning strategies,
and other factors. Our judgments regarding future profitability may change due to future market conditions and 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.
e.

Valuation Loss on Marketable securities and Investments

Valuation loss on debt securities are charged to earnings when a decline in fair value below the cost is other than
temporary. We periodically determine whether a decline in the fair value of debts securities and investments is deemed tobe other-than-temporary decline, based on criteria that include the duration and severity of market decline, the extent towhich 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.
Equity securities are measured at fair value and unrealized holding gain or loss is recorded in net profit or loss.
We believe that the criteria for evaluating impairment are reasonable. However, changes in the market or
circumstances of each individual investment due to unforeseen changes in economic and business assumptions could affectthe valuations of marketable securities and investments.
As of March 31, 2019, we held debt securities which we did not recognize any impairment charges even thoughthose securities had been in an unrealized loss position. Based on our assessment of the period of the decline in the fairvalues and our assessment of the relevant companies’ earnings outlook, we concluded that the decline in fair value for the23

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, 2019, we did not hold any debt securities that had a material unrealized holding loss.
f.

Impairment of Long-Lived Assets

The carrying values of long-lived assets, held and used by the Companies, are evaluated for impairment whenever
there is an event or change in circumstances that indicates that such assets have been impaired or that the carrying 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 2019, we performed an impairment test for fixed assets with respect to certain asset classes. As a result, thecarrying value of equipment in G TECH TEXTILE CO., LTD was reduced by 105 million yen. Also building and structure,
fixtures in Ai Co., Ltd. was reduced by 43 million yen and 19 million yen, respectively. The impairment charges of 167
million yen was recognized as impairment loss under operating costs and expenses of the “Wacoal Business (Domestic)”
segments in the fiscal year ended March 2019.
g.

Impairment of Goodwill and Other Intangible Assets

We are required to perform an annual impairment test of our intangible assets with indefinite useful lives andgoodwill at least once a year. We also assess the impairment of such goodwill and intangible assets whenever events orchanges in circumstances indicate that the carrying amount may not be recoverable. Some of the factors we consider
important that could trigger an impairment review include the following: significant negative industry or economic trends;
significant underperformance relative to projected future operation results; significant changes in the manner of the strategy
for our overall business; and significant changes in risk-adjusted discount rates.
When we determine that the carrying amount of goodwill and intangible assets may not be recoverable based upon
the existence of one or more of the above indicators of impairment, we evaluate the carrying amount of the assets based on
their fair value. If the fair value is less than the carrying amount of the assets, we record an impairment charge based on the
difference between the carrying amount and the fair value of the assets.
If we make an initial determination that the carrying amount of goodwill and intangible assets may not berecoverable, 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. In our determination of the fair value of trademark, we utilize the relief-from-royalty method andincorporate relevant unobservable inputs.
As a result of evaluation performed for fiscal year 2019, we recorded 4,325 million yen, 1,314 million yen and 195
million yen of impairment charges on goodwill, trademark and software, respectively.

h.

Employee Retirement Benefits

We provide a number of retirement benefit plans to a substantial portion of our employees. Our wholly owned
subsidiary, Wacoal Corp., has a contributory retirement plan. The amount of the projected retirement benefit obligation andpension 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 domestic bond rates. The discount rate assumption isbased upon the effective yields as of March 31, 2019 on Japanese government bonds whose maturity dates approximate thetiming of the expected future benefit payments. On March 31, 2019, the discount rate used for the contributory retirement
plan was 0.5%.
We determine the expected long-term rate of return on plan asset assumptions by evaluating both historicalreturns, 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 returnon assets for the contributory retirement plan is 2.5% for fiscal years 2018 and 2019. The estimated long-term rate of returnis based on an asset allocation of equity securities of 26.0%, debt securities of 54.0%, life insurance company generalaccounts 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:

24

Effect on net periodic benefit costs

Effect on benefit obligation

Discount rate: 0.5% decrease

an increase of 170 million yen

an increase of 2,005 million yen

Discount rate: 0.5% increasea decrease of 177 million yen

a decrease of 1,954 million yen

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

an increase of 148 million yen-

Expected long-term rate of return onplan assets: 0.5% increasea decrease of 151 million yen-

The other retirement plans provide for either lump-sum termination benefits or periodic payments under certain
conditions. Benefits are usually paid as a lump sum at the employee’s termination before the mandatory retirement age.

i.

Recent Accounting Pronouncements:

Please see “V. Financial Information – Notes to Consolidated Financial Statements – 1. Summary of Significant Accounting
Policies – Recent Accounting Pronouncements”.
(ii) Understanding, Analysis and Consideration with respect to Status of Business Performance etc. for the Current
Fiscal YearOur understanding on the management accomplishments and issues in the medium-term management plan for the 3-year
period, the last year of which was the current fiscal year, is as follows.
The management accomplishments in our domestic business include the successful exit from and rebuilding of ourwholesale-oriented business model, and completion of introduction of next-generation customer service using digitaltechnology. On the other hand, issues that we faced include increased customer defection as a result of reduced
competitiveness of our Peach John brand products, as well as that of Lecien’s private products handled at generalmerchandise stores, fashion swimwear products from Ai Co., Ltd. and CW-X sports leggings in our major markets, as aresult of failure to adapt to changes in the competitive environment of their major market.
Under the new medium-term management plan period, we believe that we need to push forward to implement unrivaled
plans for distribution channels by providing customer service advanced by digital technology, and to pursue maximization oforganizational productivity throughout the entire group or business collaboration by promoting structural reform of andcooperation within the value chain, as well as making efforts to reduce the number of and/or optimize the composition ofbrands and products.
As a result of promoting brand portfolio strategies that match the geographical characteristics in our overseas business, we
improved brand awareness of “elomi” products in Europe and “Peach John” products in China, each as our second signaturebrand after Wacoal brand products. In addition, we actively cultivated e-commerce sales channels and reinforced growth.
Sales from our e-commerce business now account for 20-30% of entire sales in the United States, Europe and China. On theother hand, the issue that we face in our overseas business is the declining business of department stores and specialty storesin key countries as has been the case in Japan. Also, we need to accelerate building of the supply chain for the raw materials
factory in Thailand as we are behind in schedule. We also need to enhance the competitiveness of our sewing factory in
Myanmar with respect to quality, cost and technology perspectives.
Under the new medium-term management plan, we need to strengthen our business framework so that we can flexibly adapt
to changing market conditions where digital transformation is accelerating and accelerate our growth rate. At the same time,
we need to make investments and build our operating foundation for business expansion in countries and regions where ourbusiness remains small, and establish a more competitive ASEAN supply chain network.
We also believe that our group needs to aim for higher social value, and not only pursue the enhancement of economic value,by committing ourselves to achieving sustainable growth along with the society surrounding our business. “Wacoal Group
CSR-based Procurement Guidelines” were established in October 2017, and we established and began operation of a seriesof CSR procurement cycles which include cooperation with the manufacturing outsourcees, and identify, correct and/or
improve the outsourcees’ compliance with respect to human rights and labor practices. Through each dialogue, we havegained an understanding of society’s expectations toward us and the highly important social issues from our stakeholders’perspectives and confirmed which important issues should be addressed by our CSR activities in light of their importance for25

our business. We are also facing new challenges along with the changes in trends. We need to reduce and avoid reputationalrisk of controversial SNS posts from advertisement, and address the increasing risk of information leakage while digitaltransformation of customer information continues to accelerate. We also need to work harder on reducing plastic use andunsold inventory to better live within the global environment.
We also made efforts to establish a system to enhance corporate governance with a high degree of transparency. We decided
to discontinue our defensive measures against takeovers during the fiscal year ended March 31, 2018. In addition, in linewith the enforcement of the amended Corporate Governance Code, we have revised our corporate governance guidelines toreflect such amendments, under the policy of reducing cross-shareholdings was established and the committees for theappointment and remuneration for officers were revised. As one of the challenges that we face, we believe that we need tomake appropriate disclosure in terms of both quality and quantity regarding our medium-to long-term vision that contributes
to the enhancement of corporate value, KPI that enhances both economic and social values, and succession plans. We alsoplan to make appropriate disclosure about targets for reducing cross-shareholdings.
In order to achieve a vital corporate culture that respects diversity, we promoted a friendly working environment through theintroduction of a leave policy for self-education and accompanying their family members, in addition to the introduction of
teleworking. Our challenge is to build an inclusive organizational system with more diverse human resources by recruiting
personnel at core career levels to create new value and create a results-oriented environment where one is proud to beworking.
The understanding, analysis and consideration with respect to improvement of capital efficiency through implementation of
our financial strategies and initiatives on shareholder returns are as follows:
Under the medium-term management plan which ended upon the end of the current fiscal year, our target was to reduceshareholders’ equity to 220,000 million yen and to increase the consolidated ROE (i.e., return on Wacoal Holdings Corp.
shareholders’ equity for the current fiscal year) to 5% or higher, by the end of the current fiscal year, based on the businessresults for the fiscal year ended March 2016. However, we achieved very low levels of net income attributable to Wacoal
Holdings Corp. and the consolidated ROE for the current fiscal year, at 341 million yen and 0.2%, respectively, due to theimpact of the impairment charges on intangible assets and valuation loss on marketable securities and investments. The real
net income attributable to Wacoal Holdings Corp. not taking into account the impact of these impairment charges andvaluation loss which were not accompanied by decreases in cash flows was 9,636 million yen. Accordingly, the realconsolidated ROE was 4.2%, which was lower than the target.
Our basic policy on profit distributions to shareholders is to provide stable distributions based on our consolidated results,
while seeking to increase our enterprise value through active investment for improving profitability, and to increase net
income per share attributable to Wacoal Holdings Corp. With respect to retained earnings, in addition to actively investingin expanding customer contacts in domestic business and expanding overseas business, from the viewpoint of enhancing ourenterprise value, we will make strategic investments to maintain our competitiveness and strengthen our growth potential.
With these efforts, we aim to return to our shareholders through improved earnings. In addition, we will acquire treasury
shares flexibly while taking into account the free cash flow level and market environment, and improve capital efficiency andreturns to our shareholders. The amount of capital investment for the fiscal year ended March 31, 2019 was 5,783 million
yen. Our capital investment was used in IT infrastructure for omni-channel services in Japan, and introduction of amanagement system for operations of planning and designing, as well as construction of overseas factory facilities. We will
return profits to our shareholders in the amount of 11,730 million yen in total, 4,811 million yen, in the form of dividends,
and 6,919 million yen, in the form of repurchases.
We will continue to make efforts to improve our potential business profitability by prioritizing on making optimal growthinvestment choices. We will also implement an active capital policy and shareholder returns in anticipation of an increase in
the ROE level on a medium-to long-term perspective.

(iii) Capital Resources and Liquidity
Our current policy is to fund our cash needs from cash flows from operating activities, which allows us to secure most ofworking capital, make capital investments, and pay dividends without relying on substantial borrowings or other financing
from outside of our group companies. As of March 31, 2019, we had credit facilities at financial institutions totaling 31,336
million yen, and the balance of short-term loan which established line of credit amounted to 8,253 million yen. Of these shortterm loan, 4,000 million yen is available to Wacoal Holdings Corp., 1,505 million yen is available to Wacoal Europe Ltd.,2,611 million yen is available to Wacoal Service Co., Ltd., and 137 million yen is available to Nanasai.

26

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 to funds
from our credit facilities, we believe that it is possible for other companies in our group to provide any necessary funds. Ourborrowing 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.
a.

Capital Investments

Please see “III. Property, Plants and Equipment – 1. Summary of Capital Investment, etc.”b.

Cash Flows

Please see “(1) Overview of Status of Business Performance etc. (ii) Cash Flow Status.”

4. 【Material Agreements, etc.】
The Company resolved at the Board of Directors’ meeting held on August 30, 2018 to conclude a Comprehensive Business
Alliance Agreement (this “alliance”) with and between Descente Ltd. (“Descente”) which was executed on August 30, 2018, to
strengthen and develop business foundations and to improve corporate value through this alliance.
(1) Reason for this alliance
We have developed the innerwear market toward the realization of a “Global Wacoal” with the goal of contributing to society
at large through the promotion of feminine beauty and wellbeing throughout the world. Today, as a leading company in the
global innerwear market, we have firmly established ourselves not only in Japan, but also in China, Asia, Europe and the UnitedStates.
In the sports apparel industry, Descente has created a healthy lifestyle through sports based on the corporate philosophy of“bringing the enjoyment of sports to all”, developing products tailored for multiple sports with advanced concepts that bring
together state-of-the-art technology and function. In recent years, we have focused on enhancing our global presence, while
maintaining our corporate philosophy and business domain, the cornerstones of corporate value, which we are dedicated to
improving further.
Under this new partnership, we have decided to pursue opportunities in beauty, health and comfort to take maximum
advantage of Wacoal’s dominant position in the innerwear market and Descente’s accumulated sportswear know-how built withelite athlete participation. Using our respective management resources we will cooperate comprehensively to create new value
beyond our current fields of fashion and sports, and by doing so, strengthen, develop and expand both our domestic and global
business.
We believe this partnership will contribute to an expansion into new markets and further strengthen overseas business, andDescente will strengthen and expand product development for the women’s market, which is expected to grow significantly and
it is expected this will contribute to further global expansion. This alliance has been forged with a mutual commitment to all
those who wish to look and feel better and healthier. A comprehensive partnership will commence here with a view to further
strengthening the relationship in the future and in doing so improve corporate values.
(2) Purpose of this Alliance(i)Creating new business beyond the boundaries of current operations(ii)

Developing commercial materials that utilize both companies’ craftsmanship strengths(iii) Effective use of assets owned by both companies27

5. 【Research and Development】
Our research and development activities are mainly conducted by our Human Science Research Center to achieve harmony
between the human body and clothing and to support better product making.
Since 1964, we have been conducting research into the female body in order to accurately understand the Japanese woman’s
physique. In particular, we have developed a silhouette analysis system and introduced a three-dimensional measuring system. We
are also working on an even more advanced measurement of sensory comfort. Our research and development activities focus onaddressing the proportional, physiological, and mental aspects of garment design. One of our most important research results was
the enrichment of our research on sensory comfort through our participation in a project led by the Ministry of Trade and Industry(presently the Ministry of Economy, Trade and Industry) from 1995 to 1998. Based on this research, we have been focusing on
developing new products that are not only comfortable for the wearer, but also have a positive physiological effect based on thebasic study from three factors, which are pressure, heat, and touch. In 2005, we developed and created a new market for ourbreakthrough Style Science series products, which support the creation of a healthy and beautiful body by changing the idea of
everyday walking to walking for exercise. In 2010, we conducted an analysis and announced principles on the physiologicalchanges associated with the aging period from a person’s 20s to their 50s. We also strengthened the development of new products
coping with aging and have been working on developing new functional products based on the lifestyle habits of people as they
undergo small physical changes associated with aging.
Our Human Science Research Center is promoting research and development, which is based on a survey analysis of the body
shapes and needs of young customers including customers of an age of which the products for the first time introduced, and a senior
generation.
During the fiscal year ended March 31, 2019, we worked on research and development focusing on “anti-gravity” to target themarket for comfort products and on research and development of high value-added products, to cultivate new market opportunities.
As a result of the above, we recorded 739 million yen for our research and development during the fiscal year ended March 2019.
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.

28

III. 【Property, Plants, and Equipment】
1. 【Summary of Capital Investment, etc. 】
The amount of capital investment for the fiscal year ended March 31, 2019, was 5,783 million yen. A majority of our capital
investment was used in the information system investment for our subsidiaries and maintenance and repair work implemented forthe real properties held by the Company.
The amounts of capital investment made in Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John Business,
and Other were 3,382 million yen, 1,837 million yen, 494 million yen, and 70 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, 2019
Book Value (Millions of yen)
Facility(Location)

Head Office(Minami-ku, Kyoto) and other

OperatingSegment

WacoalBusiness(Domestic)

Type of Equipment
and Facilities
Buildings andstructures
Facilities foradministrationaffairs, etc.

19,427

MachineryandEquipment

1,229

Land (m2)

18,342(266,637)

Number of
Employee(s)Total

38,99990［－］(2) Domestic Subsidiaries
As of March 31, 2019
Book Value (Millions of yen)
Name of Company(Location)

OperatingSegment

Type of Equipment
and Facilities
Buildings andstructures

Machinery,
Vehicle,Equipment,
and Fixtures

Land (m2)

Number of
Employee(s)Total

Wacoal Corp. Head Office(Minami-ku, Kyoto)
Two other business office in Kyoto
district

WacoalBusiness(Domestic)

Facilities foradministrationaffairs

36

272

－

308

2,169
［ 143］

Wacoal Corp. Tokyo Office(Chiyoda-ku, Tokyo)
One other business office in Tokyo

WacoalBusiness(Domestic)

Facilities foradministrationaffairs

26

29

－

56

1,517
［ 77］

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

WacoalBusiness(Domestic)

Sales facilities

63

45

－

109

－
［ －］

Wacoal Distribution Corp.
Moriyama Distribution Center(Moriyama, Shiga)

WacoalBusiness(Domestic)

Facilities formerchandise
management

18

86

－

104

351
［ －］

Kyushu Wacoal Manufacturing
Corp., Nagasaki Plant(Unzen, Nagasaki)

WacoalBusiness(Domestic)

Manufacturing
facilities

0

69

－

69

331
［－ ］

Torica Inc.
(Saihakugun Nanbucho, Tottori)
Three other plants

WacoalBusiness(Domestic)

Manufacturing
facilities

394

71

180
(40,840)

645

147
［ 49］

Nanasai Co., Ltd.
Osaka Commodity Center(Yodogawa-ku, Osaka)

Other

Manufacturing
facilities

199

8

150
(2,790)

357

24
［－ ］

29

(3) Overseas Subsidiaries
As of March 31, 2019
Book Value (Millions of yen)
Name of Company(Location)

OperatingSegment

Type of Equipment
and Facilities
Buildings andstructures

Machinery,
Vehicle,Equipment,
and Fixtures

Land (m2)

Total

Number of
Employees

WACOAL AMERICA, INC.
(New York, USA)

WacoalBusiness(Overseas)

Facilities foradministrationaffairs/
merchandise
management

997

99

268
(32,300)

1,364

204
［ －］

WACOAL DOMINICANA
CORP.
(Santo Domingo, Dominican
Republic)

WacoalBusiness(Overseas)

Manufacturing
facilities

625

222

91
(24,459)

938

1,809
［ －］

WACOAL SINGAPOREPRIVATE LTD.
(Singapore)

WacoalBusiness(Overseas)

Facilities foradministrationaffairs

10

27

202
(235）

240

53
［ 15］

WACOAL HONG KONG CO.,LTD.
(Hong Kong)

WacoalBusiness(Overseas)

Facilities foradministrationaffairs

340

－

－

340

163
［ 29］

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

WacoalBusiness(Overseas)

Facilities for adm
inistration affairs/
manufacturing
Facilities

264

26

290

563
［ －］

Guandong Wacoal Inc.
(Guandong, China)

WacoalBusiness(Overseas)

Manufacturing
facilities

92

123

215

403
［ －］

VIETNAM WACOAL CORP.
(Bien Hoa City, Vietnam)

WacoalBusiness(Overseas)

Facilities for adm
inistration affairs/
manufacturing
Facilities

106

101

－
（－）
［25,159］

206

1,744
［ 1］

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

WacoalBusiness(Overseas)

Manufacturing
facilities

243

239

－
（－）
［27,543］

482

629
［ －］

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

WacoalBusiness(Overseas)

Manufacturing
facilities

262

982

234
（58,481）1,478(Note)－（－）［11,871］－（－）［11,224］

［

324
－］

1

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

23Area of land under lease by the Company is shown in brackets.
None of our major facilities is currently out of service.

4

Buildings and land regarding certain domestic subsidiaries under (2) above are under lease by the Company. The bookvalue of the buildings and land are as follows:Book Value (Millions of yen)
Name of Business Office(Location)

Type of Equipment andFacilities

Operating Segment

Buildings and structures

Land (m2)

Wacoal Corp. Head Office(Minami-ku, Kyoto)
Two other business office inKyoto district

Wacoal Business(Domestic)

Facilities foradministration affairs

11,437

1,885(11,208)

Wacoal Corp. Tokyo Office(Chiyoda-ku, Tokyo)
One other business office inTokyo

Wacoal Business(Domestic)

Facilities foradministration affairs

1,235

1,945
(1,471)

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

Wacoal Business(Domestic)

Sales facilities

1,112

3,972
(1,739)30

Wacoal Distribution Corp.
Moriyama Distribution
Center(Moriyama, Shiga)

Wacoal Business(Domestic)

Facilities formerchandise
management

1,717

1,419
(38,923)

Kyushu Wacoal Manufacturing
Corp., Nagasaki Plant(Unzen, Nagasaki)

Wacoal Business(Domestic)

Manufacturing
facilities

205

52(19,369)

5

The average number of temporary employees during the period is in brackets.

6

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

Type of Equipment
and Facilities

Peach John
Business

Facilities foradministrationaffairs

Operating Segment

Type of Equipment
and Facilities

WACOAL AMERICA, INC.
(New York, USA)

WacoalBusiness(Overseas)

PHILIPPINE WACOAL CORP.
(Manila, Philippines)

WacoalBusiness(Overseas)

Peach John Co., Ltd. Head Office(Shibuya-ku, Tokyo)

Annual Lease
Amount(Millions of yen)

Buildings (m2)Land (m2)

1,554

－

Buildings (m2)Land (m2)

Facilities foradministrationaffairs

4,599

－

140

Facilities foradministrationaffairs

926

－

14

57

(2) Overseas Subsidiaries
Name of Company(Location)

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.

31

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

Total Number of Shares Authorized to be Issued

Common stock

250,000,000 shares

Total

250,000,000 shares(ii) Number of Shares Issued
Names of Stock Exchanges on
Number of Shares Issued
Number of Shares Issued which the Company is listed
as of the end of Fiscal
as of the Filing Dateor Names of AuthorizedYear (March 31, 2019)(June 27, 2019) (shares) Financial Instruments Firms(shares)
Association

Class

Shareholders haveunlimited standard rights.

First section of Tokyo
Common stock

70,689,042

68,589,042

Stock Exchange

Total

70,689,042

68,589,042－(Note)

Description

The number of sharesconstituting a unit is 100.
－

The total number of shares issued decreased to 68,589,042 shares following the cancellation of treasury stock of
2,100,000 shares conducted on May 24, 2019 as resolved by the Board of Directors’ meeting held on May 15, 2019.

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

July 30, 2008

Category and number of eligible grantees

Director of the Company

Number of stock acquisition rights

5

Director of subsidiary 5

19 (Note 1)

Class, description and number of shares represented by stockacquisition rights

8 (Note 1)

Common stock

Common stock

9,500 shares (Note 2)

4,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 2, 2008

Exercise period

until September 1, 2028
Issue price: 2,275 yen
Amount capitalized as common

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

stock: 1,138 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1
2

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

=

Conversion Ratio prior toadjustment

32

X

Ratio of stock split
or reverse stock split

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

(3)

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 the(4)

Organizational 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

33

after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise of(5)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(6)

exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:(i) In the event that shares are issued due to the exercise of stock acquisition rights, shareholders’ equity shallbe increased by half the limit for increases in common stock that are calculated in accordance with Article
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)

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.

(8)

Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer;(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:（3rd Stock Acquisition Rights / 4th Stock Acquisition Rights）
Date of resolution

July 30, 2009

Category and number of eligible grantees

Director of the Company

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

4

Director of subsidiary 4

20 (Note 1)

8 (Note 1)

Common stock

Common stock

10,000 shares (Note 2)

4,000 shares (Note 2)

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

Exercise period

Issue price:2,169 yen
Amount capitalized as common

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

stock: 1,085 yen

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

Subject to the approval of the Board of Directors

34

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1
2

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

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

date, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the
expiration date of the exercise period as stipulated in the table above and (ii) the five-year anniversary of the(2)“Exercise Start Date.
Notwithstanding the foregoing, during the exercise period set forth in the table above, the Option holders may
exercise their stock acquisition rights in the following cases (for item (ii), excluding the case where the stockacquisition rights of the Surviving Company are granted to the Option holders pursuant to Note 4 below) only
during the respective periods designated below:(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)Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:

35

Common stock of the Surviving Company.
(3)

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:(4)

The amount capitalized upon the exercise of each stock acquisition right to be granted shall be the amount paid
after restructuring as prescribed below multiplied by the number of shares of the Surviving Company to be issued
upon the exercise of the stock acquisition rights as determined in accordance with (3) above. The amount paid
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.
Exercise Period for Stock Acquisition Rights:(5)

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(6)

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

(7)

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.

(8)

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

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

July 30, 2010

Category and number of eligible grantees

Director of the Company

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

4

Director of subsidiary 3

21 (Note 1)

7 (Note 1)

Common stock

Common stock

10,500 shares (Note 2)

3,500 shares (Note 2)

One yen per share

36

From September 2, 2010
until September 1, 2030

Exercise period

Issue price: 2,163 yen
Amount capitalized as common

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

stock: 1,082 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1

The number of shares represented by one stock acquisition right is 500 shares.

2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
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 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):(3)
4

For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following

37

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)

Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:(3)

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

(5)

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

(6)

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

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

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

stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:(8)

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

（7th Stock Acquisition Rights / 8th Stock Acquisition Rights）

38

Date of resolution

July 29, 2011

Category and number of eligible grantees

Director of the Company

5

Director of subsidiary 5

31 (Note 1)

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

18 (Note 1)

Common stock

Common stock

15,500 shares (Note 2)

9,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

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

Exercise period

Issue price: 1,757 yen
Amount capitalized as common

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

stock: 879 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1
2

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

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

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

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

39

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

(3)

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 the(4)

Organizational 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)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(6)

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

(7)

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.

(8)

Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;40

(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.

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

July 31, 2012

Category and number of eligible grantees

Director of the Company

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

5

Director of subsidiary 4

40 (Note 1)

10 (Note 1)

Common stock
20,000 shares (Note 2)

Common stock
5,000 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 4, 2012

Exercise period

until September 3, 2032
Issue price: 1,599 yen

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

Amount capitalized as common
stock: 800 yen

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

Subject to the approval of the Board of Directors

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

accompanying reorganization acts

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note) 1 The number of shares represented by one stock acquisition right is 500 shares.
2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

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

41

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

(3)

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 the(4)

Organizational 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)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(6)

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

(7)

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.

42

(8)

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

(9)

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

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

July 31, 2013

Category and number of eligible grantees

Director of the Company

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

5

Director of subsidiary 6

39 (Note 1)

17 (Note 1)

Common stock
19,500 shares (Note 2)

Common stock
8,500 shares (Note 2)

Amount to be paid upon exercise of stock acquisition rights

One yen per share
From September 3, 2013

Exercise period

until September 2, 2033
Issue price: 1,837 yen

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

Amount capitalized as common
stock: 919 yen

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

Subject to the approval of the Board of Directors

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

accompanying reorganization acts

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note) 1 The number of shares represented by one stock acquisition right is 500 shares.
2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that the43

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

(3)

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 the(4)

Organizational 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)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.

44

(6)

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

(7)

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.

(8)

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

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

July 31, 2014

Category and number of eligible grantees

Director of the Company

5

Director of subsidiary 5

39 (Note 1)

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

17 (Note 1)

Common stock

Common stock

19,500 shares (Note 2)

8,500 shares (Note 2)

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

Exercise period

Issue price: 1,875 yen
Amount capitalized as common

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

stock: 938 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1

The number of shares represented by one stock acquisition right is 500 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, 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)Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.

(3)

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 the(4)

Organizational 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
after restructuring shall be one yen per share of the Surviving Company, which may be granted upon exercise ofeach stock acquisition right to be granted.
(5)

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

(6)

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

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

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

stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:(8)

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

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

July 31, 2015

Category and number of eligible grantees

Director of the Company

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

5

Director of subsidiary 4

37 (Note 1)

12 (Note 1)

Common stock
18,500 shares (Note 2)

Common stock
6,000 shares (Note 2)

One yen per share
From September 2, 2015

Exercise period

until September 1, 2035

47

Issue price: 2,839 yen
Amount capitalized as common

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

stock: 1,420 yen

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

Subject to the approval of the Board of Directors

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

accompanying reorganization acts

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1
2

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

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

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

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

(3)
4

If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.

In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in the48

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

(3)

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 the(4)

Organizational 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)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(6)

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

(7)

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.

(8)

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

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

July 29, 2016

Category and number of eligible grantees

Director of the Company

49

4

Director of subsidiary 6

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

43 (Note 1)

26 (Note 1)

Common stock
21,500 shares (Note 2)

Common stock
13,000 shares (Note 1)

Amount to be paid upon exercise of stock acquisition rights

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

Exercise period

Issue price: 2,089 yen

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

Amount capitalized as common
stock: 1,045 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note) 1 The number of shares represented by one stock acquisition right is 500 shares.
2

In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion
Ratio

=

Conversion Ratio prior toadjustment

X

Ratio of stock split
or reverse stock split

This adjustment will apply from the day following the record date in the case of a stock split and from the day on which
the reverse stock split becomes effective in the case of a reverse stock split. However, in the event that the Company
conducts a stock split that is conditioned on approval at a general meeting of shareholders of the Company of anincrease in stockholders’ equity or additional paid-in capital by decreasing the amount of surplus, and provided that therecord date for such stock split is set prior to the conclusion of such general meeting of shareholders, from the day
following the conclusion of such general meeting of shareholders, the adjustment will apply retroactively from the day
following the record date.
In addition to the above, the Conversion Ratio shall be reasonably adjusted as may be required in unavoidable
circumstances.
Any fractional shares that result from the above adjustment will be rounded down to the nearest whole share.
Furthermore, in case of any adjustment of the Conversion Ratio, the Company shall make any necessary notification or
announcement to Option holders no later than the day immediately preceding the day on which the adjusted Conversion
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, 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):50

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

(3)

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 the(4)

Organizational 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)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(6)

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

(7)

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.

(8)

Provisions for the Acquisition of Stock Acquisition Rights:
In the event that a general meeting of shareholders of the Company approves any of the following (or, whenshareholder approval is not necessary, in the event that the board or the representative executive officer approvesof any of the following), the Company may acquire stock acquisition rights without compensation on a dateseparately specified by the board:(i) a proposed merger agreement under which the Company is to be dissolved;(ii) a proposed corporate division agreement or plan under which the Company would be split;(iii) a proposed share transfer agreement or plan that makes the Company a wholly owned subsidiary;(iv) a proposed amendment of the Articles of Incorporation to add a provision that prescribes that the Company,
with respect to all of its issued shares, shall be required to obtain the approval of the shareholders of theCompany for the acquisition of such shares by transfer; or(v) a proposed approval for an amendment of the Articles of Incorporation to add a provision that prescribesthat the Company shall be required to obtain the approval of the shareholders of the Company for the51

acquisition 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.

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

July 31, 2017

Category and number of eligible grantees

Director of the Company

4

Director of subsidiary 7

28 (Note 1)

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

18 (Note 1)

Common stock

Common stock

14,000 shares (Note 2)

9,000 shares (Note 2)

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

Exercise period

Issue price: 2,919 yen
Amount capitalized as common

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

stock: 1,460 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1
2

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

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

date, the Company shall provide prompt notification or announcement thereafter.
(1) Option holders may exercise their stock acquisition rights on the Date of Loss of Status; provided, however, thatin such case, such Option holder may only exercise his or her stock acquisition rights until the earlier of (i) the52

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, 2036
From September 2, 2036 until September 1, 2037.
(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):For 15 days from the day after the date of said approval.

(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(2)

Rights.
Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:(3)

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

(5)

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

(6)

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

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

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

stock stipulated in (i) above.
Limitation on Acquisition of Stock Acquisition Rights by Transfer:(8)

The acquisition of stock acquisition rights by transfer shall be subject to approval by resolution of the board.
Provisions for the Acquisition of Stock Acquisition Rights:

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 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.

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

July 20, 2018

Category and number of eligible grantees

Director of the Company

5

Director of subsidiary 5

Number of stock acquisition rights

147 (Note 1)

62 (Note 1)

Class, description and number of shares represented by stock

Common stock

Common stock

14,700 shares (Note 2)

6,200 shares (Note 2)

acquisition rights
Amount to be paid upon exercise of stock acquisition rights

One yen per share

Exercise period

From August 18, 2018
until August 17, 2038
Issue price: 3,006 yen
Amount capitalized as common

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

stock: 1,503 yen

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

Subject to the approval of the Board of Directors

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

(Note 4)

Above is based on information available as of the end of the current fiscal year (March 31, 2019). No change has been made as ofthe end of the month preceding the filing date (May 31, 2019).
(Note)

1
2

The number of shares represented by one stock acquisition right is 100 shares.
In the event that the Company conducts a stock split (including the free allocation of shares of common stock of theCompany; hereinafter the same) or a reverse split of its common stock, the Conversion Ratio will be adjusted inaccordance with the following formula:
Adjusted Conversion

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

54

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 August 17, 2037
From August 18, 2037 until August 17, 2038.

(ii) if the general meeting of shareholders of the Company approves a merger agreement pursuant to which theCompany is to be dissolved or a stock swap agreement or share transfer plan that makes the Company awholly owned subsidiary (or, in the event a resolution of the general meeting of shareholders is not required,
if a resolution of the board or determination by the chief executive officer of the Company is passed):(3)
4

For 15 days from the day after the date of said approval.
If an Option holder waives his or her stock acquisition rights, such Option holder may not exercise the said stockacquisition rights.
In the event that the Company conducts an Organizational Restructuring, stock acquisition rights of the Surviving
Company shall be granted to each holder of the Residual Stock Acquisition Rights in accordance with the following
terms and conditions. In such case, the remaining stock acquisition rights shall be canceled, and the Surviving
Company shall issue new stock acquisition rights; provided, however, that this shall be limited to the case where thegrant of stock acquisition rights of the Surviving Company pursuant to the following conditions is stipulated in theabsorption-type demerger agreement, incorporation-type demerger agreement, merger and spin-off agreement, newspin-off plan, stock swap agreement, or share transfer plan:(1)

Number of Stock Acquisition Rights of the Surviving Company to be Granted:
The number of stock acquisition rights to be granted shall be equal to the number of Residual Stock Acquisition
Rights.

(2)Class of Shares of the Surviving Company to be Issued upon Exercise of the Stock Acquisition Rights:
Common stock of the Surviving Company.

(3)

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 the(4)

Organizational 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)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(6)

exercise of stock acquisition rights as stipulated in the table above.
Matters concerning Increases in Capital Stock and Additional Paid-in Capital in case of Issuance of Shares due tothe Exercise of Stock Acquisition Rights:

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)

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.

(8)

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

(ii) 【Right Plans】
Not applicable.
(iii) 【Other Stock Acquisition Rights】
Not applicable.
(3) Status of Exercise of Bonds with Stock Acquisition Rights containing a Clause for Exercise Price Adjustment
Not applicable.

(4) Trends in the Total Number of Shares Issued, Common Stock, etc.

Date

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

Changes in
Common Stock(Millions of yen)

56

Balance ofCommon Stock(Millions of yen)

Changes in
Additional Paid-in
Capital (Millions ofyen)

Balance of
Additional Paid-in
Capital(Millions ofyen)October 1, 2017 (Note 1)△71,689

71,689－13,260－29,294△1,00070,689－13,260－29,294

May 25, 2018 (Note 2)(Note)

1

Reflect the share consolidation pursuant to which two (2) shares were consolidated into one (1) share.

2
3

The decrease was due to the cancellation of treasury stock.
The total number of shares issued decreased by 2,100,000 shares following the cancellation of treasury stock on May
24, 2019, as resolved by the Board of Directors’ meeting held on May 15, 2019.

(5) Status of Shareholders
As of March 31, 2019
Status of Shares (1 unit = 100 shares)
Shares Less
Than One
Unit(share)Foreign Shareholders
Category

National and
Local
Governments

Financial
Institutions

Securities
Companies

Other
Corporations

Foreignshareholders
other than
individuals

Individuals

Number ofshareholders

－

52

29

193

264

9

11,673

12,220－

Number ofshares held
(units)－290,091

7,333

134,309

118,40247

155,285

705,467

142,342

Ratio (%)

－

41.12

1.04

19.04

16.78

0.01

22.01

100

－

(Note)

Individuals
and Other

Total

1

Out of the treasury stock of 5,510,891 shares, 55,108 units are included under “Individuals and Other,” and 91
shares of less than one unit are included under “Shares less than One Unit.”

2

Shares under “Other Corporations” and “Shares less than One Unit” include 2 units and 27 shares, respectively, held
under the name of the Japan Securities Depository Center.

(6) Status of Major Shareholders
As of March 31, 2019
Name of Shareholder

Address

Number of Shares
held by Shareholder(Thousands of shares)

Shareholding
Ratio (%)

The Bank of Mitsubishi UFJ,Ltd.

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

3,195

4.90

Meiji Yasuda Life Insurance Company

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

3,050

4.68

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

2,870

4.40

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

2,851

4.38

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

2,352

3.61

1,836

2.82

1-38, Hamamachi, Otsu-shi, Shiga

1,823

2.80

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

1,525

2.34

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

1,366

2.10

Asahi Kasei Corporation

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

1,241

1.90

Total

──────

22,111

33.92

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

1-6-6, Marunouchi, Chiyoda-ku, Tokyo(Nippon Life Insurance Securities Services)57

(Note)1

The Company is holding 5,510 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 April 13, 2018, filed by Mitsubishi UFJ Financial Group, Inc., which is
publicly available, indicates that the shareholders in the below table are holding the respective number of theCompany’s shares as of April 9, 2018. However, as we were unable to confirm the actual status of the shareholdings ofthese shareholders as of the end of fiscal year 2019, 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:

Name of Shareholder

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

The Bank of Mitsubishi UFJ, Ltd.

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

3,295

4.60

Mitsubishi UFJ Trust and Banking
Corporation

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

3,167

4.42

Mitsubishi UFJ International AssetManagement Co., Ltd.

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

187

0.26

6,649

9.28

Total

(7) Status of Voting Rights(i) Shares Issued
As of March 31, 2019
Category
Shares without voting rights
Shares with restricted voting rights –treasury stock, etc.
Shares with restricted voting rights –otherShares with full voting rights –treasury stock, etc.

Number of Shares(Shares)Number of Voting Rights(Units)Description

－

－

－

－

－

－

－

－

－
Shareholders haveunlimited standard(Treasury stock)－

Common stockrights. The number ofshares constituting a unit

5,510,800

is 100.
Shares with full voting rights – other
Shares less than one unit

Common stock
Common stock
142,342

Total number of shares issued
Total voting rights held by all
shareholders(Note)

1

650,359

65,035,900

70,689,042

Same as above.

－

Same as above.

－

－

－

650,359－

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

58

(ii) Treasury Stock, etc.
As of March 31, 2019
Name of
Shareholder

Address(Treasury stock)
Wacoal Holdings

29 Nakajima-cho,
Kisshoin, Minami-Corp.

ku, Kyoto
Total－

Number of
Shares held under
Own Name

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

5,510,800－

5,510,800

7.80

5,510,800－

5,510,800

7.80

59

Shareholding Ratio(%)

2. 【Information on Acquisition etc. of Treasury Stock】<Class of shares>
Acquisition of shares of common stock under the condition set forth in Article 155, Item 3 of the Companies Act, andacquisition of shares of common stock under the condition set forth in Article 155, Item 7 of the Companies Act(1) Acquisition of Treasury Stock based on a Resolution of General Meeting of Shareholders
Not applicable.
(2) Acquisition of Treasury Stock based on a Resolution of Board of Directors
Acquisition pursuant to Article 155, Item 3 of the Companies Act
Number of Shares
Category(Shares)
Status of Resolution of Board of Directors (May 15, 2018)(Period for acquisition: From May 21, 2018 to December 31,
2,200,000
2018)

Total Amount (Yen)
7,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year

2,200,000

6,918,217,200

Total number of remaining shares resolved and total amount－81,782,800

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 (%)－

1.2

Number of Shares(Shares)Category
Status of Resolution of Board of Directors (May 15, 2019)(Period for acquisition: From May 16, 2019 to December 31,
2019)

Total Amount (Yen)

1,900,000

5,000,000,000

Treasury stock acquired prior to the current fiscal year－－

Treasury stock acquired during the current fiscal year－－

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

－

－

226,000

620,831,300

88.1

87.6

Treasury stock acquired during the current period
Unexercised percentage as of the filing date of this report (%)(Note)The number of shares of treasury stock acquired during the current period does not include the number of shares of treasury
stock acquired during the period from June 1, 2018 until the filing date of this report.

(3) Acquisition of Treasury Stock not based on a Resolution of Ordinary General Meeting of Shareholders or Board of Directors
Acquisition pursuant to Article 155, Item 7 of the Companies Act
Number of Shares
Category
Total Amount (Yen)(Shares)
Treasury stock acquired during the current fiscal year406

1,241,100

Treasury stock acquired during the current period

161

456,227(Note)The number of shares of treasury stock acquired during the current period does not include the number ofshares less than one unit purchased during the period from June 1, 2019 until the filing date of this report.

60

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

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

Acquired treasury stock that was offered to subscribers

－

－

－

－

1,000,000

2,631,119,119

2,100,000

5,934,652,279

－

－

－

－

136

417,520

11,50032,522,000

－

－

－

－

5,510,891－

3,637,052－

for subscription
Acquired treasury stock that was canceled
Acquired treasury stock that was transferred due tomerger, stock swap, or company split
Other (transfer of shares less than one unit perpurchase request)
Other (exercise of stock acquisition rights)
Other (decrease as a result of share consolidation)
Number of shares of treasury stock held
(Note)

Current Period

The number of shares of treasury stock held during the current period does not include shares less than one unit purchased
or sold during the period from June 1, 2019 until the filing date of this report.

61

3. 【Dividend Policy】
Our basic policy on profit distribution to shareholders is to make stable distributions based on consideration of our consolidated
performance, while seeking to increase our enterprise value through active investment aimed at higher profitability and to increase
net income per share.
Our basic policy is to distribute earnings twice a year in the form of interim and year-end dividends and the Board of Directors
is the decision-making body for distribution of earnings.
Based on such policy, we plan to distribute a year-end dividend of 36.00 yen per share as a distribution of earnings for thecurrent fiscal year. As a result, the annual cash dividend per share, including an interim dividend of 36.00 yen per share, will be
72.00 yen for the current fiscal year.
As for retained earnings, with the aim of improving our corporate value, we have actively invested in expanding new points ofcontact with consumers for our domestic business and our overseas businesses. We also plan to use our retained earnings in our
strategic investments for maintaining competitiveness and reinforcing growth. With these efforts, we seek to benefit ourshareholders by improving future profitability. We also intend to acquire treasury stock in a flexible manner, and will makeefforts to improve capital efficiency and return profits to our shareholders.
We also provide that the Company may distribute earnings subject to the resolution of the Board of Directors pursuant to theprovisions of Paragraph 1, Article 459 of the Companies Act.
(Note)The distribution of earnings for which record date belongs to the current fiscal year is as follows:
Total Dividend Amount
Dividend Amount per Share
Date of Resolution(Millions of yen)
(Yen)

October 31, 2018
Resolution of Board of Directors’ meeting
May 15, 2019
Resolution of Board of Directors’ meeting

62

2,386

36.00

2,346

36.00

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

Outline of System of Corporate Governance
We, as a holding company, use an “Audit & Supervisory Board Member system” for the purpose of ensuring thecorporate governance of group companies, and have both the Board of Directors and the Audit & Supervisory Board monitor
and supervise the management operating the Company.
Our Board of Directors is composed of 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 Boardof Directors’ meeting from time to time, as necessary, in accordance with the rules of the Board of Directors, tomake decisions on matters concerning important business, such as management policy and management strategy
and matters stipulated by laws or ordinances or our Articles of Incorporation. Further, we have established the“Group Management Meeting” comprising our Directors and major management members, which considers
matters concerning the management strategy of our group and other important management issues and conducts
preliminary reviews of matters for review by our Board of Directors.
-

The Audit & Supervisory Board shall hold regular monthly meetings at the same time as the Board of Directors’
meetings and also hold special meetings from time to time, as necessary, in accordance with the rules of the Audit& Supervisory Board, to make decisions on matters concerning the preparation of audit reports and audit policies,
method of investigation and asset status and execution of duties by the Audit & Supervisory Board Members.

-

We have established the “Executive Nomination Advisory Committee” and “Executive Compensation Advisory
Committee”, which are each chaired by the Independent Outside Director and half of which is filled by the Outside
Directors. These Committees discuss and provide recommendations on nomination, promotion and remunerationof Directors. The “Executive Nomination Advisory Committee” shall be held, in principle, in January when the
Board of Directors’ meeting is held, and the “Executive Nomination Advisory Committee” shall be held, inprinciple, in April, July and February when the Board of Directors’ meeting is held. Each Committee is operated
with a high degree of transparency and fairness pursuant to resolutions approved unanimously with all members
in attendance.

--

The Independent Outside Officers Meeting, which is joined mainly by the Independent Officers, performs anevaluation on the Board of Directors after exchange of views among the members of such Meeting. The details of
discussions are reported to the Board of Directors, which are also disclosed in our Corporate Governance Report.
In order to improve our system of compliance, we have established a Corporate Ethics and Risk Management
Committee, for which our Representative Director and President acts as administrative manager and the Directorof Supervisor of Group Business Management acts as chairman, which will consider any compliance issues which
may have a material impact on the Wacoal Group, enhance awareness and enlightenment on corporate ethics andeffectively promote control of any management risks on the Wacoal Group.

63

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

Executive
Nomination
Advisory
Committee

Executive
Compensation
Advisory
Committee

Title

Name

Board ofDirectors’Meeting

Representative
Director andChairman

Yoshikata
Tsukamoto○

Representative
Director andPresident

Hironobu
Yasuhara●○

Director andVice President

Masashi
Yamaguchi○○○

Managing
Director

Akira
Miyagi○○

Outside Director

MadokaMayuzumi○

Outside Director

Shigeru
Saito

Outside Director

Independent
OutsideOfficers
Meeting

Group
Management
Meeting

Corporate Ethics
and RiskManagement
Committee

○
○

*

●

●

●

○

○

○

○

○

○

○

○

○

○

○

Tsunehiko
Iwai

○

●

●

○

Standing Audit& Supervisory
Board Member

TomokiNakamura

○

●

○

○

Standing Audit& Supervisory
Board Member

Kiyotaka
Hiroshima

○

○

○

○

Audit &
Supervisory
Board Member

HiroshiShirai○○○

Audit &
Supervisory
Board Member

Mitsuhiro
Hamamoto○○○

Audit &
Supervisory
Board Member

MinoruShimada

○

○

○
○

Other

64

○

○

The following diagram illustrates the outline of our corporate governance system:
General Meeting of Shareholders

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

Executive Compensation Advisory Committee
Chaired by: Outside Director
Members: 5 (including 3 Outside Directors)

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

Audit
Board of Directors
Members: 7 (including 3 Outside Directors)

Submitrecommendation

Appointment
and removal

Appointment and removal of
Audit & Supervisory Member

Appointment and removal of Director
Submitrecommendation

Cooperate

Secretarial Office for Audit & Supervisory Board

Evaluate/
examineIndependent Outside Officers Meeting

Audit

Appointment and removal

Representative Director and President

Cooperate

Audit Office

Key Management Committees
Corporate Ethics and Risk
Management Committee

Group Management Meeting

Accounting audit

Corporate Ethics Hotline
Quarterly Business Results
Review Committee

Group Strategy Committee

Give instructions

ReportCompliance Committee

Give instructions

Business Execution Divisions/Group Companies

65

CSR Procurement Committee

ReportInternal audit

Accounting Auditor

Execution ofoperation

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

Status of Improvement of Internal Control System
Our fundamental philosophy toward the internal control system and the status of improvement thereof, details of
which have been determined at the Board of Directors’ meetings, are as follows:＜System to Ensure Appropriate Business Conduct＞(System to ensure that execution of duties by Directors and/or employees is in compliance with laws and regulations and the
Articles of Incorporation)-

To ensure that all Directors and employees of the business group comprised of the Company and its subsidiaries (“theWacoal Group”) comply with laws and regulations and the Articles of Incorporation and conduct business based on
sound social norms, we have enacted the “Wacoal Code of Ethics” and the “Corporate Ethics: Wacoal Standards ofConduct”.

-

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

-

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

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

(System concerning the Storage and Management of Information related to Execution of Duties by Directors)- With the approval of the Board of Directors, we have enacted the “Document Management Rules” pursuant to which
we store the following documents (including electromagnetic records; hereafter the same) along with any relatedmaterials:
Minutes of the General Meeting of Shareholders, minutes of the Board of Directors’ meetings, minutes of theGroup Management meetings, documents for which a Director is the final decision maker, and any other-documents prescribed in the “Document Management Rules”.
The retention period and the place for storage of the documents prescribed in the preceding paragraph shall be subject
to the “Document Management Rules”, but such retention period shall be at least ten years. The Directors and Audit& Supervisory Board Members shall have access to these documents at all times.

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

66

-

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

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

In order to enhance appropriate decision-making by our Directors, we will 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 are consistent-

with such plan.
We will follow the business results of each Wacoal Group company on a monthly basis and report back to the Boardof Directors. In addition, by holding “Quarterly Business Results Review Committee” and “Group Strategy
Committee”, we will confirm the business results and the implementation of measures and policies, consider measuresin the event targets are not achieved, and review such targets, as may be necessary.

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

We have enacted “the Group Management Rules”, which prescribe basic policies regarding the management of Group
companies and matters to be decided by our Board of Directors, as well as matters to be reported to the Company and-manage our Group companies in accordance with the rules.
We conduct any intercompany transaction fairly in compliance with laws and regulations, accounting principles and-the tax system.
Our audit office will conduct internal audits, including an audit of the establishment and/or operation of our compliancesystem and risk management system, within the group companies and will report the results of its audits to the Boardof Directors and appropriate departments and give guidance and/or advice related to the above group companies toensure the appropriate conduct of business.

-

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 asystem that is in line with our policies to the extent reasonable.

(Matters Concerning Assistants to Audit & Supervisory Board Members)- Audit & Supervisory Board Members may appoint employees of the Company as their assistants who are to assist the-duties of the Audit & Supervisory Board Members.
Such assistants shall be full-time employees. In order to ensure the effectiveness and independence of such assistants,
decisions on personal affairs, including appointment, evaluation, relocation and discipline of such assistants will be subject tothe consent of the Audit & Supervisory Board Members.(Reporting System of Directors and Employees to the Audit &Supervisory Board Members and Other Reporting System to Audit & Supervisory Board Members)-

Directors of the Wacoal Group will promptly report to the Audit & Supervisory Board Members if they become awareof a material fact that violates the applicable laws and regulations and/or our Articles of Incorporation, misconduct ora fact that may cause significant damage to any company of the Wacoal Group.

-

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

-

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

67

Other significant matters(Other Systems to Ensure Effective Audit by the Audit & Supervisory Board Members)- The majority of the Audit & Supervisory Board Members will be independent Outside Audit & Supervisory Board-

Members to enhance the transparency and neutrality of management.
The Audit & Supervisory Board Members may order employees who belong to the audit office to perform any tasks
that are required to provide audit services. In addition, the Audit & Supervisory Board Members may request theCompany for reimbursement of expenses incurred for performing their duties.

-

Audit & Supervisory Board Members will attend meetings of the Board of Directors and may also attend other primary
meetings of the Wacoal Group.

-

The Audit & Supervisory Board Members will regularly meet with the audit office and the Accounting Auditor toreceive reports and to exchange opinions.

-

The Audit & Supervisory Board may consult legal counsel, certified public accountants, consultants, or other outsideadvisers as it deems necessary.

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

The

Compliance Committee held a meeting each quarter and discussed and reviewed awareness of compliance and mattersreported to us through the internal alert system.
- Our legal/compliance department continued to provide level-specific group education and e-learning programs as
part of our educational activities for our employees. We have also worked on awareness activities and fulfilling theinternal alert system for our foreign group companies by expanding the use of our external corporate ethics hotline.
(System concerning the Storage and Management of Information related to Execution of Duties by Directors)-

Documents prescribed in the “Document Management Rules” have been properly stored in accordance with the“Document Management Rules” and the Directors and Audit & Supervisory Board Members have access to these

documents on a timely basis.
(Rules and Other Systems Concerning Risk Management of Losses)-

The Corporate Ethics and Risk Management Committee assessed risks, monitored the implementation of measurestaken, and reported to the Board of Directors on a quarterly basis.

-

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

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

We engage in highly transparent decision-making by appointing three independent Outside Directors among our seven
Directors. In addition, “Criteria for Appointment of Officers” and “Criteria for Appointment of Outside Officers (toensure independence)” were newly stipulated in April, 2015.

-

We held discussions and prepared Wacoal Group’s mid-term business plan, with the first year starting fiscal year
ending 2020.

-

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.

68

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

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

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

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

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

We enhance the effectiveness of audit by appointing three independent Outside Audit & Supervisory Board Members
among the five Audit & Supervisory Board Members.

-

The Company reimburses any and all expenses incurred by the Audit & Supervisory Board Members for performing
their duties.

-

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

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

b.

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

c.

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

d.

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

e.

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

f.

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

69

(2)【Directors and Audit & Supervisory Board Members】(ⅰ) List of Officers
Male: 11 persons
Female: 1 person (which accounted for 8.3% of the total number of directors and audit & supervisory board members)

Title

Representative
Director andChairmanName

Yoshikata
Tsukamoto

Date of Birth

Jan. 29, 1948

Business Experience and Position(s) and Office(s)Apr. 1972
Nov. 1977
Nov. 1981
Sep. 1984
Sep. 1984
Jun. 1987
Oct. 2005
Apr. 2011
Jun. 2018
Mar. 1975
Apr. 2005
Jun. 2006
Apr. 2010

Representative
Director andPresident

Hironobu
Yasuhara

Dec. 28, 1951
Apr. 2011
Jun. 2011
Jun. 2013
Jun. 2016
Apr. 2018
Jun. 2018
Apr. 1981
Apr. 2006
Apr. 2011
Apr. 2013
Apr. 2014
Apr. 2015

Director andVice President

Masashi

Nov 26, 1957

Yamaguchi

Jun. 2015
Apr. 2017

Jun. 2017
Apr. 2019
Jun.2019

Oct. 18,1960
Managing
Director

Akira
MiyagiMar. 1984
Oct. 2007
Apr. 2011
Apr. 2014

Joined the Company
Director of the Company
Managing Director of the Company
Executive Vice President of the Company
Representative Director (acting)President and Director of the Company
Representative Director, President and Corporate Officer of
Wacoal Corp.
Representative Director and Chairman of Wacoal Corp.
Representative Director and Chairman of the Company (acting)
Joined the Company
Corporate Officer/General Manager of Wing Brand Business
Department of the Company
Director and Managing Corporate Officer, General Manager ofWing Brand Business Department, of Wacoal Corp.
Director and Senior Managing Corporate Officer, and General
Manager of Wacoal Brand Business Department, of Wacoal
Corp.
Representative Director, President and Corporate Officer of
Wacoal Corp.
Director of the Company
Senior Managing Director of the Company
Vice President and Director of the Company
Representative Director and Chairman of Wacoal Corp.(acting)
Representative Director of the Company and President(acting)Number of
Office Shares Owned
Term (Thousands ofshares)

Note 1

288

Note 1

9

Joined the Company
Business Administration Manager of Wing Brand Operation
Division of Wacoal Corp.
Corporate Officer and Manager of Personnel Division of Wacoal
Corp.
Director and Corporate Officer, and General Manager of
Personnel and Administration Division of Wacoal Corp.
Director and Managing Corporate Officer, and General Manager
of Personnel and Administration Division of Wacoal Corp.
Director and Senior Managing Corporate Officer in charge of
Administration, and General Manager of Personnel and
Administration Division of Wacoal Corp.
Director in charge of Personnel and Administration of theCompany
Director, Vice President Corporate Officer in charge of
Administration, and General Manager of Personnel and
Administration Division of Wacoal Corp.
Managing Director and Superviser of Personnel and
Administration and Future Business of the Company
Appointed Director, Vice President Corporate Officer in chargeof Administration of Wacoal Corp.
Director and Vice President and Supervisor of Group Business
Management of the Company (acting)Note 1Joined the Company
Manager of Business Management and Administration of
Wacoal Brand Operation Division of Wacoal Corp.
Director and Deputy General Manager of Wacoal China Co.,
Ltd.
General Manager of Corporate Planning of the Company(acting)Note 170

32

Apr. 2017
Jun. 2018
Jun.2019

Corporate Officer of Wacoal Corp.
Director of the Company
Managing director of the Company(acting)

Aug. 1996

Apr. 2014

Launched and organized monthly haiku magazine Gekkan
Hepburn
Member of “National Language Subdivision” of Council for
Cultural Affairs, Ministry of Education, Culture, Sports, Scienceand Technology
Member of “Council for the Promotion of Cultural Diplomacy”,
Cabinet Secretariat
Member of “Forum to Realize Culture and Arts-Oriented
Nation” held by Minister of Education, Culture, Sports, Scienceand Technology
Member of “Cultural Policy Subdivision” of Council for
Cultural Affairs, Ministry of Education, Culture, Sports, Scienceand Technology
Advisor of the Company

Jun. 2015

Director of the Company (acting)Nov. 1979

Jan. 2001

Dec. 2004
Director

MadokaMayuzumi

Jul. 31, 1962

May. 2013

Apr. 2014

Director

Shigeru
Saito

Jan 26, 1957

Oct. 1985
Feb. 1987
Sep. 2004
Dec. 2015
Jun. 2017
Apr. 1979
Apr. 2002
Apr. 2008

Director

Tsunehiko
Iwai

May 28, 1953

Jun. 2014

Jan. 2016
Mar. 2018
Jun. 2018

Standing Audit& Supervisory
Board Member

TomokiNakamura

Jan 22, 1958

Apr. 1980
Oct. 2007
Apr. 2008
Apr. 2012
Jun. 2012
Apr. 1981
Apr. 2008
Apr. 2009

Standing Audit& Supervisory
Board Member

Kiyotaka
Hiroshima

Apr. 2010
Jan 4, 1958
Apr. 2011
Apr. 2015

Audit &
Supervisory Board
MemberHiroshi ShiraiOct. 21, 1953

Note 1－Joined TOSE CO., LTD.
General Manager of Development Department
Director of TOSE CO., LTD.
Representative Director and President of TOSE CO., LTD.
Representative Director and President, and CEO of TOSE CO.,LTD.
Appointed Representative Director and Chairman, and CEO of
TOSE CO., LTD. (acting)Director of the Company (acting)Note 10

Joined Shiseido Co., Ltd.
General Manager of Product Commercialization, Planning
Department, Shiseido Co., Ltd.
Corporate Officer, General Manager of Technical Department,
Shiseido Co., Ltd.
Director, Corporate Executive Officer in charge of Research &Development, Production and Technical Affairs, Shiseido Co.,
Ltd.
Representative Director, Executive Vice President Chief
Technology & Innovation Officer, Shiseido Co., Ltd.
Senior Advisor, Shiseido Co., Ltd. (acting)Director of the Company (acting)Note 1－Joined the Company
Accounting Manager of Wacoal Corp.
Accounting Manager of the Company
Audit & Supervisory Board Member/Secretariat of Board ofAudit & Supervisory Board Members
Audit & Supervisory Board Member of the Company (acting)Note 341

Note 63Note 62

Joined the Company
Materials Control Manager of Technology/Production Divisionof Wacoal Corp.
Production Control Manager of Technology/Production Divisionof Wacoal Corp.
Corporate Officer and General Manager ofTechnology/Production Division of Wacoal Corp.
Director and Corporate Officer and General Manager ofTechnology/Production Division of Wacoal Corp.
Director and Corporate Officer and Supervisor ofTechnology/Production of Wacoal Corp.

Jun. 2015

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

Audit & Supervisory Board Member of the Company (acting)Nov. 1977
Aug. 1982
Jul. 1992

Joined Pricewaterhouse
Registered as Certified Public Accountant
Joined Aoyama Audit Corporation

Aug. 2007

Joined Deloitte Touche Tohmatsu

Jun. 2010

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

Sep. 2011

Left Deloitte Touche Tohmatsu

71

Audit &Supervisory
Board Member

Mitsuhiro
Hamamoto

Apr. 18, 1970

Oct. 2011

Established Shirai public accounting firm, Managing Partner(acting)

Jun. 2015
Oct. 2000
Oct. 2000
Oct. 2004
Apr. 2008
Jun. 2017
Feb. 2019
Apr. 1977
Jun. 2004

Audit & Supervisory Board Member (acting)
Admitted to the Bar
Joined the Law Office of Tadashi Yamada
Joined the Kikkawa Law OfficePartner at the Kikkawa Law Office
Audit & Supervisory Board Member of the Company (acting)Managing Partner of Hamamoto Law Office (acting)
Joined The Bank of Tokyo, Ltd. (current “MUFG Bank, Ltd.”)
Corporate Officer, General Manager of Corporate Banking
Group No.1, Corporate Banking Division No.4, The Bank ofTokyo Mitsubishi, Ltd. (current “MUFG Bank, Ltd.”)
Corporate Officer, Manager of New York BranchManaging Corporate Officer, General Manager of Corporate
Banking Group, Nagoya Branch, The Bank of Tokyo-Mitsubishi
UFJ, Ltd. (current “MUFG Bank, Ltd.”)
Representative Director and Vice President, SOTSU
CORPORATION
Representative Director and President, NAIGAI Construction
Co., Ltd.
Representative Director and President, SOTSU
CORPORATION
Representative Director and President, Sotsu Amenity Service
Corporation
Director and Chairman, SOTSU CORPORATION (acting)
Audit & Supervisory Board Member of the Company (acting)May. 2005
Apr. 2008

Audit &
Supervisory
Board Member

MinoruShimadaFeb. 22,1955

Jun. 2010
Jun. 2011
Jun. 2012

Jun. 2018

Total(Note)

1
2
3
4
5
6
7

(ii)

Note 40Note 5

0352

The term of office of a Director is one year from the conclusion of the Ordinary General Meeting of Shareholders heldon June 27, 2019.
Directors Ms. Madoka Mayuzumi, Mr. Shigeru Saito and Mr. Tsunehiko Iwai are Outside Directors.
The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders held on June 29, 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.
The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders to be held on June 28, 2018.
The term of office of an Audit & Supervisory Board Member is four years from the conclusion of the Ordinary General
Meeting of Shareholders to be held on June 27, 2019.
Audit & Supervisory Board Members Mr. Hiroshi Shirai, Mr. Mitsuhiro Hamamoto and Mr. Minoru Shimada are
Outside Audit & Supervisory Board Members.

Status of Outside Officers
We have three Outside Directors and three Outside Audit & Supervisory Board Members.
We have elected those persons playing an active role widely in the field of arts and culture in Japan and overseas
and persons having extensive knowledge and experience as executives to our Outside Directors, and each of such persons
takes a role in improving the appropriateness of the decision made by the Board of Directors by giving objective andindependent advice based on their long careers in each business area and extensive professional knowledge. Also, we haveelected those persons who have experiences as business administrators in financial services, independent attorneys at law or
independent certified public accountants having a considerable degree of finance and accounting knowledge, to our Outside
Audit & Supervisory Board Members. Each Outside Audit & Supervisory Board Member conducts a strict audit on the legalityof Directors’ decision making and performance of their businesses from a technical perspective by maintaining high levels of
independence.
The Company prescribes “Criteria for Appointment of Officers” and “Criteria for Appointment of Outside Officers(that ensures independence)” for appointing an Outside Director and an Outside Audit & Supervisory Board Member.
Upon the appointment of an Outside Director Board Member, the “Executive Nomination Advisory Committee”
will submit a list of candidates based on the following criteria to the Board of directors, and a candidate for Audit &Supervisory Board Member is appointed at a Board of Directors’ meeting with the approval of the Audit & Supervisory Board.

72

The list of candidates for Audit & Supervisory Board Member is then submitted to a general meeting of shareholders as anagenda item.
- A candidate with superior character and knowledge and is mentally and physically healthy;-

A candidate pursues a law-abiding spirit;
A candidate has comprehensive experience in business operation, company management, legal community,
administration, accounting, education or culture and art and upon re-appointment, his/her management
performance and contribution to the group management during the term of office shall be considered;-

A candidate is not in violation of the “Criteria for Appointment of Outside Officers (that ensures independence)”
separately prescribed by the Company;-

A candidate is not currently holding a position as an officer of 4 or more listed companies;
By appointing such candidate, Board of Directors and the Audit & Supervisory Board will each have a balanced

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

73

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

Name

Outside Director

Madoka Mayuzumi

Outside Director

Shigeru Saito

Outside Director

Tsunehiko Iwai

Outside Audit &Hiroshi Shirai

Supervisory Board
MemberOutside Audit &Supervisory Board
MemberMitsuhiro Hamamoto

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

74

Outside Audit &Supervisory Board
Member(ⅲ)

Minoru Shimada

We believe that Mr. Shimada is qualified to be our Outside Audit &Supervisory Board Member, as he has years of experience in the financial
industry and also has extensive experience and expertise in different industrial
sectors.
Also, because he meets the eligibility requirements which the Company
prescribes under “Criteria for Appointment of Outside Officers (to ensure
independence)” and because there are no concerns that any conflict of interest
with general shareholders may arise, we have designated him as anindependent officer.

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

(3)【Status of Audit】(ⅰ) Status of Audit by Audit & Supervisory Board Members
As of June 27, 2019, the Audit & Supervisory Board is composed of two Standing Audit & Supervisory Board Members and three
Outside Audit & Supervisory Board Members. In conformity with the audit standards prescribed by the Audit & Supervisory Board,
each Audit & Supervisor Board Member attended meetings of Board of Directors and other important meetings, conducted an audit on
the status of business and assets, received reports and explanations from the Accounting Auditor, examined the fair presentation of thefinancial statements and appropriateness of the accounting audit, and monitored and inspected the status of implementation andoperation of the internal control system. We have a full-time and independent employee at the Secretarial Office who assists the Audit& Supervisory Board.

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 and accounting knowledge as well.

(ⅱ) Status of Internal Audit
Pursuant to the Internal Audit Regulations, our Audit Office, the internal audit division, which is directly under the control of theRepresentative Director and President, audits the legality and appropriateness of the execution of operations at the Company and ourdomestic and overseas subsidiaries, and evaluates the effectiveness of the internal controls. The results of such audit and evaluation
are regularly reported to the Representative Director and President.
The number of staff of our internal audit department (audit office) as of June 27, 2019, was 7.
Our Audit & Supervisory Board Members and internal audit department (audit office) have a regular meeting for reporting andconfirmation once a month. The main purpose of such meeting is to report the discussions at major meetings at which our Audit &75

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, and the audit can be performed more efficiently andeffectively through alliance between our Audit & Supervisory Board Members and audit office.
Further, our Audit & Supervisory Board Members and Accounting Auditor have regular meetings for discussion six times a year.
The purpose of such discussion is mainly to report and confirm the plan and status of the audit and to exchange opinions on the
management. In addition, they have meetings from time to time as necessary.
(ⅲ) Status of Accounting Audita.

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

b. Names of the certified public accountants who were engaged in the audit:
Designated Limited Liability Partners and Managing Members:
Seiichiro Nakashimac.

Wakyu Shinmen, Hiroaki Sakai,

Composition of the assistants for the audit services:
11 certified public accountants, 6 persons who passed the certified public accountant examination and 12
other persons

d．Policies and Reason for Appointing Audit Firm
The Audit & Supervisor Board selects the certified public accountants, etc. on the condition that such certified public accountant
does not fall under any of the item under Paragraph 1, Article 340 of the Companies Act and that there are no event that may
impair the eligibility and independence of such certified public accountant.
e．Evaluation of Audit Firm by Audit & Supervisory Board Members and Audit & Supervisory Board
Upon the discussion and resolution on the appointment and non-reappointment of Tohmatsu at a meeting held on April 26, 2018,
the Audit & Supervisory Board performed an evaluation from the following perspectives: (1) how the compliance system has
been established and operated; (2) ensuring and/or monitoring of independence; (3) system to ensure audit quality; (4) high levelof audit and/or accounting expertise; (5) communication with the Audit & Supervisory Board Members; and (6) sufficiency oftime taken for audit procedures and adequacy of remuneration for audit. Also, the evaluation of certified public accountants or
accounting auditor is performed by the Audit & Supervisory Board from the following perspectives:(ⅳ)

Audit Fees
The temporary measures of the provisions of (i) through (iii) under Note (56)d(f) described in the Form 2 of the amended“Cabinet Office Order on Disclosure of Corporate Affairs” following the enforcement of “Amendment of Cabinet Office Order”(Cabinet Office Order No. 3 of January 31, 2019) are applied.

A. Fees to Certified Public Accountants
Fiscal Year Ended March 31, 2018
Category
Fees for Audit Services(Millions of yen)

Fees for Nonaudit
Services(Millions of yen)76

Fiscal Year Ended March 31, 2019
Fees for Audit Services(Millions of yen)

Fees for Nonaudit
Services(Millions of yen)

The Company

141

32

141

9

Consolidated
subsidiaries

14

－

14

－

Total

155

32

155

9

For both fiscal years ended March 31, 2018 and 2019, the Company paid fees to the accounting auditor or certified
public accountants as compensation for the advice and guidance regarding the creation of Group Accounting Rules
and consulting services for CSR procurement activities, which are out of the scope of the services that are set forthin Paragraph 1, Article 2 of the Certified Public Accountants Act.
B. Other fees
(Fiscal year ended March 31, 2018)
Wacoal International Corp., one of the Company’s consolidated subsidiaries, and its consolidated subsidiaries paid 60 million yen
as fees for audit services to Deloitte & Touche LLP, which belongs to the same network as the Company’s certified public
accountant, etc.
（Fiscal year ended March 31, 2019）
Wacoal International Corp., one of the Company’s consolidated subsidiaries, and its consolidated subsidiaries paid 58 million yen
as fees for audit services to Deloitte & Touche LLP, which belongs to the same network as the Company’s certified public
accountant, etc.

C. 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.
D．Reason by Audit & Supervisory Board Members for giving consent on the amount of fees payable to the accounting auditor

The Audit & Supervisory Board has obtained necessary documents and received explanations regarding thecomparison of the estimated time under the audit plan from the previous fiscal year and the actual time used for audit
performance and the trend in the amount of fees paid for the audit performance during the past fiscal years from therelevant departments and the accounting auditor, has reviewed the details of audit planning, basis for calculating fees
and level of fees presented by the accounting auditor for the current fiscal year, and after deliberating whether theamount of fees for the audit performance is appropriate to maintain the independence of the accounting auditor and tocarry out its accounting audit under appropriate audit system and audit plan for the assessment of risks related to theaudit environment and internal control system of the business group (including the Company and its consolidated
subsidiaries), the Audit & Supervisory Board has deemed the amount of fees for the current fiscal year is appropriate.
Based on the above, the Audit & Supervisory Board has given its consent, pursuant to the provisions of Paragraph 1,
Article 399 of the Companies Act, on the amount of fees payable to the accounting auditor.
(4)【Remunerations Paid to Officers】(ⅰ) Details and Policies of Calculation methods for Amount of Remunerations, etc., Paid to Officers or Method of Calculatingsuch AmountThe remunerations paid to Directors under our compensation system for officers consists of “Basic Remuneration,” the amount of
which is fixed, and “Bonus,” which is linked to the business results of each fiscal year, as well as “Stock Option,” which is linked
to medium- and long-term business results. In the case of Outside Directors and Audit & Supervisory Board Members who shallbe in the position independent from the management, only “Basic Remuneration” is paid because any remuneration linked tobusiness results are not appropriate in such case.
<Basic Remuneration>
The basic remuneration is designed to be determined for each position, but may be increased, within a certain range, based on thecontribution made to the management of the Company in the past years. The Company annually verifies the adequacy of thelevel of remuneration, which has been set according to the business results and scale of the Company and is based on comparison

77

with other companies within the same industry or of the same scale through the investigation results on remuneration prepared by
an external agency.
The basic remuneration amount for Directors is determined after discussion within the Executive Compensation Advisory
Committee and resolution by the Board of Directors. The basic remuneration amount for Audit & Supervisory Board Members isdetermined after discussion within the Audit & Supervisory Board.
<Performance-Linked Bonus>
The total amount of the performance-linked bonus is based on achievement as a percentage of the consolidated operating income
recorded for each fiscal year, plus other performance factors. The consolidated operating income is the base amount so that theamount of the bonus is highly linked to the consolidated business results. The base amount has been set as 1,350 million yen
based on the business results from previous fiscal years, and the consolidated operating income for the current fiscal year was
4,879 million yen.
The amount of the performance-linked bonus is determined after discussion within the Executive Compensation Advisory
Committee, resolution by the Board of Directors, and approval by the general meeting of shareholders.
The review of the calculation method for the performance-linked bonus will be performed on an ongoing basis to establish asystem with a higher degree of transparency.
<Share-Based Compensation>
Share-based compensation in the form of stock options is resolved by the Executive Compensation Advisory Committee after
discussion within the Executive Compensation Advisory Committee.
The maximum annual amounts of the basic remuneration paid to Directors and Audit & Supervisory Board Members were
determined to be 350 million yen (excluding the amount paid as salaries for employees to the Directors who concurrently serve as
employees) and 75 million yen, respectively, by the resolution adopted at the 57th Ordinary General Meeting of Shareholders
held on June 29, 2005.Totaling seven directors jointed to the resolution.
The amount of Performance-Linked bonuses was determined to be such amount as is determined according to the business resultsof each fiscal year, which was resolved at each Ordinary General Meeting of Shareholders held for the relevant year. Further, themaximum annual amount of stock options was determined to be 70 million yen by the resolution adopted at the 60th Ordinary
General Meeting of Shareholders held on June 27, 2008. Totaling eight directors jointed to the resolution.
The ratio of the basic remuneration, performance-linked bonuses and stock options is as follows:
basic remuneration 71%; performance-linked bonuses 18%; and stock options 11%.
(assuming the performance-linked bonuses meet the base amount)
The retirement allowance system for officers was abolished by the resolution adopted at the 57th Ordinary General Meeting of
Shareholders held on June 29, 2005.
<Roles and Activities of Executive Compensation Advisory Committee>
As an advisory body to Board of Directors, the Executive Compensation Advisory Committee discusses and resolves mattersrelated to officers’ compensation and system from an independent and objective perspective. Half of the members of the
Executive Compensation Advisory Committee, chaired by Independent Outside Director Mr. Tsunehiko Iwai, are Independent
Outside Directors. The Executive Compensation Advisory Committee is also attended by the Outside Audit & Supervisory
Board Member(s) as an observer to ensure transparency.
Up to December 25, 2018, the Committee acted under the name of “Executive Compensation and Nomination Advisory
Committee” which was chaired by our internal Directors and attended by one (1) Independent Outside Director. From December
26, 2018, the Executive Compensation and Nomination Advisory Committee was changed to “Executive Compensation Advisory
Committee” and “Executive Nomination Advisory Committee” after reviewing our system.
The Executive Compensation Advisory Committee has resolved after discussion on the matters related to the remuneration paid
to officers for the current fiscal year as follows:
We have resolved upon discussion the matters below related to the remuneration of officers for the current fiscal year:
February 26, 2018:

Verification of the level of remuneration for officers and basic remuneration amount78

July 20, 2018:

Issuance of stock options

April 25, 2019:

Performance-linked bonus for officers<Roles and Agenda at the Board of Directors’ Meeting>Board of Directors discusses and resolves matters related to officers’ remuneration based on recommendations received from the
Executive Compensation Advisory Committee.
The Board of Directors has resolved after discussion on the matters related to the remuneration paid to officers for the current
fiscal year as follows:
June 28, 2018:

Basic remuneration amount for the current fiscal year

July 20, 2018:

Issuance of stock options

May 15, 2019:

Activities of Executive Compensation Advisory Committee

May 30, 2019:

Performance-linked bonus for officers(ⅱ) Aggregate amount of remunerations, etc., paid to each category of officers, aggregate amount of remunerations, etc., by typethereof, as well as the number of relevant officers:
Aggregate
Aggregate Amount of Remunerations, etc., by Type Thereof
Amount of(Millions of yen)
Category of Officers
Remunerations,
Basic
Retirement
etc. (Millions of
Bonus
Stock Option
Remuneration
Allowanceyen)
Directors(Excluding Outside
Directors)
Audit & Supervisory Board
Members(Excluding Outside Audit &Supervisory Board
Members)
Outside Oofficers(Note)

Number of
Relevant
Officers

313

230

40

43

－

5

38

38

－

－

－

2

46

46

－

－

－

8

As of March 31, 2019, the numbers of Directors, Audit & Supervisory Board Members, and Outside Officers were
five, two, and six, respectively. These numbers were inconsistent with the numbers described above because thenumbers described above include two Outside Officers who resigned as Director upon the close of the 70th Ordinary
General Meeting of Shareholders held on June 28, 2018.

(ⅲ) Aggregate amount, etc., of the consolidated remunerations, etc., of the person who receives 100 million yen or more as
remunerations, etc., on a consolidated basis:

Name

Yoshikata
TsukamotoAggregate
Amount ofConsolidated
Remunerations,etc.
(Millions of
yen)
164

Amount of Consolidated Remunerations, etc., by Type
Thereof (Millions of yen)
Category of
Officers

Director

Relevant
Company

WacoalHoldings
Corp.

Basic
Remuneration

126

Bonus

Stock Option

Retirement
Allowance

17

20

－

(5)【Information on Shareholdings】① Standard and Concept for Categories of Investment Stocks
With respect to the category of the investment stocks that are held for the purpose of pure investment and that are held for the
purposes other than pure investment, the Company does not hold any shares for the purpose of pure investment as part of asset
management, but holds shares of other companies for purposes other than pure investment that are strategically important for our

79group, to maintain and enhance business transactions, to build, maintain and enhance cooperative and transactional relationships
for business expansion, and to maintain steady financial transactions.

② Equity securities held by Wacoal Corp.
Shares held by Wacoal Corp., which is among the Company and our consolidated subsidiaries and holds the largest amount ofequity securities on the balance sheet (i.e., the balance sheet amount of investment stocks) are as follows:
A．Equity securities held for purposes other than pure investmenta.

Policies and method to verify the rationality of shareholding, as well as the verification process at meeting of Board of
Directors regarding appropriateness of holding certain stock of shares
The Company examines whether it is appropriate to hold shares from a medium-to long-term perspective, whether risks
associated with such holding are worth the cost of capital, or profits and dividend income indices in connection with thetransaction and the results are reported to the Board of Directors on a regular basis. The Board of Directors thenexamines whether the holding will be enhance corporate value of the Company from a medium-to long-term perspective

based on such verification results, and determines whether to continue to hold or dispose such shares.
b. Number of Stock and Amount Recorded in the Balance Sheet
Number of Total Amount Recorded in the
StocksBalance Sheet (Millions of yen)
Unlisted Stock of Shares
Shares Other than Unlisted
Stock of Shares

28

1,398

67

59,434(Name of stock of shares which increased during the current fiscal year)
Total Acquisition Amount for
Number of
Increased Shares (Millions ofStocksyen)
Unlisted Stock of Shares
Shares Other than Unlisted
Stock of Shares

1

200

2

7

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

－

－

3

1,829

80

Reason for Increase in the Number of Shares
Acquired for the purpose of building
cooperative relationshipConverted convertible bond into common
stock of sharesc. Information on specified investment stocks and stocks deemed to be held, including number of shares by stock, and theamount recorded in the balance sheet
Specified investment stocks:
Fiscal Year 2019
Issuer Name

Number of Shares
Number of Shares Purpose of Holding, Quantitative Effects of Whether Issuer
Shareholding (Note 2) and Reason for
Holds Company(Shares)(Shares)
Increase in Number of Shares
SharesAmount Recorded in Amount Recorded in
the Balance Sheet
the Balance Sheet(Millions of yen)
(Millions of yen)
3,520,500

KDDI
Corporation

Fiscal Year 2018

8,396

3,520,500

9,563

We engage in a transaction involving
communications equipment andinfrastructure with the issuer and continue
to hold the issuer’s shares to maintain andNostrengthen our good relationship from theperspective of enhancing corporate value.
575,100

575,100

Nissin Foods
Holdings Co.,Ltd.

We continue to hold the issuer’s shares tomaintain and strengthen our good
relationship as we have cooperative and

4,370

4,244

close connections through information
sharing in business expansion.

1,542,264

1,539,247

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

Aeon Co., Ltd.
3,572

2,923

perspective of enhancing corporate value.
The number of shares has increased due to

Yes

Yes

participation in the stock ownershipassociation.
383,000

383,000

through joint product development andinformation sharing and continue to holdShiseido Co.,Ltd.

We have close connections with the issuer

3,059

2,609

the issuer’s shares to maintain andstrengthen our good relationship from theYesperspective of business strategy.
445,900

445,900

as a local firm, through information
sharing, and continue to hold the issuer’s

KyoceraCorporation

We have close connections with the issuer,

2,898

2,677

shares to maintain and strengthen our
good relationship from the perspective ofYesbusiness strategy.
825,000
Shimadzu
Corporation

2,640

825,000

2,468

We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen ourYesgood relationship from the perspective of
business strategy.
569,997
Bank of Kyoto,
Ltd.

2,639

569,997

3,385

We engage in a financial transaction with
the issuer, as a major local financial firm,and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective ofenhancing corporate value.

81

Yes

1,509,400
Kokuyo Co.,
Ltd.

2,451

1,509,400

3,159

We have close connection with the issuer
as a major supplier of office furniture andstationery and continue to hold the issuer’s
shares to maintain and strengthen ourYesgood relationship from the perspective ofenhancing corporate value.
7,606,666

4,940,000

Thailand and continue to hold the issuer’s
shares to maintain and strengthen our

Saha PathanaInter-Holding
PCL

We have close cooperative relationship inbusiness deployment in the Kingdom of

1,891

1,293

good relationship from the perspective ofenhancing corporate value in the Kingdom

Noof Thailand. The number of shares held
increased as a result of converting
convertible bond into common stock ofshares.
2,885,850

2,885,850

transactions with the issuer as a major
financial institution and continue to holdMitsubishi UFJ
Financial Group,Inc.

We engage in overall financial

1,587

2,011

the issuer’s shares to maintain andstrengthen our good relationship from theYesperspective of enhancing corporate value.
687,300

Aeon Financial
Service Co., Ltd.

687,300

Issuer is a group company of Aeon Co.,
Ltd. with whom we engage in atransaction of women’s garments and

1,548

1,680

continue to hold the issuer’s shares tomaintain and strengthen our goodNo

relationship with Aeon group from theperspective of business strategy.
1,315,769

1,315,769

products, mainly the women’s garments
and continue to hold the issuer’s shares to

IsetanMitsukoshi
Holdings Ltd.

We engage in a transaction of various

1,472

1,544

maintain and strengthen our good
relationship from the perspective ofYesenhancing corporate value.
274,000

274,000

minimize business risks and continue tohold the issuer’s shares to maintain and

Tokio Marine
Holdings, Inc.

We have various general insurances to

1,469

1,297

strengthen our good relationship from theperspective of enhancing corporate value.

230,000

230,000

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

Horiba, Ltd.
1,414

1,895

shares to maintain and strengthen our
good relationship from the perspective of

Yes

Yes

business strategy.
175,000

175,000

as a local firm, through information
sharing and continue to hold the issuer’s

NipponShinyaku Co.,Ltd.

We have close connection with the issuer,

1,410

1,246

shares to maintain and strengthen our
good relationship from the perspective of
business strategy.

82

Yes

Taisho

We continue to hold the issuer’s shares tomaintain and strengthen our good

Pharmaceutical
Holdings Co.,

relationship from the perspective ofenhancing corporate value in a close and132,000

1,392

132,000

1,380

Ltd.

cooperative connection in businessdeployment.
1,000,000

Takara Holdings
Inc.

Yes

1,309

1,000,000

1,181

We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen ourYesgood relationship from the perspective of
business strategy.
462,408

2,312,040

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

Shiga Bank, Ltd.
1,219

1,239

maintain and strengthen our good
relationship from the perspective ofYesenhancing corporate value.
517,531517,531

garments and continue to hold the issuer’s
shares to maintain and strengthen our

Heiwado Co.,
Ltd.

1,219

1,331

good relationship from the perspective ofenhancing corporate value.

217,719

217,179

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

SCREEN
Holdings Co.,Ltd.

We engage in a transaction of women’s

968

2,119

shares to maintain and strengthen our
good relationship from the perspective of

Yes

Yes

business strategy.
204,400

204,400

Fukuyama
Transporting
Co., Ltd.

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

870

959

548,890548,890As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance

Chori Co., Ltd.
854

1,151

Yes

our good relationship from the perspectiveof enhancing corporate value.

corporate value and to maintain andstrengthen our good relationship through aYesstable supply.
Mitsubishi UFJ
Lease & Finance
Company
Limited

1,320,000

1,320,000

mainly auto leases, and continue to holdthe issuer’s shares to maintain and
744

823

541,388541,388Yes

strengthen our good relationship from theperspective of enhancing corporate value.
We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares to

J. Front RetailingCo., Ltd.

We engage in a transaction of leases,

713

979

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

83

Yes

426,000
Toppan Printing
Co., Ltd.

711

852,000

743

We have close connection with the issuer
in printing advertisements, mainly
catalogues, and continue to hold theissuer’s shares to maintain and strengthenYes

our good relationship from the perspectiveof enhancing corporate value.
598,195
Asahi Kasei
Corporation

683

598,195

836

As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andYesstrengthen our good relationship through astable supply.
154,969

154,969

garments and continue to hold the issuer’s
shares to maintain and strengthen our good

Seven & i
Holdings Co.,
Ltd.

647

707

310,700

310,700

629

701

Holdings, Inc.

Yes

We have close connection with the issuer

products are being advertised and continue
to hold the issuer’s shares to maintain andYesstrengthen our good relationship from theperspective of enhancing corporate value.
197,500

197,500

We engage in a transaction of various
products, mainly the women’s garmentswith Odakyu Department Store Co., Ltd,

Odakyu Electric
Railway Co.,Ltd.

relationship from the perspective ofenhancing corporate value.

through informational programs on TBS
Broadcasting System, Inc., where ourTokyo
Broadcasting
SystemWe engage in a transaction of women’s

529

425

which is the issuer’s subsidiary, andcontinue to hold the issuer’s shares toYesmaintain and strengthen our good
relationship from the perspective ofenhancing corporate value.
120,200

120,200

Issuer is a group company of H2O
Retailing Corporation with whom weengage in a transaction of various

Hankyu Hanshin
Holdings, Inc.

498

474

products, mainly the women’s garments
and continue to hold the issuer’s shares toYesmaintain and strengthen our good
relationship from the perspective ofenhancing corporate value.
310,759

310,759

the issuer’s subsidiaries such as
department store and general merchandise

H2O Retailing
Corporation

We engage in a transaction of various
products, mainly the women’s garments at

479

604

stores and continue to hold the issuer’s
shares to maintain and strengthen ourYesgood relationship from the perspective ofenhancing corporate value.
Hisamitsu
PharmaceuticalCo., Inc.

90,00090,000We continue to hold the issuer’s shares tomaintain and strengthen our good

458

741

relationship as we have close connection
in building cooperative and transactional

84

Yes

relationship in business deployment.
283,000

283,000transaction and continue to hold theissuer’s shares to maintain and strengthen

Seino Holdings
Co., Ltd.

Chuo Warehouse
Co., Ltd.

417

554

381,300

381,300

We have close connection in logistics

385

425

our good relationship from the perspectiveof enhancing corporate value.

2,677,300

2,677,300

We have close cooperative relationship inbusiness deployment in the Kingdom ofThailand, and continue to hold the issuer’s
shares to maintain and strengthen our

371

366

Yes

our good relationship from the perspectiveof enhancing corporate value.
transaction and continue to hold theissuer’s shares to maintain and strengthen

I.C.C
INTERNATION
AL PCLWe have close connection in logistics

Yes

Yes

good relationship from the perspective ofenhancing corporate value in the Kingdomof Thailand.

170,500
Yomeishu Seizo
Co., Ltd.

170,500

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

363

408

Yes

connection in building cooperative andtransactional relationship in businessdeployment.

141,500

141,500

We have close connection with the issuer
through information sharing as apparel
manufacturers and exploring potential

Aoyama Trading
Co., Ltd.

356

592

cooperation in business strategy andcontinue to hold the issuer’s shares toYesmaintain and strengthen our good
relationship from the perspective of
business strategy.
100,000

100,000

Kintetsu
Department
Store Co., Ltd.

348

and continue to hold the issuer’s shares tomaintain and strengthen our goodYes

relationship from the perspective ofenhancing corporate value.
151,487

Marui Group
Co., Ltd.

383

We engage in a transaction of various
products, mainly the women’s garments

338

151,487328

We engage in a transaction of various
products, mainly the women’s garments
and continue to hold issuer’s shares tomaintain and strengthen good relationshipYesfrom the perspective of enhancing
corporate value.
296,500

296,500

as a local firm, through information
sharing and continue to hold the issuer’s

Nichikon
Corporation

We have close connection with the issuer,

300

357

shares to maintain and strengthen our
good relationship from the perspective of
business strategy.

85

Yes

45,648

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

235

331

shares to maintain and strengthen our
good relationship from the perspective of

IZUMI Co., Ltd.

No

enhancing corporate value.
205,000

205,000

products, mainly the women’s garments
and continue to hold the issuer’s shares to

Matsuya Co.,Ltd.

We engage in a transaction of various

205

309

maintain and strengthen our good
relationship from the perspective ofYesenhancing corporate value.
100,000

100,000

manufacturers and exploring potential
cooperation in business strategy andSanyo ShokaiLtd.

We have close connection with the issuer
through information sharing as apparel

172

232

continue to hold the issuer’s shares tomaintain and strengthen our goodYes

relationship from the perspective of
business strategy.
147,000
Nissha Printing
Co., Ltd.

171

147,000419

We have close connection with the issuer,
as a local firm, through information
sharing and continue to hold the issuer’s
shares to maintain and strengthen ourYesgood relationship from the perspective of
business strategy.
58,00058,000in printing advertisements, mainly
catalogues, and continue to hold theDai Nippon
Printing Co.,Ltd.

We have close connection with the issuer

153

127

issuer’s shares to maintain and strengthen
our good relationship from the perspectiveYesof enhancing corporate value.
62,60062,600garments and continue to hold the issuer’s
shares to maintain and strengthen our

Fuji Company,
Limited119

141

good relationship from the perspective ofenhancing corporate value.

71,10071,100As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance

YAGI & CO.,LTD.

We engage in a transaction of women’s

107

177

corporate value and to maintain andstrengthen our good relationship through a

Yes

Yes

stable supply.
168,000

168,000

We have close connection with the issuer
through information sharing as apparel
manufacturers and continue to hold theKing Co., Ltd.
95

101

issuer’s shares to maintain and strengthen
our good relationship from the perspectiveYesof business strategy.
60,000120,000

88

122

Takashimaya
Co., Ltd.

We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our good
relationship from the perspective of

86

Yes

enhancing corporate value.
46,80046,800through information sharing as apparel
manufacturers and continue to hold the

Takihyo Co.,Ltd.

We have close connection with the issuer

82

109

issuer’s shares to maintain and strengthen
our good relationship from the perspectiveYesof business strategy.
100,000
Toray Industries,
Inc.

70

100,000

100

As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andYesstrengthen our good relationship through astable supply.
20,000Fujibo Holdings,
Inc.

20,00052

77

As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andYesstrengthen our good relationship through astable supply.
75,89175,891through proposals and information sharing
related to facilities and continue to hold

Toda
Corporation

We have close connection with the issuer

51

58

the issuer’s shares to maintain andstrengthen our good relationship from theYesperspective of business strategy.
94,38094,380through information sharing as apparel
manufacturers and continue to hold the

Sankyo Seiko
Co., Ltd.

We have close connection with the issuer

44

46

issuer’s shares to maintain and strengthen
our good relationship from the perspectiveYesof business strategy.
23,347

23,347

Teijin Limited
42

46

As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andNo(Note 3)strengthen our good relationship through astable supply.
20,043
KuraboIndustries Ltd.

200,432

40

67

As the issuer is one of major suppliers of
textile-related products, we continue tohold the issuer’s shares to enhance
corporate value and to maintain andYesstrengthen our good relationship through astable supply.
6,913

6,913

garments and continue to hold the issuer’s
shares to maintain and strengthen our

ARCS Co., Ltd.
16

17

good relationship from the perspective ofenhancing corporate value.

11,000*We engage in a transaction of women’s
garments and continue to hold the issuer’s

13*

shares to maintain and strengthen our
good relationship from the perspective ofTenmaya Store
Co., Ltd.

We engage in a transaction of women’s

87

No

Yes

enhancing corporate value.
9,369

*

We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares to

PARCO CO.,
LTD.

9

*

maintain and strengthen our good
relationship from the perspective ofNoenhancing corporate value.
25,364
Izutsuya Co.,
Ltd.

*

6

*

We engage in a transaction of various
products, mainly the women’s garments
and continue to hold the issuer’s shares tomaintain and strengthen our goodNo

relationship from the perspective ofenhancing corporate value.
－

159,500

We have close connection with the issuer
to build a cooperative and transactional
relationship toward business expansion,and previously held the issuer’s shares toEzaki Glico Co.,
Ltd.

－

888

No

maintain and strengthen our good
relationship from the perspective of
business strategy.

－

209,200

We engage in transactions involving
communications equipment andinfrastructure with the issuer andpreviously held the issuer’s shares to

NTT DOCOMO,
INC.

－

568

No

maintain and strengthen our good
relationship with the issuer from theperspective of enhancing corporate value.

－

130,000

We have a close connection with the issuer
to build a cooperative and transactional
relationship toward business expansion,

Ono
PharmaceuticalCo., Ltd.

－and previously held the issuer’s shares toNo

428 maintain and strengthen our good
relationship from the perspective of
business strategy.

(Note)

1“－” indicates that the Company does not hold any shares of such stock. “*” indicates that the amount has been
omitted since the amount recorded on the balance sheet does not reach one-hundredth of the stated capital of theCompany and is below the top sixty stocks based on the amounts recorded on the balance sheet.

2
3

The quantitative effects of shareholding are difficult to describe as it relates to an individual transaction.
Teijin Limited does not hold any shares of the Company, while its subsidiary Teijin Frontier Co., Ltd. holds shares of
the Company.
Stocks deemed to be held:
Fiscal Year 2019
Issuer Name

Fiscal Year 2018

Number of Shares
Number of Shares Purpose of Holding, Quantitative Effects of Whether Issuer
Shareholding (Note2) and Reason for
Holds Company(Shares)(Shares)
Increase in Number of Shares
SharesAmount Recorded in Amount Recorded in
the Balance Sheet
the Balance Sheet(Millions of yen)
(Millions of yen)
2,544,000

2,544,000

communications equipment andinfrastructure with the issuer and continue

KDDI
Corporation

We engage in a transaction of

6,067

6,910

88

to hold issuer’s shares to maintain andstrengthen good relationship with theNoissuer from the perspective of enhancing
corporate value. We currently haveretirement benefit trust agreement underwhich we withhold our right to give
directions on the exercise of voting rights.
3,365,000

3,365,000

transactions with the issuer as a major
financial institution and continue to holdissuer’s shares to maintain and strengthen
good relationship with the issuer from the

Mitsubishi UFJ
Financial Group,Inc.

We engage in overall financial

1,850

2,345

perspective of enhancing corporate value.
We currently have retirement benefit trust

Yes

agreement under which we withhold ourright to give directions on the exercise of(Note)

1voting rights.
The information on the specified investment stocks held by the Company are shown above although the amount2

recorded on the balance sheet for the above stock does not reach one-hundredth of the stated capital of the Company.
The quantitative effects of shareholding are difficult to describe as it relates to an individual transaction.

d.

Equity securities held for pure investment

e.

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

f.

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

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

(ⅲ)

a.

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

b.

Number of Stock and Amount Recorded in the Balance Sheet
Total Amount Recorded in the
Number of
Balance Sheet
Stock(shares)(Millions of yen)

Unlisted Stock of Shares

22

Shares Other than Unlisted
Stock of Shares

1

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

－

－

－

－

－

－

89

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

－

－

－

－

Information on specified investment stocks and stocks deemed to be held, including number of shares by stock, and theamount recorded in the balance sheet
Specified investment stocks:
Fiscal year 2019
Stock Name

Fiscal year 2018

Number of Shares
Number of Shares Purpose of Holding, Quantitative Effects of Whether Issuer(shares)(shares)
Shareholding(Note2) and Reason for
Holds Company
Increase in Number of Shares
SharesAmount Recorded in Amount Recorded in
the Balance Sheet
the Balance Sheet(Millions of yen)
(Millions of yen)
2,100

2,100

3

4

The Dai-ichi Life
Holdings.Inc,

We continue to hold the issuer’s shares tomaintain and enhance a stable welfare
program for employees through life
insurance transactions

Yes(Note) 1. The foregoing table shows the information of one specified investment stock held by the Company, although the amountrecorded in the balance sheet as to such investment stock is not more than one-hundredth of the stated capital of the Company.
2. The quantitative effects of shareholding are difficult to describe as it relates to an individual transaction.
d.

Equity securities held for pure investment:

e.

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

f.

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

90

V. 【Financial Information】
1. 【Consolidated Financial Statements】
Consolidated Balance Sheets
March 31, 2019 and 2018

Millions of Yen
2019
2018

ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Time deposits
Marketable securities (Notes 3, 18 and 19)
Notes and accounts receivable (Note 6)
Allowance for returns and doubtful receivables (Note 4)Inventories (Note 5)
Return assets (Note 1)
Other current assets (Notes 6, 19 and 20)
Total current assets
PROPERTY, PLANT AND EQUIPMENT:Land (Note 8 )Buildings and structures (Notes 8 and 10)
Machinery and equipment (Note 19)
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
OTHER ASSETS:
Investments in affiliated companies (Note 6)
Investments (Notes 3, 18 and 19)
Goodwill (Notes 7 and 19)
Other intangible assets (Notes 7 and 19)
Prepaid pension expense (Note 11)
Deferred income taxes (Note 15)
Other
Total other assets¥

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

¥

29,487
4,296
1,567
25,873(2,459 )42,676

Thousands of
U.S. Dollars(Note 2)2019$

CURRENT LIABILITIES:
Short-term bank loans (Note 8)
Notes and accounts payable:
Trade notes payable
Trade accounts payable (Note 6)
Other payables
Accrued payroll and bonuses
Income taxes payable (Note 15)
Refund liabilities (Note 1)
Current portion of long-term debt (Notes 8 and 18)
Other current liabilities (Notes 11, 16, 19 and 20)
Total current liabilities

4,372

272,253
36,177
4,030
225,777(2,069 )384,062
10,66145,040108,016

105,812975,931

21,54974,033
18,914478
114,974(61,704 )21,561
73,61818,268
254
113,701(59,368 )

194,696
668,892
170,889
4,319
1,038,796(557,499 )LONG-TERM LIABILITIES:Long-term debt (Notes 8 and 18)
Liability for termination and retirement benefits (Note 11)
Deferred income taxes (Note 15)
Other long-term liabilities (Notes 10, 11 and 15)
Total long-term liabilities

53,27054,333

481,297

COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)

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

22,512
69,318
16,594
12,85910,178
1,194
5,734

197,497
572,570
108,005
111,104
36,05012,30651,021

120,481

138,389

1,088,553

¥

8,116

¥

7,104

$

73,329

1,155
10,638
6,548
7,209
2,759
3,482
50
3,905
43,862

1,174
11,393
7,053
7,213
1,979
50
3,666
39,632

10,435
96,11559,161
65,13424,92831,460452
35,282396,296

88
1,828
12,567
2,278
16,761138
1,852
17,231
2,184
21,405795
16,516
113,544
20,582
151,437

13,26029,807
193,139

13,26029,765
172,418

119,805
269,307
1,745,021

1,551

14,013(5,679 )(4,128 )2,274
27,424(1,101 )28,597(51,310 )(37,297 )(15,584 )(11,328 )(140,802 )216,494
4,650
221,144

232,712
4,785
237,497

1,956,035
42,013
1,998,048¥ 281,767¥ 298,534$ 2,545,781

EQUITY:WACOAL HOLDINGS CORP. SHAREHOLDERS' EQUITY:
Common stock, no par value –authorized, 250,000,000 shares in 2019 and 2018;
issued 70,689,042 shares and 71,689,042 shares in 2019 and2018, respectively
Additional paid-in capital (Note 12)
Retained earnings
Accumulated other comprehensive income (Note 14):
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments (Note 11)
Total accumulated other comprehensive (loss) income
Treasury stock, at cost – 5,510,891 shares and
4,322,121 shares in 2019 and 2018, respectively
Total Wacoal Holdings Corp. shareholders' equity(Note 13)
Noncontrolling interests
Total equity
TOTAL

TOTAL

Millions of Yen
2019
2018

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars(Note 2)2019

¥ 281,767¥ 298,534$ 2,545,781

See notes to consolidated financial statements.

91

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2019, 2018 and 2017

NET SALES (Notes 6 and 16)

2019

Millions of Yen
2018

2017

Thousands of
U.S. Dollars(Note 2)2019

¥ 194,201¥ 195,725¥ 195,881$ 1,754,617

89,804

92,032

93,073

811,384

93,68492,701(708 )
206

92,526

846,440OPERATING COSTS AND EXPENSES (REVENUE):
Cost of sales (Notes 6 and 11)
Selling, general and administrative expenses (Notes 1,
9, 10, 11, 12 and 19)
Compensation income
Impairment charges on goodwill (Notes 7 and 19)
Impairment charges on other intangible assets (Notes 7
and 19)4,325

39,077
13,634

1,509
189,322

184,231

185,599

1,710,535

4,879

11,494

10,28244,082

289
(11 )
1,429

194
(10 )
1,329

157
(27 )
1,176

2,611
(100 )
12,911(5,430 )206

442(49,060 )

1,047

1,073

3,770
769

9,460

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

2,792

6,287

(24,178 )INCOME BEFORE INCOME TAXES AND EQUITYIN NET INCOME OF AFFILIATED COMPANIES

2,203

14,286

16,56919,904

INCOME TAXES (Note 15):
Current
Deferred

5,350(2,817 )

4,880
662

4,830
450

48,338(25,452 )

2,533

5,542

5,280

22,886(LOSS) INCOME BEFORE EQUITY IN NET
INCOME OF AFFILIATED COMPANIES(330 )

8,744

11,289(2,982 )EQUITY IN NET INCOME OF AFFILIATEDCOMPANIES (Note 6)

725

916

1,359

6,551

NET INCOME

395

9,660

12,6483,569

NET INCOME ATTRIBUTABLE TONONCONTROLLING INTERESTS

(54 )

85

(123 )(488 )

Total operating costs and expenses
OPERATING INCOME
OTHER INCOME (EXPENSES):Interest income
Interest expense
Dividend income (Note 6)(Loss) gain on sale, exchange and valuation ofmarketable securities and investments – net (Note3)
Gain on sale of assets classified as held for sale (Note21)
Other – net (Notes 1, 11 and 20)

Total income taxes

NET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP.

¥

341

¥

9,745

¥

12,525$3,081(Continued)
92

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2019, 2018 and 2017

2019

Yen
2018

2017

U.S. Dollars(Note 2)2019

NET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP. PER SHARE (Note 17):
Basic
Diluted¥ 5.16¥ 5.14¥ 143.46¥ 142.98¥ 180.26¥ 179.71$ 0.05$ 0.05NET INCOME ATTRIBUTABLE TO WACOALHOLDINGS CORP. PER AMERICAN DEPOSITARYRECEIPT (5 shares of common stock) (Note 17):
Basic
Diluted¥ 25.78¥ 25.68¥ 717.30¥ 714.89¥ 901.30¥ 898.55$ 0.23$ 0.23As of October 1, 2017, the Company effected a one-for-two ordinary share reverse stock split. Net income
attributable to Wacoal Holdings Corp. per share is calculated assuming that the reverse stock split had occurred at the
beginning of the earliest fiscal year presented in the consolidated financial statements.

See notes to consolidated financial statements.

(Concluded)
93

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2019, 2018 and 20172019
NET INCOME¥¥ 12,648(750 )

1,113(4,079 )(6,776 )(750 )

1,113(4,079 )(6,776 )

(7 )
(97 )
(104 )

6,494(139 )
6,355

3,413(304 )
3,109(63 )(877 )(940 )(4,787 )200(4,587 )(487 )(193 )(680 )

619
(1 )
618

(43,251 )
1,807(41,444 )OTHER COMPREHENSIVE (LOSS) INCOME(5,441 )6,788(352 )(49,160 )COMPREHENSIVE (LOSS) INCOME(5,046 )16,44812,296(45,591 )COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLETO NONCONTROLLING INTERESTS

(18 )

21

(6 )

(163 )COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE
TO WACOAL HOLDINGS CORP.

¥ (5,064 )¥ 16,469¥ 12,290$ (45,754 )Unrealized (loss) gain on securities:
Amounts arising during the year
Reclassification adjustments
Total unrealized (loss) gain on securities
Pension liability adjustments:
Amounts arising during the year
Reclassification adjustments
Total pension liability adjustments

See notes to consolidated financial statements.

94

¥

2017

9,660

OTHER COMPREHENSIVE INCOME, NET OF TAX(Note 14):
Foreign currency translation adjustments:
Amounts arising during the year
Total foreign currency translation
adjustments

395

Millions of Yen
2018

Thousands of
U.S. Dollars(Note 2)
2019
$

3,569

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Equity
Years Ended March 31, 2019, 2018 and 2017

BALANCE, APRIL 1, 2016
Net income
Foreign currency translation adjustments
Unrealized loss 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 12)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2017
Net income
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥270 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Share-based compensation granted (exercised) (Note 12)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2018
Cumulative effects (net of tax) of the adoption of ASU 2016-01 and 2018-03 (Note 1)
Net income
Foreign currency translation adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥360 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Share-based compensation granted (exercised) (Note 12)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2019

Shares of
Outstanding
Common Stock(Thousands)
70,429CommonStock

Additional
Paid-in
CapitalRetained
Earnings¥ 13,260¥ 29,686¥ 162,196

Millions of Yen
Accumulated
Other
TreasuryComprehensive
Stock,
Income (Loss)at Cost¥ 22,108¥(2,876 )12,525(3,965 )
3,109
621(4,648 )Total Wacoal
Holdings Corp.
Shareholders'EquityNoncontrolling
Interests

Total Equity¥ 224,374¥ 5,027¥ 229,401

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

123
(114 )
0(3 )12,648(4,079 )3,109
618(4,648 )48(4,648 )(167 )(4,522 )74
48

227,568

4,914

232,482

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

(85 )
51
6
7

9,660
1,113
6,355
(680 )(167 )(1,851 )27

68,60521

13,26029,707(4,522 )64(11 )170,062

21,873(7,334 )

9,745
1,062
6,349
(687 )(7,386 )(4,522 )74(7,386 )86(7,386 )(194 )(4,007 )
0
68
86

4,785

237,497(194 )(1,243 )0
567,36758

13,26029,765(4,007 )
0
13

(3 )

172,418

28,597

27,834341(27,320 )(11,328 )(4,007 )068

232,712514
341(723 )(104 )(4,578 )(723 )(104 )(4,578 )(4,811 )

54
(27 )
(9 )

(4,811 )(191 )(2,200 )011

65,17842¥ 13,260¥ 29,807(6,919 )
0
2,631
32

(2,631 )(12 )¥ 193,139¥(4,128 )¥ (15,584 )(6,919 )0514
395(750 )(104 )(4,587 )(4,811 )(191 )(6,919 )062¥ 216,494

38

62
38

¥ 4,650¥ 221,144

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

(Continued)
95

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Equity
Years Ended March 31, 2019, 2018 and 2017

BALANCE, MARCH 31, 2018

CommonStock

Additional
Paid-in
CapitalRetained
Earnings$ 119,805$ 268,928$ 1,557,805$ 258,375

251,482
3,081(246,838 )Cumulative effects (net of tax) of the adoption of ASU 2016-01 and 2018-03 (Note 1)
Net income
Foreign currency translation adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp. shareholders, $3.25 per 5 shares ofcommon stock
Cash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Share-based compensation granted (exercised) (Note 12)
Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2019

Thousands of U.S. Dollars (Note 2)
Accumulated
Total Wacoal
Other
Treasury
Holdings Corp.
Comprehensive
Stock,
Shareholders'
Income (Loss)at CostEquity$ (102,349 )$ 2,102,564
4,644
3,081
(6,532 )(940 )(41,362 )(6,532 )(940 )(41,362 )(43,467 )Noncontrolling
Interests

Total Equity$ 43,234$ 2,145,798

488(244 )(82 )(43,467 )(1,726 )379$ 119,805$ 269,307(62,513 )0
23,771
289(23,771 )(108 )$ 1,745,022$(37,297 )$ (140,802 )(62,513 )0560$ 1,956,035

4,644
3,569
(6,776 )(940 )(41,444 )(43,467 )(1,726 )(62,513 )
0

343

560
343

$ 42,013$ 1,998,048

See notes to consolidated financial statements.

(Concluded)
96

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2019, 2018 and 2017

Millions of Yen
2018

2019
OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation (Note 12)
Allowance for returns and doubtful receivables – net
Deferred income taxes
Loss (gain) on sales or disposal of property, plant and equipment – net
Impairment charges on property, plant and equipment (Note 19)
Compensation income
Impairment charges on goodwill (Notes 7 and 19)
Impairment charges on other intangible assets (Notes 7 and 19)
Loss (gain) on sale, exchange and valuation of marketable securities and investments – net (Note 3)
Equity in net income of affiliated companies, less dividends received
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories
Increase in return assets(Increase) decrease in other current assets(Decrease) increase in notes and accounts payable
Increase in refund liabilities
Decrease in liability for termination and retirement benefits
Increase (decrease) in accrued expenses, income taxes payable and other current liabilities
Other
Net cash provided by operating activities
INVESTING ACTIVITIES:
Increase in time deposits
Decrease in time deposits
Proceeds from sales and redemption of equity securities
Payments to acquire equity securities
Proceeds from redemption of debt securities
Payments to acquire debt securities
Compensation income
Proceeds from sales of property, plant and equipment
Payments to acquire property, plant and equipment
Payments to acquire intangible assets (Note 7)
Proceeds from sales of shares of affiliated companies
Other
Net cash used in investing activities
FORWARD

¥

395

¥

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

9,660

¥ 12,648

5,492
68
18
662
250

5,032
74
264
450
(3,374 )(708 )
206

4,325
1,509
5,430
(211 )
822(76 )(1,180 )(653 )(1,640 )3,482(620 )
1,075
118
13,620(4,783 )
5,226
2,497
(323 )
1,008(900 )
276(2,603 )(3,180 )270
38(2,474 )¥ 11,146

2017¥

Thousands of
U.S. Dollars(Note 2)
2019

$

3,569
51,021
560(20,446 )(25,452 )434
1,509
39,077
13,63449,059(1,906 )(206 )(397 )(442 )(837 )(232 )
1,012

882(378 )

270
676

475
(95 )

(833 )(518 )
73
15,493(417 )
1,615
454
16,351

7,427(687 )(10,661 )(5,900 )(14,818 )
31,460(5,602 )
9,713
1,066
123,057(5,129 )
3,368
394
(22 )
567
(1,605 )708
159(3,429 )(2,455 )(4,336 )
3,717
1,574
(356 )
516(329 )(43,215 )47,21722,561(2,918 )9,107(8,132 )82(7,362 )

3,585(5,504 )(1,941 )4
33(3,032 )2,494(23,518 )(28,731 )2,439
343(22,353 )8,131¥ 13,319$ 100,704(Continued)
97

Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2019, 2018 and 20172019
FORWARD
FINANCING ACTIVITIES:
Increase (decrease) 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
Disposal of treasury stock
Dividends paid on common stock
Dividends paid to noncontrolling interests
Proceeds from share issuance to noncontrollinginterests
Net cash used in financing activities

Millions of Yen
2018

2017

Thousands of
U.S. Dollars(Note 2)
2019

¥ 11,146¥

8,131¥ 13,319$ 100,704¥¥(755 )

¥

$

1,061
(50 )
(6,919 )0(4,811 )(191 )(47 )(4,007 )0(7,386 )(194 )

38(10,872 )EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS(3,613 )250(403 )(4,522 )9,586(4,648 )(167 )(452 )(62,513 )0(43,467 )(1,726 )86(12,303 )48(13,055 )343(98,229 )372(336 )(328 )

3,361

646(4,508 )

(64 )

5,836

29,48733,99534,059266,417

CASH AND CASH EQUIVALENTS, END OF
YEAR¥ 30,133¥ 29,487¥ 33,995$ 272,253

ADDITIONAL CASH FLOW INFORMATION:
Cash paid for:
Interest
Income taxes

¥ 11
5,068

¥ 11
5,853

¥ 27
2,812

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

¥954

¥583

¥795

CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR$99
45,790$8,619See notes to consolidated financial statements.

(Concluded)
98

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Financial Statements – Wacoal Holdings Corp. (the "Company") and subsidiaries are predominantly
engaged in one industry, the manufacturing and sale of apparel, including foundation garments, lingerie,nightwear, and outerwear in Japan, the United States of America, Europe and certain other countries in Asia.
The accompanying consolidated financial statements, stated in Japanese yen, have been prepared on the basisof accounting principles generally accepted in the United States of America ("U.S. GAAP").
Consolidation – The consolidated financial statements include the accounts of the Company and its majorityowned subsidiaries (collectively, the "Companies"). All intercompany transactions and balances have been
eliminated.
Some foreign subsidiaries of the Company have a fiscal year ending December 31. The accounts of thosesubsidiaries are included in the Company's consolidated financial statements based on the subsidiaries' fiscal
year end. Necessary adjustments have been made for significant events related to subsidiaries that occurred
during the period between their fiscal year ends and March 31.
Investments in affiliated companies where the Companies' ownership is 20% to 50% are accounted for using
the equity method.
Significant influence is generally deemed to exist if the Companies have an ownership interest in the voting
stock of the investee from 20% to 50%, although other factors are considered in determining whether theequity method of accounting is appropriate.
Use of Estimates – The preparation of consolidated financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
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(expenses) income in the consolidated statements of income.
Foreign currency translation gains (losses) for the years ended March 31, 2019, 2018 and 2017 were ¥76
million, ¥(189) million and ¥(175) million, respectively. They have been included in other – net of otherincome (expenses).

99

Marketable Securities and Investments – The Companies classify their marketable securities and investments
in debt securities into one of two categories: available-for-sale or held-to-maturity. Available-for-salesecurities are recorded at fair value with a corresponding recognition of unrealized holding gain or loss (net oftax) in accumulated other comprehensive 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 to maturity.
Gains and losses on sales of debt securities are computed based on cost determined using the average cost
method. The Company periodically determines whether any decline in the value of debt securities is
temporary, based on the period and extent of the decline, the issuer's financial position and prospects, and theintention to hold it for a sufficient period of expected recovery of fair value. If it is determined that the decline
is not temporary, the difference between the carrying amount and its fair value is recognized as a valuation
loss.
Equity securities are measured at fair value and unrealized holding gain or loss is recorded in net profit or loss.
Allowance for Doubtful Receivables – An allowance for doubtful notes and receivables is estimated based on
historical collection experience and additional information including current economic conditions and thecreditworthiness of each applicable customer.
Inventories – Inventories are stated at the lower of cost or net realizable value, cost being determined by the
first-in, first-out method for raw materials and the average cost method for work in process and finishedproducts. Cost includes net prices paid for materials purchased, production labor cost, factory overhead andcharges for customs duties.
Property, Plant and Equipment – Property, plant and equipment is stated at cost less impairment charges.
Depreciation of property, plant and equipment is computed by the declining-balance method, except forbuildings acquired on or after April 1, 1998 as well as building improvements and structures acquired on orafter April 1, 2016, which are depreciated using the straight-line method based upon the estimated useful livesof the assets. The estimated useful lives are as follows:
Buildings and structures

2 to 50 years (mainly 38 years)

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

2 to 20 years (mainly 5 years)

Depreciation expenses for the years ended March 31, 2019, 2018 and 2017 were ¥3,538 million, ¥3,681
million and ¥3,443 million, respectively.
Impairment of Property, Plant and Equipment – The carrying amount of long-lived assets held and used by
the Companies is evaluated for impairment whenever there is an event or change in circumstances thatindicates that such assets have been impaired or that the carrying amounts of such assets might not berecoverable. The carrying amount of property, plant and equipment is not recoverable if it exceeds the sum of
the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That
assessment is based on the carrying amount of the asset at the date it is tested for recoverability, whether in use
or under development. The impairment charge is measured as the amount by which the carrying amount ofproperty, plant and equipment exceeds its fair value. Impairment charges of ¥167 million on property, plantand equipment were included in selling, general and administrative expenses in the consolidated statement ofincome for the year ended March 31, 2019. The Companies recorded no impairment charges on long-lived
assets for the years ended March 31, 2018 and 2017.

100

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, an impairment charge is recognized in an amount equal to that excess. To test for impairment of otherintangible assets with indefinite useful lives, the carrying value of an intangible asset is compared with its fairvalue. If the carrying amount of an intangible asset with indefinite useful life exceeds its fair value, an
impairment charge is recognized in an amount equal to that excess.
Other intangible assets with finite useful lives consist primarily of brands and software and are amortized overtheir estimated useful lives using the straight-line method. The estimated useful lives are as follows:
Brands

20 to 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 estimates
because the Companies' lease contracts generally have automatic renewal provisions. The estimated asset
retirement costs are capitalized as part of the carrying amount of the associated long-lived asset anddepreciated over its useful life.
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.
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.
Revenue Recognition – The Companies recognize revenue when control of promised products are transferred
to customers and performance obligations are satisfied. The Group's revenue is recognized for transactions, netof any trade discounts or rebates given. In addition, provision for expected returns is deducted from revenue
based on actual return amounts from previous fiscal year.
Shipping and Handling Costs – Shipping and handling costs are expensed as incurred.

101

Advertising Expenses – Advertising costs are expensed as incurred. Advertising expenses for the years ended
March 31, 2019, 2018 and 2017 were ¥12,329 million, ¥12,719 million and ¥12,694 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, 2019, 2018 and 2017 were ¥739 million, ¥781 million and¥810 million, respectively, and have been included in selling, general and administrative expenses.
Consumption Taxes – Consumption taxes are excluded from sales, costs, and expenses in the consolidated
statements of income.
Income Taxes – The provision for income taxes is determined under the asset and liability method in
accordance with the guidance for income taxes. Under this method, deferred tax assets and liabilities are
determined for temporary differences between the financial statements and tax bases of assets and liabilities
and tax loss carryforwards at presently enacted tax rates. A valuation allowance is recorded when it is more
likely than not that some portion or all of the deferred tax assets will not be realized in the future.
The Companies assess their income tax positions and record tax benefits for all years subject to examination
based upon their evaluation of the facts, circumstances and information available as of the end of the fiscal
year. For those tax positions only where there is greater than a 50% likelihood that the tax position will besustained, the Companies record the largest amount of tax benefit that may potentially be realized uponultimate settlement with a taxing authority that has full knowledge of all relevant information. Interest andpenalties related to income taxes are included in the consolidated statements of income.
Share-Based Compensation – Share-based compensation is accounted for in accordance with AccountingStandard Codification 718, "Compensation – Stock Compensation" ("ASC 718"). The Company measures
share-based compensation cost at the grant date, based on the fair value of the award and recognizes the costover the requisite service period, which is the vesting period. The fair value of the award is estimated using theBlack-Scholes option-pricing model.
Derivatives – Derivative instruments, including certain derivative instruments embedded in other contracts, areaccounted for in accordance with the guidance for derivatives and hedging. Because such derivative
instruments are not designated as hedges, changes in the fair value of the derivatives are recorded in earnings
or losses.
Subsequent Events – In accordance with the guidance for subsequent events, the Company has evaluatedsubsequent events through June 27, 2019.
Reclassifications – Certain reclassifications have been made to the prior years' consolidated financial
statements to conform to the current year's presentation. And as of October 1, 2017, the Company effected a
one-for-two ordinary share reverse stock split. The number of ordinary shares, outstanding shares, treasury
stock and net income attributable to Wacoal Holdings Corp. per share are calculated assuming that the reverse
stock split occurred at the beginning of the earliest fiscal year presented in the consolidated financial
statements.

102

Recent Accounting Pronouncements:
Recently Adopted Accounting Guidance
Revenue Recognition – In May 2014, the Financial Accounting Standards Board (the "FASB") issued a new
accounting guidance 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 dateof 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 upon initial application and the cost and complexityof applying the new guidance both upon transition and on an ongoing basis. This guidance is effective forfiscal years beginning after December 15, 2017 and interim periods within that annual period. The Company
has applied this guidance from the first quarter commencing on April 1, 2018, using the modified retrospective
method of adoption to contracts that were not completed as of the adoption. The cumulative effect of applying
this guidance was not recognized as adjustment to retained earnings at the beginning of the current fiscal year
as its impact was not material. Due to the adoption of this guidance, liabilities related to returns, which were
included in "Allowance for returns and doubtful receivables" under Current Assets through the previous
consolidated fiscal year are classified as "Refund liabilities" under Current Liabilities and rights to recoverproducts from customers as "Return assets" under Current Assets from the current consolidated fiscal year.
The adoption of this guidance did not have a material impact on the Company's consolidated balance sheets
and statements of income except as set forth above.
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 the equity methodof 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. In February 2018, the FASB issued new
accounting guidance related to recognition and measurement of financial assets and financial liabilities. This
guidance requires the cumulative effect of equity investments (except those accounted for under the equity
method of accounting or those that result in consolidation of the investee) to reflect their fair values to be
adjusted to the beginning retained earnings. The guidance is effective for fiscal years beginning after
December 15, 2017 and interim periods within those fiscal years. The Company has applied this guidancefrom the first quarter commencing on April 1, 2018. As a result of this adoption, unrealized gains on equity
securities of ¥27,320 million (net of tax) which were recognized under accumulated other comprehensive
income (loss) as of the previous year end, and unrealized gains on equity securities of ¥514 million (net of tax)
which were recorded at cost in the prior years, are now recognized as a cumulative effect adjustment of
beginning retained earnings. In addition, an unrealized loss on equity securities of ¥5,495 million recognized
during the current year was included in "(Loss) gain on sale, exchange and valuation of marketable securities
and investments – net" in the consolidated statement of income.
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 has applied this provision from the firstquarter commencing on April 1, 2018. The adoption of this guidance did not have a material impact on the
Company's balance sheets and statements of income.
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 has applied this provision from the first quarter commencing on April
1, 2018. The adoption of this guidance did not have a material impact on the Company's balance sheets andstatements of income.

103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. Early adoption is permitted and the Company has applied thisprovision from the first quarter commencing on April 1, 2018. The adoption of this guidance did not have amaterial impact on the Company's balance sheets and statements of income.
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 theservice cost component from the other components of net periodic benefit costs. This guidance is effective forfiscal years beginning after December 15, 2017 and interim periods within that annual period. The Company
has applied this provision from the first quarter commencing on April 1, 2018. The guidance is applied
retrospectively for the presentation of the service cost and the other components of net periodic pension costs.
The adoption of the guidance decreased operating income by ¥1,040 million and ¥783 million for the years
ended March 31, 2018 and 2017, respectively, and increased other (expenses) income by the same amounts. In
addition, due to the adoption of this guidance, operating income during the current year decreased by ¥808
million, and other (expenses) income increased by ¥843 million. The adoption of the guidance that only theservice cost is eligible for capitalization did not have a material impact on the Company's balance sheets andstatements of income.
Recent Accounting Guidance Not Yet Adopted
Leases – In February 2016, the FASB issued new accounting guidance related to leases, Accounting Standard
Codification 842, "Leases" ("ASC 842"). This guidance requires an entity to recognize lease assets and leaseliabilities on the balance sheet for those leases classified as operating leases under current U.S. GAAP ("ASC840") with a few exceptions.
In January 2018, the FASB also issued a new accounting guidance related to land easements. This guidanceclarifies that land easements are within the scope of ASC 842 and introduces a transition practical expedient
allowing the Company to forgo assessment as to whether existing or expired land easements that were notpreviously accounted for as leases under ASC 840 are or contain leases under ASC 842. The guidance iseffective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The
Company is currently evaluating the impact of adoptions on the Company's consolidated financial position,
results of operations or cash flows.
Internal-Use Software – In August 2018, the FASB issued guidance related to Internal-use software. This
guidance clarifies the accounting for costs of implementation activities performed in a cloud computing
arrangement that is a service contract. This guidance is effective for fiscal years beginning after December 15,
2019 and interim periods within that annual period. The adoption of this guidance is not expected to have amaterial impacts on the Company's balance sheets and statements of income.
Disclosure on Fair Value Measurement – In August 2018, the FASB issued guidance related to the fair value
measurement disclosure. This guidance removes, modifies, and adds some of the disclosure requirements onfair value. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods
within that annual period. The adoption of this guidance is not expected to have a material impact on the
Company's balance sheets and statements of income.
Disclosure on Defined Benefit Plans – In August 2018, the FASB issued guidance related to disclosure on
defined benefit plans. This guidance removes, modifies, and adds the disclosure requirements on defined
benefit pension. This guidance is effective for fiscal years beginning after December 15, 2019 and interim
periods within that annual period. The adoption of this guidance did not have a material impact on the
Company's balance sheets and statements of income.

104

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 ¥110.68 to $1,
the noon buying rate for yen in New York City as of March 31, 2019. Such translation should not be construed
as representations that the Japanese yen amounts could be converted into U.S. dollars at the above or any other
rate.

3.

MARKETABLE SECURITIES AND INVESTMENTS
Debt Securities – The fair value of debt securities is based on quoted market prices as of March 31, 2019 and2018. The cost, gross unrealized gain and loss and the fair value by major security type were as follows:
Millions of Yen
Gross
Gross
Unrealized
Unrealized
Gain
Loss

2019

Cost

Fair Value

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

¥446

¥0

¥1

¥445

¥1,124¥1¥4¥1,121Millions of Yen
Gross
Gross
Unrealized
Unrealized
Gain
Loss

2018

Cost

Available-for-sale securities:
Current:
Municipal bonds
Noncurrent:
Corporate debt securities

¥10

¥0

¥10

¥ 464

¥ 150

¥ 614

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

Fair Value

¥967

¥8

¥959

¥646

¥12

¥634

Gross unrealized losses and fair values of debt securities, for those that have been in a continuous unrealized
loss position for more than 12 month as of March 31, 2019 and 2018, were as follows:
Millions of Yen
2019

Held-to-maturity securities:
Marketable securities:
Corporate debt securities
Investment:
Corporate debt securities

2018

Fair Value

Gross
Unrealized
Loss

Fair Value

Gross
Unrealized
Loss

¥332

¥1

¥424

¥3

¥446

¥3

¥105

¥2

105

Gross unrealized losses and fair values of debt securities, for those that have been in a continuous unrealized
loss position for less than 12 months as of March 31, 2019 and 2018, were as follows:
Millions of Yen
2019

Fair Value
Held-to-maturity securities:
Marketable securities:
Corporate debt securities
Investment:
Corporate debt securities

¥228

2018
Gross
Unrealized
Loss

¥1

Fair Value

Gross
Unrealized
Loss

¥535

¥5

¥529

¥10

The Companies periodically determine whether a decline in the fair value of debt securities is deemed to beother than temporary based on criteria that include the duration of the market decline, the extent to which costexceeds fair value, the financial position and business outlook of the issuer, and the intent and ability of theCompanies to retain the impaired held-to-maturity securities for a sufficient period of time for anticipated
recovery in fair value as described in Note 1. No debt securities were identified that meet the Companies'
criteria for recognition of an impairment charge on debt securities in an unrealized loss position presented
above. Therefore, the Companies do not believe the unrealized losses represent an other-than-temporary
impairment as of March 31, 2019 and 2018.
Future maturities of debt securities classified as held-to-maturity securities as of March 31, 2019, were as
follows:
Millions of Yen
Fair
Cost
Value
Due within one year
Due after one year through five years

¥

446
1,124

Total

¥ 1,570

¥

445
1,121

¥ 1,566

There were no realized gains or losses from sales of debt securities classified as available-for-sale during theyears ended March 31, 2019 and 2018.
There were no unrealized losses on debt securities classified as available-for-sale for which a decline in fairvalue was deemed to be other than temporary for the years ended March 31, 2019 and 2018.
As a result of the conversion of convertible bonds into marketable securities, the Company recorded gains on
exchange of marketable securities of ¥140 million for the year ended March 31, 2019. There were no exchangeof marketable securities and investments during the year ended March 31, 2018.

106

Equity Securities – Realized and unrealized gains and losses on equity securities during the year ended March
31, 2019, are as follows:
Millions ofYen
2019
Net losses recognized during the period on equity securities
Less: Net losses recognized during the period on equity securities
sold during the period
Unrealized losses recognized during the period on equity
securities still held at March 31
4.

¥ (5,570 )(77 )¥ (5,493 )ALLOWANCES FOR DOUBTFUL RECEIVABLES AND SALES RETURNS
Information related to the Companies' allowance for doubtful receivables was as follows:

2019

Millions of Yen
2018

2017

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

¥ 207
36
(14 )

¥ 219
28
(40 )

¥ 196
68
(45 )

Balance at the end of the year

¥ 229

¥ 207

¥ 219

Information related to the Companies' allowance for sales returns was as follows:
Millions of Yen
2018
2017

5.

Balance at the beginning of the year
Charged to cost
Balances utilized¥ 2,258
2,252(2,258 )¥ 2,033
2,258(2,033 )Balance at the end of the year

¥ 2,252¥ 2,258

INVENTORIESThe components of inventories as of March 31, 2019 and 2018 were as follows:
Millions of Yen
2019
2018

6.

Finished products
Work in process
Raw materials¥ 36,358
3,793
2,357

¥ 36,635
3,678
2,363

Total

¥ 42,508¥ 42,676

INVESTMENTS IN AFFILIATED COMPANIES
Certain investments are accounted for using the equity method if the Companies have the ability to exercise
significant influence over an investee. Significant influence is generally deemed to exist if the Companies havean ownership interest in the voting stock of the investee between 20% and 50%, although other factors are
considered in determining whether the equity method of accounting is appropriate. The Companies record
investments in equity method investees meeting these characteristics as "Investments in affiliated companies."
Under the equity method, the Companies record their proportionate share of an affiliated company's income orloss based on the most recently available financial statements.

107

The primary affiliated companies and percentage of ownership as of March 31, 2019 and 2018 were as
follows:
Percentage of Ownership (%)
2019
2018

Name of Investee

25
50
34
42
21

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

Aggregate carrying amounts and fair values of investments in affiliated companies which have a quoted
market price as of March 31, 2019 and 2018 were as follows:
Millions of Yen
2019
2018
Carrying amount
Aggregate value of quoted market price¥14,523
11,075¥15,191
11,445

The following tables represent the affiliated companies' summarized balance sheets and statements of income
as of and for the years ended March 31, 2019 and 2017. Such information as of and for the year ended March
31, 2018 were not disclosed as they were immaterial.
Millions of Yen
2019
2017
Current assets
Noncurrent assets¥ 41,929
44,635¥ 40,589
41,773

Total¥ 86,564¥ 82,362

Current liabilities
Long-term liabilities
Equity

¥

¥

Total

¥ 86,564

8,569
7,145
70,8508,538
7,366
66,458¥ 82,362

Millions of Yen
2019
2017
Net sales
Gross profit
Income before income taxes
Net income¥63,066
32,1053,458
2,714¥59,172
30,2005,105
4,089

The balance of receivables and payables to affiliated companies as of March 31, 2019 and 2018 were as
follows:
Millions of Yen
2019
2018
Accounts receivable
Accounts payable
Other receivable

¥927
665
286

108

¥598
472
272

The amounts of transaction with affiliated companies for the years ended March 31, 2019, 2018 and 2017 were
follows:

Sales
Cost of sales corresponding to sales of material and products
Purchases
Royalties

2019

Millions of Yen
2018

2017

¥3,257
3,175
5,612
299

¥2,700
2,675
5,744
300

¥1,898
1,753
2,646
263

Dividends received from affiliated companies were ¥514 million, ¥519 million and ¥522 million for the years
ended March 31, 2019, 2018 and 2017, respectively.
7.

GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill – Changes in the carrying amount of goodwill by operating segments for the years ended March 31,
2019, 2018 and 2017 were as follows.
Millions of Yen
2019
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total
Impairment charges
Foreign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment charges¥ 12,269
12,269Peach John

Total

¥ 11,203(6,878 )4,325(4,325 )¥ 23,472(6,878 )16,594(4,325 )(315 )

11,203(11,203 )23,157(11,203 )(315 )
11,954

Total¥ 11,954¥¥ 11,954

Millions of Yen
2018
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total
Impairment charges
Foreign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment charges¥ 11,746
11,746(206 )
736

Peach John

Total

¥ 11,203(6,878 )4,325¥ 22,949(6,878 )16,071(206 )
736

11,203(6,878 )23,685(7,091 )4,325¥ 16,594

12,482(213 )

Total¥ 12,269

109¥

Millions of Yen
2017
WacoalBusiness(Overseas)
Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total
Adjustments during the measurement period
Foreign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment charges¥ 13,586
13,586(57 )(1,783 )Peach John

Total

¥ 11,203(6,878 )4,325¥ 24,789(6,878 )17,911(57 )(1,783 )11,203(6,878 )22,949(6,878 )4,325¥ 16,071

11,746

Total¥ 11,746¥

The Company recorded impairment charges on goodwill of ¥4,325 million for the Peach John Business in theyear ended March 31, 2019, which was included in operating costs and expenses of the Peach John Business.
The Company recorded impairment charges on goodwill of ¥206 million for the A Tech in the year ended
March 31, 2018, which was included in operating costs and expenses of Wacoal Business (overseas). During
the year ended March 31, 2017, the Companies recorded no impairment charge on goodwill. See Note 19 forfurther information about measurement of fair value.
Other Intangible Assets – The components of intangible assets excluding goodwill as of March 31, 2019 and2018 were as follows:Year Ended March 31
Amortized intangible assets:
BrandsSoftware
OthersTotal
Unamortized intangible assets:
Trademarks
Other
Total

Gross
Carrying
Amount¥6,058
14,060
1,732

Millions of Yen
2019
Accumulated
Amortization
Grossand Impairment
Carrying
ChargesAmount
¥

1,899
7,542
868

¥

2018
Accumulated
Amortization
and Impairment
Charges

6,219
11,777
1,703¥ 1,671
6,434
805¥ 21,850¥ 10,309¥ 19,699¥ 8,910¥ 5,31676¥ 4,636¥ 5,31676¥ 3,322¥ 5,392¥ 4,636¥ 5,392¥ 3,322

Other intangible assets acquired during the years ended March 31, 2019, 2018 and 2017 totaled ¥3,266
million, ¥2,569 million and ¥1,941 million, respectively, which primarily consist of software with an estimateduseful life of five years.
The gross carrying amounts of brands include foreign currency translation adjustments.
During the year ended March 31, 2019, the Companies recorded impairment charges on the trademark of
Peach John of ¥1,314 million, which was included in operating costs and expenses of the Peach John Business.
In addition, the Companies recorded ¥195 million of impairment charges on software of Ai, which was
included in operating expenses of the Wacoal Business (Domestic). During the years ended March 31, 2018and 2017, the Companies recorded no impairment charge on other intangible assets. See Note 19 for further
information.

110Aggregate amortization expenses for the years ended March 31, 2019, 2018 and 2017 related to otherintangible assets were ¥2,109 million, ¥1,811 million and ¥1,589 million, respectively. Future estimatedamortization expenses as of March 31, 2019 were as follows:Year Ending March 31

Millions ofYen

Estimated amortization expense
2020
2021
2022
2023
2024

¥ 1,977
1,885
1,673
1,385
941

Total
8.

¥ 7,861SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans as of March 31, 2019 and 2018 consisted of the following:
Millions of Yen
2019
2018
Unsecured bank loans¥8,116¥7,104

The weighted-average annual interest rates on short-term bank loans as of March 31, 2019 and 2018 were0.2% and 0.3%, respectively.
Unused lines of credit for short-term financing as of March 31, 2019 and 2018 aggregated to ¥22,935 millionand ¥23,511 million, respectively.
Long-term debt as of March 31, 2019 and 2018 was summarized below. The interest rates and maturities were
for loans as of March 31, 2019.
Millions of Yen
2019
2018
Collateralized bank loans, with fixed interest at 0.6%, maturing
through 2022
Unsecured bank loans, with fixed interest at 0.4%,
maturing through 2022
Total
Less current portion of long-term potion
Long-term debt, less current portion

¥ 55

¥ 75

83
138
(50 )

113
188
(50 )

¥ 88

¥ 138

The annual maturities of long-term debt as of March 31, 2019 were as follows:
Millions of
Yen

Year Ending March 31
2020
2021
2022

¥ 50
50
38

Total

¥ 138

111

A subsidiary has pledged assets as security for loans. As of March 31, 2019 and 2018, assets pledged ascollateral for bank loans were as follows:
Millions of Yen
2019
2018
Land
Buildings

¥ 150
169

¥ 150
191

Total

¥ 319

¥ 341

As is customary in Japan, both short-term and long-term loans are made under general agreements which
provide for security and guarantees for future and present indebtedness to be given upon request of the bank.
The bank has the right to offset cash deposits against obligations that have come due or, in the event of default,
against all obligations due to the bank.
9. 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 as of March 31, 2019were presented below:
Millions of
Yen

Year Ending March 31
2020
2021
2022
2023
2024
Thereafter

¥

695
652
497
454
454
2,266

Total

¥ 5,018

Rental expenses were ¥8,062 million, ¥7,830 million and ¥7,862 million for the years ended March 31, 2019,2018 and 2017, respectively, and have been included in selling, general and administrative expenses.
10.

ASSET RETIREMENT OBLIGATIONSThe Companies recorded the fair value of asset retirement obligations in order to recognize legal obligations
associated with the removal of leasehold improvements from leased facilities and return of the property to a
specified condition when the lease terminates.
A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation is asfollows:

2019

Millions of Yen
2018

2017

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

¥ 825
2
92
(106 )
0

¥ 855
1
62
(91 )
(2 )

¥ 878
2
84
(111 )
2

Balance at the end of the year

¥ 813

¥ 825

¥ 855

112

11.

TERMINATION AND RETIREMENT PLANS
Employee Retirement Plans – Certain subsidiaries of the Company sponsor termination and retirement benefit
plans that cover substantially all employees. Benefits are based on the employee's years of service, positionand performance. If the termination is involuntary or caused by death, the employee is usually entitled togreater payments than in the case of voluntary termination.
Certain subsidiaries of the Company have contributory defined retirement benefit plans and several unfunded
termination plans administered by certain subsidiaries of the Company. Benefits under the contributory
defined retirement benefit plan are usually paid in a lump sum at the earlier of termination or retirement,
although periodic payments are available under certain conditions. Benefits under the other termination andretirement benefit plan are paid either as lump-sum payments or periodic payments under certain conditions.
The benefits are usually paid as a lump-sum payment, if the employee resigns before the mandatory retirement
age.
Contributory Defined Retirement Benefit Plan – The following provides a reconciliation of benefit
obligations, plan assets and funded status of the plans:

2019

Millions of Yen
2018¥ 34,580
1,196
178
62
4,937

¥ 34,935
1,086
205
63
432

(961 )(976 )(339 )
4
38,681(1,007 )(1,003 )(138 )
7
34,580¥ 35,777
1,103
183
65
(509 )
271(958 )(865 )(125 )(7 )
34,935

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 rates
Fair value of plan assets at the end of the year

¥ 42,736(846 )
657
62(961 )(976 )
8
40,680¥ 43,203
878
612
63(1,007 )(1,003 )(10 )42,736¥ 42,156
2,176
633
65
(958 )(865 )(4 )43,203Funded status at the end of the year

¥

¥

¥

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 rates
Benefit obligations at the end of the year

1,999

8,156

Amounts recognized in the consolidated balance sheets as of March 31, 2019 and 2018 consist of:Millions of Yen
2019
2018
Prepaid pension expense
Other current liabilities
Liability for termination and retirement benefits¥ 3,990(163 )(1,828 )¥ 10,178(170 )(1,852 )Total¥ 1,999

¥

113

8,156

2017

8,268

Amounts recognized in accumulated other comprehensive income, as of March 31, 2019 and 2018 were as
follows:
Millions of Yen
2019
2018
Actuarial loss¥(6,820)¥(35)

The accumulated benefit obligation for all defined retirement benefit plans as of March 31, 2019 and 2018 was
as follows:
Millions of Yen
2019
2018
Accumulated benefit obligations¥38,531¥34,580

The projected benefit obligations and the fair value of the plan assets for certain subsidiaries' of the Company
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 certain subsidiaries' pension plans with accumulated benefit
obligations in excess of plan assets were as follows:
Millions of Yen
2019
2018
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¥2,856865¥2,838
815

2,856
865

2,838
815

Net periodic benefit costs for certain subsidiaries' of the Company plans consisted of the following for theyears ended March 31, 2019, 2018 and 2017:
Millions of Yen
2018

2017

¥ 1,196
178(1,007 )5¥ 1,086205(991 )(157 )(121 )¥ 1,103183(967 )
213(215 )

¥

¥

¥

2019
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss (gain)
Amortization of prior service benefits

372

22

317

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

114

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years
ended March 31, 2019, 2018 and 2017 were as follows:

Actuarial (loss) gain
Amortization of actuarial loss (gain)
Prior service cost arising during the year
Amortization of prior service benefits

2019

Millions of Yen
2018¥ (6,790 )5¥ (545 )(157 )¥ (6,785 )2017(121 )¥ 1,718213(271 )(215 )¥ (823 )¥ 1,445

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic
benefit costs over the next year were summarized as follows:
Millions of
Yen
Actuarial loss

¥1,185Certain subsidiaries of the Company use a measurement date of March 31 for their plans. The weightedaverage assumptions used as of March 31, 2019 and 2018 in computing the benefit obligations shown above
were as follows:

Discount rate

2019

2018

0.5 %

0.5 %

The weighted-average assumptions used as of March 31, 2019, 2018 and 2017 in computing the net periodic
benefit costs shown above were as follows:

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

2019

2018

2017

0.5 %
5.3 %
2.5 %

0.6 %
5.3 %
2.5 %

0.5 %
5.3 %
2.5 %

Certain subsidiaries' of the Company approach to establishing the discount rate is based upon corporate bondindices. The discount rate assumption is based upon effective yields as of March 31, 2019 on the corporatebond indices for which maturity dates approximate the timing of the expected future benefit payments.
The retirement benefit plan of certain subsidiaries of the Company is a point-based benefits system, and,
therefore, the rate of compensation increase has not been included in computing the benefit obligations.
The expected long-term rate of return on plan assets is derived proportionally from return assumptions
determined for each of the major asset classes. The return expectations for each of the asset classes are basedlargely on assumptions about economic growth and inflation, which are supported by long-term historical data.
The estimated long-term rate of return is based on an asset allocation of equity securities of 26.0%, debt
securities of 54.0%, life insurance company general accounts of 18.0% and other short-term investments of
2.0%.
The plan investment strategy of certain subsidiaries of the Company is to maintain actual asset weightings
within a preset range of target allocations. The plan investment strategy of certain subsidiaries of the Company
is broadly diversified, consisting primarily of equity and debt securities. Certain subsidiaries of the Company
believe these ranges represent an appropriate risk profile for the planned benefit payments of the plans basedon the timing of the estimated benefit payments.

115

The asset allocation as of March 31, 2019 and 2018 was as follows:

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

2019

2018

42.3 %
34.9 %
9.7 %
3.4 %
9.7 %

41.1 %
37.2 %
10.3 %
3.2 %8.2 %The target allocation percentages are reviewed and approved by the Pension Committee. The actual allocationsfor 2019 and 2018 are different from the target allocation percentages primarily because Wacoal Corp.
maintained additional equity securities within a separate plan asset which is assigned to the plan based on anagreement between Wacoal Corp. and its employees and is not governed by the Pension Committee. As such,the actual allocation percentage of equity securities to the total plan assets is higher than the target allocation
and, similarly, the actual allocation for some other types of assets is lower than the target allocation.
The following tables present the plan assets of certain subsidiaries of the Company using the fair value
hierarchy as of March 31, 2019 and 2018. The fair value hierarchy has three levels based on the reliability of
the inputs used to determine the fair value. For references to each level, see Note 19.

2019

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¥ 8,138
58

Total

¥

152

8,138
58

¥ 3,928

152
3,928

2,943

2,943

5,955
8,912
3,832
6,762
¥ 8,348

116

Millions of Yen
Level 2
Level 3

¥ 6,871¥ 40,680

2018

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)TotalMillions of Yen
Level 2
Level 3

¥ 9,423
17

Total

¥

9,423
17

69
¥ 4,403

69
4,403

2,403

2,403

6,030
11,0953,870
5,426¥ 9,509¥ 6,806¥ 42,736(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 50% Japanese companies and 50% foreigncompanies as of March 31, 2019 and 52% and 48%, respectively, as of March 31, 2018.
(c) This class includes approximately 79% of foreign government bonds and 21% of corporate bonds
investments as of March 31, 2019 and 73% and 27%, respectively, as of March 31, 2018.
(d) This class consists of hedge funds that invest in both long- and short-term debt securities and equity
securities as of March 31, 2019 and 2018.
(e) This class includes approximately 34% of corporate bonds, 1% of common stock of Japanesecompanies, 30% of common stock of foreign companies, 20% of real estate and 15% of other shortterm investments as of March 31, 2019. This class includes approximately 34% of corporate bonds,
4% of common stock of Japanese companies, 16% of common stock of foreign companies, 26% ofreal estate and 20% of other short-term investments as of March 31, 2018.
Equity securities and debt securities presented in Level 1 are primarily valued using a market approach basedon the quoted market prices of identical instruments. Life insurance company general accounts categorized in
Level 2 include contracts with insurance companies with guaranteed rates of return and capital, and thosevalues are based on the sum of principal amount and return. Pooled funds are valued using the net asset value
per share provided by the administrator of the fund.
The funding policy for the funded plans of certain subsidiaries of the Company is to contribute amounts
computed in accordance with actuarial methods accepted by Japanese tax law. Certain subsidiaries of theCompany expect to contribute ¥572 million to their plans in the year ending March 31, 2020.

117

The following benefit payments, which reflect expected future services, are expected to be paid:
Millions of
Yen

Year Ending March 31
2020
2021
2022
2023
2024
Thereafter

¥

2,335
2,220
2,161
2,349
2,094
10,825

Defined Contribution Plan – Certain subsidiaries of the Company have defined contribution plans. The
amounts of cost recognized for their contributions to the plan were ¥394 million, ¥327 million and ¥249
million for the years ended March 31, 2019, 2018 and 2017, respectively.
Employee Early Retirement Program – The Company and certain subsidiaries of the Company provide
additional benefits to employees that elect to participate in certain subsidiaries' of the Company early
retirement program. Retirement benefits of ¥230 million, ¥210 million and ¥143 million were paid in addition
to normal benefits and charged to selling, general and administrative expenses for the years ended March 31,
2019, 2018 and 2017, respectively.
Termination Plan for Directors – The Company previously had, and a certain subsidiaries of the Company
currently has, termination plans for directors. Payment of termination benefits to directors is made in a lumpsum upon termination and requires the approval of the shareholders before payment. In June 2005, theCompany rescinded its termination plan for directors upon the approval of its shareholders. The amount ofbenefits for each individual was fixed as of June 29, 2005 and will remain frozen until the retirement of each
respective director. Outstanding liabilities of ¥349 million and ¥348 million as of March 31, 2019 and 2018,
respectively, were recorded in other long-term liabilities. A certain subsidiary has plans for its directors andrecorded a liability for termination benefits for directors at the amount that would be needed if all directors
were to resign at each balance sheet date in accordance with the guidance for determination of vested benefit
obligations for a defined benefit pension plan.
12.

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, 2019, 2018 and 2017. The Company believes that such awards better align the interests of its directors withthose of its shareholders by sharing both risk and return from fluctuations in stock prices and giving
motivation to enhance corporate value. Each stock option is exercisable to acquire 100 shares of theCompany's common stock at ¥1 per share (for stock option granted prior to September 1, 2017, it isexercisable to acquire 500 shares of the Company's common stock). The compensation cost is measured at fairvalue on the grant date. Options vest over one year in proportion to the services rendered by the directors, andare exercisable from the day after the date of retirement up to (i) 20 years from the grant date or (ii) 5 years
from the day after the date of retirement, whichever is earlier.
The fair value of the options is estimated by using the Black-Scholes option-pricing model with the following
assumptions.

118

Expected dividend yield is based on the actual payout of dividends in the last fiscal year and the closing priceof the Company's common stock on the grant date. Expected volatility is based on the historical volatility of
the Company's share price over the most recent period commensurate with the expected term of the Company's
stock options. The risk-free interest rate is based on the Japanese government bond yield curve in effect at thetime of grant for a period commensurate with the expected term of the Company's share options. The expected
term of options granted is based on the average remaining service period of directors, assuming that those whoare granted options will render service until the stated retirement and they will exercise options immediately
after their retirement.

Expected dividend yield
Expected volatility
Risk-free interest rate
Expected term

2019

2018

2017

2.2%
24.6%
(0.1)%
3.7 years

2.3%
23.7%
(0.2)%
3.4 years

2.9%
25.1%
(0.2)%
2.5 years

A summary of stock option activities under the plan for the years ended March 31, 2019 and 2018 was asfollows:

Yen

Outstanding as of April 1, 2018
GrantedExercised
Outstanding as of March 31, 2019
Exercisable as of March 31, 2019

Shares

WeightedAverage
Exercise
Price

Aggregate
Intrinsic
Value

240,500
20,90011,500249,900
40,500¥1
1
1
1
1

13.09 years
3.68 years

¥687
111

Yen

Outstanding as of April 1, 2017
GrantedExercised
Outstanding as of March 31, 2018
Exercisable as of March 31, 2018

Millionsof YenYears
WeightedAverage
Remaining
Contractual
Term

Millionsof YenShares

WeightedAverage
Exercise
Price

Years
WeightedAverage
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

222,500
23,0005,000
240,500
21,000¥1
1
1
1
1

14.39 years
2.30 years

¥740
65

The total intrinsic value of options exercised was ¥33 million, ¥16 million and ¥69 million as of the years
ended March 31, 2019, 2018 and 2017, respectively.
The total compensation costs recognized for the years ended March 31, 2019, 2018 and 2017 were ¥62
million, ¥68 million and ¥74 million, respectively. The total recognized tax benefits related thereto for theyears ended March 31, 2019, 2018 and 2017 were ¥19 million, ¥21 million and ¥23 million, respectively.
The weighted-average grant date fair values of options granted for the years ended March 31, 2019, 2018 and2017 were ¥3,005, ¥2,918 and ¥2,088, respectively.

119As of March 31, 2019, 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.
13.

EQUITYJapanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to
the year-end dividend upon resolution at the shareholders' meeting. Additionally, for companies that meetcertain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an
Audit and Supervisory Board, and (4) the term of service of the directors being prescribed as one year
rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribedso in its articles of incorporation. The Company meets all the above criteria and, accordingly, the Boardof Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders
subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if
the articles of incorporation of the companies so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the shareholders, but the amount of net assets after
dividends must be maintained at no less than ¥3 million.
(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
the aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock.
Under the Companies Act, the total amount of additional paid-in capital and legal reserve may bereversed without limitation. The Companies Act also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can be transferred among theaccounts 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.

120

14.

OTHER COMPREHENSIVE INCOME (LOSS)
Changes in the components of accumulated other comprehensive income, including amounts attributable to noncontrolling interests were as follows:
Millions of Yen
2018

2019
Foreign
Currency
Translation
Adjustments

PensionLiability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized
Gain onSecurities

Unrealized
Gain onSecurities

Balance at the beginning of the year (after-tax)
Cumulative effects (net of tax) of the adoption of ASU 2016-01 and2018-03 (Note 1)
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)¥ 2,274¥ 27,424¥ (1,101 )¥ 1,212

(10 )
3
(7 )

(6,866 )2,079(4,787 )

1,158
(45 )
1,113

(140 )
43
(97 )

202
(2 )
200

Balance at the end of the year (after-tax)¥ 1,551

2017
PensionLiability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized
Gain onSecurities

PensionLiability
Adjustments¥ 21,075¥ (414 )¥ 5,177¥ 17,966¥ (1,035 )

9,309(2,815 )6,494(655 )
168(487 )(4,109 )30(4,079 )4,905(1,492 )
3,413

1,062
(443 )
619(201 )
62(139 )(278 )
85(193 )(438 )
134(304 )

(2 )
1
(1 )
3

(27,320 )(795 )
45(750 )

27
¥

9

(51 )

(6 )

(7 )

114

(0 )

¥ (5,679 )¥ 2,274¥ 27,424¥ 1,101¥ 1,212¥ 21,075¥

Reclassification adjustments (pre-tax) of unrealized gain or loss on securities are included in "(Loss) gain on sales, exchange, and valuation of marketable securities and investments – net" in the consolidated statements of income.
Reclassification adjustments (pre-tax) of pension liability adjustments are included in "Other – net" in the consolidated statements of income as the net periodic benefit costs.

121(414 )

15.

INCOME TAXESThe Companies are subject to a number of different taxes based on income. The effective income tax rates
differed from the normal effective statutory tax rates for the following reasons for the years ended March 31,
2019, 2018 and 2017:
2019

2018

2017

Normal Japanese effective statutory tax rates
Increase (decrease) in taxes resulting from:
Permanently nondeductible expenses
Change in valuation allowance
Undistributed earnings of associated companies
Differences in foreign subsidiaries' tax rate
Tax exemption
Unrecognized tax benefits
Impairment losses on goodwill
Changes in Japanese income tax rates
Other – net

30.6 %

30.9 %

30.9 %

22.9
25.5
3.9
(27.3 )
(2.9 )
1.4
60.1(0.4 )
1.2

3.0
2.8
0.7
(1.3 )(0.9 )(0.1 )
0.1
2.0
1.6

2.4
3.1
(2.1 )(0.5 )(0.4 )(1.8 )

Effective tax rates

115.0 %

38.8 %

31.9 %

0.2
0.1

On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted into law, which significantly
reduced corporate tax rates in the United States. As a result of the TCJA, deferred tax assets of foreignsubsidiaries in the United States decreased and income tax expense increased by ¥290 million.The
approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances
as of March 31, 2019 and 2018 were as follows:
Millions of Yen
2019
2018
DeferredDeferredDeferredDeferred
Tax
Tax
Tax
Tax
AssetsLiabilities
AssetsLiabilities
Allowance for returns
Refund liabilities
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
Return assets
Property, plant and equipment
Tax loss carryforwards
Intangible assets
Other temporary differences
Total
Valuation allowance
Total

¥
¥

963
9
226
837
990

15
213
840
999
934
¥

1,912
2,400

¥

10,394
792
172
245
739
250

1,981
2,355
13,443
818

175
216
727
255
357

430

2,402
479

361
1,393
1,838
602
8,694
(2,177 )¥ 6,517

122

600

1,370
1,861
1,261
245
17,722¥ 17,722

382
9,066(2,337 )¥ 6,729

1,762
5
22,766¥ 22,766

The valuation allowance decreased by ¥160 million and increased by ¥492 million for the years ended March
31, 2019 and 2018, respectively.
The Companies also utilized ¥661 million and ¥333 million of tax loss carryforwards, and recognized tax
benefits of ¥215 million and ¥87 million for the years ended March 31, 2019 and 2018, respectively.
As of March 31, 2019, certain subsidiaries had tax loss carryforwards which are available to offset futuretaxable income of such subsidiaries and expire as follows:
Millions of
Yen

Year Ending March 31
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Thereafter

¥

795
220
400
532
390
70
660
585
36
1,075
1,765

Total

¥ 6,528

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures
which was deemed to be permanently reinvested as of March 31, 2019 and 2018.
A reconciliation of beginning and ending amounts of unrecognized tax benefits is as follows:

2019
Balance at the beginning of the year
Additions based on tax positions related to the current year
Addition based on tax position related to the previous years
Reductions for tax positions of prior years

¥

5
60
36

Balance at the end of the year

¥ 101

Millions of Yen
2018

2017

¥ 4
1

¥ 300
1
(297 )¥ 5¥

4

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is ¥101
million, ¥5 million and ¥4 million as of March 31, 2019, 2018 and 2017, 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, 2019, 2018 and 2017 were not material.
The Companies file income tax returns in Japan and various foreign tax jurisdictions. In Japan, the Companies
are no longer subject to regular income tax examinations by the tax authorities for years before 2017, with few
exceptions. For other countries, the Companies are no longer subject to regular income tax examinations by
the tax authorities for years before 2010, with few exceptions. For certain subsidiaries in Japan, the UnitedStates, and Asia, the transfer pricing examinations for the fiscal years ended March 31, 2016, 2010 and 2007
were completed.

123

16.

REVENUEThe Group focuses on sales of innerwear (women's foundation garments and lingerie, nightwear and children's
underwear), sportswear, and other textile products and related products ("Products"), and our customers
include retail and wholesale distributors and consumers in Japan and overseas. See Note "21. Segment
Information" for revenue information for each segment, by each product and service, and by geographic area.
Revenue from sales of our products is recognized when performance obligations are satisfied, which is upondelivery of the products. We invoice when we satisfy the performance obligation and receive cash payment
shortly thereafter.
The Group's revenue is recognized for transactions, net of any trade discounts or rebates given. We generally
provide a right of return to our customers. In order to estimate the transaction price, provision for expected
returns is deducted from revenue based on actual return amounts from the previous fiscal year.
Contract liabilities from contracts with customers consists mainly of customer royalty points. Some ofsubsidiaries have customer royal programs as part of the promotion and provide royalty points to customers
when they purchase the products. The points provided to customers are identified as performance obligations,which are satisfied when the points are redeemed for the products. The unredeemed points as of the end ofyears are recorded as contract liabilities, which are estimated based on actual redemption amounts fromprevious fiscal year. Contract liability is included in other current liabilities, and the amount of contract
liabilities as of March 31, 2019 and 2018 are as follows:
Millions of Yen
2019
2018
Contract liabilities

¥873

¥542

Revenue recognized for the year ended March 31, 2019, which had been included in the contract liabilities
balance at March 31, 2018 was ¥324 million.
17.

EARNINGS PER SHARE
Basic net income attributable to Wacoal Holdings Corp. per share has been computed by dividing net income
attributable to Wacoal Holdings Corp. by the weighted-average number of common shares outstanding during
each year. Diluted net income attributable to Wacoal Holdings Corp. per share assumes the dilution that would
occur if share-based options to issue common stock were exercised.
The weighted-average number of common shares outstanding used in the computations of basic net income
attributable to Wacoal Holdings Corp. per share was 66,143,405 shares, 67,928,557 shares and 69,483,315
shares for the years ended March 31, 2019, 2018 and 2017, 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 66,393,127 shares, 68,157,430 shares and 69,696,631 shares for the years ended
March 31, 2019, 2018 and 2017, respectively.
*

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

124

18.

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, 2019 and 2018 were as follows:
Millions of Yen
2019
2018
Carrying
Fair
Carrying
Fair
AmountValue
AmountValue
Assets:Marketable securities
Investments¥

Total assets

446
63,372¥445
63,369¥1,567
68,057¥

1,559
68,045¥ 63,818¥ 63,814¥ 69,624¥ 69,604

Liabilities:
Long-term debt including current portion

¥

138

¥

138

¥

188

¥

188

Total liabilities

¥

138

¥

138

¥

188

¥

188

The carrying amounts of all other financial instruments approximate their estimated fair values because of theshort maturity of those instruments. For information about fair values of foreign exchange contracts andcurrency swaps, see Note 19.
Marketable Securities and Investments – The fair value of these held-to-maturity debt securities are based on
Level 1 inputs. For all other investments included in marketable securities and investments, see Notes 3 and19.
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.
19.

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.

125

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, 2019 and 2018 were as
follows:

2019

Level 1

Assets:Investments:
Equity securities
Mutual funds
Total
Derivative instruments:
Foreign exchange contracts¥ 59,911
50
59,961Millions of Yen
Level 2
Level 3

¥ 2,287
2,287

Total

¥ 62,198
50
62,248¥ 27

Total assets¥ 59,961¥ 27

Liabilities:
Derivative instruments:
Foreign exchange contracts
Currency swap
Total liabilities

2018

Level 1

Assets:Marketable securities:
Municipal bonds
Mutual funds
Total
Investments:
Equity securities
Corporate debt securities
Mutual funds
Total
Derivative instruments:
Foreign exchange contracts27¥ 2,287¥ 62,275

¥ 18
36

¥

18
36

¥ 54

¥

54

Millions of Yen
Level 2
Level 3

¥

10
590
600

Total

¥

¥ 66,751

614

66,751614
46
67,411

6

6¥ 1,220¥ 68,017

¥

13
31

¥

13
31

¥

44

¥

44

614
46
66,797

Total assets¥ 66,797

Liabilities:
Derivative instruments:
Foreign exchange contracts
Currency swap
Total liabilities

10
590
600

Investments presented in Level 1 are valued using unadjusted quoted market prices in active markets with
sufficient volume and frequency of transactions. Bonds presented in Level 2 are valued by financial
institutions using quoted market prices for identical instruments in markets that are not active. Mutual funds
presented in Level 2 are valued by financial institutions based on quoted prices in an inactive market for
identical instruments which are included in the mutual funds.
As discussed in Note 3, the Companies record impairment charges on debt securities if a decline in fair valueof debt securities is determined to be other than temporary.
Foreign exchange contracts and currency swaps presented in Level 2 are valued by financial institutions basedon market data in both active and inactive markets.
126Equity securities in Level 3 are non-marketable equity securities and are valued by the comparable multiple
valuation method using financial indicators, etc. as inputs or other appropriate valuation methods.
The table below shows the change in assets presented in Level 3 that are continuously assessed at fair value asof March 31, 2019:
Millions ofYen
2019
Balance at the beginning of the year
Total gains or losses for the period:(Loss) gain on sale, exchange and valuation of marketablesecurities and investments – net
Purchase¥ 2,002

Balance at the end of the year

¥ 2,287

84
201

Assets Measured at Fair Value on a Nonrecurring Basis
Assets measured at fair value on a nonrecurring basis as of March 31, 2019 and 2018 were as follows:
Millions of Yen
2019

Level 1

Level 2

Buildings and structures
Machinery and equipment
Goodwill (Note 7)
Trademarks (Note 7)
Software (Note 7)

Level 3

Total

Impairment
Losses
¥

¥ 680

¥ 680

(43 )
(124 )(4,325 )(1,314 )(195 )¥ (6,001 )Millions of Yen
2018

Level 1

Goodwill (Note 7)

Level 2

Level 3

Total

Impairment
Losses¥ (206 )¥ (206 )As of March 31, 2019, the carrying amount of A Tech's machinery was fully written off, resulting in an
impairment charge of ¥105 million, which is included as a charge to earnings for the year ended March 31,
2019. The impairment arose due to the close of the unprofitable business and the assets associated with it areconsidered to be non-recoverable. In addition, all the carrying amounts of Ai's buildings, equipment, andsoftware were written off resulting in impairment charges of ¥43 million, ¥19 million, and ¥195 million,
respectively. To measure their fair values, the Companies used the expected present value of future cash flows
and the prices calculated based on market data for comparable assets incorporated relevant unobservable
inputs, such as management's internal assumptions about future cash flows and appropriately risk-adjusted
discount rates, which reflected management's estimate of assumptions that market participants would use inpricing the asset in an arm's length transaction as of the measurement date.

127

As of March 31, 2018, all the carrying amount of A Tech's goodwill was written off, resulting in an
impairment charge of ¥206 million, which is included as a charge to earnings for the year ended March 31,
2018. The impairment arose due to the revision of the future business plan made in response to a decrease insales. To measure the fair values of A Tech's reporting 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 themeasurement date.
As of the end of March 31, 2019, the carrying amount of goodwill in Peach John Business was fully writtenoff, resulting in an impairment charge of ¥4,325 million, which is included in earnings for the year ended
March 31, 2019. The impairment arose due to the decline in its fair value, which was caused by a downturn inconsumption due to general market conditions. To measure the fair values of the reporting units, theCompanies used the expected present value of future cash flows and incorporated relevant unobservable
inputs, such as management's internal assumptions about future cash flows and appropriately risk-adjusted
discount rates, which reflected management's estimate of assumptions that market participants would use inpricing the asset in an arm's length transaction as of the measurement date.
Peach John's trademarks with a carrying amount of ¥1,994 million as of March 31, 2019, were written down totheir fair values of ¥680 million, resulting in recognition of an impairment charge of ¥1,314 million for theyear ended March 31, 2019. The impairment arose due to the decline in their fair value, which was caused by adownturn in consumption due to general market conditions. To measure the fair value of the trademarks, theCompanies used the relief-from-royalty method and incorporated relevant unobservable inputs, such as
management's internal assumptions about future cash flows, the rate of royalty, and appropriately risk-adjusted
discount rate, which reflected management's estimate of assumptions that market participants would use inpricing the asset in an arm's length transaction as of the measurement date. Future cash flows were based on
management's cash flow projections for the future three years, and after three years, future cash flows were
estimated using the perpetuity growth rate from 0% to 3.0%. Management's cash flow projections weredeveloped using estimates for expected future revenue growth rates, profit margins and working capital levelsof the reporting units. The rate of royalty used for the valuation was based on the actual royalty ratio used intransactions. The risk-adjusted discount rate represents a weighted-average cost of capital (WACC) adjusted
for inherent risk spread.
Valuation process:
The valuation process involved in Level 3 measurements for applicable assets and liabilities is governed by thevaluation policies and procedures, including evaluation method for fair value measurements, pre-approved by
the Companies. Based on the policies and procedures, either personnel from the accounting division or
personnel in charge of valuation determine the valuation model to be utilized to measure each asset andliability at fair value. We engage independent external valuation experts to assist us in the valuation process
for certain assets over a specific amount, and the results of their valuations are reviewed by the responsible
personnel. All of the valuations, including those performed by the external experts, are reviewed and approvedby management of the Company before being recorded in the general ledger.

128

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, 2019 is as follows:

March 31, 2019

Millionsof YenFair
Value

Trademarks¥680

Valuation
Technique
Relief-fromroyalty method

Principal Unobservable Input
Discount rate

9.9% - 13.4%

Royalty rate
Short-term revenue growth rates(within three years)
Perpetuity growth rate(over three years)
20.

Range

3.0%
2.3% - 7.0%
0% - 3.0%

DERIVATIVE INSTRUMENTS
Risk Management Policy – The Companies are exposed to the risk of changes in foreign currency exchange
rates. Derivative instruments are used to manage such risk. Derivative instruments are used based on Company
policy and administrative provisions. There were no derivative instruments used for the purpose of speculative
trading. The Companies consider the related credit risk to be low since these derivative instruments areprovided by financial institutions with international credibility.
Foreign Exchange Risk – Assets and liabilities denominated in foreign currencies, which are primarily related
to international business, are exposed to the risk of changes in foreign currency exchange rates. Foreignexchange contracts and currency swaps are used to mitigate such risk.
Derivative Instruments Not Designated as a Hedge – Foreign exchange contracts and currency swaps areclassified as derivative instruments, which are not designated as a hedge since these derivative instruments do
not qualify for hedge accounting. These derivative instruments are used to mitigate the risk of changes inforeign currency exchange rates, and the changes in fair value of such derivative instruments are recorded inearnings immediately.
Notional contract amounts of derivative instruments that are not designated as hedges as of March 31, 2019and 2018 were as follow:
Millions of Yen
2019
2018
Foreign currency exchange
Currency swaps¥1,837663¥1,598328

The amounts of derivative instruments at fair value in the consolidated balance sheets in consolidated balance
sheets as of March 31, 2019 and 2018 were as follow:

Assets:Foreign currency exchange
Liabilities:
Foreign currency exchange
Currency swaps

Balance Sheets Location

Millions of Yen
2019
2018

Other current assets

¥27

¥6

Other current liabilities
Other current liabilities

¥18
36

¥13
31

129

The effect of derivative instruments in consolidated statements of income for the years ended March 31, 2019,2018 and 2017 were as follow:

Foreign currency exchange
Currency swaps
21.

Statements of Income Location

2019

Millions of Yen
2018

Other – net
Other – net

¥45
(5 )

¥ 60
(31 )

2017
¥295

GAIN ON SALE OF ASSETS PREVIOUSLY CLASSIFIED AS HELD FOR SALE
The Companies sold land, located at sold the Nagoya branch, on April 27, 2016 to make effective use ofresources because it was unlikely that the Companies would use this site for future business.
As a result of the sale, 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.

22.

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 theCompanies for which separate financial information is available and for which operating income (loss) isreviewed 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 the same as
those described in the summary of significant accounting policies in Note 1.
The "Wacoal business (domestic)" segment primarily produces and sells innerwear (consisting of foundation,
lingerie, nightwear and children's innerwear), outerwear, sportswear and hosiery. The "Wacoal business(overseas)" segment produces and sells innerwear (consisting of foundation, lingerie, nightwear and children's
innerwear), outerwear, sportswear, and other textile-related products. The "Peach John" segment produces andsells innerwear (consisting of foundation, lingerie, nightwear), outerwear, and other textile-related products,
which are sold under the "Peach John" brand. The "Other" produces and sells innerwear (consisting offoundation, lingerie, nightwear and children's innerwear), outerwear, other textile-related products, andmannequins and also engages in construction of stores and interior design.

130Information about operating results and assets for each segment as of and for the years ended March 31, 2019, 2018 and 2017 is as follows:
Millions of Yen

2019
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on goodwill
Impairment charges on other intangible assets
Total
Operating income (loss)
Total assets and capital expenditures:
Total assets
Capital expenditures

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥ 113,400
905
114,305¥ 53,100
10,121
63,221¥ 10,491
1,083
11,574¥ 17,210
5,543
22,753¥ (17,652 )(17,652 )104,286
3,499

57,055
1,585

22,752
169(17,652 )195
107,980
6,325

58,640
4,581

11,400
394
4,325
1,314
17,433(5,859 )22,921(168 )(17,652 )249,141
3,382

78,912
1,837

8,038
494

17,395
70(71,719 )

281,767
5,783

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination

Consolidated¥ 116,085
1,051
117,136¥ 51,888
10,18062,068¥ 10,795
1,281
12,076¥ 16,957
5,283
22,240¥ (17,795 )(17,795 )

106,822
3,469

11,290345

21,712
172(17,795 )

110,291
6,845

56,504
1,506
206
58,216
3,852

11,635441

21,884356(17,795 )

260,582
3,649

77,374
1,752

13,825365

18,261
118(71,508 )298,534
5,884

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination

Consolidated¥ 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 )110,063
3,248
113,311
6,176

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 )Consolidated¥ 194,201
194,201
177,841
5,647
4,325
1,509
189,322
4,879

Millions of Yen

2018
Net sales:
External customers
Intersegment
Total
Operating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on goodwill
Total
Operating income
Total assets and capital expenditures:
Total assets
Capital expenditures¥ 195,725
195,725
178,533
5,492
206
184,231
11,494

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

131¥ 195,881(17,287 )195,881180,567
5,032
185,599
10,282294,958
7,445

The sum of the operating income (loss) of the reportable segments agrees to the operating income on the
consolidated statements of income. For a reconciliation from operating income to income before income taxes andequity in net income of affiliated companies, see other expenses income on the consolidated statements of income.
The Companies account for intersegment sales and transfers at cost plus a markup. Operating income (loss)
represents net sales less operating costs and expenses.
Products and Services Information
Net sales information by product and service for the years ended March 31, 2019, 2018 and 2017 is as follows:

Innerwear:
Foundation and lingerieNightwear
Children's underwear
Subtotal
Outerwear/sportswear and others
Hosiery
Other textile goods and related products
OthersTotal

2019

Millions of Yen
2018

2017

¥ 146,525
8,296
1,213
156,034¥ 146,970
8,758
1,376
157,104¥ 145,188
9,154
1,429
155,771¥¥¥

14,733
1,881
9,428
12,125¥ 194,201

16,1281,983
8,907
11,603¥ 195,725

17,1892,235
9,346
11,340¥ 195,881

Geographic Information
Information by major geographic area as of and for the years ended March 31, 2019, 2018 and 2017 is as follows:

Net sales:Japan
Asia and Oceania
Americas and Europe
Consolidated
Long-lived assets:Japan
Asia and Oceania
Americas and Europe
Consolidated

2019

Millions of Yen
2018

2017

¥ 140,189
22,50931,503¥ 143,196
21,05731,472¥ 147,061
19,187
29,633¥ 194,201¥ 195,725¥ 195,881¥ 45,257
4,810
3,203

¥ 46,367
4,916
3,050

¥ 47,452
4,661
3,175

¥ 53,270¥ 54,333¥ 55,288

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.

132

23.

SUBSEQUENT EVENTS(Purchase of Treasury Stock)
On May 15, 2019, the Board of Directors resolved to purchase treasury stock as described below pursuant to theprovisions of Paragraph 1, Article 459 of the Companies Act as follows.
a.

Reason for Purchase:
To return capital to shareholders in addition to promoting capital efficiency and agile capital policy in view ofthe business environmentb.

Type of Shares to Be Purchased:
Common stock of the Companyc.

Total Number of Shares to Be Purchased:
1,900,000 shares (at maximum)d.

Total Amount to Be Purchased:¥5,000 million (at maximum)e.

Purchase Period:
From May 16, 2019 through December 31, 2019

(Cancellation of Treasury Stock)
On May 15, 2019, the Board of Directors resolved to retire treasury stock as described below pursuant to theprovisions of Article 178 of the Companies Act as follows.
a.

Type of Shares to Be Retired:
Common stock of the Companyb.

Total Number of Shares to Be Retired:
2,100,000 sharesc.

Date for Retirement:
May 24, 2019

(Dividend Declaration)
On May 15, 2019, the Board of Directors resolved to pay a cash dividend of ¥180 per 5 shares of common stock toholders of record as of March 31, 2019 (aggregate amount of ¥2,346 million).

******

133

VI. 【Stock-Related Administration for the Company】
Fiscal year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

To be held in June

Record date

March 31

Record date for distribution of
surplusNumber of shares constituting
one unit
Purchase and sale of shares lessthan one unit

September 30
March 31
100 shares(Special Account)
Osaka Securities Transfer Section
Mitsubishi UFJ Trust and Banking Corporation
6-3, Fushimi 3-chome, Chuo-ku, Osaka
Office for handling business
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

Transfer agent
Forwarding office―――Handling charge for purchase
and SaleFree of charge

Method of public noticeSpecial benefit forshareholders(Notes)1.

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 500 shares or more, but less than 1,500 shares:
Wacoal Essence Check worth JPY3,000 shall be presented twice a year.
- To shareholders holding 1,500 shares or more:
Wacoal Essence Check worth JPY5,000 shall be presented twice a year.
(ii) Shareholder special discount shall be made for Wacoal products by means of catalogue
sales and internet sales as follows:- To shareholders holding 100 shares or more:
20% discount shall be made for the purchase of our products listed in catalogues
issued by Wacoal or internet sales; provided, however, that the total purchaseprice applicable for the discount shall be 1,000,000 yen (before discount) per year.

Our Articles of Incorporation prescribe that the shareholders holding shares constituting less than one unit of theCompany may not exercise any rights, except for the rights as prescribed under each item in Paragraph 2, Article 189of the Companies Act, the claim rights pursuant to the provisions of Paragraph 1, Article 166 of the same law, the rightto receive an allocation of share offerings and stock acquisition rights in proportion to the number of shares held, andthe right to request the sale of additional shares not constituting one unit.

2.

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.

134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, 2018, to the filing date of the Annual Securities Report.
(1） Annual Securities Report andFiscal Year
From April 1, 2017
Filed with the Director of thethe attachments thereto, and(70th Fiscal Year)
to March 31, 2018
Kanto Local Finance Bureau on
Confirmation Letter
June 28, 2018(2） Internal Control Report and theattachments thereto(3） Quarterly Report andConfirmation Letter

Filed with the Director of the
Kanto Local Finance Bureau on
June 28, 2018
(First quarter of 71th
Fiscal Year)

From April 1, 2018
to June 30, 2018

(Second quarter of 71th From July 1, 2018
Fiscal Year)to September 30, 2018
(Third quarter of 71th
Fiscal Year)(4） Extraordinary Report(5） Share Repurchase Report

From October 1, 2018
to December 31, 2018

Filed with the Director of the
Kanto Local Finance Bureau on
August 10, 2018
Filed with the Director of the
Kanto Local Finance Bureau on
November 9, 2018
Filed with the Director of the
Kanto Local Finance Bureau on
February 12, 2019

Extraordinary Report on the Results of the Exercise of
Filed with the Director of the
Voting Rights at General Meeting of Shareholders pursuant Kanto Local Finance Bureau on
to Item 9-2, Paragraph 2, Article 19 of the Cabinet Office
June 29, 2018
Ordinance Concerning Disclosure of Corporate Affairs, etc.
Extraordinary Report on an Event which may have serious Filed with the Director of theeffects on the financial position, results of operation and
Kanto Local Finance Bureau on
cash flow status of a consolidated entity pursuant to Item 19, January 29, 2019
Paragraph 2, Article 19 of the Cabinet Office OrdinanceConcerning Disclosure of Corporate Affairs, etc..
Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

Reporting Period

135

From June 1, 2018
To June 30, 2018
From July 1, 2018
To July 31, 2018
From August 1, 2018
To August 31, 2018
From September 1, 2018
To September 30, 2018
From October 1, 2018
To October 31, 2018
From November 1, 2018
To November 30, 2018
From December 1, 2018
To December 31, 2018
From May 1, 2019
To May 31, 2019

Field with the Director of the
Kanto Local Finance Bureau on
July 4, 2018
Field with the Director of the
Kanto Local Finance Bureau on
August 6, 2018
Field with the Director of the
Kanto Local Finance Bureau on
September 6, 2018
Field with the Director of the
Kanto Local Finance Bureau on
October 5, 2018
Field with the Director of the
Kanto Local Finance Bureau on
November 7, 2018
Field with the Director of the
Kanto Local Finance Bureau on
December 6, 2018
Field with the Director of the
Kanto Local Finance Bureau on
January 10, 2019
Field with the Director of the
Kanto Local Finance Bureau on
June 7, 2019

Part II 【Information on Guarantors etc. for the Company】
Not applicable.

136

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, 2019 and2018, 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, 2019 (all expressed in Japanese yen), and therelated 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 in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparationand 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 ofAmerica. 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 the assessment 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 preparation and fair presentation of the consolidated financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express nosuch opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness 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 forour audit opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Wacoal Holdings Corp. and its subsidiaries as of March 31, 2019 and2018, and the results of their operations and their cash flows for each of the three years in the period
ended March 31, 2019, in accordance with accounting principles generally accepted in the United Statesof America.

Convenience Translation
Our audit for the year ended March 31, 2019 also comprehended the translation of Japanese yen amounts into U.S.
dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2. The
translation of the financial statement amounts into U.S. dollars has been made solely for the convenience of readers
outside of Japan.
Report on Management's Report on Internal Control over Financial Reporting
Notwithstanding the second paragraph of the "Auditors' Responsibility" section, we have performed an audit ofmanagement's report on internal control over financial reporting ("ICFR") under the Financial Instruments andExchange Act of Japan. A translated copy of management's report on ICFR along with a translated copy of our reportis included within this Annual Securities Report as information for readers.

June 27, 2019

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING(TRANSLATION)NOTE TO READERS
Following is an English translation of management's report on internal control over financial reporting ("ICFR") filed
under the Financial Instruments and Exchange Act of Japan. This report is presented merely as supplemental
information.
There are differences between management's assessment of ICFR under the Financial Instruments and Exchange Act("ICFR under FIEA") and one conducted under the attestation standards established by the American Institute ofCertified Public Accountants ("AICPA").
In management's assessment of ICFR under FIEA, there is detailed guidance on the scope of management's
assessment of ICFR, such as quantitative guidance on business unit selection and/or account selection. In
management's assessment of ICFR under the attestation standards established by the AICPA, there is no suchdetailed guidance. Accordingly, based on the quantitative guidance which provides an approximate measure of thescope of the assessment of internal control over business processes, we designated the business units that accounted
for approximately two-thirds of the aggregated sales for the previous fiscal year on a consolidated basis as"significant business units" which should be subject to management's assessment of the process-level controls.
1.【Matters Relating to the Basic Framework for Internal Control over Financial Reporting】
Hironobu Yasuhara, President and Representative Director, and Masashi Yamaguchi, Director and Vice President,
are responsible for designing and operating effective ICFR of Wacoal Holdings Corp. (the "Company"), and havedesigned and operated ICFR in accordance with the basic framework for internal control set forth in "On the
Revision of the Standards and Practice Standards for Management Assessment and Audit concerning Internal
Control Over Financial Reporting (Council Opinions)" published by the Business Accounting Council.
The internal control is designed to achieve its objectives to the extent reasonable through the effective function andcombination of its basic elements. Therefore, there is a possibility that misstatements may not be completely
prevented or detected by ICFR.
2.【Matters Relating to Scope of Assessment, the Assessment Date, and Assessment Procedures】
The assessment of ICFR was performed as of March 31, 2019. The assessment was performed in accordance withassessment standards for ICFR generally accepted in Japan.
In conducting this assessment, we evaluated internal controls which may have a material effect on the entire financial
reporting in a consolidation ("company-level controls") and, based on the result of this assessment, we appropriately
selected business processes to be evaluated, analyzed these selected business processes, identified key controls that
may have a material impact on the reliability of our financial reporting, and assessed the design and operation ofthese key controls. These procedures have allowed us to evaluate the effectiveness of the internal controls.
We determined the required scope of the assessment of ICFR for the Company, as well as its consolidated
subsidiaries and equity method affiliated companies, from the perspective of the materiality that may affect thereliability of our financial reporting. We determined the materiality that may affect the reliability of the financial
reporting taking into account the materiality of quantitative and qualitative impacts. We confirmed that we hadreasonably determined the scope of assessment of internal controls over business processes in light of the results of
the assessment of company-level controls conducted for the Company, its consolidated subsidiaries and equity
method affiliated companies. We did not include those consolidated subsidiaries and equity method affiliatedcompanies which do not have any quantitatively or 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 selected business units for testingas "significant business units," whose combined sales were at least two-thirds of total consolidated sales for the prioryear on a consolidated basis.
At the selected significant business units, we included in the scope of our assessment those business processes
leading to sales or accounts receivable and inventories as significant accounts that may have a material impact on ourbusiness objectives. Further, not only at selected significant business units, but also at other business units, we added
to the scope assessment the following as business processes with greater materiality considering their impact onfinancial reporting:(1) those business processes relating to greater likelihood of material misstatements and significant accounts
involving estimates and management's judgment, and (2) those business processes relating to businesses oroperations dealing with high-risk transactions.
3.【Matters Relating to the Results of Assessment】
As a result of the assessment above, we concluded that our ICFR was effective as of March 31, 2019.
4.【Supplementary Matters】
Not applicable.
5.【Special Information】
Not applicable.

NOTE TO READERS:
Following is an English translation of the Independent Auditors' Report filed under the Financial Instruments andExchange Act 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 attestation standards established by
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 attestation standards established by
the AICPA, the auditors express an opinion on the Company's ICFR directly. Also, in an audit of ICFR under FIEA,
there is detailed guidance on the scope of an audit of ICFR, such as quantitative guidance on business unit selection
and/or account selection. In an audit of ICFR under attestation standards established by the AICPA, there is no suchdetailed guidance. Accordingly, based on the quantitative guidance which provides an approximate measure for thescope of assessment of internal control over business processes, we used a measure of approximately 70% of total
assets on a consolidated basis and income before income taxes on a consolidated basis for the selection of significant
business units.
(TRANSLATION)
INDEPENDENT AUDITORS' REPORT
June 27, 2019
To the Board of Directors of Wacoal Holdings Corp.

Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Wakyu Shinmen
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, 2019 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, 2018 to March
31, 2019, 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 auditors consider 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, 2019, 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, 2019.
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 the assessmentof 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 of financial reporting. Aninternal control audit includes examining representations on the scope, procedures and results of the assessment ofinternal control over financial reporting made by management, as well as evaluating the overall presentation ofmanagement'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 ofMarch 31, 2019 is effectively maintained, presents fairly, in all material respects, the results of the assessment ofinternal control over financial reporting in accordance with assessment standards for internal 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】

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 27, 2019

【Company Name】

KABUSHIKI KAISHA WACOAL HOLDINGS【Company Name in English】

WACOAL HOLDINGS CORP.

【Position and Name of Representative】

Hironobu Yasuhara, President and Representative Director【Position and Name of Chief Financial
Officer】

Masashi Yamaguchi,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 Masashi Yamaguchi, Director and Vice President,
are responsible for the designing and operating effective internal control over financial reporting of Wacoal Holdings
Corp. (the "Company"), and have designed and operated internal control over financial reporting in accordance withthe basic framework for internal control set forth in "The Standards and Practice Standards for Management
Assessment and Audit of Internal Control Over Financial Reporting" published by the Business Accounting Council.
The internal control is designed to achieve certain objectives to the extent reasonable through the effective function
and combination of its basic elements. Therefore, there is a possibility that misstatements may not be completely
prevented or detected by internal control over financial reporting.
2.【Matters Relating to Scope of Assessment, the Assessment Date, and Assessment Procedures】
The assessment of internal control over financial reporting was performed as of March 31, 2017. The assessment
was performed in accordance with assessment standards for internal control over financial reporting generally
accepted in Japan.
In conducting this assessment, we evaluated internal controls which may have a material effect on the entire financial
reporting in a consolidation ("company-level controls") and, based on the result of this assessment, we appropriately
selected business processes to be evaluated, analyzed these selected business processes, identified key controls that
may have a material impact on the reliability of our financial reporting, and assessed the design and operation ofthese key controls. These procedures have allowed us to evaluate the effectiveness of its internal controls.
We determined the required scope of the assessment of internal control over financial reporting for the Company, as
well as its consolidated subsidiaries and equity method affiliated companies, from the perspective of the materialitythat may affect the reliability of our financial reporting. The materiality that may affect the reliability of our
financial reporting is determined taking into account the materiality of quantitative and qualitative impacts. We
confirmed that we had reasonably determined the scope of assessment of internal controls over business processes inlight of the results of assessment of company-level controls conducted for the Company, its consolidated subsidiaries
and equity method affiliated companies. We did not include those consolidated subsidiaries and equity method
affiliated companies which do not have any quantitatively or quantitatively material impact on the consolidated
financial statements in the scope of the assessment of company-level controls.

Regarding the scope of assessment of internal control over business processes, we designated the business locations
that accounted for approximately two-thirds of the aggregated sales for the previous fiscal year on a consolidated
basis as "significant business locations" which should be subject to process-level controls.
At the selected significant business units, we included, in the scope of our assessment, those business processes
leading to sales or accounts receivable and inventories, as significant accounts that may have a material impact on
our business objectives. Further, not only at selected significant business units, but also at other business units, we
added to the scope assessment, as business processes having greater materiality considering their impact on financial
reporting, (1) those business processes relating to greater likelihood of material misstatements and significant
accounts involving estimates and management's judgment, and (2) those business processes relating to businesses oroperations dealing high risk transactions.
3.【Matters Relating to the Results of Assessment】
As a result of the assessment above, we concluded that our internal control over financial reporting was effective asof March 31, 2017.
4.【Supplementary Matters】
Not applicable.
5.【Special Information】
Not applicable.