WACOAL HOLDINGS

Integrated Report 2014

The Wacoal Group is based on a holding company system that is centered on Wacoal Corp. andwhich encompasses 56 consolidated subsidiaries and 10 affiliates in Japan and overseas. In Japan,
the Group is building an even more robust operational platform as a leading corporate group.
Overseas, the Group rolls out products in 66 countries and regions through bases in 22 countries
and regions, including North America, Europe, and Asia (as of March 31, 2014).
This report incorporates an integrated narrative linking the features of the Wacoal Group’s uniquevalue creation and an overview and analysis of the medium-term management plan that beganfrom April 2013. We hope this integrated report garners support for the Wacoal Group as it leverages unique intellectual assets and develops businesses to sustain growth.

CONTENTS

01

INTRODUCTION
02
04
06
08
10

11

23

BUSINESS STRATEGY
24 E
 leven-Year Financial Summary
26 The Fiscal 2014-2016

Wacoal Mindset
History of Value Creation

Medium-Term
Management Plan

Overview of the Wacoal Group
Our Overseas Operations

28 Strategies and Initiatives

Sales Channels

THROUGH
MUTUAL TRUSTBusiness Processes

14 R&D Capabilities
16 Production Technology
Capabilities

18 Customer Service Capabilities
20 Empathetic to Women

FINANCIAL SECTION
CORPORATE DATAINVESTOR
INFORMATION

in the Second Year of
the Medium-Term
Management Plan

CREATING VALUE

12 Strengths in

47
88
89

30 Message fromTop Management

33

BUSINESS FOUNDATION
34 Interview withan Outside Director

37 W
 acoal Code of Ethics
38 Corporate Governance
42 Directors and Audit &Supervisory Board Members

44 CSR Management

Editorial policy for this report 
In accordance with international norms for integrated reporting,the Wacoal Group began issuing integrated reports from fiscal 2011as part of its communication with shareholders and other investors.
This integrated report explains the Wacoal Group’s value creation
not only through financial information but also through nonfinancial
information about unique intellectual assets and other facets of theGroup’s business.
Further, the web site of Wacoal Holdings Corp. includes a wide
range of information about the Group. We hope that referring tothis integrated report in conjunction with the web site will further
understanding of the Group. Going forward, we will continue pursuing an editorial policy that responds to reader expectations.

The Wacoal Holdings web site:

Previous integrated reports (in IR Library):www.wacoalholdings.jp/enwww.wacoalholdings.jp/en/ir/library/INTRODUCTION

01

CREATING VALUE
THROUGH
MUTUAL TRUST11

BUSINESS STRATEGY

23

BUSINESS FOUNDATION

33

FINANCIAL SECTION

47

01

WACOAL MINDSET

THE WACOAL GROUP MANAGEMENT PHILOSOPHY
In the course of conducting our business we listen to the opinions of each individual customer andmodestly seek to transform ourselves, so as to build “a relationship of mutual trust” with each individual.
Wacoal is founded on this philosophy of mutual trust, and it has remained our Management Philosophy
since our founding.

OUR MISSION

We will contribute to society
by helping women to express their beauty.

OUR VISION

We, the employees and management of Wacoal,
will maintain a refined corporate culture based on mutual trust and willcontinually strive to make the Company a global leader in the industry.

OUR VALUES

1 Create products loved by customers
2 Develop new products that meet the needs of the times
3 Conduct business in a fair manner with a forward focus
4 Build a better Wacoal through better human resources
5 Fear not failure and boast not of success

02

MUTUAL TRUST“From now on, we will rigorously trust Wacoal Group employees who areunion members.” With these words, the Wacoal Group’s founder Koichi
Tsukamoto resolved at a stroke a 1962 labor-management confrontation.
At an emergency meeting of the Board of Directors, Tsukamoto declaredthat the Group should accept without reservation the union’s demands inlabor-management negotiations. However, none of the other directors
agreed. Nevertheless, this was Tsukamoto’s decision. By raising the basic
salary to fully satisfy union demands in spring 1964, Tsukamoto decisively
Introduction

chose business management based on mutual trust. As a result, personnel
realized that they supported the Group, and they all began working withrenewed intensity. Working as one, employees became highly motivated,and plants’ productivity increased conspicuously.
Subsequently, we included the words “mutual trust” in our vision, which
we announced internally and externally. Business management based on
mutual trust is realized through the collective efforts of employees with selfaware, independent mindsets. It is an approach to business management that
respects personnel by entirely entrusting to them decisions about late arrival
at work, leaving work early, and leaving work to attend to private matters.
Therefore, salaries and performance appraisals are not linked to such factors.
Responding to this approach, many personnel have exhibited a great deal of
initiative in ensuring they fulfil assigned duties thoroughly, thereby advancing the Wacoal Group dramatically.
Today, having become incorporated into numerous different aspects ofour business activities, this spirit of mutual trust continues to evolve. The
quality of the Wacoal Group’s organization, personnel, relationships withcustomers, and products are all founded on this spirit, which supports theGroup’s sustained growth. Our wish is to realize a stronger global presence
for the Wacoal Group through mutual trust.

03

HISTORY OF VALUE CREATION

The Wacoal Group traces its origins to Wako Shoji, which Koichi Tsukamoto founded in 1946.
Initially, he began the Company to market brassiere pads. Since then, we have grown in tandemwith the women’s innerwear market in Japan while creating unique value. Throughout ourhistory we have pursued the goal of “helping women to express their beauty.”
Based on mutual trust with customers, employees, and society, we will continue progressing as
we seek a stronger global presence for the Wacoal Group.
1981

Posts sales above ¥100 billion

Shape Pants become hit product

1979

Posts sales above ¥80 billion
Net Sales / Operating Income Margin

1977

Note 1: Asterisk indicates a seven-month accounting period.
Note 2: From 1978 onward, business results are consolidated and include the business results of subsidiaries.

40
20000000
2000000

Becomes first company in textile
industry to issue American
depository receipts (ADRs)

1965

Begins sales of firstinternationally patented
product: Tummy Girdle

1950
Net sales in first fiscal year: ¥13.55 million
Begins production of inaugural brassiere: No. 101

1959

1957

Establishes Wako Corp.

Launch of product number 1171,
which continues as mainstay for
13 consecutive years

Lists someshares in stock
exchanges’
First Section

1970

Establishes first sewing
subsidiaries in Japan

1949

1971

Posts sales above¥10 billion

1964

Name changes to Wacoal Corp.
Lists on second sectionsof several stock exchanges

1946

Foundation of Wako Shoji

1960
1954 (August 1953)
Net sales grow 203%year on year

Net sales growalmost 16 times
over 10 years

1952

Changes trademark fromClover to Wacoal
1950

1955

1960

1962 1962*

1964* 1965

1970

1975

0
0

Establishment of decade-by-decade 50-year plan
Foundation–1950s
Development of Japan’s market

04

1960s
Establishment of Japan’s market

1970s
Development of overseas market

1980

2005

Establishes Wacoal Holdings as holding company
Conclusion of agreement for exclusive sales rights
for Italian innerwear brand La Perla

1991

Launch of CW-X sports
conditioning wear

Launch of Style Science women’s innerwear withnew functionality

2007

Launch of sorci age as brandfor ASEAN region

1983

Records first decrease in revenue
and earnings, switches to leanbusiness management

2008

Launch of Cross Walker functional
innerwear for men

Launch of Shape Up swim suitsand leotards

1992

2012

Good Up Bra becomes hit product1986

Eveden Group
Limited becomesa wholly owned
subsidiary of
Wacoal Holdings

2004

Shape memory wire
alloy bra Cocochi E
becomes hit productOpening of directly managed
luxury brand shop
Wacoal Dia in Ginza, Tokyo

1988

2014

Launch of
Physiocomfort shoes

Net sales:¥193.8billionIntroduction

Operatingincome margin:
7.2%

1985

1980s
Establishment of overseas market

1990

1995

2000

2005

2010

2014

1990s–present
Realization of stronger global presence for the Wacoal Group05

OVERVIEW OF THE WACOAL GROUP
For the Year Ended March 31, 2014

KEY FIGURESNet Sales¥

Net Sales by Product Category

193,781 million

Textile products

4.4%

ROE

0.9%

13,860 million

5.2 %

5.6%

Hosiery

Operating Income

¥

Other

Outerwear andsportswear

8.8%Children’s
underwear

0.8%

Cash Dividends Per Share of Common Stock¥Nightwear

33.00

Annual Brassiere
Unit Sales

45.4 million

Foundation garments
and lingerie

4.8%

74.7%
Share of Women’s Innerwear
Market in Japan38.2 %*1(largest market share in Japan)

Number of Countries Where The
Wacoal Group Has Operating Bases

22

Percentage ofFemale Employees

Outside Directors /Total Directors

Female Managers as a Percentage
of Total Managers

Power Consumption

CO2 Emissions

Waste Emissions(Down 32.6%*2 )(Down 31.2%*2 )(Down 26.0%*2 )88 %11.3 million kWh

2/7

6,057tons*1 Source: Nikkei Sangyo Shimbun

13 %1,174tons*2 Versus fiscal 2007, after the Kyoto Protocol came into effect.

Wacoal Group Organization
Wacoal Holdings Corp.

Wacoal Corp.
Peach John Co., Ltd.
Lecien Corporation
Wacoal Eveden Limited (U.K.)
Nanasai Co., Ltd.
Shinyoung Wacoal Inc. (South Korea)
House of Rose Co., Ltd.
Wacoal Distribution Corp.
Wacoal Career Service Corp.
Wacoal Service Co., Ltd.

06

Domestic Principal Subsidiaries,
Joint Ventures
Overseas Principal Subsidiaries,
Joint Ventures

SEGMENT INFORMATION

Wacoal Business (Domestic)

Mainly wholesale operations of Wacoal Corp. for department stores, general merchandising stores, and specialty stores

Wacoal Business (Overseas)

Mainly operations of Wacoal International (U.S.),Wacoal China,Wacoal Eveden Limited (U.K., became subsidiary in 2012)

Peach John Business

Operations of Peach John (became subsidiary in 2008)

Other Businesses

Mainly operations of Nanasai Co., Ltd. (became subsidiary in 1987), Lecien Corporation (became subsidiary in 2009)

Share of Sales by Business Segment*

Share of Operating Income by Business Segment
Other Businesses

Other Businesses

10.1%

Peach John Business

3.3%

0.6%

Peach John Business

6.5%

Wacoal Business(Overseas)

29.1%

Wacoal Business(Overseas)

Wacoal Business (Domestic)

22.5%

Wacoal Business(Domestic)

60.9%

67.0%

* Percentage figures are calculated based on external customers sales

Introduction

Net Sales to External Customers / Operating Profit
Net Sales

Operating Income

Wacoal Business (Domestic)

Share of Sales by Business (Wacoal Corp.)¥ million

Wacoal Business (Overseas)¥ million

Catalog Sales Business Dept.

Wellness Business Dept.
7%118,085
9,284

2014

12%

2013

8,423
115,870

2012

43,636
4,037

2014

Retail Business Dept.

115,657

2013

5%

Wacoal Brand
Business Dept.
52%

Wing Brand
Business Dept.
24%

8,172

2012

33,345
2,023
21,396
1,440

Peach John Business

Other Businesses

Sales of Lecien Corporation

Sales of Nanasai Co., Ltd.

¥ million¥ million¥ million¥ million

2014

2013

2012

12,482
83
11,972–2,701
13,836529

19,5782014

456
19,256

2013

2012

754
20,795236

2014

12,098

2014

9,736

2013

11,758

2013

9,684

2012

9,637

2012

13,85407

OUR OVERSEAS OPERATIONS
For the Year Ended March 31, 2014

The Wacoal Group markets products in 66 countries based on an approach that emphasizes understanding local conditions fully and having local employees lead businessdevelopment. In 1970, we established joint ventures in South Korea, Thailand, and Taiwan.
Today, the Group has 66 operating companies including overseas affiliates.
In the United States, we boast a particularly strong presence in department stores.
In Europe, we are developing new areas mainly through Wacoal Eveden Limited.
As for Asia, we have established unshakable positions as a leading brand in markets inSouth Korea, Thailand, and Taiwan.
Wacoal America

Shares of Sales by Geographic Segment*
Americas and Europe

Consolidated Overseas Sales

12.4%

¥

44.1 billion

Wacoal (UK)

Asia and
Oceania25.6%

Overseas Affiliates Sales

¥

Japan

62.2%

46.8 billion

Wacoal China* Calculated based on net sales including net sales of overseas affiliates

UnitedKingdom
FranceCanadaNetherlands

China

Korea

United StatesJapan

IsraelHong Kong
TaiwanVietnam
Myanmar
Sri Lanka

Thailand

Malaysia

Philippines
Cambodia

Singapore

Indonesia

Number of countries
where the Wacoal Group has
operating bases

22

Sales
Australia

Manufacturing
Manufacturing/Sales

08

Dominican
Republic

9211

H I S T O RY
Overseas Operations

Net Sales by Region (consolidated)

1970

Enters overseas markets forfirst time (establishes joint
venture companies in South
Korea, Thailand, and Taiwan)Japan¥ million

2014

149,7152013

146,224

2012

149,587

1977

Enters U.S. market

1978

Establishes sales base in
Singapore (currently
Wacoal Singapore Pte. Ltd.)1983
Asia and Oceania

Americas and Europe¥ million¥ million

14,8712014

2013

29,195

2014

10,527

Establishes Beijing
Wacoal Co. Ltd.
Establishes Philippine
Wacoal Corp.

11,783

2012

1986
1989

22,2292013

11,7772012

Establishes Wacoal Hong
Kong, Co. Ltd. andWacoal America, Inc.

1990

Establishes Wacoal
France S.A.

1991

Establishes PT.
Indonesia Wacoal

1995
Internet Sales in United States¥ million¥ million

15,648

2014

1,706

Sales

767

2014

Establishes Vietnam
Wacoal Corp.

10,475

335

2012

1,113

Establishment of Wacoal
China Co., Ltd. (conversion
to wholly owned subsidiary)

454

2013

1,434

2012

1997
2000

11,631

2013

Establishes Guangdong
Wacoal Inc.

Introduction

Sales / Operating Profitof Wacoal International (U.S.)

2002

Establishes Wacoal(UK) Limited

Operating Profit

2003
Sales / Operating Profitof Wacoal China

Sales / Operating Profitof Wacoal Eveden Limited¥ million¥ million

2014

2013

2012

Sales

8,588
123
6,625
–346

Establishes Dalian
Wacoal Co., Ltd.

2,113
10,431743

2011

Establishes
WACOAL CANADA INC.

2012

Establishes Eveden Group
Limited

6,020–212
Operating Profit

2003
13,6042014

2013

Establishes Wacoal
Malaysia Sdn. Bhd.

Sales

Operating Profit

09

SALES CHANNELSTo enable a wide range of customers to purchase products when and where
they want to, we have developed an array of sales channels. These include
face-to-face sales through department stores, general merchandising stores,
specialty stores, directly managed stores as well as mail-order sales throughcatalogs and Internet stores. Having so many points of contact with customers is one of the Wacoal Group’s strengths.

Number of sales areas worldwide
Net Sales Breakdown by Sales Channel

Approx.

(Wacoal Corp.)
For the Year Ended March 31, 2014

Internet sales and mail-ordercatalog sales operations,
SPA shops, other¥

22,300Department stores¥

25,944 million

37,336 million

32.5%

22.6%

Specialty stores, retail stores¥

10,200 million
8.9 %General merchandising stores¥

41,398 million

36.0%

Net Sales by Sales Channel

Number of Directly Managed Storesand Net Sales(Wacoal Corp.)(Wacoal Corp. and subsidiaries)

Department Stores

General Merchandising Stores¥ million¥ million¥ billion

2014

37,336

2014

41,3982014

2013

36,693

2013

41,7832013

35,992

2012

2012
2011

32,5992011

2010

33,7602010

43,68140,33042,848Specialty Stores, Retail Stores

Internet Sales and Mail-Order Catalog
Sales Operations, SPA Shops, Other¥ million¥ million

2014

10,2002014

2013

10,6372013

2012

11,5562012

2011

11,968

2011

2010

10

12,505

2010

25,944
24,772
21,62823,811
22,518

20.8

254

19.5

236

2012

216

2011

210

16.0

2010

190

16.0

Directly Managed Stores
Net Sales

19.2

Creating Value
through Mutual Trust
Based on the mutual trust that underpins all of its activities,
the Wacoal Group exploits unique strengths to create value
constantly. To give stakeholders an insight into such value
creation, this section provides an explanation of our businessprocesses and key statistics illustrating the differentiating
features of each process.

OUR BUSINESS FIELDSThe Different Business Fields of “Body Design”

At Wacoal, we see the “body” as having both a physical andness businesses, based on our core competences, offer threecorresponding forms of value: beauty, comfort, and health.

COMFORT

One of these core competences is the Human Science
Research Center we have built up over many years.
Looking at things from the Human Science perspective
enables us to discover the new values our customers desireHUMAN
SCIENCERESEARCHIn

and transform them into products.
Having a clear sense of different people’s needs, turning
those insights into products and services that offer new

Out(Core Competence)

BEAUTYHEALTHvalue, and delivering them to customers in the appropriate
space—this is the process through which we have managed
to create everything from new brands to new lifestyles.

Mind Fit

11

Creating Value through Mutual Trust

Body Fita mental/spiritual side, and our intimate apparel and well-STRENGTHS IN BUSINESS PROCESSESThe Wacoal Group’s corporate mission is to “contribute to society by helping women to express their beauty.”
To realize this mission, we are advancing operations by leveraging our insistence on unique strengths in all businessprocesses, from research and development through to manufacturing capabilities, sales channels, and consultative sales.
Always the basis of its activities, empathy with women enables the Wacoal Group to create original value.
By bringing to bear such strengths not only in domestic operations but also in operations overseas, we want torealize a stronger global presence for the Wacoal Group.

Basic Value Creation Process ofthe Wacoal Business in JapanWACOAL GROUP’S
BUSINESS PROCESSES
This chart shows the basic business processes
through which the Wacoal Group creates uniquevalue in Japan. In each business process, we enjoy
unmatched strengths enabling us to create products
loved by customers and develop new products that meetthe needs of the times—fundamental facets of ourvalues and business management strategy.
We combine these strengths to create products.
Throughout our integrated series of business

R&D(Human Science Research)
Discover, create,provide value customers want

processes, we will continue giving first priority
to women’s values and individuality and taking
on challenges to become a company loved by
women worldwide.

Providing research results
Providing long-term feedback

Personnel, Organization,

12

Customers

Making inquiries and requests

Providing responses

Customer Service Center
Providing
feedback

Collecting information
on needs

Delivering
products

Providing
feedback
Providing feedback
Providing feedback

Identify needs precisely,
create customer value

Directing manufacturing

Manufacturing

Sales

Maintain rigorous quality
through same manufacturingcontrol worldwide

Provide products via convenientchannels for customers

Creating Value through Mutual Trust

Product Planningand Development

Providing feedback

Offering products
Providing information

Business Management (Strategy implementation, Control, Management)

Management Philosophy

13

R&D CAPABILITIES

Unseen Assets Making the Difference

Human Science
Research
Since its establishment in 1964, Wacoal’s Human Science Research Center has
conducted a variety of basic research focused on women’s physiques with a viewto exploiting the results in manufacturing. Linking the human with the scientific,
human science research is the wellspring of the Wacoal Group’s unique value.

Approx.

Antenna meter:

Shoulder angle meter:

Depth meter:

measures the gap at the topof the bust as well as parts ofthe bust and bottom

measures the angles ofthe shoulders

an original Wacoal
instrument that measurescleavage depth

1,000Every year, Wacoal’s Human Science Research Center
measures the physiques of approximately 1,000 womenand girls between the ages of 4 and 69.

40,000 +Over the past 50 years, we have accumulated measurement
data on more than 40,000 women and girls. We not only takeadvantage of this data to develop an array of products but
also publish it as research results shedding light on changes
in women’s physiques that accompany aging.

14

100 +
We have been measuring over 100 women continuously for more than 30 years. The time-series data
showing the changes in their physiques is a uniquelyvaluable asset. Further, the long period this researchcovers testifies to the strong relationships of mutual
trust among the monitors.

Approx.

550

This is the number of patents, utility models, andindustrial designs we have developed and registered,or filed applications for, in Japan based on the workof the Human Science Research Center.

H I S T O RY
Human Science
Research

C ASE ST UDY
Value Created from the Achievements ofthe Human Science Research Center

CW-X
Sports Conditioning Wear

1964

Establishes Product Research
Department and begins
investigation and analysis of
women’s physiques

1965
A core brand that the Wellness Business of Wacoal Corp. markets, CW-X
sports conditioning wear incorporates unique functionality based on the
Human Science Research Center’s ergonomics.
Applying the Taping Principle

Our desire to incorporate into sportswear the samefunctionality that taping provides led to the creation of
CW-X sports conditioning wear. We spent about three
years developing a product that performed two functions: providing support through pressure that follows
the flow of muscle movements and stabilizing the balance of muscles. Thanks to these efforts, in 1991 welaunched CW-X sports conditioning wear, which was
unlike anything that had gone before it.

Publishes Golden Proportions as new standard ofbeauty for Japanese women

1979

Publishes Beautiful Proportions, establishing standards ofbeauty for each age group

1990

Introduces three-dimensional
measuring equipment forcontactless measuring ofphysique

1992

Changes Central ResearchCenter’s name to Human
Science Research Center

Combining Ergonomics and Innerwear Manufacturing

Drawing on a Huge Amount of Research Data to Differentiate Products

Our technology that applies the taping principle to support muscles and which we use
to manufacture CW-X sports conditioning wear is unique. This technology epitomizes
the unmatched value we create by using the Human Science Research Center’s hugeamount of research data. The technology enables us to add functionality to sports tightsthat supports the knees and other joints as well as themuscles in a way no other sports tights can. In addition
to mitigating the impact on the knee when the footlands, this functionality lessens deviation of the physique’saxis. Such differentiation explains why so many people
continue to love CW-X sports conditioning wear.

1995

Publishes Golden Canon as
new standard of beauty

2000

Creating Value through Mutual Trust

CW-X sports conditioning wear is based on expertise cultivated by Wacoal’s Human
Science Research Center. When developing these products, we rigorously researched theexternal movement and form of the physique as well as its internal muscular and skeletal
dynamics. We also researched existing supporters and taping.
We successfully combined such expertise in ergonomics with long-standing design
capabilities for innerwear manufacturing, including technologies that modulate thestrength of product components to flatten the stomach or shape up the buttocks, sewing
technologies that ensure products feel comfortable against the skin, and the developmentof elastic materials.

Publishes SPIRAL Agingbased on research on
changes associated withaging through analysis ofsame group of individuals

2007

Launches Cross Walker,
men’s innerwear thatenhances exercise value of
everyday walking

2010

Publishes Aging of the
Physique and the Laws ofBeauty: Bust Edition,
detailing research on
physique changes associatedwith aging

15

PRODUCTION TECHNOLOGY CAPABILITIESRealizing High-Quality Products

Approx.

45.4Million

The Wacoal Group sells approximately
4.5 million brassieres worldwide every
year. We produce most of them throughhigh-quality manufacturing processes
at our plants around the world.

More than

40 Parts

The brassieres we manufacture have more than 40 parts, which
comprise approximately 25 different components and materials.
Joining these parts together creates a brassiere.

150

Approx.
Tests and Checks
Stringent quality control is essential to deliver products
customers love. We were the first company in Japan’s
apparel industry to acquire accreditation under ISO 9001,
a group of international standards for quality management
systems. Furthermore, we control cutting and sewing processes strictly based on original quality standards. Also,
we conduct approximately 150 tests and checks ofmember parts, semi-manufactured products, and finishedproducts based on their particular functions. Only brassieres passing a comprehensive and scrupulous final quality inspection are offered to customers as products. Our
absolutely uncompromising approach to quality control
plays a fundamental role in earning customer trust.

16

80

More than%of Products Manufactured
In-House
In the Wacoal Group, we manufacture more than 80% of the products
marketed in Japan ourselves. Moreover, we manufacture almost 100%of brassieres in-house. Producing
most of our offerings in-house maintains high-quality manufacturing—
one of our strengths—and, likequality control, plays a fundamentalrole in earning customer trust.

C ASE ST UDY
Realizing Wacoal Quality Worldwide

Made by Wacoal
At plants in Japan and around the world, the Wacoal Group manufactures
products that are loved for their safety and reliability.
Ensuring High Quality through Unique Manufacturing

More than four decades have passed since the Wacoal
Group made its first overseas forays in 1970. Today, we
market products worldwide, manufacturing the majorityof them at plants overseas. Irrespective of the country, wealways focus on rigorously bringing products to market
that are loved for their safety and reliability by adhering tounique manufacturing ideals. For this reason, our slogan ismade by Wacoal.
Operating 23 Wacoal Group Plants Worldwide

For overseas plants, we not only set rules and standards.
We work particularly hard to pass on skills by sending
personnel from Japan to overseas plants to give technicalguidance and accepting trainees from overseas at core
plants in Japan.
Japan’s only brassiere and girdle mother plant, theNagasaki Factory of Kyushu Wacoal Manufacturing Corp.
has played a valuable role in supporting the Wacoal
Group’s overseas development by providing support toother plants. Every year, the plant welcomes trainees fromoverseas subsidiaries, who learn sewing skills and the principles of quality control. Another of the Nagasaki Factory’s
important contributions is the training of overseas plants’future managers.
For example, the plant has been accepting trainees
from Dalian Wacoal Co., Ltd., in China since 2009. As
well as technical instruction, trainees learn about the Japanese work ethic and our uncompromising approach to
manufacturing and hone their skills during a three-year
term. Increasing the speed and quality of Dalian Wacoal’s
operations benefits the whole Group. Ultimately, our goal
is to hand down our high-quality manufacturing to theworld. Personnel that have acquired outstanding skills support the Wacoal Group’s production technology. Thus,
initiatives to pass on such skills—cultivated since ourfoundation—and develop personnel are pivotal to thecontinued creation of products customers love and theestablishment of a stronger global presence for the Wacoal
Group. In other words, they are extremely important forvalue creation.

Creating Value through Mutual Trust

The Wacoal Group has 23 plants around the world. Seven
are in Japan, with the remaining 16 overseas. At overseas
plants, we apply exactly the same quality standards as inJapan. We rigorously use the same materials, execution,technology, and inspection in the manufacture of Wacoal
products around the world. For example, our plants in
China manufacture products using the same materials forthe fabric, lace, and sewing thread as plants in Japan use.
Uniformity efforts do not end there. As in Japan, rules
stipulate procedures and handling methods when sewing
products, the number of stitches, and even the position of
sewing machines.

Boasting Japan’s Only Brassiereand Girdle Mother Plant

The Nagasaki Factory of Kyushu
Wacoal Manufacturing Corp.

17

CUSTOMER SERVICE CAPABILITIES

Earning Trust at Points of Contact with Customers

Beauty Advisors
Beauty advisors are Wacoal sales personnel who work in
stores. They are important because they have direct contact with customers. The title “beauty advisor” reflects thecommitment to continually providing customers withbeauty that is central to our corporate stance andexpresses our belief that receiving specialist advice
through face-to-face consultative sales builds trust.

BeautyAdvisors
in Japan

Approx.

Approx.

3,500

48,000 Inquiries
Another point of contact with customers is ourCustomer Service Center. At the center, morethan 30 personnel respond to approximately
48,000 inquiries and requests a year. In addition
to providing explanations to customers, thecenter relays customer feedback to relevant
departments so that we can reflect customers’
opinions in products and services.
To advance such quality assurance efforts,
we have established the Quality Assurance
Inquiry Committee, which includes senior executives. As the highest authority in this area, thecommittee advances quality assurance efforts
throughout the Group by coordinating
responses to customer requests.

18

Worldwide, the Wacoal Group employees
roughly more than 8,800 beauty advisors,of whom about 3,500 work at department stores and general merchandisingstores in Japan. As they provide information and sell products through day-to-day
consultative sales, our beauty advisorsbuild mutual trust with customers.

93.0 %We respond sincerely and earnestly tocustomers making requests to theCustomer Service Center. As a result,
93.0% of such customers said theywould buy our products again. Thishigh approval rating reflects the significant role the center plays in deepening
bonds of mutual trust with customers.

C ASE ST UDY
Building Relationships of Trust by Creating Mutual Value

Consultative Sales
Face-to-face sales in which customers consult with beauty advisors havebecome an integral part of the Wacoal way and provide unique value tocustomers and to the Wacoal Group.
Combining Advanced Skills and Knowledge
in Customer Service

We primarily market Wacoal products through the consultative sales of beauty advisors. Approximately more than
8,800 beauty advisors worldwide, including 3,500 beauty
advisors in Japan, provide information and sell products byoffering consultations at the sales areas of department
stores and at our directly managed stores.
In Japan, our beauty advisors undergo rigorous training, which requires them to acquire measuring and fitting
expertize, know the characteristics of product fabrics,
coordinate products with apparel, and provide customer
service that is sensitive to customer psychology. In addition, all beauty advisors have passed our in-house Wacoal
Bodyfit Examination and the Nihon Body Fashion (NBF)
Association standardized exam. As a result, beauty advisors
are well qualified to provide customers with unique value.

Our distinctive face-to-face consultative sales are one ofour greatest strengths. The Wacoal Group’s deployment ofbeauty advisors in stores came about as the result of amethod learned from the West. When our founder first visited the West on an inspection tour in 1956, sales personnel
in department stores in Europe and the United States
would only sell products after taking a customer’s measurements. He saw value in this Western method. As a result,
we incorporated it and continue to use it to this day.
Face-to-face sales not only give customers value
through consultations, they also enable us to receive value
from customers. In other words, customers provide us

Exploiting the Work of the Human Science
Research Center in Consultative Sales

Recently, we have been giving customers advice that draws
on the results of the Human Science Research Center’s
research on aging. Beauty advisors have to choose from thelarge number of brassieres we produce to offer appropriate
products that fit each customer’s physique from the viewpoint of human science. Consequently, beauty advisors
continuously study the Human Science Research Center’s
research results so that they can refer to them when offering products. Aging-care solutions underpinned by suchresearch results are evolving our relationships of trust withcustomers positively. Beauty advisors working diligently
day-to-day in light of such specialized knowledge—as theexperts in this area most familiar to customers—contributeto women’s beauty and health.
Thus, the responsibility today’s beauty advisors shoulder is greater than ever. Given that creating products customers love is one of our overriding management goals,
beauty advisors are an invaluable asset because throughdirect dialogue they connect us customers.

Creating Value through Mutual Trust

Remaining Committed to the Value ofFace-to-Face Sales

with valuable direct feedback about their feelings andneeds. In fact, the feedback beauty advisors receive from
customers is a treasure trove for us. Accordingly, we arecollecting such day-to-day customer feedback frombeauty advisors even more dynamically and using it inoperational decision making and product development.
In this way, the consultative sales method we haveremained committed to for many years generates valuethat is a major competitive advantage.

19

EMPATHETIC TO WOMEN

Advancing Social Contributions That Reflect Our Unique Values
We have declared ourselves a company empathetic to women based on the philosophy that having empathy for
women is part of our raison d’être. By using experience garnered from our mainstay business and the unique perspective it affords us, we want to advance social contribution activities to build mutual trust with women worldwide.

Breastcare Activities
In 12 countries and regions worldwide, the Wacoal Group

Pink Ribbon Activities

conducts breastcare activities, which include education,

In September 2002, we began full-fledged participation inscreening, and post-surgical support.

Pink Ribbon activities to educate as many people as possible
about the importance of discovering, diagnosing, and treating

Remamma Projectbreast cancer early. We conduct multifaceted activities in 12

The name Remamma* reflects our desire to help restore thecountries and regions worldwide. In Japan, we have been hold-attractive bodylines of women who have undergone breast

ing the Pink Ribbon Fitting Campaign since 2007. For every

removal surgery. “Re,” means again, and “mamma” is derived

brassiere customers try on at stores, we donate ¥10 to the Japan

from the worsened mammary. In 1974, we began theCancer Society’s Wipe Out Breast Cancer Smile Fund. Under

Remamma project with a view to giving back to women

this campaign, in fiscal 2014 customers tried on 497,738 bras-

who have had breast cancer eat at their attractive bodylines

sieres, enabling us to donate ¥4,977,380 to the fund.

and smiles. To ensure that women who have undergone breast

Also, Wacoal America, Inc., has been running its Fit for thesurgery find Remamma products comfortable, we developed

Cure® campaign throughout the United States since 1999.

them in light of advice from medical professionals and reha-

For several days every spring and fall, we hold free fitting

bilitation specialists as well as our many years of research. The

events in stores. At these events our fitting experts (sales per-Remamma product lineup includes such innerwear as bras-sonnel) provide customers with consultation about brassiere

sieres that reduce the burden placed on the body and enclosefitting and recommended styles. Every year, we hold roughly

the bust gently to give a natural feeling fit, pads, and swim-

1,200 such events and provide about 53,000 women withsuits. Recently, we have added to the product lineup items

fittings and advice.

designed for women who have had breast-conserving surgery.

During Fit for the Cure® campaign periods, for every

Currently, we send our product catalogs to approximately

brassiere that store visitors try on, we donate US$2 to Susan

2,000 hospitals. Further, as well as providing consultations at

G. Komen.* And for every brassiere or Shapewear productsix Remamma consulting rooms around Japan, we organize

they purchase, we donate a further US$2 to the foundation.

free consultation events nationwide that enable customers see,pick up, and try on Remamma products and speak withRemamma advisors. In fiscal 2014, more than 42,000 people* Susan G. Komen is a foundation established in 1982 by Nancy G. Brinker, daughter of
Susan G. Komen, who died of breast cancer aged 36 in 1980. In addition to heightening
awareness about the importance of early discovery, the foundation organizes large-scaleinitiatives to raise funds for research aimed at advancing medical treatment.

visited these events.
* Remamma is a registered trademark of the Wacoal Group.

Breastcare Activities around the World
Remamma project:
Pink Ribbon activities:
Mobile breast cancer
screening units:
Remamma products

20

Remamma consulting room

8 countries
12 countries
3 countries

The Wacoal Group’s
Pink Ribbon badge

Breast Cancer Screening Support Project

students, Kyoto’s municipal and prefectural authorities, and a

In October 2009, we began the Breast Cancer Screening

range of media outlets united to launch Pink Ribbon Kyoto,Support Project to encourage as many women as possible tothe city in which the Wacoal Group is headquartered. We havereceive breast cancer screening. In Japan, the percentage ofbeen supporting these activities since 2005.

women undergoing screening for breast cancer remains low, atThrough Kyoto’s media outlets, we issue educational

only slightly more than 20%. Aiming to help address thismessages to encourage more people to have screening andproblem in whatever small way we can, we purchased the Aio

discover breast cancer early. As part of activities, the pinkmobile breast cancer screening unit, which has digital mam-illumination of Kyoto Tower in October to publicize Pink

mography screening equipment and other leading-edge

Ribbon activities has become a fixture of the local calendar.

devices. We lend the unit to medical institutions that conduct

It has come to symbolize local Pink Ribbon activities and,breast cancer screening. Furthermore, in Taiwan and Thailand

during this month, reminds visitors that breast cancer screen-

our mobile breast cancer screening units provide screening.

ing is important.

By strengthening collaboration with medical institutions in

Taking advantage of Kyoto’s many famous sights, Pink

various regions, we aim to establish systems that give women

Ribbon Kyoto has held the Stamp Rally Walk since 2012.

reliable access to screening.

Participants walk around temples and stores of the city’s
Higashiyama area. As they tour Kyoto’s famous places, they

Cooperation with Local Pink Ribbon Activities in Kyoto

respond to a Pink Ribbon quiz aimed at making them more

Aiming to promote early screening for and discovery andfamiliar with breast cancer. The Wacoal Group will continue

treatment for breast cancer in their local community, hospitals’

working with the local community to increase the percentage

doctors and nurses, non-profit organizations, local companies,

of women receiving breast cancer screening.

The Pink Ribbon Kyoto Stamp Rally and Walk

The pink illumination of Kyoto Tower

Brassiere Recycling
As one of its environmental initiatives, Wacoal has been con-

In fiscal 2014, we collected 68,126 brassiere collection bags

ducting the Brassiere Recycling Campaign since 2008.

(or approximately 258,500 brassieres calculating based on the

Customers put brassieres that they no longer need in speciallyweight processed and the assumption that one brassiere

designed collection bags and bring them to stores. The col-weighs 100g), which were processed

lected brassieres and the unopened bags containing them areinto approximately 25.85 tons of RPF,

processed into RPF (Refuse Paper & Plastic Fuel) that paper

up 15% from the previous fiscal year.

manufacturers and other companies use as a heat source.
To date, Taiwan and Hong Kong have been taking part inthis campaign.

Brassiere recycling

21

Creating Value through Mutual Trust

The Wacoal Group’s Aio mobile breast cancer
screening unit

Tsubomi School
The Tsubomi School refers to innerwear classes the Wacoal
Group conducts for girls, from the fourth year of elementary
school through the second year of junior high school, andtheir guardians. The classes aim to enable participants tolearn about innerwear and the physical and emotionalchanges accompanying adolescence. We provide instruction
at regional children’s associations and girl scouts groups,
with an increasing number of classes held at elementary
schools and junior high schools in recent years. As of March
2014, more than 66,664 people have participated in theclasses since they began in October 2001.
In addition, we provide textbooks and lend innerwear
samples to schools that our instructors are unable to visit.
In April 2014, we produced an educational DVD “Talking
about Our Bodies and Innerwear” and an accompanying
textbook, both of which we have been distributing free tothe school nurses of elementary schools and junior highschools and other professionals responsible for health guidance. We created the educational DVD in response torequests for simpler teaching materials that children would
be able to understand more readily. Therefore, we prepared a

DVD designed to inform children about innerwear and thephysical changes accompanying adolescence.
Tsubomi School helps girls to be healthy during adolescence, which is an important period of their lives, and todevelop into beautiful, healthy women.
Also, in response to recent years’ growing demand forseminars for adults, we have been holding Aging Seminars
that explain how the physique ages, Seminars for Those in
the Third Year of Junior High School through to University
Students, and Maternity Seminars. In fiscal 2014, we hosted
54 seminars, in which 2,099 people participated.
Going forward, the Wacoal Group is committed to continuing to provide women in all generations and girls witheducation about the physique and innerwear.

The Tsubomi School logo

Educational DVD

Good Age Business
While some require nursing care, most senior citizens areactive individuals leading independent lives, although they
may feel their bodies weakening as they age. Such individuals
have more opportunities to go out, but some complain about
the lack of apparel suited to their body shape and the difficulty of buying apparel in the styles they prefer nearby.
Aiming to mitigate the wardrobe-related frustration ofsuch senior women and cater to their desire to always be
beautiful, Wacoal started up the Good Age business in 2002.
Emphasizing ergonomic design, this business has developed
products with differentiated functionality and comfort. For
example, under the Rakuraku Partner brand, the business has
designed products that are easy to put on and take off.
Also, based on the Human Science Research Center’s body
shape data, we have analyzed the body shapes of women aged
60 or older and established propriety “comfort size” standards
that differ from the normal Japanese Industrial Standard (JIS)sizes. These initiatives have enabled us to roll out a lineup of

products that provide overall support for everyday life.
Designed to fit the body shapes of senior women and ensure
their comfort, this product range includes everything frominnerwear and nightwear through to outerwear.
In preparation for an increasingly aged society, the GoodAge business will advance product planning and development.
To increase awareness of these products among active senior
women, we will further define and heighten the profile of theseniors market, which currently tends to lack differentiationfrom markets for nursing care and rehabilitation products. The
Wacoal Group intends to strengthen this business and develop
a brand that improves the qualityof life of senior citizens.

The Rakuraku
Partner logo

Magic Tape,* whichmakes innerwear easy
to put on and take off

Rakuraku Partner products* Magic Tape is a registered trademark of Kuraray Co., Ltd.

22

BUSINESSSTRATEGY
24 Eleven-Year Financial Summary
26 The Fiscal 2014-2016 Medium-Term Management Plan
28 Strategies and Initiatives in the Second Year of
Business Strategy

the Medium-Term Management Plan

30 Message from Top Management

23

ELEVEN-YEAR FINANCIAL SUMMARY
Wacoal Holdings Corp. and Subsidiaries

2014

2013

2012

Net sales¥193,781¥180,230¥171,897

Cost of sales

91,00884,54881,891

		 % of net sales

47.0%

46.9%

47.6%

88,91384,331

79,629

45.9%

46.8%

46.3%

Years ended March 31

For the year

Selling, general and administrative expenses
		 % of net sales
Government subsidy
Special retirement related expenses
Operating income

13,8608,499

10,377

Other income and expenses, net

313

(152)

(189)

Net interest income (expense)

(8)

(79)

19

Income before income taxes, equity in net income of affiliated companies,
and net (income) loss attributable to noncontrolling interests

15,033

10,940

10,207

Income taxes

5,641

3,772

4,199

Net income attributable to Wacoal Holdings Corp.

10,106

7,880

6,913

Return on assets (ROA)

5.6%

3.9%

3.1%

Return on equity (ROE)

5.2%

4.4%

4.1%

Net cash provided by operating activities

8,949

12,30910,060Net cash (used in) provided by investing activities

1,658(23,520)(3,467)

Net cash (used in) provided by financing activities(5,554)

5,379(2,824)

Depreciation and amortization

5,036

4,888

4,660

Capital expenditures

2,265

2,475

2,708

Net income attributable to Wacoal Holdings Corp. (Basic)¥71.75¥55.95¥49.08Cash dividends

33.00

28.00

28.00

Shareholders’ equity

1,456

1,325

1,218

Per share of common stock (in yen)

At year-end
Total current assets¥109,488¥103,587¥ 97,295

Total current liabilities

46,60850,50435,607

Cash and cash equivalents

30,65824,51429,985

Net property, plant and equipment

48,97849,66549,078

Total assets

271,988

254,536

221,098

Short-term bank loans and long-term debt, including current portion

18,147

18,765

6,482

Total shareholders’ equity

205,106

186,646

171,496 or the fiscal year ended March 31, 2012, to reflect earnings and losses during fiscal years in consolidated financial statements more appropriately, certain consolidated subsidiaries haveFchanged their settlement dates to March 31 to coincide with the settlement date of the Company. Financial statements for the fiscal year ended March 31, 2011, and fiscal years prior to
the fiscal year ended March 31, 2011, have been retroactively revised accordingly.

24Millions of yen, except per share amounts

2011

2010

2009

2008

2007

2006

2005

2004

¥165,548¥163,548¥170,960¥165,201¥166,410¥164,122¥160,968¥163,155

81,65980,101

83,87982,94384,65884,322

84,041

84,638

49.3%

49.0%

49.1%

50.2%

50.9%

51.4%

52.2%

51.9%

77,71678,524

77,24868,921

68,85670,946

72,26175,501

46.9%

48.0%

45.2%

41.7%

41.4%

43.2%

44.9%

46.3%

(7,100)
7,521
4,401

3,829

9,833

13,337

12,896

1,333

11,766

3,016

(523)

(717)

(2,699)

592

861

1,976

206

1,404

49

43

195

224

163

157

107

112

3,927

3,155

7,329

14,153

13,9203,466

12,079

4,532

2,010

1,655

3,083

5,774

6,502

1,459

5,800

2,520

2,785

2,475

5,062

4,845

9,029

2,821

6,790

2,902

1.3%

1.1%

2.2%

2.0%

3.7%

1.2%

3.0%

1.3%

1.6%

1.5%

2.9%

2.6%

4.8%

1.6%

3.9%

1.8%

10,441

9,463

8,202

14,249

9,339

719

2,045

5,201

(3,573)(4,759)3,709(1,185)(2,069)(5,528)

1,328(5,363)(7,448)(9,400)(8,404)(3,428)296(6,138)

4,685

4,765

4,544

3,892

3,735

3,433

3,312

3,081

2,652

3,981

2,370

1,110

2,536

6,456

5,418

2,338

¥19.73¥17.51¥35.57¥34.29¥63.18¥19.60¥47.17¥19.85

20.00

20.00

25.00

25.00

22.00

20.00

20.00

15.00

1,189

1,217

1,187

1,285

1,375

1,296

1,221

1,186

¥ 90,410¥ 89,455¥ 90,778¥ 97,671¥ 92,915¥110,773¥120,300¥123,045

33,88034,94531,76235,802

34,86835,52534,97033,89926,31622,32821,95427,06919,816

19,89324,19527,44349,73451,804

49,16551,18552,78253,501

51,82649,932

215,276

222,889

213,827240,053

250,266

242,296

226,196

224,803

6,436

8,162

5,302

5,701

5,984

6,458

6,911

4,450

167,480

171,860

166,767

184,128

193,278

186,475

175,746

170,758

Business Strategy(703)(4,965)25

THE FISCAL 2014–2016 MEDIUM-TERM MANAGEMENT PLAN

Launched in April 2013, our current three-year medium-term management plan calls on us to continue advancing a
range of measures to establish a stronger global presence for the Wacoal Group. Over the coming three years, the plancalls on the Wacoal Group to strengthen its comprehensive capabilities while ensuring its management philosophy
and conduct and ethics code are shared throughout the Group as a permanent foundation. Furthermore, to enable
responses to unexpected volatility, we will bolster profitability and build even stronger relationships of trust withsociety. Adhering to these strategies, we intend to grow in Japan, the Americas, Europe, China, and Asia as we evolve
into a global corporate group.

MEDIUM−TERM STRATEGY
Reconfirm and implement management philosophy
Develop into a global company
Strengthen Group’s comprehensive capabilities through collaboration
among companies in Japan and overseas
Strengthen business management system to enable response to changing conditions
Build mutual trust with society

TASKS

26

Cater to Japan’s diversifying
women’s innerwear market,
achieve sales and earnings targets

Secure and develop points of contact with customers
Hone products’ strengths
Have Wacoal, Peach John, and Lecien grow sales in their target markets

Increase sales andearnings overseas

Strengthen organization in Europe centered on Wacoal Eveden, build
robust earnings foundations
Recover market share in Americas’ high-end segment, maintain highearnings by development of new sales channels
Shift emphasis in China from increasing sales to earnings, penetrate
middle-class customer group

Rebuild Group’s
manufacturing system

Redeploy Group’s manufacturing resources in Japan and overseas
Shift manufacturing capabilities from China to ASEAN
Develop raw material supply sources and localize purchasing centeredon ASEAN

Develop presence in growth areas
outside Japan’s women’s
innerwear business

Develop positions for Wellness Business and men’s innerwear businesswith view to medium-to-long-term growth

Develop the Wacoal Group’s
overall business managementfoundations and infrastructure

Enhance each person’s productivity

NUMERICAL TARGETS AND PROGRESS
Fiscal 2016 targets

Net Sales: At least

Operating Income: At least¥¥

200.0 billion

Operating Income Margin: At least

14.0 billion

7%

Net Sales

Operating Income / Operating Income Margin¥ billion¥ billion / %
7.0
200.0

2016
(Targets)

2016(Targets)

Current medium-term management plan

193.8

2014

2013

Previous medium-term management plan
171.9

2012

7.2

2014

180.2

2013

14.0
Current medium-term management plan

2012

2011

165.5

2011

2010

163.5

2010

2.7
2.3

13.9

8.5

4.7
Previous medium-term
management plan

6.0

10.4

4.4
3.8

Operating Income
Operating Income Margin

OTHER IMPORTANT BENCHMARKS
SG&A Expenses / % of Net Sales

Net Income Attributable to Wacoal Holdings Corp /Per Share of Net Income Attributable to Wacoal Holdings Corp.

¥ billion / %¥ billion / %

88.9

45.9

2014

2014

2013

46.8

2012

46.3

79.6

2011

46.9

77.7

2011

19.7

2010

48.0

78.5

2010

17.5

6.9

49.1

2012

SG&A Expenses% of Net Sales

7.9

56.0

2013

84.3

10.1

71.8

2.8
2.5

Net Income Attributable to Wacoal Holdings Corp.
Per Share of Net Income Attributable to Wacoal Holdings Corp.

ROA / ROE

Total Shareholders’ Equity / Equity Ratio%¥ billion / %

5.2

2014

3.9

2013

75.4

2013

73.3

1.1

77.6

1.6

2011

77.8

167.5

1.5

2010

77.1

171.9

ROA
ROE

Total Assets¥ billion¥ billion

8.9

30.7
12.3

2013
2012

10.1

2011

10.4

2010

171.5

Total Shareholders’ Equity
Equity Ratio

Net Cash Provided by Operating Activities /Cash and Cash Equivalents

2014

186.6

2012

4.1
1.3

205.1

Business Strategy

2010

4.4

2014

3.1

2012
2011

5.6

9.5

254.5

2013

24.5
30.0
26.3
22.3

272.0

2014

2012
2011
2010

221.1
215.3
222.9

Net Cash Provided by Operating Activities
Cash and Cash Equivalents

27

STRATEGIES AND INITIATIVES IN THE SECOND YEAR OF
THE MEDIUM-TERM MANAGEMENT PLAN
In the medium-term management plan’s second year, ending March 2015, our basic strategy is to increase the operating margin. To this end, we intend to rationalize and increase the efficiency of business management to reflectchanging business conditions and strengthen profitability. Furthermore, we will continue expanding businesses inmarkets in Japan and overseas. Our initiatives in fiscal 2015 are as shown below.

WACOAL BUSINESS (DOMESTIC)
Priority measures

MeasuresSwitch to new sales system in innerwear wholesale division to cater to regions
Opened low-cost-management stores as strategy for regions and unexploited regions
Claim market sharein Japan’s regions

We reorganized so that the same division manages all sales channels within certain regions. Also, focusing
on regions that have become unexploited due to the withdrawal of existing retail stores, we will steadily
open directly managed stores with low-cost operations that are able to simultaneously realize profitability and extensive product lineups at shopping centers with wide catchment areas, which is a strategy
we have been exploring since the previous fiscal year.

Implemented initiatives to heighten awareness of products among entry-level groups
Took sales channel measures focused on purchasing behavior of working womenStrengthen entry-level andsenior customer groups

Through an initiative with major department stores, we rolled out Tuyaka, a product targeting senior
customers. For the entry-level customer group, we heightened awareness through parent-child seminars.
Meanwhile, we implemented sales channel measures reflecting the purchasing behavior of working
mothers, who comprise the majority of actual purchasers. By increasing purchasing convenience, wewill encourage sales.

Continued expanding lineups for high-volume market in sales channels
Reinforced lineups for higher-end market at same time
Expand lineups forhigh-volume market

While increasing sales of fufu, which we developed jointly with a major general merchandising store,
we will continue strengthening the product lineups of directly managed stores. Further, in conjunction with these efforts we will reinforce product lineups for the higher-end market. As part of thisinitiative, in 2013 we launched IN CARAT, which is our first new brand exclusively for department
stores in ten years.

Continued improvements
Reformed purchasing foundations in ASEAN
Restructure
manufacturing area

28

In particular, we are continuing to reduce costs by increasing production in the ASEAN region andadvancing local purchasing of raw materials. Primarily in this region, we plan to concentrate efforts on
fostering material suppliers and securing manufacturing infrastructure to establish purchasing foundations with superior quality, costs, and delivery lead times.

WACOAL BUSINESS (OVERSEAS)

Net Sales/Operating Income (Wacoal Corp.)¥ million

U.S. Business
Heighten product developmental capabilities, increase
market share in high-end segments
Make b.tempt’d business profitable through cost reduction
Reduce total inventory, including through use ofoutlet stores

2016

116,000

7,400

2014

114,878

6,928
Fiscal 2014 achievement
percentage

Net Sales

Operating Income

93.6%

99.0%

Europe Business
Rebuild product strategies and sales channels centered on
Wacoal Eveden
Heighten awareness of Wacoal brand in Europe andincrease sales
Establish business organization in Europe

Net Sales/Operating Income (Wacoal International Corp.)¥ million
2016

1,700

2014

1,706

China Business
Fiscal 2014 achievement
percentage

Use Chinese Human Science Research Center to develop
locally designed products
Reduce costs by purchasing materials locally
Foster LA ROSABELLE and grow Internet sales

16,00015,648Net Sales

Operating Income

100.4%

97.8%

Net Sales/Operating Income (Wacoal China Co., Ltd.)¥ million

PEACH JOHN BUSINESS
Increase new customers, encourage repeat store visits
Develop infrastructure for receiving orders via Internet,
including smartphones, rebuild customer base
Secure gross profit by revising sales prices and reducing
purchasing and inspection costs

2016

10,000

300

2014

8,588

123
Fiscal 2014 achievement
percentage

Operating Income

41.0%

Net Sales

85.9%

Net Sales/Operating Income (Wacoal Eveden Limited)¥ million

OTHER BUSINESSES

2016

14,0001,700

Lecien2014

Nanasai

Fiscal 2014 achievement
percentage

Operating Income

124.3%Net Sales

97.2%

Net Sales/Operating Income (Peach John Co., Ltd.)¥ million
2016

Maintain and expand rental business by offering new sales
areas and fixtures
Improve profit margins of sales and interior construction
businesses

Business Strategy

Merchandising that can lead pricing measures andchallenge brands
Secure personnel and increase their professional capabilities
with a view to realizing full-fledged operations at plant in
Cambodia rapidly as part of efforts to develop manufacturing infrastructure in response to changing external
conditions

13,604

2,113

2014

14,5001,050

12,937229
Fiscal 2014 achievement
percentage

Operating Income

21.8%

Net Sales

89.2%
29

MESSAGE FROM TOP MANAGEMENT

The Wacoal Group aims to establish a stronger global
presence for the Wacoal Group by continuing tocreate unique value that is based on mutual trust andin accordance with its mission to “contribute tosociety by helping women to express their beauty.”

Yoshikata Tsukamoto
President and Representative Director
Wacoal Holdings Corp.

A Stronger Global Presence

Business Results Evaluation:

for the Wacoal Group

Favorable Start in the First Year of theMedium-Term Management Plan

A stronger global presence for the Wacoal Groupmeans achieving the following corporate profile.
Wacoal Group’s products and services earningstrong trust from customers in markets worldwide

In fiscal 2014, ended March 31, 2014, the firstCountries and regions in which Group hasbusinesses continue to increase

ment plan, we grew net sales 7.5% year on year, toCoordinating business development on
global scale based on Group’s network

96.9% of the plan’s ¥200 billion or higher target

Rolling out innovative products in markets
worldwide and developing innerwear
culture constantly

tors included rush demand before a consumption

Group’s goals and management philosophy
instilled in personnel worldwide

local currency basis our businesses performed well,fiscal year of our current medium-term manage¥193.781 billion. In other words, we achieved
for fiscal 2016. In Japan, special contributory factax increase, while exchange rates had a positiveeffect overseas. Even allowing for such factors, on aparticularly in the United States. Another factor
increasing revenues was the full-year contribution
to business results of Wacoal Eveden Limited,which joined the Group in 2012.

30

As for earnings, operating income was up

appeal, develop manufacturing and sales systems,

63.1% year on year, to ¥13.860 billion, achieving

and invest in growth areas. For the time being, we

99.0% of our ¥14 billion or higher target for the

are not contemplating any major M&A invest-

plan’s final fiscal year. As well as overseas businesses’ments. Our priority at this juncture is to lay thehigher earnings, the absence of the impairment

foundations of growth for Wacoal Eveden, aloss recognized for Peach John Co., Ltd., in the

recent acquisition.

previous fiscal year led to a significant year-on-year
rise in earnings. Net income grew 28.2% year on

Management Philosophy:

year, to ¥10.106 billion.

Founding Spirit Supports
Wacoal’s Raison D’être

Although these business results partly reflected
one-time factors, our businesses generally performed strongly and enabled us to get off to favor-

We are working to remind all Wacoal Group per-able start in the plan’s first fiscal year.

sonnel of our founding spirit and management
philosophy. Recently, we have been establishing

Returns to Shareholders:and acquiring operating bases around the world.

Aiming for Stable Dividends toEarn Shareholders’ Trust

For these bases to collaborate and realize synergies,
the sharing of common values by all personnel isimportant. In this sense, promoting understanding

Our basic policy is to return profit to shareholdersof the Wacoal Group’s core management philoso-

stably, in light of consolidated business results. I

phy will establish foundations for strengthening thethink increasing dividends steadily—without being

Group’s solidarity and competitiveness. While we

significantly affected by short-term businesswill make changes to adapt to current needs, weresults—will benefit new and long-standing share-

must continue adhering to and pass on our man-holders alike. Looking back over the past decade,agement philosophy no matter how business con-while there have been fluctuations, dividends haveditions change. Therefore, I view reaffirming ourrisen steadily, and the average payout ratio has

founding spirit and inculcating it throughout the

been high.

Group as my duty.

For the fiscal year under review, we had

For many years, the Wacoal Group’s mission
has been to “contribute to society by helping

However, in light of business results in the fiscal

women to express their beauty.” An unwavering

year under review, we decided to pay cash divi-

commitment to this mission is at the core of alldends of ¥30.00 per share. Moreover, to mark theour business activities. Aiming to realize our mis-

50th anniversary of listing in September 2014 andsion, we have steadily built relationships of mutual

thank shareholders for their continuing support,

trust with customers, business partners, society at

we paid a commemorative cash dividend of ¥3.00

large, and our employees. We feel proud to haveper share, bringing total cash dividends for thehelped women live confidently and successfully.

fiscal year under review to ¥33.00 per share. As a

Put another way, our business would not exist if

result, the payout ratio was 46.0%.

women themselves did not want to become beauti-

Further, we will continue increasing enterprisevalue by using internal reserves to heighten productBusiness Strategy

planned to pay cash dividends of ¥28.00 per share.

ful and play a part in society. Empathy with women
has become the Wacoal Group’s raison d’être.

31

Quality First:

established a strong presence. However, I am very

The Value of the Wacoal Brand
Underpins Quality

confident we would prevail in such an eventuality
because of the product appeal and brand power wehave garnered over many years. In other words,

As a manufacturer, the Wacoal Group has pursued

products that customers truly love and trust cannot

quality unrelentingly. As with the management

be made overnight.

philosophy, quality is a fundamental component of

A good example of this is the Human Science

the Group’s identity. The trust customers place in us

Research Center, which another section of thisrelies on the high quality of our products. We haveintegrated report explains in more detail. Over a

been sincerely developing innerwear for more thanperiod of almost 50 years, the center has collected

60 years. During this time, we have fostered many

and analyzed data on the physiques of more thanemployees who have extensive experience and40,000 women. We use the results of this research

outstanding skills. Such personnel pass on thesein all business processes: product development,

skills to the next generation, thereby continuing themarketing, production, and sales. For this reason,

Group’s tradition of uncompromising quality. Fur-

Wacoal products are packed with value only wethermore, to accumulate expertise we are currently

can create. The Wacoal Group’s competitive superi-

creating a database that stores in a tangible format

ority lies in quality that is felt and which is beyond

skills that are part of our valuable legacy.

words, such as wearing comfort and fit.

On the other hand, it is important that manu-

The strength of the Wacoal Group is thefacturers do not impose quality on customers. No

unflagging, honest effort it devotes to all businessmatter how good the quality, if an over emphasis

processes. I am convinced that by avoiding com-

on quality is passed on to product prices, we areplacency and continuing to provide customers

not benefiting customers. Demand and preferenceswith even better products and even more comfort,

in relation to product quality and functionality

we will grow steadily and establish a stronger

vary among countries and regions. Therefore, ourglobal presence for the Wacoal Group. Therefore, I

basic strategy is to provide products with quality

can say with certainty that regardless of how busi-

optimized to reflect the circumstances of eachness conditions change the surviving innerwear

country and region while keeping in mind the

manufacturer will be the Wacoal Group.

need to achieve a balance between quality andBased on the spirit of mutual trust, the Wacoal

price or cost. We intend to concentrate on manu-Group will sustain growth by continuing to create

facturing that gives first priority to quality so thatvalue while maintaining and developing its unique

we continue earning the endorsement of womenstrengths. In this endeavor, I would like to ask our

the world over.

shareholders and other investors for their continued support and understanding.

Market Position:

The Wacoal Group’s Unshakable
Competitive Superiority

August 2014

Going forward, the Wacoal Group is likely to face
increasingly tough competition. For example, in32Japan companies may challenge us in the productYoshikata Tsukamoto

categories or pricing zones in which we have

President and Representative Director

BUSINESS
FOUNDATION
34 Interview with an Outside Director
37 Wacoal Code of Ethics
38 Corporate Governance
42 Directors and Audit & Supervisory Board Members
44 CSR Management

Business Foundation

33

INTERVIEW WITH AN OUTSIDE DIRECTOR

The Wacoal Group always devotes considerable
effort to analyzing trends and remaining
in the vanguard of the latest developments.

Mamoru Ozaki
Advisor, Yazaki Sogyo Corporation
Outside Director, Fujikyuko Co., Ltd.
Outside Director, Kikkoman Corporation

To earn the endorsement of all its stakeholders, the Wacoal Group should continue ensuring corporate
governance functions appropriately. In this respect, outside directors play an important role by providing
impartial advice based on expertise that helps the Board of Directors’ decision making.
For this integrated report, we interviewed Mamoru Ozaki, who has served as an outside director of
Wacoal Holdings since 2005.

Q

As an outside director of Wacoal Holdings,
what is your role?

Furthermore, when giving advice about business management I emphasize how external stakeholders view issues.
However, I think focusing on external viewpoints without aA

Corporate governance has various facets. Among

sufficient grasp of the concrete details of the Wacoal Group’s

these, appointing an outside director in itself contrib-

businesses is meaningless. Accordingly, I try to further myutes to corporate governance. Outside directors act as aunderstanding as far as possible before providing impartial

mechanism of corporate governance. I view myself as aadvice. To this end, I ask the persons concerned numerous“mechanism” that provides an important checking function

questions and, if necessary, attend related briefings.

for business management. To fulfil this role, ensuring that one

From an overall perspective, the Wacoal Group has well-reflects external viewpoints, particularly those of shareholders,developed corporate governance systems. All that remains is torather than only the Group’s viewpoint is critical. Therefore, I

inculcate an awareness in each employee of why the Group

perform my duties with an awareness that my raison d’être as

has established these systems and to realize concrete benefits

an outside director is to contribute to the Wacoal Group’s

by operating them.

development while keeping in mind the viewpoints of shareholders and other external stakeholders.

34Q

More than 60 years have passed since theinevitably the number of customers purchasing the Wacoal

Wacoal Group’s foundation, do you feelGroup’s products will decline. Faced with an aging society

employees understand the management philosophy

and a falling population, deciding which type of products toand vision sufficiently?
develop and market is a key problem. To compensate for theseAdomestic conditions, expanding overseas businesses is essential.

I think one area that calls for some caution is the

Ultimately, overseas businesses must become the Group’s

phrase “mutual trust” in the Wacoal Group’s vision.

earnings mainstay.

A relationship of mutual trust with employees is essential to

Recently, Wacoal Eveden Limited joined the Group

unite the Group. For the Wacoal Group, however, customers

through an M&A. I think that this type of quality M&A is theare paramount. This importance is reflected in the Group’s

correct option with regard to expanding overseas businesses.

mission to “contribute to society by helping women to

Further, the Group’s business in the United States is perform-

express their beauty.” The trust garnered when customers use

ing well. And, the business in China—in the red for many

Wacoal products with satisfaction is of greater importance I

years—moved into the black in the fiscal year under review.

think. Even if it is one-sided, trust from customers is valuable

This is an impressive achievement. The Group’s patience andto the Wacoal Group. Similarly, as the Group steps up thesteady efforts are finally bearing fruit. Furthermore, theglobal expansion of its business, winning the trust of local cus-

Wacoal Group’s business in China promises to continue gen-

tomers should be its first priority. Underpinning such efforts

erating earnings. Although China’s economy is growing lessare relationships of mutual trust with employees, suppliers, andvigorously and is unlikely

local business partners. In my view, the Wacoal Group should

to see dramatic growth, it

continue communicating to employees the significance ofwill continue to play amutual trust in a broad sense.

central role in the global

The experiences of the previous president as he laid theeconomy. Thus, thefoundations of the Wacoal Group after the Second World WarGroup should develop

led to the phrase mutual trust becoming significant to theoverseas businesses steadilyGroup. Communicating to employees the intent of those days,

while maintaining amore than half a century ago, is very necessary. However, I feellong-term perspective.

there are aspects of the concept that are difficult for people
who have been brought up with modern values and sensibilities to relate to. Therefore, it is important to deepen employeesQunderstanding of the phrase mutual trust by giving them concrete examples of the ways in which the Wacoal Group has
actually developed its businesses.

How do you think the Wacoal Group should
utilize personnel in respective regions?

A

From the perspective of establishing a stronger global
presence for the Wacoal Group, the most important

thing is to continue providing user-friendly products loved byQ

What do you think is needed with respect tocustomers the world over. In each region, the type of clothes

overseas development aimed at establishingpeople wear differ. Therefore, the Wacoal Group has toAquickly create designs that appeal to local preferences andtastes. This type of sensitivity is crucial if the Wacoal Group is

Monitoring and increasing sensitivity to international

to develop globally. One conclusion we can draw from this istrends and fashions is critical. I think the senior man-that the Group needs to employ local personnel. Moreover,agement team is well aware of this. As Japan’s population

the Wacoal Group should promote local personnel to man-shrinks, domestic consumption will of course decrease, andagement positions and adopt a stance of developing business

35

Business Foundation

a stronger global presence for the Wacoal Group?
circumstances. Nevertheless, reflecting the different circumstances of each region is extremely challenging. Speaking in
my capacity as a shareholders’ representative, ensuring international compliance is the first priority because the prospect of
disruptions to business activities that affect earnings adverselyis alarming. Meanwhile, respecting international codes ofconduct is also very important. Although there can be contradictions between such codes and compliance, the Group must
carefully examine merits and demerits from both perspectives.
It has to avoid the pitfall of unconditional acceptance bymanagement that suits each region’s climate, customs, andestablishing as a major premise compliance with internationalsociety. There are always issues only local people understand.

rules even if local rules permit the matter in question. Fur-

Based on a commitment to building mutual trust withthermore, until reaching an acceptable conclusion, the Groupregions, the Wacoal Group should take such requirements into

should discuss thoroughly all facets of a matter, including theaccount as it advances initiatives overseas. For many years, theintention of laws and codes, expected businesses earnings overGroup struggled in North America and China. However,

the medium-to-long term, and the effect on international

steady efforts bore fruit, and businesses in both areas are now

society or local communities. In such discussions, listening to

profitable. I believe these were praiseworthy achievements.

the opinions of local personnel who are familiar with local

From an external viewpoint, faster business development

practices and social circumstances is a must. In fact, this is the

may be desirable, but earning trust and bedding down brands

point on which I placed most emphasis at meetings of thein each region takes time. In my view, the Wacoal Group has

Board of Directors in the current fiscal year under review.

been able to grow steadily because it has laid foundations of(For details, please see Wacoal Code of Ethics on page 37.)

mutual trust with the employees, communities, and customersof each region.

Q
Q

As the overseas development of the Groupgathers speed, what matters should it exer-

cise care over from an international perspective?
A

In conclusion, what message would you
like to give shareholders and investors?

A

The Wacoal Group has retained brand power over along period not only because of business manage-

ment but because of outstanding manufacturing capabilities.

Not only the Wacoal Group but any entity develop-

I think this commitment to excellence has attracted talented

ing globally needs to comply with each country’s

personnel to the Group, who enable it to create products

laws and regulations. As well as responding to differences inloved by customers. Further, the Wacoal Group always devotes

relation to Japan, which is an obvious requirement, the Groupconsiderable effort to analyzing trends and remaining in thehas to consider differences among countries as well as deal

vanguard of the latest developments. With these attributes inwith conflicts among international values. The Wacoal Group

mind, I would like to ask shareholders and investors to take a

has its own Code of Ethics and Code of Conduct and man-long-term perspective as they look forward to the Wacoal

ages its overseas businesses appropriately in light of local

Group’s future.

36

Wacoal Code of Ethics

This document constitutes the Code of Ethics (the “Code”) for the		 2) Public Disclosures and Communications

directors, officers and employees of Wacoal Holdings Corp. (“Wacoal

		‌You are responsible for providing fair and accurate information about

Holdings”) and its consolidated subsidiaries (collectively with Wacoal

the company in a timely, appropriate and understandable manner.

Holdings, “Wacoal”).

The directors, officers and employees of Wacoal Holdings are respon-

			 This Code sets forth the code of conduct that shall apply globallysible for ensuring that all public communications made by Wacoal areto all directors, officers and employees of Wacoal. All directors, officers

fair, complete, accurate, understandable and timely. In addition, youand employees of Wacoal are required to comply with this Code withmust be responsive to society’s assessments and expectations regard-

the understanding that honest and ethical conduct and complianceing Wacoal and strive to take such assessments and expectations intowith the law, both in business and in daily life, solidifies the trust of themarkets and strengthens the competitiveness of our business.

account in the conduct of our business.
5. 1) Compliance with Legal Requirements		‌You must comply with all applicable laws, rules and regulations ineach of the countries and regions in which Wacoal operates.

I. General Rules

		 2) Respect for International Code of Conduct

1. Objective

		In case of a conflict between the international code of conduct andThis Code is designed to deter wrongdoing and to promote:the laws of the countries and regions in which we conduct our busi-(1) Honest and ethical business conduct, including in the handling ofness or the enforcement of such laws, you must respect the interna-

conflicts of interest;

tional code of conduct.

(2) Respect for human rights;(3) Consideration for the environment;

III. Operation of the Code(4) Consideration for society, including in public disclosures and1.	Inquiries, Explanations and Other Reporting regarding

communications; and(5) Compliance with legal requirements and respect for theinternational code of conduct.

the Code
Questions from Wacoal’s directors, officers or employees regarding thisCode should be directed to the Corporate Ethics Committee of Wacoal

2. Scope of Application

Holdings (the “Corporate Ethics Committee”) or other responsible

This Code applies to all directors, officers and employees of Wacoal.

departments or persons appointed by the Corporate Ethics Committee.

3. ComplianceIn addition, ethics or compliance related questions may be directed to

Directors, officers and employees must comply with this Code.

your supervisor in case that immediate advice or guidance is required.
Any person who has received an inquiry regarding this Code must

II. Operational Rules

promptly and appropriately respond to the person who made the inquiry.

1. 1) Honest and Ethical Business Conduct

2. Reporting regarding the Code		‌You must act honestly and ethically in the conduct of all business on

Any person who has knowledge of, or questions or concerns about, any

behalf of Wacoal.

actual or possible violation of the provisions of this Code must report		 2) Handling of Conflicts of Interest

the matter promptly to his or her supervisor or to the management

		A conflict of interest arises when your personal interests or those of a

office of the Corporate Ethics Committee.

third party interfere with your ability to act in Wacoal’s interests.You
must discharge your responsibilities with a view to the best interest

IV. Supplemental Provisionsof Wacoal, independent of personal considerations or relationships.

1. Amendment

2. Respect for Human Rights
You must respect fundamental human rights that foster mutual trust
and must not engage in any conduct that violates such rights.

(1) Only the Board of Wacoal Holdings (the “Board”) may amend
this Code.
(2) The Corporate Ethics Committee is responsible for regularly

3. Consideration for the Environment

evaluating the appropriateness of this Code and making appropriate

You must understand the impact of the conduct of our business on therecommendations to the Board.

environment and make continuous efforts to improve efficient use of(3) This Code is intended to clarify existing obligations for ensuring
proper conduct. This Code and the policies and procedures thereun-

4. 1) Consideration for Society

der may be amended from time to time at the discretion of the		‌You must respect the culture and the customs of the countries andBoard. It is your responsibility to know and comply with the current

regions in which we conduct our business and contribute to thelaws, regulations, standards, policies and procedures that apply todevelopment of local communities.

Wacoal’s business.

37

Business Foundation

resources and to prevent contamination.

CORPORATE GOVERNANCE

The overriding goal of the Wacoal Group’s corporate governance is to continuously grow enterprise value
by ensuring that management is highly transparent, equitable, and objective with respect to all stakeholders,
including shareholders, other investors, and customers.
Management Philosophy and Corporate Governance
The Wacoal Group’s management philosophy is based on
mutual trust. This is a value that the Wacoal Group aims tocarefully preserve in its relationships with shareholders, otherinvestors, and all other stakeholders with a vested interest in
the Group. To that end, the Group will steadily build andstrengthen governance systems pursuant to laws and statutory
regulations while working to ensure that every individual in
the Group, from the management team through to employees,
is aware of the social signiﬁcance of the Wacoal Group andadheres to good ethical conduct. We believe that properly
functioning corporate governance based on mutual trust is
indispensable in order to achieve sustained growth and further
increase enterprise value.
Corporate Governance System
Employment format

Company with board ofcompany auditors

Reason for employment

Under this corporate governance system, meetings of the Board of Directors reach decisions reﬂecting the view points of directors conversant
with respective businesses and objective, neutral advice from outside
directors with extensive business experience and specialized knowledge.
In addition, the Audit & Supervisory Board includes outside audit &supervisory board members. The Wacoal Group believes this system
ensures the corporate governance of Group companies and effectively
improves and maintains the quality of business management for all stakeholders, including shareholders and customers.
Number of directors:

7

Number of outside directors: 2
Directors’ term of office:1 yearNumber of corporate auditors:

5 (including 1 woman)Number of outside
corporate auditors:
Independent auditor:

3
Deloitte Touche Tohmatsu LLC

Corporate Auditors and the Internal Audit DivisionCorporate auditors and the internal audit division (Office ofCorporate Auditors) hold report verification meetings
monthly. These meetings primarily verify reports on the main
points of meetings that corporate auditors attend and reporton the activities of the Office of Corporate Auditors. The
Group has a system for sharing documents and other information required for audits. To facilitate efficient, effective
38

audits both parties coordinate through such measures as
mutual exchanges and verification of audit working papers.
As of June 27, 2014, the internal audit division (Office ofCorporate Auditors) had 13 personnel.
Further, corporate auditors and the independent auditor
meet six times a year. At these meetings they report and verify
audit plans and audit progress and exchange opinions aboutbusiness management. Also, they meet as required.
Outside Directors and Outside Audit & Supervisory
Board Members
The Wacoal Group appoints outside directors with outstanding experience in corporate management garnered fromduties in ﬁnancial administration and overseas business development. By providing objective, neutral advice based on theirextensive business experience and specialized knowledge in arange of ﬁelds, outside directors enhance the appropriatenessof directors’ decision making. Further, the Group appoints as
outside audit & supervisory board members individuals who
have experience of corporate management in the ﬁnancial
industry, certiﬁed public accountants who are independent
from the Group and have a high level of expertise with regard
to ﬁnance and accounting, and attorneys. While retaining ahigh degree of independence, these outside audit & supervisory board members draw on their expertise and experienceto strengthen the Group’s auditing system.
In addition, to support the outside directors the Corporate
Planning Office distributes agendas of meetings of the Boardof Directors and provides explanations to outside directors inadvance. Similarly, the Group appoints dedicated assistants foraudit & supervisory board members, including outside audit& supervisory board members. In-house audit & supervisoryboard members or their assistants explain the agenda of theBoard of Directors to outside audit & supervisory board
members in advance.
Furthermore, to encourage the appointment of capable
outside directors and outside audit & supervisory board members, the Group’s articles of incorporation enable the conclusion of contracts between the Group and outside directors
and outside audit & supervisory board members that limit
liability for damages to the Group within a certain extent.

Corporate Governance Structure
As of June 27, 2014

General Shareholders’MeetingGroup Strategy Meeting

Board of Directors

Audit & Supervisory Board

5 Directors
2 Outside Directors
5 Audit & Supervisory
Board Members

2 Audit & Supervisory Board Members
3 Outside Audit & Supervisory
Board Members

5 Directors / 2 Audit & Supervisory Board Members

Group Management
Meeting

Quarterly Business Results
Review Committee

5 Directors
2 Audit & Supervisory
Board Members

7 Directors
5 Audit & Supervisory Board Members
Representative of Each Company
and Department

Audit & Supervisory Board Secretariat

Representative Director

Executive Compensation
Advisory Committee

Independent
Accountants

Office of Corporate Auditors

Risk Management Committee
Operating Subsidiary
Compliance Committee
Operating Subsidiary
Corporate Ethics Committee

Operating Subsidiary

Corporate Ethics Hotline

Operating Subsidiary

Accordingly, the Group concludes such limited liability contracts with outside directors and outside audit & supervisoryboard members.
Also, the Group ﬁles notiﬁcation with the Tokyo Stock
Exchange for all of the below-mentioned outside directors
and outside audit & supervisory board members as “independent directors or auditors.”
Reasons for Appointment of the Said Outside Directors
Mamoru Ozaki

This outside director is an expert who has served in such official capacities as administrative vice minister of ﬁnance and president of the
National Life Finance Corporation. Appointed by the Group as a counselor in July 2003, Mamoru Ozaki principally provides advice on ﬁnanceand business in China. Extensive insight into social issues makes him anappropriate outside director for the Group given its goal of fulﬁlling its
corporate social responsibility (CSR) to an even greater extent.
Atsushi Horiba

Extensive experience and expertise in relation to business development inJapan and overseas make Atsushi Horiba an appropriate outside director for
the Group given its goal of further increasing business development overseas.

April 2013—March 2014

Mamoru Ozaki

Attended 13 from a total of 14

Atsushi Horiba

Attended 10 from a total of 14

Akira Katayanagi

Long experience in the ﬁnancial industry and a wide range of experienceand expertise in other industries make Akira Katayanagi an appropriate
outside audit & supervisory board member for the Group.
Tomoharu Kuda

Business management oversight and counseling capabilities based on
specialized knowledge of accounting and ﬁnance accumulated as acertiﬁed public accountant make Tomoharu Kuda an appropriate outside
audit & supervisory board member for the Group.
Yoko Takemura­

Legal knowledge as an attorney and experience accumulated throughspecialization in commercial matters make Yoko Takemura an appropriate
outside audit &supervisory board member for the Group.

Attendance of Outside Audit & Supervisory Board at Meetings ofthe Board of Directors and the Audit & Supervisory Board
April 2013—March 2014

Board of Directors

Audit & Supervisory Board

Akira Katayanagi

Attended 12 froma total of 14

Attended 13 froma total of 15

Tomoharu Kuda

Attended 14 froma total of 14

Attended 15 froma total of 15

Yoko Takemura

Attended 13 froma total of 14

Attended 13 froma total of 15

Business Foundation

Attendance of Outside Directors at Meetings of the Board of
Directors

Reasons for Appointment of the Said Outside Audit &Supervisory Board Members

39Compensation of Executives
Including outside directors, the Executive Compensation
Advisory Committee develops proposals for the appointment,
promotion, and compensation of executives and contributes
to the realization of highly transparent and equitablebusiness management.
Determination of Dividends from Retained Earnings
In order to return proﬁts to shareholders ﬂexibly, the Group’s
articles of incorporation stipulate that resolutions of theBoard of Directors determine cash dividends from retained
earnings, unless otherwise stipulated by related laws andstatutory regulations.
Compliance System‌In order to ensure that directors and employees adhere to
relevant laws and statutory regulations and implement operations based on sound societal norms, the Wacoal Group has
established its own Code of Ethics, and Code of Corporate
Ethics and Conduct.
‌Directors lead efforts to instill and ensure adherence to good
corporate ethics throughout the Wacoal Group.
‌Headed by the representative director and with the Legal andCompliance Department as its secretariat, the Corporate

Ethics Committee develops compliance systems and examines
compliance issues that signiﬁcantly affect the Wacoal Group.
‌The Group has established a system whereby employees discovering potential compliance problems relating to violationsof the Group’s conduct and ethics code can report these
immediately to the Legal and Compliance Department. Thissystem includes a whistleblower system (corporate ethics
hotline). Upon receiving such reports, the Legal and Compliance Department investigates the details of cases, consultswith the division in charge, and decides on the measures toprevent recurrence. The Legal and Compliance Department
submits serious problems to the Corporate Ethics Committee, which reports the results of investigations to the Boardof Directors and the Audit & Supervisory Board.
‌The Group’s conduct and ethics code, Corporate Ethics —Wacoal’s Action Agenda, stipulates resolute refusal of
demands from antisocial forces. Further, conduct standards
for crisis management set out in the Group’s crisis management manual stipulate that the Group will not have any
relationship whatsoever with antisocial forces. Also, in orderto address gratuitous demands from antisocial forces, theGroup coordinates with outside specialist organizations andcollects and manages information about antisocial forces andhas established an internal system in this regard.

Details of Remunerations Paid to Officers
Aggregate Amount of Remunerations, etc., by Type Thereof(Millions of yen)

Aggregate
Amount ofRemunerations,etc.
(Millions of yen)

Basic
Remuneration

Stock Option

Directors (Excluding Outside Directors)

340

212

46

Audit & Supervisory Board Members (Excluding
Outside Audit & Supervisory Board Members)

30

30

−

Outside officers

41

41

−

Category of Officers

Bonus

Retirement
Allowance

Number of
Relevant
Officers

82

−

5

−

−

2

−

−

6

Note: These numbers do not match the numbers described above because the numbers described above include one Outside Audit & Supervisory Board Member who had passed away asof May 20, 2013.

Aggregate amount, etc., of the consolidated remunerations, etc., of the person who receives
100 million yen or more as remunerations, etc., on a consolidated basis
Amount of Consolidated Remunerations, etc., by Type Thereof(Millions of yen)
Basic
Remuneration

Stock Option

Bonus

Retirement
Allowance

Aggregate
Amount ofConsolidated
Remunerations,etc.
(Millions of yen)

Wacoal Holdings Corp.

108

22

40

−

195

Wacoal Corp.

24

−

−

−

Name

Category of Officers Relevant Company

Yoshikata
TsukamotoDirector
Director

40

Risk Management System‌With the director responsible for risk management as its
chairperson, the Risk Management Committee manages
overall risks related to the Wacoal Group and develops andstrengthens risk management systems.
‌Based on the approval of the Board of Directors, the Risk
Management Committee establishes risk management regulations that form the basis of the risk management system.
Guided by these regulations, the Risk Management Committee clariﬁes responsibility for respective risk categories
and builds systems for comprehensive risk management of
the entire Wacoal Group.
‌The Risk Management Committee periodically reports to
the Board of Directors on the operational status of the risk
management system of Wacoal Holdings Corp. and the entire
Wacoal Group.
Group Management Systems of the Wacoal Group‌The Group has established regulations and basic policy forthe management of Group companies. The Group also stipulates items that the Board of Directors must decide and items
that must be reported to Wacoal Holdings Corp.
‌Transactions between Group companies must be equitableand pursuant to laws and regulations, accounting principles,
and tax systems.
‌The Office of Corporate Auditors conducts internal auditsof Group companies, which include audits of the status of
the construction and operation compliance systems and risk
management systems. Further, the Office of Corporate Auditors reports the results of these audits to the Board of
Directors and the divisions with jurisdiction over respective
Group companies. At the same time, the Office of Corporate
Auditors ensures Group companies conduct operations
appropriately by providing them with directions and advice
on the construction of systems.

To pi cWacoal Corp. Appoints First Female
Corporate Officer
Junko Kasai
Corporate Officer
Chief of Diversity Career Support Group
Junko Kasai joined the company in 1976. After serving as a manager responsible for product planningand design, she became the general manager of
the Customer Service Center in 2010. In April 2014,
she became a corporate officer and the chief of theDiversity Career Support Group of the Personnel
and Administration Department.

To enable it to anticipate volatile market conditions andwin out against competitors, the Wacoal Grouplaunched a new organization in the current fiscal year.
Women purchase about 80% of the Wacoal Group’s
products. However, original ideas are more important
than whether or not our employees are men or women.
Having original ideas—which come from teams withdiverse viewpoints—and the initiative to act upon themas well as convincing people and motivating them totake concerted action will be indispensable for ourbusiness going forward. With this in mind, Wacoal is
becoming diversity oriented.
Aiming to realize such dynamism, the Diversity
Career Support Group’s task is to support the creationof conditions conducive to each employee realizing
their full potential and contributing even more to theGroup. Accordingly, we intend to step up the pace ofvarious restructuring measures.

Business Foundation

Defensive Measures against Takeovers throughthe Acquisition of a Substantial Share Holding of
the Company
After the Group’s June 2009 ordinary general shareholders’meeting passed a resolution authorizing the adoption of abasic policy on measures against the acquisition of a substantial shareholding of the Group, the Board of Directors decided
upon speciﬁc countermeasures reﬂecting that basic policy.
Further, the June 2012 ordinary general shareholders’ meeting
renewed this policy. In principle, the Group does not oppose

the acquisition of large shareholdings that contribute to theenhancement of the enterprise value and shareholders’common interests. The Group’s defensive measures against
takeovers, or peace-time takeover defensive measures, include
providing advance warning that there are proceduresprospective purchasers of the Group’s shares must follow andthat a gratis allocation of acquisition rights for the subscription of new shares with discriminatory treatment for the exercise of such rights may be implemented. In addition, theGroup has established the Independent Committee to ensurethat initiations of defensive measures against takeovers are
based on substantive, objective decisions and not based on
arbitrary decisions by the Board of Directors. For further
details, please refer to the Group’s web site:www.wacoalholdings.jp/en/ir/news/index.html

41

DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS
Wacoal Holdings Corp. and Subsidiaries
As of June 27, 2014

BOARD OF DIRECTORS
President and Representative Director

Managing Director

Yoshikata Tsukamoto

Yuzo Ide

Representative Director and Chairman, Wacoal Corp.
Representative Director, Chairman, Peach John Co., Ltd.

Director and Senior Corporate Officer, Wacoal Corp.
General Manager of International Operations

Number of Shares Owned: 1,356,136 sharesBusiness Experience and Position(s) and Office(s):Apr. 1972 Joined Wacoal Corp.
Nov. 1977 Director
Nov. 1981 Managing Director
Sep. 1984 Executive Vice President
Sep. 1984 Representative Director (acting)Jun. 1987 President and Director (acting)Jun. 2002 Corporate Officer
Oct. 2005 Representative Director and President,
and Corporate Officer of Wacoal Corp.
Apr. 2011 Representative Director and Chairman of
Wacoal Corp. (acting)Dec. 2012 Representative Director, Chairman,
and President of Peach John Co., Ltd.
Jan. 2014 Representative Director and Chairman ofPeach John Co., Ltd. (acting)Number of Shares Owned: 5,000 shares
Area of responsibility: Overseas
Business Experience and Position(s) and Office(s):Apr. 1977 Joined Wacoal Corp.
Apr. 2001 Director and Vice Chairman of Wacoal America Inc.
Apr. 2006 Corporate Officer of Wacoal Corp.
Apr. 2008 Director and Senior Corporate Officer of Wacoal Corp./
General Manager of Wacoal Brand Business Department
Apr. 2010 Director and Senior Corporate Officer of Wacoal Corp./
General Manager of Wing Brand Business Department
Apr. 2012 Director and Senior Managing Corporate Officer/General
Manager of International Operations of Wacoal Corp.
Jun. 2012 Director and Supervisor of International Operations
Apr. 2014 Director, Vice President and Corporate Officer, Supervisorof International Operations/General Manager of International Operations of Wacoal Corp. (acting)Jun. 2014 Managing Director (acting)Director and Executive Vice PresidentManaging Director

Hideo Kawanaka

Masaya Wakabayashi

Number of Shares Owned: 15,000 shares
Area of responsibility: Business management reform
Business Experience and Position(s) and Office(s):Apr. 1965 Joined Isetan Co., Ltd.
Jun. 1992 Director of Isetan Co., Ltd.
Matsudo Branch Manager
Jul. 1993 Representative Director and President of West Japan
Railway Isetan Ltd.
Jun. 2001 Corporate Officer and Managing Director,
General Manager of Management
and General Affairs of OMRON Corporation
Jun. 2004 Representative Director and Senior Manager,
and Sales Manager of Matsuzakaya Co., Ltd.
Jun. 2007 Adviser
Jun. 2007 Senior Managing Director
Nov. 2007 Director and Senior Corporate Officer of Wacoal Corp.
Apr. 2008 Director and Vice President, and Corporate Officer of
Wacoal Corp.
Jun. 2009 Director and Vice President and Supervisor of
Business Restructuring (acting)Mar. 2011 Representative Director and Chairman ofPeach John Co., Ltd.
Apr. 2011 Director and Vice Chairman of Wacoal Corp.
Jun. 2011 Representative Director, Chairman and President of
Peach John Co., Ltd.

Number of Shares Owned: 16,000 shares
Area of responsibility: Overall Group management
Business Experience and Position(s) and Office(s):Apr. 1979 Joined Wacoal Corp.
Apr. 2004 Group Chief of Business Administration of Direct Retail
Operation Division of Wacoal Corp.
Apr. 2005 Group Chief of Business Administration of
Directly Managed Retail Store Operation Division of
Wacoal Corp.
Apr. 2006 Group Chief of Business Administration of Direct
Marketing Operation Department of Wacoal Corp.
Apr. 2008 General Manager of Corporate Planning
Apr. 2010 Corporate Officer, Chief of Corporate Planning of
Wacoal Corp.
Apr. 2011 Director, Corporate Officer,
Chief of Corporate Planning of Wacoal Corp.
Apr. 2013 Director, Managing Corporate Officer,
Chief of Corporate Planning of Wacoal Corp.
Apr. 2014 Director, Managing Corporate Officer, Supervisor of
Administration of Wacoal Corp. (acting)Jun. 2014 Managing Director (acting)Senior Managing Director

Hironobu Yasuhara
Representative Director, President andCorporate Officer, Wacoal Corp.
Number of Shares Owned: 9,000 sharesBusiness Experience and Position(s) and Office(s):Mar. 1975 Joined Wacoal Corp.
Sep. 1996 Deputy General Manager of Guandong Wacoal Inc.
Apr. 1997 General Manager of Wacoal China Co., Ltd.
Apr. 2004 Chief of Planning & Product Group of Wing Brand Business Department
Apr. 2005 Corporate Officer/General Manager of Wing Brand Business Department
Apr. 2006 Executive Corporate Officer/General Manager of Wing
Brand Business Department of Wacoal Corp.
Jun. 2006 Director and Executive Corporate Officer of Wacoal Corp./
General Manager of Wing Brand Business Department
Apr. 2008 Director and Senior Corporate Officer of Wacoal Corp./
General Manager of Wing Brand Business Department
Aug. 2009 Director and Senior Corporate Officer of Wacoal Corp./
General Manager of Wing Brand Business Department/
Representative Director and Chairman of Lecien
Corporation (part-time)
Apr. 2010 Director and Senior Corporate Officer of Wacoal Corp./
General Manager of Wacoal Brand Business Department
Apr. 2011 Representative Director and President,
and Corporate Officer of Wacoal Corp. (acting)Jun. 2011 Director
Jun. 2013 Senior Managing Director (acting)42

Outside Director

Outside Director

Mamoru Ozaki

Atsushi Horiba

Advisor, Yazaki Sogyo Corporation
Outside Director, Fujikyuko Co., Ltd.
Outside Director, Kikkoman Corporation

Representative Director and Chairman and President,
HORIBA, Ltd./Representative Director and President,
HORIBA STEC, Co., Ltd.
Outside Director, Rock Field Co., Ltd.

Number of Shares Owned: 0 sharesBusiness Experience and Position(s) and Office(s):Jun. 1991 Commissioner of the National Tax Agency
Jun. 1992 Administrative Vice Minister of FinanceMay 1994 President of People’s Finance Corporation
Oct. 1999 President of National Life Finance Corporation
Feb. 2003 Advisor to Yazaki Corporation (acting)Jul. 2003 Advisor
Jun. 2005 Director (acting)Number of Shares Owned: 3,000 sharesBusiness Experience and Position(s) and Office(s):Sep. 1972 Joined HORIBA, Ltd.
Jun. 1982 Director and General Manager of Overseas Business of
HORIBA, Ltd.
Jun. 1988 Senior Managing Director and General Manager of Sales
Division of HORIBA, Ltd.
Jan. 1992 Representative Director and President of HORIBA, Ltd.
Jun. 2005 Representative Director, Chairman and President of
HORIBA, Ltd. (acting)Jun. 2008 Director (acting)

AUDIT & SUPERVISORY BOARD MEMBERS
Standing Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Mitsuo Yamamoto

Tomoharu Kuda
Certified Public Accountant

Standing Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Tomoki Nakamura

Yoko Takemura
Partner at Miyake Imai Ikeda law firm, Lawyer
Outside Statutory Auditor, ADEKA Corporation

Outside Audit & Supervisory Board Member

Akira Katayanagi
Business Foundation

Special Advisor, Mitsubishi UFJ NICOS Co., Ltd.
Audit & Supervisory Board Member, Outside, TOTO Ltd.

43

CSR MANAGEMENT

Advancing CSR Management as a Group
Building mutual trust with society is the goal of
the Wacoal Group’s corporate social responsibility(CSR) initiatives.

Under the Wacoal Group’s management philosophy, building
mutual trust with society is its corporate goal and raison d’être.
Comprising our mission, vision, and values, this management
philosophy serves as a compass for our CSR initiatives.
Reﬂecting this close link between the management philosophy of the Wacoal Group and its CSR initiatives, thecurrent medium-term management plan calls on the Groupto advance CSR initiatives as a key management strategy.
Incorporating CSR initiatives in its business activities as a key
management strategy enables the Wacoal Group to communicate its unique business management stance to more
stakeholders. The Group will build further relationships oftrust with society by advancing CSR initiatives in all businessprocesses, taking CSR into consideration in business management, and ensuring each executive and employee meets society’s demands and expectations.
The Wacoal Group markets products in 66 countries,
includes 66 companies with operating bases in 22 countries,
and has 23 manufacturing bases in 11 countries. Approximately
more than 8,000 beauty advisors sell the resulting ﬁnishedinnerwear at roughly 22,300 sales areas worldwide. In Japanand overseas, we sell about 45.4 million brassieres annually.
Given that numerous women support our manufacturing andpurchase our products, we feel a natural obligation to be acompany empathetic to women.
However, the scope of the Wacoal Group’s responsibility is
not limited to women. Our stakeholders include shareholders,

Wacoal Group’s CSR

investors, business partners, employees and their families, local
communities, NPOs (nonproﬁt organizations) and NGOs
(nongovernmental organizations), and government bodies.
Therefore, we want to establish bonds of mutual trust with allof these stakeholders and earn a higher level of social trust.
The Wacoal Group’s CSR Management
The Wacoal Group advances CSR initiatives based on
ISO 26000 standards, which the International
Organization for Standardization publishedin November 2010 (Japan Standards Association, 2010).

The medium-term management plan launched in April 2013sets out establishing a stronger global presence for the Wacoal
Group as a target corporate proﬁle. By developing businesses
globally, the Group will increase its international inﬂuence.
Based on an international consensus, the ISO 26000 standards deﬁne sustainable development as unceasing efforts bysociety at large aimed at realizing a high quality of life, health,and prosperity. To identify and clearly prioritize each Group
company’s tasks and advance CSR initiatives in areas where it
can exploit unique strengths, the Group has prepared the
Wacoal Group’s Basic Policies on CSR in accordance withthe seven core subjects of the ISO 26000 standards. And, weare rigorously informing employees about these policies.
Having identiﬁed the strategic signiﬁcance of the uniquefeatures of its business, the Group will tackle social problems
and continue social business programs through its mainstay
business. As a result of these efforts, we will further enhance
our brand power and competitive advantages while passing on
the management philosophy we have inherited.

Social Business Programs through Wacoal’s Main BusinessBusiness
activities
Management
Philosophy

CSR

Uniquepersonalityof Wacoal

Wacoal’s
CSR

Code of Ethics
Code of Conduct
Pink Ribbon Activities

Remamma Project

Bra Recycling Campain

Breast Cancer Examination
Support Project

Tsubomi School

Wacoal Human Science
Research Center

CSR Goals
Basic Policies
on CSR

44

Wacoal* Group’s Basic Policies on CSR
The Wacoal Group’s basic policies for CSR initiatives accord with the seven core topics of the ISO 26000 standards.
We established these policies in June 2013 to clarify the direction of our CSR initiatives.
The Wacoal Group’s basic policies for CSR initiatives summarize the direction in which the Group should advance CSR initiatives.
In addition to complying with laws and regulations, the policies reflect respect for international codes of conduct, including the Organization
for Economic Cooperation and Development’s Guidelines for Multinational Enterprises, the United Nations Global Compact, and theInternational Labour Organization’s Core Labour Standards.

1 	OrganizationalGovernance2 	Human Rights

Wacoal shall strengthen corporate governance with the aim of earning the trust of all stakeholders by being a valuable
company. Wacoal shall ensure the transparency and equitability of its business management based on respect for international standards of conduct and in accordance with sound societal norms. Further, Wacoal shall implement corporate activities that earn stakeholders’ trust and enhance enterprise value by strengthening compliance and corporate governancesystems and remaining accountable to stakeholders.



3 Labor Practices

Based on its management philosophy, Wacoal has put mutual trust and respect for people at the center of business
management since its establishment. Believing respect for people to be a corporate responsibility, Wacoal shall further its
basic understanding of human rights with respect to the right to live freely and with dignity and reflect this understanding in
its business activities. Accordingly, Wacoal shall respect individuals’ diverse values, personalities, and privacy. Furthermore
Wacoal shall prevent acts that disregard human rights, including discriminatory language or behavior with respect to race,
religion, gender, nationality, physical or mental disabilities, or age; violent behavior; sexual harassment or authority-basedharassment; and child labor or forced labor.



4 The Environment

Based on a management philosophy that emphasizes mutual trust, Wacoal shall deepen mutual trust with employees andcreate workplace conditions that enable all employees to work actively and with a sense of fulfillment. Wacoal shallenhance measures aimed at creating a dynamic corporate culture by managing employees’ health and safety in theworkplace, training personnel, being receptive to diverse personnel and values, balancing work and private life, and building
sound relationships between labor and management.
In addition, Wacoal shall respect laws and regulations relating to labor, respect societal norms and international
standards of conduct, establish employment regulations and other personnel regulations, and create workplaces that are
comfortable to work in.



5 Fair Operating

Wacoal shall promote environment-friendly business activities reflecting the view that protecting the environment is a corporate responsibility. Wacoal shall provide products that place little burden on the environment and prevent pollution by pursuing environment-friendly initiatives in a variety of processes related to products, from design and materials development
through to manufacturing, distribution, and sales. Also, Wacoal shall adhere to environmental laws and regulations and its
independent management standards, heighten employees’ environmental awareness through education and cooperatewith and contribute to environmental preservation activities. Moreover, Wacoal shall disclose to the general public the progress of initiatives based on its environmental policies and other environmental preservation initiatives and advance initiatives
that are integrated with society.



Practices

6 Consumer Issues

The cooperation of business partners and various suppliers, contractors, and plants supports Wacoal’s manufacturing andsales activities and enables it to provide products customers love.
Wacoal shall respect international standards of conduct and adhere to laws and regulations and sound corporate ethics
to ensure that it engages in fair business transactions and conducts business in a fair and open manner. Specifically, Wacoal
shall comply with the Antimonopoly Act, the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors,
the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceutical Affairs Act, and the Unfair
Competition Prevention Act; protect and use its intellectual property rights and rigorously respect the intellectual property
rights of others. In conjunction with these activities, Wacoal shall educate employees about these issues.

(responding to customers)

Business Foundation

7 Community

Wacoal believes valuing each customer and responding to customer feedback sincerely is a duty and the key to earning
trust. Accordingly, Wacoal shall learn from customer feedback and reflect it in products and services to provide products
and services customers love. Wacoal shall ensure the quality of all operations involved in product lifecycles rigorously,
including research and development, product planning, manufacturing, sales, distribution, and customer support. In these
efforts, Wacoal shall protect customer’s rights, comply with laws and regulations related to consumer protection, andprovide safety and peace of mind. Furthermore, through its web site and other media, Wacoal shall disclose a wide range
of information to customers and promote fair activities.



Involvement andDevelopment

Wacoal regards contributing to the development of local communities as an important social responsibility.
With a view to developing local communities, Wacoal shall capitalize on the unique expertise and culture it has cultivatedto benefit society at large, implement social initiatives that it is uniquely capable of realizing, respect relationships withstakeholders, and deepen communication with them.
Also, in each of the regions where it has businesses Wacoal shall respond to society’s requests and expectations andcontribute to society in areas where Wacoal can bring strengths to bear.

* “Wacoal” refers to Wacoal Holdings Corp. and its four wholly owned subsidiaries in Japan and Wacoal Corp. and its seven wholly owned subsidiaries in Japan.

45

The Wacoal Group’s System for Advancing
CSR Initiatives
In 2004, the Wacoal Group established the CSR Promotion
Office, which is dedicated to establishing CSR policies, coordinating with related divisions, gathering information, andconducting in-house educational initiatives. Aiming to further
this office’s ability to disseminate information internally andexternally and communicate with society, we transferred it to

the Investor Relations & Public Relations Office in 2011.
In adherence with the Group’s advancement of CSR initiatives as a management strategy, since 2013 we have been
preparing guidelines for policies, goals, and targets; discussing
problems; monitoring the progress of initiatives; and sharing
information among divisions. Divisions responsible for managing CSR lead efforts to advance CSR initiatives thattranscend divisional boundaries.

Environmental Conservation Activities
A company’s management philosophy is the answer to why it exists and for what purpose. For the Wacoal Group, CSR is
nothing other than putting the Wacoal Management Philosophy, which comprises Mission, Vision, and Values, into action.

Environmental Policies
1 ‌We will reduce environmental loads generated from businessactivity processes through business improvement initiatives andmake efforts to prevent environmental pollution.
2 ‌Establishing environmental targets focusing on the following
items, we will try to accomplish the targets based on environmental management systems.
(1) Energy conservation, resources saving, and reduction of
CO2 emissions(2) Waste reduction and recycling(3) Development of products and technologies that are kind topeople and the environment(4) Purchase of product materials, materials, and office supplies
that are kind to people and the environment

3 ‌We will comply with environmental laws and ordinances,and our voluntary management standards.
4 ‌We will raise our employees’ environmental awarenessthrough ecological education and make efforts to be able tocooperate and contribute to environmental preservation
activities as a member of local communities.
5 ‌We will disclose our environmental policies and approaches toenvironmental preservation, aiming to preserve the environment
through wide-ranging social partnerships.

Environmental Targets
In accordance with our environmental policies, we prepare a medium-term environmental action plan every three years
and conduct environmental management initiatives in a planned, systematic way to achieve the targets set out in the plan.
Medium-Term Environmental Action Plan (April 2013—March 2016) 

1 ‌Improve coordination of environmental management systemthroughout Wacoal Group
Analyze data for whole Group, support environmental initiatives

2 ‌Promote environmental protection activities based on idea that“business improvement equals environmental improvement”
 iew environmental improvement as part of business activities,
V
as far as possible quantify operations to check achievements

3 ‌ Manage CO2 emissions rigorously earn from Challenge 25, by 2020 reduce 25% versus 2002 (ﬁrstLyear Group conﬁrmed its CO2 emissions) or maintain at this level4 ‌Promote green purchasing reate data showing green purchasing percentage to encourageCgreen purchasing

5 ‌Reinforce waste management
S eparate garbage rigorously, continue improvement activities toeliminate wastefulness
Maintain recycle rate at 90% or higher46

6 ‌Reinforce environmental risk management
 anage and dispose of PCB (polychlorinated biphenyl)Mwaste appropriately

7 ‌Disclose environmental information
 isclose environmental information through Wacoal Holdings’D
web site8 ‌Raise employees’ environmental awareness throughenvironmental education
 ontinue conducting environmental education for employees
CMake every June Environment Month, increase environmental
awareness

9 ‌Contribute to preservation of local environment as member of
local community
 onduct cleanup and beautification initiatives in vicinity ofCGroup’s buildings
Promote creation of networks among operating bases
and local communities

FINANCIAL
SECTION
48 Management’s Discussion and Analysis
54 Consolidated Balance Sheets
56 Consolidated Statements of Income
56 Consolidated Statements of Comprehensive Income (Loss)
Financial Section
����

57 Consolidated Statements of Equity
58 Consolidated Statements of Cash Flows
59 Notes to Consolidated Financial Statements
83 Independent Auditors’ Report
84 Management’s Annual Report on Internal Control
Over Financial Reporting (Translation)

86 Independent Auditors’ Report47

MANAGEMENT’S DISCUSSION AND ANALYSIS
Wacoal Holdings Corp. and Subsidiaries

Financial information contained in this section is based on the
consolidated financial statements included in this integrated report,
which have been prepared in accordance with generally accepted
accounting principles in the United States (U.S. GAAP). The Wacoal
Group consists of 1 holding company (the Company), 56 consolidated subsidiaries, and 10 equity-method affiliates.
The Wacoal Group is engaged in the manufacturing, wholesaling,
and—for certain products—retailing of women’s foundation
garments and lingerie, nightwear, children’s underwear, outerwear andsportswear, hosiery, and other textile products. Other operations
include restaurant businesses, cultural and service-related operations,and the construction of interiors for commercial premises.

Share of Net Sales

Overview We are a leading designer, manufacturer, and marketer in Japan of
women’s intimate apparel, with the largest share of the Japanesemarket for foundation garments and lingerie. Foundation garments(primarily brassieres and girdles) and lingerie (primarily slips, braslips, and women’s briefs) accounted for approximately 74.7% of ourconsolidated net sales for fiscal year 2014. We also design, manufacture, and sell nightwear, children’s underwear, outerwear, sportswear,
hosiery and other apparel and textile products, and several
other services.

Over the past five fiscal years, fluctuations in our sales have typically reflected changes in unit volume, as average unit prices havegenerally remained stable during this period.

• Net Sales

We principally generate revenues from sales of innerwear (consistingof foundation garments and lingerie, nightwear, and children’s underwear), outerwear and sportswear, hosiery, textile products, andother products.
For fiscal year 2014, approximately 81% of the net sales of Wacoal
Corp. (the net sales of which account for approximately 61% of ourconsolidated net sales) were apparel sales made on a wholesale basis
to department stores, general merchandisers, and other generalretailers and approximately 17% were apparel sales made through ourown specialty retail stores, catalogue sales, and the Internet. Sales
from our other businesses (which include cultural products and otherservices) constituted the remaining 2% of Wacoal Corp.’s net sales forfiscal year 2014.

2014

Hosiery

0.9%

Outerwear andsportswear

Textile products
4.4%

8.8%

Children’s
underwear

Other
5.6%

0.8%

Foundation garments
and lingerie
74.7%

Nightwear
4.8%• Cost of Sales

Our cost of sales arises principally from material and manufacturingcosts related to the production of our apparel products.
• Selling, General and Administrative Expenses

Our selling, general and administrative expenses principally consist of
employee compensation and benefit expenses and promotional
expenses, such as advertising costs and renovation costs. Other
selling, general and administrative expenses include shipping andhandling costs, payment fees (including outsourcing payments), andrental payments for our specialty retail stores.
• Key Industry Trends

We believe that the following have been key trends in our industry
during the last two fiscal years:(i) In the domestic innerwear market, sales shifted from a shrinking
trend to flat sales due to changes in the consumption environmentand distribution industry, and other factors including a decline in thefemale population. The purchase price range and the averagepurchase unit price per innerwear product continue to decline. In
addition, the number of purchased items and the number of items inpossession per customer are declining.

Net Sales to External Customers (and Percentage) by Product Category
Millions of yen
2014

2013

2012

Innerwear
Foundation Garments and Lingerie¥144,783

74.7%¥132,525

73.5%¥124,303

72.3%

Nightwear

9,301

4.8%

9,221

5.1%

9,390

5.5%

Children’s Underwear

1,475

0.8%

1,465

0.8%

1,530

0.9%

155,55980.3%

143,21179.4%

135,223

78.7%

Outerwear and Sportswear

16,9548.8%

17,287

9.6%

16,371

9.5%

Hosiery

1,791

0.9%

1,559

0.9%

1,646

0.9%

Textile Products

8,577

4.4%

7,580

4.2%

8,226

4.8%

Other

10,9005.6%

10,593

5.9%

10,431

6.1%

Total

¥193,781

100%¥180,230

100%¥171,897

100%

Total Innerwear

48

(ii) Specialty apparel and other manufacturers entered the innerwear
market. These manufacturers offer their products by focusing on newelements, such as fashionability, lifestyle, and price, rather than function and quality. Because the economic downturn has led consumers
to become more price conscious, these new manufacturers and others
have achieved a greater market share.
(iii) These manufacturers and other competitors strengthened theircost reduction efforts by, for example, sourcing fabric and producing
garments in lower-cost countries in Asia. Sales in Japan of lowerpriced women’s innerwear garments manufactured in these countries
increased, leading to an intensification of price competition in our
industry. The recent development and tendency of general merchandisers producing their own low-priced “private brand” merchandise
accelerated these trends.
(iv) Although catalogue marketing has made little progress, new sales
strategies, such as e-commerce and television marketing, have led tomore diversified sales channels and exposure to new consumer groups.
We have taken steps for two fiscal years to address these key
industry trends to build on the core strengths of our market position
and brand awareness among Japanese consumers. We continue toseek to sell higher-end products to consumers seeking high-quality
innerwear garments and to mitigate the adverse impact on sales andmargins from lower-priced garments. We have taken steps to reduce
our cost structure, such as producing more products in lower-cost
countries in Asia, consolidating and streamlining our product distribution centers and reviewing indirect expenses. We are also seeking
to expand sales in overseas markets—in particular China, the UnitedStates, and Europe, as well as in the ASEAN region, where we havebeen trying to increase sales through our directly managed stores andwebsite. Additionally, we intend to extend our innerwear productofferings into the midprice range in our product mix to help us reacha broader consumer base. We will continue to implement these steps
and evaluate other strategies to address challenges and opportunities
in the industry going forward.
Summary of Business Results iaries (collectively, “Wacoal Eveden”), which became our subsidiaryin April 2012, from its former fiscal year end to March 31 in order tomore closely conform the fiscal year end of Wacoal Eveden with thatof its parent company. Accordingly, the results for the previous fiscal
year of Wacoal Eveden which had previously been stated for a periodof 9 months have been restated for a period of 12 months, and ourgroup’s consolidated results for the previous fiscal year have been
restated accordingly.
Sales:		193,781 million yen (an increase of 7.5% ascompared to the previous fiscal year)
Operating income:	13,860 million yen (an increase of 63.1% ascompared to the previous fiscal year)
Pre-tax net income:	15,033 million yen (an increase of 37.4% ascompared to the previous fiscal year)
Net income attributable to Wacoal Holdings Corp.:			10,106 million yen (an increase of 28.2% ascompared to the previous fiscal year)

Cost of Sales

Our cost of sales increased 7.6% from 84,548 million yen for fiscal
year 2013 to 91,008 million yen for fiscal year 2014. Cost of sales asa percentage of net sales increased 0.1% from 46.9% for fiscal year
2013 to 47.0% for fiscal year 2014 due to an increase in the ratio ofsales achieved by our domestic subsidiaries with a high cost rate, in
addition to an increase of returned products at Wacoal Corp.
Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased 5.4% from84,331 million yen for fiscal year 2013 to 88,913 million yen forfiscal year 2014. On the other hand, the selling, general and administrative expenses as a percentage of net sales decreased 1.0% from
46.8% for fiscal year 2013 to 45.9% for fiscal year 2014. Thisdecrease was due to the suppression of marginal cost, while growth insales was mainly from our existing business.

• Summary of Operations
Goodwill and Other Intangible Assets

At the end of fiscal year 2013, we examined potential impairment
charges on the trademarks, customer relationships, and goodwill, all ofwhich are recorded as other intangible fixed assets of Peach John,
pursuant to its business plan, and accordingly, we recorded an impairment charge of 2,852 million yen in total. There were no impairment charges for fiscal year 2014.
Operating Margin

Our operating margin increased 2.5% from 4.7% for fiscal year 2013
to 7.2% for fiscal year 2014. This increase was mainly due to anincrease in sales, as well as our successful efforts in improving thepercentage of the selling, general and administrative expenses and theelimination of the impairment charges recorded in connection with
Peach John.
Other Income/Expenses

We recorded 1,173 million yen as other income, a decrease of 1,268
million yen, as compared to 2,441 million yen of other income

49

Financial Section

Our group entered the first year of our three-year mid-term plan(from fiscal 2014 to fiscal 2016), and we (primarily Wacoal Corp., ourcore operating entity) made efforts to expand our share of sales while
responding to the diversifying domestic women’s innerwear market,
establish an organizational structure for our business other than thewomen’s innerwear business and strengthen growth by actively developing our overseas business.
As a result of the above, with respect to our consolidated businessresults for the fiscal year ended March 31, 2014, overall sales exceeded
the results for the previous fiscal year as a result of increased sales
from Wacoal Corp., our core operating entity, due to the last-minutedemand before the sales tax hike, the expansion of sales attributableto our overseas business, as well as the influence of the exchange rate.
Operating income exceeded the results for the previous fiscal year
mainly due to the increased profits from our overseas subsidiaries andthe elimination of the impact of the impairment loss on intangible
fixed assets which we recorded in the previous fiscal year.
As of the end of the fiscal year ended March 31, 2014, we havechanged the fiscal year end of Wacoal Eveden Limited and its subsid-

recorded for fiscal year 2013. This decrease was mainly due to thegain on sale and exchange of marketable securities and investments
decrease of 2,124 million yen from fiscal year 2013.
Net Income Attributable to Wacoal Holdings Corp.

Net income attributable to Wacoal Holdings Corp. for fiscal year
2014 was 10,106 million yen, an increase of 2,226 million yen ascompared to fiscal year 2013 as a result of improved operating
margin, despite a decrease in other income.

performance of our internet sales, despite the poor performance of
our summer and winter catalog products.
In summary, overall sales attributable to Wacoal Business(Domestic) exceeded the results for the previous fiscal year. With
respect to profitability, our operating income exceeded the results forthe previous fiscal year due to an increase in sales and our successful
efforts in cost reduction.
Sales:		118,085 million yen (an increase of 2.1% ascompared to the previous fiscal year)• Summary of Operations by Operating Segment
Wacoal Business (Domestic)compared to the previous fiscal year)

In our Wacoal brand business, sales of core brassieres showed favorable
performance, due to the sales of certain campaign products andbrands in certain sales channels which gained support fromconsumers. Despite poor sales performance of our bottom products
and undergarments which were impacted by climate instability,
overall sales of our Wacoal brand business exceeded the results for theprevious fiscal year as a result of our successful efforts in strengthening our product lineup mainly for our regular items in response tolast-minute demand.
In our Wing brand business, although sales of our products basedon “body aging” and high-end products performed poorly, sales ofour core brassieres exceeded the results for the previous fiscal year
due to an increase in the number of shops promoting collaboration
products with our major clients, as well as the impact of last-minutedemand. Overall sales of our Wing brand business remained
unchanged from the results for the previous fiscal year due to thepoor performance of our seasonal men’s innerwear products, despite
the favorable sales performance of men’s innerwear products forseniors.
In our retail business, although sales from existing stores of ourdirectly managed retail store, AMPHI, performed poorly, overall sales
exceeded the results for the previous fiscal year due to an expansion
in sales as a result of opening new stores, such as our newly-launched
innerwear coordinating shop, AMPHI FUL FRU, and the steady sales
performance of our Wacoal Factory Stores at outlet malls.
In our wellness business, although sales of running tights were
impacted by the products sold by our competitors, sales of our sports
conditioning wear “CW-X” brand expanded as a result of an increasein the opening of new sports specialty stores. Overall sales exceeded
the results for the previous fiscal year due to the steady performanceof women’s business shoes with high functionality.
In our catalog sales business, overall sales remained unchanged
from the results for the previous fiscal year due to the favorable

SG&A Expenses / % of Net Sales¥ billion/%
2014

45.9

88.9

2013

46.8

2012

46.3

79.6

2011

46.9

77.7

2010

48.0

78.5

50

Operating income:	9,284 million yen (an increase of 10.2% as

84.3

Wacoal Business (Overseas)

In the United States, we made aggressive efforts in expanding our
U.S. market share, sales areas and channels mainly at department
stores, which are our major clients. Sales exceeded the results for theprevious fiscal year as a result of strong performance of our core brassiere products in general, and as a result of our expanded internet
sales and Canadian business. In terms of profit, operating income
exceeded the results for the previous fiscal year due to the increased
sales as well as the impact of the exchange rate.
With respect to our business in China (from January 1 to
December 31), we made efforts in improving profitability andenhancing our presence in the middle-class market. Sales exceeded
the results for the previous fiscal year as a result of renovations
conducted at core shops, the effect of the promotional initiatives wetook with respect to our clients and the expanded internet sales.
Sales of LA ROSABELLE, our brand targeting the middle-classmarket, at department stores also showed strong performance. In
terms of profit, we recorded an operating profit (as compared to an
operating loss for the previous fiscal year) as a result of increased sales,
closing of less-profitable stores, discontinuation of underperforming
brands, and the effect of reducing costs.
With respect to Wacoal Eveden (from April 1, 2013 to March 31,2014), we continued with success to expand our market share andimprove profitability by exploiting our strengths in fuller bust bras in
the United Kingdom, certain European markets, North America andAustralia whilst strengthening our group synergies. Although sales
were affected by slow consumer spending in the United Kingdom
and Europe as well as unstable weather in major markets such as theUnited States, Fantasie brand sales, especially swimwear, saw strong
growth in all markets. In addition, lingerie and swimwear sales of ourbrand products for the fuller figure, Elomi and Goddess, showedfavorable performance as a result of our successful efforts in strengthening product development. Sales of our Wacoal branded products,
which we launched in Australia and New Zealand, and of our Huitproducts in Asia, showed strong performance and, as a result, overallsales of Wacoal Eveden exceeded the results for the previous fiscal
year. In terms of profit, operating income exceeded the results forthe previous fiscal year both as a result of our efforts to reduce ourcost of sales by reassessing our system of production in order toimprove margins by improving business efficiency, and also by
reducing other types of costs. The increased proportion of our sales
owing to North America, which is a highly-profitable region, also
contributed to the strong results.
Significant increases in net sales and operating income under the“Wacoal Business (Overseas)” segment are due to the influence of
exchange rates. In addition, Wacoal Eveden has been added to thissegment from our “Other” segment starting with the current fiscal year
and accordingly, the results for the previous fiscal year have been restated.
Sales:		43,636 million yen (an increase of 30.9% ascompared to the previous fiscal year)

Other

With respect to the business of Lecien Corporation (“Lecien”),
overall sales exceeded the results for the previous fiscal year, due tothe expanded business volume of our core women’s innerwear andouterwear products with our major clients. In terms of profit, werecorded an operating loss due to an increased cost rate which was
impacted by the exchange rate.
As for Nanasai Co., Ltd. (“Nanasai”), which engages in the manufacturing, sales and rental business of mannequins and interior designand construction of stores at commercial facilities, although the sales
and rental businesses performed poorly due to the impact of reduced
investment in reconstruction projects by our clients, overall sales
exceeded the results for the previous fiscal year as a result of thesteady results achieved by our construction business due to theincreased number of orders received. Operating income exceeded theresults for the previous fiscal year due to our efforts in cost reduction.
As a result of the above, with respect to the overall sales and operating income attributable to our “Other” segment, overall sales
exceeded the results for the previous fiscal year, while operating
income fell below the results for the previous fiscal year.

Operating income:	4,037 million yen (an increase of 99.6% ascompared to the previous fiscal year)

Sales:		19,578 million yen (an increase of 1.7% ascompared to the previous fiscal year)

Operating income:	456 million yen (a decrease of 39.5% as
Peach John Business

Sales:		12,482 million yen (an increase of 4.3% ascompared to the previous fiscal year)

Operating Income:	83 million yen (as compared to 2,701 million yen ofoperating loss incurred for the previous fiscal year)

compared to the previous fiscal year)• Summary of Operations by Region
Japan

With respect to Wacoal Corp., overall sales exceeded the results forthe previous fiscal year due to the impact of last-minute demand in
our core Wacoal and Wing brand products. With respect to profitability, our operating income exceeded the results for the previous
fiscal year due to an increase in sales and our successful efforts in cost
reduction.
With respect to Peach John, sales from our print catalogs showed
weak performance, while our internet sales showed strong performance as a result of the favorable performance of our new brassiere
products, which gained support from consumers, as well as our
successful promotional initiatives using TV commercials and theinternet. Similarly to our mail-order catalogs, net sales attributable toour domestic direct retail stores exceeded the results for the previous
fiscal year as a result of the strong performance of our flagship shops
and as a result of our opening of new stores, such as our new business-style shop in addition to the favorable performance of our new
products and the effect of our promotional initiatives. With respect
to profitability, operating income fell below the results for theprevious fiscal year due to the increased cost rate which was impacted
by the exchange rate.
With respect to the business of Lecien Corporation (“Lecien”),
overall sales exceeded the results for the previous fiscal year, due tothe expanded business volume of our core women’s innerwear andouterwear products with our major clients. With respect to profitability, operating income fell far below the results for the previous
fiscal year due to the increased cost rate which was impacted by theexchange rate.

51

Financial Section

With respect to Peach John Co., Ltd. (“Peach John”), sales from ourprint catalogs showed weak performance, while our internet sales
showed strong performance as a result of the favorable performanceof our new brassiere products, which gained support from consumers,
as well as our successful promotional initiatives using TV commercials
and the internet. Sales from our core mail-order catalogs, however,exceeded the results for the previous fiscal year due to year-end andnew year sales and the impact of last-minute demand.
Similarly to our mail-order catalogs, net sales attributable to ourdomestic direct retail stores exceeded the results for the previous
fiscal year as a result of the strong performance of our flagship shops
and as a result of our opening of new stores, such as our new business-style shop,YUMMY MART, in addition to the favorable performance of our new products and the effect of our promotional
initiatives. With respect to our directly-managed overseas stores, sales
from Hong Kong showed steady performance as a result of theenhanced merchandise policy and our establishing a solid base ofcustomers, while sales from China showed poor performance.
As a result of the above, overall sales from our Peach John businessexceeded the results for the previous fiscal year. In terms of profit,
we recorded operating income due to the elimination of the impactof the impairment loss on intangible fixed assets which we recordedin the previous fiscal year, despite the increased cost rate which was
impacted by the exchange rate.

As for Nanasai Co., Ltd. (“Nanasai”), which engages in the manufacturing, sales and rental business of mannequins and interior designand construction of stores at commercial facilities, although the sales
and rental businesses performed poorly due to the impact of reduced
investment in reconstruction projects by our clients, overall sales
exceeded the results for the previous fiscal year as a result of thesteady results achieved by our construction business due to theincreased number of orders received. Operating income exceeded theresults for the previous fiscal year due to our efforts in cost reduction.
As a result of the above, sales from our business in Japan amounted
to 149,715 million yen, an increase of 2.4% compared to the previous
fiscal year.
Asia/Oceania

With respect to our business in China, we made efforts in improving
profitability and enhancing our presence in the middle-class market.
Sales exceeded the results for the previous fiscal year as a result ofrenovations conducted at core shops, the effect of the promotional
initiatives we took with respect to our clients and the expanded
internet sales. Sales of LA ROSABELLE, our brand targeting the
middle-class market, at department stores also showed strong performance. In terms of profit, we recorded an operating profit (ascompared to an operating loss for the previous fiscal year) as a resultof increased sales, closing of less-profitable stores, discontinuation ofunderperforming brands, and the effect of reducing costs.
With respect to our directly-managed overseas stores of PeachJohn, sales from Hong Kong showed steady performance as a result of
the enhanced merchandise policy and our establishing a solid base ofcustomers, while sales from China showed poor performance.
As a result of the above, sales from our business in Asia/Oceania
amounted to 14,871 million yen, an increase of 26.3% as comparedto the previous fiscal year.
Europe/North America

With respect to our business in the United States, we made aggressive
efforts in expanding our U.S. market share, sales areas and channels
mainly at department stores, which are our major clients. Sales
exceeded the results for the previous fiscal year as a result of strong
performance of our core brassiere products in general, and as a result of
our expanded internet sales and Canadian business. In terms of profit,
operating income exceeded the results for the previous fiscal year due
to the increased sales as well as the impact of the exchange rate.
With respect to Wacoal Eveden in the United Kingdom, we madeefforts to expand our market share and improve profitability by

exploiting our strengths in fuller bust bras in the United Kingdom,
certain European markets, North America and Australia whilst
strengthening our group synergies. Our core brand products as wellas our brand products for the fuller figure showed favorable performance and, as a result, overall sales of Wacoal Eveden exceeded theresults for the previous fiscal year. In terms of profit, operating
income exceeded the results for the previous fiscal year both as aresult of our efforts to reduce our cost of sales by reassessing oursystem of production in order to improve margins by improving business efficiency, and also by reducing other types of costs. The
increased proportion of our sales owing to North America, which is ahighly-profitable region, also contributed to the strong results.
As a result of the above, sales from our business in Europe/North
America amounted to 29,195 million yen, an increase of 31.3% ascompared to the previous fiscal year.
Liquidity and Capital Resources 
Our current policy is to fund our cash needs from cash flows fromoperations, which allows us to secure working 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, 2014, we had credit facilities at financial institutions
totaling 37,938 million yen, and the unused lines of credit for shortterm financing amounted to 12,449 million yen. Of this credit,
7,316 million yen is available to Wacoal Holdings Corp., 3,545
million yen is available to Wacoal Service Co., Ltd., and 1,588 million
yen is available to Nanasai.
In general, most of our credit facilities have automatically renewed
terms, and we are not aware of any issues with respect to any of ourlenders 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 toprovide any necessary funds. Our borrowing requirements are notaffected by seasonality.
We are not aware of any restrictions on the transfers of funds froma subsidiary to a parent company in the form of a cash dividend, loan,
or cash advance. We believe our working capital is adequate for ourpresent requirements and for our business operations in the short tolong term.
Cash Flow Status 
The balance of cash and cash equivalents at the end of fiscal year
2014 was 30,658 million yen, an increase of 6,144 million yen ascompared to the end of the previous fiscal year.

Net Cash Provided by Operating Activities

Capital Investment¥ billion¥ billion

2014

8.9
12.3

2013
2012
2011
2010

52

3.5

2014

3.2

2013

10.1

2012

2.7

10.4

2011

2.7

9.5

2010

4.0

• Cash flow provided by operating activities

Cash flow provided by operating activities during the fiscal year 2014
was 8,949 million yen, a decrease of 3,360 million yen as comparedto the previous fiscal year, which reflects the result after adjusting thenet income of 10,377 million yen for depreciation expenses anddeferred taxes, as well as changes in assets and liabilities.
• Cash flow provided by investing activities

Cash flow provided by investing activities during the fiscal year 2014
was 1,658 million yen, an increase of 25,178 million yen as comparedto the previous fiscal year, due to proceeds from the sale and redemption of marketable securities and proceeds from the sale and redemption of other investments.
• Cash flow used in financing activities

Cash flow used in financing activities during the fiscal year 2014 was
5,554 million yen, an increase of 10,933 million yen as compared tothe previous fiscal year, due to the cash dividend payments.
Summary of Capital Investment, etc. 
The amount of capital investment for the fiscal year ended March 31,
2014, was 3,464 million yen. A majority of our capital investment
was used in the information system investment for our domestic
subsidiaries and maintenance and repair work implemented for thereal properties held by the Company.
The amounts of capital investment made in Wacoal Business(Domestic), Wacoal Business (Overseas), Peach John Business, andOther were 2,210 million yen, 621 million yen, 296 million yen, and
337 million yen, respectively.

53

Financial Section

Dividend Policy 
Our basic policy on profit distribution to shareholders is to makestable distributions based on consideration of our consolidated
performance, while seeking to increase our enterprise value throughactive investment aimed at higher profitability and to increase net
income per share. Based on our basic policy, we provide a fiscal yearend dividend once a year.
We also prescribe that the Company may distribute earnings
subject to the resolution of the Board of Directors’ meeting pursuant
to the provisions of Article 459 of the Companies Act.
Based on such policy, we plan to distribute the year-end dividendof 33.00 yen per share (an ordinary dividend of 30.00 yen and acommemorative dividend of 3.00 yen) as a distribution of earnings
for the current fiscal year. We have decided to pay a commemorative
dividend in commemoration of the 50th anniversary of our listing in
September 2014, in order to return profits to our shareholders fortheir support.
As for retained earnings, with the aim of improving our corporate
value, we have actively invested in expanding new points of contact
with consumers for our domestic business and investing in our overseas businesses. We also plan to use our retained earnings in our strategic investments for maintaining competitiveness and reinforcing
growth. With these efforts, we seek to benefit our shareholders by
improving future profitability. We also intend to flexibly acquire treasury stock, and we will try to improve capital efficiency and return
profits to our shareholders.

Research and DevelopmentOur research and development activities are mainly conducted by our
Human Science Research Center to achieve harmony between thehuman 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 arealso working on an even more advanced measurement of sensory
comfort. Our research and development activities focus onaddressing the proportional, physiological, and mental aspects ofgarment design. One of our most important research results was theenrichment 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 the basic study fromthree factors, which are pressure, heat, and touch. In 2005, we developed and created a new market for our breakthrough Style Science
series products, which support a healthy and beautiful body-making
by changing the concept from daily walking to exercise walking. In
2010, we conducted an analysis and announced principles on thephysiological changes associated with aging period from 20s to 50s.
We also strengthened development of new products coping withaging and we have been working on developing new functional
products based on the lifestyle habit of people with small physicalchanges associated with aging.
Our Human Science Research Center is promoting research anddevelopment, which is based on a survey analysis of body shapes andneeds of customers of the generation for which the products are
introduced and senior generation.
In terms of product development, during the fiscal year that
ended in March 2014, we proposed our new aging products and lifestyle modification support products. In addition, we have worked on
information development to raise awareness of the “night bust care”
and engaged in marketing support for the sales of sleep brassieres.
As a result of the above, we recorded 808 million yen for our
research and development during the fiscal year ended March 2014.
In order to promote “the realization of supporting industry for
women with unbounded living beauty,” we will make efforts toenrich our research and development activities that can contribute to
the improvements of customer satisfaction and corporate value basedon the key concept of beauty, comfort, and health. We will also work
toward strengthening product appeal and developing new products orservices that can gain support from and satisfy our customers.

Consolidated Balance Sheets

Millions of yen

Thousands of U.S.
dollars (Note 2)

2014

2013

2014

¥ 30,658
2,168
3,523
26,269(2,321)
40,211
4,848
4,132
109,488¥ 24,514
1,914
4,601
23,935(1,882)37,903
4,817
7,785
103,587$  297,708
21,05334,211
255,088(22,538)
390,474
47,077
40,124
1,063,197

21,99463,024
15,446
147
100,611(51,633)
48,97821,94861,498
15,104151
98,701(49,036)
49,665

213,576
612,002
149,990
1,428
976,996(501,389)
475,607

Investments in affiliated companies (Note 6)
Investments (Notes 3, 19 and 20)
Goodwill (Notes 7, 8 and 20)
Other intangible assets (Notes 7, 8 and 20)
Prepaid pension expense (Note 12)
Deferred income taxes (Note 16)
Other
		 Total other assets

18,89445,951
22,723
13,688
5,666
1,008
5,592
113,522

17,59942,36820,442
12,899
1,400
1,064
5,512
101,284

183,473446,213220,654
132,91955,0209,788
54,302
1,102,369

TOTAL¥271,988¥254,536$2,641,173

March 31, 2014 and 2013ASSETS
CURRENT ASSETS:

Cash and cash equivalents
Time deposits
Marketable securities (Notes 3, 19 and 20)
Notes and accounts receivable (Note 17)
Allowance for returns and doubtful receivables (Note 4)Inventories (Note 5)
Deferred income taxes (Note 16)
Other current assets (Notes 17, 19 and 20)
		 Total current assets

PROPERTY, PLANT AND EQUIPMENT:Land (Note 9)
Buildings and building improvements (Notes 9 and 11)
Machinery and equipment (Note 9)
Construction in progress		TotalAccumulated depreciation
		 Net property, plant and equipment

OTHER ASSETS:

See notes to consolidated financial statements.

54

Millions of yen

Thousands of U.S.
dollars (Note 2)

2014

2013

2014

¥ 16,630¥ 16,351$  161,488

1,064
10,657
5,764
7,085
1,224
695
3,489
46,608

1,442
10,961
6,008
6,927
4,559
898
3,358
50,504

10,332
103,486
55,97268,80011,886
6,749
33,880452,593

822
1,795
13,611
1,616
17,8441,516
1,802
10,201
1,688
15,207

7,982
17,431132,171
15,692
173,276

13,26029,587
151,468

13,26029,514145,306

128,763
287,308
1,470,849

			Total equity

2,310
11,606(227)
13,689(2,898)205,106
2,430
207,536(5,924)
9,310(1,928)1,458(2,892)
186,646
2,179
188,825

22,432
112,701(2,204)
132,929(28,142)
1,991,707
23,5972,015,304

TOTAL¥271,988¥254,536$2,641,173

LIABILITIES AND EQUITYCURRENT LIABILITIES:

Short-term bank loans (Note 9)
Notes and accounts payable:
		Trade notes		 Trade accounts (Note 17)
		Other payables
Accrued payroll and bonuses
Income taxes payable (Note 16)
Current portion of long-term debt (Notes 9 and 19)
Other current liabilities (Notes 19 and 20)
			Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Notes 9 and 19)
Liability for termination and retirement benefits (Note 12)
Deferred income taxes (Note 16)
Other long-term liabilities (Notes 11, 12 and 16)
			Total long-term liabilities
COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)
EQUITY:WACOAL HOLDINGS CORP. SHAREHOLDERS’ EQUITY (Notes 13 and 22):

Common stock, no par value 		 authorized, 500,000,000 shares in 2014 and 2013; issued 143,378,085 sharesin 2014 and 2013
Additional paid-in capital (Note 14)
Retained earnings
Accumulated other comprehensive income (Note 15):
		 Foreign currency translation adjustments
		 Unrealized gain on securities
		 Pension liability adjustments (Note 12)
			 Total accumulated other comprehensive income
Less treasury stock at cost - 2,539,371 shares and 2,533,728 shares in 2014 and 2013, respectively
			 Total Wacoal Holdings Corp. shareholders' equity
NONCONTROLLING INTERESTS

Financial Section

55

Consolidated Statements of Income
Wacoal Holdings Corp. and Subsidiaries

Millions of yen
Years Ended March 31, 2014, 2013 and 2012

Thousands of U.S.
dollars (Note 2)

2014

2013

2012

2014

¥193,781¥180,230¥171,897$1,881,734

91,00888,91381,891
79,629883,744863,401

179,921
13,86084,54884,331
1,197
1,655
171,731
8,499

161,520
10,377

1,747,145
134,589

Interest income
Interest expense
Dividend income
Gain or loss on sale or exchange of marketable securities and investments - net (Note 3)Valuation gain or loss on marketable securities and investments - net (Notes 3 and 20)
Other - net (Notes 1, 3 and 20)
		 Total other income (expenses) - net

97
(105)
831
84
(47)
313
1,173

85
(164)
789
2,208
(325)
(152)
2,441

112
(93)
724
25
(831)
(107)
(170)

942
(1,020)
8,070
816
(456)
3,039
11,391INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME OF AFFILIATEDCOMPANIES (Note 16)
INCOME TAXES (Note 16):

15,033

10,940

10,207

145,980

5,256
385
5,641
9,392
985
10,377(271)¥ 10,106

6,638(2,866)
3,772
7,168
939
8,107
(227)
¥  7,880

3,523
676
4,199
6,008
1,008
7,016
(103)
¥  6,913

51,0393,739
54,77891,202
9,565
100,767(2,631)$   98,136

Yen

U.S. dollars(Note 2)NET SALES (Note 17)
OPERATING COSTS AND EXPENSES:

Cost of sales (Notes 5, 12 and 17)
Selling, general and administrative expenses (Notes 1, 7, 10, 12 and 14)
Impairment charges on goodwill (Notes 8 and 20)
Impairment charges on other intangible assets (Notes 8 and 20)
		 Total operating costs and expenses
OPERATING INCOME
OTHER INCOME (EXPENSES):

Current
Deferred		 Total income taxes
INCOME BEFORE EQUITY IN NET INCOME OF AFFILIATED COMPANIESEQUITY IN NET INCOME OF AFFILIATED COMPANIES (Note 6)
NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.

Years Ended March 31, 2014, 2013 and 2012

2014

2013

2012

2014

¥71.75¥71.61¥55.95¥55.86¥49.08¥49.02

$0.70
$0.70

¥358.77¥358.03¥279.74¥279.29¥245.41¥245.12

$3.48
$3.48

NET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP. PER SHARE (Note 18):

Basic
DilutedNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP. PER AMERICANDEPOSITARY RECEIPT (5 shares of common stock) (Note 18):

Basic
DilutedSee notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)
Wacoal Holdings Corp. and Subsidiaries

Millions of yen
Years Ended March 31, 2014, 2013 and 2012

NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (Note 15):

Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustments
OTHER COMPREHENSIVE INCOME (LOSS)COMPREHENSIVE INCOMECOMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSCOMPREHENSIVE INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.
See notes to consolidated financial statements.

56

Thousands of U.S.
dollars (Note 2)

2014

2013

2012

2014

¥10,377¥ 8,107¥7,016$100,767

8,369
2,302
1,701
12,372
22,749(412)¥22,337

5,072
5,122
1,048
11,242
19,349(316)¥19,033

(782)
1,602
(974)
(154)
6,862
(79)
¥6,783

81,26822,354
16,518120,140
220,907(4,001)$216,906

Consolidated Statements of Equity
Wacoal Holdings Corp. and Subsidiaries

Millions of yen
Shares of
Outstanding
CommonStock(Thousands)

CommonStock

Additional
Paid-in
CapitalBALANCE, APRIL 1, 2011
Net income
Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp.
shareholders, ¥100 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stockShare-based compensation granted and exercised(Note 14)BALANCE, MARCH 31, 2012
Net income
Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp.
shareholders, ¥140 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stock
Acquisition of subsidiaries
Equity transactions with noncontrolling interests(Note 13)
Share-based compensation granted and exercised(Note 14)BALANCE, MARCH 31, 2013
Net income
Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp.
shareholders, ¥140 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stockEquity transactions with noncontrolling interests(Note 13)
Share-based compensation granted (Note 14)

140,848¥13,260¥29,401

BALANCE, MARCH 31, 2014

140,839

Years Ended March 31, 2014, 2013 and 2012

Retained
Earnings¥137,274
6,913

Accumulated
Other
Comprehensive
Income (Loss)

TreasuryStock¥ (9,565)¥(2,890)

(757)
1,601
(974)
(2,817)

Total Wacoal
Holdings Corp.
Shareholders’ Noncontrolling
EquityInterests¥167,480
6,913
(757)
1,601
(974)

¥1,900103(25)
1(2,817)
(47)

(15)
6
12
140,851

13,26046
29,447

141,370
7,880(9,695)

(15)
5

(15)
5

14
(2,886)60
171,496
7,880
4,992
5,113
1,048

4,992
5,113
1,048
(3,944)

1,932
227
80
9

(3,944)
(10)
1

17
3
140,844

13,26050
29,514145,306
10,1061,458

3(2,892)

8,234
2,296
1,701
(3,944)¥13,260¥151,468¥13,689

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

60
173,428
8,107
5,072
5,122
1,048

17

(181)

(164)

53
186,646
10,106
8,234
2,296
1,701

2,179
271
135
6

53
188,825
10,377
8,369
2,302
1,701

(148)

4
69
¥29,587(2,817)
(47)
(15)
5

208

(10)
1

(3,944)(6)
1¥169,380
7,016
(782)
1,602
(974)

(3,944)
(96)
(10)
1
208

(96)
(11)
1

Total Equity

(6)
0

(6)
0

¥(2,898)

4
69¥205,106(13)¥2,430(3,944)
(148)
(6)
0
(9)
69
¥207,536

Thousands of U.S. dollars (Note 2)
Additional
Paid-in
CapitalBALANCE, MARCH 31, 2013
Net income
Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp.
shareholders, $1 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stockEquity transactions with noncontrolling interests(Note 13)
Share-based compensation granted (Note 14)$128,763$286,599

BALANCE, MARCH 31, 2014

$128,763$1,411,012
98,136$ 14,158
79,95722,296
16,518TreasuryStock$(28,083) $1,812,449
98,136
79,95722,296
16,518(38,299)$21,159
2,631
1,311
58

(38,299)(1,437)
(59)
0

39
670
$287,308$1,470,849$132,929

(59)
0

39
670
$(28,142) $1,991,707(125)$23,597

Total Equity$1,833,608
100,767
81,26822,354
16,518(38,299)(1,437)
(59)
0
(86)
670
$2,015,304

See notes to consolidated financial statements.

57

Financial Section

CommonStockYears Ended March 31, 2014

Total Wacoal
Holdings Corp.
Shareholders’ Noncontrolling
EquityInterests

Consolidated Statements of Cash Flows
Wacoal Holdings Corp. and Subsidiaries

Years Ended March 31, 2014, 2013 and 2012

Millions of yen

Thousands of U.S.
dollars (Note 2)

2014

2013

2012

2014

¥10,377¥  8,107¥ 7,016$100,767

5,036
69
365
385
94

4,888
53
269
(2,866)
103

4,660
60
(155)
676
(35)
37

48,903
670
3,544
3,739
913

(84)
47
(272)

1,197
1,655
(2,208)
325
(359)

(25)
831
(451)

(816)
456
(2,641)(1,368)(339)
636(1,541)(827)(3,649)
20
8,949

1,438
(680)
(215)
(1,905)
(853)
3,215
145
12,309(1,589)(1,801)
(377)
1,973
(685)
(513)
438
10,060(13,284)(3,292)
6,176(14,964)(8,031)(35,434)
195
86,901(2,347)
2,291
4,685
(57)
113
(322)
24
(2,265)(1,199)762(1,846)836
1,578(3,828)
334
(340)
64
(2,475)
(855)
767
(461)

(515)
488
8,477
(8,707)79(79)
451(2,708)
(846)
90
(221)

(22,791)
22,24745,494(553)
1,097(3,127)
233(21,995)(11,643)
7,400

(8)
(16)
(3)
1,658

(17,070)(253)
29(23,520)

24(3,467)

(455)

(901)
(6)
0
(3,944)(148(5,554)
1,091
6,144
24,514¥30,658

10,524
353
(578)
2,039
(2,910)(10)
1(3,944)
(96)
5,379
361
(5,471)
29,985¥ 24,514

(690)
393
(71)
500
(82)
(15)
5
(2,817)(47)(2,824)(100)
3,669
26,316¥29,985(8,749)(59)
0(38,299)(1,437)(53,933)
10,594
59,662
238,046$297,708¥    988,305¥   1614,275¥    903,702$    952
80,647¥   582¥  1,450¥   429¥  3,775¥   126¥   352$  5,652

OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
		 Depreciation and amortization
		 Share-based compensation (Note 14)
		 Provision for returns and doubtful receivables - net
		 Deferred income taxes
		 Gain (loss) on sale or disposal of property, plant and equipment - net
		 Impairment charges on property, plant and equipment (Note 20)
		 Impairment charges on goodwill (Notes 8 and 20)
		 Impairment charges on other intangible assets (Notes 8 and 20)
		 Gain on sale or exchange of marketable securities and investments - net (Note 3)
		 Valuation gain or loss on marketable securities and investments - net (Notes 3 and 20)
		 Equity in net income of affiliated companies, less dividends
		 Changes in assets and liabilities:			 (Increase) decrease in notes and accounts receivable
			Increase in inventories
			 Decrease (increase) in other current assets			 (Decrease) increase in notes and accounts payable			 Decrease in liability for termination and retirement benefits			 (Decrease) increase 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 available-for-sale securities
Payments to acquire available-for-sale securities
Proceeds from redemption of held-to-maturity debt securities
Payments to acquire held-to-maturity debt securities
Proceeds from sales of property, plant and equipment
Capital expenditures
Payments to acquire intangible assets (Note 8)
Proceeds from sales of other investments
Payments to acquire other investmentsAcquisitions of subsidiaries, net of cash acquired and payments to acquire additional shares ofa subsidiary (Note 7)
Payments to acquire additional shares of an affiliated company
Other
			 Net cash provided by (used in) investing activities

(78)
(155)
(29)
16,100FINANCING ACTIVITIES:(Decrease) increase in short-term bank loans with three months or less maturity - net
Proceeds from issuance of short-term bank loans with more than three months maturity
Repayments of short-term bank loans with more than there months maturity
Proceeds from issuance of long-term debt
Repayments of long-term debt
Repurchase of treasury stock
Sale of treasury stock
Dividends paid on common stock
Dividends paid to noncontrolling interests
			 Net cash (used in) provided by financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

(100)

(4,418)(971)

ADDITIONAL CASH FLOW INFORMATION:
Cash paid for:		Interest
		Income taxes
NONCASH INVESTING ACTIVITIES:		 Fair value of certain marketable securities received in exchange for other marketable securities(Note 3)
		 Acquisition of fixed assets by assuming payment obligation
		 Sales of investments (Note 3)
See notes to consolidated financial statements.

58

Notes to Consolidated Financial Statements
Wacoal Holdings Corp. and Subsidiaries

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
maturity only if the Companies have the positive intent and ability tohold those securities to maturity. Available-for-sale securities arecarried at fair value with a corresponding recognition of unrealized
holding gains or losses (net of tax) in accumulated other comprehensive income or loss, a separate component of equity, until realized.
Equity securities that do not have readily determinable fair values arerecorded at cost. Gains and losses on sales of investments arecomputed based on cost determined using the average cost method.
If a decline in the fair value of marketable securities and investments is determined to be other than temporary, an impairment charge
is recorded in the consolidated statements of income. The Companies
periodically determine whether a decline in the fair value of marketable securities and investments is deemed to be other than temporary
based on criteria that include the duration of the market decline, theextent to which cost exceeds fair value, the financial position and business outlook of the issuer and the intent and ability of the Companies
to retain the impaired marketable securities and investments for a sufficient period of time for anticipated recovery in fair value.
Allowance for Sales Returns—Allowance for sales returns isestimated based on historical products returns experience, sales movements, and the overall retail industry situation.
Allowance for Doubtful Receivables—Allowance for
doubtful notes and receivables is estimated based on historical collection experience and additional information including current
economic conditions and creditworthiness of each applicable customer.
Inventories—Inventories are stated at the lower of cost or market,
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 and charges for customs duties.
Property, Plant and Equipment—Property, plant and equipment is stated at cost less accumulated depreciation and impairment
losses. Depreciation of property, plant and equipment is computed by
the declining-balance method, except for buildings acquired on orafter April 1, 1998, which are depreciated using the straight-line
method, based upon the estimated useful lives of the assets. The estimated useful lives are as follows:	Buildings and building improvements: 2 - 50 years (mainly 38 years)
Machinery and equipment:
2 - 20 years (mainly 5 years)
Depreciation expenses for the years ended March 31, 2014, 2013
and 2012 are ¥3,212 million, ¥3,037 million and ¥2,913 million,
respectively.
Impairment of Long-Lived Assets—The carrying values oflong-lived assets, held and used by the Companies, are evaluated for
impairment whenever there is an event or change in circumstancesthat indicates that such assets have been impaired or that the carrying
amounts of such assets might not be recoverable. The carrying
amount of a long-lived asset is not recoverable if it exceeds the sumof the undiscounted cash flows expected to result from the use andeventual disposition of the asset. That assessment shall be based on
the carrying amount of the asset at the date it is tested for recoverability, whether in use or under development. The impairment loss ismeasured as the amount by which the carrying amount of a longlived asset exceeds its fair value. The Companies recorded no impairment charges on long-lived assets for the years ended March 31, 2014

59

Financial Section

Basis of Financial Statements—Wacoal Holdings Corp. (the“Company”) and subsidiaries are predominantly engaged in one
industry, the manufacture and sale of apparel, including foundation
garments, lingerie, nightwear and outerwear in Japan, the UnitedStates of America, Europe and certain Asian countries.
The accompanying consolidated financial statements, stated inJapanese yen, have been prepared on the basis of 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 majority-owned subsidiaries(collectively, the “Companies”). All intercompany transactions andbalances are eliminated.
Some foreign subsidiaries of the Company have a fiscal year
ending December 31. The accounts of those subsidiaries are includedin the Company’s consolidated financial statements based on thesubsidiaries’ fiscal year. There were no material intervening events
that occurred with respect to these subsidiaries.
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
between 20% and 50%, although other factors are considered indetermining whether the equity method of accounting is appropriate.
Use of Estimates—The preparation of consolidated financial
statements in conformity with U.S. GAAP requires management tomake estimates and assumptions that affect the reported amounts ofassets and liabilities 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 time deposits (all of which are interest bearing) with original maturities of three months or less.
Foreign Currency Translation—Assets and liabilities of foreignsubsidiaries 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 oftax, are included in accumulated other comprehensive income, a separate component of equity. Exchange gains and losses resulting fromforeign currency transactions and the conversion of monetary assets andliabilities denominated in foreign currencies are included in otherincome (expenses) in the consolidated statements of income.
Foreign currency translation gains (losses) for the years ended
March 31, 2014, 2013 and 2012 were ¥161 million, ¥(146) million,and ¥(94) million, respectively. They have been included in other net of other income (expenses).
Marketable Securities and Investments—The Companies
classify their marketable securities and investments into one of three
categories: trading, held to maturity or available for sale. Trading
securities are bought and held principally for the purpose of sellingthem in the near term. Trading securities are recorded at fair value
and unrealized holding gains and losses on trading securities areincluded in earnings. Held-to-maturity securities are measured atamortized cost. The Companies classify debt securities as held toand 2013. The Companies recorded ¥37 million impairment charges
on long-lived assets for the year ended March 31, 2012 which has
been included in selling, general and administrative expenses.
Goodwill and Other Intangible Assets—Goodwill represents the excess of the purchase price of an acquired entity over thefair 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 value of eachreporting unit is compared with its fair value. If the carrying amountof a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed by comparing the carrying amountof reporting unit goodwill with its implied fair value. If the carrying
amount of reporting unit goodwill exceeds its implied fair value, an
impairment loss is recognized in an amount equal to that excess.
To test for impairment of other intangible assets with indefinite
useful lives, the carrying value of an intangible asset is compared with
its fair value. If the carrying amount of an intangible asset withindefinite useful life exceeds its fair value, an impairment loss isrecognized in an amount equal to that excess.
Other intangible assets with estimable useful lives consist
primarily of brands, customer relationships and software and areamortized over their estimated useful lives using the straight-line
method. The estimated useful lives are as follows:
Brands:			
20 - 25 years (mainly 25 years)
Customer relationships:
7 years
Software:		
5 years
Asset Retirement Obligations—The Companies have obligations arising from contractual commitments to remove 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 historical experience and recorded in other longterm liabilities in the consolidated balance sheets and are 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 determinedusing best estimate because the Companies’ lease contracts generally
have automatic renewal articles. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the longlived asset and depreciated over its useful life.
Termination and Retirement Plans—Termination and retirement benefits are accounted for in accordance with the guidance forretirement benefits. The Companies amortize net actuarial gains andlosses and prior service cost over the average employees’ remaining
service period by the declining-balance method and by the straightline method, respectively. Provisions for termination and retirement
benefits include those for directors of the Companies.
The Companies do not recognize a gain or loss on settlement of
the pension obligation when the cost of all settlements in a year isless than or equal to the sum of the service cost and interest cost
components of net periodic pension cost for the plan for the year.
Leases—Certain noncancelable leases are classified as capital leases
and the leased assets are included as part of property, plant and equip-

60

ment. Other leases are classified as operating leases and are not capitalized. The payments on such leases are recorded as expense. The rental
expense under operating leases is recognized on a straight-line basis.
Treasury Stock—The Companies account for treasury stock under
the cost method and include treasury stock as a component of equity.
Acquisitions—The Companies account for acquisitions using theacquisition method in accordance with the guidance for businesscombinations. The Companies allocate the purchase price to theassets acquired and liabilities assumed based on the estimated fairvalues at the date of acquisition, including intangible assets that canbe identified and named. The purchase price in excess of the fairvalue of the net assets is recorded as goodwill.
Revenue Recognition—The Companies recognize revenue onsales to retailers, mail order catalog sales and internet sales when (1)persuasive evidence of an arrangement exists, (2) delivery has
occurred resulting in transfer of title and risk of loss, (3) the sales
price is fixed or determinable, and (4) collectability is reasonably
assured. As for consignment sales, the Companies recognize revenue
when the products are sold to the ultimate customer. The Companies recognize revenue on direct retailing sales at the Companies’
directly managed retail stores at the point of sale to the customer.
Shipping and Handling Costs—Shipping and handling fees
billed to customers are classified in net sales. Shipping and handlingcosts are expensed as incurred. Shipping and handling costs for theyears ended March 31, 2014, 2013 and 2012 were ¥5,708 million,¥5,479 million and ¥5,773 million, respectively, and have been
included in selling, general and administrative expenses.
Advertising Expenses—Advertising costs are expensed as
incurred. Advertising expenses for the years ended March 31, 2014,2013 and 2012 were ¥14,295 million, ¥13,146 million and ¥12,665
million, respectively, and have been included in selling, general andadministrative expenses.
Research and Development Costs—Research and development costs are expensed as incurred. Research and development
costs for the years ended March 31, 2014, 2013 and 2012 were ¥808
million, ¥788 million and ¥801 million, respectively, and have been
included in selling, general and administrative expenses.
Consumption Taxes—Consumption taxes have been excluded
from sales.
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
statement and tax bases of assets and liabilities and tax loss carryforwards at presently enacted tax rates. A valuation allowance isrecorded 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 theend of the fiscal year. For those tax positions only where there isgreater than 50% likelihood that the tax position will be sustained,
the Companies record the largest amount of tax benefit that may
potentially be realized upon ultimate settlement with a taxing
authority that has full knowledge of all relevant information.
Share-Based Compensation—Share-based compensation is
accounted for in accordance with the guidance for stock compensa-

tion. The Company measures share-based compensation cost at the
grant date, based on the fair value of the award and recognizes thecost over the requisite service period, which is the vesting period.
The fair value of the award is estimated using the Black-Scholes
option-pricing model.
Derivatives—Derivative instruments, including certain derivative
instruments embedded in other contracts, are accounted for in accordance with the guidance for derivatives and hedging. Because suchderivative instruments are not designated as hedges, changes in thefair value are recorded in earnings.

Subsequent Events—In accordance with the guidance forsubsequent events, the Company has evaluated subsequent events
through June 27, 2014.
Change of Subsidiaries’ Fiscal Year Ends—For the year
ended March 31, 2014, certain subsidiaries changed their fiscal year
ends from December 31 to March 31 to more closely conform with
the Parent’s fiscal year end. Accordingly, the Companies have retrospectively adjusted the prior periods’ consolidated financial statements
to reflect the change. The effect of the retrospective application forthe year ended March 31, 2013 was as follows. There was no cumulative effect of the change on retained earnings as of April 1, 2012.
Millions of yen
2013

Consolidated balance sheet:
Total assets
Total liabilities
Total equity
Consolidated statement of income:Net income
Net income attributable to Wacoal Holdings Corp.
Consolidated statement of cash flows:
Operating activities
Investing activities
Financing activities
Cash and cash equivalents, end of the year

As Originally
Reported

As Adjusted¥253,803
65,799188,004¥254,536
65,711
188,825

7,834
7,623

8,107
7,880

12,741(23,436)
5,303
24,86012,309(23,520)
5,379
24,514
Yen

Earnings per share:
Net income attributable to Wacoal Holdings Corp.:
		Basic
		Diluted
Reclassifications—Certain reclassifications have been made to

the prior years’ consolidated financial statements to conform to thecurrent year’s presentation.
Recent Accounting Pronouncements:¥55.9555.86

ance does not have an effect on the Companies’ consolidated financial
position, result of operations, or cash flows since it relates only todisclosure requirements of accumulated other comprehensive income.
Revenue Recognition—In May 2014, the FASB issued a new
accounting guidance related to revenue recognition. This guidance isbased on the principle that revenue is recognized to depict the transfer
of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange
for those goods or services. This standard provides comprehensive guidance, and requires the disclosure of information to enable users of financial statements to understand the nature, amount, timing, anduncertainty of revenue and cash flows arising from contracts withcustomers. This guidance is effective for fiscal years beginning after
December 15, 2016 and interim periods within annual periods. The
company is currently evaluating the impact of adoption on the Company’s consolidated financial position, result of operations, or cash flows.

2.	TRANSLATION INTO U.S. DOLLAR STATEMENTS
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which the Company is incorporated andoperates. The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for convenience of readers outside ofJapan and have been made at the rate of ¥102.98 to $1, the noonbuying rate for yen in New York City as of March 31, 2014. Suchtranslations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at the aboveor any other rate.

61

Financial Section

Presentation of Comprehensive Income—In February
2013, the Financial Accounting Standards Board “FASB” issued new
guidance requiring additional disclosure for the amounts reclassified
out of accumulated other comprehensive income. The guidance
required disclosure of changes in accumulated other comprehensive
income by component. It also requires an entity to present information about significant items reclassified out of accumulated othercomprehensive income by component either on the face of the statement where net income is presented or as a separate disclosure in thenotes to the financial statements. The guidance is effective for fiscal
years and interim periods within those years, beginning after
December 15, 2012. The Company adopted this guidance from thefirst quarter beginning from April 1, 2013. The adoption of this guid-¥54.1254.04

3.	MARKETABLE SECURITIES AND INVESTMENTS
Held-to-Maturity and Available-for-Sale Securities—The fair value of debt and marketable equity securities classified as held tomaturity and available for sale is based on quoted market prices as of March 31, 2014 and 2013. The cost, gross unrealized gain and loss and thefair value of held-to-maturity and available-for-sale securities by major security type were as follows:
Millions of yen
2014

Available-for-sale securities:
Current:
		 National debt securities and municipal bonds
		 Corporate debt securities
		Mutual fund			Total
Noncurrent:		Equity securities
Held-to-maturity debt securities:
Current:
		 Corporate debt securities
Noncurrent:
		 Corporate debt securities

Cost

Gross
Unrealized Gain

Gross
Unrealized Loss¥    10500
2,483¥ 2,993¥     2428¥   4305¥5¥    10502
2,906¥ 3,418¥23,844¥20,333¥7¥44,170¥3¥   102¥0¥   105

Fair Value¥   419¥     3¥   422

Cost

Gross
Unrealized Gain

Gross
Unrealized Loss

Fair Value¥    10
1,200
2,532¥ 3,742¥     00373¥   373¥ 92¥11¥    101,191
2,903¥ 4,104¥23,927¥16,603¥ 4¥40,526¥   291¥     3

Millions of yen
2013

Available-for-sale securities:
Current:
		 National debt securities and municipal bonds
		 Corporate debt securities
		Mutual fund			Total
Noncurrent:		Equity securities
Held-to-maturity debt securities:
Noncurrent:
		 Corporate debt securities¥   294

There were no available-for-sale and held-to-maturity securities that have been in a continuous unrealized loss position for more than 12
months as of March 31, 2014 and 2013. Gross unrealized holding losses and fair values of available-for-sale and held-to-maturity securities, allof which have been in a continuous unrealized loss position for less than 12 months as of March 31, 2014 and 2013, were as follows:
Millions of yen

Available-for-sale securities:
Current:
		 National debt securities and municipal bonds
		 Corporate debt securities
		Mutual fund			Total
Noncurrent:		Equity securities
Held-to-maturity debt securities:
Current:
		 Corporate debt securities

As of March 31, 2014, the available-for-sale securities in a continuous unrealized loss position are composed of three equity securities
and two other securities. The severity of decline was less than 8.1%.
The Companies periodically determine whether a decline in the fairvalue of available-for-sale and held-to-maturity securities is deemed tobe other than temporary based on criteria that includes the duration ofmarket decline, the extent to which cost exceeds fair value, the financial
position and business outlook of the issuer and the intent and ability of62

Fair Value

2014
Gross
Unrealized Loss

Fair Value

2013
Gross
Unrealized Loss

¥ 10

¥0

467
¥477

5
¥5

¥  991296¥1,287

¥ 9
2
¥11

¥144

¥7

¥  157

¥ 4

¥102

¥3

the Companies to retain the impaired available-for-sale and held-tomaturity securities for sufficient period of time for anticipated recovery
in fair value as described in Note 1. No available-for-sale and held-tomaturity securities were identified that meet the Companies’ criteria
for recognition of an impairment loss on available-for-sale and held-tomaturity securities in unrealized loss position presented above. Therefore, the Companies do not believe the unrealized losses represent another-than-temporary impairment as of March 31, 2014 and 2013.

Future maturities of debt securities and mutual funds classified asavailable for sale excluding mutual funds without fixed maturities as ofMarch 31, 2014, were as follows:

Future maturities of debt securities classified as held to maturity asof March 31, 2014 were as follows:
Millions of yen

Millions of yen

Due within one year
Due after one year through five years
Total

Cost

Fair Value¥  2101,671¥1,881¥  215
1,778¥1,993

Due within one year
Due after one year through five years
Total

Cost

Fair Value

¥105
419
¥524

¥102
422
¥524

Proceeds from sales of available-for-sale securities and the gross realized gains or losses on the sales of available-for-sale securities during theyears ended March 31, 2014, 2013 and 2012, were as follows:
Proceeds from sales of available-for-sale securities during the year ended March 31, 2013, include accounts receivable of ¥3,775 million,
which is included in other current assets on the consolidated balance sheets.
Millions of yen

Proceeds from sales of available-for-sale securities
Gross realized gains on sales of available-for-sale securities
Gross realized losses on sales of available-for-sale securities

During the years ended March 31, 2013 and 2012, the Companies
exchanged certain equity securities for other marketable securities.
The Companies recorded the newly received securities at fair value
and recognized a gain of ¥40 million in the year ended March 31,
2012. There was no gain or loss recognized for the exchange transaction during the year ended March 31, 2013 as there was no difference
between the carrying amount of the security transferred and the fairvalue of the security received. There was no exchange of marketablesecurities for the year ended March 31, 2014.
The amount of impairment charges the Companies recognized on
available-for-sale securities in which declines in fair value were otherthan temporary were ¥47 million, ¥55 million and ¥823 million in theyears ended March 31, 2014, 2013 and 2012, respectively.
Trading Securities—A subsidiary in the United States ofAmerica has trading securities consisting of mutual funds, which arerecorded as marketable securities and investments at the fair value of¥683 million and ¥518 million as of March 31, 2013 and 2012,

2014

2013

2012

¥190
64

¥5,049
2,164
9

¥180
2

respectively. There were no trading securities consisting of mutual
funds as of March 31, 2014. The Companies recorded a loss of ¥9million, and a gain of ¥19 million for the years ended March 31,
2013 and 2012, respectively, that relate to trading securities still held
as of March 31, 2013 and 2012, respectively.
Cost-Method Securities—Investments in nonmarketable equity
securities for which there are no readily determinable fair values were
accounted for using the cost method and aggregated ¥1,362 millionand ¥1,365 million as of March 31, 2014 and 2013, respectively.
Investments in nonmarketable equity securities are reviewed annuallyor upon the occurrence of an event for other-than-temporary impairment. The Companies recognized impairment charges on investments in nonmarketable equity securities of ¥261 million and ¥8
million in the years ended March 31, 2013 and 2012, respectively.
There was no impairment charges on investments in nonmarketable
equity securities for the year ended March 31, 2014.

4.	VALUATION AND QUALIFYING ACCOUNTS
Information related to the Companies’ allowance for doubtful receivables was as follows:
Millions of yen
2013

2012

¥180

¥100

32
(11)
¥201

¥ 70
84
49
(23)
¥180

2014

2013

2012

¥ 1,7022,120(1,702)¥ 2,120¥ 1,390
1,702(1,390)¥ 1,702¥ 1,517
1,390(1,517)¥ 1,390

9
(39)
¥ 70

Information related to the Companies’ allowance for returns was as follows:
Millions of yen

Balance at the beginning of the year
Charged to costs and expenses
Balances utilized
Balance at the end of the year

63

Financial Section

Balance at the beginning of the year
Increase due to change in scope of consolidation
Charged to costs and expenses
Balances written-off/reversed
Balance at the end of the year2014

5. INVENTORIESThe components of inventories as of March 31, 2014 and 2013, were as follows:
Millions of yen

Finished products
Work in process
Raw materials
Total

2014

2013

¥34,504
3,496
2,211¥40,211¥32,398
3,635
1,870¥37,903

During the year ended March 31, 2013, a subsidiary in the United States of America settled an insurance claim and received cash proceeds of¥383 million related primarily to merchandise damaged by the impact of Hurricane Sandy, which made landfall in the Northeast of the UnitedStates of America on October 29, 2012. The subsidiary recorded the proceeds from the insurance settlement in cost of sales in the consolidated
statements of income for the year ended March 31, 2013.
6. INVESTMENTS IN AFFILIATED COMPANIESInvestments are accounted for using the equity method of accounting
if the investment provides the Companies the ability to exercise significant influence over an investee. Significant influence is generally
deemed to exist if the Companies have an ownership interest in thevoting stock of the investee between 20% and 50%, although otherfactors are considered in determining whether the equity method of

accounting is appropriate. The Companies record investments inequity method investees meeting these characteristics as “Investments
in affiliated companies.” Under the equity method, the Companies
record their proportionate share of an affiliated companies’ income orloss based on the most recently available financial statements.

The primary affiliated companies and percentage of ownership as of March 31, 2014 and 2013, were as follows:
Percentage of ownership (%)
Name of Investee

2014

2013

Thai Wacoal Public Co., Ltd
Shinyoung Wacoal Inc.
PT. Indonesia Wacoal
Taiwan Wacoal Co., Ltd.
House of Rose Co., Ltd.

34
25
42
50
24

34
25
42
50
24

Aggregate carrying amounts and fair values of investments in affiliated companies which have a quoted market price as of March 31, 2014
and 2013, were as follows:
Millions of yen

Carrying amount
Aggregate value of quoted market price

2014

2013

¥11,969
10,461¥10,787
8,650

The following tables represent the affiliated companies’ summarized information from the balance sheets as of March 31, 2014 and 2013, andstatements of income for the years ended March 31, 2014, 2013 and 2012.
Millions of yen

Current assets
Noncurrent assets
Total
Current liabilities
Long-term liabilities
Equity
Total

64

2014

2013

¥42,464
38,787¥81,251¥ 8,578
8,984
63,689¥81,251¥37,653
32,341¥69,994¥ 7,763
7,098
55,133¥69,994

Millions of yen

Net sales
Gross profit
Income before income taxes
Net income

2014

2013

2012

¥60,257
31,011
3,664
2,503¥53,229
27,8193,921
2,955¥51,690
27,765
4,753
3,302

Dividends received from the affiliated companies were ¥713 million, ¥580 million and ¥557 million during the years ended March 31, 2014,2013 and 2012, respectively.
Retained earnings include net undistributed earnings of affiliated companies in the amount of ¥15,458 million and ¥15,193 million as ofMarch 31, 2014 and 2013, respectively.

7. ACQUISITIONS
Eveden—On April 10, 2012, the Company acquired all of the sharesof Eveden Group Limited (currently Wacoal Eveden Limited,“Eveden”), which manufactures and sells innerwear and swimsuits for
women in Europe and the United States of America in the amountof ¥19,961 million, inclusive of ¥2,581 million of funds to repay
Eveden’s preexisting debts and of ¥3,597 million to acquire thepreferred shares and made it the Company’s wholly owned subsidiary.
The acquisition aims to expand the Company’s overseas operations.
This will enable the group to accelerate the Company’s globalization
strategy and to expand the target customer segment by effectively
utilizing sales channels, technology, management know-how andbrand strength of both companies.
The Company has been consolidating Eveden since April 1, 2012,
because the impact of the result of operations and the changes in thefinancial position of Eveden from April 1, 2012 to April 10, 2012,
was insignificant.

Acquisition-related costs were ¥456 million, of which ¥45 millionand ¥411 million had been included in the results of operations forthe years ended March 31, 2013, and 2012, respectively, in selling,
general and administrative expenses.
As a result of the purchase price allocation, the Company has
recognized ¥10,662 million of goodwill and ¥5,499 million of brandand these are classified as goodwill and other intangible assets, respectively, on the consolidated balance sheets. Goodwill is not deductible
for tax purposes. The amount of brand will be amortized based on
the estimated useful lives of 20 to 25 years.
During the year ended March 31, 2013, the Company adjusted
the fair values of assets acquired and liabilities assumed as of theacquisition date based on the information the Company obtained
subsequent to the acquisition date. These adjustments are reflected
retroactively to the fair values of assets acquired and liabilities
assumed as of the acquisition date.

Fair value of assets acquired, liabilities assumed and noncontrolling interests on the acquisition date were as follows:
Millions of yen
After
Adjustments

Notes and accounts receivable
Inventories
Other current assets
Property, plant and equipment
Intangible assets
Goodwill
Other fixed assets
Total¥ 2,106
3,244
936
710
5,524
10,748184
23,452¥ 2,106
3,244
1,037
710
5,524
10,662
184
23,467

Current liabilities
Long-term debt
Other long-term liabilities
Total
Noncontrolling interests
Net assets acquired

1,758
2,581
1,525
5,864
208
¥17,380

1,773
2,581
1,525
5,879
208
¥17,380

Financial Section

April 1, 2012

BeforeAdjustments

The above long-term debt was repaid during the year ended March 31, 2013.

65

8. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill—The changes in the carrying amount of goodwill for the years ended March 31, 2014 and 2013 were as follows:

During the current first quarter, the division of operating segments were changed. See Note 21 for further information.
Millions of yen
2014

Balance at the beginning of the year:
Goodwill
Accumulated impairment losses
		TotalForeign currency translation adjustments
Balance at the end of the year:
Goodwill
Accumulated impairment losses
		Total

Wacoal Business(Overseas)

Peach John
Segment¥11,272¥11,203(2,033)
9,170¥22,475(2,033)
20,442
2,281

11,203(2,033)¥9,17024,756(2,033)¥22,723

11,2722,281
13,553¥13,553

Total

Millions of yen
2013
Wacoal Business(Overseas)

Balance at the beginning of the year:
Goodwill
Accumulated impairment losses
		TotalGoodwill acquired during the year
Foreign currency translation adjustments
Impairment losses
Balance at the end of the year:
Goodwill
Accumulated impairment losses
		TotalPeach John
Segment¥11,203(836)
10,367(1,197)¥11,203(836)
10,367
10,662610(1,197)

11,203(2,033)¥ 9,170

22,475(2,033)¥20,442¥10,662610

11,272¥11,272

Total

There was no change in the carrying amount of goodwill for the year ended March 31, 2012.
During the year ended March 31, 2013, the Companies recorded impairment charges on goodwill of ¥1,197 million in the Peach John
Segment. See Note 20 for further information.
Other Intangible Assets—The components of acquired intangible assets excluding goodwill as of March 31, 2014 and 2013 were as follows:
Millions of yen

Year Ended March 31

Amortized intangible assets:
BrandsCustomer relationships
Software
Others		TotalUnamortized intangible assets:
Trademarks
Other		Total66

Gross Carrying
Amount2014
Accumulated
Amortization
and Impairment
Loss

Gross Carrying
Amount2013
Accumulated
Amortization
and Impairment
Loss¥ 6,991
3,361
8,480
1,461
¥20,293¥  627
3,214
5,494
543
¥9,878¥ 5,815
3,361
8,270
1,316
¥18,762¥  260
3,068
5,329
479
¥9,136¥ 5,316103¥ 5,419¥2,146¥ 5,316103¥ 5,419¥2,146¥2,146¥2,146Other intangible assets acquired during the year ended March 31,
2014 totaled ¥1,199 million which primarily consist of software of¥1,195 million with an estimated useful life of five years.
The gross carrying amounts of brands include foreign currencytranslation adjustments.
During the years ended March 31, 2014 and 2012, the Companies
recorded no impairment charge on other intangible assets. During
the year ended March 31, 2013, the Companies recorded an impairment charge on other intangible assets for the customer relationships
and trademarks of ¥68 million and ¥1,587 million, respectively, in the
Peach John Segment. See Note 20 for further information.

Aggregate amortization expenses for the years ended March 31,
2014, 2013 and 2012 related to other intangible assets were ¥1,824
million, ¥1,851 million and ¥1,747 million, respectively. Future estimated amortization expenses as of March 31, 2014, were as follows:Year Ending March 31

Millions of yen

Estimated amortization expense
2015
2016
2017
2018
2019
Total

¥1,382
1,001
924
819
593
¥4,719

9. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans as of March 31, 2014 and 2013, consisted of
the following:
Millions of yen

Unsecured bank loans

2014

2013

¥16,630¥16,351

The weighted-average annual interest rates on short-term bankloans as of March 31, 2014 and 2013 were 0.6% and 0.7%, respectively.
Unused lines of credit for short-term financing as of March 31,
2014 and 2013, aggregated ¥25,377 million and ¥24,637 million,
respectively. The Companies compensate banks for these facilities in
the form of commitment fees, which were not material during theyears ended March 31, 2014 and 2013.
Long-term debt as of March 31, 2014 and 2013, are summarized
below. The interest rates and maturities are for loans as of March 31, 2014.
Millions of yen

Collateralized bank loans, with floatinginterest at 4.5%, maturing through 2015
Collateralized bank loans, with fixedinterest at 1.0%—1.7%, maturing
through 2022Unsecured bank loans, with fixed interest
at 0.4%—1.5%, maturing through 2022
Total
Less current portionLong-term debt, less current portion

2014

2013

¥   12¥   26

311

351

1,194
1,517
(695)
¥  822

2,037
2,414
(898)
¥1,516

The annual maturities of long-term debt as of March 31, 2014,
were as follows:Year Ending March 31

Millions of yen

2015
2016
2017
2018
2019
Thereafter
Total

¥695
534
50
50
50
138
¥1,517A subsidiary has pledged assets as security for loans. As of March 31,
2014 and 2013, assets pledged as collateral for bank loans were as follows:
Millions of yen

Land
Buildings
Machinery and equipment
Total

2014

2013

¥  888595
21¥1,504¥  888638
30¥1,556

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

Financial Section

10. LEASESThe Companies lease most of their store premises, some of theirdistribution centers, and certain equipment. Most leases have automatic renewal provisions and allow the Companies to extend thelease term beyond the initial base period, subject to the terms agreed
at lease inception. Future minimum rental commitments on operating leases having a remaining noncancelable lease term in excess of
one year as of March 31, 2014 are presented below:

Year Ending March 31

2015
2016
2017
2018
2019
Thereafter
Total

Millions of yen¥  389
342
304
238
237
152
¥1,662

Rental expenses were ¥5,975 million, ¥5,780 million and ¥5,317
million for the years ended March 31, 2014, 2013 and 2012, respectively,
and have been included in selling, general and administrative expenses.

6711. ASSET RETIREMENT OBLIGATIONSThe Companies recorded the fair value of asset retirement obligations in order to recognize legal obligations associated with the removal ofleasehold improvements from leased facilities and return of the property to a specified condition when the lease terminates.
A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation was as follows:
Millions of yen

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

2014

2013

¥648
6
112
(43)
5
¥728

¥ 661
5
92
(113)
3
¥ 648

12. TERMINATION AND RETIREMENT PLANS
Employee Retirement Plans—The Company and certain

subsidiaries sponsor termination and retirement benefit plans thatcover substantially all employees. Benefits are based on the employee’s years of service, position and performance. If the termination is
involuntary or caused by death, the employee is usually entitled togreater payments than in the case of voluntary termination.
The Company and certain subsidiaries have a contributory
defined retirement benefit plan and several unfunded terminationplans administered by the Company and certain subsidiaries. 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 and retirement 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 andfunded status of the plans:Millions of yen

Change in benefit obligations:Benefit obligations at the beginning of the year
Service cost
Interest cost
Participants' contributions
Actuarial loss
Benefits paid from plan assets
Settlement paid from plan assets
Settlement paid by the Company and certain subsidiaries
Benefit obligations at the end of the year
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
Fair value of plan assets at the end of the year
Funded status at the end of the year

2014

2013

¥34,449
1,025
398
66
(258)
(879)
(995)
(94)
33,712¥34,135
849
602
68
1,005
(825)
(1,201)(184)
34,449¥34,178
3,659
1,709
66
(879)
(995)
37,738¥ 4,026¥31,607
2,748
1,781
68
(825)
(1,201)
34,178¥  (271)

Amounts recognized in the consolidated balance sheets as of March 31, 2014 and 2013, consist of:Millions of yen

Prepaid pension expense
Accrued expenses
Liability for termination and retirement benefits

68

2014

2013

¥ 5,666(63)(1,577)¥ 4,026¥ 1,400(87)(1,584)¥  (271)

Amounts recognized in accumulated other comprehensive income (loss), pre-tax, as of March 31, 2014 and 2013, were as follows:
Millions of yen

Actuarial loss
Prior service benefit

2014

2013

¥(1,346)
1,590¥  244¥(5,396)
2,164¥(3,232)

The accumulated benefit obligation for all defined retirement benefit plans as of March 31, 2014 and 2013, were as follows:
Millions of yen

Accumulated benefit obligation

2014

2013

¥33,712¥34,449

The projected benefit obligations and the fair value of the plan assets for the Company and certain subsidiaries’ pension plans with projected
benefit obligations in excess of plan assets, and the accumulated benefit obligations and the fair value of the plan assets for the Company andcertain subsidiaries’ pension plans with accumulated benefit obligations in excess of plan assets were as follows:
Millions of yen

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

2014

2013

¥2,369729¥2,333
662

2,369
729

2,333
662

Net periodic benefit costs for the Company and certain subsidiaries’ plans consisted of the following for the years ended March 31, 2014,2013 and 2012:
Millions of yen

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

2014

2013

2012

¥1,025
398
(803)
936
(574)
¥  982

¥ 849
602
(772)
1,298
(641)
¥1,336¥  833
725
(756)
1,208
(692)
¥1,318The unrecognized net actuarial loss and prior service benefit are being amortized over 12 years (the average remaining service life of active
participants) using the declining-balance method and the straight-line method, respectively.
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended March 31, 2014,2013 and 2012 were as follows:
Millions of yen

Current year actuarial gain (loss)
Amortization of actuarial loss
Amortization of prior service benefit

2014

2013

2012

¥3,114936(574)¥3,476¥  971
1,298(641)¥1,628¥(1,999)
1,208
(692)
¥(1,483)

Millions of yen

Actuarial loss
Prior service benefit

¥ 235
(492)

69

Financial Section

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next
year are summarized as follows:

The Company and certain subsidiaries use a measurement date of March 31 for their plans. The weighted-average assumptions used as ofMarch 31 in computing the benefit obligations shown above were as follows:
Discount rate
Rate of increase in future compensation

2014

2013

1.3%
0.0%

1.2%
0.0%

The weighted-average assumptions used as of March 31 in computing the net periodic benefit cost shown above were as follows:
Discount rate
Rate of increase in future compensation
Expected long-term rate of return on plan assets

The Company’s approach to establishing the discount rate is based
upon corporate bond indices. The discount rate assumption is based
upon the effective yields as of March 31, 2014 on the corporate bondindices whose maturity dates approximate the timing of the expected
future benefit payments.
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 based largely on assumptions about economic growth and inflation,
which are supported by long-term historical data. The estimated longterm rate of return is 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%.
The Company and certain subsidiaries’ investment strategy is tomaintain actual asset weightings within a preset range of target allocations. The Company and certain subsidiaries’ investments are broadly
diversified, consisting primarily of equity and debt securities. The
Company and certain subsidiaries believe these ranges represent anappropriate risk profile for the planned benefit payments of the plans

2014

2013

2012

1.2%
0.0%
2.5%

1.9%
0.0%
2.5%

2.4%
0.0%
2.5%

based on the timing of the estimated benefit payment.
The asset allocation as of March 31, 2014 and 2013, was as follows:
Equity securities
Debt securities
Life insurance company general accounts
Short-term financing

2014

2013

43.1%
36.6%
13.6%
6.7%

35.8%
37.8%
14.9%
11.5%

The target allocation percentages are reviewed and approved by
the Pension Committee. The actual allocations for 2014 and 2013
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 an agreement
between Wacoal Corp. and its employees and is not governed by thePension Committee. As such, the actual allocation percentage ofequity securities to the total plan assets is higher than the target allocation, and similarly, the actual allocation for some other types ofassets is lower than the target allocation.

The following tables present the Company and certain subsidiaries’ plan assets using the fair value hierarchy as of March 31, 2014 and 2013.
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. For the reference to each level, seeNote 20.
Millions of yen
2014

Equity securities:
Japanese companies
Pooled funds (a)Debt securities:
Pooled funds (b)Life insurance company general accounts
Other types of investments:
Hedge funds (c)Pooled funds (d)Short-term financing
		Total70

Level 1

Level 2

¥6,976¥6,976

Level 3

Total

¥ 9,280¥ 6,976
9,280

12,443
5,146

12,443
5,146

634
973
2,286
¥30,762

634
973
2,286
¥37,738

Millions of yen
2013

Level 1Equity securities:
Japanese companies
Pooled funds (a)Debt securities:
Japanese government bonds
Pooled funds (b)Life insurance company general accounts
Other types of investments:
Hedge funds (c)Short-term financing
		TotalLevel 2

¥5,159Total¥ 7,066¥ 5,159
7,066

8,883
5,094

2,476
8,883
5,094

1,577
3,923
¥26,543

1,577
3,923
¥34,178

2,476¥7,635

Level 3(a)	T his class includes common stock of approximately 24% Japanese companies and 76% foreign companies as of March 31, 2014 and those percentages were 27% and 73%, respectively, as ofMarch 31, 2013.
(b)	T his class includes approximately 41% of Japanese government bonds, 5% of Japanese municipal bonds, 25% of foreign government bonds, and 29% of corporate bonds as of March 31, 2014,
and those percentages were 37%, 4%, 33%, and 26%, respectively, as of March 31, 2013.
(c)	T his class is hedge funds that invest both long and short in debt securities as of March 31, 2014. This class includes hedge funds that invest both long and short at a ratio of in approximately
84% in debt securities, 8% in currencies and 8% in other investments as of March 31, 2013.
(d) This class includes approximately 38% of corporate bonds, 36% of insurance swaps, 26% of Short-term funds as of March 31, 2014.

Equity securities and debt securities presented in Level 1 areprimarily valued using a market approach based on the quoted
market prices of identical instruments. Pooled funds in equity securities or debt securities and hedge funds which are categorized in Level
2 are valued by the sponsor of the funds primarily based on quoted
prices in both active and inactive market for identical instruments
which comprise funds. Life insurance company general accounts
include contracts with the insurance companies with guaranteed rateof return and capital, and those values are based on the sum of original value and return.
The Company and certain subsidiaries’ funding policy for thefunded plans is to contribute amounts computed in accordance withactuarial methods accepted by Japanese tax law. The Company andcertain subsidiaries expect to contribute ¥1,656 million to their plansin the year ending March 31, 2015.
The following benefit payments, which reflect expected futureservices, as appropriate, are expected to be paid:
Year Ending March 31

2015
2016
2017
2018
2019
Thereafter

Millions of yen¥1,983
2,070
2,151
2,108
2,067
9,737

71

Financial Section

Multiemployer Plan—A subsidiary participated in a multiemployer plan, Kyoto Orimono Oroshisho Employee Pension Plan,
but withdrew from the plan by paying a special contribution as acondition of withdrawal in the amount of ¥1,580 million during theyear ended March 31, 2012. The subsidiary recorded the estimatedwithdrawal liability of ¥774 million as of March 31, 2011 as it wasprobable that the subsidiary would withdraw from the fund. Accord-

ingly, the subsidiary recorded an additional expense in the amount of¥806 million for the year ended March 31, 2012, and it has been
included in selling, general and administrative expenses.
Defined Contribution Plan—Certain subsidiaries have a defined
contribution plan. The amounts of cost recognized for their contributions to the plan were ¥196 million, ¥193 million and ¥27 million
for the years ended March 31, 2014, 2013 and 2012, respectively.
Employee Early Retirement Program—The Company andcertain subsidiaries provide additional benefits to employees that electto participate in the Company and certain subsidiaries’ early retirement program. Retirement benefits of ¥228 million, ¥280 millionand ¥260 million were paid in addition to normal benefits andcharged to selling, general and administrative expenses for the years
ended March 31, 2014, 2013 and 2012, respectively.
Termination Plan for Directors—The Company had andcertain subsidiaries have termination plans for directors. Payment oftermination benefits to directors is made in a lump sum upon termination and requires the approval of the shareholders before payment.
In June 2005, the Company rescinded its termination plan for directors upon the approval of its shareholders. The amount of benefit foreach individual was fixed as of June 29, 2005 and will remain frozen
until the retirement of each respective director. The outstanding
liabilities were ¥399 million and ¥391 million as of March 31, 2014
and 2013, respectively, and were recorded in other long-term liabilities. Subsidiaries still maintain plans for their directors. In accordance with the guidance for determination of vested benefit
obligation for a defined benefit pension plan, the subsidiaries
recorded a liability for termination benefits for directors at theamount that would be needed if all directors were to resign at eachbalance sheet date. The liabilities for termination benefits for directors as of March 31, 2014 and 2013 were ¥218 million, and were
included in liability for termination and retirement benefits.

13. EQUITY
Japanese 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. For companies that meet certain
criteria, the Board of Directors may declare dividends (except for
dividends in kind) at any time during the fiscal year if the companies
have prescribed so in its articles of incorporation. The Company
meets all the above criteria.
The Companies Act permits companies to distribute dividends inkind (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 incorporationof the companies so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchase oftreasury stock. The limitation is defined 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 andsurplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of
capital surplus) depending on the equity account charged upon thepayment of such dividends until the total of aggregate amount oflegal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal
reserve, additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed
the amount available for distribution to the shareholders which isdetermined by specific formula.

During the years ended March 31, 2014 and 2013, changes in Wacoal Holdings Corp.’s additional paid-in capital due to equity transactions
with noncontrolling interest shareholders were as follows:
Millions of yen

Net income attributable to Wacoal Holdings Corp.
Increase in Wacoal Holdings Corp.'s additional paid-in capital due to transfers of Wacoal Holdings Corp.'s ownershipinterests in its subsidiaries from noncontrolling interests
Change in net income attributable to Wacoal Holdings Corp. and transfers from noncontrolling interests

2014

2013

¥10,106¥7,880

4¥10,11017¥7,897

There were no changes in Wacoal Holdings Corp.’s additional paid-in capital due to equity transactions with noncontrolling interest shareholders for the year ended March 31, 2012.
14. 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, 2014,2013 and 2012. The Company believes that such awards better alignthe interests of its directors with those of its shareholders, by sharing
both risk and return from fluctuations in stock prices and giving
motivation to enhance its corporate value. Each stock option is exercisable to acquire 1,000 shares of the Company’s common stock at ¥1
per share. The compensation cost is measured at fair value on the
grant date. Options vest over one year in proportion to the services
rendered by the directors, and are exercisable from the day after thedate 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 BlackScholes option-pricing model with the following assumptions.

72

Expected dividend yield is based on the actual payout of dividends in the last fiscal year and the closing price of the Company’scommon stock on the grant date. Expected volatility is based on thehistorical volatility of the Company’s share price over the most recent
period commensurate with the expected term of the Company’s
stock options. Risk-free interest rate is based on the Japanese
government bonds yield curve in effect at the time of grant for aperiod commensurate with the expected term of the Company’s
share options. Expected term of options granted is based on the
average remaining service period of directors, assuming that those
who are granted options will render service until the stated retirement date and they will exercise options immediately after theirretirement.
Expected dividends
Expected volatility
Risk-free interest rate
Expected term

2014

2013

2012

2.8%
20.6%
0.1%
2.8 years

3.2%
22.5%
0.1%
3.1 years

2.1%
31.6%
0.3%
3.8 years

A summary of stock option activities under the plan for the year ended March 31, 2014, was as follows:

Outstanding as of April 1, 2013
GrantedExercised
Forfeited or expired
Outstanding as of March 31, 2014
Exercisable as of March 31, 2014

The total intrinsic value of options exercised was ¥3 million and¥12 million for the years ended March 31, 2013 and 2012, respectively. There were no options exercised during the year ended March
31, 2014, and no exercisable options as of March 31, 2014.
Total compensation costs recognized for the years ended March
31, 2014, 2013 and 2012 were ¥69 million, ¥53 million and ¥60
million, respectively. The total recognized tax benefits related thereto
for the years ended March 31, 2014, 2013 and 2012 were ¥25
million, ¥19 million and ¥21 million, respectively.

Yen

Years

Millions of yen

Shares

WeightedAverage
Exercise Price

WeightedAverage
Remaining
Contractual Term

Aggregate
Intrinsic Value

269,000
77,000¥1
1346,000

1

17.3 years¥364

The weighted-average grant date fair values of options granted forthe years ended March 31, 2014, 2013 and 2012 were ¥918, ¥799 and¥878, respectively.
As of March 31, 2014, there was ¥12 million in total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plan. That cost is expected tobe recognized over three months.

15. OTHER COMPREHENSIVE INCOME (LOSS)
The changes in the components of accumulated other comprehensive income, including amounts attributable to noncontrolling interests wereas follows:
Millions of yen
2014

Balance at the beginning of the year (after-tax)
Amount arising during the year:
Pre-tax amountTax credit
Net amount
Reclassification adjustments:
Pre-tax amountTax credit
Net amount
Other comprehensive income attributable to noncontrolling interests (after-tax)
Balance at the end of the year (after-tax)

Foreign
Currency
Translation
Adjustments

Unrealized Gainon Securities

Pension Liability
Adjustments¥(5,924)¥9,310¥(1,928)

8,582
(240)
8,342

3,709
(1,396)
2,313

2,578
(1,110)
1,468

27

(17)
6
(11)
(6)
11,606

362
(129)
233

27
(135)
2,310

(227)

Financial Section73

Reclassification adjustments (pre-tax) of foreign currency translation adjustments are included in “Other - net.”
Reclassification adjustments (pre-tax) of unrealized gain on securities are included in “Gain on sale or exchange of marketable securities andInvestments - net” and “valuation gain or loss on marketable securities and investments - net.”
Reclassification adjustments (pre-tax) of pension liability adjustments are included in the net periodic benefit costs.
Millions of yen
2013

Foreign currency translation adjustments:
Amount arising during the year
Unrealized gain on securities:
Amount arising during the year
Reclassification adjustments
		 Net unrealized gain
Pension liability adjustments:
Amount arising during the year
Reclassification adjustment
		 Net unrealized gain (loss)
Other comprehensive income (loss)

Pre-tax AmountTax (Expense)
CreditNet Amount¥ 5,332¥ (260)9,909(2,101)
7,808
971
657
1,628
¥14,7682012
Pre-tax AmountTax (Expense)
CreditNet Amount¥ 5,072¥  (836)¥  54¥  (782)(3,435)749(2,686)6,474(1,352)
5,122

1,608
783
2,391

(470)
(319)
(789)

1,138
464
1,602

(346)
(234)
(580)
¥(3,526)

625
423
1,048
¥11,242(1,999)516(1,483)¥   72

712
(203)
509
¥(226)(1,287)313(974)¥  (154)

16. INCOME TAXES
Domestic and foreign components of income before income taxes, equity in net income of affiliated companies were summarized as follows:
Millions of yen

JapanForeign
Total

2014

2013

2012

¥22,877(7,844)¥15,033¥18,609(7,669)¥10,940¥18,045(7,838)¥10,207

2014

2013

2012

¥3,7101,546¥5,256¥ 5,578
1,060¥ 6,638¥2,942581¥3,523¥  549(164)¥  385¥5,641¥(2,754)(112)¥(2,866)¥ 3,772¥  6751¥  676¥4,199Domestic and foreign components of income tax expense consist of:Millions of yen

Current:
Japan
Foreign
Deferred:Japan
Foreign
Total income taxes

Income taxes in Japan applicable to the Companies, imposed by the national, prefectural and municipal governments, in the aggregate
resulted in a normal effective statutory tax rate of approximately 38.0% for the year ended March 31, 2014 and 2013, and approximately 40.7%
for the year ended March 31, 2012. Foreign subsidiaries are subject to income taxes of the countries in which they operate.
The Companies are subject to a number of different taxes based on income. The effective income tax rates differed from the normal statutory tax rates for the following reasons for the years ended March 31, 2014, 2013 and 2012:
Normal Japanese 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
Changes in Japanese income tax rates
Tax exemption
Unrecognized tax benefits
Impairment losses on goodwill
Other - net
Effective tax rates

74

2014

2013

2012

38.0%

38.0%

40.7%

3.3
(2.9)
0.1
(2.6)

4.2
1.0
0.0
(1.0)

(0.2)
0.2

(0.3)
0.2
(4.1)
(3.5)
34.5%

4.6
3.2
(0.1)
(1.5)
(6.0)
(0.3)
0.2

1.6
37.5%

0.3
41.1%

Amendments to the Japanese tax regulations were issued on
December 2, 2011. As a result of these amendments, the statutory
income tax rate was reduced from 40.7% to 38.0% effective from theyear beginning April 1, 2012 and will be reduced to 35.6% effectivefrom the year beginning April 1, 2015, and thereafter. Consequently,
the statutory income tax rate utilized for deferred tax assets and liabilities expected to be settled or realized in the period from April 1, 2012
to March 31, 2015 is 38.0% and for periods subsequent to March 31,
2015 the rate is 35.6%. The adjustment of deferred tax assets and liabilities for this change in the tax rate resulted in a decrease of income
taxes by ¥616 million and have been reflected in income taxes in the
consolidated statements of income for the year ended March 31, 2012.

Following after the amendment described above, new amendments to the Japanese tax regulations were issued on March 31, 2014.
As a result of these amendments, the statutory income tax rate was
reduced from 38.0% to 35.6% effective from the year beginning April
1, 2014. Consequently, the statutory income tax rate utilized fordeferred tax assets and liabilities expected to be settled or realized in
the period from April 1, 2014 is 35.6%. The adjustment of deferred
tax assets and liabilities for this change in the tax rate resulted in an
increase of income taxes by ¥255 million and has been reflected inincome taxes in the consolidated statements of income for the year
ended March 31, 2014.

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31, 2014 and2013 were as follows:
Millions of yen
DeferredTax Assets

Sales returns
Allowance for doubtful receivables
Accruals not currently deductible
Inventory valuation
Accrued bonuses
Impairment charges on marketable securities and investments
Advanced depreciation on property, plant and equipment
Undistributed earnings of associated companies
Net unrealized gain on marketable securities and investments
Net realized gain on exchange of investments
Capitalized supplies
Enterprise taxes
Accrued vacation
Asset retirement obligation
Prepaid pension cost
Pension expense
Tangible fixed assets
Tax loss carryforwards
Intangible assets
Other temporary differences
Total
Valuation allowance
Total

2014
Deferred
Tax Liabilities¥   771
51
187
1,149
1,258
1,471

DeferredTax Assets

2013
Deferred
Tax Liabilities¥   608
100
181
1,194
1,274
1,467
¥ 1,354
2,405
7,407
1,059

290
114
799
259

¥ 1,403
2,112
6,045
1,059
285
335
834
231

1,420
501
1,312
3,668
1,076
12,906(4,016)¥ 8,890

575
1,269
4,037
2,802
198
16,645¥16,645992
13,382(4,209)¥ 9,173

2,651
223
13,493¥13,493

The valuation allowance decreased by ¥193 million for the year ended March 31, 2014. The valuation allowance increased by ¥121 million
for the year ended March 31, 2013.
Financial Section

75

The Companies reversed certain valuation allowance and utilized ¥847 million and ¥705 million of tax loss carryforwards, and recognizedtax benefits of ¥226 million and ¥228 million for the year ended March 31, 2014 and 2013, respectively.
As of March 31, 2014, certain subsidiaries had tax loss carryforwards, which are available to offset future taxable income of such subsidiaries,
expiring as follows:Year Ending March 31

2015
2016
2017
2018
2019
2020
2021
2022
2023
Thereafter
Total

Millions of yen¥    13
229
478
618
2,188
2,349
1,056
733
3,222
¥10,886

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures which was deemed to be permanently invested as of March 31, 2014 and 2013.
A reconciliation of beginning and ending amounts of unrecognized tax benefits was as follows:
Millions of yen

Balance at the beginning of the year
Additions based on tax positions related to the current year
Reductions for tax positions of prior years
Balance at the end of the year

The total amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate is ¥296 million, ¥313 million and¥267 million as of March 31, 2014, 2013 and 2012, 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, 2014, 2013 and 2012 were not material.

2014

2013

2012

¥ 313
133
(150)
¥ 296

¥267
46

¥188
79

¥313

¥267

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 foryears before 2012 with few exceptions. For other countries, theCompanies are no longer subject to regular income tax examinations
by the tax authorities for years before 2006 with few exceptions. In
the year ended March 31, 2009, the transfer pricing examinations ofcertain domestic subsidiaries’ 2002 to 2007 fiscal years and certain
U.S. subsidiaries’ 2004 and 2003 fiscal years were completed.

17. RELATED-PARTY TRANSACTIONSThe Companies purchase merchandise from numerous suppliers
throughout the world, including certain affiliated companies of theCompanies. The Companies purchased merchandise from affiliatedcompanies in the amount of ¥2,375 million, ¥2,353 million and ¥2,093
million in the fiscal years ended March 31, 2014, 2013 and 2012,
respectively. The accounts payable to affiliated companies were ¥220
million and ¥166 million as of March 31, 2014 and 2013, respectively.
The Companies also sell supplies, materials and products tocertain affiliated companies. Aggregate sales to affiliated companies
were ¥342 million, ¥381 million and ¥477 million in fiscal years

76

ended March 31, 2014, 2013 and 2012. The accounts receivable fromaffiliated companies were ¥58 million and ¥81 million as of March
31, 2014 and 2013.
The Companies earn royalties from the use of the Wacoal Brandby certain affiliated companies. The amount of royalty revenue
earned was ¥248 million, ¥247 million and ¥216 million in the fiscal
years ended March 31, 2014, 2013 and 2012, respectively. Other
accounts receivables from affiliated companies, which are included inother current assets in the consolidated balance sheets, were ¥188
million and ¥190 million as of March 31, 2014 and 2013, respectively.

18. EARNINGS PER SHARE AND AMERICAN DEPOSITARY RECEIPT
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 stock
outstanding during each year. Diluted net income attributable to
Wacoal Holdings Corp. per share assumes the dilution that could
occur if share-based option to issue common stock were exercised.
The computation of earnings per American Depositary Receipt(ADR), each ADR representing 5 shares of common stock, is basedon the weighted-average number of common stock outstanding.

The weighted-average number of common stock outstandingused in the computations of basic net income attributable to Wacoal
Holdings Corp. per share was 140,841,722 shares, 140,846,298 sharesand 140,848,576 shares for 2014, 2013 and 2012, respectively. The
weighted-average number of diluted common stock outstanding usedin the computations of diluted net income attributable to Wacoal
Holdings Corp. per share was 141,135,395 shares, 141,070,568 sharesand 141,013,083 shares for 2014, 2013 and 2012, respectively.

19. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Fair Value of Financial Instruments

The carrying amounts and fair values of financial instruments as of March 31, 2014 and 2013 were as follows:
Millions of yen
2014

Assets:Marketable securities (Notes 3 and 20)
Investments (Notes 3 and 20)
Foreign exchange contracts (Note 20)
		Total assets
Liabilities:
Foreign exchange contracts (Note 20)
Long-term debt including current portion
		Total liabilities

Fair Value

Carrying
AmountFair Value¥ 3,523
44,58918¥48,130¥ 3,520
44,592
18¥48,130¥ 4,601
41,00329¥45,633¥ 4,601
41,00629¥45,636¥    (1)(1,517)¥ (1,518)¥    (1)(1,518)¥ (1,519)¥    (7)(2,414)¥ (2,421)¥    (7)(2,414)¥ (2,421)

for similar types of borrowings with similar terms and remaining
maturities. The estimated fair value is based on Level 2 input.
Limitations—Fair value estimates are made at a specific point in
time, based on relevant market information and information about
the financial instrument. These estimates are subjective in nature andinvolve 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’ businessconsists primarily of sales of women’s intimate apparel to a large
number of diverse customers in the Japanese retail industry, which
include well-established department stores, general merchandise storesand other general retailers and specialty stores. No single customer
constitutes 10.0% or more of the total sales, although the generalretail customers that are consolidated companies within the Aeon
Group collectively accounted for approximately 10.0%, 9.1% and9.8% of the total sales in fiscal years ended March 31, 2014, 2013 and2012, respectively.

77

Financial Section

There are investments in nonmarketable equity securities and debt
securities for which there are no readily determinable fair values. See
Note 3 for further information. The carrying amounts of all otherfinancial instruments approximate their estimated fair values becauseof the short maturity of those instruments.
Foreign Exchange Contracts—The Companies are exposed
to foreign currency exchange risks on the transactions denominatedin foreign currencies relating to its ongoing business operations.
Such risks are primarily managed by using foreign currency exchange
contracts. The Companies measure forward currency exchange
contracts at the fair value since they are not designated as a hedge.
Marketable Securities and Investment—Held-to-maturity
debt securities are classified as marketable securities and investments
as of March 31, 2014 and as investments as of March 31, 2013,
respectively. The fair value of these held-to-maturity debt securities
are classified as Level 1. For all other investments included inmarketable securities and investments, see Notes 3 and 20.
Long-Term Debt—The fair values for long-term debt are estimated by discounted cash flow analysis, using rates currently available

2013

Carrying
Amount20. FAIR VALUE MEASUREMENTS
The guidance for fair value measurements defines fair value as theprice that would be received to sell an asset or paid to transfer aliability (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 athree-level fair value hierarchy that prioritizes the inputs used tomeasure fair value as follows:

Level 1—Inputs are quoted prices in active markets for identicalassets 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 thanquoted prices that are observable, and inputs that arederived principally from or corroborated by observable
market data by correlation or other means.
Level 3—Inputs are unobservable.

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, 2014 and 2013 were as follows:
Millions of yen
2014

Assets:Marketable securities:
		Municipal bonds
		Corporate bonds
		Mutual funds
			Total marketable securities
Investments:
		Equity securities
Derivative instruments:
		 Foreign exchange contracts
			Total assets
Liabilities:
Derivative instruments:
		 Foreign exchange contracts

Level 1

Level 2

Level 3¥   10
502
2,906
3,418

¥    10
502
2,906
3,418

¥44,170¥44,170

Total

44,17018¥3,43618¥47,606¥   (1)¥    (1)Millions of yen

2013

Assets:Marketable securities:
		Municipal bonds
		Corporate bonds
		Mutual funds
			Total marketable securities
Investments:
		Equity securities
		Mutual funds
			Total investments
Derivative instruments:
		 Foreign exchange contracts
			Total assets
Liabilities:
Derivative instruments:
		 Foreign exchange contracts

78

Level 1

Level 2¥   497497¥   10
1,191
2,903
4,104

40,526
186
40,712¥41,209

Level 3Total¥    10
1,191
3,400
4,601
40,526
186
40,71229¥4,13329¥45,342¥   (7)¥    (7)Marketable securities and investments presented in Level 1 arevalued using an unadjusted quoted market price in active markets
with sufficient volume and frequency of transactions. Bonds
presented in Level 2 are valued by the financial institution using
quoted market price for identical instruments in markets that are notactive and mutual funds presented in Level 2 are valued by the financial institution based on quoted prices in both active and inactive
market for identical instruments which comprise funds.
As presented in Note 3, the Companies recorded impairment
charges on marketable securities and investments if a decline in fairvalue of marketable securities and investments is determined to beother than temporary.
Derivative instruments are composed of foreign currency
exchange contracts. Financial instruments presented in Level 2 arevalued using quotes obtained from third parties.

The changes in the fair value of the foreign currency exchange
contracts are recorded in earnings, since the foreign currency
exchange contracts are not designated as a hedge. The Companies
recognized a gain of ¥5 million, ¥40 million and ¥89 million in other- net of other income (expenses) in the years ended March 31, 2014,2013 and 2012, respectively.
The Companies recorded the derivative instruments as othercurrent assets and other current liabilities in the consolidated balance
sheets at fair value of ¥18 million and ¥1 million, respectively as ofMarch 31, 2014. The derivative instruments are presented as othercurrent assets and other current liabilities in the consolidated balance
sheets at fair value of ¥29 million and ¥7 million as of March 31, 2013.

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis as of March 31, 2013 were as follows:
Millions of yen
2013

Goodwill (Note 8)
Trademarks (Note 8)
Customer relationships (Note 8)

Level 2

Level 3

Total

Total Losses¥9,1703,170
293¥9,1703,170
293¥(1,197)(1,587)(68)¥(2,852)

were developed using estimates for expected future revenue growth
rates, profit margins and working capital levels of the reporting units.
The rate of royalty used for the valuation was based on the actual
royalty ratio used in transactions. The risk-adjusted discount rate
represents a weighted-average cost of capital (WACC) adjusted for
inherent risk spread.
Customer relationships with a carrying amount of ¥361 million asof March 31, 2013 were written down to their fair value of ¥293
million, resulting in recognition of impairment charges of ¥68
million for the year ended March 31, 2013. The impairments
recorded for this year arose due to the decline in their fair value,
which were mainly caused by a downturn in consumption because ofgeneral market conditions. To measure the fair values of thecustomer relationships, the Companies used the excess earnings
method and incorporated relevant unobservable inputs, such as
management’s internal assumptions about future cash flows, thepercentage of orders that the Companies expect to receive from thecustomers existing at the point of acquisition and appropriately riskadjusted discount rate, which reflected the management’s estimate ofassumptions that market participants would use in pricing the asset ina current transaction as of the measurement date. The future cash
flows were projected in the same way as described in the trademarks.
The percentage of orders that the Companies expect to receive fromthe customers existing at the point of acquisition was estimated basedon the historical trend of the percentage of sales to the preacquisition
customers. A risk-adjusted discount rate representing a WACC wasdetermined using the capital asset pricing model.
There were no significant assets or liabilities that were measured
at fair value on a nonrecurring basis as of March 31, 2014 and 2012.

79

Financial Section

As of the end of March 31, 2013, goodwill with a carrying
amount of ¥10,367 million was written down to its implied fair valueof ¥9,170 million, resulting in an impairment charge of ¥1,197
million, which is included in earnings for the year ended March 31,
2013. The impairment arose due to the decline in its fair value,
which was mainly caused by a downturn in consumption due togeneral market conditions. To measure the fair values of thereporting units, the Companies used the expected present value of
future cash flows and incorporated relevant unobservable inputs, suchas management’s internal assumptions about future cash flows andappropriately risk-adjusted discount rates, which reflected the
management’s estimate of assumptions that market participants would
use in pricing the asset in an arm’s length transaction as of themeasurement date.
Trademarks with a carrying amount of ¥4,757 million as ofMarch 31, 2013, were written down to their fair values of ¥3,170
million, resulting in recognition of an impairment charge of ¥1,587
million for the year ended March 31, 2013. The impairment arose
due to the decline in their fair value, which was mainly caused by adownturn in consumption due to general market conditions. To
measure the fair value of the trademarks, the Companies used therelief-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 the management’s estimate of assumptions thatmarket participants would use in pricing the asset in an arm’s lengthtransaction as of the measurement date. Future cash flows were basedon the management’s cash flow projections for the future five years,
and after five years, future cash flows were estimated using the perpetuity growth rate of 0%. The management’s cash flow projections

Level 1

Valuation process:
The valuation process involved in Level 3 measurements for applicable asset and liability is governed by the valuation policies andprocedures, 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 incharge of valuation determine the valuation model to be utilized tomeasure each asset and liability at fair value. We engage independent
external experts of valuation to assist us in the valuation process forcertain assets over a specific amount, and their results of valuations arereviewed by the responsible personnel. All the valuations including
those performed by the external experts are reviewed and approvedby the management of the Company before being recorded in thegeneral ledger.

Quantitative information regarding Level 3 fair value measurements:
Information about valuation techniques and significant unobservable inputs used for Level 3 assets measured at fair value for the year ended
March 31, 2013 is as follows:
Millions of yen
March 31, 2013

Fair Value

Valuation TechniquePrincipal Unobservable Input

Trademarks¥3,170

Relief-from royalty method

Discount rate
Royalty rate
Short-term revenue growth rates(within five years)
Perpetuity growth rate (over five years)
Discount rate
Remaining useful life

Customer relationships¥  293

Excess earning method

Range

7.5% - 11.5%
3.0% - 4.0%
3.3% - 5.5%0%
4.5%
2 years

21. SEGMENT INFORMATION
Operating Segment Information

The Companies have three reportable segments: “Wacoal business(domestic),” “Wacoal business (overseas),” and “Peach John,” which
are based on their locations and brands. These segments represent
components of the Companies for which separate financial information is available and for which operating profit (loss) is reviewed
regularly by the chief operating decision maker in deciding how toallocate the Companies’ resources and in assessing their performance.
The accounting policies used for these reportable segments are thesame as those described in the summary of significant accounting
policies in Note 1.

80“Wacoal business (domestic)” segment primarily produces andsells innerwear (consisting of foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear and hosiery. “Wacoal business (overseas)” segment produces and sells innerwear (consisting offoundation, lingerie, nightwear and children’s innerwear), outerwear,
sportswear and hosiery. “Peach John” segment produces and sells
innerwear (consisting of foundation, lingerie, nightwear and children’s
innerwear), outerwear, and other textile-related products, which aresold under the “Peach John” brand. “Other” segment produces andsells innerwear (consisting of foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear, other textile-related products, mannequins and construction of stores and interior design.

During the current consolidated first quarter, certain segment information has been changed in conformity with the internal reporting
segment that is based on our organizational structure. Accordingly, the amount related to Wacoal Eveden is recorded in “Wacoal business (overseas),” whereas it was originally recorded in our “Other” segment. The segment information for the years ended March 31, 2013 and 2012 hasbeen restated based on the segments.
Information about operating results and assets for each segment as of and for the years ended March 31, 2014, 2013 and 2012 is as follows:
Millions of yen
2014

Net sales:
External customers
Intersegment
		TotalOperating costs and expenses:
Operating costs and expenses
Depreciation and amortization
		TotalOperating profit
Total assets and capital expenditures:
Total assets
Capital expenditures

Wacoal Business(Domestic)

Wacoal Business(Overseas)

Peach John

Other

Elimination¥118,085
2,149
120,234¥43,636
8,049
51,685¥12,482455
12,937¥19,578
5,406
24,984¥(16,059)(16,059)

108,015
2,935
110,950
9,284

46,4101,238
47,648
4,037

12,270584
12,85483

24,249279
24,528456

244,502
2,210

69,352621

18,026296

20,070337

Wacoal Business(Domestic)

Wacoal Business(Overseas)

Peach John

Other

Elimination¥115,657
2,193
117,850¥33,345
7,575
40,920¥11,972
232
12,204¥19,256
5,415
24,671¥(15,415)(15,415)

106,482
2,945

37,868
1,029

23,699218(15,415)

109,427
8,423

38,8972,023

11,357
696
1,197
1,655
14,905(2,701)

23,917754(15,415)

236,006
2,283

59,237688

18,135
202

19,721
157(78,563)

Wacoal Business(Domestic)

Wacoal Business(Overseas)

Peach John

Other

Elimination¥115,870
2,719
118,589¥21,396
6,541
27,937¥13,836
193
14,029¥20,795
5,744
26,539¥(15,197)(15,197)

107,332
3,085
110,417
8,172

25,946551
26,497
1,440

12,766734
13,500529

26,013290
26,303236

208,373
1,991

29,367549

21,237348

20,566666

Consolidated¥193,781(16,059)(16,059)(79,962)

193,781
174,885
5,036
179,921
13,860271,988
3,464
Millions of yen

2013

Net sales:
External customers
Intersegment
		TotalOperating costs and expenses:
Operating costs and expenses
Depreciation and amortization
Impairment charges on goodwill (Note 20)
Impairment charges on other intangible assets (Note 20)
Total
Operating profit (loss)
Total assets and capital expenditures:
Total assets
Capital expenditures

Consolidated¥180,230
180,230
163,991
4,888
1,197
1,655
171,7318,499
254,536
3,330
Millions of yen

2012

Consolidated¥171,897(15,197)(15,197)(58,445)

171,897
156,860
4,660
161,520
10,377

Financial Section

Net sales:
External customers
Intersegment
		TotalOperating costs and expenses:
Operating costs and expenses
Depreciation and amortization
		TotalOperating profit
Total assets and capital expenditures:
Total assets
Capital expenditures

221,098
3,544

81

The Companies account for intersegment sales and transfers at cost plus a markup. Operating profit (loss) represents net sales less operating
costs and expenses.
Products and Service Information

Net sales information by product and service for the years ended March 31, 2014, 2013 and 2012 is as follows:
Millions of yen

Innerwear:
Foundation and lingerieNightwear
Children's underwear
		Subtotal
Outerwear/Sportswear
Hosiery
Other textile goods and related products
Others		Total

2014

2013

2012

¥144,783
9,301
1,475
155,559¥ 16,954
1,791
8,577
10,900¥193,781¥132,525
9,221
1,465
143,211¥ 17,287
1,559
7,580
10,593¥180,230¥124,303
9,390
1,530
135,223¥ 16,371
1,646
8,226
10,431¥171,897

Geographic Information

Information by major geographic area as of and for the years ended March 31, 2014, 2013 and 2012 is as follows:
Millions of yen

Net sales:Japan
Asia and Oceania
Americas and Europe
		Consolidated
Long-lived assets:Japan
Asia and Oceania
Americas and Europe
		Consolidated

2014

2013

2012

¥149,715
14,871
29,195¥193,781¥146,224
11,77722,229¥180,230¥149,587
10,527
11,783¥171,897¥ 43,446
2,894
2,638
¥ 48,978¥ 44,670
2,692
2,303
¥ 49,665¥ 45,240
2,334
1,504
¥ 49,078

Net sales are attributed to countries or areas based on the location of sellers.
Asia and Oceania includes East Asia, Southeast Asia, West Asia and Australia.
Countries or areas are classified according to their geographical proximity. Long-lived assets represent property, plant and equipment.

22. SUBSEQUENT EVENTSOn May 8, 2014, an agreement to sell a part of our paintings held as fixed assets of the Company was executed. Accordingly, we expect torecord approximately 1.2 billion yen of gain on sale of fixed assets during the fiscal year ending March 31, 2015.
On May 13, 2014, the Board of Directors resolved to pay a cash dividend of ¥165 per 5 shares of common stock to holders of record as ofMarch 31, 2014 (aggregate amount of ¥4,648 million).

82

Independent AudItors’ report

Deloitte Touche Tohmatsu LLC
Shijokarasuma FT Square
20, Naginataboko-cho
Karasuma-higashiiru, Shijo-doriShimogyo-ku, Kyoto 600-8008
Japan
Tel: +81 (75) 222 0181
Fax: +81 (75) 231 2703
www.deloitte.com/jp
To 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 theconsolidated balance sheets as of March 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, equity, and cash flows foreach of the three years in the period ended March 31, 2014 (all expressed in Japanese yen), and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements 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 preparation and fairpresentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March
31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2014, in accordance withaccounting principles generally accepted in the United States of America.

Convenience Translation
Our audits also comprehended the translation of the Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made inconformity with the basis stated in Note 2. The translation of the financial statement amounts into U.S. dollars has been made solely for convenience of readers
Financial Section

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 of management’s report on internal control overfinancial reporting (“ICFR”) under the Financial Instruments and Exchange Act of Japan. A translated copy of management’s report on ICFR along with atranslated copy of our report is included as information for readers.

June 27, 2014

83

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROLOVER FINANCIAL REPORTING (TRANSLATION)NOTE TO READERS
Following is an English translation of management’s report on internal control over financial (‘’ICFR’’) filed under the Financial Instruments andExchange 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 of Certified Public Accountants (‘’AICPA’’).
In the management assessment of ICFR under FIEA, there is detailed guidance on the scope of management 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 establishedby the AICPA, there is no such detailed guidance. Accordingly based on the quantitative guidance which provides an approximately measure for thescope of assessment of internal control over business processes, we designated the business units that accounted for approximately two-thirds of theaggregated 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, Masaya Wakabayashi, Managing Director, 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 overfinancial reporting in accordance with the 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 its 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, 2014. The assessment was performed in accordance withassessment 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 theseselected business processes, identified key controls that may have a material impact on the reliability of our financial reporting, and assessed the designand operation of these key controls. These procedures have allowed us to evaluate the effectiveness of its internal controls.
We determined the required scope of 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 materiality that may affect the reliability of our financial reporting. The materialitythat may affect the reliability of the 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 in light of the results of assessment ofcompany-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 qualitatively material impact on the consolidated financial statements in the scope of 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 theprocess-level controls.
At the selected significant business units, we included, in the scope of assessment, those business processes leading to sales or accounts receivable andinventories, as significant accounts that may have a material impact on the business objectives of us. Further, not only at selected significant business
units, but also at other business units, we added to the scope assessment, as business processes having greater materiality considering their impact on thefinancial reporting, (1) those business processes relating to greater likelihood of material misstatements and significant account involving estimates andthe management’s judgment, and (2) those business processes relating to businesses or operations dealing with high-risk transactions.

84

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 as of March 31, 2014.

4.【Supplementary Matters】
Not applicable.

5.【Special Information】
We were a registrant of the Securities and Exchange Commission (“SEC”) and our American Depositary Receipts (“ADR”) was listed on NASDAQ
until the previous fiscal year. Accordingly, pursuant to the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, the Company conductedassessments of the internal control over financial reporting in accordance with the “Final Rule: Management’s Report on Internal Control Over
Financial Reporting” and “Management Guidance” on internal control issued by SEC, and regularly filed its annual report in Form 20-F with aninternal control report of management. On April 15, 2013, we filed an application with NASDAQ for delisting our ADRs and the delisting wascompleted on April 25, 2013. Our registration with SEC and applicable disclosures under Article 15 of the U.S. Securities Exchange Act of 1934
(submission of Form 20-F) were terminated on July 24, 2013, and from the current fiscal year, we have been performing an assessment of the internal
control over financial reporting in accordance with assessment standards for internal control over financial reporting generally accepted in Japan.

Financial Section85

Independent Auditors’ Report

NOTE TO READERS:
Following is an English translation of the Independent Auditors’ Report filed under the Financial Instruments and Exchange Act of Japan. This report ispresented merely as supplemental information.
There are differences between an audit of internal control over financial reporting (“ICFR”) under the Financial Instruments and Exchange Act (“ICFR
under FIEA”) and one conducted under the attestation standards 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 the attestation standards established by the AICPA, the auditors express an opinion on the Company’s ICFR directly. Also in
an audit of ICFR under FIEA, there is detailed guidance on the scope of an audit of ICFR, such as quantitative guidance on business units selection and/or
account selection. In an audit of ICFR under the attestation standards established by the AICPA, there is no such detailed guidance. Accordingly, based on thequantitative guidance which provides an approximate measure for the scope of assessment of internal control over business process, we used a measure of approximately 70% of total assets on a consolidated basis and income before income taxes on a consolidated basis for the selection of significant business units.

(TRANSLATION)

Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:		Fumihiko Kimura

Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:		Koichiro Tsukuda

Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:		Akiyo Shimoida

To the Board of Directors of Wacoal Holdings Corp.

Audit of Financial Statements
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited the consolidated financial statements included in
the Financial Section, namely, the consolidated balance sheet as of March 31, 2014 of Wacoal Holdings Corp. and its consolidated subsidiaries (the “Company”),
and the consolidated statement of income, comprehensive income, equity and cash flows for the fiscal year from April 1, 2013 to March 31, 2014, and a summaryof 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 in accordance with accounting principles generally
accepted in the United States of America pursuant to the third paragraph of the Supplementary Provisions of the Cabinet Office Ordinance for Partial Amendment of the Regulations for Terminology, Forms and Preparation Methods of Consolidated Financial Statements (No. 11 of the Cabinet Office Ordinance in2002), 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.

86

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 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 tofraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March
31, 2014, and the results of 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 overfinancial reporting of the Company as of March 31, 2014.

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 reporton internal control in accordance with assessment standards for internal control over financial reporting generally accepted in Japan. There is a possibility thatmisstatements may not be completely 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 over financial reporting generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable 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 assessment of internal control over financial
reporting in management’s report on internal control. The procedures selected depend on the auditors’ judgment, including the significance of effects on reliability of financial reporting. An internal control audit includes examining representations on the scope, procedures and results of the assessment of internal
control over financial reporting made by management, as well as evaluating the overall presentation of management’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Financial Section

OpinionIn our opinion, management’s report on internal control over financial reporting referred to above, which represents that the internal control over financial
reporting of the Company as of March 31, 2014 is effectively maintained and presents fairly, in all material respects, the results of the assessment of internal
control over financial reporting in accordance with assessment standards for internal control over financial reporting generally accepted 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.

June 27, 201487

CORPORATE DATA
As of March 31, 2014

Head office

Overseas joint ventures

29, Nakajima-cho, Kisshoin,
Minami-ku, Kyoto 601-8530, Japan
Tel 075-682-5111 Fax 075-661-5603

Wacoal Holdings Equity Owned%

Shinyoung Wacoal Inc. (South Korea)
Thai Wacoal Public Company Limited
Taiwan Wacoal Co., Ltd.
PT. Indonesia Wacoal
Wacoal Malaysia Sdn. Bhd.
Shanghai Yadie Fashion Co., Ltd.

25
34
50
42
50
20

Web sitewww.wacoalholdings.jp/enDate of foundation
June 15, 1946
Date of establishment

International network

November 1, 1949

Wacoal International Corp. (U.S.A.)

One Wacoal Plaza, Lyndhurst,
N.J. 07071, U.S.A.
Tel 1-201-933-8400

Shareholders’ equity¥205,106 million
Number of employees

Wacoal America, Inc.

(consolidated)

136 Madison Avenue,
New York, N.Y. 10016, U.S.A.
Tel 1-212-532-6100

20,303
Domestic principal subsidiaries
Wacoal Holdings Equity Owned

Wacoal Corp.
Peach John Co., Ltd.
Lecien Corporation
Une nana cool Corp.
Kyushu Wacoal
Manufacturing Corp.
Niigata Wacoal Sewing Corp.
Hokuriku Wacoal Sewing Corp.
Torica Inc.
Nanasai Co., Ltd.
Wacoal Distribution Corp.

%

100
100
100
100
100
100
100
57
99
100

Overseas principal subsidiaries
Wacoal Holdings Equity Owned

Wacoal International Corp. (U.S.A.)
Wacoal America, Inc.
Wacoal (UK) Limited
WACOAL CANADA INC.
Wacoal Direct Corp.
Wacoal Singapore Pte. Ltd.
Wacoal Hong Kong Co., Ltd.
Wacoal International
Hong Kong Co., Ltd.
Wacoal China Co., Ltd.
Guangdong Wacoal Inc.
Dalian Wacoal Co., Ltd.
Vietnam Wacoal Corp.
Wacoal Dominicana Corp.
Philippine Wacoal Corp.
Wacoal Sports Science Corp.
Wacoal Eveden Limited

%

100
100
100
100
100
100
80
100
100
100
100
100
100
67
100
100

Domestic principal joint ventures
Wacoal Holdings Equity Owned%

House of Rose Co., Ltd.

24

88

Wacoal Hong Kong Co., Ltd.

Wacoal (UK) Limited

4th Floor, Hardy House, 16-18 Beak Street,
London WIF 9RD, United Kingdom
Tel 44-207-439-6190
WACOAL CANADA INC.

1000 de la Gauchetiere Street West, Suite
2400 Montreal, Q.C., Canada H3B 4W5
Tel 1-514-448-2173
Wacoal Dominicana Corp.

Las Americas Industrial Free Zone,
KM.22, aut. Las Americas,
Santo Domingo, Dominican Republic
Tel 1-809-549-1090
Wacoal Eveden Limited

Rothwell Road, Desborough,Northamptonshire NN14 2PG,
United Kingdom
Tel 44-1536-760-282
Wacoal China Co., Ltd.

Jia 16 Tongji North Road,
Beijing Economic and Technological
Development Area, Beijing 100176, P.R.C.
Tel 86-10-6787-2185
Guangdong Wacoal Inc.

Huahai Industrial District,
Xinhua Town, Huadu Qu,
Guangzhou City, Guangdong, P.R.C.
Tel 86-20-8686-1170
Dalian Wacoal Co., Ltd.

No.6 Fu An Street, Economic andTechnical Development Zone, Dalian,
116600, P. R. C.
Tel 86-411-8733-7722

8th Floor, EGL Tower,
No. 83 Hung To Road, Kwun Tong,
Kowloon, Hong KongTel 852-2811-3202
Wacoal International Hong Kong Co., Ltd.

8th Floor, EGL Tower,
No. 83 Hung To Road, Kwun Tong,
Kowloon, Hong KongTel 852-2561-9191
Wacoal Singapore Pte. Ltd.

215 Henderson Road,#01-08 Henderson Industrial Park,
Singapore 159554
Tel 65-6270-2887
Vietnam Wacoal Corp.

110 Amata Road,
Amata Modern Industrial Park,
Long Binh Ward, Bien Hoa City,
Dong Nai Province,
Socialist Republic of Vietnam
Tel 84-61-3936770
Philippine Wacoal Corp.

3rd Floor, 6788 Ayala Avenue,
Oledan Square, Makati City 1226,
Philippines
Tel 63-2-893-7432
Thai Wacoal Public Company Limited

930/1 Soi Pradoo 1,
Sathupradith, Bangkholaem,
Bangkok, Thailand
Tel 66-2-289-3100
Taiwan Wacoal Co., Ltd.

15 Jingkwo Road, Taoyuan,
Taiwan, R.O.C.
Tel 886-3-326-9369
Shinyoung Wacoal Inc. (South Korea)

345-54 Gasan-Dong, Geumcheon Gu,
Seoul 153-023, Korea
Tel 82-2-818-5120
PT. Indonesia Wacoal

Jl. Tarikolot Rt.01/Rk.001 No. 59,
Citeureup-Bogor 16810, Indonesia
Tel 62-21-560-0715
Wacoal Malaysia Sdn. Bhd.

5th Floor, Plaza Hamodal,
Lot 15, Jalan 13/2 (Section 13),46200 Petaling Jaya,
Selangor, Malaysia
Tel 60-3-7960-8308

INVESTOR INFORMATIONAs of March 31, 2014

Ownership and Distribution of Shares

Stock listings

Tokyo

Securities firms

Fiscal year-end

1.80%

Individuals and others
19.75%March 31
Securities code

3591

Financial institutions

40.18%

Common stock

Issued: 143,378,085 shares
Outstanding: 140,838,714 shares

Other Japanese companies

21.33%

Trading unit

Foreign institutions and individuals
16.94%

1,000 shares
Shareholder register agent
for common stock

Mitsubishi UFJ Trust andBanking Corporation,
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Major shareholders%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

4.87

American depositary receipts

Meiji Yasuda Life Insurance Company

4.25

Cusip No.: 930004205
Ratio (ADR:ORD): 1:5
Exchange: NASDAQ
Symbol: WACLY

The Master Trust Bank of Japan, Ltd. (Trust Account)

3.59

The Bank of Kyoto, Ltd.

3.28

Nippon Life Insurance Company

3.10

Japan Trustee Services Bank, Ltd. (Trust Account)

3.09

The Shiga Bank, Ltd.

2.54

Mitsubishi UFJ Trust and Banking Corporation

2.12

Depositary

The Bank of New York Mellon
101 Barclay Street,
New York, NY 10286, U.S.A.
Tel 1-212-815-8161
U.S. toll free 888-269-2377(888-BNY-ADRS)
www.adrbny.com

The Bank of New York Mellon as depositary bank for depositary receipt holders* 2.04
The Dai-ichi Life Insurance Company, Ltd.

1.90

* Shares deposited to issue American Depositary Shares traded on the NASDAQ stock market.

Number of shareholders

11,786
Stock Price / Trading Volume¥ / Thousand shares
Stock Price
2,000

1,500

1,000

500
Trading Volume
20,00015,00010,000
5,000
0

05/4

06/1

07/1

08/1

09/1

10/1

11/1

12/1

13/1

14/1

Forward-Looking Statements: Statements contained in this integrated report that are not historical facts are forward-looking statements, which reflect the Company’s plans and expectations.
These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, performance, or achievements to differ materiallyfrom those anticipated in these statements.

89www.wacoalholdings.jp/en140908-DN-AT3
Printed in Japan